The Indian response to Covid-19 could be a model for economic recovery on the African continent.
While there is much focus on China’s expansion in Africa, there is often less awareness of India’s role in Africa. Countries like Nigeria, Mozambique, Ghana and Tanzania all count India as their single biggest export trading partner while South Africa is India’s largest trade market on the continent.
Nearly 100 of India’s top 1000 corporations have operations in Africa. These are primarily focused on pharmaceuticals and motor vehicles as well as consumer products.
These bi-lateral trade relations are of vital importance and Absa believes that they will be a major driver of economic growth in at least the next decade.
As one of Africa’s leading Pan-African banking groups with strong relationships with Indian corporates and institutions, we are fortunate enough to be able to engage with commercial partners across both Africa and India and we believe there is an important dynamic playing out post the Covid-19 lockdowns and the associated supply-chain disruptions which have subsequently been exacerbated through events in Ukraine.
Africa has a lesson to learn
According to official statistics from the World Health Organisation (WHO), India is the second-most affected country in terms of infection rates after the United States. This resulted in an inward focus by the Indian government as well as the business community. There was a significant investment in local capacities such that Indian healthcare, pharmaceutical and other industries were able to thrive.
There was a noticeable shift in India’s attitude after the discovery of the Delta Covid-19 strain. It adopted an outward-focused message that India was open to business and would lead a global revival through infrastructure investments and eventually become a major player in global supply chains.
India has made significant investments in infrastructure, both domestically, and Africa has been a natural recipient, exporting steel and coal to finance this drive.
In the past, Asian growth into Africa was usually led by the government. But in the last 12-18months, it has been driven more by the private sector.
This is a crucial series of events for African governments, who are still trying rebuild their domestic balance sheets. It is sensible for businesses to partner with the private sectors. This will allow them to invest in better infrastructure and reduce red tape. This will lead to economic growth.
Indian strategy is about longevity, consistency, and bidirectional benefits.
Indian investment on the continent has one key feature: a greater focus on patient capital than extractive, quick wins. Indian businesses have a long history of competing in low-margin competitive economies with young population.
This means that they are well-positioned to succeed in Africa.
Many of our clients have made long term commitments to the expansion of their operations on the continent.
As an example, organisations in the automotive and consumer goods sectors have invested significant time and money in the integrity and growth of their brands. They have also built loyal followings in multiple African countries. They have also invested heavily in infrastructure to benefit the continent over the years, which is consistent with their long-term commitment.
This long-term approach is starting to pay dividends and in February 2022, Mahindra announced that it had achieved record sales in South Africa – a market which is characterised by intense consumer competition in the automotive space.
Countries like Kenya and Nigeria are benefiting from the establishment of technology hubs in their respective regions and one of the interesting developments has been how East Africa has “exported” the concept of mobile money. This bi-directional transfer technology perfectly captures the nature of India and Africa’s relationship.
Exim Bank, which has a presence in South Africa and Ethiopia, is supporting these investments. Exim has sanctioned significant credit across multiple sectors and projects. They estimate that the continent holds $3.6 billion. Each year, there are billions of business opportunities.
India and Africa have a long-standing historical relationship which includes social, economic, political and political exchanges. These relationships are the springboard for an economic recovery which will be a key driver of economic growth and as a banker to multinationals exploring the African continent we would like to send one message: “We are open for business”.
Abs CEO Cheryl BussYou can find more information at
Source: african.business
