India Looking to South Africa to Anchor Its African Investments

Some Indians and Africans believe Africa is on the verge of becoming a world economic power, but changes are needed to ensure that the continent takes up its rightful place in the global economy.

From India’s perspective, South Africa is vital to its engagement with the continent.

Raman Dhawan, managing director of car manufacturer Tata Africa holdings, says economic policy should focus on job creation. “But the workers must be productive to compete with the rest of the world as well. The money is in manufacturing and services and Africa is not competitive.”

Dhawan was speaking at the “India, South Africa and Africa in a Changing Global Landscape” conference in Johannesburg. The South African Institute of International Affairs (SAIIA) hosted the conference on Jun. 9-10. SAIIA is a think tank attached to the University of the Witwatersrand in Johannesburg.

Dhawan says confidence also plays a big part in filling big shoes on the global stage. “So when you host a successful Soccer World Cup, why do you allow the world to forget about it one year later? Keep on celebrating and marketing the country’s capabilities,” the Tata executive said. “Being good is one thing; being seen is quite another.”

Eltie Links, a member of SAIIA’s national council, agrees Africa is on the brink of an economic take-off due to perceptions that the continent is changing, for the good. “Optimism around this (economic) growth is apparent. Africans are investing in other African countries and that shows that investors believe in their own futures. The fact is that Africans will remain crucial in their own future.”

Links says India can and must play a large part in lifting Africa out of the economic doldrums. “Both Africa and India share a common colonial history. That gives them a platform to build from. Now, however, with constant talks among African countries and India, there is a new narrative that can change the lives of the poor on the continent and in India.

“Over and above that there needs to be changes in the developed world as well to facilitate these changes in the third world,” he adds.

Virendra Gupta, the High Commissioner of India to South Africa, reiterates “the need for faster action from both the continent and India to work together to bring about positive changes in the lives of the poor.

“The relationship between India and Africa must be approached as part of the changing global context. Developing countries have a unique opportunity to contribute to various international organisations, like the United Nations and the International Monetary Fund.

“Developing countries have weathered the storm of the global economic crisis well, in some cases better that in the developed world, and this is being underlined by their growth figures. Africa’s voice is now being heard and the countries that make up the continent are becoming more assertive. They are becoming part of the discussions that affect their future,” Gupta said.

“It is becoming more difficult to make decisions that affect the third world without having its inputs in these decisions. Again, this is showing that all countries deserve attention.”

Gupta declares that India is looking at South Africa to anchor its involvement on the African continent.

A roadmap to economic engagement, grants and technical assistance is in place. India does not see aid as a priority. “We are more interested in capacity building and developing the human resources of South Africa,” Gupta contends. “India does not want to dictate policy, economic or political. It was colonised as well and it understands the dynamics involved.”

But Gupta also believes changes are needed: “Government will have to change economic policy to help more than just a few.”

Paul Baloyi, chief executive of the Development Bank of Southern Africa, agrees that time is running out to help poor people. Institutions in South Africa, but also on the rest of the continent, are under pressure to deliver.

“Statistics show that there is more stability on the African continent than in the past and people are more positive. The improvements are small, however, and poverty and the redistribution of wealth remain key issues on the continent.

“In South Africa, executives realise that time is running out to deliver services to previously disadvantaged people. There is a lot of planning taking place, but, because this is not known, people are getting more and more restless.

“What is not needed now is a change of government, as this will throw service delivery back to where it was years ago as the new government will start from scratch. What government needs is a long quiet time to implement its plans.” South Africa held local government elections in May that showed a growth in opposition party support.

Baloyi acknowledges that Africa’s natural resources are the rationale for most of the interest from outside the continent. He cautions that African states should, however, be careful to ensure that benefits accrue to both sides. “International relations are an opportunity for both sides; to gain resources on the one hand, but also to gain skills on the other.

“The size of Africa’s population is another opportunity. The question is, ‘how do you use this market?’ South Africa’s middle class is growing, which means its spending power is growing and that is driving economic development.”