East African nations have become the latest beneficiaries of the battle heating up between India and China for control of Africa’s economic landscape.

The region raked in a huge chunk of the $5 billion from New Delhi last week as a loans package to finance key infrastructure projects.

While India has lagged behind its Asian rival China in bagging deals and projects in Africa, the funding deal announced in Addis Ababa has awakened many observers to the fact that the former is harbouring a grand agenda for the continent.

Indian Prime Minister Manmohan Singh who announced the funding was on a six-day trip to Africa, attending the India-Africa summit in Addis Ababa Ethiopia as he sought to deepen economic ties with African nations.

With the support of their government, Indian firms are increasingly making more and strategic entries into East Africa and the Continent in general, targeting the expected windfall in telecoms, mineral extraction, engineering and consumer goods markets, a field Chinese firms have previously dominated.

“Its clear India like China has realised Africa is the next frontier for their growth. What we are seeing is a competition for new markets and resources between the two, ” said Kuria Muchiru, Senior Partner and Country Leader for Kenya at audit firm PricewaterhouseCoopers (PwC).

“There is a lot of investor interest in Africa by Indian firms, ”  said Mr Muchiru.

Trade figures have been telling of the strengthening ties between India and Africa, a co-operation 16 African Heads of State agreed to support in the coming years, as they turned to South-to South relations to grow their economies. Statistics show total bilateral trade between India and African countries stood at $46 billion in 2010, up from the $3 billion in 2000 and it is estimated to clock $70 billion by 2015.

Comparatively China’s bilateral trade with Africa stood at about $200 billion back in 2009.

The new funding will be disbursed as credit to countries, in addition to the $5.4 billion that India offered Africa at the first India-Africa summit in New Delhi in 2008, said Singh.

Among the key projects to have received a boost is the proposed  Ethiopia-Djibouti railway to be contracted at a cost of $300 million. The African Union mission in Somalia would also benefit from the financing with a pledge of $2 million while African airlines will get increased access to Indian cities in what Singh said was a unique partnership between the two regions. Singh said India would offer an additional $700 million for new institutions and training programmes.

India is not hiding its intentions. “The people of Africa and India stand at the threshold of a historic opportunity. There is a new economic growth story emerging from Africa. Africa possesses all the prerequisites to become a major growth pole of the world,” Singh told African Union leaders in Ethiopia.

“The India-Africa partnership is unique and owes its origins to history and our common struggle against colonialism, apartheid, poverty, disease, illiteracy and hunger. But African states do not only expect from India, but we believe we are able to give back. India is able to count on the support of Africa,” said Singh.

Leading Indian technology companies including Bharti Airtel, Mahindra Satyam, Infosys and Tata are among the firms ramping up efforts in Africa to increase their presence in the region. Bharti has presence in 15 African countries, after it acquired the African assets of Kuwait’s Zain mid last year at nearly $10 billion. This has delivered rivalry to the doorsteps of European mobile telephone giants, Vodafone and Orange which have previously dominated the market.

African countries have also been reaching out to Indian investors as they seek to boost their economies. In October last year, Rwanda sent a 25-member business delegation to India scouting for partners and investors to give a boost to the soft and physical infrastructure sectors back home.

Rwanda’s interest

Several Indian firms have shown interest in investing in Kigali promising to start big projects worth millions of dollars in information technology, mining, agro-processing, education, pharmaceuticals and energy. Rwanda Development Board (RDB), a government agency created to facilitate investments says at least 26 Indian companies––including Essar Group, Tata Group and Karox Company––had shown interest towards the end of last year.

“The whole world is looking at India, China and Brazil. Even American investors want to go to India,” RDB chief executive John Gara said.
In November, Chinese Vice President Xi Jinping visited South Africa, Angola and Botswana signing deals worth millions of dollars to build a power plant, solar panel factory and to increase South African exports to China.

Chinese state-owned firms led by China National Offshore Company (CNOOC) have of late been major players in the oil exploration business in EAC region. In Kenya for example two Indian-based companies — Gleen Investment and Sanghi Cement— were given a green light to construct cement plants in Ortum and Sebit area in Pokot respectively. Sanghi cement of India which manages one of the world’s largest single stream cement plants––producing over 20 million tonnes annually––is to invest over $80 million in its cement plant in Kenya, giving it a footprint it plans to use to supply the region market such as in South Sudan.

Gleen Investment, a unit of conglomerate Mehta Group plans to put up a 1.2 million-metric tonne cement plant in West Pokot, to cost about $200 million in a programme that will be scaled up depending on the available limestone deposits. Indian Reliance Group associated with the Ambani brothers together with Bharti Airtel and the Tata Group had bid for a 51 per cent stake in monopoly Telkom Kenya but lost out to France Telecom’s Orange. Indian second largest mobile phone service provider Essar Group has already made one foray in Africa with the launch of the Yu brand in Kenya in 2008. Essar Energy which owns a 50 per cent stake in Kenya’s oil refinery in Mombasa, having invested $600 million is said to be looking for opportunities in Uganda following recent discovery of oil reserves in the Lake Albertine rift basin.

India - Tanzania

Indian companies and businesses in Tanzania are valued at about US$1.3 billion, creating about 32,000 jobs through direct investments and joint venture projects. In total, the India-Tanzania bilateral trade stood at US$1.1 billion up to the end of 2010.

Early this year, Tanzanian Industry, Trade and Marketing minister Cyril Chami said at least seven Indian companies are expected to build factories at a cost of $250 million and create over 6,000 jobs.

Mr Singh held discussions with President Kikwete on various protocols aimed at strengthening India-Tanzania co-operation in various economic and social sector projects. Last year, Tanzania’s exports value to India stood at  $132.5 million while imports hit $596.7 million.