Indian investment to lead trade growth in East Africa
Increased trade between India and East Africa will be driven by private sector-led development, supported by investment from Indian businesses, said participants at a recent workshop organized as part of a United Kingdom government-backed project on Supporting India’s Trade Preferences for India (SITA), implemented by the International Trade Centre (ITC).
Business leaders joined policymakers and representatives of international organizations for the 4-5 December meeting of SITA’s third Partnership Platform in the Ethiopian capital of Addis Ababa to finalize the project design and look ahead towards implementation.
‘Investment has become an integral part of this project,’ said Rajesh Aggarwal, Chief of ITC’s Trade Facilitation and Policy for Business section. ‘As SITA moves forward, the value-chain analysis will take into account the investments that will be needed. We will look at additional sectors where there are investment opportunities from India, to add more value to East African products.’
SITA targets export growth in Ethiopia, Kenya, Rwanda, Uganda and the United Republic of Tanzania in a variety of sectors: pulses; edible and essential oils; spices; business process outsourcing and information technology-enabled services; coffee; cotton, textiles and apparel; and leather. With the exception of Kenya, the rest of the countries receive special access to the Indian market under the preferential tariff treatment New Delhi accords to all United Nations-defined least developed countries.
Participants at two earlier meetings in Nairobi (July 2014) and Kigali (September 2014) selected the priority sectors through a series of consultative meetings, with inputs from the business community and government representatives on growth potential and overseas demand. Increasing exports in these sectors requires investments in technology and knowledge transfer, as well as skills development.
‘In Tanzania, we have lots of raw materials but we don’t have many factories for processing the raw materials,’ said Elibariki Mmari, Chairman of the Mwanza Region of the Tanzania Chamber of Commerce, Industry and Agriculture, and board member of the Leather Association of Tanzania. ‘This is high time to look for partners from India who could come to Tanzania, to go into joint ventures or partnerships to put in tanneries. We need to add value to the processed leather.’
‘We are interested in further value addition, from leather to footwear,’ said V. Noushad, Chairman of VKC Group India. ‘If the situation is okay, we are ready to invest. We can train people, and we can give value addition to the leather. Africa is not making the basic products needed, so it’s the right time to support Africa to make the footwear first for local consumption, then for export.’
SITA focuses on promoting East Africa’s trade with and investment from India, but it is also designed to expand in terms of markets and sectors.
‘India is a source of inward investment in the project and only one of the possible destination markets,’ said Govind Venuprasad, SITA Coordinator. ‘In terms of what we have discussed about project focus, beyond the shortlisted sectors, our donor has allowed us to scope innovative and possibly higher-risk sectors where there can be higher pay off through contributions to socioeconomic development, accessibility and inclusion.’
SITA is funded by the United Kingdom of Great Britain and Northern Ireland’s Department for International Development.