Africa looks to India for growth inputs

Updated on: Apr 11, 2011
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India-Africa ties are likely to get a boost when the Prime Minister, Dr Manmohan Singh, travels to Addis Ababa for the second Forum Summit.

Africa, which looks at India as a close friend and partner, is keen to engage more with Indian businesses in different fields. Various African states want to invite Indian investors in fields as diverse as education, hospitality , agriculture and mining of goldand uranium and exploration of gas.

This was the message that came across as a group of Indian journalists met with the top leadership, business community and the common man in the east African countries of Tanzania, Ethiopia and Sudan.

Beginnings have already been made. Indo-Africa trade which stood at $3 billion in 2000-01 had gone up to $39 billion in 2009-10.

Efforts are also on to further diversify trade relations, with the Government of India offering 33 least developed countries on the continent, facilities to avail of benefits under the duty-free tariff preference scheme. Between 2003 and 2008, India extended lines of credit worth $2.15 billion to African countries and has committed it will double the amount up to 2013 and offer additional lines of credit amounting to $5.4 billion, both bilaterally and to the regional economic communities of Africa.

Further, India is the second largest foreign investor in Ethiopia with approved investments of $4.7 billion of which one billion is already on the ground; 40 per cent of Indian investment in this country is in commercial agriculture.

In Sudan, India has cumulative investment and loans of $3 billion. There are 30 companies with Indian capital in steel, tiles, perfumes and plastics working in this country. Several Indian brand names including Bajaj, TVS scooter rickshaws and Indian tractors are “big sellers” in Tanzania.

Impartial advisor

There are several reasons why Africa is keen to partner with India. As the Tanzanian Prime Minister, Mr Mizengo Kitanza Peter Pinda, told the visiting media delegation, India is a “good friend” to whom the East Africans can turn to in times of need.

Giving an example of this friendship, the Prime Minister pointed out that if there was an issue, say on whether to allow a company from Russia or the US to mine uranium, Tanzania was likely to turn to India to get some impartial advice rather than either of the two developed countries.

At the same time, another reason forwarded by the African leadership for doing business with BRIC countries, including India was the fact that these nations did not push Africa.

Privately, Indian Government officials point out that sometimes this creates problems as Parliamentarians often want to know why India is not moving fast enough in Africa.

India, however, is not the only country that Africa is keen on doing business with.

The African leadership made it clear that apart from India they were equally at ease doing business with China and Brazil, both of whom also follow almost similar rules of engagement as India.

Areas of need

The Ethiopian Prime Minister, Mr Meles Zenawi, put it succinctly when he pointed out that the continent needs and can absorb every investment it can get from India, China and more.

While admitting that the current level of bilateral trade at about $40 billion was not commensurate with the potential that exists between India and Africa, the Ethiopian Prime Minister pointed out that this level was low as Africa currently did not have too many tradable items.

This, he felt, was another area where India, including its private sector could help. “I believe one of the key bottlenecks for the development of Africa is in infrastructure, skill formation and education which can be addressed through Indian public and private sector investment. Besides, developing our natural resources can also be addressed through cooperation with the Indian private sector,” Mr Zenawi said.

Among the Indian companies already in Africa are Kirloskar Brothers, Mahindra and Mahindra, L&T, Karuturi and Emami Biotech. Sudan represents EXIM Bank of India's largest overseas exposure with soft loans for electricity generation, transmission lines, railway projects, cement and sugar plants. BHEL, TCIL, RITES and BEL are helping the Sudanese government build its infrastructure. The major Indian companies in Tanzania include Reliance and Bharti Airtel.

Bilateral relations between India and Africa, be it people-to-people interaction or trade and investment, are likely to get a further boost when the Prime Minister, Dr Manmohan Singh, travels to Addis Ababa for the second India-Africa Forum Summit scheduled for end-May.

The summit will have the participation of 16 leading African countries who will discuss further ways of engaging with India. The first Summit was held in New Delhi in April 2008.

Published on April 14, 2011

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