Africa's involvement with Asia, specifically China and India, is growing. China has become Africa's largest trading partner, with trade over $100 billion annually, and has significant investments in infrastructure and resource extraction projects. India's investment and trade with Africa is also growing rapidly, reaching $50 billion annually, though it is more diversified across sectors. Both countries see Africa as an important source of natural resources and a market for their goods, and many large companies from China and India are actively pursuing projects in Africa. However, some projects have faced issues with transparency, local impacts, and perceptions about unsustainable practices. Overall, Asia represents a major opportunity for investment and growth in Africa, but sensitivities need to be managed.

1. Africa's Asian involvement
China, India and the Indian Ocean economy
ASIA-PACIFIC TECHNOLOGY NETWORK
20th June 2013

2. 2
Presentation Agenda
Internex Partners
The Indian Ocean Rim
Africa - China
Africa - India
Summary

3. 3
Internex Partners
• Focused on triangulation of business opportunities in and
between high growth markets, including the BRICS
economies.
• Established by market specialists, with years of experience
working with corporate and government clients.
• Access to real & qualified business opportunities and projects.
• Provides business intelligence briefings, strategic advice, and
business development support.

4. 4
The Indian Ocean Rim
20 Member states of the IOR: - Maritime Safety and Security, Trade and Investment Facilitation,
Fisheries Management, Disaster Risk Management, Academic and Science & Technology
Cooperation, and Tourism and Cultural Exchanges

5. 5
The Forgotten Continent
Johannesburg, SA
Cairo, Egypt
Nairobi, Kenya
Lagos, Nigeria

6. 6
Africa
• Sub-Saharan Africa has 30% of the world’s proven mineral resources,
making it a key partner both for the developed world and for the
industrialising economies of China and India.
• Decades of underinvestment have left the continent with an infrastructure
ill-equipped to deal with the burgeoning demand for its exports.
• Generalised perceptions of Africa’s risk profile do not do justice to those
countries which have made considerable economic and political progress
over the last 15 years.
• For those with the necessary regional knowledge and experience, this
mismatch between perceptions and reality affords a real business
opportunity.

7. 7
Fastest Growing Economies

8. 8
Population Growth

9. 9
The African Middle Class

10. 10
Infrastructure Backlog
• Satellite view of the African Continent
illustrates the extent of the
underinvestment in energy
infrastructure.
• Estimated infrastructure backlog, and
therefore investment opportunities,
currently represent in excess of
US$120bn over the next 10 years.

11. 11
Connectivity

12. 12
Abundance of Raw Materials
• 30% of the world’s proven
mineral resources.
• Only 12% of land mass had
been prospected.
• Asia currently accounts for 32%
of Africa’s exports.
• Africa is a key partner for the
developed world and for the
industrialising of economies of
India and China.

13. 13
Africa - Oil & Gas
• New finds in the East Africa and
Namibia.
• Chinese and Indian companies
active in exploration.
• Both China and India major
importers of crude oil from Africa.

14. 14
Recent Oil and Gas Activity

15. 15
Africa’s Top Trading Partners
• China - $109.1 billion
• United States - $90.5 billion
• India - $49.9 billion
• Germany - $31.7 billion
• France - $30.5 billion

16. 16
Africa and the IOR
• Africa has a diverse levels of political stability and sovereign risk.
• Apart from China and India; Malaysia and Australia have active interests in
Africa.
• A strong Malaysian community exists in South Africa dating back to the late
19th century.
• Malaysian interests have been sporadic; peaked under the Mahathir
government.
• Australia is also helping to strengthen rule of law and justice systems in
Africa, by providing capacity building training and international legal
assistance.
• Australian companies active participants in the resources and agricultural
sectors.

17. 17
India and China in Africa
• China’s exports to Africa grew by 48% annually
between 1994 and 2010, compared to 14% for
India.
• India’s Africa policy shows significant differences
with China’s scramble for Africa.
• India-African trade pattern appears to be more
diversified.
• The ‘softer Indian way’ in Africa is India’s unique
pathway to power.

18. 18
China – Jeremy Gordon

19. 19
Africa - China
• China started taking an interest in Africa during the second half of the 20th century.
• They initially supported newly independent countries who wished to follow Chinese
socialist ideology with friendship deals.
• China is a pragmatic partner, working with a variety of governments, and focusing on
commercial rather than political issues.
• Most Chinese investment in Africa are still state sponsored.
• The Chinese private sector is becoming increasingly active in Africa.
• China has become an active investor in the resources sector to support domestic
demand, but also looks to infrastructure, markets, manufacturing and agriculture.
• Chinese funds are also targeting and supporting Chinese opportunities in Africa.
• Chinese tourism in Africa is rising
• There are significant challenges for China in Africa in terms of perceptions and
operations

20. 20
China’s Drivers
• China is going out…
– Policy drivers for strategic reasons
• Resources, supply chain security, new markets
• Trends & Transitions
– New government
– Global role
– Slower growth
– Higher costs
– Economic reform & the private sector
– Urbanisation
– Domestic consumption vs trade & fixed asset investment
– Overseas Direct Investment & Going Global

21. 21
ODI. Up, Up & Away
• “Going
Global”
– Since 2000
– ODI vs FDI
• Targeting
– Resources
– Strategic
Assets
– Tech
• Brands
– Markets
Source: IMF, End 2011

22. 22
China’s ODI
China's overseas investment
Region Total
Largest recipient of
investment
SOURCE: IMF STOCK OF OVERSEAS DIRECT INVESTMENT (END 2011)
Asia $303.4bn Hong Kong ($262bn)
Latin America $55.2bn Cayman Islands ($21.7bn)
Europe $24.5bn Russia ($3.8bn)
Africa $16.2bn South Africa ($4.1bn)
North America $13.5bn US ($9bn)
Oceania $12bn Australia ($11bn)
• Where?
– Developed &
Developing Markets
• Differing drivers
• How Much?
• Unreliable numbers
• How?
– Official
– Unofficial
• Hard to measure…
Source: IMF, End 2011

23. 23
A Numbers Game
• ODI+
– US$260bn
committed?
• US$75bn
invested?
– Including official
and unofficial
• ODI
• Grants/Aid
• Loans
• Private export
credits
• NGOs
• Portfolio
investments etc.
Source: FT; AidData

24. 24
Trade. New Horizons
• Broken trade-driven
growth model
– US/EU slow-down
– Rising costs
• New resources
– Strategic supplies
• New markets
– Less competition
– Price sensitive

25. 25
Sino – African Trade

26. 26
China’s Mixed Offer
• Development Finance
– Cheap money, no strings
• Infrastructure +
– Fund & build
– Resource access + local needs at low costs
• E.g. US$6bn committed to Sierra Leone for development of road,
rail, port, logistics, industrial park…and mining
• China gets markets and supply chain Infrastructure
• Labour
– Cheap but controversial

27. 27
China’s Challenges
• Lack of transparency
• Political risk
• Expectations vs delivery
– Cost overruns, quality issues
• Business and politics don’t mix well
– Different drivers, stakeholders
– Bribery and corruption risk
• Employment / integration
– Conflict risk
• Management, culture & communications

28. 28
Problems & Prospects
• Problems in the news
– Gabon: Oil, iron ore legal disputes
– Ghana: Illegal gold mining arrests
– Zambia: Coal mining licenses revoked
– Zimbabwe: Controversial diamond mining
• Prospects too
– Resource & infrastructure development
– Special economic zone development
– Trade as well as investment
– Increased private sector role
• Critical issues
– Political sensitivity, project due diligence, delivery support

29. 29
India – Jeet Jandu

30. 30
Africa - India
• India has links with Africa dating back to early 19th century.
• Late 19th century, the British brought in skilled and unskilled labour from India to
build infrastructure and develop agriculture.
• Indian traders followed into Africa and over several generations have embedded
themselves into local economies. Introduced the concept of “Duka”.
• The Indian diaspora in Africa are skilled at building businesses and participating in
local economies.
• The Indian diaspora and the local Africans have at times had difficult relations.
• Indian companies see Africa as a continent for tapping into mineral resources in-
order to feed the growing Indian economy.
• Indian government has not made significant state sponsored investments in Africa.
• India and China have only become competitors in Africa in the last 10 years.

31. 31
India – Trade and Investments
• Current levels of trade around $50Bn a year.
• Lead by the Indian Private sector. Africa is a new
investment destination for the increasing global
profile of India’s multinational corporates.
• Total Indian investment in Africa is upwards of US$
33 bn.
• Africa recorded 26 new manufacturing projects from
Indian companies in 2011, a rise of 44% from 2010.
• Between 2003-2009, 70 Indian companies invested
in greenfield projects in Africa, totaling US$ 25
billion; this represents close to 5 percent of total
greenfield FDI projects in Africa (African Development
Bank).

32. India’s Exports to Africa
LDC* vs. NON-LDC
Total Exports to
Africa
$ 24.7 bn
To LDCs
$ 7.2 bn
(29.1%)
To non-LDCs
$ 17.5 bn
(70.9%)
KEY PLAYERS
2011-2012 USD bn
% Share
in Africa
SOUTH AFRICA 4.7 19.2
NIGERIA 2.7 10.9
EGYPT 2.4 9.8
KENYA 2.3 9.2
TANZANIA ^ 1.6 6.5
TOTAL 13.7 55.6
*Least Developed Countries
Source: Commerce Ministry, India ^LDC

33. India’s Imports from Africa
LDC vs. NON-LDC
Total Imports from
Africa
$ 43.2 bn
From LDCs
$ 9.4 bn
(21.8%)
From non-LDCs
$ 33.8 bn
(78.2%)
KEY PLAYERS
2011-2012 USD bn
% Share
in Africa
NIGERIA 14.7 34.0
SOUTH
AFRICA 9.9 23.1
ANGOLA* 6.6 15.3
EGYPT A RP 3.0 7.0
ALGERIA 2.2 5.0
TOTAL 36.5 84.4
Source: Commerce Ministry, India *LDC

34. 34
Investment determinants
• Indian conglomerates like the Tatas, Kirolaskars,
pharmaceutical firms like Cipla and automobile
companies like Mahindra have undertaken profitable
projects in Africa.
• The Tata Group has invested about US$ 300 million till
2012, and plans to triple that amount over the next 3-4
years.
• These investments are in the resources, manufacturing,
telecoms and energy sectors.

35. 35
Other Government initiatives
• The Indian government is also financing an "e-network" project to enhance
Internet connectivity in Africa, linking 5 regional universities, 5 specialty
hospitals, 53 regular hospitals and 53 educational institutions across Africa
to Indian universities and hospitals, via a satellite and fibre optic network.
• India recently announced a $5Bn loan package for Africa.
• An additional US $700 million to establish new institutions and training
programs, in consultation with the African Union and its institutions.
• India’s capacity-building programme for African countries. Under ITEC
(Indian Technical and Economic Co-operation) India has provided more
than US $ 1 billion worth of technical assistance & training to African
countries.

36. 36
Summary
• The next major growth area in the world.
• Major opportunities but understand and manage risks.

37. 37
Thank You