THE CONTEXT: Modi’s visit to Nigeria was strategically timed as a stopover on his way to the G-20 Summit in Brazil. Nigeria conferred its second-highest national award, the Grand Commander of the Order of the Niger, on Modi. Three Memorandums of Understanding (MoUs) were signed in cultural exchange, customs cooperation, and survey cooperation, broadening the scope of bilateral engagement.
Nigeria’s significance for India extends beyond bilateral relations:
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- As Africa’s largest economy and democracy, Nigeria is a gateway for India’s engagement with the continent.
- Nigeria’s role as a regional hegemon in West Africa and its influence in the African Union makes it a crucial partner for India’s African strategy.
- The country’s vast oil reserves and growing tech sector present significant economic opportunities for Indian businesses and investors.
INDIA’S INTEREST IN WEST AFRICA: India aims to expand its geopolitical footprint in Africa, countering China’s growing influence. With Nigeria as its powerhouse, West Africa is crucial for this strategy.
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- Economic Expansion: With over 200 Indian companies operating in Nigeria and investments exceeding $27 billion, India seeks to expand its economic presence further. Nigeria’s vast oil reserves continue to be significant for India’s energy needs despite recent shifts in oil imports.
- Security Cooperation: India and Nigeria pledged to combat terrorism, violent extremism, and radicalization jointly. Cooperation in addressing piracy and securing sea lanes is crucial for India’s maritime interests.
- Global South Leadership: India and Nigeria are positioning themselves as leaders of the Global South. This meeting reinforces their commitment to amplifying the voices of developing nations in international forums.
- Development Cooperation: India’s development model emphasizes capacity building and inclusivity. India’s concessional loans and lines of credit have funded infrastructure projects across Africa, including solar energy initiatives in Mozambique and sugar industry modernization in Ethiopia. Programs under the Indian Technical and Economic Cooperation (ITEC) initiative provide scholarships and training for African professionals.
INDIA’S COMPREHENSIVE VISION IN WEST AFRICA:
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- Diversifying Trade Relations: India is focusing on negotiating trade agreements such as the Economic Cooperation Agreement (ECA) and the Bilateral Investment Treaty (BIT) to facilitate investment and trade. Indian companies can establish operations in the 230 special economic zones (SEZs) across Africa to benefit from reduced tariffs and improved market access. Encourage West African countries to use India’s DFTP scheme to increase their exports to India.
- Sectoral Focus: Prioritize key sectors such as pharmaceuticals, ICT, agriculture, and energy for trade expansion. India’s pharmaceutical exports to Africa reached $3.94 billion in 2023-24, highlighting the potential for growth in healthcare-related trade.
- Promote Infrastructure Projects: Leverage India’s expertise in sectors like power, renewable energy, and transportation to support infrastructure development in West Africa. EXIM Bank of India has extended Lines of Credit (LOCs) for various infrastructure projects in countries like Ghana, Senegal, and Togo. Promote partnerships in emerging areas such as fintech, e-governance, and digital infrastructure.
- Financial Cooperation: India and Nigeria have agreed to work towards early conclusion of a Local Currency Settlement System Agreement, which could reduce exchange rate risks and streamline transactions.
THE CHALLENGES
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- Geopolitical Competition: Chinese companies dominate various sectors in Nigeria and other West African countries, including infrastructure and telecommunications. China has invested heavily in African infrastructure, with $47 billion allocated for 22 large-scale projects in Nigeria alone.
- Economic Constraints: China-Africa bilateral trade reached $258 billion, while India-Africa trade stood at $52 billion in 2016-17. China pledged $50 billion for Africa over three years at the 2024 FOCAC summit, including $30 billion in credit.
- Regional Instability and Security Concerns: Terrorism, piracy, and drug trafficking pose significant threats in the region. Political instability in some countries can disrupt long-term partnerships and investments.
- Limited Diplomatic Presence: China has diplomatic relations with all African countries except Eswatini. India’s diplomatic efforts are primarily concentrated in eastern and southern Africa.
- Perception Management: China has effectively positioned itself as an alternative development partner to the West. There are concerns about overdependence on external powers, including both China and India.
- Technological and Innovation Gap: At the 2024 FOCAC summit, China emphasized areas of technological cooperation in industry, agriculture, and science. China is promoting its Beidou satellite navigation system in Africa.
- Logistical Challenges: Indian exporters often prefer to sell goods on a ‘free on-board’ basis instead of ‘on-delivery’ due to high shipping and insurance costs. This transfers risk to buyers and makes Indian exports less competitive.
- Delays and Inefficiencies: Indian development projects in Africa often face delays and implementation challenges. The Rivatex textile factory revival project in Kenya, funded by India, faced significant delays. These issues can erode trust and make African countries hesitant to engage in future projects with India.
THE WAY FORWARD:
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- Strengthening Diplomatic Engagement: Revive the India-Africa Forum Summit to facilitate dialogue between leaders. The last summit was held in 2015; a new summit could address contemporary issues and set a collaborative agenda. According to the Ministry of External Affairs, India has established diplomatic missions in 34 African countries. However, only a fraction actively engages with West African nations. Increasing diplomatic presence can enhance visibility and trust.
- Enhancing Trade Facilitation Measures: Implement local currency settlement systems to mitigate exchange rate risks and transaction costs. This would encourage trade by making transactions smoother and less costly. The World Bank’s “Doing Business” report highlights that cumbersome customs procedures significantly impact trade efficiency in West Africa. Streamlining these processes can lead to increased trade volumes.
- Investing in Infrastructure Development: Encourage Indian companies to collaborate with local governments on infrastructure projects through PPP models. This approach can mitigate financial risks while enhancing local capacity. According to the African Development Bank (AfDB), Africa requires $130–170 billion annually for infrastructure development. Indian investments can play a significant role in bridging this gap.
- Fostering Capacity Building: Increase the scope of the Indian Technical and Economic Cooperation (ITEC) program to provide more scholarships and training opportunities tailored to West African needs. The United Nations Educational, Scientific and Cultural Organization (UNESCO) reports that education is critical for economic growth in Africa. Enhanced skill development can lead to better job creation.
- Addressing Quality Perception Issues: Establish stringent quality control measures for products exported to West Africa. Collaborate with local agencies to ensure compliance with international standards. Launch campaigns highlighting success stories of Indian products in Africa, focusing on quality assurance and reliability.
- Strengthening Security Cooperation: Conduct joint military exercises focusing on counterterrorism and maritime security with West African nations like Nigeria. Establish frameworks for intelligence sharing on security threats such as terrorism, piracy, and drug trafficking. According to the Global Terrorism Index 2023, Nigeria ranks high on terrorism-related issues; addressing these concerns is vital for fostering a secure business environment.
THE CONCLUSION:
Encouraging Indian companies to set up manufacturing facilities in West Africa can support local job creation and economic diversification. Collaborations in the oil and gas sector and renewable energy projects can strengthen energy security for both regions. The International Solar Alliance, spearheaded by India, has earmarked $2 billion for solar projects in Africa.
UPSC PAST YEAR QUESTION:
Q. “If the last few decades were of Asia’s growth story, the next few are expected to be of Africa’s.” In light of this statement, examine India’s influence in Africa in recent years.
MAINS PRACTICE QUESTION:
Q. “India’s engagement with West Africa is a critical component of its broader Africa strategy, reflecting its aspirations to strengthen economic ties, enhance geopolitical influence, and foster South-South cooperation.” Critically analyze.
SOURCE:
https://www.thehindu.com/opinion/op-ed/indias-strategic-focus-on-west-africa/article68946565.ece
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