India-Africa: Harnessing the Africa-India opportunity

26 Jul 2021

Opportunities for India-Africa in the changing global architecture

The pandemic has visibly disrupted the international economic architecture, creating in its wake a multipolar world, where a greater number of countries play an instrumental role in determining world trade patterns, investment flows and development cooperation.

The changing global economic architecture is expected to create new external economic opportunities for both India and Africa.

Though the pandemic has disrupted Africa’s growth, there is expectation of accelerated economic growth in the region, once the health crisis is brought under control through mass vaccination programmes.

India sees an enduring partnering role in Africa’s economic transformation, given that it has demonstrated a deep stakeholder interest in Africa’s economic transformation. The current crisis presents many opportunities for the countries to strengthen their existing bilateral ties and carve out new avenues for joint initiatives, especially in areas largely under-explored in Africa, such as the services sector. 

India-Africa economic relations

India’s economic relations with Africa are truly multi-faceted, with the Indian Government extending timely grant-in aid to African countries, concessional lines of credit (LOCs), capacity building and technical assistance, supporting major projects in Africa, establishment of industrial units, among others.

Africa has been one of the largest beneficiaries of Government of India’s LOCs that currently amount to more than US$ 6.3 billion out of an overall commitment of US$ 10 billion.

The India-Africa bilateral trade has been growing steadily, year-on-year, with the trade volume touching US$ 55.9 billion in 2020-21.  India is the fifth largest investor in Africa with cumulative investments of US$ 54 billion.

The greater goals are to take bilateral trade beyond the level of US$ 150 billion, as well as double investments in Africa to US$ 100 billion in the next few years.

While India’s Duty-Free Tariff Preference Scheme (DFTP) for Least Developed Countries (LDCs) has benefitted 38 African countries and contributed to the expansion of India-Africa bilateral trade, yet, there is significant scope for more geographical diversification of India-Africa trade flows.

Potential Areas for Collaboration

One key area where Indian industry could play a catalytic role is the strengthening of the region’s manufacturing abilities, as currently, only 2% of global trade in intermediate manufactured goods comes from Africa.

It would be strategic for African countries to maximise their trade-related economic growth by tapping into India’s growing markets and invest in trade-related infrastructure and trade facilitation.

Building Strong Linkages

The establishment of the India-Africa Trade Council and opening of 13 offices in India working directly with African embassies in Delhi will open up huge trade and investment opportunities for Indian business in Africa.

The Government of India identified 18 African countries including Burkina Faso, Cameroon, Cape Verde, Rwanda, Somalia, among others where new missions would be opened. The initiatives would be based on a model of cooperation, that is responsive to the needs of African countries.

In the recent past, India has also established IT centres in South Africa, Egypt, Morocco, Ghana, Namibia and Tanzania, among others; a Centre for Geoinformatics Applications for Rural Development (CGARD) Technology Centre in Madagascar, vocational training centres in Ethiopia, Rwanda, Burundi, Burkina Faso, Gambia, Zimbabwe, and Egypt; a Technology Centre in Zimbabwe; and entrepreneurship centres in a few countries.

In pursuance of trilateral cooperation with Africa, India is collaborating with Japan and Kenya to build a cancer hospital and is collaborating with UAE to set up a centre of IT Excellence in Ethiopia.

India is also helping Africa to bridge the digital divide through the 2nd phase of the pan-Africa e-Network project – e-VidyaBharati and e-ArogyaBharati Network Project, which aims to provide 5-years free tele-education to 4,000 students, free medical education to 1,000 doctors/nurses/paramedics and free medical consultancy.

Energy cooperation is also a key subset of India’s development partnership with Africa. Under the International Solar Alliance (ISA) a sizeable share of India’s concessional credit has been earmarked to Africa.

The India-Africa partnership has also immense potential in the area of addressing key environmental risks including climate change and loss of biodiversity.

Similar cross border initiatives may also be undertaken toward promoting a circular economy that advocates re-use and recycling of goods for a greener tomorrow.

CII-EXIM Bank Conclave on India-Africa Project Partnership

The 16th CII-Exim Bank Conclave on India and Africa Project Partnership was held during 13-15 July 2021 over a virtual platform, with the theme “Harnessing the Africa-India Opportunity: Connect, Create, Collaborate”.

Over the last 15 years, India-Africa Conclave has helped build bridges and develop economic and commercial engagement. It has created capacities, encouraged networking, results of which are visible in India’s growing presence in Africa as much as with Africa’s collaborations with Indian institutions.

This year’s conclave deliberated on the many opportunities and challenges that underpin the India-Africa bilateral partnerships and was attended by ministers and dignitaries from both countries, including India’s Minister of External Affairs, Dr. S. Jaishankar.

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