India has increased its Line of Credit to Africa, the second most important continent for India after Asia, aiming to enhance its presence in the continent and to counter China’s influence in the region.
According to the Bloomberg report, Africa has now received about $32 billion as line of credit from India. With this, it becomes the second-largest recipient of credit from India after Asia.
The managing director of India’s Export-Import (EXIM) Bank, Harsha Bangari said in an interview that forty-two African nations received about $12 billion in the project-based line of credit provided by India in the last decade. According to the director, the EXIM bank serves as a tool for ‘economic diplomacy’ for India. She also mentioned that Africa has been making good use of credit lines in projects based on infrastructure, healthcare, agriculture and irrigation.
Countering China’s ‘debt trap’ policy
Despite India’s recent efforts to have a greater reach in Africa, it still lags behind wealthier China. Recent reports say that China gave around $40.5 billion in loans in 2021 to the African continent. However, unlike China, which basically follows a ‘debt trap’ policy through its credits to the countries, India has a more people-centric approach to its projects. India provides reasonable loans to countries and focuses on improving the lives of their people and building better relations with these countries.
EAM Mr. S Jaishankar on Line of Credit to Africa
India’s external affairs minister is on a four-day visit to the African Country Tanzania, where he addressed the Indian community in Dar-es-Salaam city of Tanzania on Thursday. In his address, Mr. Jaishankar, in a veiled attack on China, said that India is not here as an “extractive economy” like other countries, who are there for very “narrow economic objectives”. This is a broader and deeper partnership for us, he said. He added that the bridge that the Indian diaspora provides us is very unique and not many countries have it.
Developments from EMA S Jaishankar’s recent visit to Tanzania
In a significant development, an agreement is signed on setting up the IIT Madras Zanzibar campus. It is going to be the first IIT global campus.
India is helping Tanzania on an infrastructure project improving the water supply, that will bring drinking water to 8 million people in Zanzibar to which $500 million of the credit is dedicated. To this, Mr. Jaishankar said that it is just a natural extrapolation of what we are doing in India through the Jal Jeevan Mission. He said that it is a great privilege to share with Zanzibar India’s experience in the field of water development.
EMA attended a deck reception with the president of Zanzibar hosted onboard INS Trishul. He said that INS Trishul’s presence in Zanzibar today is a statement of India’s SAGAR commitment. SAGAR i.e., Security And Growth for All in the Region is a maritime initiative by India that prioritises the peace, stability and prosperity of the Indian Ocean region.
Future of Trade with Africa
In the month of June, while speaking at the EXIM bank conclave on the India-Africa Growth Partnership, Mr. Jaishankar had shown confidence and said that India-Africa trade will cross $100 billion soon.
In his current Tanzania visit, he said that “Our trade with Africa is $95 billion… I can predict very confidently that.. will grow very rapidly in the community and they will grow rapidly in the coming decade for three reasons. One, the Indian economy, Indian businesses are going up more and more.”
India wants to increase its exports to Africa and has a target of about $1 trillion of total export by 2025. Even though the export as of now is low there is a potential of exporting about $40-50 billion. Africa’s growth as compared to India is much low (3.9%) right now but soon its combined GDP is projected to exceed that of many other countries.
It is going to become a very important market for everyone to capture including USA, Europe and China and so India wants to tap it as well. EMA had mentioned that he is looking forward to African Continental Free Trade Agreement (FTA).
An interesting fact is that India has also provided over $51 billion in concessions to African countries other than loans through vaccines, medicines, etc. This makes India’s cumulative investments in Africa stand at $70 billion. There are 193 projects completed, 66 under execution and 88 in the pre-execution stage.
Africa is important to India given its huge potential. Out of 54 African countries, if about 45 countries favor India at the United Nations, that makes a huge international community in support of India.
India has been vocal about the global south through platforms like G20. India also hosted the Voice of Global South summit this year. Using India’s presidency at G20, PM Modi during the recent G20 summit asked the member countries for permanent membership of the African Union.
