The Coming of a New Dawn

Sunil Bharti Mittal
Chairman & MD, Bharti Airtel

The India-Africa Partnership is at the cusp of a renaissance. Historic ties, both economic and cultural, are being re-established, influenced by the changing global economic order as well as the recent growth experiences of both economies. Over the next few years, India is slated to become the third-largest economy in the world. Although largely driven by domestic demand, the sustainability of India's growth story will depend, to a great extent, on the performance of the external sector. In the case of Africa, the average economy is expected to outpace its Asian counterpart over the next five years. Looking even farther ahead, Standard Chartered forecasts that Africa's economy will grow at an average annual rate of 7% over the next 20 years, slightly faster than China's. The realisation of this growth will rest on the ability of the domestic sector to move up the global value chain.

Culturally, too, the ties between India and Africa are wide, deep and intertwined. The late 19th century witnessed the first wave of substantial Indian emigration to East and South Africa, especially from Gujarat and Punjab. Today, this diaspora is considered an intrinsic part of the local community and stands out for the commercial backbone it provides in its host countries. India, too, has benefited by the social moulding that Africa has provided. Indeed, India would not be the country it is today had it not been for the formative impact that South Africa had on a young Mohandas Karamchand Gandhi. That experience spurred a life of social activism, resulting in the creation of India as an independent country and his anointment as the Father of the (Indian) Nation.

What is unique and noteworthy is that the India-Africa relationship has been marked by mutual respect and sensitivity to shared compulsions and developmental needs. In the political sphere as well as the global arena, India and Africa have often stood together. Both have, invariably, spoken in one voice on issues such as dismantling of apartheid (on which my late father led a major global parliamentarian movement), non-alignment and free and fair trade, even when it was not considered fashionable to do so.

That enhanced economic, political, social and cultural cooperation between India and Africa has promise and potential is self-evident. The manner with which this will be achieved will define the hue of the new dawn.

Resurgent Africa

Over the last 10 years, Africa has had among the highest bloc growth rates in the world, averaging around 6 percent growth per year. In comparison, the EU has been around 3 percent, Asia, without Japan, at 5 percent and South America at around 3 percent. Even during the global economic downturn, as a bloc, Africa was estimated to grow at 4.8 percent compared to 0.1 percent in Europe and -0.1 percent in North America.

Furthermore, according to The Economist, over the 10 years to 2010, six of the world's 10 fastest-growing economies were in sub-Saharan Africa. These were Angola, Nigeria, Ethiopia, Chad, Mozambique and Rwanda — all with annual growth rates of around 8 percent or more. To put it in perspective, in the two decades running up to 2000, Uganda was the only African country to make it to the top 10. Over the next five years, Africa is forecast to garner seven of the top 10 places.

The continent has clearly exhibited its resilience and that it has the ingredients essential for growth. However, these ingredients, though necessary, will not be sufficient. Growth will need to be blended with good governance initiatives to sustain Africa's prosperity. Initiatives such as the three-year old ‘Ibrahim Index of African Governance' are creative, compelling and catalytic in their power to introduce positive transformation.

This mix of growth and good governance has already become manifest in growing investor interest in Africa, further strengthened by improved sovereign ratings for several African economies. Significantly, these are at par with the ratings of some OECD economies. Not surprisingly, many predict the decade 2010-2020 to be ‘Africa's decade'.

The Indian Footprint

Africa is deeply ingrained in the Indian psyche, shaped by a common international understanding, economic exchanges and cultural contiguity. India, unlike many other developed and emerging economies, has approached Africa in a very functional and collaborative manner. Over the years, the Indian government and industry have been closely engaged with Africa's development process. Leading Indian engineering and consulting firms have played a major part in Africa's physical infrastructure development. In fact, Indian construction companies have made significant investments in Africa to build roads, rail lines and ports in several African countries.

Traditionally, Indian investments in Africa have been small to medium in scale. Being driven by bigger companies, the recent wave of Indian investments into the continent has gained in size. More importantly, most of these have been significant investments in sectors other than extraction which, historically, has happened to be the primary focus of foreign investment in Africa. Indian companies have invested in key sectors like automobile, engineering, chemicals, banking, IT and ITES, telecom, drugs and pharmaceuticals, healthcare, education and services. Investments from auto majors like Tata Motors and Mahindra & Mahindra, pharmaceutical majors like Ranbaxy, Cipla and Dr. Reddy's and consumer firms like Marico, Emami and Godrej have made a significant impact on the economies. In the IT space, India's two largest players have, of late, started increasing their investments in Africa.

Bharti Airtel's acquisition of 15 telecom operations in sub-Saharan Africa for $10.7 billion last year opened a new chapter in the history of the India-Africa relationship. We see this investment as having two principal objectives — to create value and to transform lives. While these are early days, the signs are already promising. A few months ago, IBM committed to join hands with us and walk this unchartered road together. I am convinced that it will be partnerships such as these that will create the transformation that Africa desires.

Indian oil companies are also geared to acquire oil and gas assets in Africa as also invest in downstream industry. The continent has proven oil reserves of about 16 billion metric tons and gas reserves of about 500 trillion cubic feet. This emerging partnership is aimed to be mutually beneficial as it will allow India to enhance its energy security while African countries would benefit from better investments, institutions, technology, environmental sustainability, local content development, human resources development and employment generation.

Notably, Indian public sector companies such as RITES and WAPCOS have executed some of the most challenging infrastructure projects in Africa. The $125 million Pan-African e-Network (PAN) project best represents Indian Government's collaborative efforts in Africa. The PAN project is revolutionising Africa's tele-medicine and tele-education services and is equipped to support e-governance, e-commerce, infotainment, resource mapping and meteorological and other services in the African countries. The project has already entered the second leg of its development.

A noteworthy aspect of Indian corporate engagement in Africa is that most of these business groups have stated policies of long-term commitment to a sustainable partnership in the region. Many of them have backed this commitment by deed and have initiated their corporate social responsibility programmes to signal such intent. In the last half a decade, companies such as Jain Irrigation and Kirloskar Brothers have gone beyond their basic business of commissioning agriculture projects toward establishing better water management systems for the benefit of millions of people. My own group's philanthropic arm, the Bharti Foundation, has already adopted 18 schools in different countries where Bharti Airtel is present as a mark of its commitment to the people of Africa.

The growing Indian corporate presence in Africa is complemented by a definitive expansion of the India-Africa bilateral trade flows. India's total trade with African countries rose from $961 million in 1991 to $24.98 billion in 2006-07 and then to $34.66 billion in 2007-08, $39.54 billion in 2008-09 and $45 billion in 2009-10. It is hoped that the trade volumes will breach the $70 billion mark in two to three years. Notably, the trade balance has firmly shifted in favour of Africa, demonstrating the spirit of partnership with which India has approached the continent, especially in the Sub-Saharan region.

India's engagement with Africa is not limited to pockets of affluence, concentration of natural resources or cultural contiguity and familiarity of language. It is an extremely broad-based partnership with a clear potential to usher in a transformational impact on individual African economies. Agreements like the South African Customs Union (SACU)-India Preferential Trade Agreement (PTA) when concluded will provide further impetus to these trade ties.

Growth and Development

The bilateral trade and investment ties have been greatly supported by the Indian Government's concessional lines of credit and developmental assistance which contributed to asset creation in Africa and have acted as catalytic confidence boosters. At the 1st India-Africa Forum Summit, which took place in New Delhi in 2008, and where I had the privilege of actively participating being the industry co-host as the President of the Confederation of Indian Industry, the Government of India increased the credit lines to Africa from $2.15 billion to $5.4 billion up until 2012. Since the development of human resource is expected to play a critical role in Africa's future growth, India is intent on collaborating with different African Governments to set up institutions to promote research and training. These institutions are aimed at creating an enabling environment for promoting Human Excellence. India has committed to establish the India Africa Institute of Foreign Trade in Uganda, the India-Africa Institute of Information Technology in Ghana, the India Africa Diamond Institute in Botswana, and the India-Africa Institute of Education, Planning and Administration in Burundi.

The India-Africa partnership is clearly underpinned by strong political understanding and deep, symbiotic economic engagement. In the last decade, China stepped up its engagement with Africa manifold, focusing primarily in securing minerals, metals and oil. This intervention has acted as a wake-up call for the Indian government and industry to step up its engagement with Africa. Along the way, the partnership has created an indelible impression on the global economic order. Cited as the beacon of South-South Cooperation, the India-Africa partnership has the potential to strengthen the global governance systems and democratise multilateral institutions. Making this possible will be robust people-to-people contact between the 1.2 billion in India and 1.03 billion in Africa. The relationship is clearly poised to move to the next level during the coming decade.

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