India’s Africa Drive – OpEd
Till now, the India – Africa relation was polarized. A new twist emanated with Japan making a foray to deepen the relation with Africa in cooperation with India.
In the Joint Statement during the recent visit of Indian Prime Minister to Japan in November, both Mr Narendra Modi and Mr Shinzo Abe committed to jointly develop jointly. The statement said, “the two Prime Ministers underscored the importance of India- Japan dialogue to promote cooperation and collaboration in Africa …. explore specific joint projects including in the areas of training and capacity building, health infrastructure and connectivity.”
Prime Minister Narendra Modi’s Look Africa drive can be viewed as India’s new turf for trade and investment expansion. Modi’s fervor to vie for the African heart is synergized by his visit to Africa in July 2016, closely following visits of President of India Pranab Mukherjee and Vice President Hamid Ansari in June 2016. Modi’s bent towards Africa stemmed from two factors. First, a large population of non-resident Indians in Africa are Gujaraties and Mr Modi , who is a Gujarati , has emotional link with the African Gujaraties. Second, Africa turned towards India to rebuild the economy after the decade long dust of political turmoil settled in the continent and fall in oil prices led Africa in dismay.
The African bent towards India can be gauged by the African participation in India – Africa Forum Summit. In the first two summits, held in 2008 and 2013, African participation was at a nadir. Only few African countries participated in the summits. The 3rd Summit, held in October 2015, was buzzed with 55 African nations participating. It drew a new synergy in cementing India – Africa relations.
Against this backdrop of sa urge in India’s relation with Africa, Japan’s relation with Africa has been promiscuous. The focus of Japanese relations has been Japan’s yearning for African support to the UN Security Council reform and concerns over China’s hegemony in South China Sea. The 20 years initiative of Japan — led by Tokyo International Conference on African Development (TICAD) — has always been held in Tokyo. For the first time, the last conference was held in Nairobi in August 2016.
The Nairobi Declaration pitched for the concerns in maritime security, embracing piracy, illegal fishing and other maritime crimes. This is reckoned circuitous of China. Little focus was made on economic dimension, excepting pledging US $30 billion for infrastructure support in Africa. This suggests a lag to support the Africans who were looking forward for economic development with Japan, according to analysts. To this end, the move by Japan to have a joint cooperation with India for the development of Africa added a new direction in the Japanese strategic cooperation with Africa.
The African economy has made a phenomenal turnaround in the growth from negative to positive during 2000s. The average annual real GDP growth of sub-Saharan Africa was one of the highest with 5 percent in the world during 2013-2014, against the backdrop of simmering growth in the global economy.
Buoyed by strong domestic demand and resurgence in manufacturing activities, Africa emerged a potential destination for world export. Hitherto, Africa was an import sourcing continent. India’s export to Africa surged by over26 percent over a period of five years in between 2010-11 to 2015-16. Export to Africa became the legacy to drive India’s global export , amidst world recession. Africa’s share in India’s total exports increased from 7.9 percent in 2010-11 to 9.6 percent in 2015-16. As compared to this, shares of major countries in India’s exports showed downturn. Excepting USA , shares of EU and Asia in India’s total export declined from 20.9 percent to 20.5 percent and from 49.8 percent to 47.4 percent during 2010-11 to 2015-16 respectively.
Historically, East and Southern Africa are the centre for Indian descendants. However, in terms of trade, five African countries (South Africa , Kenya, Egypt, Tanzania and Nigeria) are the major trading partners of India. More than half of India’s export to Africa is shipped to these five countries.
In terms of commodity exports, petroleum products (refinery products) , drugs and pharmaceutical, motor car, textiles and ready made garments and plastic products are the major items in India’s export basket. In 2015-16, these five product groups accounted for 51.3% of India’s total export to Africa.
However, there were noteworthy changes in the Indian basket of export. India shifted its export more to value-added products to Africa. Export of car is an example. Till 2012-13, India did not export car and auto components to Africa at all. In 2015-16, car was third biggest item of India’s export to Africa. Africa was the second biggest destination of Indian car export ( after Latin America ) , accounting for 23 percent share in 2015-16. Of these, South Africa was the key destination for car exports.
Interestingly, India’s exports of car to Africa were driven by Indo-Japanese joint ventures. Toyota Kirloskar Motors India and Nissan India have already made bids in African car market and Maruti is under planning stage to export cars to Africa .
India has an adverse trade balance with Africa. But, the adverse trade balance proved benign to India. The main reason for adverse trade balance is India’s import of bulk crude oil from Nigeria. Even though import of crude oil is the cause for adverse trade balance, it leveraged India exports of oil refinery products, which are value added products.
Africa is projected the next attractive destination for foreign investment. Given the surging growth in investment opportunities in Africa, coupled with India’s emotional link with Africa, India stands for a good opportunity to invest in Africa. In Africa, India’s investment was US $ 32 billion by 2015, according to a media report. They are in telecommunications, hydrocarbons, IT, water treatment, drugs and pharmaceuticals.
Now, the triple axis between India, Japan and Africa should augur well for a deeper connectivity between Africa and India and Japan. There are various challenges to fructify this movement.
For example, development of African healthcare services can be an important challenge for India-Japan cooperation. Africa is reeling under acute laggard stage of healthcare services. Africa consists of 11 percent of global population, but is engulfed by sharing 24 percent of the burden of world disease. India has made notable contributions to perk up the African healthcare services. Through Pan–Africa e-Network Project (PAENP), medical practitioners in Africa can consult on-line with various Indian specialists in various disciplines and specialists, selected by African Union. India is the third largest pharmaceutical formulations supplier to Africa.
Given India’s strong platform in healthcare services in Africa, Japan can cooperate by supplying sophisticate medical instruments, diagnostic kits and grants for medical service infrastructures.
To begin with, improvement of African socio-economic activities should be the primary target for India – Japan cooperation.
*S. Majumder, Adviser, Japan External Trade Organization(JETRO), New Delhi, India. Opinions expressed are personal.