Unpacking India s African Engagement

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1 Unpacking India s African Engagement Presentation prepared for the OECD Expert Meeting Paris By Abdullah Verachia Director: Frontier Advisory Faculty: Gordon Institute of Business Science October2010

2 Contents India India s economy Drivers of growth Challenges India- Africa Historical ties Diplomatic and political ties Drivers of growth Sectors of focus Trade Lessons from India

4 India

5 India June 2006 February 2007 March 2008

6 India March 2008 December 2008 May 2009

7 India August 2009 April 2010 August 2010

8 Indovation in Africa 1. Tata Nano 2. The Gramateller - an automatic teller machine (ATM) for the rural market 3. Tata Swach (a water filter which retails at USD22 and is geared for poor households with no electricity or running water) 4. Low-cost refrigerator, which is resistant to power cuts 5. Flour mill powered by a scooter 6. USD 35 laptop

9 India s economy

10 India s drivers of growth

11 A Rising Middle Class

And a Young Population Years 45 36 27 18 9 0 Population Median Age (in years): 2008E1 44 34 37 38 25 India China US Russia

12 And a Young Population Years Population Median Age (in years): 2008E India China US Russia Japan World India Africa China SE Asia Lat America Southern Asia US Europe Japan Additions to Working Age Population by 2010

13 But the Spirit of Entrepreneurship continues

14 Global Technical Support from Rural Rajasthan

15 Efficiency, speed and HOT The Dabawallahs A 125 year management lesson to all Growth of 15 percent Why Queue, fresh and on time dabbahs a day Six sigma rating, 1 mistake in 6, transactions Continuous cycle of employment Average dabbah 60 kms and four hands

16 India- Africa

17 India and Africa Historical relations

18 Historical relations Trade relations established in the 16 th century

19 India and Africa Diplomatic and political relations

20 Diplomatic and political relations African Asian Bandung Conference 1955 Focus on rights to self- determination, mutual respect for sovereignty, non- aggression, non- interference in internal affairs, equality for the third world. India supports Africa s liberation movements 1964 s Indian Technical and Economic Cooperation (ITEC) Bilateral programme of financial assistance and mutual cooperation to benefit both India and Africa. 1990s increased focus on economic, education and technical cooperation

21 Diplomatic and political relations India- Africa Summit African countries Economic, political, science and technology, capacity building, infrastructure Preferential market access to Africa s 34 least developed countries Solar panels & equipment for 35 schools in Rwanda 10 vocational training institutions India- Lesotho centre for Advance Education in IT Procurement of medical equipment in the Seychelles 19 institutions to develop human resources in Africa Education project in Namibia

22 Diplomatic and political relations India Brazil South Africa (IBSA) Established in 2004 to present a common front at multilateral gatherings. E.g. The Doha Rounds and the UN. Annual Conclaves on India Africa Organised by Confederation of Indian Industry (CII) and India EXIM Bank to encourage Indian exporters to increase their presence in Africa. Last summit in March 2010 with 1000 delegates and 145 projects (worth US$9 billion) under discussion.

23 India s drivers to Africa

24 India s drivers to Africa 1. Energy Security 3 rd largest economy by % of the world s population 30% of energy requirements met by oil- 70% imported 4 th largest net imported of oil by 2025 Strategically vulnerable 7 th biggest importer of natural resources May face a shortfall of 189 million metric tonnes of coal per annum by 2015

25 India s drivers to Africa 2. Resource Seeking Specifically copper, uranium, iron ore 2007: ArcelorMittal signs US$1.6billion for iron ore exploration with the Liberian government Vedanta Resources owns a stake in Zambia s Konkola Copper Mine Coal Ventures International comprises of Coal India Limited, National Mineral Development Corporation, National Thermal Power Corporation, Rashtriya Ispat Nigam Limited and Steel Authority of India Limited raised US$2.7 billion to invest in mining interests abroad

26 India s drivers to Africa 3. Market Seeking High levels of liquidity of Indian multinationals Africa s growing consumer market increasingly attractive (Africa s population estimated to have reached US$1 billion) Market in Africa for Indian pharmaceuticals: US$1.119 billion 4. South- South Cooperation 5. Indian Diaspora in Africa 2nd largest Diaspora in the world: 25 million Africa: 2.8 million Persons of Indian Origin (PIO) 1.3 million in South Africa; 855,000 in Mauritius; 100,000 in Kenya; 90,000 in Tanzania and 90,000 in Uganda.

27 India s drivers to Africa 6. Familiar operating environment Strong cultural and historic ties 7. Playing Catch up to China India is said to have lost out to China in US$12.5 billion worth of contracts in the energy sector in Indian government needs to be increasingly involved on the continent to keep up with Chinese investment.

28 India- Africa Trade

29 India- Africa trade 1991 US$1 billion 1999 US$7.7 billion 2009 US$42.8 billion 2014 US$70 billion target set by the Indian government Top African Exporters to India 1. Nigeria 2. South Africa 3. Angola 4. Congo Brazzaville 5. Tanzania

30 India- Africa trade

31 India- Africa trade Top SSA Exporting Countries to India

32 India- Africa trade Top SSA Importing Countries from India

33 India- Africa trade Total trade between India and selected African countries

34 Outbound FDI from India to Africa 1997 US$205 million 2007 US$11 billion January July 2009 Indian investors the source of 130/ 3062 Greenfields FDI Projects in Africa Worth US$25 billion 9 th largest source of FDI into Africa

35 Bilateral Trade

36 Indian Exports to South Africa

37 Indian Imports from South Africa

38 Indian Africa Summit April Heads of State. African Union agenda Delhi Declaration Blueprint for Cooperation New Delhi s Africa engagement strategy Quid pro quo approach Doubling of Lines of Credit to $5.4 bn Duty free access to 34 African LDC s

39 Indian Africa Summit April 2008 Increase in aid packages to US$ 500 million JV between state owned MMTC and Tata to bid for mining projects Launch of TATA Nano in Africa Reshaping global diamond trade Direct diamond trading with Angola and Namibia Extending trade beyond traditional African partners Increased investments in West Africa for energy security Development of mining investment strategy

40 India- Africa Sector focus of Indian investment

41 India- Africa deals in 2010 Footprint of select major Indian in Africa

42 The Second Wave Beyond the Tatas India Inc s renewed interest on the continent in 2010 Bharat Heavy Electrical to invest in 3 coal based power projects -$2 bn NTPC to secure 3 million tonnes per annum of LNG (liquified natural gas) in exchange for building three power plants in Nigeria We don t need MTN Bharti s US $ 10.7 bn bid for Zain telecom Increased transport links - Jet Airways announces SA India leg to start in April Essar Group purchases majority shareholding in Econet Wireless ONCG to increase investments in West Africa in 2010

43 Agriculture The Farms Race 80 Indian Agriculture Companies invest 1.5 billion in Ethiopia, Kenya, Madagascar, Senegal, Mozambique 500 million loaned from Indian government to these companies $2.5bn has already been invested in East Africa s agricultural sector alone Public Private Partnerships between government and Indian Agro companies

45 Abdullah H Verachia T F Sixth Street, Parkhurst, Johannesburg, South Africa PO Box 1884, Killarney, 2041, Johannesburg, South Africa

India Studies in Business and Economics

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