Potential of India-Africa bilateral trade manifold: Exim Bank

Bilateral trade between India and Africa has risen massively in the past decade, from $8.2 billion in 2004 to $75 billion in 2014. However, India’s imports from Africa grew at an average annual rate of 35 per cent in this period, while exports only rose by an average annual rate of 23 per cent.

This has resulted in a rising trade deficit with Africa. Trade surpluses stood at $ 1.4 billion in 2004, and turned deficit at $ 5.7 billion in 2014, according to a working paper by Export Import Bank of India (EXIM Bank).

The paper assumes importance as the ongoing India-Africa summit strives to boost bilateral trade between the two sides.



India currently maintains the largest trade deficit with Nigeria, Angola, Botswana, Gabon, Equatorial Guinea, Morocco, Cameroon, Guinea, South Africa and Côte d'Ivoire.  According to the paper, a strategy to address this rising deficit involves the identification of select commodities with high export potential to Africa.

 

The study shows that these include machinery, electronic equipments, transport vehicles, petroleum oils, and articles of iron or steel. Africa also stands to gain from an increase in imports of such intermediate goods from India, with a potential for high value-added production.

Currently, mineral fuels, oils and distillation products are the largest items in India’s export basket, accounting for 33 per cent of India’s exports to Africa in 2014.

Africa is a continent on the rise. According to African Development Bank’s (AfDB) African Economic Outlook 2015, the African economy grew at 3.9 per cent in 2014, as compared to 3.5 per cent in the preceding year.

Africa’s GDP stood at $ 2.5 trillion in 2014, as compared to US $2.4 trillion in the preceding year. Africa’s GDP is mainly dominated by oil exporting economies. Nigeria, South Africa, Egypt, Algeria, and Angola are the largest economies in the region, together accounting for 77.1 per cent of the region’s economy.

Ethiopia, Democratic Republic of the Congo, Côte d’Ivoire, Mozambique, and Mali were among the fastest growing economies in the region in 2014

In the recent years, Africa’s global trade has witnessed significant upward trend. During the period 2004 to 2014, Africa’s total trade has risen more-than three-fold, from $ 340.4 billion to $ 1,168.9 billion.