Foreign Trade is considered a significant determinant of economic development in a country. It involves the inward and outward movement of goods and services, which results into a flux of foreign exchange from one country to another. In the current times of increasing protectionism and hiked tariffs, platforms that bring different nations to work together for mutual development are essential. Such platforms promote international trade – a vital part of the world’s development strategy and an effective instrument of economic growth, employment generation and poverty alleviation for the global economy. Year 2005 was when one such common ground was established to bring powerful and influential leaders of two emerging economic superpowers – India and Africa – under one roof. It was the year when the first CII-EXIM Bank Conclave on India-Africa Project Partnership took place.
THE JOURNEY – FROM 2005 TO 2019
Since then, the Conclave has galvanised economic change in India and Africa on matters widely debated across territorial boundaries. The event has seen the political and business elite of the two regions participate with open minds to discuss entire swathes of economic activity. The conclave has witnessed wave after wave of partnerships and reforms, triggering discussions on all forms of development. In 2005, India was revelling at a consistent growth with a Gross Domestic Product (GDP) of above 8 percent. The services sector was booming contributing 75% to the GDP from 30 percent in the 1950s. The 1991 liberalization reforms had unfolded new market avenues, helping India grow rapidly, amplifying its forex resources through massive inflows of foreign funds via Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII).
This had established India among the top three most preferred investment destinations in the world. However, the inflow of FDI (expected to be long-term) was less that FII (seen as good weather friends), making the forex environment unstable. During the same time, several nations of the African continent were battling chronic poverty. According to the United Nations Economic Commission for Africa, despite significant improvement in the growth of Africa’s collective GDP, a large part of the population had no jobs and hence no stable sources of income.
With the highest incidence of poverty in the world, Africa urgently needed to create more employment – to the tune of eight million new jobs every year. And economic growth was the only tool of liberation from the bondage of poverty. As per the United Nations Conference on Trade and Development (UNCTAD), Africa saw a moderate acceleration in its growth over the years, supported by external factors including a strengthening of global demand for Africa’s products, and domestic factors such as robust private consumption, sustained investments in infrastructure, and rising oil production particularly due to new field development. While the global economy had declined measurably compared to a strong and broad expansion in 2004, India and Africa exhibited a strong resilience to this slowdown. India’s focus on being self-sufficient aided by the Green Revolution and Economic Liberalization and Africa’s continuous diversification in many of the continent’s economies provided the necessary scaffolding. Read more
