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Profits at the pyramid’s base

India has been late in entering Africa but it scores in its non-exploitative approach.

india Updated: Nov 20, 2011 11:28 IST

India is wooing Africa with aid and the prospect of less exploitative investment to deepen trade ties with the continent. Prime Minister Manmohan Singh is carrying promises of over half a billion dollars in aid to enhance trade from $46 billion today to $70 billion five years from now. Bilateral trade has taken huge strides from the $3 billion a decade ago but pales against the $107 billion China notched up in 2008. India can be blamed for waking up late to the African opportunity, but it can make up for lost time by projecting itself as a more humane investor than its northern neighbour. China’s voracious appetite for minerals and commodities has lent its investments in Africa an unsettling aggressiveness. In contrast, India’s biggest investment — Airtel’s $10 billion acquisition of Zain’s African assets — is far removed from the resource grab that Africans have come to associate with most foreign investments.

Mr Singh is pitching the India-Africa partnership on “capacity-building and skill transfer, trade and infrastructure development”. The thrust is in areas like construction, information technology and pharmaceuticals, where India can offer products and services at price points far below the global average. Both Africa and India recovered quickly from the 2008 financial meltdown and this could be a good time to push for a higher level of economic engagement that reduces dependence on the West for trade. Yet there can be no denying the draw African resources hold for any country that is energy deficient and is at risk of losing its food security. Indian oil firms have invested in countries like Nigeria and Kenya, while India is among the largest investors in Ethiopia with approved investments of $4.78 billion, two-thirds of them in commercial agriculture.

Indian investment in Africa is, however, distinct in one crucial aspect: it seeks out, and thrives on, domestic consumption. Africa offers Indian entrepreneurs an immense market for the frugal management they have tested in their home laboratories. Cellphone calls at 1 paisa a second and cars for $1,000 have used India as proof of concept. Africa provides proof of execution, and, therefore, an international template. The continent is the next logical staging ground for those seeking — and having found — billions at the bottom of the pyramid. This message, if sent across forcefully, can undo the impression gaining ground that China and India are in a frantic race for African resources, with India playing catch-up.