Prime Minister Manmohan Singh signed trade and investment deals yesterday to expand India’s economic footprint on the African continent, where China has made huge advances.
The Indian premier offered a $5-billion credit line for its trade partner at the start of a two-day summit with some 10 African leaders in the Ethiopian capital Addis Ababa.
Singh also signed the Addis Ababa Declaration, a political agreement calling for a comprehensive reform of the United Nations, including an expanded Security Council in which Africa and India have pledged each other’s support for a permanent seat.
“We share the view that the UN should function in a transparent, efficient and effective manner and that the composition of its central organs must reflect contemporary realities,” according to the declaration of the summit which ended yesterday.
He also promised an additional $700 million to set up a raft of institutions and training programmes in different African regions in fields ranging from food processing to weather forecasting.
India is stepping up its foray into the Africa market, where its Asian competitor China has outpaced it in trade and investment over the past decade.
Asked why he was confident to invest in Africa where many countries suffer from political instability, Singh said: “An act of investment is an act of faith.”
He said: “The people of and the government of India have enough faith in the people and the governments of Africa that whatever temporary difficulties they may be facing. They have the will, the resources and the inclination to overcome.”
India will fund the formation of the India-Africa Institute of Foreign Trade in Uganda, the India-Africa Institute of Information Technology in Ghana, the India-Africa Diamond Institute in Botswana, and the India-Africa Institute of Education, Planning and Administration in Burundi.
The two sides also agreed a cooperation framework to further bolster the economic relations that got a boost after the first India-Africa summit in 2008 in New Delhi.
At the 2008 New Delhi summit, India offered $5.4 billion in concessionary credit lines over a five-year period.
“In the three years since the first India-Africa summit, Indian trade and investment in Africa have significantly increased,” noted Alex Vines of the London-based think-tank Chatham House in a report last week.
Last year, India’s imports from Africa were worth $20.7 billion, compared with $18.7 billion the previous year, and its exports stood at $10.3 billion the same year.
But those numbers are far outweighed by China. Beijing has funded infrastructure projects in exchange for access to resources and its bilateral trade with Africa in 2010 totalled $126.9 billion.
India and China have turned to Africa to seek energy resources to power their fast-paced economies, but while China prefers government-to-government deals, Indian investment is mainly in the private sector, notably in telecom, pharmaceuticals and manufacturing.
India, which deployed its navy in 2008 as part of an international armada fighting piracy in the Indian Ocean and the Gulf of Aden, is also ramping up its security ties with Africa and pledged $2 million for the African Union Mission in Somalia tasked with protecting the transitional government.
“Africa welcomes India’s support to efforts to safeguard shipping in the Gulf of Aden, Arabiam Sea and the Indian Ocean from piracy,” the final declaration said.