Updated: December 25, 2015 10:54:31 pm
Old friends and old family,” the Union minister of state for commerce, Nirmala Sitharaman, called delegates from 54 African countries who had gathered in New Delhi this week to discuss the continent’s engagement with India. The delegates have headed home with reason to believe Delhi is serious about transforming its old relationship, forged in the anti-colonial struggle, into one rooted in today’s rapidly changing world. Prime Minister Narendra Modi has held out a credit line of $10 billion over the next five years, and grant assistance of $600 million for everything from skills development to education and healthcare. Delhi has also demonstrated a willingness to at least discuss making regional security commitments, with Modi discussing United Nations reform in the context of counter-piracy operations in the Indian Ocean and shared counter-terrorism. It’s unclear just how much muscle Delhi will eventually commit, but the fact that the discussion is taking place is welcome.
The smiles seen at the summit, though, were tinged with nervousness. Long cast as the next great economic hope, recent figures out of Africa give reason for concern. Earlier this week, the International Monetary Fund predicted that GDP growth in sub-Saharan Africa would fall to 3.75 per cent in 2015, the lowest in six years. Nigeria and Angola, both important destinations for Indian exports, have been hit hard by oil prices, which have fallen by more than 50 per cent in a year. Zambia, Ghana and South Africa, all major mineral exporters, are also suffering from lower commodity prices. India and Africa might, as Modi said, be the two bright spots in the global economy. In just a decade, Africa-India trade more than doubled, to $72 billion, with Indian exports crossing those from the United States. The good times might, the numbers out of Africa suggest, be ending.
For India to make a genuine mark on the continent, its private sector will have to work harder — much harder.
There’s plenty of good news: Indian chemicals firm Kanoria opened Africa’s first major denim unit earlier this month, adding to the presence in everything from automobiles to agriculture. However, Indian investment in Africa is anaemic. Although, on paper, Indian investment in the continent tops $50 billion — almost twice that of China — 90 per cent of that goes into Mauritius, from where it is round-tripped back to India, to evade taxes. Indian firms, moreover, are concerned about investing as growth slows, particularly since many are saddled with dangerously high levels of debt. The prime minister’s ambitious plans for Africa will, in the final analysis, depend on his success in healing India’s asthmatic economy.
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