Comment

The opportunities for businesses on both sides are tremendous

There are encouraging signs that India and Africa are embarking on long-term initiatives, which can help address key developmental challenges and enhance the economic and strategic leverage of both the partners.

Each side is aware that without leveraging on the complementarities and forging a constructive and mature partnership, managing economic, technological, and governance challenges of the twenty-first century will be even more difficult.

In 2007, the merchandise trade between India and Africa was about $30 billion, about 8% of India’s global trade. If services trade were included, this figure would be higher. In 2006, India’s total services trade was $140 billion, but its breakdown by countries and regions is not available. This gap needs to be urgently filled as India now ranks sixth in the world in service exports.

While India’s key economic partners in Africa are South Africa, Nigeria, Egypt, and Algeria, the African continent comprises more than 50 countries. India’s trade, investments, and its nearly 3 million-strong Diaspora (about 10% of its global Diaspora) are nevertheless spread in all parts of Africa, providing it with a solid base from which to expand economic linkages.

Africa’s improving growth prospects are turning its 700 million people, with a GDP of $710 billion, into an attractive market opportunity for globally integrating India. As with Africa’s other economic partners, India also hopes to access Africa’s energy and mineral resources, but its involvement is far less resource-centric than has been the case with Africa’s other partners.

Some African nations (e.g. South Africa) have technologies in sectors such as mining, agriculture, and food processing, which could be profitably employed in India. Given India’s current skills shortage, it may find professionals from Africa competitive.

Africa may find India’s knowledge-intensive, private-sector led development; and its adaptable, appropriate, and affordable technologies suitable for small, medium and large enterprises as useful balancing factors against its other partners, including the industrial countries and China.

Studies undertaken by the World Bank and others have found that Indian firms in Africa are better integrated into domestic markets, and they overwhelmingly opt for Africans, even for managerial positions.

This is likely to be even truer of the new global Indian firms, which have acquired deserved reputation for taking their corporate social responsibility seriously. Their experiences in profitably tapping the opportunities of the market of those at the ‘bottom of the pyramid’; and improving their employability within India are fairly well-known. These can be duplicated in Africa, thus helping to address its major developmental challenge.

There has been consistency in India’s economic and strategic diplomacy towards Africa. The NDA government’s initiatives (such as Techno-Economic Approach to Africa-India Movement, or TEAM-9, covering eight West African nations) have been continued by the current UPA government. India has extended a $500 million credit under TEAM-9.

A South African academic has expressed the hope that India’s long-standing programme called Indian Technical and Economic Cooperation (ITEC) through which thousands of Africans have been trained in agriculture, engineering, construction and small-scale industries, will be expanded further to cover all African Union countries.

The Pan-African e-network joint initiative between India and the African Union, launched in 2007, aims to develop information and communication technology (ICT) infrastructure across the African continent. Under it, India would donate $1 billion to connect 53 African countries through a satellite and fibre-optic networks to promote tele-medicine and tele-education programmes.

The first ever India-Africa Summit, held in April 2008 in New Delhi, has agreed on a Framework for Cooperation, which envisages long-haul developmental partnership, with focus on health, food security, water sanitation, skills development and infrastructure.

The other areas in which greater linkages are envisaged are development of business enterprises and unification of Africa’s markets. This focus reflects Ugandan President Yoweri Museweni’s remarks at the Summit that Africa erred in not encouraging private entrepreneurship and in not preventing excessive fragmentation of African economies, and polity.

During the Summit, India announced preferential access for manufactured goods from 34 African nations. To fully benefit from this initiative, these countries could consider a partnership with India’s business organisations to increase the density of bilateral business linkages.

The Framework also includes regular exchanges of experiences in climate change research, science and technology, security and peacekeeping, and governance. The Framework particularly singles out railways, information technology, telecommunications, and power generation for priority attention.

In the area of food security, African countries need to apply knowledge-based integrated crop management, develop supply chain, and use proven technologies to turn waste and marginal lands into a more productive resource. India’s private and public sector companies have been engaged in innovations in this area, though Indian government’s investments in agriculture research and infrastructure have lagged. A constructive partnership between African nations and Indian companies is feasible and should be pursued.

The property rights relating to land and regulatory issues involving agricultural inputs such as fertilisers, are likely to be the major constraints in developing such a partnership. African nations, which are serious about such a partnership, should address these constraints.

More positive perceptions about African countries need to be encouraged. The Indian businesses and academic organisations should also encourage training in languages used in Africa; and develop deep strategic expertise about African countries.

There are business opportunities in the services sector in Africa, particularly in professional services sector involving healthcare, accountancy, and others. There is also scope for partnerships among Indian Diaspora based in different parts of the world for economically engaging African countries.

African leaders are aware that their enhanced leverage due to the abundance of energy and resources, and due to improved growth prospects, can only be sustained if excessive dependence on one major power is avoided; and they avoid excessive nationalism by building regional and sub-regional cooperative institutions.

India should recognise that its continued growth prospects are vitally dependent on addressing domestic infrastructure, governance and human development challenges. Unless it is perceived by the rest of the world to be addressing these challenges with competence and focus, its long-term high growth cannot be sustained.

The stakes therefore are high for both sides in making the development partnership work.

The writer is Professor of PublicPolicy, National University of Singapore and can be reached at sppasher@nus.edu.sg. Views are personal.