The Road to Africa: Indo-Sino Perspective

Mumbai, 13 July 2017:  People joined for a riveting discussion on Indian and Chinese investment strategies in Africa at Nehru Centre. The panel was moderated by Rajrishi Singhal, columnist for LiveMint, who was joined by Zheng Bin, CEO of Industrial and Commercial Bank of China Limited India, and Rajneesh Verma, Former Assistant Professor, Jilin University.

The discussion began with Singhal noting that Europe and Africa have historically had a colonizer-colonized relationship, which has not been the case with India and China. Today Asia accounts for 45% of African trade, of which India and China are the largest trading partners.

While there have been huge Chinese investment flows into Africa, especially into infrastructure and Special Economic Zones (SEZs), there has been comparatively low FDI from India, however, plenty of soft investment. The discussion then veered towards a comparison of Chinese and Indian investment strategies in Africa, noting that China overall has had a more aggressive and long term perspective in investment than India. Mr. Zheng noted that oil and gas is not a priority overall in Chinese investment. Noting that Africa has always been a priority for China, whereas investment initially was poured into railway development and came in the form of aid, today the focus has shifted to setting up trade and investing in manufacturing. Today almost 50% of construction and 40% of manufacturing in Africa is carried out by Chinese companies. Chinese companies are also known for getting things done quickly – Mr. Zheng recalled an anecdote where a tile factory was set up near Nairobi in only eight months, a shorter time than it would take a bathroom to be tiled if it had been done by anyone else!

India, by comparison, has had a longer historical relationship with Africa which primarily took the form of trade and cultural interaction, with sizeable diasporas in East and South Africa. Additionally India enjoys soft power in the form of education and IT. Verma mentioned that there is great respect for the Indian community in Nigeria, many of whom were teachers in the past. Even today, Nigeria looks to India for many of its solutions.

While there has been no centrally-focused strategy until now, with Indian investors typically overlooking Africa in favour of building ties with Europe and the U.S., this is set to change under the Modi administration which will focus on greater engagement with Africa-based NRIs. Verma predicted that going forward there will be increased investment in skill development and the education sector, especially from small and medium sized enterprises (SMEs). These SMEs, Verma noted, have been responsible for generating significant employment.

The discussion ended with a look towards the way forward, noting that there was a possibility for cooperation between the two countries, and even suggesting the possibility of a trilateral union.

As reported by Ishani Shukla, Programme Assistant, Asia Society India Centre