China Effect : India Commits $200 Million To Tiny African Nation, Rwanda

Why did India offer $200 Million line of credit to Rwanda? Was it a coincidence that Indian PM Modi and President Xi of China visited the African nation almost simultaneously? What is so special about the tiny African nation that PM Modi became the first Indian PM to visit Rwanda? Was China the driving force behind the visit of Indian PM?

PM Modi’s Historical Visit to Rwanda

After discussing bilateral ties with the President of Rwanda – Paul Kagame, Narendra Modi announced that India will soon open its mission in Rwanda. At the joint press conference after one on one talks, Narendra Modi said that India’s mission in Rwanda will not only enhance communication between the two nations but also make access to visas, passports much easier.

Prime Minister Narendra Modi also said that it is a matter of pride for India to assist Rwanda in its economic ambitions and to stand by Rwanda in its journey of economic development. The two leaders after one to one discussions also held a delegation-level talks between in which partnership in trade and investment, capacity building, development and people to people ties were extensively discussed.

The two nations also signed bilateral agreements on agriculture, animal resources, defence and trade. India and Rwanda agreed to promote, diversify and facilitate economic cooperation.

India extended two lines of credit worth $100 million each. One credit line of $100 million was for agriculture while the other line of credit worth $100 million was extended for industrial parks and special economic zones.

India and Rwanda also signed a Memorandum of Understanding on cooperation in the areas of leather and allied areas, dairy cooperation, agricultural research, and collaborations in the education sector. President Kagame hailed Narendra Modi’s visit as a milestone in India and Rwanda’s friendship.

The Chinese Angle in Rwanda

While India is seeking to boost investment and trade opportunities in Rwanda, China’s massive stake and interest in the country leaves India trailing. China is by far Rwanda’s biggest trading partner and contractor — with 70% of roads in the country built by Chinese corporations. China has invested over $400,000 million in 61 different projects and signed various joint ventures over the last decade.

Earlier this year, the IMF stated that Rwanda is the third fastest growing economy in Africa. China is Africa’s largest trading partner, overhauling the United States nearly a decade ago. Bilateral trade between China and African nations touched a whopping $220 billion in 2014 and India seems to be catching up.