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New Delhi’s answer to OBOR

India and Japan woo Africa with the 'Freedom Corridor' in a bid to counteract  China’s massive economic project

Published: 22nd May 2017 04:00 AM  |   Last Updated: 22nd May 2017 08:25 AM   |  A+A-

African Development Bank (AfDB) starts its 52nd annual general meeting in Gandhinagar today. It will be attended by over 3,000 delegates representing governments, banks, businesses, civil society and think- tanks from 81 countries. Participants will include top leaders of Benin, Comoros, Ivory Coast and Senegal besides the finance ministers and/or central bank governors of 54 African countries. Also present will be representatives of 27 other countries and organisations associated with the AfDB.

Most noticeable among these will be the high-powered delegations from Japan. They are participating to launch various India-Japan initiatives aimed at connecting the Asia-Pacific region with Africa. This vision was finalised during the Narendra Modi-Shinzo Abe meet in Tokyo last November and is touted as 'Freedom Corridor'. It is aimed at ensuring regional stability and transparency in building cross-continental partnerships. In the context of India’s  non-participation at China's One Belt, One Road (OBOR) summit, this is bound to be seen as India's pushback to President Xi Jinping declaring China-Pakistan Economic Corridor as OBOR’s 'flagship' project.

As part of the India-Japan partnership, a special session on 'India-Japan Cooperation for Development of Africa' will be held Wednesday. This will involve participants from Japan External Trade Organisation, Japan International Cooperation Agency, and Japan Bank for International Cooperation. These agencies will hold deliberations with both India and Africa to build their synergies and explore future initiatives across Africa. Japan’s state minister of finance, Minoru Kihara, is expected to lead his country's deliberations.

Japan is already in discussions with New Delhi to join India's forays into the expansion of Iran's Chabahar port and the adjoining special economic zone. India and Japan are also discussing working together to expand the strategically located Trincomalee port where India is building oil storage facilities. They may also be joining hands to develop the Dawei port along the Thai-Myanmar border. These are all part of the India-Japan 'Freedom Corridor'. In the face of China’s Maritime Silk Road, these attempts stand in contrast to China's reluctance to accept the Indo-Pacific discourse that propagates freedom of overflights and navigation in the South China Sea region.

Prime Minister Narendra Modi will address the gathering Tuesday while Finance Minister Arun Jaitely, who will represent India at the AfDB, will chair the meeting of its board of governors. Union ministers Prakash Javadekar and Piyush Goyal will also participate in the proceedings. This is all part of India's expanding engagement with Africa.
With total investments reaching $54 billion during 1999-2016—which constitutes 20 percent of India's total investments abroad—India today stands as one of the largest investors in Africa. India’s trade with Africa rose five fold from $7 billion in 2005-2006 to $56.7 billion in 2015-2016  making it the largest destination of India's exports.

This momentum was given a boost in the 2015 Third India-Africa Summit that was attended by over 40 leaders from Africa. Then Modi had announced a $10 billion export credit and a $600 million grant and $100 for the Africa-India Development Fund to support businesses. Since then, Africa and India have set a target—bilateral trade should reach $100 billion by 2018.
Also, credit must be divided equally among the African nations. India's expanding economic engagement with Africa remains both a cause and consequence for African economies showing impressive growth rates averaging over 5 per cent in the last decade. Six of the world's top ten fastest growing economies are in Africa.

These positive macroeconomic trends provide improved business and investment opportunities due to increased political stability in most African nations. It is in this backdrop that, starting from the year 2001 AfDB had begun expanding its global outreach by holding its first general meeting outside Africa. The meeting was held in Spain. This was followed by China hosting it in 2007 followed by Portugal in 2011. Next year AfDB will hold its meeting in South Korea’s Busan. All this implies great potential for India's economic engagement with Africa and this first general meeting in India can prove to be another watershed moment for India-Africa relations.

No doubt China's trade ($194 billion for 2016) and investment ($75 billion) with African nations are bigger and growing faster than India's. Yet there has also been a growing resentment towards China's tone and tenor. This has pushed the African nations to look for alternatives.
What sets India apart is its enduring historical and societal bonds with various African nations. India was part of Africa's freedom struggle.

It became a member of the African Development Fund (ADF) in 1982 and  the African Development Bank (AfDB) in 1983, as soon as they opened memberships for countries outside Africa. The primary mission of AfDB is to fight poverty by promoting investments in projects for economic and social development. This has not been China's agenda in Africa. Only 10 per cent of its investments is in the social sector. With over a million Chinese working across various projects in Africa, China's resource extraction has failed to generate employment or revival.

India's ‘Freedom Corridor’ may not be a real pushback to China's OBOR yet India can showcase its strengths by building collaborations in sectors like solar and renewable energy, food processing and agro-industries and co-financing of the feed Africa. India's International Solar Alliance has already received great response from African nations and can become the 'flagship'  project of the Indo-Japanese ‘Freedom Corridor!’

Swaran Singh

Professor, School of International Studies, JNU

Email: ssingh@jnu.ac.in

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