Keynote address India-Africa Forging the Future Together

30 January 2017
ITC News

Keynote address delivered by ITC Executive Director Arancha González

30 January 2017 - Mumbai, India

Good morning Ladies and Gentlemen,

I am very pleased to be here in Mumbai today. It is a great pleasure to be in the company of a group of young motivated African students, taking full advantage of opportunities to learn and build their skills in one of the world’s fastest growing emerging economies.

I thank Mr. Mathur and the team at EXIM Bank for hosting this important discussion here today and providing the opportunity for me to address the issue of “India-Africa: Forging the Future Together”.

The International Trade Centre (ITC), which I lead, is a joint agency of the United Nations and the World Trade Organization. For more than fifty years we have been working with both the private and public sectors to boost the competitiveness of small and medium sized companies (SMEs) in developing countries.

Over the last six decades, the landscape of international trade has changed dramatically. Women and youth were rare topics on the international trade agenda. The World Trade Organization did not even exist! But we live in a very different world today.

The UN Sustainable Development Goals are our roadmap to reducing poverty and inequality, and promoting sustainable and inclusive growth and development by 2030. And as the locus of decision-making is changing – developing countries, NGOs, academic institutions, the private sector…and yes, women and young people…you all have a major role at the table in making this happen.

Despite the current global rhetoric about anti-globalisation and protectionism, the International Trade Centre believes we stand on the cusp of a great new era of trading relations between Africa and India. But that future also has an interesting and colourful past.

For those who remember the children’s book, Sinbad the Sailor, you will know that Sinbad was an Omani trader who sailed from the southern Iraqi port of Basra – pushed along by the predictable winds of the annual Indian Ocean monsoon.

Sinbad’s voyages took him from Africa to Mumbai. It was a tale of a young trader who sought new partnerships and markets across the vast reach of the Indian Ocean. If Sinbad sailed from Basra, many others have undertaken the journey from Salalah, Porbunder, Mumbai and many other ports from the sub-continent.

At the ITC, we have always seen south-south partnerships as an important contributor to job creation and as a source of knowledge transfer. The Government of India has likewise been a long-time proponent of south-south partnerships, already since the 1960 through programmes like ITEC. So South-South partnerships are not new. But what is different today? The context looks a lot different.

Since the 1990s, South-South trade has consistently expanded at a rapid level. The share of South-South trade in world trade skyrocketed from just 7.4% in 1990-91 to 15.4% in 2009. Trade between India and Africa alone has grown dramatically - African exports to India have grown over 80 per cent between 2008 and 2015

The 21st century has witnessed a remarkable and virtually sustained surge in South-South investment, which as of 2015, was growing at an annual average rate of 21%. India has emerged as one of the fastest growing sources of foreign direct investment (FDI) in developing countries in recent years. India’s total outward FDI stock stood at US$ 120 billion at the end of 2013.

In addition, both Africa and India have amongst the fastest growing young workforces that will need decent and well paid job opportunities. This is an opportunity for businesses in the regions which need a young workforce in order to expand their manufacturing as well as services industry. But as any young person nowadays will tell you, it is also challenge, when competition for jobs are fierce and not enough decent employment opportunities around for everyone.

In my view, these trends heighten the importance of south-south partnerships significantly for the long term development of both regions.

Firstly, the challenge of creating decent jobs for a growing number of young people necessitates that we enable businesses (the job creators) to maintain current strong trade and investment links but also strengthen links to new markets. In South-South there are still large untapped market opportunities and when done right –the growth will benefit both regions.

Maintaining and expanding South-South trade and investment links however also requires people with skills and understanding of both business cultures that can act as bridge builders. Thus partnerships in broader sense, also means building up a group of young global professionals – students like yourselves here today - who feel as comfortable doing business in Mumbai as they do in Kampala. Or young entrepreneurs who can see innovative solutions abroad and find ways to adapt it at home.

It also requires business leaders with vision who are willing to invest for the long terms – mentoring and educating local professionals, identifying new solutions for local needs as well as strengthening backward linkages to the local economy. Many of these businesspeople, I understand are in the room here today.

Programmes like ITEC and ITC’s various projects can support and strengthen these South-South partnerships.

Now, a few examples from the work we do, with a particular focus on the “Supporting Indian Trade and Investment for Africa” (SITA) project. Financed by the UK Department for International Development and in its second year of implementation, the project promotes trade and investment linkages between India and East Africa.

Indo-Africa Internships Programme – Work exposure for young graduates

One of the sectors SITA focuses on is the Information Technology (IT) and IT enabled services sector. We chose IT for a good reason - being one of the fastest-growing sectors of the Indian economy and a global market leader. Linking with the highly successful Indian ITES sector offers great potential to businesses in Africa - to learn from best practices, acquire specific expertise and seek partnerships for commercial projects and investment from India.

In the services sector, we all know that your business rises and falls with the skills set of your personnel. So when considering how to enable African businesses to best learn from India’s vast IT services expertise, our attention turned to the young African students already studying IT programming and similar degrees in India. We know that a large number of African students are already enrolled at Indian universities and some of you are in the audience today. Yet from feedback we have heard, many return home without having had the chance to gain work experience in India. We see this as a missed opportunity for both the students as well as the Indian companies.

So we have initiated an Indo-Africa Internship Programme where we enable young African students the chance to gain first work experience with an Indian IT company. Such exposure has several benefits:
- it helps young graduates gain practical skills and enhances their employability at home as well as internationally
- it helps African future entrepreneurs and employees in bringing back knowledge of best practices from India and
- it can create and strengthen long term business relationships between Indian and African companies.

I am pleased to say that in March this year the first two interns from East Africa will start their positions at an Indian IT company in Noida.

I would like to use this opportunity to encourage interested African students as well as Indian company representatives here today to reach out to us, if you wish to learn more on how to become a part of this exciting initiative.

This is one just concrete example of how we are trying to strengthen south-south partnerships through our projects.

SheTrades - Mitreeki – Mentoring young women entrepreneurs

Another way in which ITC aims to support learning from South-South partnerships is by building networks of entrepreneurs. These networks form part of the Shetrades - Mitreeki East Africa – India Partnership initiative, and will serve as knowledge exchange platforms, where Indian and East African women can come together to share experiences, best practices and further develop their business ideas. Business leaders will also join the network, acting as mentors to the young entrepreneurs. Shetrades - Mitreeki will also enable access to online trainings, technical experts, buyers and financial services.

ITC also has a Youth and Trade Programme - strengthening the environment in which young entrepreneurs operate and the level of assistance they receive. The tailor made approaches help young entrepreneurs integrate into international value chains and enhance their competitiveness.

Platforms like these can be instrumental in giving young entrepreneurs a head start and a higher likelihood to succeed in international business. More established businesspersons in turn are not only able to impart their knowledge, but are also investing in future business partners in their sectors.

These platforms allow us to broaden the networks that young students like you have built up during your academic time here, and also enable access to young entrepreneurs in Africa that have not had the chance to study abroad and create connections themselves.

Overcoming information asymmetries and trust barriers

When we speak to potential Indian buyers and investors about the opportunities in Africa for doing business, we find that one of the first challenges concern information asymmetries. Many companies are unaware of the opportunities simply due to the lack of information. Others have voiced concern around security and many indicate having challenges in identifying business partners.

Interestingly, we hear exactly the same concerns from African companies–around the reliability of global markets, the lack of knowledge of market opportunities and concerns around the safety of international travel.

In our experience, trade is not only about the exchange of goods but also about bringing people together and establishing trust.

In projects like SITA, we found that it was often through simple exposure visits or trainings that much of these challenges can be overcome – and business deals often followed naturally on the side-lines of these visits. Projects like SITA thus serve an important purpose in bringing people together to help dispel misconceptions and build up trust.

For this purpose we often call on global trade champions –Indian and African businesses and professionals who are already actively engaged in south-south business, and who can tell it as it is – the challenges but also the real opportunities to be made.

Learning from Indian buyers

To give you one example, in Rwanda, SITA is working with an experienced Indian spices producer and buyer in trialling the farming of six new chilli varieties. This spices producer already had many years of experience of south-south partnerships across Asia and starting in Africa. It was in large part this vision that initiated the pilot. The Indian company partnered with a number of young entrepreneurs in Rwanda, keen to diversify their current basket of spices exports.

The company supplies the seeds and know-how, and guarantees a buy-back of product. SITA is providing coordination and execution of appropriate agronomic practices. The Rwandan SMEs with the support of the National Agricultural Export Board are piloting the scheme, intent on expanding chilli cultivation in Rwanda to 360 hectares and in future to process chilli for export to global markets.

I have mentioned the strong growth in exports from Africa to India. Yet we know that a large proportion of this export from Africa to India remains dominated by a few numbers of primary commodities and is furthermore often in the hands of a few large players.

It is through examples like this that we see the potential that south south linkages can harbour for creating win-win business opportunities for Indian buyers willing to invest in a long term engagement and for African SMEs, able to translate knowledge from Indian spices production into export success at home.

I see the many Indian business representatives here today who are already active in Africa, as such champions. Likewise the African students here today who already understand the Indian culture and business context better than many back home, and will be the future African business men/women. You can act as door openers to strengthen business ties between your regions and translate solutions you see here to your local context back home.

The future of international trade belongs to next generation of entrepreneurs and business leaders. For this reason, the ITC has a particular interest in fostering trade opportunities for young people and women. With 1.8 billion young people around the world between the ages of 10 and 24, we are witnessing the largest youth bulge in history.

Whether this youth bulge can be transformed into a demographic dividend for sustainable growth depends on what policies, and initiatives are put in place to leverage the competitive advantages of young people.

As students and business leaders, I encourage you to be active participants in the global trade debate. You have a real opportunity to help shape the current and future agenda. Your voice is important.

I thank you for this opportunity to speak with you today.