Competition in Africa

India wants to be a serious challenger to China in Africa in the game of buying influence. At the recent Africa-India Forum, PM Singh promised $5 billion over the next three years in credit to African countries.

The Indians are playing catch up. Trade between China and Africa is greater but the real Chinese lead is in influence building. Outlook listed a sample of Chinese projects that are either wholly good will building or at least only partially commercial in motive:

"Two rail roads, from Zambia to Congo and from Zambia to Tanzania; 100 wind-powered projects; 52 stadia, including six in Mali, two in Ghana and four in Angola; a $1.5 billion telecom project in Ethiopia; undertaking hydro-electric projects in Sudan, Ethiopia, Gabon, Ghana, Nigeria and Republic of Congo."

Truly this list is only a sample. The number of building projects undertaken by the Chinese state in Africa is too numerous to easily document. Against this lead in influence and trade, the Indians will try to stay competitive but I don't think this is the right strategy. China has too much going for it in developing Africa. Indians would be better off focusing on a handful of countries that they deem most vital. The state resources and individual energy that both the Chinese state and people are and will keep on applying in Africa is very formidable.

1. State Resources

China has a much bigger budget. That cash will pay for the bridges and stadiums and even the odd gift. Last year the president of Malawi married and China provided a "shiny white limosine." The contractors building any Chinese funded bridge, stadium, or other infrastructure will be Chinese, shutting out Indian and Western companies. Chinese financing and cash will allow Chinese state firms to steamroll over Indian ones in bids for oil and mining concessions. (See a Google search including the terms "ONGC," "China" and "bidding.")

2. Individual Energy

By individual energy I mean numbers on the ground, the individuals establishing businesses and making deals. The Indian diaspora is well settled in much of Africa so India had a head start. There is a Gujarati merchant minority belt stretching from Kenya to South Africa. One of the major cities of South Africa, Durban, is about 20% Indian. On top of this foundation, Bharti Airtel, an Indian mobile provider acquired the African operations of Zain for $10 billion in 2010 and is delivering a level of service that Chinese mobile companies would not be able to match. (The Indian mobile market is highly competitive and Bharti is no doubt more nimble at succeeding in the African market than a lumbering state monopoly like China Telecom which doesn't put much effort into expanding outside of China.)

However despite this notable exception and the head start, the sheer energy of Chinese people in pursuing the African dream overwhelms other diasporas. An estimated one million Chinese people are in Africa. Many are construction workers working for state companies. (Remember 35,000+ Chinese were evacuated from Libya alone at the start of the conflict so the one million figure is not implausible as it may first seem.) Many are also individual entrepreneurs. They turn up everywhere:

• "When Yang Jie left home at 18...he figured that ice cream would be in high demand, and with money pooled from relatives and friends, he created his own factory at the edge of Lilongwe, Malawi’s capital."
• "I asked one of my local colleagues where the Chinese communities were in Kinshasa. 'There is no Chinese community, they live with us,' he said. 'They live right next door to me. They eat with us, they shop with us and they even sell 'beignets!' (tasty donut-like fried dough)."
• "Out in the entertaining country of Somaliland – entertaining because it is unrecognised as a country by anyone...a Chinese guy and a Yemeni were arrested doing something dodgy – it is not clear what – involving minerals."

In contrast, the Indian diaspora in Africa tend to stick to the comfort zones of forbearers. The Chinese advantages of big budgets and cowboy entrepreneurs will give it a safe lead. Indians should concentrate efforts on a list of targetted countries rather than try to cover all 50+ countries of Africa.