India-Africa Economic Relations: Partnering for Growth in Key Sectors
Africa’s exports to India have grown sharply over the last decade, with mineral fuels consistently making up the majority of exports since 2006. Mineral fuel exports to India, which is mostly made up of crude oil (89 per cent in 2014), have grown from a mere USD832 million in 2005 to just over USD27.4 billion by 2014. The major African suppliers of crude oil to India last year were Nigeria (58.9 per cent) and Angola (21.7 per cent), with Egypt also supplying another 5.8 per cent of India’s total crude oil imports from Africa in 2014. In turn, South Africa has historically been India’s second largest supplier of imports (averaging 19.5 per cent of India’s total imports from 2010-14), with Africa’s southernmost country primarily exporting coal to India.
Indian investment into Africa has a rich and diversified history, ranging from spices and textiles to significant investments in the natural resources sector. India’s dependence on energy imports, are partly fulfilled with oil exports from Africa.
According to a report published by the Heinrich Boll Foundation (HBF) in December 2014, the Export-Import Bank of India (Exim Bank) signed a memorandum of understanding with the African Development Bank (AfDB) in 2009 in order to finance Indian projects in Africa totalling USD3.4 billion.10 As per this report, up to 2012, the line of credit was most prominently used to develop the chemical, plastics and rubber sub-sector (31 per cent), with the marketing, sales and distribution sub-sector coming in second (17 per cent). However, it must be noted that this line of credit only forms a small part of total Indian investment in Africa, and is only provided as an example of the diversified range of investment opportunities across Africa.
African Economic imports from India
Looking at Africa’s imports from India, the supplying categories are much more diversified than the other way round, with some of Africa’s largest imports from India accounting for just 2 per cent of its overall imports. Nevertheless, mineral fuels (mostly non-crude petroleum oils) are still the single largest import category (averaging 26 per cent of total imports from India during 2010-14). On balance, Africa ran an average mineral fuels trade surplus with India of USD20.1 billion over the last five years. Vehicles accounted for an average of some 10.3 per cent over the last five years, with pharmaceutical products and machinery each accounting for an average of 8.4 per cent and 5.6 per cent of total imports from India, respectively.
Similar to the import categories, India’s exports destinations in Africa are much more diversified than India’s import sources. Countries that import less than 2 per cent of Africa’s total imports from India also sum to the largest share of the last five years. South Africa was the single largest importer of Indian goods over the 2010-14 period, with Africa’s second-largest economy primarily importing non-crude petroleum oils and vehicles from the Asian giant. In line with Africa’s total imports from India, the six largest African recipients of Indian goods have increased the size of their imports from India over the last five years. Notably, Kenya and Tanzania overtook Egypt and Nigeria to become the second-and-third-largest importers of Indian goods in Africa over the last two years, cementing East Africa’s growing economic ties with India.
Please download our free copy on India and Africa -Collaboration for Growth
About David Okwara
Africa, Africa brief, Africa challenges, Africa opportunities, African countries, agriculture, Angola, challenges, development, East Africa, economic growth, economy, Ethiopia, FDI, financial services, Foreign Direct Investment, foreign investment, India-Africa, international trade, KPMG, KPMG Africa, sub-Saharan Africa