The change means little to the average customer, but for the continent, it is another sign that India is moving in.
The expansion by Bharti Airtel into 16 African countries underscores the rise of India in Africa at a time when much of the focus on foreign investment here has been on China.
The Indian government is raising its diplomatic profile in Africa, with Prime Minister Manmohan Singh and his cabinet having led several business delegations in recent years. And Indian companies are striving to keep up with China’s business profile in Africa, taking advantage of historical ties with the continent.
“I think one of the things that India doesn’t want to allow to happen is that it doesn’t want to get behind in this kind of engagement,” said Sanusha Naidu, research director at the Fahamu organization, an advocacy group based in Oxford, England, that tracks African issues.
Naidu said India’s renewed interest in Africa had not received as much attention as China’s because India was not seen as a threat. “It is seen as a democratic state,” said Naidu, a South African. “It doesn’t have a communist regime. All that plays in favour of India.”
India and China are vying for Africa because Africa represents new growth. “This is the last growth continent in the world,” said Sunil Mittal, founder and chairman of Bharti Airtel. “Europe is a done industry. The US is a done industry. Southeast Asia is old. Our model is not suitable for a matured market. We need growth, and Africa is the right place to grow.”
The International Monetary Fund said in October that the sub-Saharan region would register the second-highest growth rates in the world in 2011, behind only those of Asia. The IMF said the sub-Saharan Wonomic growth rate would be 5 percent in 2010, up from 2.5 percent in 2009. This year, the IMF projects Africa’s rate at 5.5 percent. The relations between India and Africa are centuries old. In the 1960s and 70s, India helped newly independent African states by training their citizens and leaders at Indian universities and other institutions. Indian conglomerates like Tata Group have had a presence in Africa for decades.
But India is changing its relationship with Africa from the political — like advocating an end to colonialism — to the economic. In recent years, some Indian companies have expanded their business in Africa, turning what were once small operations into major players. New companies have also moved in. Among the moves:
*In October 2008, the Indian conglomerate Essar Group began a mobile telephone company in Kenya in its first investment in Africa. Since then, it has acquired mobile telephone companies in Uganda and the Congo Republic.
Essar Oil, one of the largest private oil firms in India, entered an agreement in 2009 to acquire 50 percent of Kenya Petroleum Refineries, which serves three countries in east and central Africa. Last year, Essar won the bid to acquire a 60 per cent share in the state-owned Zimbabwe Iron and Steel.
*In 2005, Karuturi Global, an Indian agriculture company, bought 15 hectares, or 37 acres, in Ethiopia to grow roses for export, an investment of about $1.9 million. Karuturi has since expanded to 75 hectares of roses. In 2007, it bought one of the largest flower farms in Kenya in a deal valued at about $65.5 million. In the past two years, Karuturi has acquired another 311,700 hectares in Ethiopia for an undisclosed amount.
*The Indian drug companies Cipla and Ranbaxy have been a lifeline for years for millions of Africans who are HIV-positive because they produce far cheaper generic anti-retroviral drugs than the branded drugs from European and US companies.
Ranbaxy, which moved into South Africa in 1996, now has 10 full-fledged subsidiaries or offices across Africa. This year, it is opening its second manufacturing facility in South Africa. Cipla also opened a manufacturing facility in South Africa in September.
Along with business, India is playing a philanthropic role in Africa, while at the same time raising its profile. During a summit meeting with African leaders in April 2008, India pledged more than $500 million in grants for development projects. It also pledged to increase by more than $2 billion its lines of credit to African countries and regional economic groups.
The meeting was India’s first with African leaders. However, China has held three such sessions since 2003 and has pledged loans and infrastructure projects much bigger than what India has promised. In its most recent session, in November 2009, China pledged $10 billion in loans over a three-year period. In October, Indian Commerce & Industry Minister Anand Sharma, led a trade mission to East Africa. He said India was exploring whether African farmers could be encouraged to grow legumes and export them to India, the largest marketeer legumes.
“I think at this time India is taking off in terms of industrialization, so definitely they are looking for a market,’’ said Jacob Mignouna, the technical director at the African Agricultural Technology Foundation, a research organisation based in Nairobi. “Of course there may be some philanthropic aspect of it, but the bottom line is, they are looking for trade, for opportunities also for the Indian industries.”
The close relationships are reflected in trade. In the period from April through July 2010, India exported $4.8 billion worth of goods to Africa — a 51 per cent increase from the same period in 2009. India imported about $7.8 billion worth of goods from Africa between April and July 2010, a 40.7 per cent increase from the previous year.
The Bharti Airtel investment in Africa is so far one of the biggest from corporate India. Last year, Bharti Airtel, the largest mobile phone company in India, tried and failed to acquire MTN of South Africa, one of the continent’s largest communication companies. This year Bharti Airtel bought the Africa operations of the Kuwaiti operator Zain for $10.7 billion, and immediately began cutting prices.
Call prices dropped 50 per cent or more in 11 countries to attract more customers.
Sunil Mittal said he wanted to more than double the company’s Africa business in the next two and a half years to 100 million subscribers. At the end of September, Bharti Airtel said it had about 40 million subscribers in Africa.
Africa, for its part, needs to look more critically at its developing relationship with India, said Naidu of Fahamu. “Is it gaining technical experience? Is it gaining development experience? We need to interrogate the relationship much more clearly,” she said. “I think we need to ask those questions where if Africa is not gaining out of this relationship, then what needs to be done?”