Forum on China-Africa Cooperation: India’s Engagement with Africa
STORIES, ANALYSES, EXPERT VIEWS
The ninth edition of the Forum on China-Africa Cooperation (FOCAC) took place from September 4-6, 2024, in Beijing.
The meeting signals China's influence in a continent that it hopes will be a key ally in pushing back against a U.S.-led global order.
Chinese President Xi Jinping proposed to the assembled leaders Thursday (September 5) that relations with all African countries that have diplomatic ties with China be elevated to the “strategic” level. “We have always understood and supported each other, setting an example for a new type of international relations," he said at the opening ceremony of the Forum on China-Africa Cooperation.
Xi said China is willing to deepen cooperation in industry, agriculture, infrastructure, and other areas and further open its market — in part by eliminating tariffs on products from most of the world's poorest countries, including 33 in Africa.
The relationship has moved beyond trade and investment to take on political overtones as China seeks allies in Africa and elsewhere in the developing world for its competition with the United States to define the norms governing the global economy and how countries interact with each other.
China now, a major player in Africa
With its initiatives and investments, China has become a major player in Africa since the forum was founded in 2000. Its companies have invested heavily in mining for the resources the Chinese industry needs. Its development banks have made loans to build railways, roads and other infrastructure under Xi's Belt and Road program.
China has become sub-Saharan Africa's largest bilateral trading partner but exports much more to the continent than it imports. In part to reduce its trade deficit, African leaders are seeking China's help to expand their agricultural exports and industrialize their economies.
Forum meeting at a time when African nations are facing multiple issues
The event came at a time when African nations are facing multiple issues such as high inflation, currency depreciation, a heavy debt burden, unconstitutional military takeovers and geopolitical challenges.
Moreover, in the view of Abhishek Mishra (Associate Fellow at the Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), New Delhi) “a sense of ‘summit fatigue’ has seeped into the mindset of African leaders following multiple recent Africa+1 summits with Türkiye, Russia, South Korea, and the U.S.-Africa Leaders’ Summit. Rather than having 54 leaders attend, following the Banjul format of 15 countries plus the African Union Commission (AUC) is more prudent.”
African negotiators on the back foot: The utility of the FOCAC process for Africa argues Mishra is “increasingly contingent upon Africa’s ability to set the agenda and take greater ownership of its strategic thinking.” While there has been no dearth of statements and papers on Chinese strategies in Africa, “there is a glaring absence of corresponding papers or strategies from the African side….Consequently, African agency gets constrained, which results in the agenda being driven by the Chinese side and African negotiators being on the back foot.”
The African debt issue: On the economic front, while progress on Beijing’s ambitious goal to import $300 billion worth of goods from African countries between 2022-24 has been modest, “China’s role in African debt sustainability is highly complex,” says Mishra. According to data from the Boston University Global Development Policy Center, Chinese loans to African governments and regional institutions amounted to around $170 billion between 2000-22.
A 2022 study by AidData showed that half of Chinese loans to sub-Saharan Africa are not disclosed in sovereign debt records, which complicates the estimation of debt levels. Notwithstanding concerns of opacity, lack of transparency and non-disclosure clauses, Mishra argues “China is unlikely to entertain debt forgiveness or cancellation. Instead, Beijing is more likely to write-off small, interest-free loans.”
Indian engagement in Africa
Observers often point out that Indian engagement in Africa tends to mimic Chinese patterns of engagement. But such simplistic characterisation, says Mishra “fails to consider the standalone nature of Indian engagement. India is not influenced by the actions of any third country. The Indian model and way of doing business has its own comparative advantages in sectors such as ICT, human resource development, agriculture and pharmaceuticals.”
Crucial lessons for India
Nevertheless, the way African leaders negotiate with their Chinese counterparts under FOCAC, writes Mishra “could offer some crucial lessons for India’s own engagement.
Continuity: First, “India must emphasise continuity in its engagement with Africa. The last India–Africa Forum Summit (IAFS) was in 2015. Dialogues such as the CII-EXIM Bank Conclave, and India Africa Defence Ministers meeting have been held regularly. But if India wants to capitalise on the momentum following the inclusion of the African Union (AU) in the G-20 under the Indian presidency, it must hold the IAFS-IV at the earliest. Meanwhile, an India-African Union Track 1.5 Dialogue could be set up to deliberate on issues of mutual interest…..”
Strengthening integration of African economies into global value chains: Second, “India could play a central role in strengthening the integration of African economies into global value chains and supporting Africa’s industrialisation…..”
Encouraging greater Indian private sector participation: The third lesson pertains to “encouraging greater Indian private sector participation and finding innovative financing solutions. While India’s lines of credit remain a popular instrument for financing projects, African countries are apprehensive about taking newer loans after the COVID-19 pandemic. Subsequently, innovative ways of financing such as public-private partnerships, and blended finance are the way forward….”
Technology: Finally, states Mishra “India’s own digital stack….. could help establish digital and physical connectivity with Africa. The Unified Payment Interface (UPI) and RuPay services are already established in Mauritius. Kenya, Namibia, Ghana and Mozambique have shown interest in utilising the UPI platform. Additionally, to strengthen Indian banking and reduce forex risk, rupee-based lines of credit must replace dollar-based ones. African nations lose billions of dollars annually in exchange rates. Therefore, making transactions that are currency-neutral is in the interest of both India and Africa.”
Opportunities for India in the area of minerals
While India will learn lessons, one of the real opportunity lies in the area of minerals. In the Union Budget 2024-25, Union Finance Minister Nirmala Sitharaman announced the setting up of a Critical Mineral Mission. There were three aims: expand domestic production, prioritise the recycling of critical minerals, and incentivise overseas acquisition of assets.
For India’s Critical Minerals Mission to succeed, Veda Vaidyanathan (Associate Fellow, Centre for Social and Economic Progress, New Delhi) writes “New Delhi will have to find ways to leverage its existing partnerships with countries in Africa, a region that houses 30% of the world’s known critical mineral reserves.”
Collaborating on critical minerals, “will bring in a new dimension to the multifaceted energy partnerships between the regions. Of the total bilateral trade of $98 billion in 2022-23, $43 billion is attributed to the mining and mineral sectors. Similarly, a significant portion of the $75 billion that India has already invested in Africa, is by public sector units for the acquisition of energy assets. India sources approximately 34 million tonnes of oil — accounting for 15% of its total demand — from Africa, alongside rising imports of natural gas, minerals, and mineral fuels. Further, as part of the International Solar Alliance, the Government of India has benchmarked $2 billion for solar projects in Africa. Building resilient supply chains to Africa is being imagined at a time when African governments are employing an array of policy instruments to diversify away from a ‘pit-to-port’ model. Tanzania is developing a multi-metal processing facility, Zimbabwe and Namibia have banned the export of raw minerals to ensure value addition and Ghana has approved a new policy for the exploitation and management of green minerals. The forthcoming African Green Mineral Strategy champions ideas for Africa’s minerals-based industrialisation. This presents opportunities for India to support a developmental agenda.”
China factor: Increasing “international attention, especially the extent of control China exerts over the value chain, poses economic and security risks for India. With its early acquisition of assets, development of processing and manufacturing capabilities, Beijing enjoys enormous influence. Chinese mining companies have a significant presence in cobalt mining in the Democratic Republic of Congo and recently signed a $7 billion ‘minerals-for-infrastructure’ deal.”
India’s unique advantages: In this geopolitically fraught environment, where the African agency is looking to build viable alternative partnerships, Vaidyanathan sees “some that India could leverage.
“Indian construction companies have completed several projects in 43 African countries, which include transmission lines in Tunisia, hospitals in Tanzania, and railway lines in Ghana. In the African critical minerals landscape, identifying strategic projects with host countries and building mining-adjacent infrastructure are key to development.”
India has signed “memoranda of understanding with Zambia and Zimbabwe for cooperation in geological mapping, mineral deposit modelling, and capacity building. To help build a critical mineral workforce, utilising mechanisms such as the Indian Technical and Economic Cooperation, which has trained 40,000 Africans in 10 years, would help drive positive energy partnerships.”
There is an “increasingly nuanced role of Indian technology start-ups across the mining value chain. From innovating tools that accelerate mining exploration and extraction while minimising ecological impacts, to utilising technology for beneficiation of mineral ores, and providing reconnaissance services, there is a whole suite of services that private technology companies provide. Their expertise in niche areas of mining brings an element of value addition that African governments could explore.”
On African priorities, Marit Kitaw, Director of the African Minerals Development Center said, “the only way to transform lives is to add value”. Therefore, India’s Critical Mineral Mission should prioritise responsible practices in an era that threatens to be dominated by the geopolitics of a not-so-green energy transition.
