Battlefield Next - Africa

If time plays in a cycle then perhaps the next destination is Africa. With Asia already bursting with development, Africa will play a crucial role in running the engines of the giants – India and China. The question is whether it will be able to accommodate the two giants simultaneously and fairly. The concern is also about sustainable development of the native African population and their secure futures. And for a long time it will be unclear whose futures are more at stake than others.

The gravest requirement and investment is in the field of infrastructure which is blooming at a frantic pace. The Chinese are building presidential palaces (as souvenirs to the governments), railway tracks, roads and ports across the continent. With their advent into strategic areas like mining, railways and ports the Chinese investment might well be beyond 90 billion US dollars (counting unrecorded deals) while its bilateral trade stands at 130 billion dollars.

Just as the reasons for China‘s interest in Africa are complex, so too are the reasons that so many African leaders are receptive to Beijing‘s entreaties.  First, China can provide much-needed funds for development (or simply to avoid become more impoverished).  This is important because many African states are desperate for investment and aid, and, (promises to the contrary notwithstanding) because many Western countries are providing relatively less aid or providing aid in ways that are less appealing to recipient countries.  Second, China‘s approach to providing aid or investment is a congenial one to many African leaders. China generally requires only that the recipient country refuse to recognize Taiwan. Beyond this, China‘s approach is, to many African leaders, refreshing:  it is pure capitalism, without attempts to work social or political changes through the pursuit of wealth. Besides, the Chinese do seem to cut their way through labyrinthine government policies – no meetings, no environmental impact assessment, no demand for anti-corruption measures and no check on private benefits for local leaders.

Long ignoring this case of ‘Dutch Disease’, the after effects of this in-pour of wealth have been neglected. The cases of over reliability on one goods (banana republic), a marginalized manufacturing sector, over dependency on FDI from a single source shall culminate into a deep hangover for the over-zealous countries.

Contrast this with Indian investments - mainly in the private sector, notably in telecom, pharmaceuticals and manufacturing. Interestingly, some Punjabi farmers have got farming outsourced from the Kenyan farms where the natives find themselves unable of being able to handle vast stretches of land. Besides, we are doing, what we do best – being a soft power. Despite the relatively neglected role of India in Africa compared with that of China, India’s trade with the continent has grown ten-fold over 4 years to $39.5 billion in 2008-09 (over half of the US’s $77 billion).  The turning point, came in 2008 with the India-Africa summit in Delhi, which led to a doubling of credit to Africa (to $5.4 billion over 5 years), a focus on African human capital development programs, and a duty free preferential tariff scheme for the 34 least developed countries in Africa (with 94% of all tariff lines opened).

The young population, the second fastest growth rate of any continent, and the possession of nearly a third of the world’s natural resource value are the main motivations for India’s interest in Africa. While Chinese investments were merely extractive in purpose, India’s were more transformative, focusing on small and medium businesses, agricultural productivity, information technology, and investments in health care.

The mounting investments in Africa specially come into limelight by the name of expenditure on development. Vastly simplified, the theory is that if rich countries provide a big push of aid, and if the aid is used to address a wide range of problems simultaneously, then people in poor countries will, in a generation or so, begin to enjoy the kind of economic development that those in the west have seen. Broadly speaking, this approach emphasizes the transfer of wealth from rich to poor countries, the targeting of aid to meet human needs, and a strong role for rich and poor governments.  A second model is similar to the first, but with much less faith in the power of governments and aid agencies to meet the needs of people.  Argued most provocatively by William Easterly, this model accepts the need for Western countries—including governments—to contribute generously to the development needs of those in poor countries. And it accepts a limited role for Western aid agencies in fostering economic development.  But it is deeply skeptical of the efficacy of conventional aid programs because they rely on plans developed by outside experts and provide little room for aid recipients to influence the programs designed to help them.

Recent time brought an unpredicted change to the African black waters – social revolution. Prima facie it has over thrown authoritative governments, but on second thoughts it has triggered something bigger. The Africans are more aware of their place in the world than ever. The policies of ‘neo-colonialism’ cannot fool them forever. The issues of drainage of wealth and resources from Africa can no longer be put on back burner. But equally true is that the rate of development can only be accelerated by putting certain industries on accelerated rate while ensuring that the development process in all the areas goes along simultaneously.

As an African official candidly put – the Chinese are investing in the present of Africa while the Indians are investing in its future. Sooner or later, the Africans will rise enough to judge what is right for them; none of the players in their development process would want to show a laggard performance.