Currently, China is leading Asian investment in Africa. While criticism and controversies have kept international attention on the biggest Asian economy, investigating whether China is setting an example for other Asian countries to follow bears interesting results. Among the Asian players in Africa, India, Indonesia, Japan, South Korea and Thailand, to name a few, have been investing in the energy sector as well as in natural resources throughout the continent. They are differentiating themselves by relying more on the private sector than on their Governmental ties with African countries.

India - more to offer?

China has attracted attention because of its investment in Africa, so much so that other Asian investments have received little attention in comparison. One of those Asian players is India. In May 2011, the 2nd Africa-India Forum Summit took place in Addis Ababa, Ethiopia. The event was described by India as an opportunity to build and strengthen “a new paradigm of cooperation far beyond the usual bilateral relationship as a way of containing the challenges of a globalising world.”(2)

Calling itself a "better partner" in comparison to China, India is using its shared history of colonialism to act as the foundation of better corporate responsibility and Government partnerships between itself and African countries. Instead of the upfront need for a business partnership like its Chinese counterpart, India has actively differentiated itself through what it has proposed to African countries as part of a shared profit on the exploitation of natural resources. Indian propositions include trade partnership and development packages such as human resources and capacity building.⁽³⁾ In addition, India differs from its Chinese counterpart by bringing a considerable network of private companies to invest in African countries with little to no Government-to-Government networks involved.

The Indian diaspora in Southern Africa has played an essential role in increasing Indian foreign direct investment (FDI) into countries such as Kenya and Tanzania, though new interests have caused India to look elsewhere – more precisely, to those countries with huge mineral resources such as Angola. Angola is presently the main oil supplier to India, and with the 18 refineries on Angolan soil (by 2011), India has actively secured at least 70% of its needed importation.⁽⁴⁾ While China is Angola’s main oil customer as well as its biggest construction investor, India is slowly moving to become a respectable investor in the country, as evidenced by recent investments in Angola’s transportation and Information Technology (IT) sectors.⁽⁵⁾

Another Portuguese-speaking country, Mozambique, has also responded to Indian mining interest by granting the Asian country mining rights. These lucrative mining agreements between both countries require India to participate in social projects throughout the country.(6) Previous Indian investment in Mozambique was in the cashew nut processing sector, which is one of Mozambique’s main export products. While India has invested significantly in these two countries, it has not limited its activities to the Portuguese-speaking countries in Africa only.⁽⁷⁾

In an effort procure its persistent need for oil, India has also invested in the other main oil producing countries on the continent such as Nigeria. By 2008, the Indian publicly-owned oil company, Oil and Natural Gas Corporation Limited (ONGC) Videsh, had already secured US$10-billion worth of oil; representing up to 12% of India’s oil importation from Africa.⁽⁸⁾ Not limited to that, in 2006, India had followed China’s example in Sudan by allegedly maintaining commercial relations during the Darfur Crisis and currently, Sudan accounts for 5% of the oil India imports.⁽⁹⁾ In Democratic Republic of the Congo (DRC), India will be investing half of the US$ 280 million required for the construction of a hydroelectric power plant in the West Kasaï region, the country’s second project in the DRC with the first being a hydroelectric power plan in the city of Kakobola).⁽¹⁰⁾ Other investments in Central Africa include manganese mining in Gabon where annual production of 7.6 million tonnes has encouraged India to seek an investment arrangement with the Government.⁽¹¹⁾

Smaller Asian players…

While international attention is on an emerging economic power (India) and a confirmed big investor (China), the African continent is also attracting smaller Asian investors who are becoming more and more interested in what Africa has to offer. One of those investors – Kazakhstan - has been investing in the Democratic Republic of Congo's (DRC's) copper mining sector for some years. Through the Eurasian Natural Resources Corporation (ENRC), the Central Asian country has successfully conducted mineral exploitation in the African country and investments have been made in cobalt and copper mining, with expected production being 10,000 tonnes for copper and 5,000 tonnes for cobalt by 2014.⁽¹²⁾ Another country, Malaysia, through the state-owned oil company, PETRONAS, has also been investing in oil exploitation. Recently, the company conducted a study on the Mozambican coast to identify suitable drilling sites.⁽¹³⁾

Whereas other Asian players such as Indonesia have focused on investing in African countries with which they share interests, such as agriculture or religion, Côte d’Ivoire and Liberia have shown interests in Indonesia’s expertise in large-scale palm oil production. Both countries have also received business propositions from the Asian country related to palm oil production and rubber production.⁽¹⁴⁾ Indonesia has also made significant investments in Nigeria, specifically in the petrol-chemical industry and has shown interest in the northern part of Nigeria, which is mainly Muslim, where it has investments in housing development and power generation.⁽¹⁵⁾ Indonesian investments are not limited to Central and West Africa and – the country is actively organising the 26th Trade Expo Indonesia in Zimbabwe, which is also a tobacco supplier for the Asian country.⁽¹⁶⁾

Conclusion

Continuous investments in Africa by emerging economic powers such as India are attracting other Asian investors. They differ from the traditional Asian investor – China – by what they have to offer, the type of investment, the sectors they choose to invest in, and the fact that they are mainly private investors rather than Governmental entities. Additionally, these other non-traditional Asian investors include a South-to-South aspect on their partnership by providing what China does not currently offer and, importantly, what is needed in Africa - capacity building, transfer of competencies, and agricultural expertise.

NOTES:

(1) Contact Astrid B. Akoyoko through Consultancy Africa Intelligence’s Asia Dimension Unit (asia.dimension@consultancyafrica.com).
(2) Emmanuel Mayah, ‘African journalists converge for India-Africa Summit’, Flamme D’Afrique, 23 May 2011, http://www.panos-multimedia.org.
(3) Ibid.
(4) ‘Angola becomes main African oil supplier to India’, Macauhub, 28 May 2011, http://www.macauhub.com.mo.
(5) ‘India finances railway in Angola’s Huila province’, Macauhub, 11 August 2009, http://www.macauhub.com.mo.
(6) ‘India: Indian state company to mine for coal in Mozambique’, Macauhub, 6 March 2009, http://www.macauhub.com.mo.
(7) ‘India finances cashew factory in Mozambique’, Macahub, 27 May 2006, http://www.macauhub.com.mo.
(8) Pierre Sersiron, ‘Géographie des relations’, Flamme d’Afrique, 23 May 2011, http://www.panos-multimedia.org.
(9) Ibid.
(10) Angolan Investment Promotion Agency website (Agence Nationale pour la Promotion des Investissements), http://www.anapi.org.
(11) Gabon Industriel website, http://www.gabon-industriel.com.
(12) Steven Addamah, ‘Le Kazakh ENRC s’intéresse au cuivre de la RDC’, Le Griot, 18 May 2011, http://www.legriot.info.

Written by Astrid B. Akoyoko ⁽¹⁾