India ups lending to Africa in bid to counter China’s dominance

Africa has become the second-largest recipient of credit from India while over the past decade 18 of the 25 new Indian embassies or consulates were opened in the continent, as the South Asian powerhouse tries to catch up with China’s massive sway in the resource-rich continent.

Many African nations received about $12 billion or 38% of all credit extended by India in the past decade, just a few percentage points below its neighbors, according to Harsha Bangari, Managing Director of India’s Export Import Bank. The bank is an instrument of India’s “economic diplomacy,” Bangari said, adding that the South Asian nation has also opened up 195 project-based lines of credit across Africa, three times the number it has in its own region in the last decade. These credit lines have been utilized for crucial projects in healthcare, infrastructure, agriculture, and irrigation, driving a steady increase in demand from Africa.

Despite these impressive figures, India has lagged behind its bigger and wealthier neighbor in making inroads in Africa. While China’s loans to Africa have dipped since 2016, overall between 2010-2020, it pledged $134.6 billion, or more than 11 times more than which India has offered, to African nations, according to data from Boston University’s Global Development Policy Center. China has also made an early move to tap mineral resources in Africa, including new centers of lithium supply, helping it navigate a tight market for a key metal for electric vehicles.

However, Prime Minister Narendra Modi’s government has pushed for greater reach into Africa, boosting both economic and diplomatic links. As the continent deals with the economic fallout of the pandemic and Russia’s war in Ukraine, New Delhi is seeing an opportunity to push deeper into the continent.