India Escalates African Lending Initiatives in a Bid to Counter China's Growing Sway

?As India strategically endeavours to bridge the gap with China in terms of expanding its influence across the resource-abundant African continent, it has resulted in Africa ascending to the position of the second-largest beneficiary of Indian credit.

Within the span of the last decade, a remarkable transformation has taken place. A significant financial flow of approximately $32 billion, accounting for approximately 38% of the total credit extended by India, has found its way into the economies of forty-two African nations. This influx of financial support has not only bolstered India's ties with these nations but has also served as a testament to its steadfast commitment to fostering cooperative economic relationships and partnerships within the African region.

Harsha Bangari, a distinguished figure who holds the prestigious position of Managing Director at India's Export Import Bank, offered illuminating insights during a comprehensive interview. In his discourse, Bangari elucidated how the bank functions as a pivotal instrument of India's overarching "economic diplomacy." He further highlighted that India's dedication to strengthening its bonds with African nations is evident through the establishment of an impressive 195 project-based lines of credit, collectively valued at around $12 billion, spanning across the African continent. This statistic holds particular significance, as it signifies three times the number of similar credit lines initiated within India's own region during the same timeframe.

Bangari expounded on the positive outcomes stemming from these credit lines. Africa's adept utilization of these lines has facilitated the execution of an array of projects encompassing crucial sectors such as healthcare, infrastructure, agriculture, and irrigation. This multifaceted approach has undoubtedly contributed to the steady surge in demand for Indian credit offerings within the African context.

Despite India's recent and proactive strides in fostering connections with countries within the second-largest continent globally, it is undeniable that the nation continues to trail behind its more formidable and affluent neighbour, China. The discrepancy is particularly conspicuous when considering China's substantial financial commitments to Africa, even though its loans have experienced a decline since 2016. Data sourced from Boston University's Global Development Policy Centre underscores the substantial gap, revealing that over the decade leading up to 2020, China pledged an astonishing $134.6 billion to African nations—a figure almost eleven times greater than India's comparable contributions.

Source: Economic Times