India emerges as fastest growing market for Africa
10 Jul 2013
Bilateral trade between India and Africa grew at a much faster rate of 32.4 per cent as against overall China-Africa trade that rose by 27 per cent during 2008-2011, according to a new report.
The report – India-Africa Trade and Investment – said the period saw India emerge as the fastest growing export market for Africa clocking 41.8 per cent growth while China grew by 28 per cent.
The report released on the sidelines of the fourth WTO Global Review of Aid for Trade event held at its headquarters Geneva, also noted that the growth in India's exports to Africa from 2005 to 2011 at 23.1 per cent was lower than China's which grew by 25.6 per cent in the period.
The report stated that while India started on a much lower base as against China in the African market in 2005, the India-Africa trade picked up with commodity exports from Africa and technology exports from India.
India's investments in Africa are estimated to be over $50 billion, the report said, adding that expanding India's investment-led trade approach and addressing trade irritants on both sides could help sustain this growth in numbers as the partners involved.
India had emerged Africa's fourth largest market while on the other had China had pipped US as the second largest market for Africa after European Union (EU). Brazil, China and India now accounted for a quarter of the total African exports, thus becoming the three major emerging destinations for African goods. Also, the three emerging economies now accounted for around 22 per cent of Africa's imports of $501 billion, up from 13 per cent in 2005.
As far as African exports to India were concerned, crude oil and LNG comprised nearly two-thirds of exports basket. ''Due to the persistent rise in global commodity prices between 2005 and 2011, value of Africa's exports to India have risen faster than the volume of commodity exports, thus exposing exports to global commodity price shocks,'' the report stated.
The report added, lack of proper mechanism for financing as also poor infrastructure facilities were the major constraints to trade and investment between India and Africa.
The India Africa trade had grown to around $50 billion in 2011-12 from $1 billion in 2001 with the regions, between them, accounting for a huge market of 2.2 billion people with a combined GDP of over $3 trillion.
Africa had also witnessed a surge in Indian private investment with big ticket investments in the telecommunications, IT, energy and automobiles sectors, according to the joint report.
''Lack of financing and poor infrastructure facilities are the two key constraints in India-Africa trade and investment. African traders' concerns include poor access to Indian buyers and trade finance. On the other hand, transport and logistics costs and poor business environments are cited as major difficulties by Indian traders,'' the report states.
Suggesting several steps that may be taken to boost trade and investment between India and Africa, the report says that to sustain trade growth, there was an urgent need to broaden the trade basket and increase cooperation between small and medium enterprises. ''
The commercial wings of Indian embassies in Africa can play a facilitating role by providing in-country research on market expansion opportunities available to Indian exporters,'' the report added.
