India’s growing presence in Africa

India has two reasons to take an interest in Africa – it’s deeply concerned about China’s forays into the continent’s strategic and economic space, and it’s also mindful that it requires the support of its 54 nations if it is to realize its ambitions to become a permanent member of the U.N. Security Council. India is a latecomer in Africa, but as a demonstration of its pro-active engagement with the continent, the government this week announced that its trade target with the continent has now been revised upwards to $90 billion by 2015, up from the previous target of $70 billion. The announcement came on March 17, when the India-Africa Business Council met in New Delhi for the first time. The second meeting of India-Africa trade ministers took place the same day. The growing ties between India and African nations has seen bilateral trade soar over the past decade, and India has established a number of pan-African institutions under the umbrella of the India-Africa Forum Summit for capacity building and human resource development across many areas, including the India-Africa Institute of Foreign Trade, the India-Africa Diamond Institute, the India-Africa Institute of Educational Planning and Administration and the India-Africa Civil Aviation Academy. Yet another institution, the India-Africa Business Council, was launched on March 17, with a brief to put in place a vibrant mechanism for enhancing economic and commercial relations between the two sides, especially in areas including agriculture, agro-processing, manufacturing, pharmaceuticals, railways, energy and petroleum and natural gas. As of now, India is in no position to take on China in Africa. But the Indians are clearly making a concerted pitch to win friends and influence people there.


Brazil looks to Africa for economic expansion

Brazil, a growing nation in importance in foreign policy circles and world capitals is increasingly eyeing Africa in expanding its influence and businesses.

Brazil is launching a top-level drive to expand its economic ties with Africa, a sign of how crises in the rich world are pushing faster-growing emerging economies to trade and invest among themselves.The new initiative, ordered by President Dilma Rousseff after her three-country trip to Africa last month, comes as nervousness grows in Brazil over the impact in the coming months of Europe’s debt crisis and lurch toward recession.Europe’s woes, combined with anemic growth in the United States, are already dampening demand for Brazilian exports and will make it more difficult for Brazil to rebound from disappointing growth of around 3-4 percent this year.In contrast, the eight most promising emerging economies in sub-Saharan Africa, not including South Africa, have grown by an average of 6.6 percent per year over the past decade, according to Deutsche Bank. That is about the same rate as the BRIC group of big emerging countries Brazil, Russia, India and China and faster than emerging Asian economies.Africa’s total share of Brazil’s trade remains small at just over 5 percent but Brazil has rapidly grown its footprint in the region in recent years as it tries to catch up with China’s burgeoning investments and influence there.

Brazilian President President Dilma Rousseff with South African President Jacob Zuma.

“The crisis has accelerated this strategy,” Pimentel told Reuters. “There will be a dispute for economic space in Africa, and Brazil has to be positioned there.” Pimentel will lead government officials and business executives this month on a 10-day mission to explore opportunities in the three countries that Rousseff recently visited – Angola, Mozambique, and South Africa. The new thrust builds on progress made under former President Luiz Inacio Lula da Silva, who visited at least 25 African countries and doubled the number of embassies in the region as he looked to establish Brazil as a leader of the developing world. Brazil’s overall trade with Africa has quadrupled since 2002 to $20.6 billion last year, compared to its $82 billion trade with the European Union. The fast-growing ties are overwhelmingly based on the exploitation of commodities as Africa taps Brazilian firms’ expertise in mining, oil exploration and tropical agriculture. Mining giant Vale (VALE.N) opened a $1.7 billion coal mine in Mozambique in May that Pimentel said would give a $1 billion boost to Mozambique’s trade balance next year. Brazilian construction firm Odebrecht is the largest private employer in Angola, with activities including food and ethanol production, factories and supermarkets. Petrobras(PETR4.SA), Brazil’s state-controlled oil company, is active in Angola in deep-water drilling. Brazil sees a growing market for its services and goods related to such investments. BRAZIL’S TRUMP CARD – BEING NICE Almost half of sub-Saharan African exports now go to emerging and developing markets compared with less than a quarter in 1990, according to the International Monetary Fund. China alone accounts for about 17 percent of the region’s trade, with India and Brazil accounting for 6 percent and 3 percent respectively. Skeptics say Africa’s low level of business diversity and its relatively small economic output limits its potential to become a major trade and investment partner for Brazil. “It’s still a very small market, income is very concentrated and the space for advance is small,” said Bruno Lavieri, an economist at Sao Paulo consultancy Tendencias. “Even in the long term it will take decades for Africa to be really an important player in Brazil’s trade.” Brazil has also struggled to match China’s financial clout in the region as Beijing backs its companies with generous subsidized loans. Jinchuan Group, China’s dominant nickel producer, outbid Vale this year when it bought South African mining firm Metorex for more than $1.3 billion. Pimentel said his group would be looking at creating new financing mechanisms to support Brazilian projects. But Brazil believes it has a trump card against China that it intends to play in its new economic push — put simply, that it treats Africans better. Chinese firms have been accused of flouting worker safety laws in some African nations and have also been criticized for importing Chinese workers rather than hiring locally. “This is our big selling point – that we are arriving in these countries doing more than just selling products and services,” said Pimentel. “Brazilian companies have a good image in Africa. This compensates for our fragility in financing compared to China.” Brazil’s shared Portuguese language with countries like Angola and Mozambique, ethnic ties, a common history of colonialism and Brazil’s success in alleviating poverty and hunger at home also help its brand on the continent. Embrapa, Brazil’s agriculture research agency, has operations in four African countries where it is transferring its technology and expertise in raising crop yields that helped turn Brazil into a tropical farming powerhouse. Rousseff said during her trip that a pharmaceutical plant being financed and assisted scientifically by Brazil should start next year making cheap anti-retroviral drugs to help Mozambique’s fight against AIDS. Even with competition from China, Africa’s rich and largely untapped resources mean Brazil still has huge potential to expand its presence, said Jorge Heine, the CIGI chair in global governance at Canada’s Balsillie School of International Affairs. “Given Brazilian needs and the abundance of natural resources in Africa, it is by no means evident that we are near the limit of the volume of trade between Africa and Brazil,” he said.

Brazil is interested in looking for new markets to diversify it’s economy, which is oriented towards the U.S., Europe and China. As a BRIC nation as well, it is strategically trying to position itself as a player on the international scene. Hence it following in the foot steps of follow BRIC nations Russia, India and China.

South Africa sells India mine protected vehicles

South Africa has exported mine protected vehicles to India.

Police in India have begun to receive their first Mine Protected Vehicle for India (MPV-I) vehicles, which will be used for anti-terrorist/guerrilla operations.

On August 25 the Jharkhand police received the first of six MPV-Is on order. They are being manufactured by Defence Land Systems India (DLSI), a joint venture between Mahindra & Mahindra (74%) and BAE Systems (26%).

Brigadier (retired) Khutub Hai, MD and CEO of DLSI, handed over the keys of the first MPV-I to B B Pradhan, Additional Director General of Police, Jharkhand Police, late last month. “This is a proud moment for DLSI as this is the first such vehicle of its kind indigenously manufactured by the private sector industry being delivered to the Police Forces in the country,” said Hai. “The MPV-I will meet all the stated parameters and we hope it will greatly enhance the operational effectiveness of the police forces in Naxal affected areas of the country.”

This year, nearly 300 security personnel were killed or injured in 76 improvised explosive device (IED) attacks, India’s Business Standard reports. Security forces in Jharkhand recently recovered 17 landmines during a search operation. India is battling Maoist Naxal rebels as well as other security threats.

“The equipping of police forces in the Naxal-affected states with 300 MPVs will reduce casualties by some 90%,” noted Hai.

DLSI is producing the MPV-Is at its factory at Prithla, near Faridabad, which has the capacity to produce 100 MPV-Is per year. It expects to build around 20 vehicles this year.

The six-wheeled MPV-I was designed by BAE Land Systems South Africa, world renowned specialists in building mine protected vehicles, and resembles South Africa’s Casspir mine protected vehicle.

The MPV-I’s protective shell comes from Sweden and is built into a monocoque body, using kits imported from South Africa. The 230 hp engine and chassis are from Russian Ural trucks manufactured at Haldia, West Bengal, which significantly reduces the vehicle’s price.

Like the Casspir, the 14 ton MPV-I is capable of withstanding a 21 kilogram blast of TNT under any wheel and a 14 kg blast of TNT under the crew compartment. Apart from mine protection, the MPV-I’s armour can withstand a variety of bullets, including 7.62 x 51 mm NATO ball, 7.62 x 39 mm AK-47 ball and 5.56 x 45 mm INSAS lead core from up to 45 degrees from the top and up to 90 degrees from the sides at a distance of ten metres, according to Mahindra. There are 16 ports from which to return fire.

With a seating capacity of 18 people, the MPV-I can transport a complete operational team of army or police personnel.

In February 2008 BAE Systems announced it was in discussions with Mahindra to jointly develop a mine protected vehicle based on its RG-31 and in January the next year announced it was setting up a joint venture with Mahindra & Mahindra to focus on land systems for the Indian market.

Mahindra already has experience building military vehicles and since 2001 has sold around 1 500 smaller vehicles, including the Rakshak, Marksman and Rapid Intervention Vehicle, India’s Business Standard reports.

India is one of the latest countries to acquire the knowledge developed by the former Defence Research Unit of the SA Council for Science and Industrial Research in the early 1970s (which produced the Casspir). Other countries that now have the once unique SA technology include the US, Australia, Britain, France, Germany, Namibia, Russia and Serbia.

India already operates Casspirs, having bought 165 between 1999 and 2001. They have been extensively used by the Army and paramilitary units, especially in Jammu and Kashmir. Casspirs serve with a number of national armies including South Africa, Djibouti, Indonesia, Namibia and Peru, as well as private firms such as Mechem.

India is one of the worlds largest arms importers and it’s defense budget has gradually increased with no signs of slowing down. This presents an opportunity for South African defense firms to establish contacts and relationships with India for the long term given India’s importance will only grow.

India plans to invest more in African gas and oil sector

Indian firms plan on expanding their presence in Africa.

India’s state-run companies are looking to acquire stakes in oil and gas blocks in Africa, form joint ventures in the continent and source natural gas to meet rising fuel demand at home, Indian Oil Minister S. Jaipal Reddy said Friday.

“Today as much as 21.5% of India’s crude oil imports are from Africa. In the years ahead, we seek more crude oil and liquefied natural gas from Africa,” Mr. Reddy said at a conference.

Africa is considered to have good hydrocarbon potential, with significant oil production coming from West Africa, and new promising gas discoveries in East Africa. Countries like China have already invested heavily in the region to develop its resources.

India, which faces a huge energy deficit and imports about 80% of its crude oil requirements, is scouting for hydrocarbon assets that can boost its energy security in the long term.

“Our companies are also interested in farm-in opportunities in producing blocks, especially in Libya, Algeria, Egypt and Nigeria,” Mr. Reddy said. He added that companies like GAIL (India) Ltd., Petronet LNG Ltd. and Indian Oil Corp. are interested in sourcing natural gas on a long-term basis from Africa.

He said the companies would “explore possibilities of equity participation” in natural gas export projects, gas processing businesses and gas-based petrochemical projects in Africa.

“There is no ceiling on imports from Africa. We are trying to maximise our [oil supply] sources in Africa,” Mr. Reddy said.

He didn’t specify which projects Indian oil companies were eyeing, how much they would invest and where the money would come from. He said that “with Africa’s economic development picking up momentum and its energy demands rising, India is keen to become a dependable supplier of petroleum products to Africa.”

Mr. Reddy also said that India’s crude oil imports from Iran remain on schedule and aren’t facing any bottlenecks.

Trade settlement between the two countries was hit after India’s central bank barred Iran-related payments from being processed through the Asian Clearing Union, a regional clearinghouse which the U.S. says is opaque and could be used by Tehran to finance its alleged nuclear-weapons program.

“The government of Iran is eager to help us in supplying oil in spite of many disturbing developments at the global level. Payment issues are being settled,” Mr. Reddy said.

Energy security is of top concern for India. Facing the critical challenge of meeting a rapidly increasing demand for energy, India is looking for more sources.  Africa naturally comes to mine.  Although India has significant reserves of coal, it is relatively poor in oil and gas resources. Its oil reserves amount to 5.9 billion barrels, (0.5% of global reserves) with total proven, probable, and possible reserves of close to 11 billion barrels. The majority of India’s oil reserves are located in fields offshore Bombay and onshore in Assam.

Due to stagnating domestic crude production, India imports approximately 70% of its oil, much of it from the Middle East. Its dependence is growing rapidly. The World Energy Outlook, published by the International Energy Agency (IEA), projects that India’s dependence on oil imports will grow to 91.6% by the year 2020.

Concerned about its growing reliance on oil from the Persian Gulf – 65% of its energy is imported from the region – India is following in the footsteps of other major oil importing economies, and seeking oil outside the Gulf. Indian firms’ investment in overseas oilfields is projected to reach $5 billion within a few years. Of particular interest is Africa

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Malaysia seeks to tap African market

Malaysia following the foot steps of other Asian nations, seeks to increase its economic presence in Africa.

Malaysia is the latest nation seeking to tap into the African continent’s massive economic potential – following the success of countries such as China and India. Speaking prior to the launch of the Langkawi International Dialogue (LID) on 19th June 2011, Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin, described Malaysia and Africa as “natural partners” due to their abundance of natural resources and their relatively young population. “It is thus only natural that we work together to build on the opportunities and potential available,” he said. In 2010, trade between Malaysia and Africa stood at US$8.2 billion, a 39 percent increase from the previous year. However, trade and investment levels between the two regions remain relatively “untapped” with further partnerships and bilateral cooperation required. “There are tremendous opportunities for Malaysia. We need to explore the various opportunities” said Malaysia’s Deputy Foreign Minister Kohilan Pillay. Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin also expressed his disappointment at the present lack of economic activity between Malaysia and Africa while emphasising the enormous potential that Malaysia could potentially tap into with the African market, “Contrast this with the US$12 billion trade Malaysia had with Germany last year, a country one per cent the size of Africa. These figures speak for themselves. As such I urge you (Malaysian investors) to be proactive.” Former Malaysian Prime Minister Dr. Mahatir Mohamad believes that the LID will open up new avenues for Malaysia in Africa. “After the dialogue, Malaysia would have a higher visibility in the African market and Malaysian businesses could expect to do better there.” The LID was the brainchild of Dr. Mahatir and aims to bring together leaders of developing economies from Africa and the Caribbean in order to discuss and promote economic collaboration. More than 500 delegates from 15 African and Caribbean countries are attending the event that is seen as an important outreach program for Malaysia to Africa. According to Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin, the move would help build sustainable economic prosperity by synergising Malaysia-Africa business partnerships. However, the event has also met up with criticism over the attendance of Zimbabwean President Robert Mugabe as well as Malaysia’s invitations to other controversial African leaders such as Sudan’s Omar al-Bashir. Malaysia’s Prime Minister Datuk Seri Najib Tun Razak has deflected the criticism by citing that Malaysia was not yet a member of the Rome Statute of the International Criminal Court (ICC) and therefore did not break any international laws by inviting Omar Al-Bashir.

Africa is prime opportunity for Malaysia to look for growth. South Korea, India, Japan and of course China have made moves to tap the growing and expanding African market.

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India and Africa sign major cooperation deals

ETHIOPIA, Addis Ababa : (From R) Indian Prime Minister Dr. Manmohan Singh (R), Equatorial Guinea President Teodoro Obiang Nguema, and Chairperson of the African Union Commision Jean Ping attend the opening ceremony of the Second Africa-India Forum Summit, attended by 15 African countries pn May 24, 2011 in Addis Ababa.The leaders will discuss significant aspects of the India-Africa partnership with the objective of enhancing and widening its ambit for mutual benefit.

India and a host of African countries have decided to deepen cooperation and trade-investment(s) among themselves.

Indian Prime Minister Manmohan Singh and around 10 African leaders opened Tuesday the second India-Africa summit aimed at consolidating trade ties between the two regions, which together account for a third of the world’s population.

India has stepped up its economic foray into Africa where its fellow Asian powerhouse China has made huge investments over the past decade.

“Africa possesses all the prerequisites to become a major growth pole of the world in the 21st century,” said Singh. “We will work with Africa to enable it realise this potential.”

In addition to the $5 billion credit line for the next three years, the Indian premier also announced an additional $700 million to build institutions and training programmes in different African regions.

India is also ramping up its political and security ties with Africa and pledged $2 million for the African Union Mission in Somalia tasked with protecting that country’s fragile transitional government.

Indian Prime Minister Manmohan Singh addresses delegates and partcipants at the Second Africa-India Forum Summit attended by 15 African countries in Addis Ababa on May 24. India will seek to expand its economic footprint in Africa, where rival China has made major inroads.

The two sides will Wednesday sign a cooperation framework to further bolster the economic relations that got a boost after the first India-Africa summit in 2008 in New Delhi.

They will also sign a political statement — the so-called Addis Ababa Declaration — calling for comprehensive reform of the United Nations system including an expanded UN Security Council in which the partners have pledged each other’s support for a permanent seat.

India in 2008 deployed its navy to be part of a foreign armada fighting piracy in the Indian Ocean and the Gulf of Aden.

Both India and China have turned to Africa to seek energy resources to power their fast-paced economies, but while China prefers government-to-government deals, Indian investment is mainly in the private sector.

This is expected by India given China’s increasing political-economic reach across the continent.  India knows it just can’t compete with investment that China pours into Africa.  How does India compete with China? Let the private players take lead and limit the government’s role to diplomacy and things like investments, scholarship/trainings etc. Soft power is what India should look for.

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Indian drug firms use South Africa as entry way into rest of Africa

Indian drug firms have set up shop in South Africa as a launching stone into the rest of Africa.

A white South African woman runs the local operations of India’s largest drug company, Ranbaxy, and the second largest, Cipla, is listed on the Johannesburg Stock Exchange.

India’s pharmaceutical industry has rolled out a strong local presence in South Africa, cornering a large share of the market and using the country as a base to gush a flood of cheap generic drugs into Africa.

Unlike most multinational companies, India’s “big three” pharmaceuticals — Ranbaxy, Cipla and Dr Reddy’s — have carefully cultivated their local credentials by bringing South Africans into the top corporate echelons.

Ranbaxy and Cipla have also won fans by slashing the price of anti-AIDS drugs, saving countless lives in the country with the world’s largest HIV epidemic.

“They’ve been very strategic in terms of how they’ve positioned themselves in South Africa and using South Africa as a launch pad into Africa,” said Abdullah Verachia, an analyst at consulting firm Frontier Advisory who has followed the Indian companies’ ascent.

“That reflects one, their understanding of the market and two, their commitment to South Africa. You seldom get a foreign multinational company appointing a local CEO,” he told AFP.

India’s pharmaceutical industry has transformed itself over the past three decades from almost non-existent to the second-largest in the world by volume, with revenues of $3 billion (two billion euros).

Cheap generic drugs have been the catalysts of that growth, and Africa has been a key market, buying 14 percent of India’s $8-billion pharmaceutical exports in 2009.

The relationship was cemented in 2001 when Cipla announced it would supply anti-AIDS drugs to Africa at a massive discount, slashing the per-patient price of the “AIDS cocktail” from more than $10,000 a year to less than $400.

“Indian pharmaceutical companies have been absolutely critical in bringing down the cost of treatment,” Francois Venter, head of the South African HIV Clinicians Society, told AFP.

“If the cost of treatment hadn’t come down, there would be very many fewer people on the drugs.”

Sub-Saharan Africa, which has an estimated 22.5 million HIV positive people — 68 percent of all infections globally — is chronically short of funds to fight the disease.

Thanks to cheap Indian drugs, it has been able to increase the proportion of AIDS patients on treatment from two percent in 2003 to 37 percent in 2009.

But the Indian firms have gained more than just goodwill in the bargain. Providing discount generics has been big business and helped the Indian industry displace its Western rivals.

South Africa, which has 5.6 million people living with HIV, in 2008 launched a tender worth $526 million to provide its health department’s anti-AIDS drugs for two years, giving preference to companies with local operations.

South African firm Aspen Pharmacare took the lion’s share of the contract, but Ranbaxy’s local joint venture Sonke won 4.5 percent of the deal and Cipla Medpro, Cipla’s local subsidiary, won 1.9 percent.

Ranbaxy, today South Africa’s fifth-largest pharmaceutical company, last year opened a $30-million manufacturing facility west of Johannesburg — its second.

Cipla, the country’s sixth-largest pharmaceutical, has announced a $36-million upgrade to its plant in the eastern city of Durban.

Verachia said the thriving pharmaceutical partnerships are part of a larger vision of south-south cooperation that South Africa and India share.

“We share a very close diplomatic and political relationship in that both countries are advancing the interests of the south,” he said.

“That close and burgeoning political relationship has translated into quite a strong commercial relationship.”

Indian companies have began making a major push into Africa following China and not wanting to be left behind by fellow Asian rivals like South Korea and Japan.  South Africa offers a good entry point since it is Africa’s largest economy, can be accessed by water and has one of Africa’s most dynamic economies.  South Africa also gets foreign direct investment from some of the worlds best upcoming pharmaceuticals companies.

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