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The rise of China and India in Africa

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The OECD (Organization for Economic Cooperation and Development) is an organization composed of many developed countries of the World. It is located in Paris and was established in 1960. Its role is to provide aggregates through various international studies, and to help countries better manage their relationships at all levels (diplomatic, economic, political etc).

In this review, the OECD report published in May 2005, entitled "The Rise of China and India: What's in it for Africa?" will be studied. It deals with relations between Africa and two of its key partners: China and India. The nature and value of investments on the African continent will first be analyzed, and then will pursue the question in the second part by studying their role in diplomatic and economic decisions, as it is important to remember that agreements signed between these 3 countries will have a direct impact on the global economy.

It is first necessary to clearly specify that China invests in Africa with a very specific purpose, that of access to raw materials up to the continent, specifically, oil in Africa. More specifically, China is investing considerable capital in Africa, through its two flagship companies such as CNPC (China National Petroleum Corporation) and Sinopec, specializing in investment against oil.

The C.N.P.C. is mainly present in West Africa, where it received a right to operate four oil fields in Nigeria in return for a share (of 2.282 million dollars) to build the hydro-electric plant in Mambila, and the refinery in Kaduna (in agreement with PetroChina). In addition, it signed an agreement with Sudan (in 1995), allowing it, if it provided at least 47% stake in the refinery in Port Harcourt, only to exploit the oil facility. Finally, it allowed access to oil fields located in Darfur, and in the Melut Basin.

In addition to these prestigious jobs, investments are grafted to a more human scale, with the migration of many individual entrepreneurs Chinese (of Henan Province, for example) on the African continent, in areas as diverse as the manufacture of clothes, capital goods of the house (soap, mattresses) or services such as installation of support beams for the roofs of houses.

India for its part does not concentrate its efforts on raw materials, even if the program provides, to a lesser extent the exploitation of them (include the investment of 200 million dollars to implement the African rail network for example).

The investment is mainly industrial and commercial in the sense that many Indian companies (like the TATA Group Industries) seek to establish themselves in Africa (especially the South), mainly to Mauritius, for economic reasons (signature of non-taxation agreements between the two great powers) and social (labor is cheap, and the clash of cultures is less obvious between the Indians and Mauritians than the rest of Africa).

Indian investments on the island represent 415 million dollars over three years (between 1999 and 2002). The sectors concerned are mainly those services related to New Technologies of Information and Communication (NTIC), as well as industrial production (car and bus body by the TATA group, for example).

In addition to industrial production automobile production is growing in South Africa as a very specific industry, pharmaceutical generic drugs, through the two multinational groups Ranbaxy and Dr Reddy, are taking competitive advantage of the exemption production quotas by the WTO in crisis, endemic to serious diseases: HIV, flu).

Tags: China; India; investment in Africa; oil, automobile, pharmaceutical industries in Africa

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