Africa Has The Potential To Create An Entirely New Development Path: IPE MD Ashwajit Singh

Does India have Africa at the core of foreign policy? How are we reaching out to Africa?

The African continent has gained greater importance for India, post 1990. India has substantially expanded its political, economic, social and military relations with Africa, in recent years, which has made Africa an integral part of India. The most noticeable event has been the three India-Africa summits, held, in 2008, 2011, and 2015, and thereby planned for 2020. 

India’s engagement involves dealing with climate change, efforts for food and energy security, capacity building, the WTO compliant Duty-Free Tariff Preference (DFTP) Scheme, amongst many. India sees itself as a development partner in African resurgence – with a larger focus on sharing its experience of digital revolution to achieve Sustainable Development Goals (SDGs), enhance agricultural productivity, deal with terrorism & build upon cyber security, amongst others. While, India has a lot to offer, India’s reliance on energy imports, from Africa, cannot be neglected. Moreover, both sides also need backing of each other in the United Nations on UN Security Council reforms. It is gathered that the vision of India’s policy towards Africa is thus of a collaborator with an enlightened approach. 

Home to the 1.21 billion-person market, and having largest free trade area, Africa has the potential to create an entirely new development path exploiting its capacity and capability. In comparison to World’s growth rate of 3.013% for the year 2019, the Sub-Saharan Africa registered a 3.217% growth, and is expected to register an average rate of 3.896% till 2024, compared to World’s 3.549%[1]. There seems to big differences among the countries, though, fact remains, four of the fastest growing economies in the world in 2019 are in Africa: Cote d’Ivoire, Ethiopia, Ghana, and Rwanda. Africa’s opportunities are huge, though, its challenges persistent. 

With offices in Kenya and Ethiopia, IPE Global Limited (IPE) is playing a significant role, supporting, Africa’s[2] development. IPE is working very closely with Ministries / Departments, at federal and regional levels, and development partners (DFID, The World Bank, USAID, UNICEF, etc.) across sectors, viz., WASH, Education and Skills, Private Sector Development, among others. Some of our engagement have been - scoping and designing economic development program supporting creation of jobs (in Tanzania); evaluating a multi-donor project supporting lifting of existing barriers to improve trade (Burundi, Rwanda, Uganda, Kenya, etc.); knowledge sharing partner facilitating education sector reforms; evaluating tax transformation program to improve domestic revenue mobilization (in Ethiopia); reviewing public expenditure in the health sector, which aims at rationalizing the expenditure from national to regional levels (in Ethiopia).

Through these programs, IPE is playing a vital role in strengthening Africa’s comparative advantage in achieving greater economic diversification, supporting the development initiatives under the banner of south-south cooperation.  

What are the strength of India- Africa relations? Are we tapping the potential with Africa in terms of trade & investment?

India and Africa share a deep connect, which has played a strong role in strengthening their trade & economic and social relationship. The areas of cooperation has been vibrant, extending beyond trade and investment to culture exchanges, technology transfers, knowledge sharing, capacity building, and skills development. Some of the initiatives have been - India has pledged USD 1 bn for capacity building under the Indian Technical and Economic Cooperation Program; USD 1 mn towards sustainable development, poverty alleviation and capacity building under African Capacity Building Foundation Program; USD 100 mn to bridge the digital divide in Africa, via Pan-African E-Network. 

Investments across African nations through bilateral trade, has also increased manifold in the last decade. Trade has increased more than eight-fold from USD 7.2 bn in 2001 to USD 59.9 bn / USD 62.66 bn in 2017 & 2018, respectively, making India Africa’s fourth-largest national trading partner, accounting for more than 6.4% of total African trade in 2017, while, just over 8% of India’s total trade[3]. Despite this increase in trade, the two sides seems to be impacted by factors, such as, weak infrastructure & supply side capacities, limited access to trade finance, market access challenges, inappropriate policies, amongst others. 

IPE Global is playing a vital role in bridging many of these shortcomings. Through an AfDB funded program, IPE is supporting the IGAD Secretariat in developing a regional infrastructure plan that focuses on identifying projects and developing policies to improve integration, infrastructure, facilitate intra-regional trade, and support regional economic growth; IPE is involved in reviewing Ethiopian regulatory / policy norms and other constraints that are critical to mobilize finances in mini-grid sector. 

The challenges in Africa in terms of investment from India hinge on the factors like instability & regulation. What is changing now?

Indian investment into Africa has a diversified history, ranging from spices and textiles to manufacturing, natural resources and technology. The total Indian Foreign Direct Investment (FDI) outflows from India to the world from 2008 to 2016 are estimated at USD 250.9 bn, of which, the African continent accounts for about 21% (USD 52.6 bn)[4]. As per the UNCTAD 2019 World Investment Report, India is among the top 10 investor economies, by FDI Stock, investing into Africa. 

Over the last few years, the African countries have made huge efforts to improve their investment climate. The Sub Saharan African economies set a new record for a third consecutive year, carrying out 107 reforms in year 2018 to improve the ease of doing business for domestic small and medium enterprises, says the World Bank Group’s Doing Business Report, released in 2019. Much of the reform activity in the past year focused upon improvements in the area of enforcing contracts, business registration; starting a business; rules of civil procedure for small claims support, amongst others. The noteworthy acceleration in the reforms effort is evident to the strong push for providing stability and change in the region. 

You have had deeper engagement with Africa. India has been a co-developmental partner with African nations but India has also missed out on many fronts in addressing the challenges-political & economy. What can we do now to make India- Africa truly a great partner?

IPE Global’s footprint in Africa is well established. We are operating in Africa for the last 15 years, having an intense engagement with government and development partners across the nations. For both, India and Africa, to become strong and sustainable partners in the long-term, it is important for them to successfully manage their own resources in their best interest, capitalize on their strengths, and work together as equal partners. 

There seems to be vast opportunities and a great deal of potential in India-Africa partnership and to harness them, it is important that we strike the right chord, and, move quickly. From India’s perspective, the focus should not only be on technical or financial assistance, but also, on strengthening ties through culture, people to people connect, amongst others. From collaboration (at different levels, and, with multiple institutions) to high level engagements, there should be sustained efforts to build on the strong base that already exists. 

From IPE’s perspective, our development agenda is driven by the following transformative shifts: to improve the living standards; to provide support for a transformed, inclusive and sustainable economy; to remove trade barriers within and improve market access; to empower women and youth; to build effective, open and accountable institutions for all. 

Our focus expands from hard core infrastructure to social infrastructure sectors, providing technical assistance, program evaluation, facilitating trade through policy initiatives and improving market accessibility, knowledge sharing support, and other services across cross-cutting themes focusing national, regional to sub-regional levels. 

[1] Growth rates are as per IMF World Economic Outlook, October 2019

[2] Working across Burundi, DRC, Ethiopia, Ghana, Kenya, Liberia, Malawi, South Africa, Somalia, Uganda, Zimbabwe, Zambia, etc. 3] Trade figures from EXIM Bank.

[4] Source: Research Paper published by Observer Research Foundation (Original source for data is Reserve Bank of India)