Igniting new hopes
In South Africa -- the first stop in Prime Minister Narendra Modi’s African tour -- an aspirational middle class is splurging in malls and global coffee chain outlets, according to The Economist.
Mozambique, the next destination, is the latest market where the Made-in-India hatchback Renault Kwid has gone on sale with exports commencing in the first week of June. In Tanzania, the mobile phone sector is one of the most sophisticated in Africa.
Not to forget Kenya, the final leg of the PM’s African tour, where the growth of digital banking has ushered in next generation ATMs to help make bill payments and reduce wastage of time at long queues.
Obviously, Africa is changing fast and this change augurs well for India-Africa relations as Prime Minister Narendra Modi embarks on another round of a proactive agenda of engagement with Africa.
It is his belief that “Africa’s economic growth has gathered momentum and has a more diversified base. African initiatives are replacing old fault lines with new bridges of regional economic integration”.
This round of African diplomacy involving Mozambique, South Africa, Tanzania and Kenya which marks his first visit to the African mainland is significant from two perspectives.
First, it is a determined build-up of the momentum that India-Africa struck during the India-Africa Forum in October last year which was India's largest ever Africa outreach and largest gathering of pan-African leaders in India.
It appears that Prime Minister Modi is not keen to let the African dialogue slip to a routine. Spaced out interfaces like summits with African heads of state or governments as borne out by back-to-back visits to Africa by Vice President Hamid Ansari and President Pranab Mukherjee.
Industry welcomes what it sees as a strong signal of the Modi Government’s intent to continue, consolidate, and capitalise on the progress made in engaging with African nations.
Second is the growing importance of India and Africa to each other economically and strategically. India has been a significant partner in Africa’s growth story, underlined by progress, potential, profitability, and expanding footprints of Indian industry.
Africa’s is an emerging force with the continent’s collective GDP expected to touch $3.6 trillion by 2020 up from $2.1 trillion in 2011, and a burgeoning market projected to expand to $1.4 trillion by 2020 from $860 billion in 2008.
From the strategic point of view, Africa’s importance lies in India’s economic and maritime interests in the Indian Ocean region. We may see Prime Minister Modi’s trip in sync with his emphasis on building ties with Indian Ocean Rim economies through the “blue economy initiative” which aims to build on maritime trade links between India and the countries situated along the Indian Ocean.
With South Africa, Kenya and Mozambique among these, it is important for India to establish deeper links with Africa so as not to get crowded out by other Asian giants looking to build up equity with many countries in Africa.
Even as a vibrant India and a resurgent Africa bond over economic and strategic complementarities, industry would like to see a more robust partnership commensurate to the size and strengths of India and Africa. There are plenty of options to deliver on these goals and expand trade and investment. It is believed that manufacturing has tremendous potential to do so.
Africa’s automotive sector is growing on the back of rapid urbanisation, a growing consumer base with rising disposable income and a huge regional market, significant investments towards creating infrastructure across ports, roads, and railways and training programmes to build a skilled labour force. These are incentives that Indian automotive manufacturers need to tap.
Likewise, Africans would also do well to utilise “Make-in-India” to boost their prospects. Indian manufacturing offers scope for real value addition. Matching India’s capability in high value-added production and manufacturing with African products and technology would help in developing a mutually rewarding long-term partnership.
India is also building world class infrastructure and I see no reason why we can’t share our valuable expertise and human resources in building roads, airports, ports, railways, economic zones and industrial corridors.
What we can’t overlook are the prospects of commercialisation of Indian innovation and technology in Africa which is opening up big time to these new areas. For instance, a unique opportunity lies in Africa’s agriculture sector which suffers from low productivity, limited use of technology, lack of high yielding varieties of crops and good quality seeds.
This opens a window for Indian entrepreneurs to showcase their innovative capabilities in high social impact sectors including agriculture, information and communication technology, pharmaceuticals, energy and healthcare.
Industry has already put in place various initiatives such as the Millennium Alliance and India Innovation Growth Programme which can support Indian innovators in strengthening industries with cutting edge technologies.
Capacity building of entrepreneurs is critical today to fuel the economic engine of African economies. There is a growing interest among Indian entrepreneurs to invest in African countries in diverse sectors including mining, driven by the potential for high growth in these markets.
India and Africa need to bring together educators and capacity building institutions from the two regions to find mechanisms for building capacities of private sector to bolster global competitiveness of Africa.
A natural and lucrative partnership between India and Africa is in renewable energy. India we know has set a target of adding 175 Giga Watts of capacity in the next seven years and East Africa is witnessing significant advancements leading to solar cells that are less expensive, sturdier, and able to produce more wattage from the sunlight they absorb.
Indian solar energy firms can partner with African banks to advance low-interest loans for purchase of equipment — solar panels, and solar-powered water heaters, lamps and TVs -- and then tap a mature market to invest in facilities to manufacture solar equipment. There are gains on both sides.
Let us not ignore the rich possibilities of collaboration in agriculture and agro-processing. Africa has vast tracts of very fertile land for agriculture but Indian investments in agriculture can fulfil Africa’s needs -- improvement in access to credit for small farmers, utilisation of inputs, enhancement of yield per acre as well as address the need for low-cost mechanisation of farms and irrigation solutions.
India can also unleash massive possibilities in digital penetration in the continent. The Digital India initiative can be useful as Africa steps up its IT spend on e-government solutions, new banking platforms, security to information management. Indian industry has technical expertise in these areas as well as in setting up low-cost IT parks which could be an asset to Africa’s nascent IT sector.
At the heart of the economic stakes is the very significant constituency of Indian diaspora that Prime Minister Modi has been conscious about drawing into a closer embrace. There is a sizeable number of people of Indian origin in Africa—especially South Africa and Kenya and there is a need to evolve programmes that can involve the diaspora more intensely.
It is obvious that the possibilities of building relations are infinite. We have to push the boundaries, become more risk-averse and make this African safari a win-win game on both sides.
(The writer is President, FICCI. Views expressed are strictly personal.)