Asia's awakened tiger watches Africa's lions...
posted on Thursday, June 26, 2008 08:22 AM
This article was submitted by Milo Small from Cape Town, South Africa shortly before his death earlier this year.
Its about time for NRI's and India to rediscover Africa….
Why haven't NRIs in the West invested in Africa? Perhaps due to the lack of information about high returns on investment. Perhaps due to the outdated perceptions and prejudices about Africa. Perhaps due to apathy about Africa as a growing market. Or perhaps due to violence that constantly bursts into headlines.
Whatever may be the reasons, it is really worth looking at Africa as a major opportunity for investment and trade. This was the prime focus of a two-day India-Africa conference in New Delhi recently, with the participation of 14 African countries that brought the continent to the forefront as an equal partner for development.
In today's global village with its overload of information, it is tragic that sharp NRI business people still do not know about the new business openings in Africa. All the information they need to get going is just a click away on the Internet.
The outdated impressions of Africa as the 'dark' continent, unsafe for business and investment are antiquated like the colonial empires that are no more. Africa is a growing market for most goods and services. While the developed markets of the world are buying cars and white goods mostly to replace the ones in use, Africa presents a market where these goods are bought for the first time. So Africa has a current and a high potential demand.
Finally, the news about violent conflicts and disasters in Africa. Of the 53 countries on this continent, there are about half a dozen witnessing some form of conflict all the time. True. But the same is true of any other group of over 50 countries in the world. As for disasters like drought and floods, they are no different from other natural disasters in any part of the world. With 35 least developed countries (LDCs) of the world in Africa, these disasters mean global appeals and thus the news.
Now look at some Indian companies that started to sell to Africa in the last 50 years.
Targeting East Africa, major Indian corporate houses like the Birlas, the Singhanias and the Kirloskars started to sell their products and later established their industries to capture the market there. After countries in East Africa gained independence, they sold equity to Africans after reaping high profits.
Now, a second wave of Indian groups like the Tatas, Ambanis and Ranbaxy as well as government-owned companies has moved into Africa during the last decade.
The success story of a medium-sized Indian enterprise in Africa is worth studying.
A Delhi-based company manufacturing and selling printing rollers scouted for foreign markets and started to sell them in Kenya. After its sales executive visited Kenya, a joint venture was set up in Nairobi. Another got going in Johannesburg in South Africa and a third in Lagos - all three in partnerships with local Indians in these countries.
The company outsourced the manufacturing equipment from Punjab, supplied raw materials and sent its technicians to start the plants. Since these countries have thousands of small and medium sized printing presses, the demand for this consumable input is constant as it comes at a lower price than competing products from the West. Thus these joint ventures are viable and profitable. All this has been accomplished in the last five years despite the news of unrest from Africa.
India has a huge list of tropicalised products that can better withstand the tough African conditions. India has also developed many technologies eminently suitable for Africa - for example manufacturing processes for low-cost construction materials with a massive demand in Africa. With India announcing new lines of credit amounting to $5.4 billion at the Indo-African conference, there is plenty of scope for new trade and business ventures.
Many areas are promising. Leather is a major product and would bring more income and profit if it were exported as high value goods instead of as a raw material.
Business partnerships are viable in trade capacity building, skill development, technological upgradation and value addition for the leather industry in Ethiopia, Kenya, Tanzania and Uganda. Cashew apple, a waste product, can be used as renewable feedstock for the production of ethanol fuel with Indian technology.
Biogas is an equally profitable product in Africa. Auto components units can be set up in Egypt, Nigeria and Morocco for global markets. Then there is IT: as India is a global leader in the sector, a three-way partnership between NRI enterprise, Indian technology and an African base can become a winner.
These projects have been identified by the UNIDO Centre for South-South Cooperation in New Delhi. Other projects have been developed by Indian apex industry and business bodies like the Confederation of Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Associated Chambers of Commerce and Industry of India (Assocham) among others.
So India, forget the bias sensational news and outdated prejudices and get on with making money in Africa.
Notes to Editor:
A World Bank study reported that, led by China and India, Asia now gets 27% of Africa's exports, triple the amount in 1990.
Asian exports to Africa are now growing 18% per year, faster than any other global region.
The World Bank report ntitled Africa's Silk Road: China and India's New Economic Front, the report recommends the elimination of China's and India's tariffs on African exports.
Written by World Bank Africa Region Economic Advisor Harry Broadman, the study further calls for Africa to reform its economies to better "unleash competitive market forces, strengthen its basic market institutions, and improve governance".
It also wants to see African countries improve their infrastructure and customs arrangements. Taken together it said such changes were "not only in the best interests of Africa's economic development, but in China's and India's own economic fortunes".