Indian investments in mining and agriculture in Africa: Impact on local communities

The research project analyses the impact of Indian investors in selected in select African countries (namely, Kenya, Uganda, Zambia and Etopia) making use of the nine principles of the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) as well as other applicable rules and regulations.

 

In recent years, the BRICS (Brazil, Russia, China and South Africa) countries have emerged not only as major recipients of Foreign Direct Investment (FDI) but also as important investors. At the 2013 BRICS Summit too, leaders expressed their commitment to ‘stimulate infrastructure investment on the basis of mutual benefit to support industrial development, job creation, skills development, food and nutrition security.

 

BRICS countries are increasingly becoming significant investors in Africa and although Africa receives four percent of BRICS FDI outflows, BRICS countries have joined the ranks of top economic bloc in Africa.

 

As part of BRICS group, India has emerged as an economic power in the past two decades and this growth has been accompanied by an increasing demand and subsequent investment in primary resources, such as minerals, agricultural land and fuel in Africa. Indian investments in Africa have a long history dating back to pre-colonial era and have since increased significantly in agriculture, infrastructure, telecoms and mining.

 

One of the key roles of foreign investment, apart from economy wide efficiency gains through the transfer of technology and funds, is to contribute to social, economic and environmental benefits for the local communities and to improve their living standards. Foreign companies/investments have to demonstrate that communities in the host countries will derive development benefits from their existence. There is growing recognition that businesses need not to be just profitable, but more importantly sustainable in the broader context pertaining to the stakeholders and the community.

 

The research used the framework of National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Businesses (NVGs) areas of responsible business and community development. The NVGs released by the Government of India in mid-2011, look at the business responsibility as a holistic concept integrates with core business and Corporate Social Responsibility. It is applicable to both indigenous businesses as well as Indian multinational corporations (MNCs) planning to invest or already operating in other parts of the world.

 

On mapping the principles with critical socio-economic impacts of companies on the local community and environment in both the sectors, common issues such as migration, displacement, gender impacts, land rights and environment emerged as key indicators for assessing the performance of companies.