India urges Africa to tap its potential

2011-04-02 13:12

African countries need to improve their ­infrastructure and manufacturing capacity to enable them to be globally competitive, the 7th India-Africa business conclave in New Delhi, India, heard this week.

While India was critical of Africa’s rate of growth and development, delegates were told that African companies must also look for business opportunities in the Asian country instead of only being recipients of ­investments.

Limpopo Premier Cassel Mathale, who spoke at the conclave, said Indian ­businesses must follow government ­procedures when entering African markets instead of taking short cuts.

Several African leaders, officials and business people attended the conclave to court new businesses to help their ­countries ­develop and grow.

Africa – which has 25% of the world’s ­arable land – has the potential to be one of the world’s rapidly growing regions, but lack of infrastructure is holding it back.

TC Rathanagan, the managing director of Indian lender Exim Bank, called on ­African leaders to do more to develop their continent if they want it to be globally ­competitive.

The continent’s collective gross ­domestic product stands at $1.6 trillion and is expected to reach $2.6 trillion by 2020.
This growth will be fuelled by an increase in the continent’s working population, which is expected to hit one billion by 2040.

Rathanagan said Africa could realise its potential by improving the quality of its ­infrastructure.

He also called on Africa to boost its ­manufacturing value chain.

“The focus here should be on addressing the structural constraints in African ­economies to make them more responsive to manufacturing and export ­opportunities.

“This will require massive investments in productive and trading infrastructure, with a view of increasing the continent’s competitiveness in the world market of manufactured products,” he said.

One of the obstacles to Africa’s growth was poor rail networks.

This week, India signed infrastructure deals worth $50 billion with Mozambique and Tanzania, which will see roads, ports and rail lines being built in the two ­countries.

Mathale said a rail network that links ­African countries could be a catalyst for ­promoting trade on the continent.

“We need to establish a rail network that will be able to talk to the different countries on the continent so that we are able to do trade among ourselves. In that way, we will make a long-lasting contribution to the problems that we have,” he said.

He added that some parts of South Africa – especially urban areas – had highly ­sophisticated road networks but in other areas roads were poor.

He called on Indian businesses to join hands with business partners in South Africa to resolve the infrastructure challenge facing the country. “We are quite certain if we work together we will be able to deal with this backlog,” he said.

Mozambican Prime Minister Aires ­Bonifacio Baptista Ali extended the ­continent’s warm welcome to investment by Indian companies and government “to join our efforts geared to boost and ­diversify our economies, thus contributing to African development”.

The Indian external ministry said that African companies wanting to trade in ­India needed to diversify their products ­instead of offering what local companies were already providing.

Currently, bilateral trade with Africa stood at $40 billion and a new target of boosting it to $75 billion over the next four years has been set.

A quarter of this bilateral trade – $10 billion – was with South Africa.

African Finance Corporation president and chief executive Andrew Alli said there was a need for African companies – ­especially banks – to use their experience to tap into the Indian market.

He said trade between Indian and ­African companies was becoming “much easier as the Indian economy itself is ­gradually being deregulated”.

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