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BW Businessworld

The Last Frontier

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Cheihh Gueye, a 9-year-old boy from Senegal, symbolises the Indian government’s engagement with the African continent better than anyone else.

Gueye was diagnosed with a life-threatening heart problem in January. The Senegalese doctors found Gueye’s problem — gross heart failure leading to repeated heart attacks – too complex to handle. Also, the boy had no chance of getting a pacemaker implant done urgently. That is until an Indian doctor succeeded in instilling confidence in the doctors to carry out the procedure in Senegal itself.

“The doctors had never done this procedure on children before. They wanted the boy to be flown to India. But we convinced them that the patient may not survive the travel and needed immediate treatment. Under our guidance, the implant was carried out successfully and the boy is fine now,” says Dr Ashutosh Marwah, a paediatric cardiologist associated with Fortis Escorts Heart Institute, Delhi.

Marwah’s interaction with the Senegalese doctors, who were some 10,000 km away, happened through a tele-consultation programme, a part of India’s relationship-building exercise with Africa — the Pan African e-network.

Conceived by former President A.P.J. Abdul Kalam in 2007, the Pan African e-network is doing wonders in terms of India’s African engagement, says S.N. Ray, the Indian high commissioner for Uganda, Rwanda and Burundi. “Hundreds of (medical) queries are raised; they (doctors in Africa) are utilising the opportunity very well,” Ray adds.
ANAND SHARMA, Union minister of commerce and industry “WE HAD SET A TARGET OF $70 BN (INDIA-AFRICA TRADE) BY 2015. BUT WE CROSSED $60 BN LAST YEAR ITSELF” (BW pic by Sanjay Sakaria)
Gueye’s surgery was just one of the 456 tele-consultations between Indian hospitals and medical centres in over 40 African countries in the past two years. Dozens of doctors from the All India Institute of Medical Sciences (AIIMS), Delhi; Apollo Hospitals in Chennai; Narayana Hrudayalaya, Bangalore; Amrita Institute of Medical Sciences, Kochi; CARE Hospital, Hyderabad; and several other multi-speciality hospitals are part of this e-network.

The Rs 554-crore Pan African e-network project aims to connect all 54 nations of the African Union, and is the biggest distance education and tele-medicine project ever undertaken in Africa.

“When the 5-year project gets complete in 2014, India would have conducted hundreds of continuous medical education programmes for African doctors, helped a large number of African patients through expert advice, and offered a host of other services, thereby tremendously boosting the goodwill India enjoys with its African counterparts,” says Vimal Wakhlu, chairman and managing director of Telecommunications Consultants India, the implementation agency of the e-network.

And it is not just medical consultation.

Indian medical experts attached to these hospitals have conducted 2,380 continuing medical education programmes for several hundreds of African doctors. Since there are 22 French- speaking countries in the African Union, many of these lectures are in French as well.

Similarly, India’s leading educational institutions such as Delhi University, University of Madras, BITS-Pilani, Amity Noida and IGNOU are partners in the project. “These universities offer post-graduate programmes to African students through the network. We have already enrolled 9,780 students and conducted 3,492 tele-education sessions,” says Wakhlu.

The e-network also provides a secure hotline communication platform for the heads of all African Union member countries. Termed the VVIP network, it provides video-conferencing, voice-over-IP (VoIP) and internet facilities to enable real-time communication among the African heads of state, each of whom has been provided a VSAT terminal that connects to the Pan African hub. 

Preferential Treatment
“India’s interest in Africa is not just about business. We are not seen as a nation that is only interested in sourcing cheap raw materials. We assist them in building production capacities and train them to run their own factories,” says Ravi Bangar, joint secretary (East and South Africa), Ministry of External Affairs.

It was in this spirit of cooperation that India announced a duty-free tariff preference scheme for the least developed countries, which included 33 African nations. “This unilateral market access window for African goods and services covers 92 per cent of the entire tariff line,” adds Bangar.

Institutional and human resource development is another significant area of the India-Africa engagement. More than 22,000 scholarships (half of which have already been given), and more than 80 capacity-building institutions are being developed by India in Africa. The proposed institutions include a food processing cluster, an integrated textiles cluster, a centre for medium-range weather forecasting, English-language training institutes, IT institutes and as well as vocational training centres.

Institutes for foreign trade, educational planning and administration, IT, life and earth sciences, and civil aviation are some of the other centres that will be set up by India in the next three to five years.

“Let us not look at bilateral advantages. Africa is going to be the next development destination for sure. Imagine the goodwill we will have when these young professionals, trained by Indian teachers in such institutions are in decision-making positions in future,” says Bangar.

According to him, the moot question to be asked is: Are Indians liked in Africa? And the answer, he says, is yes.

The Importance Of Africa
Global advisory firms are unanimous in their predictions when it comes to Africa.

According to McKinsey’s Africa at Work published last month, the continent has been the second fastest-growing region in the world in the past decade. KPMG points out that the African economy is expected to grow at 5.8 per cent in 2012. “In the world’s 10 fastest-growing economies (2001-2010) list published by The Economist and the International Monetary Fund (IMF), six are African. More importantly, for the 2011-2015 period, seven of the 10 fastest-growing economies will be in Africa. Such high growth has created enormous business opportunities on the continent and thereby attracts investors,” a recent report from KPMG Africa notes.
(BW pic by Bivash Banerjee)
From a collective GDP of $1.6 trillion in 2008, African GDP is expected to touch $2.6 trillion by 2020.

In 2009, China surpassed the US to become Africa’s main trading partner, while the share of trade conducted by Africa with emerging countries has grown from about 23 per cent to 39 per cent in the past 10 years, according to KPMG. “Africa’s top 5 emerging trade partners are now China (38 per cent), India (14 per cent), Korea (7.2 per cent), Brazil (7.1 per cent) and Turkey (6.5 per cent),” it says.

Recent estimates by the World Bank indicate that the annual infrastructure investment requirement in Africa is about $93 billion over the next decade, more than double the previous estimate by the Commission for Africa.

Ernst & Young’s 2012 Attractiveness Survey highlights the fact that in the World Bank’s most recent Ease of Doing Business rankings, 14 African countries ranked ahead of Russia, 16 ahead of Brazil and 17 ahead of India.

“Africa is often perceived as being inherently corrupt. While corruption no doubt remains a big challenge, 14 African countries rank higher than India, and 35 higher than Russia in Transparency International’s Corruption Perceptions Index,” the survey observes.

While India is an important destination for African exports, the reverse is not so. Though India-Africa bilateral trade has been growing, it is just 6.88 per cent of India’s overall foreign trade. In 2011, it touched $60 billion. During the April-June 2012 period, the country’s exports to Africa grew 23.6 per cent year on year, much above its overall export growth of 15.75 per cent.  “We had set a target of $70 billion (India-Africa trade) by 2015. But we crossed $60 billion last year itself. A 20-fold growth within a decade is indeed an achievement worth applauding. I propose that given the current growth rate, we may agree to revise the trade target to $90 billion by 2015,” Anand Sharma, Union minister of commerce and industry said at a meeting of African ministers in March. The 2015 projections were indeed revised to $90 billion later.

Reaching Out
On 18 September, India extended a line of credit worth over $40 million (about Rs 216 crore) to Burundi, one of the world’s poorest countries, to set up farm mechanisation and food processing projects. The announcement, which was made during Burundi President Pierre Nkurunziza’s visit to Delhi, was the second such assistance offered; the earlier one being the $80-million (Rs 432 crore) line of credit for a hydroelectric project.

RAVI BANGAR, joint secretary, ministry of external affairs “WE ARE NOT SEEN AS A NATION THAT IS ONLY INTERESTED IN SOURCING CHEAP RAW MATERIALS” (BW pic by Tribhuwan Sharma)
Indian agri-engineering and food processing equipment makers will now have an exclusive opportunity to win tenders floated by Burundi to execute these projects. It will help India build a trade relationship with Burundi, while the African nation, whose rate of electrification is just 2 per cent and electricity production is just 43 MW, is able to develop basic infrastructure. 

Line of credit, or assured amounts of liquid funds for specified projects in return for a guaranteed business for home entrepreneurs, has become one of the Indian government’s most visible tools to promote Indo-African trade. Of the 157 lines of credit extended by India so far, 112 or over 70 per cent have been to African countries in areas such as urban development, agri-projects, electrification, fertilisers and cement, IT, etc. Of the $4.37 billion sanctioned under these lines of credit so far, over $3 billion has been utilised by the beneficiary countries.

Last year, Prime Minister Manmohan Singh had made a $5.7-billion credit commitment (for a three-year period) to Africa. This includes lines of credit worth $5 billion, and a $700-million grant assistance for human resource development, transfer of technology and building new institutions.

But India’s link with Africa is much more than lines of credit (the budgetary allocation for ‘Aid to African countries’ for 2012-13 is just Rs 250 crore). “The central government has been focusing on aiding African nations develop soft skills. The cooperation is mostly in the area of knowledge sharing, capacity building, etc. But India’s African engagement in terms of business and investment is driven by its private entrepreneurs,” says K.T. Chacko, ex-director, Indian Institute of Foreign Trade (IIFT).

The Other Half
If the Indian government is the head of the African engagement exercise, the private sector is the body. According to E&Y’s 2012 Africa Attractiveness Survey, India has been among the top 5 foreign direct investors or job creators in new projects in at least 13 of the 18 African nations identified by the consultancy.

If India is the top investor in Ethiopia, the credit should largely go to commercial agriculturists such as Karuturi Global (which has 340,000 hectares in the country), Emami Biotech (40,000 hectares) and Ruchi Soya (25,000 hectares).

Over 100 Indian companies are estimated to have a footprint in Nigeria, yet another favourite destination for Indian investments. Bharti Airtel, Tata Group, Bajaj Auto, Aditya Birla Group, Mahindra & Mahindra, Ashok Leyland and NIIT are just some of the Indian brands that have a strong presence in Nigeria.

Indian private players are present in many manufacturing and services sectors. Petroleum and natural gas, mining, agriculture, manufacturing, pharmaceuticals, IT and ITeS, gems and jewellery, banking, financial services (including microfinance), energy, core infrastructure including roads and railways, are sectors with high Indian private sector participation.

With a young population, abundant resources and a fast-improving political and business climate, global companies are making a beeline for Africa, which is also strategically important. “For its markets, resources, proximity to developed markets, and many more reasons,” says Kaushlendra Sinha, regional director (Africa, Gulf & Middle East), Confederation of Indian Industry (CII).

To promote private investments in Africa, industry chambers FICCI and CII, along with the ministry of commerce and industry, have set up the India Africa Business Council (IABC). Sunil Bharti Mittal, chairman and CEO of Bharti Enterprises, co-chairs the council.

No Cakewalk, This
Africa, however, is not one single market. One size won’t fit all. While a strong Indian diaspora gives Indian players an edge, language and cultural barriers exist from region to region. Moreover, the realisation that Africa is the last frontier has increased competition between various countries.

Differential treatment is also essential because of the differing economic development status of various African countries. While the  least developed countries are in a majority, countries such as South Africa and Egypt are economically much more developed. In fact, South Africa is not part of the Pan African e-network.

While the government is doing its bit, it is for the industry to realise the market potential of Africa, feels CII’s Sinha. “We have been organising the CII EXIM Bank Conclave of India-Africa Project Partnership over the past eight years, and we have seen the growing partnership between government and industry. This year, two heads of state and more than 35 ministers from different African countries participated. More than 200 projects worth close to $30 billion were showcased.”

Indian initiatives in Africa also have an implication back home. The entire e-health initiative in Africa can be replicated in India.
54 sovereign states, 1 billion people, $2 trillion collective GDP, 20% CAGR growth in FDI projects during 2007-11, 5.5% is Africa’s share in global FDI projects, 26 states have tripartite free trade agreements, 17 African nations are ahead of India on the World Bank’s Ease of Doing Business index
In fact, Sanjay Gandhi Post Graduate Institute of Medical Sciences, Lucknow, a partner institution in the Pan African e-network, and which offers tele-medicine services to doctors and patients in Africa, has joined hands with the Orissa state government to run rural tele-medicine projects.

“We have a lot of lessons to learn from Africa. The biggest challenge before our development agenda is lack of networking between our 637,000 villages. What we are trying in Africa, the e-health as well as the e-education programmes, can very well be replicated in our own rural areas,” says Wakhlu.

A perfect example of targeting two countries with one programme.


(This story was published in Businessworld Issue Dated 15-10-2012)