With Africa emerging as the destination of choice for many overseas companies, India’s trade and investment interests in this vast continent are on the rise – currently more than 200 major companies are doing business there. Here, Chandrajit Banerjee, Director General of the Confederation of Indian Industry (CII) – India’s premier business association – talks to Global about why Africa, with its growing and dynamic economy, has become the “destination of choice” for many of the country’s enterprises. He also explains CII’s active agenda in exploring new avenues of partnership to enhance business opportunities for both sides – and how, as more African countries embrace democracy and stability, these opportunities can only grow.
Global: Why was the CII set up and what is its primary role?
Chandrajit Banerjee: The Confederation has evolved from its establishment in 1895 as a membership-driven industry association. Its role is multidimensional and extends to working with government on policy issues relating to industry and economic growth, supporting competitiveness of Indian industry through ten dedicated centres of excellence, facilitating the engagement of Indian companies overseas and building the India brand, and enabling industry’s engagement with society to foster inclusive growth and development. CII works through a partnership model of operations with institutions across the globe.
How do you explain the rapid expansion of Indian companies in Africa – i.e. is Africa’s economic growth the prime driver for Indian investments or does Africa form part of the global growth strategy for Indian companies?
India enjoys historic trade and people-to-people linkages with Africa. As Indian companies have acquired global ambitions, Africa has emerged on the natural radar as a destination of choice. Africa is a continent of opportunities. With over a billion population, young workforce, vast arable land and natural resources, and a GDP growth of over 5 percent, Africa has emerged as an attractive destination for both trade and investment. This synchs well with the strengths of Indian companies in emerging markets, as they are well positioned to expand their footprint in Africa. India’s trade with Africa has surged from $20 billion in 2006-07 to $55 billion in 2011-12.
How many Indian companies operate in Africa today and what is the area of greatest concentration?
As per our estimate, more than 200 Indian companies across scale are doing business in Africa across sectors. The list is constantly expanding. They are present in all African geographies, notably Southern Africa and Eastern Africa.
Which sectors are the most attractive to Indian companies? What are some of the major companies involved in these areas?
Africa is investment-hungry and Indian companies are working across sectors. Companies like Tata Group, Godrej Group, Bharti, Kirloskar, Mahindra & Mahindra, Escorts, Apollo, Essar and many others are doing business in Africa. The Tata Group is present in many manufacturing and services sectors, while Bharti has entered the telecommunications market. Other companies are active in FMCG, automotives, IT, power and energy, mining and minerals, banking, etc. Infrastructure such as railways, construction, roads and bridges, is also an area of great interest.
How important is Africa to Indian companies? Why?
Every Indian company wanting to expand globally is looking at Africa as the land of a new set of opportunities. We believe that just as India and China became global growth engines, Africa too will shortly become a major growth driver for the world. Indian companies want to get first-mover advantage in Africa, building on historical friendship. We believe that Indian companies can offer the affordable, accessible and sustainable goods and services that a growing Africa requires. Indian companies are not just engaging in trade and investment, but also working with governments and communities for building a presence over the longer term. The development of Africa offers huge opportunities across sectors, including manufacturing, infrastructure, services and agriculture. At the same time, India too can benefit from Africa’s natural resources to fuel its own growth. Governance has been an issue, but as more and more countries move towards democracy and stable investment climates, we believe the coming decades will see the action moving to Africa.
How do you see future trends?
Africa is an exciting and happening space. Over the last decade, substantial progress has been made in growth and human development. This imparts an inherent momentum to the African economy. Governments across the continent are placing increasing stress on forging attractive business environments to attract investments. We see growing global linkages in Africa and we are well placed to leverage the emerging opportunities to mutual benefit.
Any other points of interest?
CII organises the CII-EXIM Bank Conclave on India-Africa Project Partnership every year in March. The next one is scheduled to take place from 17-19 March 2013. The CII Conclave has acted as a platform for African governments and businesses to engage with their Indian counterparts to discuss project opportunities in Africa. At the last conclave, held in March 2012, two heads of state along with 35 ministers from different African countries participated, and discussions centred around more than 200 projects worth over $30 billion. CII has a very active agenda on Africa which we pursue very diligently.
