In­dia, Africa rekin­dle trade ties

Old friends ex­plore new pos­si­bil­i­ties

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U ntil she trav­elled abroad when she started col­lege, Zara Mwanzia had thought that cha­p­ati— the de­li­cious bread she ate while grow­ing up, which most Kenyans still eat— was a lo­cal del­i­cacy. “I was sur­prised to find out that cha­p­ati ac­tu­ally orig­i­nated from In­dia,” she said, mus­ing at how she had been wrong all those years.

Zara could be for­given for her ig­no­rance of the per­va­sive­ness of In­dia’s cul­tural in­flu­ences in east­ern and south­ern Africa. Tea is another In­dian di­etetic in­flu­ence on lo­cal cus­toms. In the Kenyan cap­i­tal of Nairobi and around the coun­try, teatime has an East­ern in­flu­ence: In­dia’s chai—a mix of milk, tea, sugar and spices—is the drink of choice over other beverages nor­mally served at break­fast and other meal­times.

Cul­tural and trade re­la­tions be­tween In­dia and Africa ex­tend be­yond cha­p­ati and chai, go­ing back to an­cient times— from early fourth-cen­tury trade, through Bri­tain’s ship­ments of In­dian labour to work on colo­nial projects, to po­lit­i­cal co­op­er­a­tion dur­ing the strug­gle for Africa’s in­de­pen­dence.

“Old friends and old fam­ily”

The In­dian pop­u­la­tion in Africa, in­clud­ing peo­ple of In­dian de­scent, was es­ti­mated to be about 2.7 mil­lion in 2015. More than half of them are set­tled in South Africa, a third in Mau­ri­tius and some in the East African coun­tries of Kenya, Tan­za­nia and Uganda.

We are “old friends and old fam­ily,” said Nir­mala Sithara­man, In­dia’s min­is­ter of state for com­merce, at the Third In­dia-Africa Fo­rum Sum­mit ( IAFS-III) in Oc­to­ber 2015. Held ev­ery three years, the sum­mit is used by In­dia to dis­cuss trade and in­vest­ment op­por­tu­ni­ties with African lead­ers and to fos­ter diplo­matic re­la­tions.

At a time when African coun­tries are look­ing east­ward, shift­ing at­ten­tion away from their tra­di­tional Western eco­nomic part­ners, and when Asia’s boom­ing economies are rush­ing to in­vest in Africa, a shared his­tory ap­pears to help in boost­ing trade and in­vest­ments be­tween African and In­dian “friends and fam­i­lies.”

A four-na­tion African tour by In­dia’s Prime Min­is­ter Naren­dra Modi in July 2016 ( his first-ever), on the heels of Pres­i­dent Pranab Mukhar­jee first-ever visit to the con­ti­nent a month prior, is the

strong­est sig­nal yet of re­vived in­ter­est be­tween “old friends.”

Data from the In­dian govern­ment and the African De­vel­op­ment Bank shows that bi­lat­eral trade be­tween In­dia and Africa rose from $1 bil­lion in 1995 to $75 bil­lion in 2015.

From 2010 to 2015, Nige­ria was In­dia’s largest trad­ing part­ner in Africa with $1.6 bil­lion ex­port-im­port vol­ume, fol­lowed by South Africa with $1.1 bil­lion, while Kenya came third and Mozam­bique fourth.

Over­all, since 2010, In­dia’s ex­ports to Africa have in­creased by 93% while im­ports rose by 28%, ac­cord­ing to Africa-In­dia: Facts & Fig­ures 2015, a joint pub­li­ca­tion of the United Na­tions Eco­nomic Com­mis­sion for Africa ( ECA) and the Con­fed­er­a­tion of In­dian In­dus­try (CII). Africa’s share of In­dia’s global ex­ports rose from $17.9 bil­lion in 2010 to $34.6 bil­lion in 2015, ac­cord­ing to the report.

With $64.2 bil­lion from 2000 to 2012, Mau­ri­tius is by far the main des­ti­na­tion for In­dia’s for­eign di­rect in­vest­ment (FDI), ac­cord­ing to a 2015 pub­li­ca­tion of the South African In­sti­tute of In­ter­na­tional Af­fairs.

Yet that amount, which rep­re­sents three- quar­ters of In­dia’s to­tal FDI to Africa over the same pe­riod, is skewed be­cause Mau­ri­tius is a tax haven for for­eign in­vestors, the report sug­gests. The siz­able in­vest­ments in Mau­ri­tius, the report says, are linked to Amer­i­can com­pa­nies’ tak­ing ad­van­tage of favourable fis­cal rules to route their money through the coun­try. They in­vest in In­dia through Mau­ri­tian com­pa­nies.

Pri­vate sec­tor in the driv­ing seat

In­dia’s in­vest­ments in Africa con­tinue to ex­pand. Bharti Air­tel, the New Delhi– based gi­ant telecom­mu­ni­ca­tions com­pany, is an ex­am­ple of In­dia’s ex­ten­sive pri­vate­sec­tor pres­ence across the con­ti­nent. The com­pany has been the mar­ket leader in 18 African coun­tries since it en­tered the mar­ket in 2010 af­ter tak­ing over op­er­a­tions from Kuwait’s Zain Tele­com in a deal val­ued at more than $10 bil­lion at the time. With over 76 mil­lion sub­scribers as of March 2015 and a work­force of about 5,000 peo­ple, Air­tel is now the sec­ond­biggest tele­com op­er­a­tor in Africa.

Tata Africa Hold­ings, with a base in Jo­han­nes­burg, South Africa, is another highly rec­og­niz­able In­dian com­pany in Africa. Its ve­hi­cles, in­clud­ing trucks, semi-trucks and pub­lic trans­porta­tion buses, branded with its red-and-white lo­gos, are com­mon on African roads.

Tata Africa Hold­ings busi­nesses go be­yond ve­hi­cle as­sem­bly, how­ever. Strongly present in 11 coun­tries, it is also in­volved in in­for­ma­tion tech­nol­ogy, chem­i­cals, steel and en­gi­neer­ing, hos­pi­tal­ity, en­ergy and min­ing. In 2016 the com­pany de­clared in­vest­ments in Africa in ex­cess of $145 bil­lion and a work­force of 1,500.

Other ma­jor In­dian com­pa­nies op­er­at­ing in Africa in­clude Arcelor-Mit­tal (steel prod­ucts and iron min­ing), Es­sar Steel (steel prod­ucts), Coal In­dia, Vedanta Re­sources (cop­per and other met­als min­ing), Varun In­dus­tries (rare earth min­er­als), Jin­dal Steel and Power (steel and en­ergy) and Apollo Tyres (tyre man­u­fac­tur­ing and dis­tri­bu­tion).

On the other hand, In­dia-bound in­vest­ments from Africa are about $65.4 bil­lion, ac­cord­ing to Africa-In­dia: Facts & Fig­ures 2015. Most of the in­vest­ments were by Mau­ri­tius-based com­pa­nies, with South African multi­na­tional com­pa­nies’ in­vest­ments in in­fra­struc­ture de­vel­op­ment, brew­eries and fi­nan­cial and in­sur­ance ser­vices ac­count­ing for less than $1 bil­lion. But a South Africa-based In­sti­tute of Strate­gic Stud­ies (ISS) report pre­dicts African in­vest­ments in In­dia are likely to keep grow­ing.

At the end of the 2015 In­dia-Africa Fo­rum Sum­mit, Prime Min­is­ter Modi an­nounced a $10 bil­lion line of credit over the next five years for In­dian com­pa­nies wish­ing to in­vest in Africa. He also promised grant as­sis­tance of $600 mil­lion, to in­clude an In­dia-Africa De­vel­op­ment Fund of $100 mil­lion, an In­dia-Africa Health Fund of $10 mil­lion and 50,000 schol­ar­ships for African stu­dents in In­dia over the same pe­riod.

Bol­ster­ing the links

If such an­nounce­ments at the previous In­dia-Africa sum­mits in 2008 and 2011 are any in­di­ca­tion, the line of credit and grant will sup­port projects in many African coun­tries. An ear­lier grant of $7.4 bil­lion was geared to­ward 137 projects in 41 coun­tries, the joint ECA- CII report pointed out, while another grant of $500 mil­lion funded ca­pac­ity-build­ing projects, in­clud­ing set­ting up spe­cial­ized in­sti­tu­tions, pro­vid­ing schol­ar­ships and train­ing pro­grammes, and im­ple­ment­ing the Pan-African e-Net­work project. The e-net­work cur­rently con­nects 48 African coun­tries. In ad­di­tion, in the past three years alone, 25,000 Africans have been trained or ed­u­cated in In­dia.

Dur­ing a visit to Ghana in June this year, Pres­i­dent Mukher­jee said his African tour was part of a wider out­reach and would be fol­lowed by Prime Min­is­ter Modi’s to more African coun­tries. This, he re­port­edly said, meant: “Africa, we stand by you.” A month later, Mr. Modi vis­ited Kenya, Mozam­bique, South Africa and Tan­za­nia, where he signed sev­eral bi­lat­eral agree­ments with his hosts.

In­dia Min­istry of State for Ex­ter­nal Af­fairs

African Union Com­mis­sioner for Trade and In­dus­try Fa­tima Haram Acyl (left) and In­dia Min­is­ter of State for Ex­ter­nal Af­fairs Vi­jay Ku­mar Singh (cen­ter) at the Third In­dia-Africa Fo­rum Sum­mit in Oc­to­ber 2015 in New Dehli, In­dia.

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