India Increases Financing to Africa in an Effort to Compete With China

As India attempts to catch up with China in terms of increasing its influence on the resource-rich continent, Africa has surpassed Asia as the second-largest beneficiary of credit from that nation.

According to Harsha Bangari, managing director of India’s Export Import Bank, 42 African countries received $32 billion, or 38%, of all credit given out by India during the past ten years, only slightly less than their neighbours.

According to Bangari, the bank is a tool for India’s “economic diplomacy,” and during the past ten years, the South Asian country has opened up 195 project-based lines of credit worth roughly $12 billion across Africa, which is three times as many as it did in its own region.

According to her, “Africa has made good use of credit lines,” which were provided for projects involving irrigation, infrastructure, agriculture, and health care. She also noted that India’s demand is steadily rising.

Despite recent efforts by India to engage with nations on the second-largest continent in the globe, the country has lagged behind its larger and wealthier neighbour in making inroads in Africa. According to data from Boston University’s Global Development Policy Centre, China pledged $134.6 billion to African countries in the ten years leading up to 2020, despite the fact that its loans to Africa have decreased since 2016. That is roughly 11 times what India has offered.

China has also taken the initiative to access the mineral resources of Africa. The country of North Asia is using new lithium supply hubs to get around a competitive market for a crucial metal for electric vehicles.

The nation also purchases the most bauxite from Guinea, which has one of the largest sources of the alumina-making mineral in the world and is working to develop the largest undeveloped high-grade iron ore deposit in the West African country.

Requests for comment from the Beijing Foreign Ministry were not answered.

However, the administration of Prime Minister Narendra Modi has pushed for deeper engagement with Africa, strengthening both diplomatic and economic ties. New Delhi sees an opportunity to expand farther into the continent as it struggles with the pandemic’s economic effects and Russia’s conflict in Ukraine.

In the past nine years, 18 of the 25 new Indian embassies or consulates have been located in Africa. At the Voice of Global South event in February, India hosted 48 nations from Africa. In order to raise awareness of the debt difficulties in emerging economies, Modi has also been promoting India as a spokesperson for the Global South and leveraging forums like its G-20 chairmanship.

In a speech on June 28, India’s Foreign Minister Subrahmanyam Jaishankar stated, “We are trying to think 25 years from now.” “And we should consider where we might be in 2047 and what we should be doing right away to get ready for it.”

China receives more funding than India, but New Delhi allows governments to pick what they need without imposing the kind of vanity projects Beijing is frequently criticised for. According to Bangari, “If you look at the projects that India has backed, you will see that they have a big positive impact on the economy.”