India and the autumn of the African Patriarch

Your average working day in Kigali, the capital city of Rwanda, begins with hailing a “moto-taxi” – the preferred mode of commute for the city’s residents through its hilly terrain. These ubiquitous two-wheelers, which sustain the livelihood of a great many Rwandans in their twenties, are invariably bikes built by TVS or Bajaj Motors. Once at work, you make a few calls using your Airtel subscription, which now offers one of the largest telecom networks in the country. By afternoon, your colleagues or friends would have convinced you to head downtown and try the famous paneer butter masala at Khana Khazana, a hugely popular (and expensive) Indian restaurant. Kigali has no dearth of malls, but shopping for groceries at Sharma Supermarket takes forever, what with a long queue of customers who have stuffed their trolleys with spices, lentils and - if you are a bachelor - MTR Ready-To-Cook meals. Your Rwandan host’s hospitality is matched only by his passion for Bollywood movies, requiring you to translate Dharmendra’s dialogues in ‘The Burning Train’, playing for the umpteenth time on Star Gold. As the joke among expats goes, the set-top box may be Chinese, “lekin andar ki baat desi hai.”

India’s presence in sub-Saharan Africa is quite pervasive. To be sure, there are two dimensions to our ties with the continent. Where the Diaspora has maintained a robust presence, as in the East African cities of Nairobi, Kampala and Arusha, and in Lagos and Cape Town to the west and south respectively, it is firmly embedded in the civil society of those countries. The first wave of Indian emigration mainly comprised labourers and traders, but later included officers who served in colonial bureaucracies and in the services sectors of newly independent African economies. More recent are the infusion of private capital and the foray of India Inc. to destinations like Rwanda, Ethiopia and Angola – countries which bear a violent and bloody past. Our role as an investor in a frontier market may offer many benefits, but it is also susceptible to political churnings in the region. If the fragile peace in some countries has taken a toll on the Diaspora - Idi Amin’s xenophobic policies which resulted in the forced displacement of Indians from Uganda are well-documented¹; similarly, television coverage of the Rwandan genocide of 1994 was enough to trigger an exodus of Indian families from as far as Nigeria - there can be no doubt that Indian businesses would suffer doubly in the event of large-scale conflict, insurgency or civil war.

Thus far a group of leaders, described variously in the Western press as ‘visionaries’, ‘strongmen’ or ‘dictators’, have staved off this nightmarish possibility. These figures, the likes of which include Rwanda’s Paul Kagame, Ethiopia’s Meles Zenawi, Angola’s Jose Santos and Zimbabwe’s Robert Mugabe, were cut from the same cloth: they rose to prominence as rebel leaders fighting brutal regimes or militias, and once in power, offered some semblance of a social contract that ensured stability and peace. Their political fortunes flourished concomitantly with the economic outlook of their countries. But this template is far from unilinear. Some politicians like Kagame and Zenawi seized upon the narrative of struggle to overcome a devastating past, and made genuine attempts to foster national unity through development. Others like Mugabe faltered quickly, in the absence of institutions to carry their rhetoric through.

Nearly two decades later, politicians who were once coddled as developmentalist darlings are now being criticised for their brazen attitudes towards human rights and democracy. In a July editorial, The Guardian suggested these leaders “have disappointed mightily”²,and called for foreign aid, liberally offered thus far, to be curtailed. In the process of consolidating power, these men became staunch American allies, positioning themselves as bulwarks against terrorism and regional instability. If their relations with Washington DC have deteriorated, it has only manifested in the form of private rebukes, with little discord to show in the open.

For better or worse, India’s concerns in this regard are altogether different. New Delhi has quietly skirted the discourse on hypocrisy and double standards, choosing instead to reap the benefits of stable economic conditions in these autocracies. The World Bank’s Doing Business report this year has identified Kagame’s Rwanda – which aid workers increasingly refer to as ‘Africa-lite’ - as the 8^th easiest country in the world to start a commercial enterprise. Access to credit and deregulated sectors are not the only business attractions. Important decisions affecting foreign investment are made by a centralised authority, such as the Angolan National Private Investment Agency and the Rwandan Development Board, the heads of which are controlled by or report directly to their Presidents. Leaders like Zenawi and Kagame have used their charisma to great effect, often lending direction to national debates on corruption and industriousness. Just as conducive has been a stable security environment which mitigates political risk and the possibility of expropriation or other such investment-adverse policies.

The patriarchs of Africa envisioned a ‘developmental state’ as the central motif of state reconstruction. Meles Zenawi, a trained economist, was one of the most articulate exponents of this framework. “African states do not have the institutional and physical infrastructure to compete on a global free-market,” he wrote in a book published earlier this year.³ “A privileged and non-reciprocal access to developed markets is thus critical for their success. They need such access to compensate for their institutional and infrastructural weakness and attract domestic and foreign investment of the productive type, which in turn would generate the resources and experience required to overcome the institutional and infrastructural failures.” To revive the economies they had inherited at the end of protracted civil war these leaders relied on guided and calibrated market reform. Political entities like Uganda’s National Resistance Movement and the Ethiopian People’s Revolutionary Democratic Front shed their socialist affiliations to mobilise domestic and foreign capital. Soon after Isaias Afewerki came to power in Eritrea, his government issued a ‘Macropolicy’ document that aimed to establish an “outward looking, private sector-led market economy [...] with the government playing a proactive role to stimulate private economic activities.” ⁴

Recognising their popular appeal and control over the state-building process, the Bretton Woods institutions, with the blessing of the United States, rushed to offer them assistance. The benefits, which took the form of sustained double-digit economic growth for nearly a decade, have nevertheless come at a high price. The political institutions, which were assumed to be a natural by-product of robust growth, are yet to surface. Legislative bodies in these countries are rubber stamps, and civil society is nowhere to be seen. Driven by a heady cocktail of foreign aid, authoritarianism and poor institutional support, many sub-Saharan economies are struggling to fight corruption and cronyism. Critical issues like land reform remain unaddressed – investment savvy Rwanda also suffers from one of the highest Gini co-efficients in the world, as a result of grossly inequitable income distribution.

To top this situation, the patriarchs of Africa are now approaching, if not well into the twilight of their careers and their sudden withdrawal from politics is likely to pull regional socio-economic vectors in different directions. Details of their illnesses, if any, are notoriously difficult to obtain – in most cases, the world comes to know of the same after these politicians have passed on. Meles Zenawi’s recent death is no exception: Africa-watchers were taken aback by announcements as to the deaths of Ghana’s President John Atta Mills earlier this year, and Nigeria’s Umaru Yar’Adua in 2010, although both were known to be suffering from ailments. This, despite the fact that both Mills and Yar’Adua were towering democrats, presiding over relatively open societies. For Africa’s authoritarian rulers, a life-threatening condition is as much a political vulnerability as it is a health problem.

It is unclear whether these politicians have a succession plan in place, prompting analysts to warn of a “political vacuum” in their absence. Precedent suggests the second-in-command, usually a Vice-President or the Prime Minister, would assume the role of Head of State. But their claims to wield state power will be contested by multiple centers that surface after the patriarch’s exit. More often than not, the successors themselves would have little international visibility, limited experience as power brokers, appear uncharismatic and unable to prevent the ethnicisation or fractionalisation of politics. Most importantly, they will barter institutional design for political survival, resulting in executive and legislative dysfunction through numerous constitutional amendments.

If history is any indicator, this chaotic situation will result in the rapid withdrawal of foreign investment. For rentier states rich in oil or mineral wealth, the ‘resource curse’ will kick in, killing any hope for sustainable development.

For India, the stakes are staggeringly high. Our Africa policy since 1991 has moved singularly through an economic trajectory. During the Cold War, countries like Ethiopia recognised India’s leadership role in the Non-Aligned Movement. But after a new generation of rulers took over, New Delhi’s equations with them were lukewarm till the turn of the 21^st century. Commensurate with its economic growth and the need to access foreign markets, India then renewed diplomatic ties with much of sub-Saharan Africa. Today Indian investment in the continent stands at approximately US $35 billion in sectors ranging from oil and gas to infrastructure.

But foreign investment, be it Indian or Chinese, has also been a political tool for Africa’s patriarchs. Lucrative contracts inked with multi-national companies become a poster child for their model of governance. As mentioned earlier, FDI is tightly controlled by the ruler, with business entities having to liaise with his close advisors. As a result, the future of business enterprises is intimately linked to the political lifeline of the patriarch and his regime. The ailing lives of these leaders are therefore a cause of great concern.

What may follow the exit of the African patriarch may seem like a dystopic narrative but it is a plausible scenario within a decade or two, for most ‘stable’ sub-Saharan economies. It is verily a contingency that India’s business and foreign policy establishments must prepare for. I outline here a few steps that India-based MNCs and the government could adopt to buffer unpredictable developments in the political economy of Africa.

• Eschew ‘state capitalism’ and the Chinese investment model - One way for Indian businesses to withstand political turbulence in sub-Saharan Africa is through integration with the local economy. In other words, by making themselves almost indispensable to the economic well-being of citizens. What does this entail? Public-Private Partnerships should be encouraged, as long as rules and regulations regarding ownership, stakeholding and takeover are clearly laid out. Second, the region’s demographic distribution is tilted in favour of a younger population, a pool from which unskilled and semi-skilled labour can be easily drawn. Indian companies should not follow the Beijing model, which brings in workers from rural China – for one, there is no conclusive evidence that this approach would improve profit margins dramatically; more importantly, the tension between local labour and its Chinese counterpart has resulted in several armed attacks of late. Similarly, it is crucial that the Indian government encourage private investment in Africa – New Delhi should aim mainly at negotiating an environment conducive for the same and must also guarantee the security of Indian citizens in Africa. But any financial involvement, such as the establishment of Lines of Credit should be done after a rigorous appraisal of applicant companies. Indian companies that offer jobs and better financial prospects for local residents will figure favourably in the calculus of new African leaders.

• Adopt fair and ethical labour practices – The present generation of African politicians have kept trade unions on a tight leash. But their exit is likely to rejuvenate hitherto suppressed labour movements, resulting in a call for better working conditions and enforceable rights. India must welcome any development in this direction, and Indian companies must take care to adopt standards set by the International Labour Organisation while employing citizens. If African patriarchs are running near-dictatorial regimes now, their tenure is likely to be followed by a corporatist framework that renders trade unions and labour representatives highly influential. Likewise, the space opened up in the absence of political repression will be utilised by civil society – therefore, it would behove Indian businesses to adopt and adhere to recognised principles of corporate social responsibility, which include a commitment to sustainable development.

• Refrain from subversive financial activities - Political uncertainty that follows a leadership transition after decades could lend itself to widespread corruption and money laundering. Western business enterprises, especially oil conglomerates, have drawn flak for their manipulative practices in Africa, preferring to grease the palms of elected officials in return for short-term gains. Indian companies would do well to steer clear of a “this is Dar es Salaam, not Delaware” attitude and maintain integrity in their commercial dealings. India’s presence in the continent, unlike Western or Chinese interests, rests on enormous goodwill which would be foolish to squander away.

• Reinvigorate the Non-Aligned Movement – When a new generation of African leaders emerged from civil war and ethnic conflict, the world was unipolar. It remains definitively so. But the gradual souring of relations between these figures and the United States has not only exposed their personas but also their regimes to criticism. A change of guard, led by less seasoned and savvy politicians, need not find such rebukes palatable. Some of them will adopt a nationalist posture that projects, if only on paper, independence and autonomy from the West. The Non-Aligned Movement offers a pragmatic avenue to channel such rhetoric into constructive policy-making at regional and international forums. India being a traditional leader of the NAM could make use of this opportunity to deepen ties with the continent.

• Ultimately, there can be no doubt that the winds of economic, social and political change are sweeping Africa’s shores. As an emerging heavyweight, India could well choose to toe the line of powers-that-used-to-be, engaging the continent in a relationship of dependency. Alternatively, New Delhi could chart its own path; one that factors both the material considerations of Indian companies in Africa and the need to consolidate mutual respect with its leaders and peoples.