India and China are vying to influence Africa’s economic trajectory, each employing distinct strategies. China’s approach emphasizes large-scale infrastructure projects funded through loans, while India focuses on market-driven investments and partnerships. This rivalry is particularly evident in East Africa, where both nations are advancing their economic models.
China has invested heavily in African infrastructure, with state-owned banks financing $75 billion in loans between 2000 and 2021. These projects, primarily in energy and transportation, have elevated Africa’s role in global value chains but have also led to significant debt burdens for African nations. For instance, Kenya’s external debt to China accounts for 64% of its liabilities, raising concerns about dependency and unsustainable financial practices.
In contrast, India’s strategy centers on fostering long-term economic partnerships. Indian investments prioritize sectors like healthcare, IT infrastructure, and manufacturing, which facilitate skills transfer and middle-class growth. Indian firms have also acquired local businesses and collaborated with African partners to expand their footprint. For example, Tata Motors and Mahindra & Mahindra are establishing assembly plants in Tanzania, while Indian pharmaceutical companies provide affordable generic drugs to African markets.
India’s approach aligns with its broader foreign policy goals, emphasizing open markets and sustainable development. The India-Middle East-Europe Economic Corridor (IMEC) exemplifies this vision, promoting connectivity and economic integration. Meanwhile, China’s Belt and Road Initiative (BRI) faces criticism for its opaque contracts and limited local benefits.
As competition intensifies, India’s market-oriented model appears more sustainable, fostering deeper ties with African economies. Geography also favors India, as East Africa’s proximity enhances New Delhi’s strategic interests in the Indian Ocean region.
— new from GIS Reports