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Angola: The Topmost Market in Africa

India is making all the right moves to get a foorhold in the markets of Angola

India has stepped up its efforts to gain an economic foothold in Africa in a new scramble with China for the continent’s resources, signing energy deals with top oil producers Angola and Nigeria. India has lagged behind China’s aggressive courting of African nations to secure rights to energy as well as raw materials. Beijing is using its deep pockets to build roads, railways, even a new parliament building in Malawi, to win favour across Africa, deploying at least half a million Chinese workers to labour on projects around the continent. India’s democratic system and often lumbering bureaucracy have left it slower to make inroads and less likely to fund big projects, since government must account for all spending to parliament.

But recently India deployed two high-level missions to the continent, with Oil Minister Murli Deora leading a delegation of top energy executives through Sudan, Nigeria, Angola india angola tradeand Uganda. India’s state Oil and Natural Gas Corporation (ONGC) left with deals for US$359 million worth of investments in Nigeria and an agreement for joint exploration and refining projects with Angola, seen as a precursor to a broader future deal. Deora also tried to patch up a dispute over payments on oil deals in Sudan while discussing major new oil finds in Uganda.

Nigeria is already India’s largest African trading partner, at about US$ 10 billion annually and it wants to see that figure grow. India’s flagship gas company GAIL has expressed an interest in liquefied natural gas (LNG) projects in Angola and Nigeria, Africa’s two top oil producers. India also offered to invest billions of dollars in building and refurbishing refineries in Angola and Nigeria, which cannot process enough crude to meet their fuel needs.

“India has been trying to get its foot into Angola for a long time so this is a significant development,” said Edward George, specialist in Africa’s economic affairs. “The key will be the next licensing rounds to see if ONGC can win oil blocks,” he said. India had lost out on previous attempts to win contracts in Angola, much in part to Chinese competition, but GAIL chairman BC Tripathi played down rivalry between the growing giants.

“We don’t see China as a direct competitor but we know they are like us and have a growing economy so need to source oil,” he said in Luanda. India’s ambassador to Angola, AR Ghanashyam, believes the latest deal is just the start of co-operation with India and pointed out that ONGC was already working with Sonangol in Iran. Trade between the two nations exceeded US$2 billion in 2010, up from US$1.3 billion in 2007/8 and from US$300 million the year before, mostly in oil exports to India. Trade with China in 2009 totalled more than US$25 billion, however, as Angola became the country’s fifth-largest supplier of oil.

China has granted Angola an estimated US$10 billion in loans, compared to around US$70 million in Indian loans, mainly for rebuilding a railway in southern provinces. In practical terms as well, China has a larger physical presence in Angola, with more than 40,000 workers, compared to 1,500 Indians. “We are a much smaller country than China,” Ghanashyam said. “We have half their GDP and cover one third of the area but give us 20 years and we will catch them up.” Analysts said Africa could benefit from increased competition. “It’s very good for Africa to have another investor to compete with China because it will drive competition and hopefully bring benefits in terms of quality and delivery,” George said.

ATTACKS AGAINST CHINESE WORKERS THREATEN SINO-ANGOLA TRADE TIES

Chinese workers in Angola are being targeted in “mafia-style” attacks that could threaten bilateral relations, say Chinese business leaders. Recently there has been a series of violent chinese workers in angolarobberies and a Chinese man was murdered in the capital, Luanda. Recently robbers reportedly poured boiling water on three Chinese workers.

In September, 2010 businessman Xu Tonggou was murdered trying to resist a robbery. On the same day six armed men robbed the offices of a construction company, beating workers with batons and threatening them with AK-47s. “These are just the tip of the iceberg,” says Xu Ning of the CBC. Chinese people here are afraid, they are afraid. They don’t know who’s a criminal. What used to be something that happened perhaps once a month has become a daily occurrence. This is bad for business between Angola and China,” he said.

Superintendent Jorge Bengue of Luanda’s Police Command police, however, disputed there was a campaign of violence specifically targeting Chinese nationals in the city. He said crime was a reality in any city in the world and he was not aware of any rise in incidents involving Chinese people. There are tens of thousands of Chinese workers based in Angola, involved in several reconstruction projects after the end of the country’s 27-year-long acrimonious civil war. Chinese workers had also built stadiums in Angola for the much talked about 2010 African Cup of Nations. China has given Angola more than $5 billion in oil-backed loans to Angola to build infrastructure.

 

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