To counter China, India must revive the Asia Africa Growth Corridor, a major collaboration between India and Japan to develop quality infrastructure in Africa, complemented by digital connectivity, which would undertake the realization of the idea of creating free and open Indo-Pacific Region.
Essentially seen as a counter for China’s Brick and Road Initiative, the AAGC is an effort to provide an alternative model of doing business in Africa, using transparent and adaptive measures. With China’s aggressive economic and financial developments in Africa and the Indo-Pacific region, there is a stronger need for the revival of AAGC, in order to counter China’s advances. The revival of the project lies central to checking the dominance of China as well as ensuring free trade and development across Africa, without falling into China’s debt-traps.
The need of the hour remains to rope in other agencies and organizations which could finance the project and bring substantial credibility by marginalizing private-sector engagement and involving state-owned companies.
Chinese Traps
Chinese policy of “resource-backed lending model for financing infrastructure projects” as well as the patterns of business dealings in Africa remain questionable and lately, many countries have raised their concerns over this model.
Last month, Kristalina Georgieva, Managing Director, International Monetary Fund noted that debt levels—which were already elevated before the pandemic—have increased sharply. Public debt in sub-Saharan Africa jumped by more than 6 percentage points to 58 per cent of GDP in 2020, the highest level in almost two decades, she said.
A sectoral decomposition of Chinese loans highlights that more than 65 per cent of its lending goes to infrastructure sectors such as energy, mining, construction, transport among others, The Carnegie study said, adding that in comparison, traditional lenders—mostly from Europe and North America as well as Japan in the OECD-Development Assistance Committee focus more on social sectors like health, population, education, and humanitarian aid.
G7 Nations
As the Chinese power has started to reshape geo-politics and geo-economics, the global footprint of the nation, in terms of global power and economy has raised eyebrows among the West as well. The Group of Seven Nations (G7) which met in June and discussed Biden’s “Build Back Better World” (B3W) initiative can be essentially termed as the West trying to find one foot in the Indo-Pacific and Africa region in order counter China’s rise as a superpower.
Asia Africa Growth Corridor
The Asia Africa Growth Corridor, launched in 2017, is a mega infrastructure project that seeks to connect Asia and Africa. This economic cooperation agreement between India, Japan and multiple African nations was designed and signed at the African Development Bank meeting in Gujarat, India on May 25, 2017. The AAGC consisted of four main components: development and cooperation projects, quality infrastructure and institutional connectivity, capacity and skill enhancement and people-to-people partnerships.
The AAGC is essentially a sea corridor linking Africa with India and other countries of South-East Asia and Oceania by reviving ancient sea-routes and creating new sea corridors that will link ports in Jamnagar (Gujarat, India) with Djibouti in the Gulf of Aden and similarly the ports of Mombasa and Zanzibar will be connected to ports near Madurai (India); Kolkata (India) will be linked to Sittwe port in Myanmar.
