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CHERYL BUSS | India offers blueprint for Africa's post-Covid recovery

Investment focus is on patient capital rather than quick wins

Stock photo.
Stock photo.
Image: 123RF/pavelvero

The Indian response to the Covid-19 pandemic could serve as a blueprint for economic recovery for the African continent. While there is a huge focus on the Chinese expansion into Africa, there is often less appreciation of the importance India plays in Africa. Countries like Nigeria, Mozambique, Ghana and Tanzania all count India as their single biggest export trading partner while SA is India’s largest trade market on the continent.

Of the top 1,000 Indian corporates, nearly 100 have operations in Africa. These are primarily focused on pharmaceuticals, motor vehicles and consumer goods. We believe that this trend will be a highlight of economic growth for at least the next decade.

As one of the leading pan-African banking groups with strong relationships with Indian corporates and institutions, we believe there is an important dynamic playing out after the Covid-19 lockdowns and the associated supply chain disruptions that have been worsened by events in Ukraine. According to official statistics of the World Health Organisation, India was the second-hardest hit country in terms of infections after the US.

This drove an inward focus from the Indian government and business community where there was a heavy investment in local capacitation of sectors such as healthcare and pharmaceutical activities. After the Delta Covid-19 strain in India, there was a noticeable shift where the country adopted a more outward-focused message: India was open for business and was going to lead a global resurgence through investment in infrastructure and ultimately become a key player in global supply chains.

To achieve this, India has invested both domestically in infrastructure and Africa has been a natural beneficiary, exporting coal and steel to fund this drive. In the past, Asian expansion into Africa has typically been government-led but over the past 12 to 18 months this has been driven by the private sector.

This series of events is important for African governments who are still trying to rebuild their domestic balance sheets. By collaborating with the private sector, it is sensible to do business with better infrastructure and less red tape that will convert into economic growth. Longevity, consistency and bidirectional benefits are a key part of the Indian strategy. One of the key features of Indian investment on the continent is a focus on patient capital rather than extractive, quick wins.

If one looks at the history of Indian businesses, they are accustomed to competing in low-margin, competitive economies with young populations. This means they are ideally positioned to succeed in Africa. Many of our clients have made long-term commitments to the development of their operations on the continent. Organisations across automotive and consumer products, as sector examples, have invested in the integrity of their brands and have built loyal followings. They have also invested in infrastructure that will benefit the continent for years to come.

This long-term approach is starting to pay dividends and in February, Mahindra announced it had achieved record sales in SA – an automotive market characterised by intense competition. Countries like Kenya and Nigeria are benefiting from the establishment of technology hubs and one of the developments has been how East Africa has “exported” the concept of mobile money.

These investments are being supported by Exim Bank. Exim has sanctioned credit across multiple industries and projects, and estimates that the continent offers $3.6-trillion in business opportunities each year. India and Africa enjoy a long-standing relationship that is the springboard for economic recovery.

As a banker to multinationals exploring the African continent, we would like to send one message: “We are open for business”.

Buss is the CE of Absa International

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