The Vivekananda International Foundation (VIF) organised a Conference on ‘Enhancing India-Africa Cooperation’ as a bilateral initiative with an objective to enhance growth and connectivity between India and Africa. The Conference was divided into three themes: i) Enablers for Deepening India–Africa Engagement with a focus on Connectivity, Banking & Insurance, Skill Development and Defence; ii) Economic Cooperation: Opportunities and Challenges, with focus on Capacity Building /Indian Technical and Economic Cooperation (ITEC), Infrastructure, Energy and Agriculture; and iii) Economic Cooperation: Opportunities and Challenges with focus on Higher Education and Healthcare.
During the conference few important areas were identified for enhancing cooperation in order to maintain and step up engagement with Africa. Following were the recommendations made:-
India needs to do more in terms of the Research and Development centers in Africa.
India’s contribution to security in Africa cannot be overlooked. Without security there cannot be development, hence, certain issues like terrorism and anti-piracy operation were discussed. While discussing about the United Nation peacekeeping, it was mentioned that Indian troops went to Africa in some of the most difficult situation ranging from Angola to Somalia to Rwanda to Sierra Leone; not to advance Indian strategic interests, but to ensure African lives and African Sovereignty.
Africa under the African Union and some of the regional organisation like the Economic Community of West African States (ECOWAS) and the Intergovernmental Authority on Development (IGAD), are contributing immensely to peacekeeping in Africa along with the United Nation (UN) forces.
Under shipping, there was a mention of tying up of national shipping companies of various African countries with non-vessel owning companies. This will lighten up the financial burden for those national shipping companies to invest in containers which will be provided by Non Vessel Operations (NVO). Both India and Africa are not capital rich so the idea becomes significant.
There can be joint operations instead of joint ventures. This is a much more a flexible model business model which doesn’t involve more investment and structure. Some of the crude being imported in India can be imported on board Indian National Carrier. This will generate employment and the funding can finance empty containers.
Without Export Credit Guarantee Corporation of India Ltd. (ECGC) and Export–Import Bank of India (EXIM), no trade and investment is possible. Furthermore, ECGC has risked coverage of $1.5 bn and this coverage includes medium and small business, where most of the African companies coming up, falls under this category. ECGC also follows rating which is liberal than OECD ratings. This rating has direct bearing on the insurance cost and the product cost which consumer has to bear.
ECGC also provides political risk coverage without any ceiling which is a tremendous step forward. There is an image that Africa is conflict prone, and this act as a barrier for investment in Africa. If an insurance companies comes forward to cover the political risk, its shows the maturity of African institution. Hence, no Letters of Credit will be required and there is extension of payment period. Also, the ECGC has taken share in African Trade Insurance Agency (ATI), where they hope to increase risk coverage from 1.5 bn dollar to 4.5 bn dollar. Africa has stability and profitability, as 500 out of 600 projects are being funded by commercial banks. So Indian companies should come forward and invest in Africa.
On the Exim Bank, it was mentioned that the Indian content under the Letter of Credit requirement should be relaxed to include up to 30 percent of local content, which is very important for any project because these projects involve civil construction work and local services. Also, the export credit on the Organisation for Economic Co-operation and Development (OECD) terms was given the grandfather status at time of the creation of World Trade Organisation (WTO), which has given companies from OECD countries unfair advantage. Thus, the credit period should be longer than project period so that the project is not left in lurch.
Partnering with African countries to build Hospital in Africa, than to bring the African patients to India. Also, Indian public sector undertaking (PSU) banks should have larger presence in the continent. Lastly, there should be some kind of development of knowledge partners from Africa.
DSC_1451.JPG