Africa, once known as “continent that does not grow” has transformed into a new catchphrase “Africa that means for rapid growth”. The first attempt of Indo – African Forum Summit in 2008, was nimble with a paltry participation of 14 African nations. The attempt failed to gather momentum in the 2nd summit held at Addis Ababa in 2011, where only 15 African nations participated. Surprisingly, the Summit made an impact in the 3rd Indo-Africa Summit, held in New Delhi on October 29, when 55 African nations participated. This was considered Prime Minister Narendra Modi’s one of the successful diplomatic overtures to Africa , a continent which was left to itself by the previous governments.

His penchant towards Africa is gauged by the fact that he is himself a Gujarati and a large number of NRIs in Africa are Gujaratis. His overreach to Africa, immediately after he became the Prime Minster, exhibits a paradigm shift in India’s foreign policy – from economically dominated partners to upturned and untapped destinations, which foretell the future global growth. Hitherto, the foreign policies of the previous governments were compartmentalized by the uptick in relation with super powers , viz, USA and Russia and muster the support to resist China’s aggression in Asia.

African economy made a dramatic turnaround from a negative growth during 1980s and 1990s to an upward growth during the 10 years period between 2001 and 2011. The average annual real GDP growth hovered on 4-5 per cent during these periods, notwithstanding the global economy submerged into a gloomy growth of 2-3 per cent. Its nominal GDP rose from US $ 580 billion in 2001 to US $ 1.97 trillion in 2011. Strong domestic demand in Africa was the pillar to spearhead the growth.

In the backdrop of Africa’s growing domestic demand, the world honchos sat on the drawing boards for their strategic entries in Africa. The countries like Japan and EU are in regular meetings with Africa for their strategic partnerships to penetrate in the African market. But, India was a late runner for African entry, notwithstanding large number of Indians have been migrants in Africa centuries ago. It was only Mr Modi’s special effort to bring Africa closer to India through Indo-Africa Forum Summit, with an eye on large number of non-resident Indians in this continent to fructify Look Africa policy.

Powered by domestic demand, Africa is deemed as a potential destination for India’s export. From an import sourcing destination, Africa has emerged an important export destination for India. India’s export to Africa spurred by over 60 per cent over a period of five years in between 2010-11 to 2014-15. Africa turned a driving force to leverage India’s export to the world. Africa’s share in India’s total exports increased from 7.9 per cent in 2010-11 to 10.6 per cent in 2014-15. In contrary, shares of other major regions in India’s export showed a downturn, excepting America. Shares of EU in India’s total export declined from 20.85 per cent in 2010-11 to 19.23 per cent in 2014-15; shares of Asia declined from 49.84 per cent in 2010-11 to 48.81 per cent in 2014-15.

South Africa + 4 are the key drivers to boost exports from India to Africa. The four countries are Kenya, Egypt, Tanzania and Nigeria. More than half of India’s export to Africa is accounted by South Africa + 4. In 2014-15, together these five countries accounted for 53.5 per cent of India’s export to Africa.

There were dramatic changes in India’s export baskets to the African countries over a period of five years. Export basket to South Africa, which is the biggest destination of India’s export, has changed to more value added and technology oriented items than traditional items like agricultural and textile products. In 2014-15, the two biggest items of India’s export to South Africa were Petroleum products (29.8 per cent share) and motor cars (14.8 percentage share). As compared to these, in 2010-11 the major items of export from India to South Africa were petroleum products (22.1 per cent share) textiles, pharmaceutical products and ships.

The Japanese foray in Indian automobile industry made a breakthrough in India’s export of motor cars to South Africa. Japanese automobile big companies are making India as the base for export to Africa. Toyota Kirloskar company is exporting ETIOS model car, manufactured in India, to South Africa . Maruti is envisaging to export of cars to Africa from its new plant in Gujarat. Similar planning is underway by Honda Motor India to export car, made in India, to Africa.

Africa is projected as the next attractive destination for investment. According to a survey by Ernst and Young, Africa moved from eighth position in 2011 to second most attractive destination in the world in 2014. FDI in Africa increased by 64 per cent in 2014 to US $ 87 billion, according to FDI intelligence. France, Greece, USA, China and Belgium were the top five foreign investors in Africa in 2014.

Given the spurring growth in investment opportunities in Africa and against the background of historical relation established with the presence of large Indian Diaspora, India stands for a good opportunity to invest in Africa. In Africa, India’s investment was US $ 30 billion. They are in telecommunications, hydrocarbons, IT, water treatment, drugs and pharmaceuticals.

It is paradoxical that Japan, the second biggest manufacturer in the world, reinvented India a springboard to make a dent in African automobile market. India may utilize Japanese tech-power and human relations, built up with Indian inhabitants in Africa, to make a foray in Africa’s emerging investment opportunities. (IPA Service)