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FEATURES/Boardroom | Aug 21, 2009 | 13768 views

The Siege of Africa

The newest frontier for global business. A fusion of tempting opportunity and formidable risk. A China-India battleground. Come, watch the potboiler called Africa.
The Siege of Africa
Image: Malay Karmakar

P

rejudice dies hard. In 1972, Manubhai Madhvani was arrested in Uganda for being of Indian origin and jailed in a dungeon nicknamed the “Singapore Block”. Dictator Idi Amin snatched all his wealth and expelled him from the country. To this day, the 79-year-old businessman counts himself lucky for not having been killed then.

It is events like this — and the all-too-familiar images of disease, poverty and squalor — that have shaped the stereotype of Africa in the minds of Indians. Somehow, we may have been a bit late to note when the continent began to change for the better. In fact, Madhvani returned to Uganda in 1985 and rebuilt his family business in sugar and hospitality to a $200 million empire. Uganda, and many other African countries, reformed their economies and opened up to foreign investment.

But before we responded to the new Africa, someone else did. In a well-planned and executed strategy, China has been thrusting itself in all spheres of economic activity in the continent. The Chinese “invasion” of Africa is veritably the biggest state-run investment in the last decade. They are everywhere. State-run Chinese firms are building bridges, roads, telecom networks, airports, and generally boosting the infrastructure all around. In return, they are getting access to natural resources. China is now Africa’s biggest trading partner, ahead of the US. More than a million Chinese workers are now based there. After the European colonists left Africa, the Chinese have been dubbed the “neo-colonists”.

But recently, a new picture is emerging in our image of Africa. And happily, its tone is Indian. Unlike China’s push driven by its government, the Indian march to Africa has been led by the private sector. After proving themselves in fields as varied as automobiles, telecom and education in recent years, Indian businesses are gradually upping the ante. Big ticket investments and acquisitions are emerging. In other words, Africa has become the new frontier for Indian companies to break into.

Steadily, the profile and the scale of Indian investments in Africa is going up. In early August, the Essar group bought a refinery in Mombasa, Kenya. Essar is no stranger there. Its $450 million investment in the country’s mobile telephony market is yielding results — Essar’s brand ‘Yu’ has 400,000 subscribers.
There’s considerable excitement around Bharti group’s on-going talks for a merger with MTN, Africa’s biggest telecom company, which could create the world’s third largest telecom company. NIIT has grown to be one of the continent’s biggest firms in information technology training, having taught 150,000 students across 55 centres.

The Tata group, the Mahindras and Ashok Leyland have been selling vehicles for more than five years now with increasing success. Indica cars are a common sight in Johannesburg. Sales have moved up from 5,000 to 20,000 a year. Consumer products company Marico is already in Egypt and South Africa through a carefully orchestrated strategy of buying out local hair care brands. This is just a snapshot of the 42-odd frontline firms from India that have answered the call to Africa.

GAME FOR TECH: NIIT's IT scholarship test in Nigeria attracted enough people to fill a football stadium
GAME FOR TECH: NIIT's IT scholarship test in Nigeria attracted enough people to fill a football stadium
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Why Africa
What have all these companies sensed in the form of the African opportunity? When asked why Africa, Raman Dhawan, managing director of Tata Africa Holdings, asks why not. “We are expecting Africa to grow substantially over the next two decades. We are here like any other international company. We are no different from the rest of the world. They are looking at growth here, so why shouldn’t we? If you can be a good international company, you will find growth in Africa.”

After decades of living on the fringes when the West dominated and Asia rose, the African continent is finally coming on its own. “Since the early 1990s, African countries went through serious structural reforms, improvement of economic management, incentives to develop the private sector, important changes in governance legislation in doing business,” says Jose Gijon, head of Africa and Middle East desk, OECD Development Centre.

This article appeared in the Forbes India magazine of 28 August, 2009
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Comments (2)
matt Aug 21, 2009
As AK said,there is still lack of integration by ethnic Indians, despite being in Africa and being citizens for centuries. Many concentrate entirely on business, and avoid politics and social integration. If they took the initiative and become more visible in society issues, then a lot of the myths about Indians keeping to themselves would not exist. But, at least the younger generation is more open and culturally integrated than their parents, definitely good for the future.
AK Aug 21, 2009
What is not covered is the negative attitude and resentment for Indians across the continent and in many cases the racism and the inability of Indians to integrate with Africans . So its not all so rosy.
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