India Inc should align efforts with the African Continental Free Trade Area’s agenda for benefits to flow in both directions.
India and Africa share a long and rich relationship, with our freedom movement becoming an inspiration for African nationalists in their desire for independence from colonialism. In present times, both India and Africa desire a mutually beneficial relationship by collaborating through lucrative trade and investment opportunities.
The African Continental Free Trade Area (AfCFTA) is significant in this regard, as it provides a wide scope to create the largest free trade area in the world, by geography, with a lot of countries actively taking part in it. The AfCFTA provides a window of opportunity to lift 30 million people out of extreme poverty, though it requires conducive policies to realize its true potential.
The AfCFTA will boost intra-regional trade by creating a single market for goods and services, facilitate the movement of persons, promote industrial development as well as sustainable and inclusive socio-economic growth, and also resolve the issue of multiple membership in accordance with Africa’s agenda for 2063.
Growth in India-Africa economic relations is evident in rising developmental projects by India. India has worked extensively on these projects via concessional loans, grants and capacity building programmes, all of which have played a significant role in Africa’s socio-economic development.
So far, India’s cumulative investments in Africa stand at $70 billion, while the country has extended lines of credit (LoCs) worth $12.26 billion to African countries; 193 projects have been completed and 66 are under execution, while 88 are in their pre-execution stage in various sectors. The investments are related to oil and gas, mining, banking, pharma, textiles, the automotive sector and agriculture.
Indian industry can play a significant role in development cooperation and leverage the new opportunities presented by the AfCFTA. Our industry strengths can be harnessed to advance a digital transformation through innovation and transfer of technology, set up investment in cross-border supply chains to help create jobs, incomes and wealth, and build ports, airports and roads and other infrastructure to facilitate commerce. These developmental efforts should be in sync with the priorities of the AfCFTA.
The 17th Confederation of Indian Industry Exim Bank Conclave on the India Africa Growth Partnership this week has a large participation from African ministers and delegates and will discuss steps to catalyse Indian investments in Africa. Some key areas have been marked out for a special focus:
First, we must promote India-Africa bilateral trade and investment under AfCFTA, as its formal arrangements will allow for much more of both. Indian industry could align its efforts with the free trade agreement’s priorities to gain greater market access for its goods and services. It could also look at investments that would help tap other markets in Europe and the Gulf from the African continent.
Two, opportunities in services trade with Africa include information technology, other new areas of technology, IT services, health, education, legal services and other fields which have a wide scope. Mobile payment solutions, insurance and many other banking and financial services also could be looked at as avenues of collaboration.
Three, opportunities in pharmaceuticals and the healthcare sector are especially relevant in the post- covid era. There is significant space available for Indian industry in this area. India’s success in manufacturing vaccines and pharmaceuticals, as also its more recent advances in tele-medicine, are strengths that could be leveraged.
Four, a robust digital infrastructure could serve to accelerate economic growth and is imperative for all-round development, encompassing all sectors. Africa’s digital transformation will also contribute to the achievement of the continent’s Agenda 2063. India, as the world’s third largest startup ecosystem with a wide base of small and medium enterprises, could count on its strengths to fortify the digital infrastructure of an entire continent.
Five, India should engage in building important infrastructure for cross-border supply chains to operate efficiently in Africa. The AfCFTA seeks to facilitate international supply chains for food, pharmaceuticals and various other essential products. It would help if an African policy focus were to encourage the development of cold-storage hubs at major air and road border points to facilitate the movement of agricultural products. This could be facilitated through partnerships with local agri-business experts, investors, farmers or farmers’ associations to leverage their domestic knowledge of the participant countries.
Six, empowerment of the youth and women are pre-requisites for overall development. Skill development and capacity building play a vital role in achieving this and India has proactively facilitated arrangements on this front for African nationals. In 2017, almost 50,000 scholarships had been granted to African students over five years under the aegis of the Indian Council for Cultural Relations. Further, the Indian Technical and Economic Cooperation programme is assisting Africa in giving people opportunities to learn new skills and acquire knowledge through training programmes. The latter are largely guided by a desire for scientific and technological cooperation and include joint research projects on building capacities.
In Africa, women today represent nearly 90% of its labour force in the informal sector. Women are largely employed in education, healthcare and tertiary services in Africa. Therefore, sectors that are primarily women-oriented in their income generation will get a boost from developmental cooperation under the AfCFTA’s auspices. These efforts can be greatly scaled up to provide tangible benefits to African youth and women, which would enhance India’s brand image across the continent as its economy emerges.
These measures would contribute to the longstanding India-Africa partnership and would clearly be a win-win for both.
This article first appeared in Mint on 18 July 2022.