Exim Bank’s study analyses opportunities for India’s trade and investment in North Africa. Notwithstanding the challenges face by few countries in the region, North Africa in general has several advantages and has been witnessing high growth rates in the recent years. An analysis of the current trends in trade and investment in the North Africa region, highlights that the region is slowly emerging as major trade and investment destination for India.
(Release of Exim Bank's publication entitled ‘North Africa: Unlocking India’s Trade and Investment Potential’ by Shri Hardeep Singh Puri, Minister of State for Commerce & Industry, Minister of State of Ministry of Housing and Urban Affairs, and Minister of State of the Ministry of Civil Aviation, Government of India in the presence of dignitaries Mr. Mohammed Ali Abdalla Mohamed Ali, Under Secretary, Ministry of Trade and Industry, Sudan, Hon’ble Mou Mou Athian Kuol, Under Secretary for EAC Affairs, South Sudan, Mr Khaled ben Abdalla, General Director-Foreign Trade, Tunisia, Dr. Nabeel Altel, Deputy Director-Foreign Trade, Policies Directorate, Ministry of Industry, Trade and Supply, Jordan, Mr Tarek Tawfik, Deputy Chairman, Federation of Egyptian Industries (FEI), Mr David Sinate, Chief General Manager, Export-Import Bank of India, Mr Salil Singhal, Chairman- CII Agriculture Council & Chairman Emeritus, PI Industries Limited during the CII-EXIM Bank Regional Conclave on India-West Asia & North Africa held in Cairo, Egypt on November 06, 2019.)
North Africa, covering Algeria, Egypt, Libya, Mauritania, Morocco, Sudan and Tunisia, accounts for 29% of total GDP of Africa, 20% of Africa’s Population and 30% of Africa’s land area. North Africa’s contribution to Africa’s development is significant, with its economies largely driven its huge reserves of minerals and natural resources including phosphate, oil and gas reserves. Of Africa’s projected 4% growth in 2019, North Africa is expected to contribute 40% to the growth of the continent.
The total exports of the region stood at US$ 153.2 billion, while imports amounted to US$ 226.4 billion in 2018. Though inter and intra trade in the region have been limited due to various reasons, the countries have taken efforts over the years to improve trade relation with nations within Africa as well as outside. A major issue facing North African countries is that these countries export resources and low-value products and in return imports manufactured goods, an increasing share of which are high-tech products. This resource-for-manufacturing exchange and flood of cheap goods especially from China has resulted in a negative impact on regional industries. The exports of primary commodities have also resulted in high price sensitivity of the region’s exports to commodities, thereby leading to growth volatility.
In 2018, North Africa accounted for 30.9% of total investments to Africa. FDI inflows to North Africa increased by 2.4% in 2018 to US$ 14.2 billion, from US$ 13.9 billion in 2017 due to elevated investments in most countries of the region. Morocco and Egypt are considered the most attractive investment destinations, not just in North Africa, but in the entire African continent as well. Proximity to the European Union gives a unique advantage to North African countries in attracting FDI.
During the last ten years, India's total trade with North African countries increased by a CAGR of 4.5% from US$ 7.5 billion in 2009 to US$ 11.1 billion in 2018, with a 20.7% share in Indian exports to Africa and 13.4% share in Indian imports from Africa during 2018. While commodities such as automobiles, products of mineral fuels, and machinery dominated India’s exports to the region, imports were mainly mineral fuels, inorganic chemicals and fertilizers. Indian investments to North Africa was US$ 48.6 million, with maximum investment going to Egypt, Morocco and Algeria.
The unique strategic location of the region, connecting Middle East, Africa and Europe along with abundance of resources make North Africa a preferred investment destination. Moreover, Egypt and Morocco have the two largest industrial bases in the region while Tunisia has traditionally been the country with the highest industrial intensity. With the recent reforms being undertaken by these countries, there exist lot of opportunities for Indian investors in a variety of sectors. This range from fertilizers and automobile in Algeria to ICT and cotton in Egypt; healthcare and pharmaceuticals in Libya; hydrocarbon, fisheries and ship-building in Mauritania; automobile manufacturing, renewable energy and textile industry in Morocco; agriculture, gold mining and exploration and transport infrastructure in Sudan; and organic farming, renewable energy and water plants in Tunisia. Similar is the case with Indian exports to the countries in the region.
The study also pointed out the need for export diversification in these countries, effective policy implementation, faster industrial development, easing of investment laws, ensuring protection and security of investors and projects, addressing issues of informal sector/ businessmen, and high level research for product and market diversification as some of the key areas to be addressed for ensuring high growth rates and increase investment levels.
For further information, please contact
Mr. David Sinate, Chief General Manager, Research & Analysis Group
Export Import Bank of India, Centre One Building, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai - 400005
Telephone: 91-22-2217 2701, Fax: 91-22-2218 0743, E-mail: firstname.lastname@example.org