India calls to boost trade with Africa to $70 bn

Written by ASHOK B SHARMA | New Delhi | Updated: Mar 24 2009, 03:44am hrs
India has called for doubling the India-Africa bilateral trade to the level of $70 billion over the next five years, continuing the growth trajectory that began in 2000-01 when trade was a mere $3 billion and shot up to $36 billion in 2007-08.

In April 2008 India had announced duty free tariff preferential scheme for 49 least developed countries (LDCs) which has benefited 33 African countries.

Delivering the keynote address at a special plenary at the 5th CII-EXIM Bank Conclave on India Africa Project Partnership 2009 on Monday, the Indian External Affairs Minister, Pranab Mukherjee said, Given the concrete opportunities that exist between the two sides, India-Africa trade could easily be doubled to $70 billion over the next five years. I would urge this conclave to accept this challenge and plan out strategies to achieve it. He also urged for supplementing governments effort with those from the industry, civil society and private institutions in order to widen and deepen the foundation of Indias growing partnership with the African continent.

While Indian companies have already begun investing in Africa, the African leaders have called for boosting investments in agriculture, mining, power, agro-processing, irrigation, pharmaceuticals, IT, health, retail chain and small and medium scale sector for generating employment.

The two-day conclave has the participation from 450 participants from Africa, including ministers from 12 African countries namely Mauritius, Burkina Faso, Cote dlvoire, Botswana, Mozambique, Sudan, Comoros, Togo, Congo, Uganda and Central African Republic.

India is the worlds largest importer of rough diamonds, most of which are sourced from Africa. It is also an exporter of cut and polished diamonds.

Mukherjee assured the African leaders that India was favourably considering the request of some African countries to set up Diamond Cutting and Polishing Institutes in that continent for training their personnel. He supported the endeavours of the African Union towards regional integration and for building Pan-African institutions. He said that despite the current global economic downturn India would continue to fulfill its commitments towards Africa made at the India-Africa Summit in April, 2008.

Mukherjee said that both India and Africa were in a position to confront international terrorism, hunger, poverty and to tackle global warming and evolve new frameworks for global institutions.

The Indian Technical and Economic Cooperation has benefited African students undertaking training courses in India and in 2009 the government has designed special courses for experts from Africa in mining and new and renewable energy resources. The number of training slots for African students has been increased from 1100 to 1600. The number of scholarships for African students has been doubled to 500.

Mukherjee said India was committed to helping Africa bridge the digital divide and help spread the benefits of development, specially in sub-Saharan Africa. In this connection, he pointed to Indias Pan-African e-Network Project, the first phase of which he had inaugurated in February. He said this project aims at linking major universities and centres of excellence in Africa and India as also its major hospitals with super-speciality hospitals in India to improve higher education and medicine facilities. The project, which currently covers 11 countries, will be extended to 22 more by the middle 2009.

The executive director of EXIM Bank of India, Shankernarayan R Rao said that the bank has already extended $2 billion line of credit to African nations and extending another $600 million credit was under consideration at various stages. This was a part of the commitment to extended $5.3 billion assistance over a period of five years, he said. The credit is for development of trade, infrastructure both in the private and public sectors.

Delivering the special address on behalf of the President of Burkina Faso, Alian Bedouma Yoda, the countrys Minister of Foreign Affairs & Regional Cooperation, said the great opportunities existed for Indian businessmen in his country, which had only recently opened its doors to privatization. The legal framework for this was already in place, he said.

Yoda said Burkian Faso was attempting to improve its economy by developing its mineral resources, improving its infrastructure, making its agricultural and livestock sectors more productive and competitive. All these areas offer a window of opportunity for Indian industry, he added.

In his address, the Dean of the African Group of Heads of Mission, Ambassador Jonathan Wutaunashe, emphasized that relations between India and Africa today represented the growth paradigm. The African drum and the Indian sitar are today producing beautiful music and this is clearly evident in the growth in bilateral trade between the two regions.

Pointing out that India was the place where the economic action was taking place, Wutaunashe said that relations between the two regions had graduated from simple merchandise trade to investing in assets and jointly working towards achieving the millennium development goals (MDGs).

Earlier, the Chairman, Kirlosakar Brothers Ltd, Sanjay Kirloskar noted that today the bulk of African exports continued to be of primary products and this presented an opportunity for Indian industry to help African businesses to move up the value chain, especially in the small and medium enterprises sector. Indian industry, he said, must increase its footprint in Africa.

According to Kirloskar, the areas of concern for Indian industry remained procedural and clearance delays, and inadequate bank linkages. As a result, industry is often unable to make use of approved lines of credit, letting a good business opportunity go by. For African businessmen, he said, the Indian micro-finance and SME models presented a good launching pad to upgrade their skills.

In his welcome address, the CII Director-General Chandrajit Banerjee noted that while India remained a key contributor to the development of Africas mineral and mining sectors, it could now enter into long-term partnerships in several new areas like agriculture, pharmaceuticals, alternative fuels and energy.

Development of strong capital market in Africa is imperative. The region cannot rely exclusively on outside financing. As 80% decrease in private capital flow to emerging countries in 2009 as compared to 2008 is anticipated, we need to find complementary sources of financing. Besides institutional arrangements to build capital markets, MauritianVice-Prime Minister, Minister of Finance and Economic Empowerment, Ramakrishna Sithanen, said and added that investment portfolio should be rearranged from project to program based financing.

Sithanen called for greater capacity building in recipient countries to ensure the optimal utilization of the available finance; regional coordination and cohesion; streamlining technology transfers and adopting concessional financing mechanism amongst others. He specifically mentioned that African SMEs can greatly benefit from technology transfers from India which can then be adapted to local conditions.

The Southern Sudan Minister of Finance and Economic Planning, Kuol Athian Mawien was of the view that Indian investment in commercial banking will provide favorable platform for trade in the region. He suggested Indian enterprises can invest in range of sectors in Sudan namely agriculture, infrastructure, education, oil, mining & minerals, transportation, tourism development and capacity building.

Pointing out the popularity of Indian line of credit in Kenya, Chairman, IDB Capital Limited, Obadiah K Mbaya said that the last line of credit received from EXIM Bank India was worth $5 Million in 1997 and expired in 2003. Negotiations for a new LOC have been initiated with India, he said, adding that Development Financing Institutions (DFI) should be accorded a key role in utilization of concessional credit.

President & Director General, Banque Nationale d Investissement, CotedIvoire, Nembolessini said, As India is the provider of key alternative financing, we need to formulate modes to translate this into durable joint ventures. ECA are generally directed to the government and private counterparts do not know how to use it. The regional markets therefore need regulations to direct enterprises for using ECA. Foreign Direct Investments (FDI) too should be effectively drawn to further economic development. Emerging countries like India and China assume greater responsibility in providing such arrangements.

Vice-President-Finance and Corporate Services, EBID Bashir M. Ifo, highlighted signing of a framework agreement with the Government of India in 2006. The project came into force in January 2007 and has allocated $249 (99% of the total amount) to 13 projects in energy, industry, transportation, telecom, health, water supply and social sector.