Abstract
In Africa, the dawn of political independence, which many countries experienced in the late 1950s and the early 1960s, ushered in political freedom but not economic prosperity. It was for this reason that the onset of the third wave of democratisation, which culminated into the end of the Cold War in 1989, came to be hailed by the African masses as a second form of liberation. The Africans hoped that democracy, once consolidated, would be the basis for economic development on their continent. This article observes, nonetheless, that democracy in many African countries has not proceeded to the expected phase of democratic consolidation due to several challenges that the article outlines. The article explains further that despite the uninspiring picture of political instability on the continent, Africa is actually home to at least six of the fastest growing economies in the world. The article, thus, suggests that India should not hesitate, but seek to increase its investment portfolio in Africa, since the continent’s unstable political environment is not at all inimical to foreign direct investment.
Introduction
At the tip of the twentieth century, democracy, as a form of human government, ascended to hegemonic status. That development followed the dismantling of socialism in Central Europe, Eastern Europe and beyond. To use the now famous words of one commentator, democracy then emerged as ‘the last man standing’, as it appeared to conquer ‘rival ideologies like hereditary monarchy, fascism and communism’ (Fukuyama, 2006, p. viii). Indeed, from Alaska to Australia, as well as from South Africa to Siberia, democracy came to be regarded as the only game left in town (Schedler, 1998; Shin, 2011). For good or for evil, the term democracy actually began to pop out of people’s mouths almost spontaneously, as it freely circulated worldwide like a debased currency in the marketplace (Schmitter & Karl, 1991).
The activities that constituted the fall of socialism and the globalisation of democracy now fall under the rubric of what scholars have come to refer to as ‘the third wave of democratisation’ (Huntington, 1993, p. 3). In Africa, the ‘third wave of democratisation’ came to be hailed as a ‘second (form of) liberation’ (Gifford, 1995, p. 1). That was because it provided a rare window of opportunity for the native people to demand political reforms from their leaders.
In the run-up to the expiry of colonialism in Africa in the late 1950s, Ghana’s nationalist leader, Osagyefo Kwame Nkrumah, used Biblical jargon to encourage his fellow Africans: ‘Seek ye first the political kingdom’, he would say, and added, ‘everything else will be added unto you’ (Nkrumah, 1957, p. 163). By that, Nkrumah actually meant that if the people of Africa gained political independence from their colonial masters, they would, thereafter, become managers of their national economies and, accordingly, economic benefits would accrue to them. Nonetheless, Nkrumah’s economic prophesy never came to be fulfilled in the majority of African countries. Hunger, poverty, disease, corruption, illiteracy, unemployment and human rights abuses literally gained a strong foothold in the incubator nations, as Africa’s newly independent nations were called. Ake (1992, p. 2) vividly depicted Africa’s malaise when he wrote:
The democracy movement gathered momentum as commodities disappeared from grocery stores in Lusaka and Dar-es-Salam, as unemployment and inflation got out of control in Kinshasa and Lagos, as a bankrupt government failed to pay wages in Cotonou, as vanishing legitimacy of incompetent and corrupt managers of state power drove them to political repression in Nairobi, as poverty intensified everywhere defeating all possibilities of self-realization, threatening even mere physical existence.
Thus, Nwabueze (1993, p. 2) could not have been wrong when he observed that the democracy movement in Africa ‘(was), among other things, an expression of the will to survive’. Ihonvbere (1996, p. 2) was even blunter when he asserted that the democracy movement in Africa ‘…was largely a response to frustrations with authoritarian rule and the suffocation of civil society…’.
The African people, thus, wasted no time in seizing the moment and striking while the iron was hot. They began to ask political questions they never dared to ask not too long before; they began to make concerted demands for a swift shift to democracy, social justice and respect for human rights generally (Ihonvbere, 1996). The pace of political change that ensued was breath-taking. ‘It (actually) surpassed any predictions and expectations’ (Africa News, 6 January 1992), as one country after another jumped on the bandwagon and embarked on democratic experimentation.
Interestingly, ‘the Western powers that had earlier supported (African) dictators and brutal governments —such as those in Zaire (now Congo, DR), Equatorial Guinea, Kenya, Nigeria, the Sudan, and Somalia—(also came) to make new demands on their former allies’ (Ihonvbere, 1996, p. 3). They came to demand political reform, democratisation and good governance as preconditions for continued financial support. Thus, following internal and external pressure on the leaders, democratic transitions took place in many African countries. Authoritarianism, one-party rule, military rule and socialism were substituted with democratic experimentation (Diamond, 1997). Thereafter, changes of regime through multiparty elections took place in several countries, including ‘Benin, Cape Verde, the Central African Republic, Ghana, Guinea-Bissau, Lesotho, Madagascar, Malawi, Mali, Sao Tome e Principe, Sierra Leone, South Africa and Zambia’ (Haynes, 2001, p. 134).
Nonetheless, not all the political transitions to democratic experimentation that recently took place in Africa endured to culminate into democratic consolidation 1 as anticipated. As a matter of fact, several of the newly inaugurated democracies came to conform to the infamous idiom of ‘one step forward, two steps backwards’. Some countries, such as Burundi, Liberia, Rwanda, Somalia and Sudan, relapsed into renewed civil conflict. Other countries, such as Cote d’Ivoire, Niger and Congo Brazzaville, reverted to military rule. And in Nigeria, Togo and Congo DR, the incumbent governments stayed put and did not allow for meaningful political change to take place, rendering their political transitions almost meaningless. It was in that milieu that Ihonvbere (1996, p. 1) observed that Africa had made yet ‘another false start’ to democratic transition.
Democratic Transition without Democratic Consolidation
‘Another false start’ to democratic transition in Africa? Was that by default or by design? More specifically, why have several of Africa’s recent transitions undergone still-birth and have fallen short of democratic consolidation? And what, exactly, is meant by the term ‘democratic consolidation’? How can we possibly recognise a ‘consolidated democracy’ if we were to see one? These are, indeed, cardinal questions to ask, especially because Africa is experimenting with democratisation for a second time now, having gone through the same process following the successful termination of colonialism in the late 1950s and the early 1960s (Ng’oma, 2013).
What Democratic Consolidation Entails
In the proto-science of ‘consolidology’—which is the study of democratic consolidation (Haynes, 2001, p. 6)—it is assumed that any reference to democratic consolidation is made on the premise that a democratic regime does exist in the first place. Proceeding from this premise, Schedler (1998, p. 91) is of the view that democratic consolidation can be taken to refer to ‘attempts made to secure emerging democracies, to extend their life expectancy beyond the short-term, and to make them immune to the threat of authoritarian regression, by building dams against potential and actual reverse waves’.
Implied in Schedler’s definition of democratic consolidation is the assumption that democracy, once inaugurated, does not and cannot proceed naturally to consolidation. Rather, democratic consolidation must be engendered through deliberate efforts made by the people and their leaders to protect democracy, and to nurture it until it firmly becomes rooted and eventually matures to the point where it is able to withstand whatever shocks may come about (Moore, 1966).
In a consolidated democracy, democratic procedures and practices are worked out on the basis of consensus, and put in place to guide and govern the behaviour, not of some but of all the citizens in the land (Gill, 2000). To this end, institutions are created to serve as the overseers, implementers and defenders of such democratic procedures. For example, the manner in which national elections are (to be) conducted is not left in the hands of one or more individuals or a political party. Rather, an independent electoral body is created and tasked with election administration and management. In short, the rule of men is, in a mature and stable democracy, replaced by the rule of law through institutions.
Challenges of Democratic Consolidation in Africa
Political theory is fraught with propositions of why democracy appears to always hit barren ground in such places as Africa (see, for example, Morgan, 2001). To begin with, long before African territories even became nations, Jean Jacques Rousseau (1712–1778), a Swiss-French philosopher, relying on the ideas of Montesquieu (1689–1755), a French lawyer and political philosopher, held the view that democracy was not suitable for countries which did not value ‘liberty’ (Rousseau, in Morgan, 2001, p. 803). Rousseau included African territories on his list of countries that, in his view, did not value liberty and, therefore, could not sustain democracy.
Almost a hundred years later, in 1859, John Stuart Mill (1806–1873), a British philosopher, came to suggest that representative government, a form of democracy, was not appropriate for people in what he called ‘backward societies’ (Mill, in Morgan, 2001, p. 881). Such people, in his view, lacked maturity of faculties. Mill included African territories on his list of ‘backward societies’, and recommended despotism as the appropriate form of government for them.
Following this line of thought, Lord James Bryce (1838–1922), a former British statesman, writing in 1921, also propagated the view that democracy and free government were not suitable for and should not even be embarked upon by ‘backward people’. Like Mill, Bryce included the natives of Africa among those he referred to as ‘backward people’. He also recommended authoritarianism as the appropriate form of government for such people.
The foregoing propositions received elaboration in the work of Seymour Martin Lipset. He came to contend that democracy, once inaugurated, required preconditions, such as a certain level of economic development, if it is to survive and become consolidated (Lipset, 1959). In Lipset’s view, democracy could not survive and become consolidated in societies like those in Africa where the said preconditions were non-existent.
However, Africa not only lacks the so-called ‘preconditions for democracy’; the continent is also fraught with structural impediments which make democracy an unlikely outcome of political change. Among these impediments are: the big man syndrome; the lack of good and democratic constitutions; the absence of suitable legal frameworks for electoral processes; the existence of electoral management bodies that are inefficient and partial; inappropriate electoral systems; the absence of alternative dispute resolution mechanisms (ADRMs); a political culture not supportive of democracy; the absence of free and independent media; a weak and fragmented civil society; and finally, a judiciary that is not independent (Bratton & van de Walle, 1997; Haynes, 2001).
First, many African countries have been characterised, for prolonged periods of time, by the ‘big man syndrome’, also known as mannism. As demonstrated by the cases of Malawi under Ngwazi Hastings Kamuzu Banda, Congo DR (formerly Zaire) under Seseseko Mobutu and Zambia under Kenneth David Kaunda, the ‘big men’ are the Founding Fathers of these nations. They ruled them with an iron hand and in very personalised ways for prolonged periods of time. Banda was the President of Malawi for 28 years (1966–1994); Mobutu was the President of Zaire for almost 32 years (1965–1997); and Kaunda was Zambia’s strongman for an unbroken record of 27 years (1964–1991). Banda, in particular, attempted to make himself life President of Malawi. He was actually Malawi and Malawi was Banda. Any thought by anyone to challenge his presidency was considered taboo. The Malawi News, dated 20 December 1964, confirmed this observation when it reported Banda’s sentiments that:
Opposition groups are unnecessary in countries (like Malawi) whose primary goals are nation-building and economic development. There is no opposition in Heaven. God himself does not want opposition; that is why he chased away Satan. Why should (President) Kamuzu Banda have opposition (in Malawi)?
It is such personalistic rule that denied African countries an opportunity to create independent and efficient institutions that characterise governance systems in mature democracies, such as the United States (US). Thus, Bratton and van de Walle (1997, p. 278) were not wrong when they asserted that attempting to build stable and well-functioning democracies in countries with no history of political competition is likely to result in democratic experiments that are ‘fragile, possibly transitory and are constantly threatened by reversal’.
Second, the ‘lack of good and democratic constitutions’ in many African countries has proved to be a serious source of conflict and, therefore, an impediment to democratic consolidation. As the case of Zambia has demonstrated, the country has had five constitution reviews since its independence in 1964. Nonetheless, the constitution-making process still remains inconclusive to this very day. This is because past presidents who have presided over this process have tended to pursue personal or partisan interests at the expense of national ones. As such, whatever constitutional changes have been effected lacked a national outlook. To have a national character, the constitution-making process should answer the following three cardinal questions, and do so in an objective way (Mwale, 2005): (a) why do we need a new constitution?; (b) what should the content of the new constitution be?; and (c) what road map should we follow in our constitution-making process? In seeking answers to these fundamental questions, consensus building should be the password that actually binds the citizens together and leads to the crafting of a national constitution that has the potential to stand the test of time.
The third impediment to democratic consolidation in many African countries is the ‘absence of suitable legal frameworks of electoral processes’. To begin with, all the electoral activities that take place in a country, such as national elections, do so within the specifications of a nation’s legal framework. However, as the cases of the Ivory Coast, Kenya, Madagascar, Nigeria and Zimbabwe have demonstrated, elections constitute a tightrope walk between war and peace, or between stability and instability. As Pastor (1999, p. 1) has elaborated, ‘Accidents (do) occur at the intersection between political suspicion (of electoral fraud) and the technical incapacity’ of the electoral body tasked to organise and conduct national elections that are credible. Many elections are often discredited simply because the losing candidates opt to interpret technical challenges and irregularities as fraudulent electoral acts perpetrated by the victorious candidates, in connivance with the electoral bodies tasked to organise and manage elections. Such technical shortcomings may, however, be simply due to administrative shortcomings, or due to an inappropriate legal framework of electoral processes.
Fourth, the existence of election management bodies (EMBs) that are inefficient and partial impedes democratic consolidation in many African countries. This the EMBs do by their failure, first and foremost, to organise elections that are free and fair. To begin with, an election is deemed to be free and fair if it is, among other things, organised and conducted by an EMB that operates independently of the influence or control of any entity, especially the government (Electoral Commissions Forum [ECF], 2007). According to the ECF of Southern African Development Community (SADC) countries, there are a number of conditions that an EMB should fulfil if it is to conduct elections that meet the specifications of the free-and-fair elections criteria (ECF, 2007). One of them is that the manner in which the EMB itself is established should be agreed on a priori by all the major political players, or their representatives, and should be enshrined in the country’s constitution. That way, the work and the integrity of the EMB will not be called into question, unnecessarily, by any of the political players.
Another condition is that the composition of the EMB (which should be gender sensitive), together with the qualifications and appointment procedure of its personnel, should also be agreed on a priori by all the major stakeholders, or their representatives, and should be enshrined in a country’s constitution as well. Consensus built around these and other related issues stands to enhance respect for and credibility in the EMB and the work it is intended to do.
Fifth, the existence of ‘inappropriate electoral systems’ in many African countries has been a serious source of conflict and, therefore, an impediment to democratic consolidation. Although electoral systems fall into numerous categories, they can, in practice, be grouped into three broad families: (a) proportional electoral systems; (b) majoritarian electoral systems; and (c) plurality electoral systems. Most of the electoral systems in Africa are majoritarian. One of the major weaknesses of this electoral system is that it excludes the losing candidates, and their political parties, from direct participation in the governance of the country. It is precisely such political exclusion that leads to frustration, followed by political conflict.
Sixth, although disputes are an inevitable feature of every human society, the absence of ADRMs in many African countries allows even the simplest of conflicts to escalate into violent ones. Countries can enhance their chances of promoting peace, forging national unity and consolidating democracy by devising effective ways and means of diffusing or neutralising societal tension before it escalates into long-term conflict. One way to do so is to put in place, a carefully worked-out strategy for alternative dispute resolution (ADR). The term ‘ADR’, as used in this article, refers to a wide array of practices, techniques and approaches employed in resolving and managing disagreements, alternative to full-scale court processes, such as litigation and the judicial enforcement of verdicts (Foundation for Cultural Policy Research Cupore, 2014). The commonest ADR mechanisms are: negotiation, conciliation, mediation, arbitration and expert opinions.
In Zambia, the Electoral Commission of Zambia has formed what are known as National Conflict Resolution Committees. These consist of eminent persons, who represent civil society organisations (CSOs), political parties and the church mother bodies. The members of these committees are first trained in conflict resolution and management skills. They operate at the local, district, regional and national levels. Their mandate is to handle political disputes as soon as they become aware of them. That way, such disputes are nipped in the bud, before they escalate into serious political conflicts.
Seventh, many African countries have political cultures that do not value democracy as a political system. For example, while democracy calls for tolerance for others, together with their views, the cases of Rwanda, Kenya and Zimbabwe have demonstrated that political violence is often exercised against others simply because they belong to other political parties or different ethnic groups. Confrontations between cadres from ruling parties and their counterparts from the opposition are not uncommon. Intolerance, distrust and violence are typical ways of life. It is these realities that have tended to hinder democratic consolidation in many African countries.
Eighth, the absence of free and independent media houses or institutions in many African countries has turned out to be a serious impediment to democratic consolidation. The media, both print and electronic, can, without hesitation, be described as the lifeblood of the democratic process. This is because of the vital roles they play in democratic transition and consolidation processes. To begin with, the media play an informational role by publicising electoral issues and activities. They further play an analytical role by critically scrutinising the contesting parties, their manifestos and their candidates as well. Beyond that, media houses and institutions provide forums for public debates and discussions, which accord the citizens an opportunity to listen to and, hence, be able to compare and contrast the various viewpoints, opinions, ideas and beliefs of the various political parties and their candidates. That way, the citizens are able to make informed choices.
Not only this, but media houses and institutions play a watchdog role which aids democracy. They do so by keeping a watchful eye on the entire electoral process and publicising their findings accordingly. For example, they investigate and report on allegations of electoral fraud or malpractices, and thereby protect and enhance the integrity of a country’s electoral process. Finally, the media, both print and electronic, are and can be tools or instruments for peace building and conflict resolution. The sad story of the 1994 Rwanda massacre reeks of failure by the media in that country to build peace across ethnic groupings. By reporting truthfully and factually, the media can, in a nation, clarify misunderstanding and hence, pre-empt conflict.
To be able to play all these roles successfully and objectively, as well as to operate ethically and professionally, the media, both print and electronic, need to be free and independent of the control of any individuals, groups of individuals or institutions. To be truly independent, the media houses and institutions must not be owned by the government, or political parties, but rather by business houses. They must also not be dependent on government for their funding or financing.
Ninth, the existence of a weak and fragmented civil society in many African countries deprives society of the benefits that a vibrant and united civil society normally offers to the society. At the centre of civil society are non-governmental organisations (NGOs). A virile civil society, driven by NGOs, supplies the glue that binds a nation together. It does so by being committed to public interest causes, such as: environmental protection and management; good governance reflecting human rights protection; promotion of women’s issues; fighting corruption; and monitoring election (Carothers & Barndt, 2000). In Zambia, NGOs have been instrumental in demanding that all the public officials, in their political behaviour, always observe and abide by the known tenets, values and norms of democracy.
In countries undergoing political transition from autocratic rule to democratic governance, NGOs tend to assume the role of midwives; they initiate freshmen democrats into a culture of political activism that they are not accustomed to (Ng’oma, 2008). For example, they teach the new political converts the need to always participate actively in national elections as candidates or as voters, or both, and always observe the rules of the political game.
On a different note, a virile civil society can keep a watchful eye on the manner in which political power is exercised by those in whose hands it is entrusted. Thus, CSOs help to resist any attempts by public officials to use political power in ultra vires ways. Similarly, any attempts by public officials to abuse the authority of their public offices can be checked by the masses, acting through CSOs. By performing such roles, CSOs contribute positively to the inculcation of a culture of the proper use of state power by elected officials. This is particularly important in newly democratising nations where the remnants of dictatorial tendencies tend to manifest and must, thus, be kept in check.
Finally, NGOs are involved, and they must be involved, in election monitoring worldwide, in order to enhance the credibility of the electoral process. The background to this activity is that emerging democracies, such as Zambia, generally encounter challenges in organising elections that are, or can be deemed to be, genuine, free and fair (Pastor, 1999). Questionable voter registration and voter education exercises, a marginalised or even silenced citizenry, inadequate technical skills on the part of the electoral officials, assertions of electoral fraud, insufficient or biased oversight by the electoral bodies and many other factors often conspire to taint the polling results obtained after an election (FODEP, 1996). It is from this perspective that election monitoring and election observation by CSOs become not only desirable but also important.
Tenth, and finally, ‘the existence of a judiciary that is not independent’ is an impediment to democratic consolidation. To begin with, constitutional democracy is anchored, in part, on the rule of law. The latter, in turn, has its full effect only in a country where no individual or institution operates above the law and also where the officials in the judiciary operate independently, with full authority and without fear or favour. However, this is not always the case in many African countries. As the case of Zambia illustrates, for example, the Chief Justice, who is the Head of the Judiciary, is appointed by the Republican president, subject to ratification by the legislature. Many Zambians, especially the leaders of the opposition political parties, insist that it is naturally not wise to ‘bite the finger that feeds you’, meaning that there is no way the Chief Justice can apply the law equally when it involves the officials or members of the president’s inner circle.
Implication for India’s Investment Drive: The Way Forward
First, the seemingly negative picture of contemporary Africa’s failure to consolidate democracy, presented in the foregoing pages, is somewhat puzzling. It is somewhat puzzling in the sense that it bears no correlation, as would be expected, with the economic activities taking place on the African continent. To an unsuspecting mind, nothing in the area of international trade, commerce and industry could surely be taking place in the midst of the continent’s political chaos. While politics, indeed, shapes economic activity everywhere in the world, the reality of contemporary Africa appears to defy this practice and thus, has a mind of its own. The continent is actually the fastest growing region for foreign direct investment (FDI) in the world today (Africa Panel, 2015). The number of FDI projects in Africa’s 54 countries grew by 27 per cent from 2010 to 2011 (England, 2012). This growth has been at a compound rate of almost 20 per cent since 2007. Apart from that, Africa is home to six of the 10 fastest growing economies in the world in the period from 2010 to 2015 (The Economist, 2015). And according to a McKinsey Report (2010), the combined gross domestic product (GDP) of African countries will be about $2.6 trillion by 2020. So, India should not hesitate to enhance its economic presence in Africa. After all, India is regarded by the African people as Africa’s all-weather friend. Or, as India’s first Prime Minister, Jawaharlal Nehru (1889–1964) once put it, India and Africa are actually ‘sister continents’ (Sharma, 2007, p. 20).
Second, this article contains a lot of information about the governance challenges that Africa faces. However, in order for India to have a successful investment campaign in Africa, this Asian giant should seek the services of researchers to conduct a full audit of Africa’s overall macro environment. The purpose of such an audit would be to collect valuable environmental information that can, in turn, be used to guide the making of investment decisions in an informed manner.
To simplify the gathering of information on Africa’s macro environment, one practical way that the researchers can follow is that of theoretically demarcating the environment into what is known as the physical environment on one hand, and what is known as the social environment on the other hand (Cole, 1997).
The physical environment is what may be referred to also as the geographical, ecological or simply the natural environment. It consists of such things as: the land, the trees or forests, the rivers, the mountains, the valleys, the weather, rainfall patterns, incidences of earthquakes or volcanoes and so on. It is important that first-hand information about Africa’s physical environment is gathered because of three reasons. One is that such information would familiarise potential Indian investors in Africa with the kind of knowledge, ideas, skills and experience possessed by indigenous Africans. From that familiarity, the potential Indian investors would know upfront whether they would be able to find readily available manpower in Africa or they would have to do something about manpower development.
Another reason why information must be gathered about Africa’s physical environment is that such information would actually shed some light on the size of the continent’s market for the goods that would be produced, or for the services that would be offered. Armed with such information, potential Indian investors in Africa would then be able to plan upfront whether to target the local market only, or to already begin formulating export strategies, to ensure that their goods and services have a large market as required in business.
A final reason why information should be gathered on Africa’s physical environment is that such information would reveal the available investment opportunities on one hand, and the logistical challenges inherent in the physical environment on the other hand. Armed with such valuable information, potential Indian investors in Africa would be able to plan accordingly, how best to exploit the investment opportunities identified on one hand, and how best to deal with the logistical challenges identified on the other hand.
Once the physical environment has been dealt with in the manner described above, information should then be gathered, next, on the social environment. The social environment is simply the sum total of the working ideas developed by humans about the physical environment, contrasted with the natural environment. One practical way that the researchers can follow to gather information about the social environment in an orderly and systematic manner is by the use of what is known as the PEST factors framework of analysis (Johnson, Scholes, & Whittington, 2008). PEST is an acronym which stands for political–legal, economic, social–cultural and technological factors. It summarises the factors to be found in the social environment.
Thus, with the help of the PEST factors framework of analysis, information should be gathered, first, on Africa’s overall political–legal environment. The political–legal environment consists of the laws put in place by the government to regulate how economic activities should generally be conducted in the country. Information about Africa’s political–legal environment should be gathered because Indian business houses hoping to invest in any of the continent’s 54 member countries would, like their counter-parts elsewhere in the world, inevitably be required to obey and respect the laws of their host countries. The laws of host nations provide authoritative guidance, for example, on how organisations should operate, how they should treat their workers, how they should relate with various stakeholders and so on. Advance knowledge of the laws of host nations acquired by potential Indian investors in Africa would ensure that none of them is found on the wrong side of the law simply as a result of ignorance.
On a different note, information must be gathered on Africa’s overall economic environment. Such information would prove very vital for planning purposes. For example, it would shed some light on the growth trends of national economies in various African countries, as well as on the inflation rates, exchange rates, employment levels, shareholder confidence and so on. Armed with such powerful economic information, potential Indian investors in Africa would be better placed to make the right investment decisions, such as where to invest and where not to invest and so on.
Next, information should be gathered on Africa’s social–cultural environment. Such information would familiarise potential Indian investors with such things as social trends and the kind of social changes taking place in various African countries, cultural changes, demographic changes and business ethic practices, among others. Familiarity with Africa’s social–cultural environment would guide potential Indian investors in understanding the local people and how best to work with them. It would also prove to be useful in making appropriate investment choices and decisions as well as in forecasting business trends.
Finally, information gathered on Africa’s technological environment would help potential Indian investors to identify and plan for the kind of technology that would be the most appropriate for business on the continent. Technology is important because it determines the kind of goods and services that can be provided, the way in which they are to be made available, the way in which markets are to be identified, the way in which employees are to be mobilised and so on. Where it is found that appropriate technology is unavailable, potential Indian investors in Africa would decide accordingly, how to make such technology available.
Third, it is a well-known fact that Africa is endowed with all kinds of raw materials, especially minerals such as gold, diamonds, copper ore, coal, petroleum, natural gas and so on. The African people themselves are already largely into the extraction of such raw materials for export. What India could consider doing, however, is seeking to go into those areas that the Africans appear to have difficulties going into. Those areas are basically manufacturing, processing and refining—in short, value addition. Africans have challenges in these areas because they generally lack both the equipment and the technical know-how that is required to transform their raw materials into more useful products. To give an example, milk is produced in large quantities in many parts of Africa. What has been lacking is value addition in this area. In 2014, Danone, the largest yoghurt-producing company in the world, took advantage of the situation and acquired 40 per cent shareholding in Brookside Dairy Limited, East Africa’s largest milk producer. That share purchase alone gave Danone access to 140,000 milk farms across the East African region. Danone now plans to increase its shareholding in Morocco’s Centrale Laitiere, which already enjoys 60 per cent of the dairy market in that country. This is the path that India should follow.
Similarly, the Huajian Group of Companies, the giant Chinese shoes manufacturer, opened a shoes manufacturing plant in Ethiopia in 2012. Huajian is now the largest footwear producer in Ethiopia; it accounts for at least 50 per cent of the country’s footwear exports and employs 4,000 Ethiopians. These investment examples illustrate what is happening in Africa at the moment, in the area of FDIs. So, India would not be wrong at all in seeking to jump on the bandwagon and beginning to do what other global investors are doing in Africa.
It is not being implied here that India should confine itself only to investing in manufacturing, processing and refining. Rather, the idea is meant to underscore the fact that it is in these areas where India would find the greatest opportunities for investment on the African continent—opportunities that would not attract any competition, at least in the short run. Several Indian companies have already made a good start in various sectors in Africa. To use the case of Zambia as an example, Verdanta Resources has invested US$ 1.5 billion in copper mining where other mining giants from China, Canada and Australia are also actively involved. And Tata Africa Holdings has partnered with Zambia’s government-owned electricity company, Zambia Electricity Supply Corporation (ZESCO), in an electricity joint venture at Itezhi-Tezhi Dam, worth US$ 200 million. Tata Africa Holdings is further collaborating with a privately owned electricity company in Zambia, called the Copperbelt Energy Corporation (CEC), in a 36 megawatts power project. Beyond that, Tata Africa Holdings has acquired a tannery in Zambia’s mining town of Kabwe, at a cost of US$ 1.64 million. Tuarian Manganese Ltd has also joined the race and has invested US$ 11 million in manganese mining in Zambia. And R.J. Corporation has equally established a US$ 30 million Pepsi manufacturing plant in Zambia. Furthermore, Mahindra has established an outlet for the sale of Indian-made Mahindra tractors in Zambia. Finally, Bharti Airtel now owns Airtel Zambia, the largest mobile phone company in the country.
The foregoing investment examples should serve to indicate that there still is a lot of room for Indian investment even in such areas as raw material extraction, construction, agriculture, power generation and so on. Indian farmers have perfected the art of growing rice and wheat in their home country, for example. Since Africa imports such food items in large quantities, potential Indian farmers can actually explore the possibility of growing them in Africa. Indian companies can also seek to invest in such areas as the production of animal fats for use in the production of biodiesel. Bio-alcohols provide yet another investment opportunity for Indian companies, considering the fact that there are glaring electricity shortages all across the African continent. Bio-alcohols can readily be produced from sugarcane, wheat, rice, millet, sorghum and corn, all of which can easily be grown all across Africa. Africa’s agricultural potential is unlimited.
Fourth, in its quest to strengthen its business presence in Africa, India must realise that no investment is too large or too small for the continent. As such, India’s investments do not need to be restricted to the multinational corporation level only. Rather, investment opportunities can be sought even in the small and medium enterprises (SMEs) sector as well. Opportunities are there, at least for now, for every potential investor, large and small. Investments can still be made at SME level in: industrial enterprises (extractive, processing, refining, manufacturing, construction and fishing); trading enterprises (wholesaling and retailing, as well as importing and exporting); and also in the services enterprises (banking, insurance, education, health, etc.). In all these, India can consider going into joint ventures with the local people, since this appears to be the most preferred approach to job creation in many African countries.
Fifth, and finally, India’s foreign policy orientation has largely been passive, and has been anchored on non-interference in the internal affairs of other countries. It is, indeed, in order for India to respect the sovereignty of other nations, so that its sovereignty can also be respected in return. However, it is equally important for India’s present government to recognise the fact that a country’s economic interests in the global arena appear to ride naturally on the country’s foreign policy. As such, India should consider shifting to a more active foreign policy towards Africa in order to strategically enhance the pursuit of its economic goals on the continent. Such a policy shift is likely to inspire Indian investors to look at Africa as their country’s preferred investment destination.
India has already done well by creating the India–Africa Forum Summit, which is the official platform for India–Africa relations. The summit is intended to take place every three years. The inaugural summit took place in New Delhi in April 2008; the second was held in Addis Ababa in 2011, while the most recent one welcomed African heads of state and government back to New Delhi again, in November 2015. The first summit attracted only 14 African heads of state and government, while the second was attended by 15 of them. However, the third one, which took place a year later than scheduled, due to the Ebola epidemic that ravaged Africa in 2014, invited all of Africa’s 54 heads of state and government; the aim of the expanded invitations was to underscore India’s resolve to enhance its status and influence on the African continent, and indeed in world affairs. India’s quest for a permanent seat at the United Nations (UN) Security Council is likely to receive greater support from African countries in the wake of its more assertive foreign policy.
Finally, India can do well to also consider engaging its sizeable diaspora in Africa. There are about three million Indian-Africans on the continent. Many of them are actually very established in various sectors of human activity. As such, they can form an important link between India and Africa. They can also provide guidance to their brothers and sisters back home in India, on how best to pursue investment opportunities in Africa’s 54 countries. They can further be employed to lobby their host governments on how to make Africa more receptive to Indian investment.
Conclusion
From the foregoing analysis, it can be seen that the political environment in Africa, the world’s second largest continent, is indeed somewhat unstable or turbulent. There are generally governance challenges in the majority of the continent’s 54 countries. However, assurance must also be given that the African people, through the African Union, the continental body, and indeed at the individual level of their respective countries, are making efforts to bring stability to the continent, so that good and democratic governance can take root and become consolidated.
This analysis has established further that contemporary Africa is, however, the investment destination of choice; opportunities abound in all the sectors of industrial activity. The seemingly chaotic political environment obtaining in Africa is not at all inimical to FDI. As such, India must avoid being left behind; the country must begin to invest more aggressively in the world’s second largest continent. After all, India and Africa have long historical ties, and Africa is actually home to many Indians in the diaspora.