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India and Africa: The way forward for two potential economic giants
May 15, 2019

After seven decades, the fifty-five African states are trying to sincerely decide on their own future course through greater and definitive integration. Several regional organisations were conceived of whom some function more actively and comprehensively than the others especially in the domain of economy and trade. Several regional groups have overlapping entities and overarching approaches which tended to confuse the effort with the expected outcomes. Africans have made sincere efforts to unite and evolve multilateral institutions like the African Union (AU) or the African Development Bank (AfDB) and several effective regional organisations be they related to financial, banking, customs or developmental priorities. Despite the slow and occasionally wavering processes they have been working hard to create a pan-African economic space which could provide them the requisite levers for international negotiability and protection. They established an Agenda 2063 at the AU Summit in 2015 which seeks to achieve a more prosperous Africa through an inclusive growth and sustainable development embracing Pan-Africanism. Since they identified the basic problems afflicting the continent a Call for Action Plan sought to eradicate poverty, provide affordable housing, education and skill development, equitable industrialisation, modernising agriculture, creating infrastructure across the spectrum, mobilisation of domestic resources for development, and conflict prevention across Africa. These are the key issues that face any developing country. Trade and not Aid surely not the conditional aid has been the driving force for achieving these objectives. One of the key recommendations has been to establish a Continental Free Trade Area since the Agenda 2063 had set the target of enhancing intra-regional trade to 50 percent by 2050 from the current 18 percent. It estimated an eventual growth and share of 12 percent for Africa in the global trade from two percent to 12 percent in the same time frame. Despite road blocs and divergences the project is moving smoothly as it seeks to establish ‘a prosperous Africa, a peaceful Africa and a just Africa’. Earlier in 2008 an African Free Trade Zone had been created with the participation of sub regional groups like EAC, SADC and COMESA.
However, in March 2018 at the Kigali Summit 44 countries signed up to the African Continental Free Trade Area (AfCFTA) encompassing 1.2 billion people with a combined GDP of $2.3 billion. This happens to be the largest trade agreement since WTO and seeks to establish a single continental market for goods and services with free movement of business persons and investments’. It would end up reducing the average export tariffs of 6.1 percent on over 90 % of the items. A closer integration continues even though the biggest economies like Nigeria are yet to come on board and scotch their apprehensions while South Africa did finally join in. President Buhari, in order to protect their industries and manufacturing does not want Nigeria to become a dumping ground’. However only last month with the ratification by Gambia as the 22nd country adequate legal requirement is completed and the AfcFTA could kick start. For India it will be an immense opportunity if we sign an Comprehensive Economic Cooperation Agreement with them as on our own we already provide significant market access to dozens of LDC countries.
But undoubtedly Africa is slated to be the next big thing in the later half of the 21st century as it would provide consumer market with 1.7 billion people of over $ 6.7 trillion consumer and business spending by 2030 and investment opportunity of over $100 billion a year after discounting for the domestically generated funds for the infrastructural needs across 55 countries. According to the AfDB economic outlook report 2018, Africa now collects $500 billion in tax revenues; $ 50 billion in foreign aid and $60 billion in remittances and almost the same in FDI. Yet the inherent sub-regional, administrative, bureaucratic logistical, connectivity as well as security challenges remain, that have stunted the integration and growth so far, and will have to be addressed in a more concerted manner.

Financial Express