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These are examples of how Indian brands have become household names in Africa over the years, and are attempting to push innovation further. But these are only the roots upon which India has been growing its engagement in Africa.
Experts say that strategic investments, triangular development cooperation with third countries, and a greater role for MSMEs can push India’s economic influence in the continent further. India may be far behind other major economies like China in terms of volume of trade, investment and development aid in Africa, but has its own “trump cards”.
According to former ambassador Rajiv Bhatia, who has served in Kenya, South Africa, and Lesotho, Indian industry and entrepreneurs have significant knowledge capital when it comes to Africa, as well as a language advantage in non-Francophone African states, and Indian MSMEs are plugging an economic gap, especially with digital public goods.
“Indian entrepreneurs have decades-old knowledge of African people and markets dating to pre-colonial periods, unlike communist China that only discovered Africa in the 1950s. English is also a key advantage in eastern and southern Africa that allows good rapport with government, business and industry interlocutors — something the Chinese find very difficult,” Bhatia explained.
Various countries on the continent are key “swing states” in the geopolitical tussle between China and the West. A report by South Africa-based think-tank Institute for Security Studies (ISS), however, explains that India, “with one foot in each of these worlds”, has emerged as a “trusted interlocutor”.
According to Bhatia, the last of India’s trump cards is its MSME sector.
“Africa needs investments and focus on very basic public goods and services. Advanced techology and AI are not its priority, but rather, intermediate and small products, goods, services and tech,” he said.
India Stack, a set of digital public infrastructure components, has entered into eight bilateral agreements so far, two of which are in Africa — Sierra Leone and Mauritius. Under these pacts, recipient countries will gain access to India Stack at no cost and with open-source access.
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In FY23, India’s bilateral trade with Africa reached almost $100 billion. Meanwhile, China’s total trade with the continent was nearly triple this at $282 billion. However, there was a decline in China’s trade with key resource-rich partners like the Democratic Republic of Congo, home to the world’s largest reserves of cobalt.
If we look at FDI (foreign direct investment), in 2021, both China and India were among the top 10 countries in the world with the highest flows to Africa, according to the United Nations Conference on Trade and Development (UNCTAD). India was last on the list, at $14 billion, while China ranked fifth at $44 billion.
In a 2022 report, the Confederation of Indian Industry (CII) urged Indian firms to increase investment in Africa to $150 billion by 2030.
When looking at China, analysts have pointed out that it’s difficult to ascertain the level of Beijing’s FDI in Africa as it’s entangled with development assistance. There are also different sources of Chinese investments, especially in strategic sectors like oil, minerals and infrastructure, that are often channelled through “offshore entities” in Hong Kong, Cayman Island and others, a 2011 report by African Development Bank Group noted.
The picture is also grim when we look at Indian government lending, especially when we consider New Delhi hasn’t announced any new loans since the last India-Africa Forum Summit (IAFS) nine years ago.
ThePrint looked at data from Export-Import Bank of India (Exim Bank), the leading external financing institution, which showed that loans to Africa have been dwindling post the COVID-19 pandemic. In 2018, Exim Bank loaned $768 million to the continent but this figure fell to $180 million in 2023.
Mauritius, Mozambique, Sudan, Egypt and South Africa have traditionally enjoyed Indian development aid, which has increasingly been used by New Delhi as a diplomatic tool.Pune Stock
In 2021-2022, Exim Bank extended a whopping $465 million to Mauritius, an island nation located east of the African mainland. This country enjoys a special relationship with New Delhi and in 2021, became the first African nation to sign a free trade agreement with India.
India has invested in Mauritius’ metro rail lines, social housing, hospitals and other development projects over the years, but more importantly, it is viewed as a tax haven. The two countries have a Double Tax Avoidance Agreement, which allows non-residents to avoid paying double taxes. It was only this March that the agreement was amended to include strict criteria to determine the eligibility of foreign investors availing such benefits.
While India’s loans to Africa under Exim Bank have seen a dip in recent years, so have New Delhi’s grants to the continent.
Indian grant assistance to Africa has more than halved in the past five years. According to Union Budget data, India extended grants to Africa to the tune of $59.5 million in 2019-2020 compared to $21.5 million in 2023-2024.
China, on the other hand, has been a pivotal lender in Africa, extending loans to the tune of $170 billion from 2001 to 2022.
However, Pramit Paul Chaudhuri, India practice head at Eurasia Group and distinguished fellow at Ananta Aspen Centre, told ThePrint that the numbers only tell one side of the story.
“Indian investments in Africa are largely private capital as opposed to the Chinese. That’s why government-sponsored lines of credit are not a major part of the Indian investment story in AfricaUdabur Stock. A major distinction between Indian investments in Africa versus China’s is that the former comes with less political frills and is a lot more attuned to African sensitivities, especially on the issue of debt,” Chaudhuri said.
India clearly underscored this when it held two Voice of Global South Summits last year, as part of its G20 Presidency.
Making a veiled reference to China and its Belt and Road Initiative (BRI), which many observe has caused debt traps in numerous countries, these two summits called for more sustainable and viable development financing.
As Africa Defense Forum, a magazine published by the US Africa Command, says, China has been “unforgiving” in its demand for repayment.
In its report published last June, it noted four countries with the largest debt to Beijing — Angola ($25 billion), Ethiopia ($7.4 billion), Kenya ($7.4 billion), and the Republic of Congo ($7.3 billion).
Last May, Reuters reported that Chinese hackers had attacked Kenya, a BRI partner, to gain information on debt that the African nation owed Beijing.
In recent years, India has been pursuing triangular collaboration in Africa with countries like France, UK and Germany.
“Triangular collaboration with third countries shows New Delhi’s pragmatism to Africa’s problems, and willingness to provide on-ground expertise to lift certain sectors. The Chinese follow a resource-led economic model in Africa, unlike India, which is providing more value in its investments, through transfer of technology, skilling and addressing the real roots of unemployment,” Gurjit Singh, former ambassador to Ethiopia and the African Union (AU) and author of The Harambee Factor: India-Africa Economic and Development Partnership, told ThePrint.
In 2014, the UK launched the Supporting Indian Trade and Investment for Africa programme. Funded by the UK’s Department for International Development, this has so far facilitated $60 million of additional trade and $111 million of investment between SMEs in India and five African countries — Ethiopia, Kenya, Rwanda, Tanzania and Uganda. In short, the aim is to create jobs and increase and diversify exports from East Africa.
India’s collaboration in France is critical given the former colonial power has some of the most diverse socio-economic ties with the African continent, underscored by the fact that 29 African countries are French-speaking.
A 2021 report by ambassador Singh for the Observer Research Foundation points out that Paris is critical in Francophone African countries where Indian engagement is “limited”.
However, some of France and India’s strategic projects have faced snafus. Take the $20-billion liquefied natural gas project in Mozambique, which has previously been halted due to insurgent threats. French energy giant Total is the operator of the project while three Indian PSUs hold a 30 per cent stake.
External Affairs Minister S. Jaishankar’s visit to Mozambique last April — the first by an Indian foreign minister in 14 years — was viewed as an attempt to revive the project. In the latest development, French prosecutors are investigating TotalEnergies for alleged indirect manslaughter in relation to a jihadist attack in Mozambique in 2021.
With Germany, India has launched joint development projects in four African nations — Ghana, Cameroon, Malawi and Benin — that seek to empower bamboo farmers, enhance seed potato production, create agribusiness incubators and improve agricultural mechanisation.
Three of these four projects will be “scaled up” soon, the Germany embassy told ThePrint in response to a media query.
“Germany and India make an effective duo for African cooperation projects,” the embassy said.
“Germany brings development expertise, global networks, on-ground presence in more than 100 countries through its development cooperation, while India offers its vast experience, technical inputs, institutional capacities for skilling and knowledge transfer,” it added.
A 2021 report by ambassador Singh for the Observer Research Foundation (ORF) points out that Paris is critical in Francophone African countries where Indian engagement is “limited”.
“Shared strategic interests” combined with ‘time-tested mutual trust’ underpins Indo-French collaboration in Africa, the French Embassy in India told ThePrint in response to a media query. Plans are underway to conduct the fifth edition of the France-India dialogue on Africa this year,” the embassy said.
However, some of France and India’s strategic projects have faced snafus, it said.
“Take the $20-billion liquefied natural gas project in Mozambique, which has previously been halted due to insurgent threats. French energy giant Total is the operator of the project while three Indian PSUs hold a 30 percent stake,” it said.
This is an updated version of this report
(Edited by Nida Fatima Siddiqui)
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