A new India-Africa business alchemy

More than 1,000 Indian and African businessmen, political leaders and policymakers descended on the Indian capital mid-March to mine the new business alchemy between the world\’s second fastest growing economy and the resource-rich 53-nation African continent. The stakes were huge: projects exceeding $10 billion were on the table. They were in areas ranging from power, fertilisers and agriculture to education, small and medium industries and telecommunications but the tension that goes with deal-making was missing. Instead, the businessmen chatted amiably, cracked jokes and, yes, shared ideas and talked business.

When business combines with a sense of camaraderie and ideological kinship, one gets more than deals. It\’s a sustainable partnership with a long-term future, says Ghana\’s Vice-President John Dramani Mahama, the guest of honour at the sixth edition of the India-Africa partnership conclave that\’s growing in size and enthusiasm since it was launched nearly five years ago. Now, the conclave is a must-attend event, and has come to epitomise the economic surge of an old trusted relationship that harks back to the shared legacy of the anti-colonial struggle.

Led by the private sector, bilateral trade has grown to $39 billion, recording a more than ten-fold increase in the last 15 years. Almost every week, an Indian firm announces a new business venture in an African country. Tata buses and the Kirloskar pump, made by Indian companies, have become iconic brand names in many African countries. Jonathan Wutawunashe,

Zimbabwe\’s ambassador to India and Dean of African Diplomatic Corps in New Delhi, is fond of recounting that if someone loses his way in African villages, he is told to go to the Kirloskar pump and find his way!

Adi Godrej, a top Indian industrialist, is the latest to join the African dream of the Indian corporate world, with his eponymous company recently buying Nigeria\’s Tura Group. Africa is \”the continent of the future,\” says Godrej, encapsulating the mood of optimism among Indian entrepreneurs towards investing in Africa.

There is now virtually a scramble to invest in Africa, with big Indian companies leading the charge.

The Essar Group has invested $100 million in Essar Telecom Kenya Holdings. Essar\’s Yu brand has 400,000 telecom subscribers in Kenya. It has a 50 per cent stake in Kenya Petroleum Refineries where it plans to invest $300 million. Tata Steel KZN has acquired $120 million in a Greenfield ferrochrome venture in South Africa. The Vedanta Group has spawned 55 learning centres to train 28,500 learners each year, and has trained nearly 150,000 students since 1997. ONGC Videsh, the overseas arm of India\’s oil major, operates $2.1 billion oil assets in Libya, Sudan, Cote d\’Ivoire and Egypt, making it India\’s biggest investor in Africa.

India\’s leading telecom operator Bharti Airtel has announced an $8.3 billion deal for acquiring Kuwait-based Zain Telecom\’s Africa assets. If investments grow at this rate, the two sides will be able to scale up their bilateral trade to $70 billion much before the 2015 deadline set by their leaders.

Although the private sector has been in the forefront of driving Indian investment into Africa, the Indian government has shown the way by forging a proactive Africa policy and has offered incentives to spur two-day trade and investment. Outlining India\’s approach towards the African continent focused on the triple Ts - Trade, Technology and Training, India\’s Prime Minister Manmohan Singh announced a slew of measures at the maiden India-Africa Forum Summit in 2008 that included granting preferential market access to 34 least developed African countries. He also announced doubling of the lines of credit to $5.4 billion and pledged over $500 million in capacity building and human resource development projects. The

market access is expected to boost African exports ranging from cotton, cocoa and aluminium to copper ore and cashew nuts.

The fundamentals of India\’s engagement with Africa have only grown stronger. Speaking at the March 2010 business conclave, India\’s Minister of State for External Affairs Shashi Tharoor outlined the unique agenda-free \”India\’s model of cooperation\” with the continent that revolves around capacity building, training and private sector investments. \”We do not wish to go and demand certain rights or projects or impose our ideas in Africa. But we do want to contribute to the achievement of Africa\’s development objectives as they have been set by our African partners,\” Tharoor said.

The Indian model of cooperation has been reinforced by the joint action plan India and Africa launched early March this year. The action plan envisages India setting up 19 institutions in Africa with the African Union Commission and member states in areas of diamond polishing, IT, vocational education and the Pan-African Stock Exchange. The action plan builds on such pioneering initiatives like the India-aided Pan-Africa e-network project that seeks to bring tele-education and tele-medicine to the African people.

India wishes to be a partner in Africa\’s resurgence, Manmohan Singh memorably said at the 2008 summit. African leaders have responded enthusiastically. \”India is a terrific example,\” says Togo\’s Prime Minister Gilbert Fossoun Houngbo. \”Africa can learn from the trajectory of development in India and the Indian experience.\” Says Ghana\’s former president John Agyekum Kufuor: \”If India\’s experience is married to Africa\’s vast resources, it will result in the accelerated development of Africa.\”

This symbiosis opens up limitless possibilities of engagement in areas ranging from agriculture, food security, infrastructure and hydrocarbons to IT and frontier areas of human knowledge. The economic surge, animated by a larger strategic vision of seeking a bigger role in international affairs and spurring each other\’s resurgence, is set to drive the two sides closer to create the century of Asia and Africa