Image Source: File Photo
As 2025 begins, it is a good time to look back and evaluate India’s existing African policies, as well as suggest new policies based on past learnings. From Prime Minister (PM) Narendra Modi’s visit to Nigeria, and inaugurating the naval base in Mauritius, to deploying defence attaches in several key African countries, 2024 has been a pivotal year for the India-Africa relationship. As India plans its Africa policy for the coming year, one often-ignored area that could shape the course of India’s future engagements with the continent is its ability to assist Africa in implementing the AfCFTA African Continental Free Trade Area (AfCFTA).
From Prime Minister (PM) Narendra Modi’s visit to Nigeria, and inaugurating the naval base in Mauritius, to deploying defence attaches in several key African countries, 2024 has been a pivotal year for the India-Africa relationship.
Given its experience with similar challenges in boosting trade and economic growth, India is well-equipped to assist African nations in implementing and improving the AfCFTA. In addition, this engagement would foster South-South cooperation and provide India with significant commercial benefits.
Africa’s AfCFTA journey so far
In January 2021, with the launch of the AfCFTA, Africa became the largest free trade area in the world, serving approximately 1.2 billion people, and a combined gross domestic product (GDP) of US$3.4 trillion. The agreement brought together 54 of 55 African countries, 47 of which have already ratified it. The agreement is designed to boost intra-trade between African countries by eliminating trade barriers and enabling the free flow of goods and products among member states.
In 2022, intra-African trade was merely 13.2 percent. With AfCFTA, this number is expected to go up to 52.3 percent by 2050, adding US$29 trillion to the African economy. This represents a consistent 7 percent annual GDP growth.
Eventually, this projection stimulates African GDP growth by 7 percent every year. An estimated 30 million Africans will escape extreme poverty thanks to this GDP growth, while roughly 68 million more who make less than US$5.50 per day will see an increase in their income.
The agreement is designed to boost intra-trade between African countries by eliminating trade barriers and enabling the free flow of goods and products among member states.
The agreement also gives preferential markets access to products from member states through the Rule of Origin (RoO). Through RoO, the protocol intends to stimulate the agricultural sector that employs more than 240 million people in Africa, thus generating robust raw materials to feed the industrial sector in Africa. This is significant since Africa currently makes up only 1.9 percent of the global manufacturing sector.
India’s contribution
Trade has long been a cornerstone of India-Africa relations, with the value of bilateral exchanges reaching nearly US$103 billion over the past decade, reflecting substantial growth. Currently, India is Africa’s third largest trading partner after the European Union (EU) and China. India’s top export products in Africa are machinery and transport equipment, pharmaceuticals, textiles, automobiles, mineral fuels, oils, and wooden products.
In contrast, Africa exports metallurgical goods, raw cotton, fruits, crude oil, precious stones and ferroalloys to India. For Africa, India’s contribution to its global exports and imports was 6 percent and 5.6 percent, respectively. In comparison, the contribution of Africa to India’s global exports and imports lies at 9.6 percent and 7.8 percent, respectively.
Inadequate transport infrastructure is a significant barrier to a unified market across the continent. Colonial legacies have led to networks that primarily connect resource-rich regions to ports, resulting in stronger links with other continents than with other African nations. India and AfCFTA signatories could work together to boost investment in transport infrastructure.
Further, agriculture constitutes 35 percent of Africa’s GDP and employs about half of its population. Despite having a vast agro-technological industry market, Africa struggles with food security. A striking 80 percent of the food production in Africa comes from smallholder farmers.
Colonial legacies have led to networks that primarily connect resource-rich regions to ports, resulting in stronger links with other continents than with other African nations. India and AfCFTA signatories could work together to boost investment in transport infrastructure.
For the AfCFTA to achieve its objective, a fully functional agricultural sector that plays a central role in the African economy is necessary. As per some estimates, if import tariffs are eliminated, by 2030, intra-African agricultural trade will increase by 574 percent. Currently, the continent spends a staggering US$75 billion on cereal imports each year, which could be used for other development purposes.
With its vast experience in this field, India could advocate agri-tech initiatives for African smallholder farmers by empowering modern technologies and encouraging digitalisation. As India has invested in Africa’s pharmaceutical and transportation sectors, it could also invest in the agro-industry and equip the local farmers with more sophisticated technologies such as drones and artificial intelligence (AI) to aid with agricultural production, yield prediction, and tracking the health of soil and crops.
Furthermore, India has made substantial investments in its digital public infrastructure, developing a range of digital public goods. A service like the DigiLocker application could help African countries store essential trading documents, such as import-export declarations, on a single platform, thereby streamlining processes and reducing the friction between businesses and bureaucracy.
India may also assist Africa in implementing initiatives such as the Indian National Agriculture Market Scheme (e-NAM), to create a unified continental agricultural market.
Way forward
Dr S. Jaishankar, India’s External Affairs Minister, described India’s upcoming foreign policy as having a “big, long, and smart” vision, striving for a “deeper engagement with the world”. No other region matches this agenda better than Africa.
At last year’s African Union Summit, United Nations Secretary-General António Guterres voiced his support for a united, wealthy, and peaceful continent, stating that the 21st century could genuinely belong to Africa.
There is no denying that the continent has been dealing with many difficulties, including debt, internal strife, political instability, and combatting the effects of climate change. Yet, at last year’s African Union Summit, United Nations Secretary-General António Guterres voiced his support for a united, wealthy, and peaceful continent, stating that the 21st century could genuinely belong to Africa. Toward that journey, the success of AfCFTA will be highly critical.
India can play a significant role by assisting Africa attain its vision outlined in “The Agenda 2063: The Africa we want”. India is committed to partnering with all African nations as they embark on the AfCFTA, to address the challenges impeding progress in the continent. From this perspective, India can also help Africa realise its vision of a prosperous Africa. As AfCFTA will play a key role in attaining this vision, India must incorporate the successful implementation of the AfCFTA in its Africa Policy.
Samir Bhattacharya is an Associate Fellow at the Observer Research Foundation.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
PREV
