Pledges by a group of Indian companies to invest $14 billion in Nigeria are an indicator of growing private sector momentum to support Indian Prime Minister Narendra Modi’s ambitions to increase the country’s influence in Africa.
The commitments, made by four conglomerates on September 6, come just three days before the G20 endorses Mr. Modi’s proposal to accept the African Union into the intergovernmental forum.
The new deals come amid rising Indian investment in Africa and have sparked debate over the country’s ability to reduce the economic influence of its regional rival China on the continent.
“This is a long-standing ambition for many in New Delhi India compete with China in Africa,” says Barnaby Dye, senior lecturer in development policy at the University of York.
This situation has accelerated under the leadership of Mr. Modi, who has sought to deepen strategic ties, among other things, by proclaiming the 10-point Kampala Principles to guide India’s engagement with Africa, in signing its first African free trade agreement with Mauritius in 2021, and last year, hosting senior officials from 17 African states.
However, strict divisions between India’s private and public sectors mean that the government has never influenced companies’ overseas investment programs.
“Unlike China, many large Indian companies – both public and private – are largely run by the private sector and operate relatively independently of diplomatic and strategic ambitions,” says Mr Dye.
This has limited the country’s ability to keep up with Beijing’s investment momentum, which has leveraged public financing and government-to-government deals to become the continent’s second-largest source of capital expenditure (capex) since 2003. according to fDi Markets.
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Nevertheless, the $14 billion investment pledges announced this month show that Indian companies are increasingly exploiting the opportunities presented by the market. continent with the fastest growing population. These include Indorama Petrochemical’s plan to inject $8 billion into its existing fertilizer and petrochemical plant in Rivers State, Jindal Steel and Power’s expression of interest in establishing a $3 billion steel mill, and SkipperSeil’s plan to deploy $1.6 billion in renewable energy projects. and Bharti Enterprises’ $700 million expansion of its communications network.
Data from fDi Markets show that Africa has been the largest regional recipient of Indian investment over the past five years, up from fifth place in the previous five years. Last year, Indian companies announced a record $22.2 billion in foreign direct investment in Africa.
Business groups suggest more is to come. In a 2022 report, the Confederation of Indian Industry urged the country’s companies to increase their investments in Africa from $74 billion to $150 billion by 2030. The India-Nigeria Business Council was launched l last year to exploit bilateral trade and investment opportunities.
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Despite the Indian government’s historic hands-off approach, Harsh Pant, a professor at King’s College London, said it has begun to play more of a facilitating role by showing that “the state and the private sector can ‘help each other’. Although the commitments of the country’s conglomerates have grabbed headlines, the focus on small and medium-sized enterprises (SMEs) is an important part of this change.
“The government is deliberately pushing some SMEs to do business” in Africa, he said. While in the past, executives of large companies accompanied the government on trips to the continent, “business delegations today… are almost evenly matched, if not in favor of SMEs,” says Mr. Pant.
SME investments also continue to be supported by the large Indian diaspora, particularly in East Africa, South Africa and Ghana. “They have often been key contacts for Indian companies wishing to develop their activities on the continent and stimulate Indian investment,” explains Mr. Dye. “Individual entrepreneurs with contacts in India were able to promote and offer their services to Indian companies wishing to develop on the continent. »