Critical Dimensions of
Indian Investments in
Africa
(IIA project)
By Chenai Mukumba
Assistant Policy Analyst
Research Questions
1.
To what degree have Indian investments impacted local
communities?
2.
What is the perception of local communities on the direct
social, economic and environmental impact of Indian
companies?
3.
Can social, economic and environmental good practices by
other Indian and non-Indian companies in other sectors be
adopted by Indian companies in agriculture and mining?
Framework of Analysis
Three-pronged process:
1.
Undertook a comprehensive literature review to identify
relevant social, economic and environmental indicators in
both mining and agricultural sectors
2.
Juxtaposed the National Voluntary Guidelines on Social,
Environmental & Economic responsibilities (NVGs) for
India against the selected indicators
3.
Undertook scoping study in each country to verify results of
secondary research analysis
Results as follows:
Research Framework
(Mining)
Critical Social Impacts
Corresponding NVG principle
and core elements
Migration - Movement of people to a
new area or country in order to find
work or better living conditions
Principle 4: Businesses should
respect the interest of, and be
responsive towards all
stakeholders, especially those
who are disadvantaged,
vulnerable



One of the most significant
impacts of mining activity is the
migration of people into a
mining areas, particularly in
remote parts of developing
countries where the mine
represents the single most
important economic activity.
Influx of people into mining
communities and reduction of
agriculture activities can result
in social conflict.
Sudden increases in mining
communities can also lead to
pressure on land, water and
other resources as well as
bringing problems of proper
infrastructure and sanitation.
Principle 5 - Businesses should
respect and promote human
rights
Kenya – Tata
Chemicals Magadi
Zambia – Nava
Bharat Ventures
Limited
• There has been an
influx of workers
and people visiting
the district.
• There is a
population increase
expected when the
coal mine is fully
operational.
• There are concerns
regarding how
migration is
affecting social life particularly sexual
behaviour.
Research Framework
(Mining)
Critical Social Impacts
Corresponding NVG principle
and core elements
Kenya – Tata
Chemicals Magadi
Zambia – Nava
Bharat Ventures
Limited
Displacement – The enforced departure
of people from their homes
Principle 4: Businesses should
respect the interest of, and be
responsive towards all
stakeholders, especially those
who are disadvantaged,
vulnerable
• Concerns were
raised regarding the
acquisition of land.
• There had been
displacement of
community
membes in the
area which
effected much
opposition from
the local
community.



In rural communities, locals depend
on the land as a source of livelihood
and many times mining activities
(exploration, expansion etc.) force
people to be displaced from their
land threatening their livelihood and
resulting in confrontation between
communities and companies.
The long-term implications of such
displacement includes accelerated
food insecurity to landless classes,
increased poverty and intensified
environmental degradation
Land rights are often an area of
consternation for local communiteis
Principle 5: Businesses should
respect and promote human
rights
• Community
members felt that
their leader was
coerced into signing
an agreement for
120 years which
resulted in loss of
land for the Masai
people.
• There is a Masai
ranch is
approximately 8 km
away from the
company and
consists of about 6
to 10 households.
• Houses for the
displaced had been
built.
Research Framework
(Mining)
Critical Social Impacts
Infrastructural investment
Corresponding NVG
principle and core
elements
Principle 4: Businesses
should respect the interest
• Education, basic amenities
of, and be responsive
like electricity and water,
towards all stakeholders,
proper infrastructure,
especially those who are
rent-sharing with locals
disadvantaged, vulnerable
and health care facilities
etc.
Principle 8: Businesses
should support inclusive
growth and equitable
development
Kenya – Tata Chemicals Magadi
Zambia – Nava Bharat
Ventures Limited
• Only the company and its

resultant establishments have
been built in the area.
• The company has built
educational and
accommodation facilities as well
as training facilities for new
staff.
• Better road networks including 
tarmac and rail transport that
link community and the

company and facilitates
movement of goods have been
constructed.
• Unlike surrounding
communities, the one in close
proximity with the company
enjoys a wide network of
electrification.
There has been an
increase in
development - water
facilities, road,
schools, health
facilities are
provided by the
company.
An airport bridge
was built.
There are efforts to
renovate Mamba
private school and
preschool are and in
the pipeline
Research Framework
(Mining)
Critical Social Impacts
Corresponding NVG principle
and core elements
Kenya
Gender impacts of mining
Principle 4: Businesses should
respect the interest of, and be
responsive towards all
stakeholders, especially those
who are disadvantaged,
vulnerable
• There have been
noticeable increased job
opportunities for women.
• Women are usually not
consulted when companies
negotiate access to land,
compensation or benefits. It
is therefore important for
mining companies specifically
and the mining sector in
general to involve women in
coming up with decisions on
issues that affect the women
directly.
• It is also important for the
sector to take into account
the needs, aspirations and
concerns of women as they
emanate from the community
Principle 5 - Businesses should
respect and promote human
rights
Zambia
Research Framework
(Mining)
Kenya
Critical Environmental
Impacts
Impacts on air/land/water
• Ground water depletion;
degradation of water
bodies; resultant health
impacts on
communities/labours
• Impact on agriculture
land/soil quality and yield
of crops as well as
deforestation
• Harmful gases or
chemicals from mining
causing health impacts on
communities and
labourers
Principle 2 - Businesses should
provide goods and services that
are safe and contribute to
sustainability throughout their
life cycle
•
Some community
members are concerned
that chemicals employed in
the processing could be
posing health risks
Principle 6: Businesses should
respect, protect and make
efforts to restore the
environment
• The environment smells
bad and the air is
completely different from
that in the immediate
neighbourhood as a result
of the contents of the lake
water which for long has
seen a mix of chemical
processing.
Zambia
• Community members are
uncertain as to whether
the oil interceptors and
ground fuel tanks are
sufficiently safe to
guarantee a conducive
and dignified living from
an agricultural and
general perspective
Research Framework
(Mining)
Critical Economic Impacts
Corresponding NVG
principle and core
elements
Kenya – Tata Chemicals
Magadi
Zambia – Nava
Bharat Ventures
Limited
Economic viability - Employment
creation, backward –forward linkages,
and skills development
Principle 3: Businesses
should promote the
wellbeing of all employees

Principle 8: Businesses
should support inclusive
growth and equitable
development
• The company is a key source
of livelihood and has created
both skilled and unskilled job
opportunities.
• There has been an increase in
employment in other sectors
as a result of the presence of
the company including
banking, hotel industry,
butchery, cultural artefacts,
bars
• The community can no
longer establish their own
businesses because the land
is owned by the company.
• There is some frustration
regarding inadequate
remuneration, expensive
health care and exorbitant
school fees by the private
schools causing the
community to rely on the
public schools.
• Young people have
gained employment
opportunities.
• Job opportunities
have increased
since Nava Bharat
took over in 2009
• There have also
been employment
spinoffs due to
input suppliers





Livelihood options sometimes
arise due to mining activates.
Loss of access to common
property resources i.e. ponds,
grazing land, market place.
Impact on businesses and/or
jobs.
Changing labour patterns that
make labour-intensive irrigation
unattractive
Impact on local economy as a
whole.
Overall reduction/increase in
income
Research Framework
(Agriculture)
Critical Social Impacts
Corresponding NVG
Principle and Core
Elements
Uganda – Mcleod Russel Uganda Limited
Land Rights
Principle 4: Businesses
should respect the interests
of, and be responsive
towards all stakeholders,
especially those who are
disadvantaged, vulnerable
and marginalised.
Land issues pertaining to boundary issues were
raised in the scoping study.

Land tenure and/or ownership patterns
are sometimes disrupted by major
rehabilitation works as well as new
agriculture projects

Small plots, communal land use rights,
and conflicting traditional and legal
land rights all create difficulties when
land is converted to irrigate agriculture.

Changes in land use patterns
sometimes have impacts on social and
economic structure of the project area
Principle 5: Businesses
should respect and promote
human rights
Research Framework
(Agriculture)
Critical Social Impacts
Corresponding NVG Principle and
Core Elements
Uganda – Mcleod Russel Uganda
Limited
Principle 4: Businesses should respect
the interest of, and be responsive
towards all stakeholders, especially
those who are disadvantaged,
vulnerable
• There has been a high migration of
workers to the area particularly in
search of employment.
Displacement and Migration
• Agricultural projects tend to
encourage population densities to
increase, either because of the
increased production of the area or
because they are part of a
resettlement project.
• Resettlement and migration of
people displaced due to large scale
farming.
Principle 5: Businesses should respect
and promote human rights
• This has had both positive and
negative impacts on the community.
Increase in teenage pregnancies
Research Framework
(Agriculture)
Critical Economic Impacts
Corresponding NVG principle and
core elements
Uganda – Mcleod Russel Uganda
Limited
Gender Issues
Principle 4: Businesses should respect
the interests of, and be responsive
towards all stakeholders, especially
those who are disadvantaged,
vulnerable and marginalised.
•
Farming at large scale may affect both the
mobility and economic activities
performed by women.
There is a large number of women
employed in the tea-picking, drying and
processing
Principle 5: Businesses should respect
and promote human rights
Infrastructural Development
Infrastructural development such as
education, medical facilities, roads,
electricity, basic amenities, training
opportunities etc.
Principle 4: Businesses should respect
the interests of, and be responsive
towards all stakeholders, especially
those who are disadvantaged,
vulnerable and marginalised.
Principle 8: Businesses should support
inclusive growth and equitable
development
• Amenities are evident.
• There has been general development
in water, road, schools and health
facilities wither provided or
supported by the company
Research Framework
(Agriculture)
Critical Environmental Impacts
Corresponding NVG
Principle and Core
Elements
Uganda – Mcleod
Russel Uganda
Limited
Impacts on air, land and water



Principle 2 Usage of Land: In a sustainable system, soil is kept in balance. Crops are rotated Businesses should
through the fields to replace nutrients in the soil. Industrial farms disregard
provide goods and
that need for balance. At times land is used continuously and not given proper services that are safe
rest. Crops are not rotated in a way that replenishes the soil. Manure and
and contribute to
chemical fertilizers are used to “feed” the soil, but through over-application
sustainability
these additives become a problem.
throughout their life
cycle
Use of fertilizers: Fertilizer carries with it other substances that are used on
industrial farms. These include antibiotics and artificial growth hormones,
which contaminate waterways and affect the plants and animals that live in
Principle 6: Business
them. Salt, a common component of manure from industries can damage soil
should respect,
quality and contributes to erosion.
protect, and make
efforts to restore the
Factory farms emit harmful gases and particles such as methane and hydrogen environment
sulphide, which can contribute to global warming and harm the health of those
living or working nearby.

Air pollution results from the overuse of machinery, the mismanagement of
manure etc.

Pollution of surface water and ground water from agricultural biocides,
deterioration of water quality
•
•
•
•
The company runs
forestation projects
for the timber
required in the
running of its
projects.
It also supports
community
forestation
initiatives.
When expansion is
started,
environmental
authorities are called
in to assess impact.
Environmental
concerns were also
raised but not
addressed but the
scoping study.
Research Framework
(Agriculture)
Critical Economic impact
Corresponding NVG Principle and
Core Elements
Economic viability : Employment creation,
backward – forward linkages, and skills
development
Principle 3 - Businesses should
promote the wellbeing of all
employees
• Backward-forward linkages: whether largePrinciple 8: Businesses should
scale farming has resulted into growth of other support inclusive growth and
sectors/industries and employment in the
equitable development
region.
• Livelihood options arisen due to large-scale
farming.
• Loss of access to common property resources
i.e. ponds, grazing land, market place.
• Impact on businesses/jobs.
• Changing labour patterns that make labourintensive irrigation unattractive:
Adverse/positive impact on local economy as a
whole.
• Overall reduction/increase in income
Uganda – Mcleod Russel
Uganda Limited
• The company has had a high
impact in reducing the high
unemployment in the area
resulting in positive socioeconomic impacts. There has
also been a growth in trading
centres, trading centres and
other similar activities.
Data Collection –
Tools and Methodology
• Scoping Study
• Surveys (structured questionnaires)
• Focus Groups Discussion (FGD) with community members
largely and one to one interviews
Stakeholder Groups
Sample Size (+/-)
Communities
50
Business Chambers
3
Project company
2
Industry/sectoral associations
2
Regulatory authorities
2
CSOs/NGOs/think tanks
5
Media/local journalists
5
Challenges
• Finalisation of countries
• Ethiopia - Had to change company, Karuturi, due to likely
closure of company
• Lack of cooperation from companies: we however managaed to
make inroads in Kenya and Uganda
Outline of Research Report
I.
EXECUTIVE SUMMARY (+/-10 pages)
This section will include:
• Background; methodology; rationale for both country and sector selection; the overall survey
results; commonalities in challenges and perspectives in the respective countries: the main
economic, social and environmental impacts of Indian investments in each country as
understood from both the local community perspective (through surveys) as well as the
selected company (through interactive sessions)
• A summary of the policy implications of the results obtained in the study and
recommendations for future policymaking and implementation at the national levels in select
‘host’ African countries as well as good practices as adopted by individual companies
II.
INTRODUCTION (+/-10 pages)
This section will provide:
• A description of the structure of the study; methodology; research questions
• The aims of the study; an overview of the role and importance of investments in developing
regions, particularly Africa; a perspective on policy space autonomy with reference to
institutional resources, capabilities, and the political economy.
• An overview of the BRICS call for increased investments in Africa and an analysis of
individual BRICS country current investment in Africa, trends, shifts, etc.
• A summary of Indo-Africa investment: how it compares to Brazil, Russia, China and South
Africa
Outline of Research Report
III.
INDO – AFRICAN INVESMENT (+/- 10 pages)
This section will provide:
• Comprehensive analysis of India’s investment in Africa: historical context, sectorial,
country/region-wise breakups, size of investments
• An overview of India’s National Voluntary Guidelines on Social, Environmental and Economic
Responsibilities of Business (NVGs), as set up by the Ministry of Corporate Affairs to assess
whether these companies are meeting their social, economic and environmental responsibilities.
• An assessment of other regulations governing Indian MNCs such as the Companies Act
IV.
CASE STUDIES (+/-100 pages: +/- 25 pages/case study)
This section will look one company in each selected country in a separate section and provide a
comprehensive analysis of the survey results. Below is a general outline for each case study:
• Introduction; economic overview; national investment climate environment; national laws, rules
and regulations governing foreign investment; country’s bilateral relations with India
• Secondary data analysis of social, economic and environmental practices of other companies
• Company selected: overview of sector, operation, size, employment (foreign/local),
backward/forward linkages, infrastructural investment, account of any campaigns/media on the
country, inclusivity, accountability and transparency
• Comprehensive analysis of local community survey results as well as other stakeholders and
companies
• Assessment of each company as per the nine principles of the NVGs that provide Indian
multinational companies with a framework for responsible business behaviour when operating in
other parts of the world
Outline of Research Report
IV.
KEY FINDINGS AND RECOMMENDATIONS (+/-30 pages)
The concluding section will draw from the previous assessments to provide useful insights on
the impact of the increasing BRICS investments in Africa. Drawing from the Indian experience, it
will look at:
• Findings from the case studies as divided by sectors
• What policies by BRICS countries could facilitate sustainable investment in Africa and make a
particular contribution to productive capacity building and employment generation,
including: infrastructure development, investments beneficial to local enterprise
development (operations with significant local linkages, financial sector investment
improving access to finance etc.).
• What policies by BRICS countries could help ensure that investment in Africa is conducive to
inclusive and sustainable development?
• Way forward
Thank you