Disclaimer: This interview is the product of Dr. Modi and Dr. Venkatachalam’s work and the IUKDPF does not necessarily endorse any of the views expressed in this interview.
Dr. Renu Modi (Professor and Director, Centre for African Studies, University of Mumbai) and Dr. Meera Venkatachalam (Post-Doctoral Researcher, Centre for African Studies, University of Mumbai); in conversation with Ambassador Gurjit Singh, Indian Ambassador to Ethiopia and Djibouti (2005-2009). This interview was conducted in collaboration with CAS, University of Mumbai, and are a part of Dr. Modi and Dr. Venkatachalam’s ongoing project on South-South Cooperation and SEWA.
Mr. Singh has served as Ambassador to the Association of Southeast Asian Nations (ASEAN) and the African Union (AU). He is the Chair of the CII Task Force on Trilateral Cooperation in Africa and was the Deputy Permanent Representative of India to UNEP and UN-HABITAT. Mr. Gurjit Singh has published several books and articles on issues pertaining to international trade, development and investment promotion in India and abroad.
“India does not believe that Africa’s best resources lie under its ground, India believes that Africa’s best resources live in it.”Ambassador Gurjit Singh
RM: India’s development compact with Africa has changed from the language of South- South Cooperation, to development cooperation, to economic diplomacy. Can you run us through these shifts? Also, tell us about your India Africa Forum Summit (IAFS) experience?
GS: I don’t think when we planned the India Africa Forum Summit (IAFS) we really had South South Cooperation (SSC) at the top of our minds. In hindsight, if you read the documents of all three summits, you will find that the word South-South cooperation keeps coming up. So, there is an element of SSC involved but I don’t think it was a determinant. When you come to the crux of India’s development compact with Africa, from the very beginning, it has been human resource development (HRD) and capacity building through the Indian Technical and Economic Cooperation (ITEC) programmes. When the ITEC programme was created, it had a synergy with the Buenos Aires agreement on SSC but I seriously doubt that the people who created the ITEC programme had even read those documents. These synergies evolved later.
I have found this to be the case in my own experience as well. I was not formally talked about the principles of SSC which we fulfilled. We simply did what we were good at and what Africa said it wanted, and it invariably complied with the principles of SSC; I think it was great.
The Lines of Credit (LoCs), for instance, were not typical of SSC, but they worked. Thus, the Indian development compact with Africa essentially consists mainly of capacity building and HRD. Secondly, it consists of grants which were originally very small, but thanks to the IAFS, they have significantly increased. Finally, there are the LoCs, which started in the current fashion around 2003. I think all three pillars worked well for India, provided we could implement them.
Initially, the crux of the cooperation came from doing something, and later came down to the speed of implementation. In early years, the time taken for implementation did not matter much. However, today, India is constantly compared with the other countries operating in Africa, on grounds of the speed of decision making, approval, implementation and finally the handing over of the project. Furthermore, what you do after the project is completed also matters – do you hold onto it or you leave. Thus, I think the nature of the development compact has altered depending on: (1) India’s rising stature and her ability to do much more; (2) on the demands from Africa, influenced by the variety and expansion of development partners, and; (3) the nurturing of the projects which we ultimately undertake and the benefits they bring to the countries that they were undertaken in and to India.
MV: India’s development cooperation with Africa is shifting – from a state sponsored model of cooperation, to one that is driven by the private sector. What would you say is the role of the State in this shift?
GS: Actually, I don’t think it has shifted to the private sector. I wish it did. Many of our ideas come from our interactions with civil society organisations (CSOs), academicians, private sector and technical organisations etc. However, I don’t remember that we actually fixated ourselves on promoting the private sector in our HRD and capacity building initiatives, which were largely scholarships and ITEC programmes. The private sector was not involved in these efforts. Even today, the large numbers of foreign students that come to India go to private universities, which are not funded by government of India (GoI) scholarships, because the ITEC program does not extend to private institutions. The grants are also always implemented by the public sector units (PSUs), and not by the private sector bodies. With respect to the Lines of Credit (LoCs), they did involve the private sector, which was responsible for the development and implementation of the projects in Africa.
Thus, the private sector did have a big role to play when it comes to the LoCs, because many of them were entrepreneurial and ventured into several countries where India was not known, particularly in central and French-speaking West Africa. The fact that India’s LoCs are operational in 41 African countries is actually a tribute to India’s private sector. In many countries like the Central African Republic or Cabo Verde, there were no Indian government representatives which promoted such economic cooperation. In fact, in most of these countries, the ITEC scholarships and other similar offerings were rarely picked up. But the fact that the Indian LoCs were utilised in these countries was mainly due to the efforts of the Indian private sector. The funding was not from the private sector but from the EXIM bank of India, which is funded by the GoI. Through this mechanism, the private sector got an entry into large parts of Africa which were earlier restricted and enabled them to bid for internationally funded projects or to set up their own projects.
MV: The EXIM Bank of India is now talking about the Buyers’ Credit scheme. Could you explain this to us?
GS: The LoCs are concessional loans backed by sovereign guarantees as well as a GoI guarantee to the EXIM Bank. This means that EXIM Bank has a double guarantee and they were paid the interest equalization by the Ministry of Finance from the GoI. It was thus a win-win solution. If there was a good Ambassador in Africa who picked up a large project, or the Ministry of External Affairs (MEA) developed a large project, the EXIM Bank was medium of implementation. With regard to the Buyers’ Credit, I could take some credit or discredit for it. When I was Additional Secretary, Africa, I would often encourage the private sector that the government has opened many doors for you in Africa, and you should do something on your own rather than rely only on GoI money. I remember when they announced the scheme, I had met the then Managing Director (CMD) of EXIM Bank who stated that we owe a debt of gratitude to you for always provoking us into doing something. However, EXIM bank is a sarkari outfit and not a risk-taking bank, so they provide the option of Buyers’ Credit, but it is after obtaining sovereign guarantees from the borrowing government or its agency. So, the GoI did not guarantee this but they were still looking for a sovereign guarantee, which charges a commercial rate of interest instead of a concessional rate of interest, along with certain project fee- a compulsory charge. For instance, a Heavily Indebted Poor Country (HIPC) in Africa would get a LoC at 1.75% for 30 years, whereas under Buyers’ Credit it was for 8 to 10 years at about 6%, with a sovereign guarantee from the borrowing country.
Thus, initially, it did not seem that the scheme would succeed, but today it is promoted and more countries are seeking it. I think we really need to look into the reasons behind this and understand why a country would prefer a 6% instrument over a 1.75% instrument and why it would prefer a 10-year term against a 30-year term. Despite the higher RoI, the Buyers’ Credit scheme is preferred. In fact, on the EXIM bank website, you can find the details of all LoCs, but there is little to no information about the Buyers’ Credit, which shows that despite the popularity of the scheme, it is not seen to be reflected in the public domain.
RM: What do you think are the differences in the FDI-led and the trade-led strategies in relation to Africa as far as India is concerned?
GS: I think the two are not the same thing because trade is something that has been there for a very long time. FDI came along later and went into countries where there was a diaspora or where there were direct trading facilities – like in East Africa, Ghana or Nigeria. And then there were some trading relationships which were there because India was looking for a particular commodity, for e.g., cashew nuts. However, in my studies, I could not really see a trade expansion and FDI link. I can see that when the LoCs started flourishing, the FDI also often followed. Many people felt that the LoCs showed the GoIs intent and therefore they could safely follow them. My studies have shown that the rise of India investments in Ethiopia, Mozambique and Tanzania, followed this model of LoCs that lead to more FDI. On the other hand, Kenya, Ghana, Nigeria, South Africa, Morocco, and Mauritius are some examples where FDI went in by itself. The only real link created between trade and FDIs was when India unilaterally announced the Duty-Free Tariff Preference (DFTP) scheme in 2008. It provided LDCs with duty-free access to India. The DFTP scheme was valid in 33 countries, out of which about 20 have thus far started utilizing it.
Theoretically, these should encourage Indians investors to invest in these countries and produce commodities which were without a quota or duty, to come back to India. But this complementarity was not immense. I can say that more Indians invested in Africa to export commodities of floriculture and horticulture to Europe rather than doing something similar to India. Now that the African Continental Free Trade Area (AfCFTA) has been established, the largest interest of Indian entrepreneurs is to gain from the intra-regional trade of Africa.
The pharmaceutical FDIs from India have largely gone into countries which were large – South Africa, Ethiopia, Nigeria, Morocco, Kenya etc. They hope that their market size will improve with regional integration, but in the case of trade, it is not one simple formula which works. For instance, the DFTP seemed like a good idea initially as it covered 94% lines. Among the tariff lines, many of the items of interest to Africa for export were not covered. Even now, there is about 96-97% coverage. Exports are not open unless there is greater complementarity and a match between what is produced and the demand for the same product. These traditional trade access issues don’t really help FDI in the same way with regard to the AfCFTA. We still have to test whether it will create a regional market for the kinds of things Indians are interested in. The jury is out on whether the trade-led FDI is really supported by any bilateral or multilateral trading arrangement. The only thing I can say is that through the European Union, access to horticulture and floriculture related markets have improved in Africa. This has certainly incentivized many Indians to invest on the continent. For example, businesses invested in flowers in Zimbabwe, but exited because it was cut out of the preferential access because of its politics. The shift came to Kenya but Kenya became a Middle-Income Country (MIC) so they did not get the benefits. The investors then shifted to Ethiopia and Uganda to some extent, from where they got about 12% duty free access into Europe. Thus, when you have substantial duty-free access, it does incentivize FDIs but it also becomes the duty of the state receiving the FDI to nurture it.
In most cases, the nurturing has been the problem. India has an inadequate number of Bilateral Investment Promotion and Protection (BIPP) agreements or double taxation avoidance agreements with African countries. They have never been the target of these efforts because they have never seen FDI as a great source of income. Outgoing FDI from India is not a government objective and neither is it part of our development compact. But when you go to African countries and study them, they always talk highly of Indian investments in their country. Thus, there seems to be a dichotomy in the way India and Africa view each other as investment partners.
RM: Do we need to promote it through the Bilateral Investment Promotion Agreement and Double Tax Avoidance Agreement because that’s what Africa wants?
GS: I think that’s what the Indian investor wants. For instance, in Ethiopia, we had a large investment portfolio. When I was the Ambassador in 2007, we signed a Bilateral Investment Promotion Agreement (BIPA), but till today that agreement has never been enforced. When the Ethiopian bureaucracy took the agreement to their Parliament, they put the wrong date on it and nobody went back to correct it. Hence, the agreement has not been implemented till date. Since that time, new investments to Ethiopia from India have not slowed.
RM: Are the countries which invested earlier in Africa covered by any agreement or they went on their own?
GS: They went on their own. Normally, a BIPA needs to be signed when there is a substantial amount of investment coming in, which makes it worth the while for the bureaucracies to pay attention. As an Ambassador, I had to fight very hard to get this done because incoming FDI is the priority of the GoI (particularly for the Ministry of Finance) whereas outgoing FDI and facilitating it is not a priority. For example, if we are investing in Ethiopia, we need to protect our people. We have had an agreement with Mauritius and South Africa for a long time because there was incoming investment, so there are differences in approach. While the MEA has developed an extroverted approach towards Africa and other developing countries, a majority of the Indian government remains introverted – focusing more on what we can get rather than what we can give.
RM: And how should we go about correcting these issues if we realise them now?
GS: It is for the industry bodies to learn about this, but even an industry body follows the government line. Even when FDI is extended, not many industry bodies spoke up for Indian investors overseas. Ultimately, it is the India Business Forum (IBF) type of institutions which embassies in Africa set up in countries to articulate these demands. Indian investors overseas––supposing it is a well-known company like Tata or Jindal in Africa––have a stake both in Africa and in India – that they get heard. However, there are Indian investors in Senegal and Ethiopia and elsewhere who are not among these big names. They are small businessmen who made it big in Africa. Their voices also need to be articulated by the embassies.
MV: In the Covid scenario, what do you think are the opportunities for India’s education and capacity building in Africa, especially with reference to the telemedicine project that you were witness to in Ethiopia when it began?
GS: The Pan Africa e-network project (PAENP) was one of the most significant projects and a total game changer in building new perceptions of India in Africa. I have seen that project from when it was explained to the then African Union (AU) Chairperson, Ethiopian Prime Minister, University Presidents, and the education minister. It was an eye-opener and frankly quite unbelievable for most people. People were thrilled to see that we could use digital technology to bring about capacity building without having to send across people to both sides. It also came as a grant and did not involve countries spending their own money. The countries that used it well and understood its significance greatly benefited from it.
In six years, numerous people were trained in Masters Programmes at various universities. The programme helped expand university networks and these fresh graduates went on to start other departments in several others. In Rwanda, Burundi and other such countries, the project became a part of their digital revolution. On the other hand, in countries like Kenya and South Africa, where progress had already been achieved, the project did not do much. It was active in 47 countries, and I believe it was successful in about half of them.
The PAENP operated from 2009 to 2019, after which a new model was adopted. This new model would be entirely digital and function through Internet-based technology. This was a good idea because from 2005, when we started implementing the PAENP, there was barely any internet penetration in Africa. There was no optical fibre connectivity. In fact, I remember laying the first optical fibre from the Djibouti coast into Addis Ababa, which then started the optical backbone in Ethiopia. Today the situation is very different and has changed quite rapidly. We can now have an entirely Internet-based system, but I am still unsure about the speed at which the new e-ArogyaBharti and E-VidyaBharti (e-VBAB) projects are running. The PAENP was an entirely MEA exercise, but now under the e-VBAB, there is a wider government involvement – of the Ministry of Health, the Ministry of Education, as well as other agencies. We are also seeking better partnership models as opposed to the outright grants to the African governments that we undertook earlier. I am aware that pilots have started and various other activities are also happening under this project. In the Covid situation, the online ideas upon which the e-VBAB project is built are the ideal solutions.
I recently pitched the idea of Covid related experience sharing with African countries using the e-VBAB to the MEA. I must say that they were receptive, and they did it through the ITEC programme – now called the e-ITEC initiative. Hence, a large number of ITEC programmes today are done electronically through the internet, rather than bringing the people here. It is found that the ITEC budget could cover a far larger number of people since we no longer pay for their travel/stay in India. The students gather at one point in their home country, which is much cheaper. Thus, I think the e-ITEC programme has been completely transformed and is doing quite well.
RM: Could you please tell us about some of the highpoints of your career as a diplomat in Africa? What experiences do you remember and what learnings can you share from your experiences as part of the India Africa Forum Summits (IAFS)?
GS: I have lived in two African countries – Kenya and Ethiopia. I distinctly remember that the link of our educational institutions to common people in these countries was immense. The GoI cannot take sole credit for this because it was a largely private effort. I realised that Africans look to India for education a lot. Thus, HRD should be our main effort when it comes to India’s Africa policy. In fact, when I was the Ambassador, I adopted the slogan that ‘India does not believe that Africa’s best resources lie under its ground, India believes that Africa’s best resources live in it’. Of course, this was done partly to counteract China. I was involved with IAFS I and II, both of which had a very high degree of HRD and capacity building with extremely ambitious programmes that were undertaken. Between the two summits, about US$ 1.5 billion was placed in grants simply to promote HRD and capacity building, which I think was a major effort.
Secondly, I remember this very distinctly, when I would stop at a red light in Ethiopia and a person would come knocking on my car window, he would often greet me by saying ‘Salaam Babuji’. This is something they picked up from their teachers. It was an immense learning for me about the respect that Indian teachers command, which again contributed to our HRD effort on the continent. Finally, I had the good fortune of implementing Dr. Kalam’s visionary program, the PAENP. I learned a lot from it, and so did the African interlocutors. It was a great achievement in my opinion and once again its entire focus was on capacity building and HRD. Those aspects of it were the most successful.
My biggest learning in my time in Africa was that the people of Africa have a great desire to learn and India is one of the places they wish to come to gain knowledge. They come not just through scholarships and grants, but a majority of them come with their own funds. One survey I read showed that there are about 25,000 African students in India, and the total scholarships India gives to African are about 1000 a year. This clearly shows that most students are privately funded. There are also many governments which create programmes to bring people in for higher education or PhD studies to India, which they fund themselves.
Another big takeaway for me was that India should never try to be like China. India is nothing like China – we do not have the same agility, quickness of decision making, deep pockets, and or way of doing business, which they have. Between the first and second IAFS, India did a lot in Africa. In fact, Africans so often tell me that China certainly does more, but what India does is much better.
I recall this one program that I started, which was called ‘Training for young parliamentarians of Africa’. We invited first-term MPs from select African countries for experience sharing visits. At one of the earlier programmes, some of these young MPs would tell me that China builds Africa’s Parliament buildings, but India shapes our minds. I think that approach of not trying to be China and doing what we are best at, is far better. Africans really respect India for it being a democratic country which is pluralistic, quasi-federal, and economically progressive.