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

Current FDI Scenario Indian FDI into Africa

Current FDI Scenario

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 Billion Source: World Investment Report 2007, UNCTAD Egypt Kenya Morocco Nigeria Angola Equatorial G Sudan Chad

Share of Sectoral FDI inflows (2002-April 2006) South Africa Ghana Angola Equatorial G Sudan Chad From the World Bank Report “Africa’s Silk Roads: China and India’s New Economic Frontiers” 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

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

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 Africa 0 10 20 30 40 50 60 70 80 90 Response to UNCTAD Survey, % of respondents Decrease No Change Increase

Current FDI Scenario Indian FDI into Africa

Current FDI Scenario

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

India Inc. Investing in Africa

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 Sudan

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

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