africas silkroute indias new economic frontier

Africa's Silk Road: India's New Economic Frontier

1. Current FDI Scenario2. Indian FDI into Africa

Africa: Inbound FDI

Source: US World Development Indicators

From the World Bank Report “Africa’s Silk Roads: China and India’s New Economic Frontiers”

Africa FDI inflows 1995-2006

Source: World Investment Directory, 2008 UNCTAD

FDI Africa by Destination (Cumulative 1990-2004)

South Africa

Nigeria

Angola

Equatorial G

Sudan

Source: UNCOMTRADE

Billion USD

Chad

From the World Bank Report “Africa’s Silk Roads: China and India’s New Economic Frontiers”

Top 15 FDI Destination Africa in 2006

South Africa

Nigeria

In USD BillionSource: World Investment Report 2007, UNCTAD

Egypt

Kenya

Morocco

Nigeria

Angola

Equatorial G

SudanChad

South Africa

Ghana

Angola

Equatorial G

SudanChad

From the World Bank Report “Africa’s Silk Roads: China and India’s New Economic Frontiers”

Share of Sectoral FDI inflows (2002-April 2006)

Tanzania

Investment Drivers

A number of factors have contributed to the overall increase of FDI inflows as well as to the sectoral and source country composition of FDI flows to the region

Rich natural resources have always attracted FDI inflows in Oil and primary commodities sector, regardless of poor investment climate conditions

Improved macro economic and political stability for many of the African countries

Sector based reforms » Financial sector liberalisation and changes in trade policy encourages FDI into

financial and automotive sectors in South Africa» Change in mining codes in Ghana and other African countries has facilitated FDI

in mining» Simplification of FDI regulations and the establishment of more transparent FDI

regimes in Ghana, Senegal and Tanzania

Impediments

Political instability and conflict for a number of countries High tariff barriers among the countries in the region than between the

regions and countries outside of Africa resulting in the balkanization of domestic markets

Regulatory and fiscal burden (Africa has the highest taxes compared to the other developing countries and most cumbersome business and customs procedures)

High corruption Weak and at times deteriorating physical infrastructure Lack of critical mass of skilled workers and labour force

Prospect of FDI in Africa 2007-2009…

Africa North Africa Sub Saharan Africa0

10

20

30

40

50

60

70

80

90 Response to UNCTAD Survey, % of respondents

Decrease

No Change

Increase

1. Current FDI Scenario2. Indian FDI into Africa

India’s FDI Outflow: Sector & Destination

From the World Bank Report “Africa’s Silk Roads: China and India’s New Economic Frontiers”

Source: UNCTAD

India’s Bilateral Trade with Africa

From the World Bank Report “Africa’s Silk Roads: China and India’s New Economic Frontiers”

India’s FDI in Africa: (2000-2004)

Source: UNCTAD, FDI/TNC database

FDI flows to Africa from India 2000-2004

243.3184.8

883.4

338.4

22.10

100

200

300

400

500

600

700

800

900

1000

2000 2001 2002 2003 2004

USD

Mill

ion

India Inc. Investing in Africa

South Africa

Egypt

Tanzania

Morocco

Nigeria

Angola

Equatorial G

Sudan

Chad

Zimbabwe

Zambia

Ghana

Congo

Kenya

Mauritius

Sudan

Nature of Indian FDI in Africa

Much of the accumulated stock of Indian FDI in Africa is concentrated in extractive sectors, such as oil and mining

Greater diversification of FDI flows to Africa has in fact been occurring more recently

Recent Indian investments on the African continent have been made in apparel, food processing, retail ventures, fisheries, commercial real estate and transport construction, tourism, power plants, and telecommunications, among other sectors

Thank you…