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9 May 2019, Gateway House

Africa’s priorities, India’s approach

The recently concluded CII-Exim Bank Conclave on the India-Africa Project Partnership elicited in-depth discussions on how to increase economic cooperation between the two countries. Three themes emerged, the infrastructure deficit continuing to be one of Africa’s greatest preoccupations

Distinguished Fellow, Foreign Policy Studies Programme

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Africa has been a top priority for India in recent years, but the quantum of trade is still distant from India’s projected goals.[1] Economic cooperation between Africa and India has therefore been under constant review and monitoring by officials, experts and the business community. A joint exercise to assess its progress was undertaken at the 14th CII-Exim Bank Conclave on the India-Africa Project Partnership, held in Delhi on 17-19 March 2019. An annual conference, it was attended by 500 delegates from 41 African countries. An equal number from India participated. Their conclusions will interest stakeholders in Africa, India and third countries, desiring to take part in trilateral cooperation projects.

Among a variety of themes and topics discussed at this incredible festival of ideas, here are three that deserve to be highlighted.[2]

First, infrastructure and connectivity are of the highest importance to Africa today. The continent stands on the verge of launching the world’s largest trading bloc, but it may remain an unfulfilled dream for a long time to come if the deficit in physical infrastructure persists. Infrastructure is critical to the African Development Bank’s strategy of ‘High Fives’, viz. Light up and Power Africa, Feed Africa, Industrialise Africa, Integrate Africa and Improve the Quality of Life for the people of Africa.

An in-depth dialogue among experts covered various aspects of the infrastructure sector, including roads, railways, ports, electricity, water supply, sanitation, housing and digital connectivity. Only 39% of the population in Africa has access to sanitation; 69% to drinking water; and 46% to electricity. Africa has the lowest expanse of paved roads relative to other continents. Consequently, the cost of goods exported from Africa, mostly natural resources such as minerals, coal, diamonds, crude oil, wood and copper, increases by 30%-40% owing to poor connectivity and delays in delivery. Exporters to Africa, who encounter these constraints as they fight to be competitive, must find solutions that contribute to improving infrastructure in Africa. (Investment in infrastructure by trading partners can promote employment and help grow the country’s economy substantially.)

Development financing, therefore, assumes crucial significance for Africa. In this regard, the continent suffers from an estimated annual financing deficit of $100 billion in the infrastructure sector. This can be met only if all available avenues are tapped optimally:

  • Foreign investment apart, African countries need to enhance their own revenues, especially the private sector, which barely contributes 8%-10% share of infrastructure financing. The business community needs to take a more concerted interest in having roads materialise.
  • Global institutional investors, who manage funds worth $120 trillion globally, ought to invest in Africa.
  • The African capital market should be developed steadily so that trading in shares of infrastructure companies can take place.
  • Finally, partner countries, such as India, should be clear that investment into Africa is the only way to step up mutually beneficial cooperation. Merely trading is not enough; investing is the way to reach the heart of Africa.

Speakers at the conclave suggested measures to reduce the construction risks in road and rail projects. They also pointed to the need to leverage pension funds for long-term financing of these projects. Ease of doing business – or the lack of it – is a problem that Indian industry has brought up periodically. Another idea advocated was to introduce innovative financing products to the African diaspora.

Second, agriculture received priority attention both from the African and Indian participants. The contrasts between African and Indian agriculture is striking: India has one-ninth of Africa’s land area, both have roughly the same size of population; yet, while India is largely self-sufficient in food production, Africa is unable to feed itself. With 60% of the world’s arable land, it barely contributes10% of the global output. Those who spoke confirmed the need for partnerships between Indian and African companies at the pre-farming, farming and post-farming stages. The potential for cooperation in infrastructure, skill development, mechanisation and food processing is enormous. India has proven prowess in the agricultural sector, thanks to the Green Revolution, whereas Africa has a felt need here, with massive tracks of unused, cultivable land and a large population to feed.

Participants broadly agreed on a multi-pronged strategy to fill this lacuna. India needs to help generously with inputs, such as seeds and fertilisers, as the soil quality is in decline in Africa. Agricultural practices can be based on scientific knowhow and better techniques, such as crop rotation, hybrid breeding, genetic modification, crop tracking, advanced irrigation and use of modern equipment: while 800,000 tractors are sold in India annually, only about 16,000 are sold in Africa.

At the post-harvest stage, cooperation should encompass skill development and speedy transportation of agricultural produce to the processing facilities before reaching it to the consumer.

Seeking African land on lease for agricultural purposes is a prickly area and India is aware of not hurting African sensitivities, but at the conclave, the Africans themselves suggested that Mozambique, for example, is open to contract farming whereby private players mobilise the highly dispersed population and help the people raise higher yields.

Third, the idea of forging trilateral partnerships between India, Africa and a third country drew much attention at this year’s conclave, with a new study by the CII[3] discussing the huge potential for cooperation by five select countries, namely Germany, Japan, U.S., France and UAE. The B-to-B platform for such cooperation can be more effective than the G-to-G. Enticing opportunities beckon in numerous sectors, such as infrastructure, start-ups and social enterprises, healthcare, consulting, manufacturing and development cooperation. The study has stressed the need to build “familiarity and trust” between Indian and foreign companies “to a level that they can operate in Africa jointly”.[4] A recent example of such collaboration is a proposal, still in the formative stage, for an Indian company to build a hospital in Ethiopia with funding from the UAE.

India’s business sector needs to internalise these ideas and come up with practical plans to scale up its operations in Africa in collaboration with Africa Inc and suitable partner companies in third countries.

As Nqobizitha Mangaliso Ndlovu, Zimbabwe’s minister for industry and commerce, advocating more inflow of Indian investment into Africa, put it: “Climb the elephant when it is rising because you cannot go up once it has risen.”[5]

Rajiv Bhatia is Distinguished Fellow, Foreign Policy Studies Programme, Gateway House. A former high commissioner to Kenya and South Africa, he writes regularly on African affairs.

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[1] India-Africa trade in 2017-18 was valued at $62 billion whereas the stated goal is $150 billion in the next few years.

[2] The author participated in the conclave and cited information in the ‘Post Event Report: Key Assertions and Recommendations’, put together by the CII Secretariat.

[3] “India in Africa: Developing Trilateral Partnership”, published by CII.

[4] Ibid. Page 38.

[5] Author’s notes.