Insights into Editorial: Reaching out to Africa
31 October 2015
The 3rd India-Africa Forum Summit, which concluded recently in New Delhi, was the largest gathering of foreign dignitaries in New Delhi since the 1983 Non-Aligned Summit. 41 heads of state and government from 54 countries in Africa were present at the summit. This summit has taken the relationship between India and Africa to a higher level with a demonstrated resolve and a clearly laid-down road map. During this summit, India offered a new line of credit worth $10 billion to Africa to strengthen economic cooperation and has also called for a unified stance for the reform of the UN Security Council.
The India-Africa Forum Summit serves as the official platform for the African-Indian relations. It will be held once in every three years and was first held in 2008.
Why Africa is important for India?
- A rapidly growing India not only needs more commodities from Africa, but also needs its vast market to pay for them. Africa is an important trade partner for India. India-Africa trade was worth almost $70 billion in 2014-15, and Indian companies invested some $30-35 billion in the continent over the past decade.
- Indian energy companies have assets in African countries, and India exports consumer and capital goods and medicines to Africa.
- Energy imports from Africa have increased dramatically from mid-2000s and Africa now accounts for about 18% of India’s oil imports. Nigeria is India’s largest source of oil in Africa followed by Angola.
- Apart from oil, Africa is also an important source of coal, natural gas and uranium.
- Bilateral trade in agricultural goods has also grown rapidly. Agricultural goods currently account for about 11% of India’s total exports to sub-Saharan Africa and about 7% of India’s total imports from sub-Saharan Africa.
- Beef, sugar and fish are other important agricultural exports from India to Africa. About 15% of India’s beef exports are destined to Africa.
- Africa has also emerged as an important source of cash crops such as shelled cashew, vegetables, nuts (fresh and dried), coffee, tea, and spices for India.
The present pace of growth of Africa will ensure that most African countries will be middle income by 2025. The projected GDP of Africa in 2050 is $29 trillion, placing it in the same range as India’s projected 2050 GDP.
India’s main concerns:
- While trade between the two countries has improved in the last decade, it is still much less than Africa’s trade with China, which was $200 billion in 2014-15.
- India’s investments in Africa are less compared to China. China has invested more than $180 billion in Sub-Saharan Africa alone in areas ranging from energy to infrastructure during the period 2005-2015.
From the above points it is evident that deeper engagement with Africa is imperative for India. Economic relations between India and Africa have intensified in the last decade but there is an urgent need to consider the role of other big players such as China and Brazil in Africa, particularly in the energy and agriculture sector. India’s approach towards Africa needs to be much more structured, development cooperation in Africa must be closely linked to India’s economic interests, and financial packages to Africa must be more generous.