Africa is a high-reward economic opportunity that can’t be ignored any longer. It is the newest frontier for global business. As the continent unleashes its consumer power at last, India and China rush in to compete for the control of its economic future. The Chinese have a head start in Africa and their government is championing their cause, but the Indians are no pushovers. They are using their private sector muscle, people-to-people contacts and a general goodwill among the public to penetrate the market.
Forbes India in its latest issue shares a substantial study on Indian companies’ size of investment in Africa:
- Essar Group - $100 million in Essar telecom Kenya Holdings. Also, has 50% stake in Kenya Petroleum refineries where it will invest $ 300 million and plans to enter petrol and diesel retailing in East Africa.
- ONGC Videsh- $2.1 billion. Operates oil in Libya, Sudan, cote d’lvoire and Egypt. Known to be India’s biggest investor in Africa.
- Tata Steel KZN-$120 million in a Greenfield ferrochrome venture in South Africa.
- KEC- Power transmission projects across Africa. Completed projects worth $120 million in Nigeria alone.
- Vedanta – 55 learning centres to train 28, 200 learners each year. Has trained nearly 150,000 students since 1997.
Unlike China’s push driven by its government, the Indian march to Africa has been led by the private sector. After proving themselves in fields as varied as automobiles, telecom and education in recent years, Indian businesses are gradually upping the ante. In other words, Africa has become the new frontier for Indian companies to break into reports Forbes India.
When asked why Africa, Raman Dhawan, Managing Director of Tata Africa Holdings tells Forbes India that, “We are not expecting Africa to grow substantially over the next two decades. We are here like any other international company. We are no different from the rest of the world. They are looking at growth here, so why shouldn’t we? If you can be a good international company, you will find growth in Africa.”
Manubhai Madhvani, industrialist is one of those who returned to Uganda in 1985 and rebuilt his family business in sugar and hospitality to a $ 200 million empire comments “In Africa, any country depends on the leadership of the right person. Uganda, for instance is becoming more open to foreign investments due to President Musevani who is all for an open economy and free trade.”
Forbes India further notify that while India put in $2 billion in the continent last year, the Chinese committed investments of about $8 billion dollars in 2009, according to the HBR article. Commenting on this, Andrew Mold, Senior economist & head of the Finance for Development Unit, OECD Development centre said, “For one, almost all of China’s investments tend to be state-led, while India’s investment is private.”
Adding to Mold, Prashant Ruia, Group CEO of Essar comments, “Competing with the Chinese is impossible, to be honest. They are building roads, airports and projects as a grant. They are taking a 20 year investment risk –something private companies like us cannot do. We do not have the kind of backing that the Chinese have, they are present on a much larger scale too. They have had a head start and have been there for the past 10 years,”
While Indian Generic drugs are far cheaper than their branded counterparts, many African countries still don’t find them affordable enough. South Africa is rolling out a $500 million plan to provide antiretroviral to everyone and such plans depend on international aid which means business for Indian companies of the likes of Cipla, Ranbaxy, Aurobindo and Dr. Reddy’s.
Talking in the context to Forbes India, Vikas Salig, south Africa CEO at Dr. Reddy’s Labs (Pty) Ltd. says “India is probably where Japan was in the 1960s and 70s, trying to establish itself in the global marketplace. And sadly one of the strategies that we find emanates from vested inertest and to some extent from innovator companies is to place concern around quality, safety an efficacy of generic products. And given the momentum India has created, they seem to be facing the brunt of it.”
The battle is intense, the stakes high. One is trying to impress with state-sponsored might, giving away goodies and walking away with plum deals. The other is sending its private citizens to build trust, radiate through the people and build long-lasting businesses.
All this and much more in the latest Forbes India.
