Unlocking Africa’s Potential –Through India-Japan Collaboration

Confederation ofIndian Industries (CII)CII – Promoting Indian Trade & Investment inAfrica
 Driving Indian engagement with Africa
 Africa division formed 25 years ago.

 Plays a catalytic role to strengthen India – Africa ties in business Linked with 78 counterpart organisations in 37 African countries
 Facilitation of information exchange and tie-up with investment promotion agencies.

 Works with GOI to promote Brand India and its ‘Triple A’ (Affordable, Adaptable,Appropriate) technologies.
 CII Africa organizes multi-lateral business forums to enhance South – Southcommercial co-operation.

CII Africa Conclaves
 CII-EXIM Bank Conclave on India Africa Project Partnership is an importantdimension of engagements with Africa. Twelve editions of the Conclave havebeen organised.
 India-Japan-Africa Seminar - CII & JETRO organised the Seminar on 8thMarch 2017 alongside 12th CII-EXIM Bank Conclave on India Africa ProjectPartnership.
 13 Regional Conclaves in Africa - Zambia, Ethiopia, Ghana, Mozambique,South Africa, Cote d’Ivoire, Uganda, Senegal, Tanzania, Namibia andNigeria.
 India – East Africa Regional Conclave - Kampala, Uganda November
2017.

Africa’s growth story

Africa’s growth story(1/2)

Africa grew at 4.5% in the 10 years till 2014, beating the global GDP growth rate
However since 2015
Economic slowing

Commodity Movement v/s GDP growth• ↓Last year, SSA growth 1.4%;
lowest in the last two decades• Unease about monopoly inexternal aid
Commodity – Cyclic• ↓World commodity prices• ↑Use of renewable resources
Infrastructure – key to growth• Bridging the deficit could boost
GDP by 2.2%
• Annual needs above $93 billion• Concerns over quality,technology transfer & skill
upgradation

Source: The Economist, African Economic Growth; Jan 8, 2015

Africa’s growth story(2/2)

Economic slowdown has exacerbated thedebt challenges

Still significant growth potential exists,
driven by strong fundamentals

1

Ongoing economic reforms• Widespread business-friendly reforms

2
Demographic shifts• World’s largest working age
population by 2035

• ↑ Discretionary spending power

3

Proven resource base and naturalwealth• Oil & Gas finds in East Africa• Iron Ore in West Africa• Copper, Coal, Uranium etc

FDI inflows to Africa
FDI Inflows in 2016

Source Countries

Egypt$8.1bn+17.1%

Approaches toCollaboration &Procurement
Structures

Ghana$3.5bn+9.2%

Nigeria$4.4bn+45.2%

Angola$14.4bn-11.2%

Source: UNCTAD

Ethiopia$3.2bn+45.8%

Germany
Switzerland
Spain
India
FranceUKJapan
USA
Italy
UAE
China

0.4
0.5
0.8
1.2
2.1
2.4
3.1
3.64

FDI Investment ($bn) in 2016
11

Significant investment from China,
creating excessive dependence

36.1

An Indo-Japan alliance can unlock morevalue in Africa
Breakdown by sub-regions in Africa, shows limited Japanese and/or Indian presenceWest Africa

East Africa

Central Africa• Africa – 26.1%• China – 17.4%• France – 6.5%
• Italy – 6.5%
• UK 4.3%• China – 41.9%• Africa – 25.6%• US – 4.7%
• Japan – 4.7%
• South Korea –4.7%• Turkey – 4.7%

• China – 50%• Africa – 20.8%• France – 8.3%

SouthernAfrica

North Africa• China – 17.6%• Portugal – 9.4%
• South Africa –8.2%• Private
Domestic 28.2%• Africa – 28.6%• Italy – 16.7%• France – 9.5%
• China – 7.1%
• South Korea –7.1%

Significant Potential for India and Japan to increase their share of participation“Time right for India, Japan and Africa to forge winning partnerships”

Synergising Indo – Japan relationship• Strong India – Africa connect– Mutual appreciation and support during independence struggles in
1940s created a strong connect between India and many Africancountries, which exists till today– PM Narendra Modi announced a $10 billion line of credit fordevelopment projects in Africa– India, fifth-biggest investor in Africa– Indian companies have established significant presence in Africa
India offers many advantages as a springboard for entering the Africanmarket, including geographical proximity, a network of Indian expatriates
and market similarity.

Indian Companies with African Footprints (1/2)

Infrastructure

Financial Services

Resources

Indian Companies with African Footprints (2/2)

Agriculture

Manufacturing

Communication/IT

Pharmaceuticals

Consumer Goods

New National Assembly Building, Gambia

Seat Of Government And Presidency, Ghana

Chirodzi mine, MozambiquePort construction – Madagascar

Bajaj in Africa

Airtel in Africa

Oil Jetty for Mauritius Port Authority

Iron Ore Mining Project - Liberia

10 Advantages to enter African Market incollaboration with India(1/2)
Experiences in Africa have enabled India to develop following advantages
Geographicaladvantage
Historical/culturalconnection

English-speaking
employees
Market similarity
Similarity withIndia growth India is located on the opposite shore of the Arabian sea
and has good access to West Africa.
 19 African countries belong to the same British
Commonwealth as India.
 Persons of Indian origin have been present in Africancountries for 200+ years, with substantial businesspresence The high English-language proficiency of Indians facilitatesa variety of commercial activities.
 African markets are diversified and structured similar toIndia
 Internal consumption driven growth through increasing
middle class Strong Entrepreneurial skills

10 Advantages to enter African Market incollaboration with India(2/2)
Establishedpresence on
Indian businesses India companies have already created a footprint acrossmajority of African nations
 Deep understanding of “doing-business” in Africa

Desire to expand
overseas Deregulation of foreign exchange controls Indian corporates interested in overseas investment

Scale of industry
and personnel

 There are no countries which rival the industry
accumulation and scale of India.

 One of the world’s leaders in production amount ofagricultural and marine products and fibers.
 Provides a wealth of basic engineering products such as
metals and chemicals
Support from Indian Government supports Indian companies’ entry into
Indian government
the African market
 Active provision of information on investment in Africa andtax incentives for exporters.

Rich resources

Opportunities in Africa for India JapanPartnership
1. Development of value chains between India and Africa by Japanesecompanies
2. Joint development of Infrastructure project in Africa : India andJapan have a number of iconic infrastructure projects done together• Delhi Mumbai Industrial Corridor• Dedicated Freight Corridor
3. Agri and food processing: India and Japan could work jointly onlarge agri projects in African continent
4. Skill Development: Both the countries can look to promote skill
upgradation and skill development in both public and private sectorsin Africa through skill training and certification, Bilateral exchanges.

Developing “Asian Africa Growth Corridor” toharness the opportunities
 Opportunity for nations in Africa-Asia region to emerge as a “competitive economicbloc”
 Draw on Indo-Japan strengths to create a pan Africa
 E-network, develop industrial corridors, telecommunication networks
 power grids

 Synergize efforts and explore joint projects in trade, capacity building, health,infrastructure and connectivity
 Enhance skills, research and development capacities in Africa. Strive to develop
institutional, industrial and transport infrastructure in the Asia – Africa region“Vision document which is a road-map for an Asia-Africa Growth
Corridor already in place ; AAGC has the potential to unlock theimmense growth potential between Asia and Africa”

India-Japan-Africa: Win-Win-Win
Africa’s Needs•••
India’sneeds• EconomicGrowth• Effectiveutilizationof aid• Projectexports• Long-term
access tonaturalresources

Robust Infrastructure
Employment and job
opportunities
Education and skill development

India’s value proposition• Low cost innovation and operatingmodel• Cultural affinity and understanding• Skill and talent development• Entrepreneurship and service
orientation• Infrastructure development••

Low cost healthcare solutions
Constructive FDI

Japan’s value proposition• Technology Leader• Capital raising• Vast resources

Commitments for Africa
JapanIndia$32 billion$ 10 billion

Japan’sneeds• Economic
Growth• Provide aid
on OECDguidelines• Equipment
exports• Long-term
access tonaturalresources

Steps to Collaboration with Japan
1 Collaborative Development – Enhancing Reach and impact
a. Combined Buyers Credit to developing countries from EXIM Bank of India andJICA/JBIC
b. Joint execution by Indian and Japanese firms with complementary expertise

30%70%70%

30%

2 Credit Enhancementa. Guarantees offered from JICA/JBIC to EXIM Bank of India for providing longer tenureloans(>12 Years) to developing countries.

3 Bilateral Access to Technology, Expertise and Capabilities
a. Contractors and consultants should be cross empanelled with JICA/JBIC and EXIM Bankof India.

Key Takeaways

An Indo-Japan alliance can unlock morevalue in Africa
StrategicPartnership

Synergies
Developmental
Impacts

Benefits of IndiaJapan Alliance• Common interests to ensure balance of power• Strong diplomatic ties between the countries• Common focus on development• Japanese high technology can be combined with appropriate/frugal
engineering and construction experience from India to execute projects
in an economical manner and engage on a larger scale in Africa• Financing and execution of key infrastructure projects in Africa tosupport its growth.
• Projects of large scale can be executed• Geo-politically sound partnership• Cost of long-term borrowing for projects would be lower due to highJapanese sovereign rating• Possibility for Japanese companies to set up a JV in India and use
India as a manufacturing hub• Enhanced potential for technology exports from Japan as its projects inAfrica increase• Alternates to the monopoly currently established in Africa

Thank You.