While everyone seems to be focusing on commodities when relations between Africa and India are on the table, Standard Bank’s executive Craig Polkinghorne, sees the biggest opportunity for growth in agriculture.
Standard Bank’s Global Head and Director of Structured Trade and Commodity Finance, Polkinghorne, said while commodities was currently the centre of trade between India and Africa, the biggest opportunity for growth in the Africa-India trade relations is in agriculture. India, like China, is going to have to import more food in coming decades because of its growing population and strained capacity to produce enough from its own resources.
He said rising Indian incomes and urbanisation were leading to dramatic increases in food consumption which is now among countries that consume the most food in the world. In addition, it is facing increasing strains on agricultural supply. Urbanisation and industrialisation are swallowing up farmland, and diminishing water tables.
“In Africa, two core areas create an allure for India. First, given the manner in which the continent’s agricultural sector has persistently underperformed, the provision of developmental and technical assistance allows India an important avenue in fostering and building deeper bilateral ties. And, second, sub-Saharan Africa’s immense and largely untapped agricultural potential is being increasingly viewed by India as a cog in an unfolding and inclusive food security strategy,” he says.
Polkinghorne said bilateral trade between Africa and India could double to an estimated $100-billion in the next few years. That is if the continent and one of the world’s fastest growing economies fully exploit their trade potential. This would bring India a step closer to the level of China, whose two-way trade with Africa reached a record $115-billion in 2010, according to Chinese officials.
“With Africa continuing to emerge as a growth pole of the world and India on a path of sustained and rapid economic development, there is no shortage of opportunities to deepen trade relations much further,” said Polkinghorne.
Bilateral trade between Africa and India has more than doubled from $25-billion in 2007 to $53.3-billion in 2011, about a decade behind the pace of trade between China and Africa. Standard Bank expects growth in Africa—India trade to double again in the next five years.
He said African countries offer a variety of trading opportunities for India, particularly as sources of raw materials and potential markets for Indian products and services.
“India’s focus on building infrastructure means that the high levels of economic growth are expected to continue for some time to come. This in turn means that India’s appetite for all sorts of metals is in all likelihood going to increase, and this is where Africa comes into its own,” said Polkinghorne.
“India’s close proximity to Africa means that commodities from the continent can be shipped quicker and cheaper compared with other markets such as china and Europe. In addition, India and a number of several countries share very close historical and cultural ties that can also be leveraged.”