Modi working hard to close gap with Africa

If India and China are in a race to secure influence and business opportunities in Africa, then the Chinese are most probably ahead when it comes to political sway, and running away with the economic prize. But Indian Prime Minister, Narendra Modi, is working hard to close the gap.

He is in South Africa on an official trip, the latest in a series of visits by Indian leaders to African countries.

On this trip, Modi is also visiting Mozambique, Tanzania and Kenya. Already this year, senior representatives of the Indian government have been to the countries of the Maghreb, as well as Ghana, Namibia and Ivory Coast.

“Africa is a big place and there are more than enough opportunities to go around for China, India and South Africa,” says the chief executive of the South African Institute of International Affairs, Elizabeth Sidiropoulos. She was speaking to Gulf News.

However, she points out that this does not mean that there will not be competition for opportunities between companies in particular economic sectors or countries. South African and Chinese construction companies, for example, compete for building projects.

In any event, India has a long way to go before it catches up with China’s $200 billion (Dh734 billion) trade with Africa.

Sidiropoulos explains that China has more political sway on the continent, because it has been courting African countries for longer than India. This is why the time Indian leaders have been spending in Africa is important.

And South Africa in particular can be a strategic partner in helping India achieve its ambition of matching its international political influence to its emerging global economic power.

“South Africa is an important strategic partner, with whom our ties are historical and deep-rooted,” Modi is reported to have said ahead of his arrival in Pretoria, on Friday.

Both countries have long pushed for the reform of international financial institutions, like the World Bank, as well as other organisations of global governance, such as the United Nations Security Council.

Sidiropoulos sounds a realistic note about the long-running campaigns. “Reforms do happen, but not as fast as what we would like,” she observes.

While the global financial crisis and the emergence of new economic powers — like India and China — have seen some reforms at the World Bank, for example, there are few signs of changes at the United Nations Security Council, where special interests make achieving consensus much more difficult.

But perhaps of more immediate international interest to India, according to some analysts, is South African support for its membership of the Nuclear Suppliers Group (NSG), which seeks to prevent nuclear proliferation by controlling the export of materials, equipment and technology that can be used to manufacture nuclear weapons. All 48 nuclear supplier countries are signatories to the Nuclear Non-Proliferation Treaty (NPT) — which India has not signed.

While India has a waiver from the NSG allowing it to trade in nuclear materials, it still wants to become a member of the group. And, while there is support among the group for India to join, it is believed that China is leading opposition to the application of its Asian rival.

However, South Africa and Brazil are also thought to have reservations about allowing India to join the suppliers group, as this could be seen to weaken the NPT.

No doubt Modi will try to use his visit to South Africa to convince the country to support India’s bid to join the group, by arguing that while it is not an NPT signatory it has been compliant with the treaty’s provisions.

Despite differences over specific issues within their ranks, Brazil, India, China and South Africa, along with Russia — the Brics countries — seemingly remain committed to turning what was a description of an informal economic concept, into an alternative global institution.

In a statement ahead of the visit by Modi, the South African Minister of International Relations and Cooperation, Maite Nkoana-Mashabane, said: “South Africa and India are committed to addressing the common challenges of inequality, unemployment and poverty that are still too prevalent on both our continents. South Africa looks forward to attending the BRICS Summit that India will be hosting [in October] this year, under the theme ‘Building Responsible, Inclusive and Collective Solutions’.”

Economic and political crises in Brazil, international tension around Russia, a stagnant economy in South Africa, and slowing growth in China, have all conspired to reduce global enthusiasm for the Brics countries.

However, Sidiropoulos points out that while their economies might not be as attractive as before, the grouping is growing its institutional capacity, with the establishment of the New Development Bank, for example. This bank, whose president, KV Kamath, is from India, is a joint venture between the Brics countries and was established to finance infrastructure projects.

There has also been persistent talk about the creation of an alternative investment rating agency, to provide another assessment of companies and countries in the developing world to that of the conventional “big three”: Fitch, Standard and Poor’s, and Moody’s.

South Africa and India have a long and intertwined history. There was shared opposition to colonialism and apartheid, Mohandas Ghandi spent some of his formative years in South Africa and the country has a large and influential indigenous Indian community which Modi will be addressing during his stay. Modi’s visit to South Africa, will be rich in symbolism.

But, to make the changes in the world order that South Africa and India want, the visit will also have to tackle how they will work together, and deal with their differences, in future.

Sidebar

Inevitably, the Prime Minister of India, Narendra Modi, invoked the names of Nelson Mandela and Mahatma Gandhi when he addressed the South Africa — India Business Forum, during his official visit to Pretoria, on Friday.

“Leaders like Nelson Mandela and Mahatma Gandhi brought political freedom for us, now it is time to work for economic freedom,” he is reported to have said. He added that: “We have been friends and adversaries. Now we should franchise in opportunities.”

No matter the other international issues, trade and business opportunities are critical for both countries, says the chief executive of the South African Institute of International Affairs, Elizabeth Sidiropoulos. And the aim of economic diplomacy is to increase trade and commerce.

Bilateral trade between India and South Africa exceeded R94 billion (Dh24 billion) in 2015, with South Africa exporting R41 billion worth of goods and importing R53, 7 billion.

“We need to intensify our efforts and enhance value added exports,” said South African President Jacob Zuma, commenting on his country’s trade deficit with India.

India’s investment in South Africa’s economy has been R62 billion.

India is currently one of the fastest growing major economies in the world. South Africa is struggling with a stagnant economy and persistently high unemployment.

There are more than 100 Indian companies that have invested in South Africa, including manufacturing and pharmaceutical concerns. Major South African companies have invested in India, especially in financial services and retail.

The two countries have a five-year strategic cooperation agreement, which covers deep-level mining, agro-processing, financial services, defence and infrastructure development.

Other areas of cooperation include: information and communication technology; tourism, sport and culture; grassroots innovation; renewable energy and the simplification of visa procedures.