- The Washington Times - Thursday, September 27, 2007

NEW DELHI

Although eclipsed by aggressive Chinese state-owned enter- prises, especially in the energy sector, Indian companies are catching up and expanding operations in Africa like never before.

China seems to be everywhere, but behind the lavish ceremonies for African heads of state in Beijing, past the lucrative deals struck with abusive Africa regimes and past China’s recent $5 billion in soft loans and lines of credit to Africa, stands an Asian elephant in the African bush: India.

India is overturning the traditional ties between sub-Saharan countries and their former colonial masters, challenging the aggressive expansion of Chinese companies, and supplanting the long-standing trade links to Indian merchants in East Africa with those in new marketselsewhere on the continent.

Indian companies assert that their approach is better for Africa’s developing business climate.

“It is not only about natural resources,” said Shipra Tripathi, director of Africa programs for the Confederation of Indian Industries in New Delhi.

“India is looking to Africa to partner, not exploit,” whereas China, the world’s second-largest consumer of energy, is extracting oil and gas resources out of Africa’s dangerous Niger Delta and Angola and exploring in Sudan’s volatile Darfur region.

“It is to our benefit for them to be strengthened,” said Mr. Tripathi.

In New Delhi, Indian businessmen crowd into investment forums in hotels and African embassies for long afternoons to learn about the latest opportunities available on the continent.

They talk of similar histories in struggling against colonialism and out of poverty, modern-day “synergies,” sharing a piece of the pie and making money. Unlike their Chinese counterparts, they say, their interest is across sectors — telecommunications, steel, automobiles, agriculture and pharmaceuticals — not just oil and exports.

“West Africa has been trading with India for years,” said John Bentum-Williams, Ghana’s high commissioner in New Delhi. “They have now transitioned from trading to manufacturing, agriculture, services and [information technology]. The government of India sees Africa as a natural ally.”

The Indian government has paid special attention to step up its presence in West Africa, a region in which it historically lacked a foothold. India committed a $500 million line of credit to eight West African nations under an initiative called the Team-9 — under the condition Indian contractors are used.

The initiative includes a national post office for Burkina Faso; bicycle, steel and cotton plants for Chad; a tractor-assembly plant in Mali; and irrigation projects in Senegal. India is also financing the construction of Ghana’s new presidential palace.

Throughout Africa, India is partnering with the African Union to establish the Pan-Africa ENetwork, which is a high-speed fiber-optic network between the governments of all 53 African countries, as well as tying 12 hospitals in India with 58 across Africa and nearly an equal number of universities for telemedicine and education.

The Chinese government has its aid projects as well, but authorities say the greatest difference between the Indian and Chinese approach is seen in the private sector, where India excels in the transfer of skills and the construction of infrastructure.

Trade between India and West Africa went up 30 percent for a 3-month period ended Oct 2006 to $1.3 billion. Ghana, for example, now receives its largest number of foreign-investment projects from India, followed by China and the United Kingdom.

Uttam Glava, a large Indian steel company, will open a steel re-roller mill worth $60 million in Ghana later this year. India is Senegal’s second-biggest trading partner; new Tata buses sail down the streets of Dakar, replacing old minivans. Kirloskar Brothers, the Indian pump manufacturer, is helping transform that country’s agriculture sector by bringing irrigation systems to all corners of the country.

And Mohan Energy, which has implemented more than $200 million worth of contracts across Africa, is currently building a rural-electrification program in Ghana.

Mahindra & Mahindra, the large Indian automobile manufacturer, plans to use South Africa as a gateway to the rest of the continent. Already, 40 percent of the company’s overseas sales are in Africa, and it is looking into construction of an assembly plant in South Africa in the next two years.

It’s not been a smooth road.

“You need to understand the local environment,” said P. N. Shah, Mahindra’s executive vice president for overseas operations. “You have to take a long-term view of the markets.

“At times, the financial position of those economies are a big challenge,” but, he insists, “You need to take the risk. Country by country things are getting greener.”

Indian companies trumpet their relative size and flexibility, compared with their Chinese counterparts.

Not only are they are more capable of adapting to market demands, they say, but they value integrating into the fabric of society — business owners of Indian ethnicity are almost twice as likely to have African nationality than their Chinese counterparts.

Indian companies also source a far greater percentage of their material requirements locally — about 22 percent is brought from India, as opposed to China’s 60 percent — which indicates a greater level of comfort with and confidence in the African marketplace.

Nonetheless, India’s trade with Africa — just over $10 billion last year — is but a fifth of China’s, which is expected to top $100 billion by 2010.

But, said Cheikh Diallo, an economic adviser with the Senegalese Embassy in New Delhi, Africans “don’t appreciate the invasion of the Chinese goods. [The Chinese] don’t invest. Many Indian companies see the potential and want to invest.”

India’s strategy, as described by trade policy and government representatives in New Delhi and as proven on the ground, is more of a long-term approach.

“The investment is not driven by the government — it’s a purely commercial business orientation. Whereas with the Chinese, it’s a project that’s totally backed by the government,” said Ruchita Beri, an authority on Indian-African relations at the Institute for Defense Studies in New Delhi.

“The Indian industry is interested in long-term investment in Africa,” said Malvinder M. Singh, CEO of Ranbaxy, one of India’s largest pharmaceutical producers with manufacturing plants in South Africa and Nigeria and operations in 44 African countries. “Africa 10 to 15 years from now will be where other Asian countries are today.”

Mr. Singh recently completed a $70 million acquisition of Be-Tabs, one of South Africa’s largest pharmaceutical companies. His company has helped slash the price of generic anti-AIDS drugs to a fraction of their original price.

“Indian firms are far more integrated into the political, social and economic fabric of the African economy,” said Harry Broadman, an Africa-region economic adviser to the World Bank. “Indians feel more confident and comfortable.”

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