May 25, 2007

India and West Africa:A Burgeoning Relationship

Sushant K. Singh

• India's involvement in West Africa is expanding beyond its traditional Commonwealth
partners. Although Nigeria is India's largest trading partner (worth $3 billion in trade – mostly oil), Indian investment in Côte d'Ivoire will grow to $1 billion during the period 2006–11 – 10% of what Indian companies have invested abroad in the last decade.

• India faces fierce competition from the West and other Asian countries to secure West African resources. India's quest for energy in West Africa is not a core component of the government's energy security policy; rather, it is part of its bid to diversify energy sources. India is prepared to offer package deals offering infrastructural investments in addition to cash bonus payments on signature of contracts. There has also been controversy in Liberia over a $900 million deal to mine ore with Mittal, whose contract allowed the company to opt out of national human rights and environmental laws. The contract is currently being reviewed by the Liberian Senate.

• Indian companies are not blindly entering into business relationships in West Africa. The Indian Cabinet’s Committee on Economic Affairs prevented a planned $2 billion deal in late 2005 at the last moment because of due diligence concerns. A Nigerian licensing round for 45 oil blocks was announced on 3 April 2007. India’s ONGC-Mittal is likely to be offered rights of first refusal for additional blocks but has insisted that some of these have proven reserves. However, they seem to be less tough than their Chinese and South Korean rivals on specifics about the infrastructure packages offered in exchange. The winners are announced on 3 May 2007.

• Beyond oil and infrastructure development, India is well placed as a soft power to
enhance the relationship in the future. The mechanics of India's democracy in a postcolonial setting may provide relevant lessons. Moreover, India can offer West Africa important insights into agricultural expansion, clean water management and how to confront the growing threat of climate transformation.


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