India-Africa trade has grown four fold in last six years, underscoring their perfect fit and growing relationship as trading partners. While Indian low cost technology can help create infrastructure in Africa and build its education system, Africa provides resources and markets for India’s booming economy.
The 7th India Africa Conclave, organized by the Confederation of Indian Industry (CII) and EXIM Bank of India with support from the Ministry of Commerce and the Ministry of External Affairs, provided an opportunity to strengthen this relationship. The conclave was held between 27- 29th March 2011 and 204 projects worth more than US$ 18 billion were discussed. In the last six editions of the conclave, 1084 projects worth US$56.08 were discussed.
This year’s conclave focused on reducing Africa’s dependence on western technology, products and services and enabling India to step in with its Appropriate, Affordable and Adaptable technologies, known as Triple A technologies. Participants also talked about catalyzing large scale exports from the Indian Small and Medium Enterprise (SME) segment.
Trade between India and Africa has grown as EXIM bank extended Lines of Credit (LOCs) on behalf of the Government of India for Indian businesses to grow in Africa. The Indian presence has been largely in agriculture, food processing, irrigation, education, infrastructure, health and pharmaceuticals. A sector wise analysis of India’s engagement in the key sectors stated above and the value of trade in these priority sectors since 2009 are detailed at the end of the article.
Agriculture, Food Processing and Irrigation: Agriculture has been a priority sector in India-Africa co-operation because while Africa has about 27% of the global arable land, low productivity has meant that it is wracked by food insecurity. The Indian presence is aimed at creating a ‘sustainable solution to hunger and poverty in Africa’ and to be an ‘engine of growth’, according to New Partnership for Africa’s Development (NEPAD) and Comprehensive Africa Agriculture Development Programme (CAADP).
Over 80 companies have already invested up to US$2.3 billion in commercial farming initiatives at the invite of African countries offering land on long term lease. Indian companies, including Kirloskar Brothers Ltd (KBL) and Jain Irrigation, have brought in their cost effective irrigation technologies, which have helped raise crop yields through an increase in the acreage under cultivation. WAPCOS, a public sector undertaking that tailors solutions in the water resources, power and infrastructure sectors in several developing countries including Africa, offered to share its expertise with their African counterparts, at the conclave.
Such indigenous technologies in the SME sector, such as food processing, are triple ‘A’ technologies and suitable to the African context.
Education, Human Resource Development and Capacity Building: India has been a preferred destination for African students because of its reputed institutions, cost effective fee structure and affordable cost of living. At the conclave, participants talked of extending the presence of Indian educational institutions in Africa and giving out more scholarships to African students to study at Indian educational institutions. Several countries, including Mozambique and Somalia, urged India to impart quality education and skills and share their expertise and promote innovation.
India has announced 300 new scholarships for African students, especially in agricultural sciences, through the African Union Commission to be implemented by Department of Agriculture Research and Education (DARE) and the Indian Council of Agricultural Research (ICAR) at 75 a year for four years since March 2010. Through this program 45 scholars are already in place.
The benefits of Indira Gandhi National Open University (IGNOU), the largest of its kind in the world, have been extended to more than 13 countries in Africa, through the novel Pan African e- network.
NIIT, a technology education provider, has tied up with various companies for providing training and skills through e-learning and has been developing Information and Communication Technology (ICT) manpower through its state-of-the-art training centres in Africa, for over a decade.
DARE and the ICAR will also provide 2-4 week long customized training in water conservation and utilization; production of seed, sapling and planting material, livestock production, fisheries production, farm mechanization, post-harvest processing & value addition.
In addition to this, India is also in the process of setting up 21 educational institutions in Africa to help Africans develop skills in sectors like coal and diamond mining, ICT, foreign trade and to provide other kinds of vocational training.
Investments in Africa’s Infrastructure- for Value Addition and Increasing Connectivity: Africa’s recent growth has accentuated the need to strengthen its poor infrastructure. Increasingly, growth is held back by the lack of infrastructure. While African governments continue to be the largest investors in infrastructure, with a share of over 40% of investments, there is a still a huge need for investment for which Africa turns to the private sector and funding from abroad.
About half the operational LOCs extended by EXIM Bank have a direct infrastructure focus. With the help of these LOC’s Indian companies have invested in infrastructure projects and provided water, power, roads, and plants for assembly of agricultural equipments, housing, rural electrification, IT parks and hydro electric projects.
The Indian railways has shared its low cost model and supplied locomotives to Mozambique, Tanzania, Mali and Senegal and coaches to Angola
At the 7th CII Conclave the value of infrastructure projects discussed was well above any other sector and has increased almost six fold since 2009 ( See table 1). Speaking about the upcoming India-Africa Forum Summit of 2011, the Ethiopian Prime Minister Meles Zenawi said, “The key area of interest is going to be the Indian investment in infrastructure.”
Health and Pharmaceutical Sector- the Indian Comparative Advantage: With the tagline ‘First world health care at third world costs’, India has the fastest growing health and pharmaceutical sector. By providing access to life saving medicines inexpensive generic anti retroviral (ARV) drugs at affordable costs by Indian pharmaceutical companies such as Ranbaxy, Aurobindo Pharma and others have won global acclaim.
A large number of African people have benefited from affordable anti-AIDS drugs from India which reduced the cost of treatment from $11,000 per patient to $400. At the Conclave, delegates from Malawi, South Africa and Zimbabwe lauded India companies for providing cost effective ARV’s and requested them to build capacity through sharing of knowledge and manpower and developing innovative ways to increase access to healthcare.
Apollo Hospitals, the Indian hospital chain, has set up a multi-specialty hospital in Mauritius and is exploring the possibility of other joint ventures in Africa, through a private public partnership (PPP) model. The novel Pan- African e-network project that offers telemedicine consultations is operational is several countries
The government of India has extended an LOC of US$ 5 million to Government of Senegal for financing supply of medical equipments, furniture and other accessories to four hospitals in Senegal.
India’s strengths in the above sectors have provided a basis for greater collaborations between the two partners wherein cost effective and innovative business models that are adaptable to the local conditions can be replicated in Africa.
Lines of Credit and Bilateral Trade: Speaking at the 7th CII conclav
e India’s Commerce Minister, Anand Sharma said, “While the current volume of India-Africa trade stands at $45 billion, we have set a target of $70 billion for 2015. I am confident we will achieve that.” The government of India will facilitate this by extending LOCs, encouraging Public Sector Undertakings (PSUs) to enter Africa, giving grants and other such measures. So far, India has extended LOCs of more than US$ 5 billon and grants worth US$500 million to countries in Africa. Of the total of 138 operative LOC’s by EXIM Bank globally, 98 are in Africa. (as of 15th April 2011).India’s strengths in the above sectors have provided a basis for greater collaborations between the two partners wherein cost effective and innovative business models that are adaptable to the local conditions can be replicated in Africa.
The Years Ahead: Africa, as a region, shows great potential for growth with seven out of the top ten fastest growing economies for 2011 – 15 being from Africa, according to EXIM Bank, March 2011. China was the fastest growing economy followed by India. Going ahead, the focus areas for trade will be agriculture and infrastructure because the unfinished tasks in these sectors are of a great magnitude. With a population of over one billion people, the continent has tremendous business potential for government and private sector stakeholders, who wish to expand their trade and engagement in to the ‘new frontier’ through Foreign Direct Investment (FDI), capacity building and human resources development.
*This article is a summation of the India- Africa CII- EXIM Bank Conclave held in New Delhi, 27- 29 th March, 2011. It is based on the author’s research and participation at the annual CII- EXIM Bank Conclave, 2011.