India offers $5 billion line of credit to Africa over 3 years

China,Asia’s largest economy,growing at close to double-digit growth rates for most years of the past decade,has made huge infrastructure investments by negotiating individually with African countries in the last five years. Such investments were almost always tied to extraction of natural resources including oil and iron ore. President Hu Jintao’s 12-day visit way back in January 2007 set the tone for China’s long-term Africa strategy.

The global economy crisis of 2008 — when the world plunged into a recession and India continued to post modest growth rates — presented to New Delhi a window of opportunity to improve trade relations with Africa and start focusing on investments. Companies such as Bharti,Tata International,Punj Lloyd,Jindal and Karturi Global,among others,have now begun building upon their investment plans.

Though the world is still recovering from the crisis of 2008,fresh political upheavals in regions not far from Africa are taking place,Singh noted in his address. “The world faces new challenges in meeting the requirements of food and energy security. Global institutions of governance are outmoded and under stress,” he said. It is in this backdrop that India and the African Union must foster a new spirit of solidarity.

At the closed-door lunch retreat that followed the plenary session,leaders of the African countries sought a more transparent mechanism to review the commitments made under various schemes. Officials said African countries could utilise only $2 billion worth LoCs against the commitment of $5.4 billion in April 2008 during the 1st Africa India summit in New Delhi.

India tries to distinguish itself from China by building domestic capacities in African countries,but refuses to be drawn into any India-China in Africa debate. “The race is a figment of imagination,” said Amit Katju,secretary (west),external affairs ministry,at a media briefing after the retreat. Under the capacity building plank,Prime Minister Singh today announced setting up of a food processing cluster for value addition and creation of export markets,an integrated textiles cluster,a centre for medium range weather forecasting to harness satellite technology for agri-based sectors,a university for life and earth sciences and an institute of agriculture and rural development.

India also said it would contribute $2 million for the African Union Mission in Somalia. This seems to help Africa build indigenous solutions to take care of piracy in Somalia. “India has consistently supported the development of African capacities in the maintenance of peace and security,” the Prime Minister said.