Africa’s lower export revenues have exacerbated the economic asymmetry. For instance, till 2013, the China-Africa trade was nearly in balance. But, in 2023, China had a surplus of $64 bn out of the total trade of $282 bn. China’s debt to Africa has mushroomed to around $170 bn, making it nearly 12% of the total debt owned by Africans. After five years of declining Chinese debts to Africa, these climbed in 2023. In some cases, these commercial loans have become unsustainable ‘debt traps’. With coups d’etat galore in Africa, Chinese debts have also become riskier. However, facing Western ostracisation, FOCAC is good political optics for Beijing.
China was on a wanton quest for Africa’s raw materials for over two decades. It fuelled China’s overcapacities from real estate to manufactured goods, and the current bust is a sobering story. Now that commodity prices are down, Africans have learnt that it’s best not put all eggs in one basket and perils of borrowing-driven development.
Nevertheless, FOCAC-9 has been reason enough for some experts to hyperventilate that India has ‘missed the bus to Africa’. This is untrue. We are Africa’s second-biggest trading partner – around $100 bn in FY23 – and fourth-largest investor. India’s 3 mn-strong diaspora is omnipresent in the continent. The following needs must be met to help craft a better strategy in Africa:
With 54 countries, 1.4 bn people and myriad needs, Africa is too large and diverse to be the backyard of a single country. Centuries of engagement with the continent have given us respect and momentum in several domains that we need to deploy.
China has its well-known attractiveness for Africans, and India is often no match for them. But the converse is also true, say, in pharma. We should concentrate on our strengths.The Chinese model of mass manufacturing is unsuited for Africa. Our proven MSME role model best fits Africa’s eco-political requirements of appropriate and ruggedised (jugaad-based) tech, low-capital requirement, company-to-company bonding, and personnel-to-personnel synergy. Language and culture are less of barriers between Indians and Africans. However, the MSME ecosystem needs active government funding and support.Soft skills are India’s forte. We are most appropriate for Africa’s managerial prowess, IT, skilling, education and healthcare needs. Building such capacities can release synergies and create lucrative opportunities.
Over 75 years, India has built credible eco-political institutions from the central bank to EXIM banks to EC, and stock markets, Aadhaar, UPI, Jan Dhan, DBT, India Stack and startup ecosystem. Most African countries are interested in leveraging or upgrading their ecosystems with such innovations. This could anchor bilateral economies.
Despite its expansive farmlands, African agriculture is in distress. Our success in this sector can be replicated, unleashing opportunities. Commercialising this sector through a collection of produce, such as edible oils, processing them locally and exporting them to India can be mutually rewarding.
Defence and security sector is a priority for African countries, particularly Sahel countries – Burkina Faso, Chad, Mali, Mauritania and Niger – facing Islamic insurgencies. We should leverage the opportunities.
Our large corporate sector has the wherewithal and staying power to explore opportunities in Africa, but should not compete in the same market.
At the government level, India needs a more national interest-driven, holistic, but granular strategy towards Africa. We must not abdicate our funding and skilling to the African Union but offer these directly to the African states as a quid pro quo to strengthen our diplomatic hand. Signing comprehensive economic cooperation agreements with African countries would spur our trade.
At a policy level, we need not blindly follow the FOCAC model. It wastes too much diplomatic energy and creates distractions. Engaging with Africa is too serious a matter for showmanship.