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A Lot Of Digging And Some Football

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Some years ago I found myself in Djibouti - a tiny country on the Horn of Africa, surrounded by Ethiopia, Eritrea and Somalia. It was not a fancy place when I got there along with many others for the inauguration of a Dubai-funded container port.

On the streets ravaged by long years of violence were gun-toting soldiers and tanks. Also, at a road crossing was an old, discolored and decrepit bust of Mahatma Gandhi.

Nobody could tell me what that bust was doing there, when had it been installed, and what opportune moment in history had prompted somebody to introduce the messiah of non-violence to a rather violent part of the world. But there he was – looking at soldiers, stray goats and sporadic traffic through his rimmed glasses – a sign of times when India meant more to Africa than it probably does now.

Some of the old links still exist, but are now mostly overshadowed by China’s increasing influence in a continent which the West left for dead and the rest never looked at seriously. Zambia’s Vice President Guy Scott described the situation succinctly in a recent newspaper interview.

“If you fly over Africa, and find yourself looking down, you will see football stadium after football stadium. They are all Chinese-built; they are all Chinese-financed,” he told Mint during a visit to India. He should know well. His government has done and continues to do business with the Chinese just as several other African governments.

Some of these African governments also do business with India, and want to do more, if only India and Indian companies knew how to do business with the new, emerging Africa. Here again Scott had a few suggestions. According to him, India needs to learn a few lessons from China.

“The Chinese somehow, without getting into the nuts and bolts of it, manage to be quick on their feet or produce something tastier... Maybe the Chinese are doing it more effectively,” Scott said.

Fascinating lessons from a continent where the biggest stock markets worry more about what’s happening in China thousands of miles away than in their own economies; punters play the Chinese roulette, and a change in policy in Beijing could make or break African businesses worth billions of dollars.

The deep influence of China on Africa is a story that’s been told many a times, mostly from the point of view of the West that has fared miserably in recent years in a land which it once colonized. There is also a tendency to club India in the same narrative and speak of its failure to spread its sphere of influence. India has lost out to China in the dash for natural resources, people like Scott tell us. Yes, that’s true, but then that’s only one side of the coin.

China began by throwing money and creeping in slowly in its hunt for minerals and oil that are needed to churn its economic machine. They were initially quite democratic in their choice, willing to do business with dictators, military juntas, rebel militias and others who were seen as pariahs by the rest of the world. It was an easy give and take: you let us dig; we give you cavernous palaces and football stadiums. It worked well for a long time before the tide turned and African governments and population began suspecting the Chinese and their intentions.

But China, knowing well it has to rely on Africa for a lot of its needs, has been smart. It has changed tack over a period of time and worked hard to enhance local economies through jobs and investments and complaints against the Chinese have lessened after certain countries brought in laws restricting industrial sectors in which Chinese companies can invest. Politically, the Chinese have not interfered with African governments and have helped some smoke the peace pipe too.

For China, which has bilateral trade worth $166 billion with Africa, the continent is more of a business partner today. Beijing will pull all stops to ensure that its interest is secure. And it has money to throw around through subsidies and state-owned banks, which are quick to provide soft loans to fund projects.

In recent months, for example, a Chinese consortium led by mining group Jinchuan, announced it was taking a 45 per cent stake in South Africa’s Wesizwe Platinum with China Development Bank pumping in $650 million. Similarly, the Hanlong Group is about to complete a $1.45-billion takeover of Australia’s Sundance Corporation, which owns large tracts of iron ore mines in West Africa. If the $3.5-billion acquisition of African Barrick Gold – Tanzania’s largest gold mining company – would have gone through, Chinese investments in the first few months of this year would have equaled India’s committed credit line of $5.5 billion to African nations.

India’s low on money, but it could still win a few games if it realises that it can’t match China dollar for dollar and find smarter ways to engage Africa, which is not only a huge reservoir of natural resources but also aching for help to grow its economy.

The need, therefore, is to move away from the traditional mining sector and expand the footprint in services, telephony, information technology, pharmaceuticals, healthcare and education – areas Chinese companies are generally weaker given their focus on natural resources. These areas offer huge potential and are those where Africa needs help as it grows and emerges from its centuries-old cocoon.

India shouldn’t fall in the trap of being equated with China in rush for gold. It should set its own pace and look for smart synergies that would ensure a long-term, sustainable and equal engagement, not the lop-sided arrangement that first made Westerners and then the Chinese unpopular.

(The columnist is President, Public Affairs, Genesis Burson-Marsteller, and a former newspaper editor. He has a keen interest in matters involving China and Southeast Asia. Views expressed here are personal)