India and China Follow 'Don Nori' Diplomacy... Emerging as Major Creditors in Africa

India Provides $12 Billion Loans to Africa
Funds 195 Infrastructure Projects
Aims to Dominate Critical Minerals Market
Ambition to Expand Economic and Diplomatic Influence

India has emerged as a major creditor in the African region by consecutively extending loans to developing countries. The intention is to expand its economic influence in Africa. Concerns have been raised as India appears to be following the precedent set by China, which burdened developing countries with debt.

Narendra Modi, Prime Minister of India [Photo by Yonhap News]

According to the Export-Import Bank of India on the 5th (local time), over the past decade, 42 African countries have borrowed $12 billion, equivalent to 38% of the credit limits extended by the Indian government. The funds were invested in infrastructure projects within these African countries, with a total of 195 projects financed by the Export-Import Bank.

Harsha Bangari, Managing Director of the Export-Import Bank of India, explained, "We have extended loans for more than three times the number of infrastructure projects in our own country over the past 10 years," adding, "The Export-Import Bank of India has effectively been used as a tool for economic diplomacy with Africa."

Since Narendra Modi took office in 2014, India has been making every effort to expand its diplomatic influence in Africa. The plan is to secure the African mineral market to get ahead in the emerging secondary battery sector. Africa is rich in key minerals such as lithium and nickel, which are essential materials for secondary batteries.

India’s loan diplomacy is analyzed as following in China’s footsteps. China has been dominating Africa’s major mineral markets through loan diplomacy. In exchange for large-scale investments, China has acquired mineral mining rights from African countries. From 2016 to 2020, China promised loans totaling $134.6 billion to African countries, which is 11 times the amount provided by India.

However, India is going a step further than China by also expanding its diplomatic influence. Bloomberg reported that since 2014, the Indian government has established embassies or consulates in 25 countries, 18 of which are in African nations. In January, Prime Minister Narendra Modi hosted the ‘Global South’ summit, which included developing countries from Asia and Africa, inviting 48 African countries.

Bloomberg stated, "Prime Minister Modi is actively entering the African market with the goal of simultaneously expanding economic and diplomatic influence," and added, "The Indian government views the current crisis caused by COVID-19 and the Russia-Ukraine war as a golden opportunity to enter the African market."

This content was produced with the assistance of AI translation services.