India and Africa: Partners in Development

18 Sep 2020

India and Africa relations go back many centuries and are well documented, but the dynamics of their relations today are fitting for economies that represent the world’s most vibrant growth stories today. 

Africa will represent almost a quarter of the world’s workforce and consumers by 2030. It will not be an overstatement to say that with 54 countries, a billion people, a youthful demographic, and an abundance of resources, Africa will emerge as one of the regional engines for investment and trade.

The continent has taken major strides towards economic integration through initiatives such as the African Continental Free Trade Area (AfCFTA). When in force, AfCFTA is projected to raise intra-Africa trade levels by 52% and create one of the largest and most ambitious trading regions  in the world. It is evident from the Indian government’s proactive approach that India wants to be a part of that exciting space.

What has allowed India to chart its growth in the continent is its foreign policy, which is based on a model of cooperation beyond strategic concerns and is responsive to the needs of a rapidly growing continent, especially its youth. Moreover, India has strong people-to-people connect through a long-established and well-integrated diaspora community in Africa. 

Since 2014, there has been strengthening of political engagement from both sides, with 29 visits to African countries at the level of President, Vice President and Prime Minister from India and 35 reciprocating leaders from Africa. To enhance diplomatic engagement, India has decided to open 18 new embassies in Africa (out of which 9 have already been opened), to take the total number of Indian missions to 47 out of a total of 54 countries. 

Today, both have comprehensive diplomatic mechanisms at many important levels – continental, regional, bilateral, and through multilateral fora. The India-Africa Forum Summits I, II, and III have accelerated cooperation in many new areas, adding new sectors and processes. India has also had meetings with the Regional Economic Communities (RECs) of Africa and is looking at ways to enhance cooperation in International Solar Alliance (ISA), Indian Ocean Rim Association (IORA), Indo-Pacific and other groupings.

Secondly, trade and investment numbers are also encouraging. India-Africa trade in 2019-20 was valued at $69 billion, a 12% annual increase. The Duty-Free Tariff Preference (DFTP) Scheme announced by India has benefited 38 African nations by extending duty free access to 98.2% of India’s total tariff lines. India has also become the fifth largest investor in Africa with cumulative investments of $54 billion with thousands employed locally – yet another example proving that India’s interests in the continent go beyond economic benefits. 

The goal now is to scale up bilateral trade volumes to US$150 billion and double Indian investments in Africa to US$100 billion in the next few years.

The Government of India has taken part in various capacity building initiatives in the region. These include more than $1 billion in technical assistance and training under the Indian Technical and Economic Cooperation (ITEC) program, 40% of the seats of which have been traditionally reserved for Africa. 

In the context of COVID-19, India has shared management strategies and training webinars by Indian health experts to train African healthcare professionals. Further, India has invested $100 million in the Pan-African E-Network to bridge the digital divide in the continent, leveraging its strengths in information technology.

CII’s Conclave Partner, EXIM Bank of India, further ensures that development cooperation remains a key feature of our engagement under the Indian Development and Economic Assistance Scheme (IDEAS). After South Asia, Africa is the largest recipient of Indian overseas assistance with Lines of Credit (LoC) worth nearly $10 billion (nearly 40% of total LoC’s globally) spread over 100 projects in 41 countries. Private sector has an important role in leveraging innovation and entrepreneurship, which will allow market extension and transfer of skills and technology that work on the ground. 

Apart from this, trilateral partnerships have proven to hold considerable potential. For example, India will be collaborating with Japan to build a cancer hospital in Kenya and is in discussion with the UAE to set up a Centre for IT Excellence in Ethiopia. This is also in line with the nascent Asia-Africa Growth Corridor initiative, a 2017 economic cooperation agreement between the governments of India, Japan and multiple African countries and a first attempt at a growth plan that will integrate the strengths of Asia with the development priorities of Africa. 

India has an intrinsic interest in partnering with Africa’s progress. The two can give a strong impetus to South-South Cooperation, both in traditional fields of collaboration, as well as in addressing and overcoming new challenges like digitization and connectivity in the context of the current pandemic.

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