Africa’s perception has been
changing rapidly, from being an unsafe investment destination to being a place
hard to neglect. Businesses are no longer asking the question,”whether to
invest in Africa?” they are now more worried about the risks of not investing
in Africa. That South Africa is now a part of the BRICS group; the group of
largest emerging market economies; is a sign of the growing significance of
African countries. The continent of more than a billion people has steadily
grown at a rate of 5.6% from 2001 to 2008. Africa has large number of Indian
nationals and Indian companies are tapping this population to enter into this
continent. For aspiring Indian corporates all roads lead to Africa!
Bharti Airtel’s Zain acquisition
is the biggest by an Indian company in Africa; however, Bharti is not
the only Indian company raring to go out on all cylinders firing in Africa.
Many large Indian companies are betting big on Africa. Godrej acquired personal
care product manufacturer Tura for $33 million and is eyeing a stake in hair
care company ‘Darling Group Holdings’. FMCG companies like Dabur, Marico, Emami
are all present in Africa and doing well. The Tata conglomerate has been
present in Africa since decades. Essar, another big Indian corporate house has
been aggressively investing in Africa since 2008. It started out with its own
mobile company in 2008, but has since then acquired mobile companies in Uganda
and Congo Republic. Essar Oil, an Essar group has acquired stakes in Kenya
Petroleum Refineries and State owned Zimbabwe Iron and Steel.
Karuturi Global, has become one
of the largest private land owners in the world thanks to its investments in
Africa. It started with a 15 hectare land purchase in 2005; for an investment
of $1.9 million, to grow rose. In 2007, it bought one of the largest flower
farms in Africa for an amount of $65.5 million. In the last two years, it has
acquired 311,700 hectares of land in Ethiopia for an undisclosed sum of money.
Drug companies Cipla and Ranbaxy
have been present in Africa for a long time now, helping African nations in
their fight against HIV-AIDS by providing cheap generic drugs. Ranbaxy, which
is present in Africa since 1996, now has around 10 subsidiaries in Africa. It
also has two manufacturing units in the continent. Cipla has recently set up a
manufacturing facility in Africa.
One of the main reasons for
acceptance of Indian companies is the reason that India has had a long political
relation with African countries. However, in terms business it’s the Chinese
who are front runners. The Chinese have been investing heavily in the
continent. The Indian government though late to act, recently has been sending
many delegations to the continent to create business opportunities for Indian
companies. One thing in India’s favour is its democratic set-up; unlike China
whose Communist nature makes it appear as a threat. All Indian investment in
Africa is not about business, some of it is philanthropic in nature. In 2008,
during a summit in Africa, India pledged more than $500 million for development
projects. It also pledged to increase by $2 billion its lines of credit to
African countries.
As Indian companies grow, they
have to look beyond the boundaries of the country for new markets and Africa
seems to be their number one choice for the time being. For corporate India,
conquering Africa is a top priority.