India Is Driving Change by Working Together with Africa

By Premeshin Naidoo

Indian Prime Minister Narendra Modi has been flying his country's flag in Africa lately, seeking to expand trade and investment ties between the two.

He kicked off the Group of 20 summit in New Delhi in September with the announcement that the African Union would become a permanent member of the group, which should amplify the voice of the Global South. This move followed on the heels of the decision the previous month by India and the other four current members of the BRICS group to admit Egypt and Ethiopia, along with four other countries, into its ranks.

These examples show how India is increasingly playing an active role in international diplomacy on behalf of Africa and the Global South. New Delhi's growing trade and investment relations with Africa, meanwhile, illustrate how driving funds toward the Global South not only can reap financial benefits, but also drive real systemic change on environmental, governance and social issues.

Trade ties between India and Africa date back centuries, to when Indian traders would travel to the east coast of the continent seeking precious metals and gemstones. These days, India is a key driver behind the increasing global recognition of the strategic importance of Africa. Modi, in particular, is using the platform his position offers to promote better understanding of the investment opportunities that Africa holds for foreign investors.

Africa has a large working-age population, a growing middle class and a wealth of raw materials including gold, diamonds, oil and minerals. As the race to secure minerals for the transition to green energy gains momentum, Africa's strategic importance to the global economy is rapidly being redefined, with increasing overtures coming from the U.S., Europe and China, as well as India.

For its part, India exports food and beverages, petroleum products, pharmaceuticals, machinery and vehicles to Africa. Indeed, India has become the largest supplier of passenger vehicles to South Africa as South Korean and Japanese carmakers assemble vehicles in India for onward export. This model is likely to be expanded to other African nations as their middle classes seeks affordable transport for their families.

Over the past decade, India has also become one of the top five investors in Africa, with around $74 billion flowing over to the continent, attracted by rich supplies of crude oil, grain and nuts. There are still many potential areas for further collaboration and innovation for Africa and India, particularly in agriculture, where a huge transformation is underway.

Agriculture accounts for around 57% of employment on the African continent. New startups and established companies alike are disrupting the market with innovative solutions that address challenges across the agricultural value chain, from creating dashboards to connect farmers in need of funding with potential investors to digitalizing trade documents to minimize farmers' paperwork burdens.

There is wide scope for India to contribute to the modernization of agricultural infrastructure in Africa, increase agricultural supply chain efficiency and improve productivity. India and Africa can strengthen their agribusiness ties by channeling funds into agrotechnology, which could boost global food security. With its investments, India has an opportunity to drive sustainable agricultural practices in Africa.

India produces agricultural inputs like fertilizer, pesticide and seeds, which African countries are keen to access to enhance productivity. New Delhi can also help African farmers to adapt to the effects of climate change. For investors, there is an opportunity to finance the processing of agricultural products in Africa for export. This activity can be a catalyst for economic and social development in rural parts of the continent.

Concerns around climate change spread well beyond agriculture. Africa's clean energy transition is now a center of attention, with renewable energy an emerging focus of India-Africa trade. India is already heavily investing in renewables and is the third-largest renewable energy producer globally.

Indian investors could support Africa's renewable transition by funding solar, wind and hydroelectric projects across the continent. Leveraging its long-standing trade ties, India could help to drive real systemic change and contribute to global net-zero goals. India and other Asian countries have already demonstrated interest in using their technologies, skills and capacity to actively participate in Africa's green energy transition through bidding for contracts to engineer, build and manage renewable energy projects.

While the wheels of globalization have been in motion for some time, we are now faced with myriad new challenges. As seen at the G20 summit, key issues include energy supplies and costs, the climate crisis, food security and population aging.

What is often overlooked is that the solution to many of these modern problems lies in Africa and Asia. With the world order continuing to shift, investors and businesses must turn to the Global South if they want to get ahead of the curve and support international growth.

India and Africa have built a foundation for a strong and long-lasting trading relationship. It is time to channel investments in a strategic way to foster collaboration, innovation and shared growth between India and Africa.

Premeshin Naidoo is managing director for the Middle East & Asia corridor at Absa Bank in Johannesburg.