 "Modi's Africa visit: What did India gain?")
Prime Minister Narendra Modi has completed a tour of four nations in the southern part of Africa: Mozambique, Tanzania, Kenya and South Africa. Why is this part of the continent so important and what does the visit mean for India?
The tour's importance can be guaged by its political, investment and strategic aspects. India hosted the Africa Forum summit a few months ago and this visit was to build on that. However, each of the countries the PM visited is absolutely crucial for India for a variety of reasons – and each of them has their own internal problems. (But then who doesn’t?)
Take Mozambique which is trembling on the brink of a debt default on loans taken from the IMF. The situation is remotely similar to India in 1991. According to the Mozambique opposition and civil society groups, the default is perfectly legitimate because the loan was illegal – Parliament was not informed of it. The debt was taken by two state owned companies which represented sovereign guarantees during the tenure of former President Armando Guebuza and amounts to two separate loans of $622 mn by a company called Proindicus and $535 mn by the Mozambique Asset Management (MAM). The political argument is that the government should prioritize spending on health, education, social action, pensions or other areas aimed at poverty reduction rather than repayment of debt to foreign banks.
Prime Minister Felipe Nyusi’s government is under pressure because Mozambique has a massive fiscal deficit and a default will send it further down the spiral. Moreover, as Nyusi was Defence Minister in the Guebuza regime, he cannot just shrug off responsibility. The IMF is weighing its options and is likely to act soon to recover its money by agreeing to restructure the loan.
India has taken all this in its stride and is holding Mozambique’s hand – for the nation is sitting on vast gas and oil resources. Moreover, it has evolved a policy of leasing land for farming and India expects to buy pulses grown there for its own consumption. Modi’s visit yielded a lot of assurances from the country.
Tanzania, where President John Pombe Joseph Magufuli took charge in November 2015, is where the PM played the drums along with President Magufuli. But the PM’s thwarted musical ambitions notwithstanding (he played drums in Japan as well), Tanzania is important for India although it is one of China’s favourite countries in that part of Africa. China made huge investments in Tanzania’s copper mines, for instance – that dream has now died, with China’s own appetite for minerals, oil and metals waning. Nearly a dozen MoUs signed between India and Tanzania have to be seen in that context: a way of shoring up Tanzania’s infrastructure via investments from India. Most of the MoUs are in the area of water management and urban development in Zanzibar and other Tanzanian countries.
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Kenya, which has a vast Indian community that is engaged in business was important for diaspora engagement. Moreover, as Modi noted in a speech at Nairobi,“We [India and Kenya] have a thriving economic and commercial relationship. But, it is not a temporary or transactional relationship. It is a time-tested bond, built on the foundation of shared values and shared experiences.”
India is Kenya’s largest trading partner but China is the biggest investor with India at the second position. Like Tanzania, Kenya too is feeling the pinch of the Chinese slowdown though for different reasons. Kenya is not as resource rich as other countries in this part of Africa but has been the target of aggressive development with Chinese investment. The China-Africa Industrial Platform (CAIP) located in Kenya is host to massive structures that showcase showrooms and warehouses for Chinese-built machinery import. A power plant just outside Nairobi is built with Chinese money. During the Modi visit, India signed seven pacts, including in the field of defence and security and avoidance of double taxation. Investment is set to pick up.
With South Africa, the BRICS engagement is another link in the relationship. But internal politics in South Africa is complex and could take the government’s eye off foreign relations. Corruption charges against President Jacob Zuma are going through the mill of the legal process. There are 783 charges of fraud, corruption and racketeering against him. This could set into motion a process for his removal from office – either through a parliamentary process or a direct recall by the ruling African National Congress (ANC).The test of his political credibility is the August 3 municipal elections that will be held all over South Africa. Even if the ANC stands behind him, if Zuma is forced to stand trial, a parliamentary no-confidence vote in the president would provide another route to remove him from office. This would require a two-thirds majority. All this means South Africa will be mired in managing domestic politics.
India is South Africa’s sixth largest trading partner and while that trade deficit benefits India, Indian companies in South Africa have created 10,660 jobs, mainly in tech and financial services. Modi’s visit leveraged the diaspora and the fact that India-South Africa trade would increase to $18 bn by 2018.