India-Africa trade and investment has seen tremendous growth in the last decade. The deepening relationship between old partners and allies prompted the launch, in 2008, of the India-Africa Forum Summit. Cooperation is deepening on a number of fronts. Economic cooperation, political cooperation, cooperation in social development and capacity building, cooperation in health, culture and sports, as well as cooperation in tourism, infrastructure, energy and environment are all mentioned as viable areas for cooperation in key documents of the India-Africa Forum Summit. Both sides envision a partnership that goes beyond bilateral linkages. In the Delhi Declaration adopted in 2008 at the conclusion of the First India-Africa Forum Summit, both sides agreed that India “will … progressively strengthen its partnership with the African Union and the Regional Economic Communities of Africa.” In the Africa-India Framework for Enhanced Cooperation adopted at the conclusion of the Second Africa-India Forum Summit 2011, both sides agreed to “to further expand cooperation and sharing of experiences to increase trade, investment and financial flows between India and Africa as they provide a common paradigm of cooperation in the true spirit of South-South engagement.” India-Africa trade reportedly reached US$71 billion in 2014 (up from about US$5.3 billion in 2001) and was projected to reach US$90 billion in 2015. On the investment front, a growing number of companies from India are making their mark in Africa including Cairn India, Vedanta, Essar Group, Essar Africa Holdings, Wipro Technologies, Tata Chemicals and Bharti Airtel. Given growing economic linkages between India and countries in Africa, what questions should Africans be asking their leaders about the future direction of Africa-India relations? At least ten questions.
First, India does not have a written and published Africa policy comparable to China’s Africa Policy. Although it does not have a published Africa policy, India does have an Africa policy which it is fine-tuning and appears to be taking strategic steps to increase its economic and diplomatic footprint in Africa. In a 2010 op-ed piece in The Hindu, Rajiv Bhatia, former Indian High Commissioner to South Africa, Lesotho and Kenya, opined that India “has a reasonable successful policy towards the African continent, one that reflects a balance between our values and interests.” Some of the contours of India’s Africa policy can be found in the address by the Prime Minister Dr. Manmohan Singh at the Plenary Session of the Second Africa-India Forum Summit, in key documents of the India-Africa Forum Summit, and in documents emanating from the Export-Import Bank of India (“Exim Bank of India”). Questions: Do countries in Africa have clear and coherent India policy? What factors and considerations inform and underpin Africa’s engagement with India? What considerations currently guide the economic diplomacy of African countries towards India? Do countries in Africa have concrete strategies for maximizing the potential benefit from increased India-Africa trade and investment?
Second, India is in the process of reviewing, and possibly revamping, its Model Bilateral Investment Treaty (BIT). In March 2015, the Indian government published the Model Text for the Indian Bilateral Investment Treaty and invited public comments and suggestions. Questions: Have governments in Africa reviewed the BITs that they have with India? Are governments in Africa paying serious attention to the BITs and investment agreements that they are signing with India and other external partners? What can they learn from India regarding BIT negotiation and reform?
Third, established in 1982 pursuant to the Export-Import Bank of India Act 1981, the Exim Bank of India is described as “the premier export finance institution of the country.” One of the goals of the bank is to enhance exports from India, encourage Indian companies to invest overseas, and integrate the country’s foreign trade and investment with the overall economic growth. Questions: What concrete steps are governments in Africa taking to boost African export to India and encourage outbound foreign investment from the continent? Are there concrete plans to establish more export finance institutions and mechanisms in Africa?
Fourth, in a speech in October 2013, Narendra Modi, India’s Prime Minister, stated: “I believe a strong economy is the driver of an effective foreign policy…we have to put our own house in order so that the world is attracted to us.” Questions: Is Africa’s house in order? Are individual countries in Africa taking concrete and measurable steps to get their houses in order? Is Africa’s economic interest the organizing principles for the formulation of the foreign policy of countries in the continent? Are countries in Africa engaging India from a position of strength or a position of weakness?
Fifth, a number of factors currently hinder Africa’s trade and investment relations with India. According to a recent survey, the CII-WTO Joint India-Africa Trade Survey 2012-13, African businesses face a lot of difficulties exporting goods to India. Difficulties that African businesses face in exporting goods to India include: limited access to trade finance, poor business environment, trade and logistics costs, informal controls and corrupt practices, standards and technical regulations, customs delays and paper works, federal and state level import requirements and rules of origin. Questions: What are governments in Africa and financial institutions in the continent doing to address finance and other constraints to African trade? Compared to Africa’s emerging partners, are governments in Africa doing enough?
Sixth, in the Delhi Declaration, both sides agreed that the Africa-India partnership “will be based on the fundamental principles of equality, mutual respect, and understanding between our peoples for our mutual benefit.” Both sides also agreed that the partnership will be guided by the several core principles including inter alia “collective action and cooperation for the common good of our states and peoples.” Question: What mechanisms do countries in Africa have in place to ensure that India-Africa economic engagement yield win-win outcomes and contribute to sustainable development in Africa?
Seventh, corporate social responsibility (CSR) is very important to the Indian government. With the passage of the India’s Companies Act, 2013, India became the first country in the world to have a CSR legislation. The said law was passed by both Houses of the Parliament in India and was signed into law by the President on 29 August 2013. Clause 135 of the Companies Act, 2013, mandates that qualifying companies spend 2% of their average net profits in the previous three years on charitable causes. The new law which became applicable from fiscal year 2014-2015 requires companies to establish a CSR-Committee and even defines CSR-eligible activities. Documents such as India’s National Voluntary Guidelines for Social, Environmental and Economic Responsibilities of Business (released in 2011 by the Ministry of Corporate Affairs), the Guidelines on Corporate Social Responsibility and Sustainability for Central Public Sector Enterprises (issued in 2013 by India’s Department of Public Enterprise), and the Business Responsibility Reports which the Securities and Exchange Board of India mandated for the top 100 listed companies vide circular dated August 13, 2012, all demonstrate India’s new commitment to CSR. Questions: Are governments in Africa taking corporate social responsibility seriously? What concrete steps are governments in Africa taking to ensure that businesses, foreign and domestic, contribute to sustainable development in the continent? What concrete steps are governments taking to promote and ensure corporate accountability in Africa?
Eight, minerals and commodities dominate Africa’s export to India with crude oil accounting for nearly two-thirds of the continent’s export to India. Africa’s export basket is still largely driven by natural resources and low-value agricultural products. According to CII-WTO Joint India-Africa Trade Survey 2012-13, six products collectively account for over 87% of Africa’s total export to India: crude oil (60%), gold (15%), phosphoric acid (3.8%), coal (3.5%), liquefied natural gas (2.7%) and shelled cashew (2.6%). On the other hand, India exports high-value products to Africa. Questions: What concrete and measurable steps are governments in Africa taking to boost and diversify Africa’s export basket? Specifically, what effort is being made to diversify Africa’s export to India?
Ninth, besides, crude oil and minerals, Africa also exports products such as edible fruits, nuts, wood, wood products, cocoa and cocoa preparations to India. In 2011, mineral fuels accounted for 66.6% of Africa’s export to India, followed by Precious stones (16.1%), inorganic chemicals (4.0%), edible fruits and nuts (2.7%), and iron and steel (1.7%). Question: What effort is being made to ensure that countries in Africa export value-added products to India and to the rest of the world?
Tenth, the private sector in Indian has been a major driver of the burgeoning Africa-India trade and investment linkages. Corporate India’s global expansion has been nothing short of remarkable and its presence is increasingly felt in every economic sector in Africa. Organizations such as the Confederation of Indian Industry, Indo-African Chamber of Commerce & Industries, and the Indian Chamber of Commerce are playing a critical role in fostering engagement between the two sides. The annual CII-EXIM Bank Conclave on India-Africa Project Partnership has become a as a platform for deepening and enhancing trade and investment linkages. Questions: What concrete steps are governments in Africa taking to encourage the private sector to play a leading role in promoting, developing and extending commerce, trade and industry between Africa and India and between Africa and other emerging partners? How can government policies and practices in Africa be made to be more supportive of the private sector in the continent? What can be done to foster stronger public-private partnership in the area of global trade, commerce and investment?
In conclusion, economic cooperation between countries in Africa and India is deepening and widening. Unlike China-Africa economic linkages that are primarily government-led, Africa-India trade and investment is largely led by the private sector. Through both greenfield and brownfield investments, Indian companies such as Cairn India, Vedanta, Essar Group, Essar Africa Holdings, Wipro Technologies, Tata Chemicals and Bharti Airtel are impacting a growing number of sectors in Africa. In his op-ed piece Rajiv Bhatia stated that “A powerful triad of the Government of India, India Inc., and civil society can take the India-Africa relationship to a new level of strength and vitality.” This begs a number of questions. Are African governments, businesses and civil society equipped to engage India as equals and based on clearly defined goals and objectives? As India–Africa cooperation expands into new and diverse areas, what concrete measures can governments, businesses and civil society in Africa take to ensure that the arrangements are mutually beneficial?
* LL.B. (Nig.); LL.M. (London); LL.M. (Harvard); S.J.D. (Harvard). Arkansas Bar Foundation Professor (2015 – 2017). Affiliate Faculty Member, The J. William Fulbright College of Arts and Science, University of Arkansas. Professor Uche Ewelukwa Ofodile is currently the Co-Chair, Int’l Investment & Dev. Committee, American Bar Association Section of International Law; Co-Chair, Africa Interest Group, American Society of International Law; and Secretary General, African Society of International Law. Professor Uche Ewelukwa Ofodile teaches Public International Law, International Trade & Investment Law, Food Law, and Intellectual Property Law at the University of Arkansas School of Law. The views expressed are those of the author in her personal capacity and does not necessarily reflect the views of the institutions that she is affiliated with.