ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Delivering a Global India

Capital Flows and Development Dilemmas in South Africa’s Mining Zones

Manjusha Nair (mnair4@gmu.edu) teaches at the Department of Sociology and Anthropology at George Mason University, Fairfax, US.

The high volume of capital flow from India to Africa is often enclosed in the political rhetoric of a shared future shaped by shared histories of colonial exploitation and anti-colonial resistance. Scholarly discussions on the Indian networks in Africa portray them as either a re-scramble or a win–win partnership, but little is known of the ground practices surrounding them. This ethnographic study of two Indian mining corporations in South Africa testifies to cautious engagement by Indian capital negotiating corruption scandals, commodity–price fluctuations, and the conflicting expectations of state bureaucracies and mining communities. It transcends the depictions of South–South capital flows as win–win situations, re-scrambles, or enclave economies.

The author thanks Dilip Menon at the Centre for Indian Studies in Africa, University of the Witwatersrand for institutional support and the Singapore Ministry of Education for financial assistance (under grant R–111–000–142–112). Ntebogiseng Bojosi and Bongekile Malinga provided research assistance. The author is grateful to the anonymous reviewer at EPW for their valuable comments.

The commerce between India and Africa will be of ideas and services, not of manufactured goods against raw materials after the fashion of Western exploiters. Then, India can offer you the spinning wheel. If I had discovered it when I was in South Africa, I would have introduced it among the Africans who were my neighbours in Phoenix. You can grow cotton; you have ample leisure and plenty of manual skill. You should study and adopt the lesson of the village crafts we are trying to revive. Therein lays the key to your salvation.

— Gandhi, in conversation with West African soldiers, 1946

In the past 15 years, Africa has emerged as a key destination for capital flow from India. Foreign direct investment (FDI) flow from India to Africa reached an unprecedented $15 billion in 2014, from a meagre 0.049 million in 1996 (United Nations Conference on Trade and Development 2015).1 The value of Indian exports to Africa also rose by over 100% from 2008 to 2013, a rise that while not quite comparable to the huge export basket of China, was still notable as India had surpassed the United States. The African imports into India saw a simultaneous increase of 80% during that period (Sy 2015). The trade and investment flows have been forged through new institutional arrangements agreed upon by the concerned state representatives. The Third India–Africa Forum Summit was held in October 2015 in New Delhi, where India hosted the heads and representatives of 54 African states. The selectively chosen histories of Indian Ocean connections and the anti-colonial resistance to the British were used to cement this partnership.2

Prime Minister Narendra Modi, in his visit to Mozambique, South Africa, Tanzania, and Kenya in 2016, evoked the shared pasts to hint at how India would be a better partner than China, offered Indian expertise in meeting the soaring health needs of the continent, laid the ground plans for future collaborations, and invited African manufacturers to India as part of his Make in India initiative (Chandran 2016).

While recent studies have produced interesting conversations on the presence of China in Africa (Hart 2002; Lee 2014; Mohan 2013), little is known about the Indian presence in Africa. Speculations about a mutually beneficial partnership are proliferating among the business media, yet very little systematic social research on the ground practices of Indian multinational corporations—let alone a study of their practices in host societies—has been accomplished. What do the ground practices reveal about the nature of capital flow from India to Africa? Is it a re-scramble with no benefit to Africa, or is it a beneficial partnership with developmental outcomes such as skill transfer? Does it create enclaves that are set aside from the bulk of Africa, as James Ferguson (2005) has claimed about neo-liberal capital–state engagements, or does it improve the well-being of local residential areas?

I draw on ethnographic research on two Indian mining firms in South Africa conducted in the summers (South African winter) of 2015, 2016, and 2017, stretching to two and a half months. India and South Africa have been entangled in multiple historical connections and contemporary similarities, which make them ideal for examining South–South capital flows. Slavery, trade, and indentured labour have shaped the movement of people, resulting in a huge Indian diaspora in South Africa. Gandhi started his Indian nationalist struggle in South Africa, while the anti-Apartheid struggle drew power from the ideals and tactics of the Indian freedom movement. India was a steadfast opponent of the Apartheid regime: it cut ties with the Apartheid state and imposed a comprehensive embargo on Apartheid-era South Africa. The inherited British colonial legacies continue to shape the institutional present of both countries (Hofmyer and Williams 2009; Patel and Uys 2013). Both are vibrant and obstinate democracies despite being swarmed by poverty, inequality, corruption, and health issues (Heller 2009). Further, India and South Africa are similar states and societies: both are middle-income economies, neither a hegemon nor subordinate state, and both economies were incorporated into a neo-liberal regime in the 1990s.

I use the pseudonyms “Incoal” for the colliery and “Oremag” for the iron ore mining firm to protect the confidentiality of my respondents. Fieldwork involved structured and semi-structured interviews, conversations, and field observations. I spent time in the colliery and iron ore mines after gaining permission from their headquarters in Johannesburg and interviewed executives, management, and mining staff. My attempts at talking to the mining communities associated with Incoal were met with resentment from some of the locals that considered me an outsider and possibly a spy recruited by the mining firm; the mine managements of both firms were averse to the idea. I was fortunate to find student assistants who assisted me in asking questions and collecting information about the communities.

My fieldwork was caught up many a time for want of capital and due to the fears of contentious communities. There were two strikes by mine workers that occurred during my visit, but I could not talk to the mine workers at length, being under the watchful eye of the mine officials. The fact that I am Indian helped my conversations with Indian staff in the mines, but it discredited me in front of the local communities who associated my Indian ethnicity with the Indian company.

In this paper, I offer an overview of the debates surrounding South–South capital flows and build on the empirical evidence from my fieldwork to articulate my argument about a complex South–South engagement.

Debates on South–South Partnerships and Development

Although an Afro–Asian partnership that detached itself from colonial and imperial connections to the Western world characterised the Bandung Conference in 1955, it was not until the conclusion of the Cold War and the consolidation of the world through a neo-liberal organisational framework that a discourse on South–South cooperation and development emerged. The Buenos Aires Plan of 1978 charted the possibilities of technology partnership among 138 states in the global South under the aegis of the United Nations (UN); these were later institutionalised as the Special Unit for South–South Cooperation of the UN in 2004 and other institutional branches such as the BRICS (Brazil, Russia, India, China, South Africa) and the IBSA Dialogue Forum (India, Brazil, South Africa) partnerships. These partnerships, especially the IBSA Dialogue Forum, were built on common colonial histories and expectations of ambitious futures of the participating countries as emerging economies (Alden and Vieira 2005; Sidiropoulos 2011).

Implicit in this discourse was an uninhibited faith in the global processes such as trade and investment flows in strengthening economies and societies. The role of FDI specifically in bringing forth development through employment, training of locals, transfer of skills, building capabilities, and expanding capital and technologies has been praised as a better alternative strategy to foreign loans and aid (Harrison 1994; Shin 2014). The demand for the products and the markets was further created by these economies within the partnership, such as with the rise in demand for crude oil, iron ore, and coal in China, India, and Brazil. In 2012, China consumed 50.2% of the world’s total coal demand and 11.7% of its total oil demand, and China and India alone accounted for about 90% of the net growth in worldwide energy consumption (Bildirici and Bakirtas 2014).

Scholars see in this South–South partnership as yet another re-enactment of the deeply hierarchical and exploitative colonial imperialism. A few have characterised the rising interest of India, China, and other emerging economies in Africa as a “re-scramble for Africa,” drawing parallels to the original scramble for the African resources by the Western colonial powers that resulted in the pauperisation of the continent (Bond and Garcia 2015; Harris 2005; Martin 2013; Palat 2008; Robinson 2015). In the case of Africa in particular, the question was raised whether the economic hardships created by the flight of Western capital and the location of the African states at the periphery and semi-periphery could be compensated by a new invasion of Southern capital that was, once again, not bound to these states by any means other than rhetoric (Arrighi 1979; Martin 2008). The trends in investment and trade do substantiate this critique. China and India reinforce the classic colonial trade pattern of buying natural resource-based goods such as crude oil and copper from Africa, while flooding the African market with consumer merchandise. In 2014, India’s imports from sub-Saharan Africa consisted primarily of raw materials (84%) and exports were dominated by consumer goods (64%) (Sy 2015).

However, there are many others who see in this new partnership a tactic to counter the stifling agency of the Southern powers in global institutions such as the International Monetary Fund (Glenn 2008; Vieira and Alden 2011). The emergence of new global governance agencies such as BRICS perhaps pointed to the possibilities of a multipolar phase in global development, and the Southern powers could use their new markets, expertise, and political weight to shift the global system to their advantage (Guerrero 2013).

A variety of interesting conversations are afloat on China’s African engagements. The patterns of spread and organisation of capital through exclusive enclaves of development encouraged by the gatekeeper states and elite agreements portrayed at length by James Ferguson (2005) and Fred Cooper (2005) have been used to analyse them (Bergesen 2008; Bräutigam and Tang 2011). Others have argued that enclave economies and elite bargaining have characterised China’s expansion only partially (Mohan 2013; Lee 2009) and that their use and character vary across projects and according to local labour availability (Chen and Orr 2009).

Little is known about the field experiences of the Indian corporations in Africa. Indian pharmaceuticals have captured the African markets through the discourse of a humanitarian intervention that permits them to enter into mutually beneficial agreements with the South African state (Kottakkunnummal 2016). The difficult attempts at the construction of a racialised and gendered Indian ethnic space in a mining corporation in Mozambique have been narrated poignantly by Melinda Barnard (2016). Yet, as Sharad Chari (2015) points out, we know little about the uneven processes of extractive accumulation on the ground and the potential of Indian capital for something we might defensibly call “development.”

An enquiry into the practices of Indian capital in Africa must justify the need for a distinct study of India. Chinese capital, both from parastatal corporations and small entrepreneurs, is heavily protected and subsidised by the Chinese state through a network of state investments in infrastructure, political patronage, and soft power. A Chinese investor whom I met in Johannesburg in July 2016, an official of a firm run by the Beijing Municipal Corporation, summarised the Chinese presence in South Africa in these words: “China is going to stay in South Africa, whether the ZAR [South African Rand] is rising or falling. China wants to be a global player and needs friends.”3

Investments that are tightly backed by the state are not the character of Indian capital and could make it more volatile to the global market and local political conditions. On the other hand, India has much more of a shared colonial history, postcolonial trajectories, and diasporic connections with Africa than China. This might mean a greater assimilation with local contexts and an ability to navigate the local terrain that Chinese firms might not have.

It is in this context that this paper undertakes a study of Indian mining in South Africa. My exploration adds yet another layer to the unpredictability of the outcome of South–South flows by highlighting the nature of capital and regional differences within South Africa.

Dissociating from India: The Northern Cape

“Oremag Iron Ore Proprietary Limited” was a subsidiary of a multinational industrial conglomerate in India that started iron ore extraction in the Northern Cape in 2012, taking advantage of the iron ore price boom in 2011, a boom triggered by huge demands from infrastructural developers and steel manufacturers in China who could not rely on the inferior ore available at home. Despite the naively optimistic predictions of a further boom by market advisers, the price fell from the highest peak of $187.18 per dry metric tonne to the lowest in 10 years at $40.88 in December 2015, a few months before my visit, subjecting Oremag to a vicious downhill cycle. My fieldwork in Oremag in July 2016 was done in the shadow of this slump in the market as well as that of the Gupta family scandal.4

Oremag presented the impression of a cautious entity carefully carving out its space in the South African mining space under the towering presence of established enterprises such as Anglo American and Assmag, which controlled the lion’s share of the mining and exports. As an intentional business strategy to remove visible connection to the Indian parent corporation, Oremag was set up under a South African subsidiary. The Indian corporation held 64% of the equity shares in the South African firm, while 26% was held by the South Africa Industrial Development Corporation and 10% by a local business group, following the mandated ownership requirements under the Mining Charter.5

As such, there was no evidence of an Indian ethnic enclave in sight around Oremag. It appeared almost inconsequential to Anglo American, which had maintained an old-fashioned company town about 20 kilometres away, housing the employees of Oremag and other mines. Anglo American also ran an airport that functioned as the local airport. The Indian staff of Oremag lived in what was called a “farmhouse” in the wilderness surrounding the mines, intended perhaps to provide closer access to the mines. Other than the Punjabi cook (in the absence of whom the residents ate out in the town) and the NDTV channel to which the TV was tuned, there was little else in the farmhouse that directly pointed to India. There was no Indian flag or other visible marker of Indianness or the parent corporation in the farmhouse or the mine.

Oremag employed 123 workers directly on its payroll, of which 23 were women, and 360 were recruited indirectly through contractors. The number of Indians among them was low: a geologist who lived in the farmhouse and a few high-ranking executives visiting from Johannesburg. All other office employees and mine workers were South Africans, and most were native to the province. The legacy of Apartheid was visible in the racial hierarchies entrenched in recruitment:
the top-level managers were white, except for the Tswana-speaking human resource manager native to the Northern Cape, chosen intentionally due to the close interactions with the predominantly black field staff. The middle and lower tiers of management were racially mixed, including whites, the “coloured,”6 and the Tswana-speaking groups, all indigenous to the Northern Cape. The field workforce was mostly Tswana.

There were a few accusations of lack of assimilation by the Indians of South African culture and history. The Oremag management lapsed in the celebration of Mandela Day on 18 July; in the mines where an employee worked previously, the staff went into town and did their 67 minutes of service to humanity.7 Only one staff member, who held a middle-level managerial position, accused the Indian owners of racism. He commented that the Indians trusted the whites and placed them in positions of power. The field-level staff strongly disagreed with suggestions of racism; their grievances were because of the problematic ways in which the Indian owners recruited labour, but they did not view that as racism. In fact, I was told at the headquarters of Oremag in Johannesburg that Indians did engage in racist discrimination in the farmhouse: they refused to hire a black cook or to share the farmhouse with guests who were black. They seemed cautious, however, to not nurture these racist preferences at the workplace.

The top-level managerial staff had experience with working in other mining companies before joining Oremag. Many had limited interactions with Indians in the Northern Cape. The Head of Mining in Oremag, also simultaneously a white farmer, revealed that this was his first interaction with Indians though he had seen them in the Natal province (KwaZulu-Natal now) before. One way in which he made sense of the racial hierarchy and working for an Indian boss was by differentiating between South African–Indian and “Indian-Indian.” Indian-Indians, he said, were tolerant, had a culture of learning, had integrity, and were willing to look after the employees.

Many staff at the middle managerial level were appreciative of the way in which the company treated them and the opportunities they got to improve their human capital. The cultural affinity between Indians and South Africans was drawn on to praise the Indians. The field bay administrator, who was coloured, considered the Indian companies humane and interested in helping family and felt that he was given the respect of an elder in the workplace. The chief safety officer, who was Tswana, had encouraging experiences with Indian teachers in his high school. He also knew Indians who owned bookshops in his town who could speak Tswana well. He was happy to have joined Oremag as it provided him with more space to grow: he could even email the chief executive officer (CEO) directly rather than going through multiple in-betweens as at other mining companies. He praised the CEO for avoiding large-scale retrenchment during the financial slump. The control room supervisor, one of the 23 women employed by Oremag, felt that both Indians and South Africans shared similar family values.

While a culture of fear of the management was absent at Oremag and I could conduct interviews with all the staff and field workers freely, the fear of job security was notably present. Oremag workers lived under the fear of retrenchment and wage cuts due to the fluctuating commodity prices and resented that the management resisted the formation of a union that could represent them and was mandated by South African legislation. Many were associated with an unrecognised union connected with the Association of Mineworkers and Construction Union (AMCU), and a few wore AMCU t-shirts during the interview. Negotiations mediated by the Department of Labour for recognition of the union were ongoing, but Oremag was still able to “keep unions at bay.”8 Workers expressed resentment at the lack of job security, flexible employment practices, salary freezes, and the inability to address these grievances through a trade union.

Oremag had limited interactions with the one mining community on its premises, though the mining regulations mandated that the mining companies must conduct an assessment to determine the development needs in collaboration with mining communities. Companies are required to identify projects for contribution to community development, and the costs must be proportionate to the size of their investment. The municipal government that was supposed to lead these projects was yet to show an interest in drawing a collaborative plan. Oremag had only one village in its vicinity; this Tswana village was a recently habituated one with shiny new shacks. The residents were relocated here from another location during the Apartheid era to make way for a military base. They were now being asked to relocate again to prevent being exposed to the health hazards associated with mining in the region. Some of them decided to stay, while some others moved.

Those who moved to the vicinity of Oremag found that even after three years, they lacked access to basic necessities such as water, health clinics, and schools, which the other village had, and that they had little avenue for employment in the mines since they did not possess any skills. They did not know of the Mining Charter, yet they expected Oremag to help in providing the basic services that the village lacked:

Their mine is just opposite our village. They are aware that people live there and their water supply pipes run through our village, yet we do not have any water. The humane thing for them to do would be to assist us by providing [us] with water supply.9

They also wanted Oremag to look to them first when hiring general workers, before giving the opportunity to others. While my research assistant was visiting them, they decided to march towards the mines with their requests. At Oremag, they were not stopped at the gate, and the staff sat down to talk to them and redirected them to the municipality. At the municipality, the receptionist welcomed them, wrote down their complaints, and promised speedy solutions. The Oremag official at Johannesburg told me that the firm had to build communities in consultation with the municipality and not personally. The municipal government was supposed to come up with a plan for things that the local community wanted, such as a soccer field, mobile clinics, roads, and internships, and only then could Oremag intervene. The firm was still waiting to hear from the municipality.

Oremag was navigating a relatively tolerant mining environment, due in part to its own cautious tactic of underemphasising differences from the rest of South Africa. Incoal presented a contrasting picture; it was proud to bare its Indian origin and faced a contentious mining environment. We turn next to a discussion of Incoal.

Representing India in a Contentious Environment

“Incoal” is a direct venture of a corporate entity that shot to fame in neo-liberal India through its coal mining and power generating operations in the 1990s. The colliery in Mpumalanga, which was acquisitioned in 2008, was one among the many of its undertakings in 13 African countries. Though it was a private firm with 26% of its stock owned by South Africans in accordance with the mining regulations, symbolic references to the Indian state and nation were present everywhere in the headquarters in Johannesburg and the colliery that was about 350 kilometres away. The Indian and South African flags swayed together in the bright winter sun in front of the colliery and the mine office, conveying the impression of an equal business partnership between two nations. The Indian colours, photographs of the Indian Prime Minister, and a portrait of the chairperson against a flag with another flag in his lapel, all referred to the rather proud presence of a global India in this place where the only South Asian presence otherwise was in the form of a few shops owned by Pakistani immigrants. The Indian management was distinctly present here, unlike with Oremag. Indian tea and coffee were offered, and the offices were adorned with figures of Indian gods and goddesses. Incoal was bold in rendering a global India in this South African community.

Incoal is situated 25 kilometres from a town named after a Boer leader killed by a Zulu king and with a majority of Zulu-speaking black African residents but economically dominated by prosperous Afrikaner farmers. The unaccompanied Indian staff lived in the guest house there with an Indian cook, while those with families lived in gated communities with other South Africans and immigrants, among growing fears of rising xenophobic sentiments among the locals, which had led to an unprovoked shooting of a Zimbabwean geologist of the colliery. The town was a vestige of Apartheid segregation, and poverty and unemployment among the black population had given rise to popular protests in 2009, which had garnered national media attention.10

The new South African–Indian lawyer the company had hired told us that the company was facing serious problems from the Department of Labour for not following employment equity regulations. The firm directly employed 22 whites, 157 blacks, 22 foreigners (predominantly Indian), and two coloureds. Just as in Oremag, the race hierarchies were reproduced on the job but with a difference: the top management in the Johannesburg office was predominantly white, while the management in the mines was multiracial (black South African general manager and human resource manager, Indian chief operating officer and accountant, Zimbabwean geologist, and the newly hired South African–Indian lawyer). Most field staff was black, and from their accents, my research assistant could distinguish that some were not South African but migrants from Zimbabwe.

There were another 300 workers recruited through contractors. While the workers directly hired by the mine had full-time employment, housing subsidy, and medical and unemployment insurance, Incoal did not have any information on the wages or work conditions of those hired by the contractors. We were told by a relative of the janitor at the lodge that he was hired for three months, fired, and then hired again.11 I witnessed two strikes in the colliery and urgent meetings of the human resource manager with the miners during my visit in 2015. During my visit in 2016, I met with a Congress of South African Trade Unions representative in the town who told me that the colliery had resisted the formation of a union for five years before a union affiliated with the National Union of Mineworkers was registered in 2015. The strikes were then probably led by the unionised workers.

Work Cultures

There was a culture of insecurity and lack of trust in the colliery; a managerial representative from Johannesburg sat with us while I interviewed the staff, and those with whom I tried to have casual conversations were not comfortable doing so. I was told that I could sit in community meetings and meet with workers, but I was not given the opportunity to do so. The only other interaction I had with the workers was when I was participating in the induction programme to the mines. This induction involved listening to a slide presentation on safety measures in the mines as well as watching a few videos on accidents in other mines with graphic photographs. Workers were supposed to attend this induction at routine intervals. Young workers who sat with me ridiculed the speaker when she told me about how the workers are made to undergo sound and vision tests; they claimed that these tests were not conducted in the colliery. One of them told my research assistant that we could meet him for further conversations, but we dared not give our phone numbers or ask for any under the watchful eye of the speaker, who was a managerial staff member.

A few South African office staff commented on the management technique of the Indians, which was creating problems for labour relations in the company. The Indian management was held as aggressive and had a tendency to focus on achieving fast results while ignoring the process of arriving at the result. Some presented this as the inability of the technically educated Indian management to think beyond the immediate circumstances and their unwillingness to adapt to South African work culture. For instance, one of them pointed out that when the colliery faced problems from the contractors that were engaged in in-house mining operations, the management decided to change contracts within one month, without consultation with the employees. In other words, the Indian style of management did not believe in forging and nurturing relationships, and in the South African context, such an approach was not conducive to business and eventually led to, in a mine staff member’s own words, “volcanic eruptions in societies” that were not informed of or assisted to navigate sudden changes.

Among the Indians, there was a fear of deportation and the difficulty in getting and renewing a work visa in South Africa. Since 2009, when the Zuma government was sworn into power, the state had initiated policies to protect South African jobs from outsiders; stringent conditions had to be satisfied for a work visa to be sanctioned, which included a confirmation of the compliance of the firm to the labour laws, to be provided by the Department of Labour to the Department of Home Affairs.

The Mining Charter regulations held the colliery responsible for the social and economic development of nine communities that existed within a radius of 25 miles of the colliery. Incoal was in charge of developing two communities surrounding the mines. These communities were visibly poor: residents, who were natives, and migrants who came looking for work in the old mines before 1994, lived in shacks made of tin and plastic, and only a few owned land or cows. They lived on the fringes of huge farms owned by Afrikaner farmers.

The families we talked to sustained themselves on child and elder subsidies from the state and any income from members who had migrated to Johannesburg. There was no access to public transportation; children often dropped out of school, unable to manage a daily commute of seven kilometres in a winter that lasted six months. There were no working clinics in the area; we saw a visibly ill resident transported in a wheelbarrow to the main road to be taken to the hospital in town. Though the municipal administration was only a few miles away, there was a visible absence of the local government. There were no election flyers and canvassing agents here before the local elections in 2016, while the city was alive with them. In 2009, when the city was rocked by service delivery protests against the municipal government (note 9), these communities were not part of it. “To mount a protest in the city, we need transportation. No one will see us if we protest here.”12

To comply with the mining charter regulations, several schemes were introduced to help the residents in the mine communities, but all of them, except educational bursaries, ended in failure. Based on the social and labour plan prepared five years previously, Incoal spent around 10 million Rand ( ₹ 45 million) a year on schemes such as truck driving classes for the youth, brick making, vegetable and poultry farms, and food and beverage vending. Incoal officials claimed that most projects had to be scrapped in the middle because of infighting within the community. One reason for the failure of the development schemes was the mismatch between their goals and the needs of the communities. Due to the high rates of unemployment in the communities, any scheme involving skill transfer was not appreciated as residents wanted full-time jobs.

The Indian chief operating officer narrated his chance meeting with a few participants from the stipend programme that was introduced recently, intended to train 41 youth and provide nominal payment. The participants told him that the programme was not useful since it did not pay much and that they wanted regular work. Being someone who had risen to his position in Incoal through hard work, he was startled by their coldness towards a skill-transfer programme, given that these young people had little other opportunity in life. In our own conversations with the participants, they highlighted the uncertainty of getting a mining job after the programme and the difficulties of reporting to the training centre at 6:30 am with no conveyance.13 None of them had finished high school, and there was no college in the area to which they could commute without hitch-hiking. To these youth, who had little knowledge of what education could bring and no success stories to look up to, a skill-transfer programme seemed inconsequential.

The discontent at the colliery was marked in all the conversations that were conducted with local residents. They claimed that Incoal was investing in “ambiguous” income-generating activities such as poultry and vegetable farms, while they wanted basic services. Conversations to discuss projects and gauge the interest of communities were ongoing, and the Indian chief operating officer had to postpone his meeting with me twice to attend meetings at the town hall. Incoal’s scorecard on social responsibility depended on its success in implementing the schemes. Furthermore, Incoal faced disruptive outbursts from local residents; on one occasion, residents barricaded the entry of the colliery staff to their work premises, and children threw stones at their cars. The community representative of the joint committee with Incoal commented rather harshly on Indians:

Indians are stingy, and these guys just came here to rip off the community. The mine must just take their things and go.14

 

During my last visit to the mines in 2016, a year after the first visit, the residents claimed that the situation remained unchanged, perhaps pointing to the structural drawbacks in the social and labour plan that mismatched with community expectations.

Reviewing the Existing Evidences

Africa has emerged as an important destination for Indian capital flow, and the business arrangements around the Indian investments have been framed in the language of shared histories, Indian Ocean connections, and a shared vision of the future built on South–South cooperation. Much of the investment has been, however, in the extraction of raw materials dependent on the rising energy demand from within emerging economies. While the recent literature on multinational resource extraction from Africa, including those of Chinese parastatal and state-independent corporations, highlight an enclave-based engagement that climbed over and marginalised local communities, little is known about the ground practices of Indian firms. This paper proposes that the study of Indian engagements in Africa is worth an enquiry: India shares an entangled history with many African nations, yet unlike Chinese investors who rely on the political and financial backing of the Chinese state, Indian firms are mostly on their own.

The field studies of Oremag, an iron ore mining firm, and Incoal, a coal mining firm, in South Africa generate a complex picture of Indian engagements in Africa. The deep social regulations in South Africa, intended to protect the powerless after the end of Apartheid, negated the idea of a gatekeeper state and put enormous state pressure on the Indian firms to develop and transfer skills, provide ownership, and develop communities. Indian firms were able to firmly implement some of the projects on ownership and were trying to incorporate diversity and some skill transfer. While commodity price fluctuations threatened job security, the firms resisted the role of trade unions that the workers wanted. Communities had strong expectations of the firms to provide basic services, but the firms could not deliver due to mismatch with regulations, as in Mpumalanga, and the inefficiency of the local government, as in the Northern Cape.

These findings reveal huge variations in firm practices. While Oremag was cautiously building a place for itself in the shadows of the established mining corporations such as Anglo American and preferred not to unveil its Indian connections, Incoal was daring in explicitly representing global India. The Oremag staff and fieldworkers were more appreciative of the presence of the Indian owners than Incoal, while the latter was visibly a contentious work environment, partly due to the presence of the union that the workers were able to register. Oremag had few workers from outside South Africa, while there was overt presence of non-natives at Incoal. Both had mining communities with absolutely no development of facilities. Incoal faced a contentious environment in the mining communities where the demands of the communities did not match the social and labour plan drawn up with the help of the municipal government. Oremag, in comparison, did not engage with the local communities at all, while the communities requested welfare provisions from the mines.

This study has limitations that only future research can address. While the extractive economy shows a different pattern that demands intimate interactions with the local communities, politicians, and bureaucrats, do investments in other fields (such as pharmaceuticals) present a different picture? My own preliminary studies and an analysis of secondary literature shows that the pharmaceutical companies have been more successful in establishing a foothold in South Africa, utilising the humanitarian crisis of drugs for HIV and the presence of nearly laissez-faire regulations surrounding drug manufacturing. They were also far removed from interactions with the local communities since their manufacturing units were in urban locations, and they were less subject to commodity price fluctuations.

South Africa has a specific historical context due to Apartheid, which ended only in 1994, and a transition to a neo-liberal era without solving structural problems such as black poverty. South Africa is also a BRICS country. It is therefore left to be seen how the specificities of local state institutions and host societies might create different outcomes for Indian capital flow into other countries.

An interesting case would be that of Ethiopia. Between 2008 and 2016, about 64 Indian companies invested a total of $96.4 million in Ethiopia (Chakrabarty 2018). About 92% of the Indian investment in Ethiopia is channelled into the manufacturing sector. Unlike the discourse of partnership and cooperation that dominates Indian FDI flow into South Africa, the rhetoric that dominates Indian investment in Ethiopia seems to be that of “developmental help” (Ethiopia Online 2017). Only field research can examine how much of this discourse frames the practices of Indian business groups in Ethiopia. In sum, a lot more scholarly attention needs to be focused on the array of engagements, interactions, and outcomes that South–South economic flows can produce based on the character and histories of capital and host institutions and societies.

Conclusions

The evidence from this two-and-a-half-month field study in Indian iron ore and coal mining ventures in South Africa suggests a cautious engagement by Indian capital negotiating the rough terrain of fluctuating commodity prices and high and conflicting expectations from the state bureaucracies and mining communities. The deep social regulations in post-Apartheid South Africa placed enormous pressure on the firms to create local ownership, transfer skills, and build up communities. The state regulations conflicted with the demands of local communities for basic services, and this frequently resulted in a contentious environment. Mine workers lauded the Indian owners for their paternal care for the company. They nevertheless resisted the trade unions while the oscillation in commodity prices and use of labour contractors threatened job security. The scandals of state capture by the Gupta family eroded trust in the firms though there was no evidence of their engagement in corrupt practices.

This paper proposes that South–South capital flows may generate a wide array of possibilities that cannot be reduced to being described as re-scrambles, elite agreements, or enclave economies. While still not questioning the inane exploitative nature of resource extraction, I suggest that a lot more scholarly attention needs to be focused on the array of engagements, interactions, and outcomes these flows can produce based on the histories of capital, host institutions, and societies.

Notes

1 Though this amount is highly inflated due to the flows to Mauritius, which has a tax treaty with India, it is still significantly high.

2 See the Times of India (2015) report for the full text of Prime Minister Narendra Modi’s speech.

3 Interviewed in Sandton Business District on 25 July 2016.

4 An immigrant South African family that established a media and mining business empire through strong connections to President Jacob Zuma. Allegations of state capture, stating that the Gupta family has influenced cabinet appointments, allocation of financial and mineral resources, and control of state enterprises, have rocked the South African political field since 2016 (Chutel and Kuo 2016).

5 Since South Africa’s political transition happened at a time when the world had taken a neo-liberal turn, the state could not alter the deep-seated structural inequalities that, under Apartheid, had systematically and violently excluded the black majority (Bond 2000; Padayachee 2010). While a redistribution programme was off the table, the African National Congress-led state did embark on a series of empowerment schemes to transfer skills and ownership to the blacks and other marginalised South Africans within the neo-liberal paradigm. The goals of the Mining Charter of the Department of Mineral Resources in 2002 included achieving 26% ownership of mining interests by the Historically Disadvantaged South Africans (HDSA) by 2014, procurement from local companies in which the HDSA has a 26% share, a minimum 40% representation by HDSA at all managerial and technical levels of employment, and investment in skill development of local populations.

6 Those of mixed racial heritage. The coloured were treated as a distinct racial category by the National Party and were assigned separate and segregated residential spaces from blacks and whites by the Apartheid government.

7 On Mandela Day on 18 July, many in South Africa follow the global call by the Nelson Mandela Foundation and the charity 46,664 to spend 67 minutes in service to humanity out of respect to the 67 years Nelson Mandela spent on service to social justice.

8 Interview conducted in Johannesburg on 25 July 2016.

9 Interview conducted in the Northern Cape Province on 25 October 2016.

10 South Africa was home to a series of protests against local government demanding better service delivery and end of corruption from 2009 to 2014. Renowned sociologist Peter Alexander (2010) has termed these protests as the “rebellion of the poor.”

11 This practice of hiring and firing workers at intervals to evade the cost of hiring full-time employees has been a norm of the labour market in India even before the advent of globalisation (Nair 2016).

12 Interview conducted in Mpumalanga Province on 11 August 2015.

13 Interview conducted in Mpumalanga Province on 24 June 2015.

14 Interview conducted in Mpumalanga Province on 25 June 2015.

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Updated On : 26th Nov, 2018

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