Continent and subcontinent

That South Africa will host the Indian Premier League matches owing to security concerns may well be an ironic...

That South Africa will host the Indian Premier League matches owing to security concerns may well be an ironic given that nations reputation for violent crime but still fortuitous turn of events for Indias foreign relations. For one,the export of the broadcasts will further trade between two of the vaunted BRICS nations: South Africas share of Indias imports will definitely surge over the 86 per cent rate it rose according to the research service RIS over the previous decade. That the security firm already advising the IPL is South African underscores that security is something that that nation takes seriously.

Given the inevitability of a jump in trade,and the CII-sponsored conference in Delhi analysing that trade,now is perhaps an opportune time to look anew at how the seeming challenges of doing commerce with growing African economies might be tackled. There are reasons why India-Africa trade,albeit rising at 29.2 per cent over 2004-6,has not easily grown. For example,markets in sub-Saharan Africa SSA are mostly small and splintered and so the cost of creating market access is large relative to the potential trade. The constraints of power and roads are often more severe than those in our country. African countries rarely rank highly in Doing Business tables and transparency rankings. But then,neither does India. However,just as India moved beyond its stagnant 60s and 70s,so too SSA countries have moved beyond the previous two decades,where the absence of capacity to regulate and maintain infrastructure led to the poor design and decay of projects. The rise of a technocratic class in SSA is one of the important developments that Indian projects can benefit from. And,given the need for low-cost infrastructure development in difficult political circumstances,Indian companies with considerable work over the past decade in infrastructure investments via the successful operation of public-private partnerships and investments in captive power and renewable energy might have a competitive edge.

Indeed,if Indian companies venturing into Africa attempt to harness practices and productivity gained from overcoming critical constraints,they will benefit from the fact that Indias growth has produced scalable platforms for expanding energy,telecommunications and information technology; prototypes that would enable off-the-grid countries in Africa to access the level playing field that more and more of India has gained access to. Indias pan-African e-network,developed at the initiative of former president Kalam,to share African medical resources with Indias premier medical and technical institutes certainly leads the way in this regard; it complements resources that already exist in India and makes them available across diverse SSA countries with varying levels of development. Renewable power seems another critical field where the absence of existing grids might be leapfrogged by Indian entrepreneurs with the ability to adapt to African conditions,and with our Nano-like ability to shrink costs.

Indian entrepreneurs must,however,proceed mindful of the generation that went before them. In previous decades,the dearth of native entrepreneurial classes in some SSA countries paved the way for an Indian diaspora that was able to thrive in sparse markets by the advantage of their ethnic ties,sharing information and pools of credit to gain an advantage over local competitors. Language reflected this dominance: mduka,the word for trader in Swahili,became a synonym for wahindi,or Indian.

These traders were often the target of violence in decades past,most notably in Uganda,but things have indeed changed: African governments are now mostly pro-business and the rapid growth of business ties with Chinese companies and immigrants has led to a shake-up of the previous order,for example in newly open Rwanda. The dependence on entrepreneurial immigrant groups has declined as states are courted by Chinese companies and capital.

The recession will play a role,however: Chinese investment is mostly in downturn-hit,resource-intensive infrastructure and extraction. This turn of the market in commodities engenders both caution Indian companies like the Vedanta Resources-operated Konkola Mines in Zambia are retrenching,the gem-polishing trade is drying up as well as fresh ideas on how Indias more resilient companies might engage growing economies in Africa to mutual benefit.

Another Indian resident did not find himself as welcome as IPL Commissioner Lalit Modi. The denial of a visa to the Dalai Lama to attend a peace conference of Nobel Laureates until the Olympics is clearly a signal that South Africa will bend over to keep from irking its trading partners in China. Oddly enough,the oft-cited reason for China being a preferred partner for African economies is Chinese non-interference in their politics. What to make of this glaring exception,then? It seems Chinas heft in the continent wont allow it to tread lightly even when it comes to a regional power like South Africa. That kowtowing to Chinese interests lends a certain sheen to the way Indian business would be perceived in Africa. It is inconceivable that Indias increasingly important commercial relations with African countries would ever ride roughshod over any of those countries external policies or prove embarrassing in such a glaring way.

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The writer is a Delhi-based Africa-watcher for a New York analysis firm

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