ABIDJAN, Ivory Coast — The African Development Bank for the first time held its recent annual meetings in India, signalling the rapid growth in importance of the relationship between India and Africa which many delegates expect to expand further, driven by investments in the energy sector and major infrastructure projects.
Over the past decade India’s bilateral trade with Africa has more than quadrupled, growing from $12 billion in 2005 to $56.7 billion in 2015-16, largely due to strong government support. India is now Africa’s fifth largest investor.
“Now we expect the bilateral trade to exceed $100 billion in the next two years,” AfDB President Akinwumi Adesina said during a press conference held at the summit, where an estimated 3,000 attendees included African and Asian ministers, business and agribusiness leaders, civil society, farmers and youth, as well as President Macky Sall of Senegal and Indian Prime Minister Narendra Modi.
“I want Africa, already a place brimming with opportunity, to win its own place in the world’s workshops and marketplaces — to become a global industrial powerhouse,” Adesina said.
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During opening remarks in Ahmedabad, Modi pledged the Indian government’s continued support to African development.
“I have made Africa a top priority for India’s foreign and economic policy. India’s partnership with Africa is based on a model of cooperation which is responsive to the needs of African countries,” he said. “It is demand-driven and free of conditions.”
During the India-Africa Forum Summit 2015, the Prime Minister announced a $10 billion line of credit — funded by the Export-Import Bank, or Exim, of India — to be delivered over the next five years, to boost India’s engagement with African countries.
In addition to an India-Africa Development Fund, an India-Africa Health Fund and 50,000 scholarships for African students in India were also established. Modi has also been a key figure behind the establishment of the Asia Africa Growth Corridor, in partnership with Japan, whose purpose is to “expedite development in the region.”
The likely continued focus of this relationship will be co-financing of projects in power, agriculture and irrigation over the next two to three years, according to Exim’s managing director, David Rasquinha. “Sky is the limit on this [co-financing]. [Africa] has so much potential,” he said earlier this year following Adesina’s visit to India in March.
Experts say the recent growth of Indian investments in Africa can be traced to key developments on both sides. Following India’s economic reforms of the 1990s, the rules and procedures for outward Indian investments were gradually liberalized. By 2003, the overall investment cap was abolished and Indian companies were much more free to invest abroad.
During the same time, Africa began demonstrating strong economic growth in comparison to decades past. The continent emerged as an attractive investment destination based on high growth rates experienced by countries such as Ethiopia, Kenya and Rwanda, a growing middle class, as well as a wealth of natural resources, particularly in energy and oil.
The 2017 African Economic Outlook, which was released during the meetings, revealed Africa’s continued growth and investment potential. Fourteen out of 54 countries grew by over 5 percent in 2016, backed by diverse investments across construction, transportation, energy and ICT sectors.
Africa and India have development journeys to share and huge opportunities to explore together, Adesina said in Ahmedabad.
The bank plans to further develop the recently-formed Kukuza Project Development Company, a partnership between the AfDB, India’s Exim Bank and the State Bank of India which is developing a pipeline of bankable infrastructure projects in Africa and facilitating exports from India to Africa, based in Mauritius.
The African Development Bank is pushing for increased off-grid energy solutions on the continent as part of a wider New Deal on Energy initiative launched in 2016 as the bank's leading agenda. The AfDB vice president of Power, Energy, Climate and Green Growth tells Devex that without closing the energy gap the continent will struggle to attain other development goals.
The greatest potential for collaboration, however, may be in the power sector, in which the AfDB expect to invest $12 billion and leverage another $40 to 50 billion. With 645 million Africans still without electricity, Adesina hopes the AfDB and India will work together under the International Solar Alliance, a coalition of solar-rich countries to address their specific energy needs and collaborate to address identified gaps, to power economies.
AfDB President Akinwumi Adesina continues to push his High 5 agenda as the best way to accelerate growth with his mission to light up and power Africa, feed Africa, industrialize Africa, integrate Africa, and improve the lives of the people.
Though bilateral trade is expected to reach record highs in the coming years, Manoj Dwivedi, joint secretary of India’s Minister of Commerce and Industry, suggested that further involvement of entrepreneurs and small to medium enterprises could cement the growing bond between Africa and India.
“Capacity building of the small and medium enterprises is very important. If the SMEs on both the sides are strong enough to invest in each other’s country, or to enter into partnerships, then I think it will be a game changer because that kind of strong relationship between our small businesses is required between India and Africa,” he said.
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