Can India really out-compete China in Africa?

The decision by New Delhi to hold its triennial summit on African soil for the first time was informed by the need to consolidate some much-needed political goodwill, but just across the African Union headquarters where the meeting will take place stands a reminder that India could well be in the lion’s den.

Rival China is putting up an imposing new complex for the AU that hogs up the entire front view at the current building – and all for free. The agreement for the “expansion project” was signed in 2007 with the initial bill put at $150 million, and to be entirely financed by the Chinese government.

India bristles at suggestions of a struggle for clout and dismisses as simplistic the narrative of an offensive against its neighbour, insisting its approach is based on “friendship” and “mutual” benefits – a clear dig at China which has been accused of “grabbing” the continent’s resources.

But in reality India has little option. Despite historical links with Africa, it was caught flatfooted by Beijing’s extraordinary advance on Africa and has only begun to react in the last decade, after what some in the Indian capital wistfully term as the “lost” decades.

It also does not help that China boasts a formidable war-chest in its foreign reserves, and given Beijing’s state-run entrepreneurial model, decision-making is swift. India, despite an economy that last financial year grew at 8.6 per cent, by virtue of being a democracy it has to contend with layers of officialdom to make key bilateral decisions.

India’s diplomatic presence in Africa is also limited, while nearly 35 African countries have started infrastructure developments through Chinese financing.

'Soft power'

In such a context, is this “soft-power” approach of skills and technological transfer really working for India? “You decide, the conclusions are yours, I can only tell you what our approach is, it is for you to decide whether it is right or wrong,” the spokesperson of India’s external affairs ministry, Vishnu Prakash, rather testily tells me.

But despite the buzzwords of ‘friends’, ‘mutually beneficial’, ‘joint ventures’ and Mahatma Gandhi that punctuate most Indian official speeches here, the fact is that India is by 2030 projected to the third-largest net importer of oil. It already has petroleum deals spread out from Gabon to Sudan, and has been looking to gain a foothold in Angola.

Its roaring economy also calls for investment in African farmland to feed its people. (Recently it has leased 50,000 hectares of prime Ethiopian land in addition to existing deals with other African countries such as Kenya and Madagascar).

And with India signalling its intention to raise bilateral trade with Africa to $70 billion by 2015, and China having done business with the continent estimated at $110 billion in 2008/9, the stage is set for some titanic battles.

At the moment there are whiffs of a David-versus-Goliath match-up: China has in the last two years lent more money to Africa than the World-Bank.