By Chaitanya Mallapur
“Africa and India are the two bright spots of
hope and opportunities in the global economy,” Prime Minister Modi said during
the inaugural ceremony of the recently concluded India-Africa Forum Summit
(IAFS).
India’s bilateral trade with 55 African nations increased 38% to $72 billion in 2014-15 from $52 billion in 2010-11.
Why Engagement With Africa Matters to India
India-Africa Bilateral Trade, 2011 to 2015
Source: Ministry of Commerce Get
the data
/ Visualization: IBM Watson Analytics
/ Visualization: IBM Watson Analytics
Africa is of strategic importance to India in
terms of economic and commercial engagement in addition to security and defence
cooperation.
The continent is rich and abundant in natural
and mineral resources with many regions yet to be explored.
It is the second-most populous (1.2 billion
people) continent in the world and the second-fastest growing economic region
after Asia.
Its overall growth (gross domestic product) is
expected to accelerate from 4% in 2014 to almost 5% in 2017.
The annual average income of Africans is
growing at almost twice the global average rate. The net wealth per adult in
Africa increased 56% from $2,916 in 2000 to $4,536 in 2015, according to Credit
Suisse Global Wealth Report 2015.
Consumer spending in Africa was $860 billion
in 2008, expected to grow to $1.4 trillion by 2020.
India’s trade with Africa rises steadily
India’s exports to Africa increased 65% from $20 billion in 2010-11 to $33 billion in 2014-15. Imports from Africa are up 22% from $32 billion in 2010-11 to $39 billion in 2014-15.
Source: Ministry
of Commerce Get
the data /
It is important to note that crude oil is Africa’s single-largest exported product in terms of value. India’s major imports from the region include crude petroleum products, edible fruits and precious stones.
West Africa is the most important region in
terms of trade, contributing almost 38% of total African trade ($27 billion) in
2014-15.
It is India’s largest trading region in Africa
with 22 nations, including major trading partners such as Nigeria ($14 billion)
and Ghana ($1 billion).
The region also contributed 51% ($20 billion)
of total imports from Africa to India in 2014-15.
The Southern African Customs Union ($13
billion) is the second-largest trading region, with an 18% share of African
trade. The important trading nations from this region include South Africa and
Botswana.
East Africa is the largest market for Indian
goods, contributing 30% ($10 billion) of India’s total exports to Africa. Kenya
($4 billion), Tanzania ($2 billion) and Mauritius ($2 billion) are India’s
major export destinations in this region.
Nigeria is India’s largest trading partner in
Africa with a total trade worth $16 billion in 2014-15. The country is
important to India in terms of crude oil and energy security.
India imports nearly 8-12% of its crude
requirements from Nigeria. India imported mineral fuels and oils worth $14
billion during 2014-15.
Exports to South Africa include vehicles,
transport equipment, drugs and pharmaceuticals, gems and jewellery, engineering
goods and rice.
South Africa is India’s second-largest trading
partner with a total trade of $12 billion in 2014-15. It is also India’s
second-largest import ($6 billion) and leading export ($5 billion) destination
in Africa.
Angola ($5 billion) is the third-largest
trading partner followed by Egypt ($5 billion) and Kenya ($4 billion).
The top five countries account for 58% of
bilateral trade with the African continent.
Huge jump in Indian investmentsIndia’s foreign direct investment (FDI) in Africa was reported to be over $12 billion in 2014 compared to $4 billion in 2013.
Eastern Africa was the largest recipient of
Indian FDI in 2014, valued at $5 billion. It is assumed that most of these
investments flow through Mauritius as FDI to Africa.
North Africa received Indian FDI worth $4
billion in 2014, followed by Southern Africa ($3 billion).
India announced a new line of credit to
Mauritius worth $500 million in March 2015 for civilian infrastructure
projects.
India assured additional concessional credit
of $10 billion over the next five years to strengthen partnership with African
nations during the recently concluded IAFS summit. India will also offer grants
of $600 million, which will include an India-Africa Development Fund of $100
million and an India-Africa Health Fund of $10 million.
Can India meet China’s challenge in Africa?
India’s initiative to build ties with African
nations is seen by many as a counter to China’s dominance in the region.
China’s trade with Africa was reported to be $200 billion in 2014, while India just reached the $72 billion mark in 2014-15.
China’s trade with Africa was reported to be $200 billion in 2014, while India just reached the $72 billion mark in 2014-15.
India announced investments worth $5 billion
in 2013, declining to $1 billion in 2014. China’s investments in greenfield
projects increased to $6 billion in 2014 from $0.3 billion in 2013.
About The Author:
Chaitanya Mallapur is a Policy Analyst associated with India Spend. He primarily writes on International
Relations, Foreign Policy, Martime Security, Internal Security & Renewable
Energy. He can be reached at his Linkedin Profile (Click)
This article has been originally published at IndiaSpend's Website on October 30, 2015 and all rights are reserved by the original publisher.
NOTE: All Data Elements Provided by India Spend and Data Visualization - IBM Watson Analytics
AIDN-001-11-2015-0387
NOTE: All Data Elements Provided by India Spend and Data Visualization - IBM Watson Analytics
AIDN-001-11-2015-0387