One of the most exciting aspects of the economic growth of both China and India is their increasing realization that the African nations will be an important leg on which these two countries’ growth will depend. While Beijing has its work cut out, New Delhi appears to be proceeding in an ad hoc fashion. It is, however, important to direct India’s future relations with the African nations in terms of a long-term plan to attend to each other’s strength and weakness. If such a policy is not worked out in advance, the relationships will get stuck in a customer-client framework, inevitably resulting in disagreements and eventual animosity.

Although yet in a nascent state, the recent growth of Indian trade and investment in Africa has already attracted attention in the West, the United States in particular. In a monograph, India in Africa: Implications of an Emerging Power from AFRICOM and US Strategy, published last month by the Strategic Studies Institute (SSI) of the US War College, author J. Peter Pham points out that while China’s growing presence in Africa has been well documented and well read, “India’s own rapidly expanding network of connections to the continent have gone largely unexamined.” Besides a few papers and essays, the military dimension has been treated only in passing, the document notes.

Pham observes: “As Africa, long marginalized in international relations, becomes increasingly recognized as strategically, diplomatically, and economically vital to both the emerging 21st century global order and the individual national interests of the major powers, India’s burgeoning public and private investments in the region as well as its policies vis-à-vis African regional organizations and individual states need to be better understood. This is especially true of US policymakers and others responsible for managing America’s own growing political, economic, and security commitments on the continent. Only thus can it be possible to consider ways to engage India in Africa, both as an end in itself and within the context of broader US-India ties.”

No Colonial Games, Please

What should be clear to New Delhi at the outset is that the Indian presence historically in Africa - the British colonial rulers shipped Indians to Africa to act as a barrier between themselves and the black Africans and to carry out tasks on the colonialists’ behalf - did not endear them to the Africans. In the post-colonial period in some African nations, domiciled Indians, now much wealthier than average Africans and living mostly in urban areas, sided with the powers-that-be, protecting their assets and interests while handing out gobs of money to the rulers, who often presided over highly repressive regimes.

India-Africa relations cannot be built on that historic connection. At the same time, the Indian presence in a friendly Africa is not only of great importance to India’s security, but is a huge strategic necessity for the Indian Ocean nations. Such a strategic relationship cannot be developed if India continues to consider Africa solely as a great potential market for Indian businesses and a source of natural resources, including hydrocarbons, that India needs. New Delhi did issue a positive signal in 2007 when India cancelled the debts of five HIPCs (heavily-indebted poor countries) in Africa - Ghana, Mozambique, Tanzania, Uganda, and Zambia - while its EXIM Bank extended lines of credit to institutions in a number of African countries, including Angola, Djibouti, Ghana, South Africa, Sudan, Togo, and Zambia.

One area where India can make substantial contributions to a large number of African nations’ long-term well-being is in the agricultural sector. Last March a beginning was made when the International Crops Research Institute for Semi-Arid Tropics (ICRISAT) announced the formation of the ICRISAT South initiative (IS-SI) to boost the India-Africa partnership on agricultural research to fight poverty in dry lands. “A strong, ICRISAT-led south-south initiative between India and Africa is expected to promote better policies, more effective institutions, improved infrastructure, and better access to markets and to higher quality inputs for dry land farmers,” ICRISAT Director General William Dar told reporters In Hyderabad.

Africa Needs Indian Agricultural Know-How, But…

The Hyderabad-based global agriculture research centre has 51 African and Asian nations as its members, and with the launch of the “ICRISAT South-South Initiative” has further elevated its role as a bridge, broker and catalyst in the global fight against poverty and hunger. The center has signed a memorandum of understanding with the European Market Research Centre (EMRC) to facilitate ICRISAT’s participation in two key annual Africa business forums organized by EMRC — the Africa agribusiness forum and the Africa finance and investment forum.

The ICRISAT-led project in ten sub-Saharan African countries and four Indian states, “Harnessing Opportunities for Productivity Enhancement (HOPE) of Sorghum and Millet in Sub-Saharan Africa and South Asia,” has 50 partners that include the Alliance for a Green Revolution in Africa, the International Sorghum and Millet Improvement Program, Africa Harvest, and the West Africa Seed Alliance, as well as the Institute d’Economie Rurale of Mali and USAID.

“Agriculture is without doubt at the forefront of India’s engagement with Africa in the current transformation phase,” Gurjit Singh, joint secretary in charge of east and southern Africa, told experts at a seminar in January that explored the twin themes of food security and India-Africa relations in the context of South-South cooperation. Singh, however, added that it was for Africa to choose its own model of “green revolution,” and he underlined India’s focus on capacity building, human resource development, and skills transfer as key features of its Africa policy. “We are not setting any agenda. We only share our experiences when we are asked to do so,” Singh said in a bid to distinguish India’s agenda-free engagement with the African continent.

If New Delhi does not monitor the agricultural tie-ups carefully, there could be serious problems later. For instance, some Indian firms, solely driven by the profit motive, have begun to identify Africa as a source of cheap agricultural labor. A few years ago, for example, two Indian firms, Ms Mashuli Gashmani Ltd. and Angelique, invested a total of $12 million in Uganda to establish, respectively, a commercial prawn fishery and turnkey aquaculture development.

Reports indicate that Indian farmers may soon be looking to Zambia for sugar, with the southern African nation seeking India’s cooperation and investment in agricultural production. A Zambian delegation visited India last year and met with officials of the Tata Group and Essar. While the Tata Group already has substantial investments in Zambia, the Essar group, which has interests in steel, energy, power and minerals, has expressed interest in infrastructure development in the African country.

As the US War College document points out, Uganda has become something of a favorite for Indian agricultural investment. At the end of 2009, Jay Shree Tea & Industries—a part of the B.K. Birla group of companies that has extensive tea-growing holdings in Assam, Darjeeling, Jalpaiguri, Uttar Dinajpur, and Tamil Nadu—announced plans for its first overseas acquisition in Uganda, as well as plans to establish itself in Kenya.

Pham observes such enterprises will undoubtedly proliferate as India, where the average food energy intake per person is still below 2,500 kcal and the population is set to grow at an average of over 1 percent per year for the next three decades, overtakes China as the major driver of growth in world demand for agricultural products. In fact, individual Indian states like Punjab have begun exploring possible accords with African countries for the export of agricultural technology and investment in exchange for access to land for rice cultivation.

A Prescription for Disaster

In other words, leveraging its financial and other capabilities, including manpower, India will be using Kenyan farmland to grow food for Indians. This is in principle a prescription for disaster since a large section of the population of Africa remains undernourished and food-short. And, one can be sure that Kenya is not the only nation upon which the money-hungry eyes of some of the newly wealthy Indian entrepreneurs have set.

There are roughly 70 Indian companies that are already in the process of making a foray into the farming sector in Africa. The countries offering big opportunities include Ethiopia, Malawi, Kenya, Uganda, Liberia, Ghana, Congo, and Rwanda. Various Indian tea companies, for instance, are making a beeline to acquire estates. “We will be inking a deal with the Ethiopia government for at least 50,000 hectares for growing crops like pulses and maize, which will be exported to India and Europe,” Confederation of Potato Seed Farmers President Sukhjit Singh Bhatti told reporters recently.

At the same time, media reports claim ambassadors of various African countries, including Tanzania and Uganda, visited Punjab recently and encouraged farmers from the state to till the land in their countries. “Vast tracts of arable land are lying vacant. The land is fertile, the climate is suitable, and water is abundant. Also, both land and labor are cheap,” says Punjabi farmer Jaswinder Singh. Punjabi farmers are scaling up their small Indian farms into large African plantations in Ethiopia, Kenya, Madagascar, Senegal, and Mozambique. The profit opportunities are huge, with growers exporting rice, wheat, sugar cane and lentils back to Indian and European markets.

Again, this is a prescription for the eventual development of enmity between the locals and Indian entrepreneurs. If New Delhi cannot foresee and monitor these developments in advance, it can count on facing troubles ahead.

An independent US-based group, The Maritime Security Review (MSR), claims that it has learned from sources within the US Department of State that talks have recently been held to discuss how India could contribute to Africa’s maritime security. According to these sources, the recent US-India strategic talks covered a number of areas including that of maritime security. In particular, the United States would be keen to see India extend its maritime security cover as far as the eastern seaboard of Africa, MSR says.  Reports also indicate that India has already made significant investments in African security, in particular through supporting and participating in United Nations peacekeeping operations and in training future African military leaders.

Quest for Natural Resources

Pham’s SSI monograph also addresses India’s quest for natural resources from Africa to keep the engine of India’s rapid economic growth going. He reports that the Oil and Natural Gas Corporation (ONGC) Videsh (OVL), the overseas division of India’s state-owned ONGC, has aggressively sought stakes in exploration and development across the African continent.

“In 2005, teaming up with the world’s largest steel maker, Mittal (now Arcelor Mittal), owned by London-based Indian billionaire Lakshmi Mittal, OVL formed a new entity, ONGC Mittal Energy Ltd. (OMEL), which agreed to a $6 billion infrastructure deal with Nigeria in exchange for extensive access to some of the best oil production blocks in the West African country. More controversially, in 2006, OVL also plunked down $690 million to acquire a 25-percent stake in Sudan’s Greater Nile Oil Project, despite the resistance of the China National Petroleum Corporation (CNPC), which has a 40-percent ownership in the enterprise. OVL subsequently acquired minority interests in two other oil blocks in Sudan, although the subsequent laggard implementation of the Comprehensive Peace Agreement between the regime in Khartoum and the Sudan People’s Liberation Army/Movement as well as the ongoing humanitarian crisis in Darfur—to say nothing of the lack of democracy and good governance in Sudan as a whole—have posed challenges to Indian interests there,” Pham reports.

“Meanwhile another Indian state-owned entity, the India Oil Corporation (IOC), has invested $1 billion in an offshore block in Côte d’Ivoire. ONGC has obtained permission to conduct geological studies in the exclusive economic zone of Mauritius. Other African countries being courted by Indian oil companies include Burkina Faso, Equatorial Guinea, Ghana, Guinea-Bissau, and Senegal. In 2009, OVL initiated a bid to buy US-based Kosmos Energy’s 30-percent stake in Ghana’s offshore Jubilee oilfield. The deal, although ultimately not consummated, would have cost between $3 billion and $4 billion. In total, Africa currently accounts for about 20 percent of India’s oil imports, a figure that will only rise in coming years.”

Hydrocarbons are not the only natural resources being sought by the growing Indian economy. Vedanta Resources, a publicly traded metals conglomerate founded in Mumbai in 1976, has invested over $750 million in Zambian copper mines, while Liberia entered into a 25-year deal with Arcelor Mittal to launch a $1billion iron ore mining project that will eventually employ 20,000 and is expected to begin exports next year after the company refurbishes train tracks damaged during the West African country’s long civil conflict.

In Senegal, a joint public-private Indian group has invested $250 million in exchange for a stake in the colonial-era enterprise, Industries Chimiques du Senegal, with rock phosphate mines and plants to produce phosphoric acid used in agriculture. On a more modest level, in April 2010, the Indian investment company JSW paid about $12 million to obtain a majority stake in South African Coal Mining Holdings, a coal producer started by the traditional monarchy of the Bafokeng people to exploit the resources on their tribal lands in the North West Province.

Voices from the Colonial Past?

In this context, New Delhi has to be careful as well. After India embraced globalization and liberalization—although not quite with the proverbial open arms—in the later part of the last century, India’s industrialists and corporations have become global. They not only serve their own corporate interests, but they also serve foreign corporations’ interests as well. Where they are headquartered is no longer a primary factor.

The weak Indian political leadership of recent years and the Indian political class’ complete ignorance of how global finance works has allowed these highly-profitable foreign exchange-earning Indian corporations to make many of New Delhi’s economic and financial decisions. Corporations functioning globally also become powerful enough to participate in foreign policymaking and in security matters, directly or indirectly. The seamless corruption that has enveloped India now is a direct outcome of this phenomenon. The process is steadily making India’s political leadership a secondary power next to the business-industry-corporation-Dalal Street combo. Needless to point out, that the combo is not accountable to the people of India.

Some of the claws and teeth of these Indian corporate globalizers have already been bared. IANS reported on April 5 that several Indian companies have planned huge investments in the African  mining and agriculture sectors, “buoyed by the prospects of high returns, on the back of rich resources and low labor and input costs.”

“Africa offers the most attractive returns when it comes to mining and agriculture. A lot of Indian companies are already there, and a massive investment is in the pipeline,” K.S. Aswathanarayana, chief executive of Jaguar Overseas, told IANS. Jaguar Overseas, a unit of the diversified DP Jindal Group, has interests in areas such as mining, engineering, construction, and power projects in six African countries, including the Democratic Republic of Congo, Mozambique and the Central African Republic.  The Jindal executive told IANS that the cost of production of mines in most African countries was almost half that of India because of the easy availability of resources and cheap labor and because of the relatively high selling price.

“Cost of agricultural production in Africa is almost half that in India. There is less requirement of fertilizer and pesticides, labor is cheap and overall output is higher,” S.N. Pandey, director of the Agro Technology Division at Lucky Group, told IANS. Pandey said his firm had already bought 3,000 hectares of land in Ethiopia and 1,500 hectares of land in Sudan. “We are already operating in eight African countries and plan to increase investment and operation in the region.” Pandey pointed out that the cost of production of cotton in India was around $900 per hectare while it was about $400-500 per hectare in most African countries.

“Investment decisions are made on hard facts. Those who want to invest rely on numbers and the numbers are very good in Africa. Say you want to set up a cement unit plant: in India the payback period is about seven to eight years; in Africa you can get your money back in two to three years,” Aswathanarayana said.

Do these sound like the voices of the European colonialists of the past, setting up their cheap sources of natural resources in Africa under the pretext of “hard facts”? One wonders.

What cannot be denied is that the present corporate culture in India is very much in line with what the promoters of globalization and liberalization are comfortable with. Such a development weakens the political system in the country and engulfs the entire political-bureaucratic and justice system in corruption, making room for the global corporations to dictate terms not only in business and investment, but also in overall policymaking.

This was primarily the model that the British Raj adopted in bolstering the British East India Company in India and a vast number of corporations operating within Africa, and elsewhere, by ruthlessly exploiting natural resources. However, there was a difference, and not an insignificant one. Those corporations, and the British East India Company, worked for the British Crown and for strengthening the British Empire. India does not have an empire and in India’s future relations with African nations, some of which are home to the poorest in the world, this old colonial trap must be avoided.

The author is South Asian Analyst at Executive Intelligence Review News Services Inc.