The importance of being Africa

Some years ago, a socially mobile Indian Foreign Service officer in charge of the high-profile external publicity division (XP), whose penchant for publicity of the Page 3 kind irked the then foreign minister, suddenly found himself posted as the joint secretary of the Africa division. In those days, Africa division was responsible for the whole continent, minus the Arab countries that were the NA in the WANA (West Asia and North Africa) division dealing with the entire Islamic crescent. Our well-connected diplomat moaned to all who would listen and he considered the posting a humiliation. He wanted anything else under the ministry of external affairs (MEA) than that. Such was the standing of the Africa division in the MEA not very long ago.

The perspective about Africa has changed quite a bit since then. India has taken notice of the changes in Africa. It realises that not engaging with Africa with the intensity it deserves will be economically and politically costly. The MEA now has two full Africa divisions, one for East and Southern Africa (E&SA) and the other for West Africa (WAF). Then there is the NA in WANA. It was about time too. Africa has 54 sovereign nations and is now among the fastest growing regions in the world. The population of the African continent, this includes the Arab countries of North Africa, is now 1.16 billion. Africa is spread over a mineral and natural resource rich landmass of over 30 million sq. kms. It is geographically so large that it can squeeze in 13 countries — including the United States, China and India — and the whole of Eastern Europe and the UK if you add Madagascar.

The total gross domestic product (nominal) of Africa is over $2.80 trillion. In the past decade, India and Africa posted average GDP growth rates of 7.4 per cent and 5.7 per cent respectively. This pace of growth will ensure that most African countries will be “middle income” by 2025. One of the results of strong economic growth in the past two decades has been a significant increase in the size of the African middle class (defined as earning between $4 and $20 per day). The middle class will continue to grow, from 355 million (34 per cent of Africa’s population) in 2010 to 1.1 billion (42 per cent) in 2050.

The population of Africa has more than doubled in the past three decades, giving it a very youthful demographic profile. More than half the population is less than 25 years old. With the population projected to quadruple in just 90 years, plus an impressive economic growth rate that will make Africa even more important to the global economy. The projected GDP (PPP) of Africa in 2050 is $29 trillion, placing it in the same range as India’s 2050 GDP (PPP) projected to be about $40 trillion, also powered by a huge expansion of the middle class. India is expected to add a further 900 million to its already growing middle classes. Within Africa, a handful of countries such as South Africa, Nigeria, Kenya, Mozambique, Ghana and Zambia have caught the attention of economists and businessmen because of their superior infrastructure, natural resources, pool of skilled manpower and relative political and institutional stability. The International Monetary Fund (IMF) has forecast that six of the 10 highest growing economies between 2012 and 2017 will be African economies. While Chinese growth is expected to slow down even further, Indian and African growths are poised to keep increasing for the next few decades, given their favourable dependency ratios.

Indian and African trade is as old as recorded history itself. Arab seafarers joined Indian and African markets and production centres and a brisk exchange of goods and people ensued. Over the centuries, the merchant kingdoms of Sindh, Gujarat, Maharashtra, Konkan and Malabar traded with East African merchant states such as Barawa, Kismayu, Kilwa, Sofala and Mombasa. Consequently, the Indian silver rupee or sikka became the currency in that sprawling area and kept this status even during the European colonial period. India’s modern-day bilateral trade with Africa picked up late. Yet, this has been burgeoning at an exponential pace. It was a relatively modest $1 billion in 1995, but had risen to $35 billion in 2008, and the three following years had scaled to $45 billion. This year it is expected to be in the region of $70 billion.

African exports to India have been growing annually at 32.2 per cent, while Indian exports to Africa grew annually at 23.6 per cent. Consequently, Africa’s trade surplus with India is rising rapidly, albeit driven in large part by a narrow range of supplies and commodities. The top six African exporters — Nigeria, South Africa, Angola, Egypt, Algeria and Morocco — account for 89 per cent of total African exports by value to India. India’s merchandise imports totalled $447.5 billion in 2015. Of this, oil imports accounted for $116.4 billion and gold was $34.4 billion. Since 2000, when India’s GDP growth entered a different trajectory and took it to become the world’s third-largest economy (PPP), India has emerged as a major consumer of oil and gold.

This has contributed to the huge expansion of Indian imports from Africa, particularly with West Africa. Crude oil and gas account for over 66 per cent of exports to India, gold and other precious metals another 16 per cent, and most of the rest to the import of fertilisers from Morocco, Egypt and Algeria. A rapidly growing India not only needs more commodities from Africa but also its vast market to pay for them. Africa is thus a great economic opportunity for India and, rightly, India has turned its focus towards enhancing its economic ties with Africa. Just as important is the realisation that as India seeks a more important role in world affairs, it cannot remain indifferent to Africa’s 54 members in the UN.

The conditions for a closer economic and political relationship with African countries are now propitious. But traditional Indian attitude towards Africa and Africans, in particular, need to change. India has always attracted African students, but their treatment here is not conducive to building good relations by making them ambassadors for India when they return. We need to create slots in all our elite institutions like the IITs, IIMs, National Law Schools and even the top undergraduate colleges. The MEA will do well to establish an Africa-oriented education cell to focus on this.

Our diplomacy in the continent needs to be top class. An Africa posting must no longer be seen as a punishment posting. To make its presence felt in African capitals, India needs to build big and even somewhat grand high commission in the major African nations. Since the IFS is so reluctant to go to Africa, this presents the government with an opportunity to make lateral entries into the diplomatic service by inducting top class professionals from the private sector, who can be mandated to focus on the expansion of economic relationships. The IFS is also woefully short of talent, and this could very well be the booster shot it needs.

The writer, a policy analyst studying economic and security issues, held senior positions in government and industry. He also specialises in the Chinese economy.