Strong Indo-Africa business relations present enormous opportunities for trade and economic development: KPMG-CII paper

Strong Indo-Africa business relations

Strong Indo-Africa business relations

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Strong Indo-Africa business relations present enormous opportunities for trade and economic development: KPMG-CII paper

Indo-Africa business relations

  • With their abundant resources, African nations can address India's growing energy demands
  • Africa’s exports to India have grown sharply over the last decade, with mineral fuels consistently making up majority of the exports since 2006
  • Mineral fuel exports from Africa to India, which mostly include crude oil (89 per cent in 2014), have grown from a mere USD832 million in 2005 to just over USD27.4 billion by 2014
New Delhi, 28 October 2015: With India focussing on nuclear energy to meet the rising demands, it aims to produce 25 per cent of its electricity through nuclear power by 2050. The country has entered into numerous nuclear deals with African countries, owing to their high growth prospects that present significant business opportunities for corporates and investors to contribute towards the development of this continent which has over a billion in population. Transport, including roads and highways, ports and airports and railways, present immense opportunities in the region’s infrastructure space, according to the KPMG-CII background paper titled – ‘India and Africa – collaboration for growth’.
 
In recent times, India’s economic partnership with the African countries has been vibrant, extending beyond trade and investment, to technology transfers, knowledge sharing and skills development. India has in-depth knowledge in a range of areas that could benefit Africa, especially small farm mechanisation. Indian investment in agriculture has the potential to exponentially boost production. With growing economic prowess and a shared vision of crafting an inclusive world order, India and Africa are proactively seeking to collaborate on global issues, ranging from combating terrorism and piracy, to close coordination in the global fora over the United Nations (UN) reforms, climate change and the World Trade Organization (WTO) negotiations.
 
Mr Chandrajit Banerjee, Director General, CII, said, “With our two regions enjoying young populations, abundant natural resources, good connectivity and strong ties, we can progress together on our development journey. Both sides have experienced strong growth in recent years, including in social and physical infrastructure, leading to rising incomes and new sectors of cooperation”. This is reflected in the fact that bilateral trade has multiplied manifold in the last decade, while Indian companies are displaying rising interest in investing in Africa. The sectors of interest include agriculture, infrastructure, education and skill development, healthcare, manufacturing amongst others, Mr Banerjee added.
 
“India is an emerging economy and many Indian enterprises are investing in Africa, which contributes to Africa’s domestic and export economies. Indian companies are generating employment, transferring technology and building local investments to help boost Africa’s economy. We see India’s economic partnership with African countries blooming. Also, over the years, Indian companies have been actively engaged in major infrastructure projects in Africa, including watershed development, and construction of roads, railways, ports, airports, power plants, dams, etc.,” said Mr Navin Agrawal, Partner, KPMG in India.
 
Energy trade is one of the major drivers of the India-Africa partnership. India is the fourth largest consumer of electricity, accounting for 4.4 per cent of global energy consumption, and is soon expected to take over Japan as the third-largest consumer. India’s economy is expanding and is expected to grow by 7.7 per cent in 2016. With this trend, it is also projected that, by 2035, India’s energy production could rise by 117 per cent, and consumption by 128 per cent. To the energy requirement and to attain better accessibility to power, India needs an investment of USD250 billion over the next five years. The growing energy supply dependence on Africa is likely to be one of the key influencers in India-Africa trade and investment.
 
According to one of the agreements signed, India will depend on Namibia for Uranium supplies. Uranium trade is critical for India’s civil nuclear programme, which is focussing on the country’s pressurised heavy water reactors fuelled by this metal.
 
The paper also talks about Africa’s farm sector, which is expected to grow to USD1 trillion by 2030 from USD280 billion in 2014. This can only happen with growth largely dependent on technology. There is significant scope for the agriculture sector in Africa to benefit from the Indian experience in this sector, as well as co-operation on solutions for common challenges. The paper also mentions that Africa can be a key sourcing destination for pulses, a major source of protein in the diet of the Indian population, especially as the demand for pulses is expected to increase as the country develops. The biggest challenge anticipated for both Africa and India is the gap in food demand and supply.
 
A number of healthcare organisations from India have established footprints in Africa, with many more planning to penetrate the healthcare sector in Africa. In a nutshell, Indian healthcare organisations are actively looking to establish their presence in the form of greenfield and brownfield expansions, tele- medicine centres to attract medical tourism, etc. Many Indian manufacturers have set up their subsidiaries in this continent and have secured a large market share by supplying antiretroviral drugs to treat HIV, and other drugs that are in demand on a mass scale by the government/NGOs.
 
About KPMG in India
 
KPMG in India, a professional services firm, is the Indian member firm of KPMG International and was established in September 1993. KPMG has offices across India in Delhi, Chandigarh, Ahmedabad, Mumbai, Pune, Chennai, Bengaluru, Kochi, Hyderabad, Kolkata and Vadodara. KPMG in India is currently offering services to over 3,000 national and international clients in India across sectors. We strive to provide rapid, performance-based, industry-focussed and technology-enabled services, which reflect a shared knowledge of global and local industries, and our experience of the Indian business environment.
 
KPMG.com/in
 
About CII
 
The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes.
 
CII is a non-government, not-for-profit, industry-led and industry-managed organization, playing a proactive role in India's development process. Founded in 1895, India's premier business association has over 7100 members, from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 90,000 enterprises from around 257 national and regional sectoral industry bodies.
 
CII charts change by working closely with Government on policy issues, interfacing with thought leaders, and enhancing efficiency, competitiveness and business opportunities for industry through a range of specialized services and strategic global linkages. It also provides a platform for consensus-building and networking on key issues.
 
www.cii.in

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 155 countries and have 174,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

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