EXIM BANK Strategic Partnership With EU For Local & Global Issues NEW MEDIA connecting global business

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1 EXIM BANK R E D I S C O V E R I N G A V I B R A N T C O N T I N E N T Nov 07-Jan 08 Rs.100/- Strategic Partnership With EU For Local & Global Issues NEW MEDIA connecting global business

2 Issue n This PERSPECTIVE 06 As South-South Trade Gains Momentum India Further Intensifies Africa Focus Founder Chairman Late Shri R.K. Prasad Distributed by: New Media Communication Pvt. Ltd. in association with Export-Import Bank of India FINANCE Exim Bank s LOCs Spur Africa s Economic Growth COVER STORY EU-Africa Joint Strategy on Local & Global Issues Managing Editor: Satya Swaroop Director: B.K. Sinha Group Editor: Dev Varam Consulting Editors: Prabhuu Sinha, Umesh Luthria, Rajiv Tewari & Mohd. Sabir Nishat Asst. Editors: Tripti Chakravorty & Shushila Singh Project Co-ordinator: Himadri Deka Strategic Advisor: Vinaya Shetty Head-Busi. Dev.: Veerendra Bhargava Manager: Sunil Kumar Manager Mktg. Services: K. Biswas Accounts Asst.: Vrunda Gurav Circulation: Madhavi, Jawaharlal, Santosh Gangurde & Vijay Wangade Art Director: Santosh Nawar Visualizers: Maya Vichare & Sagar Banawalikar DTP: Nilima Kadam & Mohammad Ismail Photographer: Bilal Khan BRANCHES: Kolkata: Anurag Sinha, Branch Manager, A-7/1, Satyam Park, 2nd Lane, Near 3A Bus Stand, Thakurpukur Kolkata Tel: , anurag@newmediacomm.biz CO-OPERATION 2nd IBSA Summit Binds 3 Nations with 6 MoUs & 1 Agreement 22 Pune: Jagdish Khaladkar, Regional Director, Tel: Geeta K. Regional Head, Sahyog Apartments 508, Narayan Peth, Patrya Maruti Chowk Pune Telefax: pune@newmediacomm.biz jagdishk@vsnl.com FACE-TO-FACE Infrastructure Key to Indo-African JVs 25 Australia Office: Bandhana Kumari Prasad, 129 Camboon Road, Noranda, Perth, W.A Tel: bandhana@newmediacomm.biz New Media Communication Pvt. Ltd., B/302, Twin Arcade, Military Road, Marol, Andheri (E), Mumbai India Tel: Telefax: enquiry@newmediacomm.biz International Marketing: Tripat Oberoi Shailesh Patel Section française Printed & Published by Satya Swaroop and printed at: M/s Young Printers, A-2/237, Shah & Nahar Industrial Estate, Lower Parel, Mumbai and published from B -302, Twin Arcade, Military Road, Marol, Andheri (E), Mumbai India The news items and information published herein have been collected from various sources, which are considered to be reliable. Readers are however requested to verify the facts before making business decisions using the same. INDO-AFRICAN BUSINESS 04

3 EDITORIAL Dear Reader, Greetings. We are all aware that the 21st century has ushered in a new economic order in which developing countries have a much bigger and active role to play. In fact, the change that began with China in the 1980s, picked up momentum in India in the 1990s and spread then onwards to Latin America and Africa. The catalysts driving this change have been globalization and economic reforms carried out by countries across continents. Globalization and economic reforms have changed the face of Africa. In the distant past, world trade was dominated by the North. In the not-sodistant a past, trading between the countries of North and South underlined the global world economic order, the pattern of which is fast changing. The undercurrent of the change has been South-South economic co-operation. The economic rise of China and India and their involvement in the development of Africa have been the hallmarks of South-South co-operation. In the current issue of Indo-African Business, T.C. Venkat Subramanian, Chairman and Managing Director of Export-Import Bank of India, writes about India's intensified engagement with Africa. The issue also carries an article by P.R. Dalal, Chief General Manager of Exim Bank, on the role of India's premier financial institution in extending various Lines Of Credit (LOCs) to various countries in Africa, aggregating close to three billion dollars over the years. The cover story of the current issue is on the European Union's engagement with Africa on various fronts, especially infrastructure. An EU-Africa Summit held in December 2007 in Lisbon, chalked up a joint strategy for the overall development of the African region. We carry the report in detail. The issue also covers the proceedings of the Second IBSA (India-Brazil South Africa) summit held in Tshwane, where several Memoranda of Understanding (MoUs) were signed. We also carry two reports on Indian companies' involvement in Africa. While Tata Consultancy Services (TCS), India's leading IT services company, has set up a subsidiary in South Africa, Mahindra and Mahindra, the one of country's top automobile firms, has launched a range of global class vehicles in Ghana. The issue also highlights an International Festival of Films on Tribal Art and Culture (IFFTAC), to be held shortly at Indore in Madhya Pradesh. The festival, organize by Vanya, the state's Department of Tribal Welfare is expected to be a great success. We carry an interview with O.P. Rawat, Principal Secretary, Department of Tribal Welfare, in which he talks about IFFTAC and related issues. Satya Swaroop Managing Editor satya@newmediacomm.biz INDO-AFRICAN BUSINESS 05 Nov 7 - Jan 08

4 PERSPECTIVE As South-South Trade Gains Momentum India Further Intensifies Africa Focus Today global attention is riveted on Africa, The reasons for this are the African region's growing appetite for industrial investment and its thirst for expanding trade. Africa has now emerged as one of the world's hottest growth regions. T.C. Venkat Subramanian, Chairman and Managing Director Export- Import Bank of India, in a detailed and lucid write-up, throws light on Africa's immense potential for investment and India's increasing commitment to expanding its trade ties with that region. T C Venkat Subramanian For decades, world trade had been dominated by flows amongst developed countries - the North - and between the North and the developing countries - the South. Of late, there has been a growing importance of developing countries in world trade, with South- South trade getting increasingly an important role. South-South trade has been expanding since the last 20 years, albeit from a small base. The growth in South-South trade has been over 12% during this period, as compared to around 7% growth of North- North trade, and around 10% of North-South trade. Prominence of Africa Region Many countries in the world are increasingly paying attention towards Africa region, which is developing into a region with high business potential. Though the size of the economy and its share (3% in 2006) in world trade is relatively small, at present, the Africa region is increasingly in the limelight. The region has witnessed a cumulative annual growth of 16% in exports and 15% in imports of merchandise trade, and 13% in exports and 14% in imports of commercial services trade, during the period Economic growth in Africa has been driven not just because of oil or mineral wealth. Asia's thirst for competitive exports has spread to African continent too. At the same time, the national Governments are also modifying their policies and encouraging private INDO-AFRICAN BUSINESS 06

5 PERSPECTIVE in 1995 to around 20% in The value of cross-border acquisitions of African enterprises has also reached a record level (US $ 18 billion) in 2006; most of which have been in the form of mergers and acquisitions by Asian firms. Similarly, FDI outflows from Africa have also reached a record US $ 8 billion in 2006, up from US $ 2 billion in It may be said that the growing attention, paid by many countries, towards Africa is due to increased interest in natural resources, more favourable business climate, and conscious strategy to partner Africa in its economic development. According to United Nations Conference on Trade and Development (UNCTAD), extractive industries accounted for most of the FDI inflows received by Africa. Most of the mergers and acquisitions undertaken by the Asian multinational corporations in Africa have been in oil, gas and mining industries. investment in viable and profitable projects with a lasting impact on development. African exports have been increasing over the past few years, not only for the oil exporting countries but also for the non-oil-producers. Exports from the region rose from US $ 190 billion in 2004 to US $ 287 billion in 2006, while imports increased from US $ 195 billion to US $ 281 billion during the same period. The sectoral structure of exports by Africa region shows that fuel and mining sector accounted for about 71% of total exports in 2006, followed by Agriculture sector (9%) and manufactures (20%). Direction-wise, Africa's trade was dominated by Europe (41%), North America (22%) and Asia (20%). Within Asia, China and India have been showing increasing business relations with Africa. Foreign Direct Investment (FDI) flows to Africa amounted to US $ 36 billion in 2006 a new record level and twice that of The surge was in large part related to investments in extractive industries, but FDI also rose in various service industries like transport, storage and communications. During the period , Africa region witnessed a cumulative growth of 18% in FDI inflows. Such FDI inflows have also increased their share in Gross Fixed Capital Formation of the Africa region, from 9% India's Contribution to South- South Trade India's directions of trade have also been changing significantly. Concentration of developing countries in India's exports and imports has been increasing. The share of developing countries in India's exports, which stood at around 25% in 1980's have increased to around 43% now. Similarly, the share of developing countries in India's imports has increased from around 45% in 1980's to over 65% now. India's Growing Business Relationship with Africa Region An important development that has characterised India's trade and investment relations with developing countries of the world has been India's growing trade INDO-AFRICAN BUSINESS 07

6 PERSPECTIVE and investment relations with Africa region. The symbiotic commercial relations that have developed between countries from Africa region and India can be assessed from the enhanced two-way trade and investment flows. India's total exports to Africa amounted to US $ 8.4 billion during registering a significant growth of 54% over the previous year. During the period April September 2007, exports to Africa aggregated US $ 5.5 billion, a rise of 33% over the corresponding period last year. India's export basket to Africa is well diversified with no single export tem exceeding a share of 15% in total exports. India's imports have been driven largely by India, the Government of India put in place the Focus Africa petroleum products and gold, which together Programme from the year to enhance India's trade with accounted for three-fourths share in India's total Africa. The main objective of the programme is to increase imports of US $ 11.4 billion from Africa during interactions between the two regions by identifying the areas of During the period April September bilateral trade and investment. The Focus Africa programme 2007, imports from Africa amounted to US $ when first introduced, focused on the Sub-Saharan African region 7.4 billion, an increase of 22% over the with added emphasis on seven major trading partners of the corresponding period of last year. region, viz., Nigeria, South Africa, Mauritius, Kenya, Ethiopia, As regards investment, India has been Tanzania and Ghana. Effective April 1, 2003, the Focus Africa expanding its contribution to sustainable programme has been extended to cover in effect the entire African continent. development through joint ventures. India's emergence as an important investor in Africa is Specific focus products for exports to these countries have been reflected in its rise in approved cumulative identified, which in turn can be broadly classified into the investments in the region. This amounted to US $ following major product groups: cotton yarn, fabrics and other 3.7 billion during April 1996 to October 2006, textile items; drugs and pharmaceuticals; machinery and accounting for around 17% of India's global instruments; transport equipments; and telecom and information overseas investments (US$ 22.1 bn). Mauritius technology. At the same time the Focus Africa programme and Sudan are the two largest destinations in envisages enhancing India's exports to the region through Africa for Indian investments, followed by integrated efforts of the Government of India and its agencies Liberia, Libya, South Africa, Morocco, Nigeria including the Export-Import Bank of India. and Senegal. TEAM - 9 Initiative: Focus on West Africa Policy Initiatives Focus Africa Programme As the countries from the Africa region are emerging as important business partners for With a view to facilitate and further enhance bilateral trade and investment relations with countries in Africa, the Government of India has set in place various policy measures as also an enabling institutional framework. These include, among others, Focus Africa Programme, TEAM- 9 Initiatives, and India-Africa Partnership Conclaves. With a view to provide a special focus to enhancing commercial relations with countries in the West African region, the Government of India has put in place the Techno-Economic Approach for Africa India Movement (TEAM9 Initiative). TEAM-9 Initiative envisages a special cooperation model amongst eight countries of West Africa, viz. Burkina Faso, Chad, Cote d'ivoire, Equatorial Guinea, Ghana, Guinea-Bissau, Mali, Senegal, along with India. Under the TEAM-9 Initiative, a cooperation mechanism is envisaged which will operate at governmental, institutional and private sector levels sharing various types of expertise, intellectual and physical resources as well as economic opportunities for promoting welfare, growth and prosperity in these countries. It INDO-AFRICAN BUSINESS 08

7 PERSPECTIVE would thus involve, among others, providing opportunity for education and training in crucial sectors; transfer of critical technologies from India; undertaking specific projects in individual TEAM-9 countries which would have region-wide beneficial impact in the sectors critical for employment and growth, such as agriculture, smallscale industries, pharmaceuticals and healthcare, information technology, telecommunications, transport, energy, etc. putting in place Lines of Credit (LOCs), and identifying priority sectors in the eight countries which would be financed out of the LOCs. The projects financed will increase bilateral trade between Indian and the select countries in West Africa. India-Africa Partnership Conclaves conclaves were also held in Lusaka, Zambia; and in Addis Ababa, Ethiopia, during April 2006; in Accra, Ghana, during May 2006; and in Uganda, during June In light of the success of these Conclaves, as also the need to institutionalize the endeavour as key events in bilateral commercial relations, another conclave is scheduled to be held in India in March India Partner in Africa's Growth India is pursuing commercial strategies with Africa that are about far more than seeking resources. The diversified nature of India's investments in Africa highlights India's endeavours to contribute towards infrastructural and manpower development, as also enhancing capacity development in Africa. Recognising the immense potential to enhance trade and investment relations between India and Africa, the Government of India (Ministries of Commerce and Industry, and External Affairs), in partnership with Confederation of Indian Industries, Export- Import Bank of India and African Development Bank, initiated the India-Africa Partnership Conclaves. The Conclaves created platforms for firms from African countries and India to interact and identify potential projects for cooperation. With a view to build upon the achievements of the Conclaves held in India, mini- For India, with countries in the Africa region emerging as important trade and investment partners, and the need of African countries for strategic partners in their developmental and growth endeavours, sharing of experiences in capacity building, investments and endeavours in growth-inducing sectors in Africa could prove to be strategic in fostering and enhancing long term commercial relations as also presence in the African region. Measures to enhance bilateral commercial relations between India and countries in Africa could encompass an integrated approach comprising, among others: Strategic investments and linkages by Indian companies for energy cooperation and energy security; Increased cooperation with countries in Africa for developing / exploring natural and mineral resources, and help enhancing economic value creation; Enhanced cooperation in agriculture sector development in the African region to foster sustainable and equitable development; Enhancing linkages with banks and financial institutions in Africa to foster increased bilateral trade and investment flows; Broadening linkages with trade promotion institutions in the region to enhance bilateral INDO-AFRICAN BUSINESS 09

8 PERSPECTIVE trade flows; Strengthening linkages with investment promotion agencies in Africa to enhance information about potential investment sectors and holding investment promotion events and specialised exhibitions to showcase Indian expertise; Contributing towards entrepreneurship and human capability development in Africa, particularly in the SME and agri-related sectors. Such endeavours could be supplemented by measures such as: focus on ICT sector development; increased participation in multilateral funded projects; institutional building; setting up regional business hub(s) in line with regional trading arrangements in Africa; cooperation with chambers of commerce and industry associations in the region. Role of Exim Bank of India Africa is a focus region for Exim Bank of India. Exim Bank through its comprehensive range of financing, advisory and support services, seeks to create an enabling environment for enhancing two-way flow of trade, investment and technology between India and the African region, in addition to promoting infrastructure development, facilitating private sector development, as also in contributing towards institutional building in the Africa region. A case in point is the Lines of Credit extended by Exim Bank to enhance bilateral trade and investment relations. The LOCs facilitate import of project-related equipments and services from India on deferred credit terms and many of these LOCs are earmarked for infrastructure and related projects. Further, Exim Bank of India supports Indian companies in their endeavour to globalise their operations, through joint ventures (JVs) with local partners. Such support includes loans and guarantees, equity finance and in select cases direct participation in equity along with Indian promoter to set up such ventures overseas. In the African region, the Bank has supported several such ventures in countries such as South Africa, Kenya, Mauritius, Nigeria, Zambia, Morocco, Uganda and Tanzania. These ventures serves to promote value addition, as also contribute to capacity building and capacity creation in host countries. As a partner institution in promoting economic development in Africa, Exim Bank of India shares its experience in the setting up of institutional infrastructure for international trade. In this regard, the Bank has taken active participation in the institutional building process in a number of countries in Africa. Exim Bank of India has representative office in Johannesburg, South Africa, which plays a key role in facilitating economic cooperation with the Africa Region. To give greater emphasis to the West Africa region, Exim Bank has now opened a representative office in Dakar, Senegal, which would facilitate economic cooperation between India and West African countries. In sum, Exim Bank of India, with its comprehensive range of financing, advisory and support services, seeks to create an enabling environment for enhancing two-way flow of trade, investment and technology between India and the African region, while also promoting infrastructure development, facilitating private sector development in host countries, also in contributing towards institutional building in the Africa region. INDO-AFRICAN BUSINESS 10

9 PERSPECTIVE Exim Bank s LOCs Spur Africa s Economic Growth Prabhakar Dalai, Chief General Manager, Exim Bank The Export Import Bank of India (Exim Bank) is a premier Faso, Chad, Cote d'lvoire, Equatorial Guinea, Ghana, export finance institution in the country and is engaged in Guinea promoting two-way trade and investment flows between Bissau, Mali and Senegal, have set up a regional India and its trading partners across the globe. Sound cooperation mechanism called Techno-Economic financial support structure is a sine qua non for Approach for Africa-India Movement, known as Team-9. promoting international trade and economic Under the Team-9 initiative, the Government of India development. (GOI) provides LOCs through Exim Bank to Team-9 The countries in the African continent have always been a countries, to finance setting up of various projects by focus region for Exim Bank, and thus a critical Indian companies in those countries. Also, GOI provides component of the Bank's strategy to promote and support LOCs through Exim Bank, under the NEPAD (New two-way trade and investment. As a partner institution to Partnership for Africa's Development) initiative of Africa, promote economic development in Africa, the to finance setting up various projects by Indian commitment towards building relationships with the companies, across Africa. With a view, inter-alia, to African region is reflected in the various activities and promoting India's trade and economic relations with programmes which Exim Bank of India has set in place. developing countries in particular, GOI has also Exim Bank, since its inception in 1982, has been launched the India Development Initiative (IDI). extending Lines of Credit (LOCs) to foreign governments, Developmental Thrust in Africa overseas financial institutions, regional development banks and other overseas entities, to enable them to Many of the LOCs under the aforesaid programmes have import Indian projects, technology, equipment, and been/ are being utilized for infrastructure development, services, on convenient credit terms. Exim Bank's LOC industrial development, SME and agricultural programme has gained considerable recognition in the development. Examples of the projects financed in Africa recent years, in developing countries of Africa, Asia, Latin under Exim Bank's LOCs are given below: America and the CIS, as it enables the LOC recipient Angola - Railway Rehabilitation Project, irrigation countries to import developmental and infrastructural project, and acquisition of Tractors from India; projects, equipment, goods and services from India, on Burkina Faso - Agricultural projects including medium to long term credit terms. The LOC programme acquisition of tractors, harvesters, agricultural has also enabled India demonstrate project execution processing equipment; capabilities in the emerging markets. Special Initiatives To enhance bilateral trade and investment relations, Exim Chad - Setting up of cotton yarn plant, Steel billet plant and rolling mill, plant for assembly of agricultural equipment; Bank of India has in place several Lines of Credit (LOCs) Cote d'lvoire - Project for renewal of urban transport extended to a number of institutions/agencies in Africa. system in Abidjan and for agricultural projects; These LOCs supplement the "Focus Africa" programme of the Government of India. Exim Bank is also involved in Congo DR - setting up a cement factory, urban the implementation of several promotional initiatives of transport system Government of India for the African continent such as Ethiopia - Energy transmission and distribution project; Team-9, India Development Initiative (IDI) and Development of sugar industry; contribution toward NEPAD (New Partnership for Africa's Ghana - Rural electrification, agriculture, Development). Government of India and the eight (8) communication and transportation projects; countries in West Africa, viz. Governments of Burkina INDO-AFRICAN BUSINESS 12

10 PERSPECTIVE Mali - Rural electrification and setting up of agro machinery and tractor assembly plant; Electricity transmission and distribution project from Cote d'lvoire to Mali Mozambique - Gaza Electrification Project, irrigation project, and Agricultural projects Senegal - Development of rural SMEs and purchase of agricultural machinery and equipment from India, Irrigation project and Acquisition of railway coaches and locomotives from India; Sudan - Transmission and Sub-Station Project, Project for setting up Power Plant, Agricultural projects, Irrigation project and Acquisition of railway coaches and locomotives from India; Africa Enjoys Lion's Share LOCs help the overseas governments/ financial institutions in implementing their developmental projects in key sectors of economy like agriculture, industry, infrastructure, energy, telecom and transportation, using Indian technology and equipment. Currently, Exim Bank has in place 86 Lines of Credit, covering over 84 countries in Africa, Asia, Latin America, Europe and the CIS, with credit commitments amounting to US$ 2.8 billion.. Out of these, 50 LOCs amounting to over US$ 1.75 billion are to Africa covering more than 39 countries. Africa's share in Exim Bank's LOCs is the highest at 63%. This consists of US$ 862 million to Eastern Africa, US$ 699 mn to Western Africa, US$ 95 mn to Southern Africa, US$ 10 mn to Northern Africa and US$ 84 mn to Central Africa. West Africa Due to barriers such as distance from India and the fact that many of the West African countries speak French (and not English), trade and investment flow from India to West Africa was not up to its potential. Exim Bank's LOCs have helped overcome these constraints. The projects financed under Exim Bank's LOCs to West Africa cover a variety of sectors like agriculture, transportation, manufacturing (cement, sugar), energy (generation, transmission and rural electrification) and Infrastructure. For instance, in Senegal, Exim Bank has extended six Lines of Credit (LOCs) to Government of Senegal, aggregating US$ million, for a variety of sectors such as urban transport, agriculture, development of rural SMEs, rail transport, social sector and IT, sector. In Mali, the projects financed under Exim Bank's LOCs to Mali cover a variety of '* sectors such as railway, rural electrification, and farm mechanization and for electricity transmission project from Cote d'lvoire to Mali. In Ghana, the projects financed under Exim Bank's LOCs to Ghana are designing and building project for Seat of Government and Presidency of Ghana, rural electrification, agriculture, communication and transportation. In ECOWAS, Exim Bank has also extended a Line of Credit (LOG) of USD 250 million to Ecowas Bank for Investment and Development (EBID), which covers 15 countries in West Africa, for financing projects in the public sector in the member countries of EBID, such as health and hygiene related infrastructure project, acquisition of bi-directional units of trains, fertilizer project, rural electrification extension project, and urban transport system. Besides operating Lines of Credit (LOCs), Exim Bank extends its own commercial Lines of Credit (LOCs) to various financial institutions and other entities in Africa, such as to PTA Bank (Eastern and Southern African Trade and Development Bank, covering 17 countries in the eastern and southern African region), Banque Quest Africaine De Developpement (West African Development Bank, covering 8 countries in the west African region), East African Development Bank and Nigerian Exim Bank. Exim Bank has been consciously forging a network of alliances and institutional linkages to help further economic co-operation with the Africa region. Exim Bank has taken up equity in African Exim Bank, West African Development Bank (BOAD), and Development Bank of Zambia. Exim Bank s LOCs help the overseas governments/ financial institutions in implementing their developmental projects in key sectors of economy like agriculture, industry, infrastructure, energy, telecom and transportation, using Indian technology and equipment promoting infrastructure development, facilitating private sector development in host countries, as also, in contributing towards capacity building in the Africa region. INDO-AFRICAN BUSINESS 13

11 COVER STORY EU-Africa Joint Strategy on Local & Global Issues The European Union and Africa have agreed to forge a strategic partnership aimed at facing common challenges together, ranging from climate change to development, energy, migration, peace and security, trade and regional integration, and good governance human rights. This Joint EU-Africa Strategy was launched at the 2nd EU- Africa Summit held on 8 and 9 December in Lisbon. The strategy followed negotiations between the EU and the African Union (AU). Based on a deeper and broader political dialogue, Europe and Africa now intend to leave the archaic and narrow minded "donorbeneficiary relationship" behind and create a partnership between equals. The Joint Strategy is expected to enable both partners to work increasingly together on global issues. It will also involve civil society as well as institutions. INDO-AFRICAN BUSINESS 14

12 COVER STORY Africa and the EU will enhance cooperation in the context of international initiatives to counter the illicit trade and to promote the transparent and equitable management of natural resources, such as the Kimberley certification process, the Forest Law Enforcement Governance and Trade (FLEGT) and the Extractive Industry Transparency Initiative (EITI). Africa and the EU will also, together, address issues relating to the fight against corruption, bribery, counterfeiting, money-laundering, taxfraud, as well as other aspects of economic governance. In this context, both sides will take measures to facilitate the investigation and return of illegally acquired assets, including funds, to their countries of origin. On all these issues, Africa and the EU recognise that civil society, the media and democratic institutions have important roles to play in ensuring transparency and accountability. The improvement of economic governance and the investment climate are essential elements to build Africa's economic strength and allow Africa to move away from continuous donor support and find its place in global markets. In this regard, the development of domestic markets and regional integration are key in creating larger and more integrated markets that, in conjunction with enhanced regulatory convergence, will help to attract investment, increase productive capacities and therefore foster sustainable economic growth and development. One of the priorities of the Africa-EU partnership will be to help Africa improve its productive capacities, move up the value-added scale and become less dependent on raw materials and simple processed products, which in the long term is the best way to avoid a deterioration of the terms of trade and participate in, and benefit from, the global economy. Africa and the EU will also, together with other international partners, work to promote fair trade. In order to achieve this, the key goals which will be pursued by Africa-EU cooperation on trade and regional integration will be: (i) private sector development, supported by foreign investments, to strengthen the supply side of African economies; (ii) the development and strengthening of physical infrastructure networks and related services, which are needed for the movement of persons, goods, information; and (iii) trade integration, which is essential to increase both South-South and North- South trade flows. Private Sector Development The promotion of an investment and business friendly environment is a core prerequisite for the development of the private sector, within the framework of a stable political environment and governance-related reform. These efforts should be underpinned by appropriate African economic growth strategies aiming at maintaining macroeconomic stability, promoting regulatory reform and harmonisation, protecting intellectual property rights and standards, promoting investment codes, and establishing credible laws and guarantee systems. In this context, it will also be necessary to address key investment disincentives such as fraud, corruption, money laundering and organised crime. Cooperation between Africa and the EU in this field will aim to promote stable, efficient and harmonised legal frameworks for business, free of red tape, as well as to promote Corporate Social Responsibility. Both sides will cooperate on technology development and transfer, quality infrastructure and skills development in support of the industrialisation process. It will also aim at enhancing appropriate business support services, and facilitate better access to credit, especially for converting activities from the informal to formal sectors, which is also a key contribution to enabling more women to participate in the formal economy and to facilitating investment and business activities by members of diasporas. INDO-AFRICAN BUSINESS 15

13 COVER STORY The partnership will, furthermore, contribute to the On all these issues, Africa and the EU recognise that civil facilitation and strengthening of the dialogue between, society, the media and democratic institutions have and within, governments and with the private sector on important roles to play in ensuring transparency and both continents via appropriate continental and regional accountability. networks. In this regard, the EU Africa Business Forum One key area will be regulations and technical will play a key role in bringing together entrepreneurs standards, including sanitary and phytosanitary (SPS) and public and private investors from both Europe and measures. It is widely recognised that meeting Africa in order to discuss ways of improving the international SPS standards is a key component for investment and business climate and to raise the profile advancing the competitiveness and market access of of doing business in Africa. Trade & Integration African agriculture and food processing industry. Improving African standards will therefore enable greater In line with the Abuja Treaty, establishing the African access to international markets, the promotion of South- Economic Community, trade and integration are South trade and the diminution of non-tariff barriers to recognised as essential components of the wider process trade. Both sides will continue to promote market access of regional integration and development, which shall be for African goods and services to international markets, duly promoted by the present partnership. in particular the EU market. Another key area will be enhancing pharmaceutical production capacities in Regional Economic Communities will play an essential accordance with international rules on good role as building blocks of the continental integration manufacturing practices (GMPs) and efficient regulatory process. In order to do so, Africa and the EU will work procedures, including the control of counterfeit together to make trade rules and regimes more coherent medicines and of other products, while promoting access and harmonised. This will require the gradual to affordable essential generic medicines, vaccines and harmonisation of trade, customs and industrial policies, commodities for major prevailing diseases and laws, regulations and procedures. Africa and the EU will epidemics. In this regard, the capacity of African cooperate to put in place programmes and mechanisms countries to make full use of flexibilities in TRIPs, in line to develop norms, standards and quality control at with the Pharmaceutical Manufacturing Plan for Africa, regional and pan-african levels with reference to will be developed. A third key area will be preferential international standards. market access for environmentally friendly technologies Africa and the EU will enhance cooperation in the context and products. of international initiatives to counter the illicit trade and to Africa-EU cooperation will be underpinned by stronger promote the transparent and equitable management of bilateral development-oriented trading relationships natural resources, such as the Kimberley between Africa and the EU: (i) through the certification process, the Forest Law implementation of Economic Partnership Enforcement Governance and Trade Agreements (EPAs) with African EPA (FLEGT) and the Extractive Industry regions (West Africa, Central Transparency Initiative (EITI). Africa, Eastern and Southern Africa and the EU will also, Africa and the Southern together, address issues African grouping), which relating to the fight against involve the RECs and other corruption, bribery, African organisations, and counterfeiting, money- the implementation of the laundering, tax-fraud, as EU-Mediterranean Free well as other aspects of Trade Agreement with the economic governance. In countries of North Africa, (ii) this context, both sides will by supporting African take measures to facilitate the business in its efforts to meet EU investigation and return of norms and standards and to illegally acquired assets, including develop its productive capacity, funds, to their countries of origin. and (iii) by cooperating in developing INDO-AFRICAN BUSINESS 16

14 COVER STORY export strategies and business-to-business relations. The build technical and institutional capacity for negotiations EPA-agreements, as instruments for development, are to in trade and related areas, such as quality and food be implemented at the sub-regional level, however, the safety, industrial goods, TBT/SPS and commodities issues AU-EU dialogue is relevant to the overall process of in order to promote African trade and safeguard the regional integration and interface with developing health and rights of consumers. Regional Economic Communities. Both sides stress the Finally, Africa and the EU will strengthen their need for the EPA process to be supportive of Africa's cooperation in the field of statistics with the aim of regional and continental integration agenda on the basis helping policy makers and other users of statistics and of the Abuja Treaty. ongoing efforts in the coordination and harmonisation of The above efforts, in particular the EPA implementation statistics in Africa within the framework of the African process, as well as more general efforts to better Charter for Statistics. integrate into the rules-based world trading system and The regional economic communities (RECs) and other to more effectively use trade in the promotion of growth organisations involved in the EPA negotiations are: and the eradication of poverty, will be supported by the ECOWAS, UEMOA, ECCAS, CEMAC, COMESA, Community (EDF and other instruments) and EU Member SADC, SACU, EAS, EAC and IOC. States in accordance with the EU Aid for Trade Strategy, as well as by contributions from other development Accelerating Progress towards the MDGs actors. In coherence with the efforts to further integrate at sub-regional level, efforts to better integrate at For the Millennium Development Goals (MDGs) to be continental level will also be supported. achieved, African countries need to sustain economic growth and equitable social development, and both At the global level, Africa and the EU will seek to promote Africa and the EU have to boost their investments, better global economic governance, and sustain Africa's efforts focus their policies and deliver on the promises made. to integrate into the world economy. To achieve this, the Mid-way between 2000 and 2015, supporting Africa's coordination of African and EU positions in international efforts to achieve the MDGs remains the key challenge fora will be promoted. Africa and the EU will seek to join for the EU's external and development cooperation efforts to conclude the Doha Development Agenda as policy vis-à-vis the continent. In this regard, efforts should soon as possible. This could involve, in particular, focus on making a key contribution to the achievement of seeking common ground to address key issues for the 8 MDGs on (1) poverty and hunger, (2) universal development, such as reductions in trade distorting primary education, (3) gender equality and subsidies, greater access to the markets of all WTO empowerment of women, (4) child mortality, (5) maternal members, reductions in tariff peaks, better anti-dumping health, (6) HIV/AIDS, malaria and other diseases, (7) rules, as well as the implementation of reforms in view of environmental sustainability, and (8) the development of facilitating trade and ensuring the security of the supply a partnership for development. chain. In this context, Africa and the EU will cooperate to INDO-AFRICAN BUSINESS 17

15 COVER STORY Development Cooperation In order to achieve the objectives set out in the present Joint Strategy, partners should urgently work on more predictable and less volatile aid, focusing on results. The EU therefore reaffirms its determination to reach the targets agreed in the context of the Monterrey consensus in May 2005 to increasing ODA volume to individually achieve 0.51% ODA/GNI for those Member States which joined the EU before 2002; to strive to achieve 0.17% for those Member States which joined the EU after 2002 within their respective budget allocation processes, and collectively achieve 0.56% ODA/GNI by 2010 as an intermediate step towards achieving the UN target of 0.7% by By 2010, attaining the 0.56% ODA/GNI should correspond to at least an additional 20 billion in ODA per year, and no less than 50% of this increase will benefit the African continent. The EU will respect and implement these commitments and will take appropriate measures to guarantee a timely delivery of aid commitments towards Africa. Partners will also make further efforts to keep debt at sustainable levels and, where debt becomes unsustainable, consider debt cancellation in the framework of existing initiatives and fora. Africa and the EU will also strengthen their cooperation in the implementation of the Paris Declaration on aid effectiveness. They will further promote alignment and harmonisation of development aid instruments, increase the use of general and sectoral budget support where circumstances permit, and cooperate closely to implement the EU's commitments to promote complementarity and division of labour. The predictability of development aid should be promoted and the EU will work toward a limitation of conditionalities and further move towards result-oriented aid, with a clear link with MDG indicators and performance. In this context, Africa and the EU will also improve and expand their cooperation in the field of statistics so that policies and decisions are made on the basis of clear evidence. Moreover, the two sides fully recognise that development cooperation alone is not enough to achieve these objectives and that non-aid policies on both sides need to be better geared towards attaining the MDGs, including by enhancing Policy Coherence for Development (PCD). To this end, the EU and the AU will discuss how the coherence between policies and initiatives with development objectives could be enhanced, on the basis of stronger commitments on both sides. In order to ensure coherence and complementarity with the work of other international actors, including emerging partners, Africa and the EU recognise the need to broaden their cooperation with third partners through enhanced tripartite dialogue. Similarly, both parties recognise the importance of triangular cooperation for the development of the two continents. Human & Social Development Employment issues, notably social protection, the shortage of employment opportunities and the promotion of decent work in Africa, will be jointly addressed, with priority being given to creating productive jobs in the formal economy, improving poor living and working conditions in line with the UN decent work agenda and integrating the informal economy into the formal. Investments in private sector development will be promoted, looking in particular to youth and women. The service sector will be further developed as this is where women and youth are mostly involved. Africa and the EU will make technology work for employment, and will ensure that infrastructure works to create jobs for Africans, both skilled and unskilled. In addition, attention will be paid to the creation of jobs through micro-finance schemes. As generally disadvantaged groups often benefit substantially from such microfinance schemes they should be actively pursued. INDO-AFRICAN BUSINESS 18

16 COVER STORY The global concerns on energy security, energy access and climate change have reinforced the links between the energy future of Africa and Europe. The Africa-EU Energy Partnership will be a long-term framework for structured political dialogue and cooperation between Africa and the EU on energy issues of strategic importance and reflecting Africa's and Europe's needs. Through the Partnership, Africa and Europe will work together to develop a shared vision and common policy, answers, and to stimulate specific action that addresses the energy challenges of the 21st century. It aims at creating a momentum that will also mobilise increased financial, technical and human resources in support of Africa's energy development. The Africa-EU Energy Partnership will strengthen the existing Africa-EU dialogue on access to energy and energy security. It will aim at scaling up European and African investments in energy infrastructure, including promotion of renewable energy and energy efficiency and improving the management of energy resources, as well as to mainstream climate change into development cooperation. The new political dialogue and cooperation on energy will further address the energy issues at the local, national, regional, continental and global levels. Priority action: Implement the Energy Partnership to intensify cooperation on energy security and access Objectives Effective Africa-EU dialogue on energy access and energy security; Improved access to reliable, secure, affordable, climate friendly and sustainable energy services for both continents; Increased European and African investments in energy infrastructure in Africa, including promotion of renewable energy and energy efficiency. Expected outcomes Scaled up investment in energy infrastructure, including the promotion of sustainable, renewable energy and improved energy efficiency on both the supply and demand sides; Improved management of energy resources, including increased development-oriented use of oil and gas generated Energy Security High On Agenda resources; I m p r o v e d electrification rates, development of networks and of cross-border interconnections and other energy e x c h a n g e infrastructure in Africa and between Africa and Europe; Improved institutional, technical capacities, and donor coordination; Expanded Africa-EU technology cooperation and transfer in the energy field; Climate change mainstreamed into energy development cooperation. Activities Further implement already agreed EU support to the African energy sector; Jointly analyse and discuss the operational aspects of the Africa-EU energy cooperation, support energy policies and planning at all levels, and build capacity; Make progress towards the establishment of enabling legal, fiscal and regulatory frameworks at the continental, regional and national levels in Africa, and strengthen African energy institutions; INDO-AFRICAN BUSINESS 20

17 COVER STORY Facilitate contacts and exchange know-how between relevant EU bodies (such as national energy agencies and energy research centres) and their African counterparts, including possibly via twinning arrangements; Explore the ways and means to launch a dialogue on the peaceful uses of nuclear energy, within the framework of all relevant IAEA-and NPT- provisions and in line with international safety standards and rules; Explore the possibility of using innovative financing and guarantee methods, notably small-scale facilities through public-private partnerships; Mobilise increased grant funding and investment capital from public sources, financing institutions and the private sector both in Africa and Europe; Examine the creation of African Energy Funds, such as Rural Electrification Funds and Stabilization Funds; Elaborate Associated Gas Recovery Plans (industry) and Country Implementation Plans (oil/gas producing countries) through the Global Gas Flaring Reduction partnership; Promote the regional integration of the energy markets in Africa, including through the completion of ongoing initiatives like the Maghreb electricity markets' integration project, and explore their possible extension and replication in other African regions; Promote the development of energy interconnections between Africa and Europe; Explore the possibilities for launching a major cooperation programme in the field of renewable energy sources in Africa, including the possible establishment of regional centres for promotion of renewable energy and energy efficiency; Mainstream climate change into development cooperation in the area of energy; Hold a high level Africa-EU energy dialogue meeting every two years. Players AU Commission/NEPAD, African States, RECs, AFREC, and other African Energy Institutions; European Commission, EU Member States; Private sector (in particular energy companies), AfDB, EIB, other IFIs, energy centres, civil society and other Interested actors; African local authorities. Finance Appropriate financing sources in accordance with their respective scope and their relevance to objectives and activities concerned, their specificity and eligibility criteria, such as the 10th EDF, ENPI, DCI; Infrastructure Trust Fund, Energy Facility, Thematic Programme for Environment and Natural Resources Management, including Energy (ENTRP); Bilateral contributions from EU Member States and African States; African Development Bank, European Investment Bank; Private sector contributions. INDO-AFRICAN BUSINESS 21

18 CO-OPERATION 2nd IBSA Summit Binds 3 Nations with 6 MoUs & 1 Agreement Six MoUs and agreement were signed during the 2nd India Brazil South Africa (IBSA) Summit at Tshwane, South Africa on 17 October These were signed in the presence of the Indian Prime Minister and the Presidents respectively of South Africa and Brazil. The salient features of these MoUs/Agreements are: Agreement on Customs and Tax administration Cooperation The purpose of this Agreement is to strengthen trilateral cooperation with the objectives of: Facilitation of legitimate trade and investment; Combating commercial fraud, smuggling, drug trafficking, money laundering and other illicit international trade activities; Curbing abusive tax avoidance transactions, arrangements, shelters and schemes; and Strengthening the modernization programs of the administrations through capacity building and co-operation. MoU on Public Administration and Governance This MoU provides for cooperation in specialised areas such as e-governance, human resources development, anti-corruption and ethics, and accountability and transparency. MoU on Cooperation in the field of Health and Medicine This MoU provides for development of a common strategy to tackle HIV/AIDS epidemic. The areas of cooperation include Tuberculosis (TB), Malaria, Pharmaceutical assistance, Procurement of medicines, vaccines, medical research and development, Traditional Medicine, Intellectual property rights and Disease surveillance. MoU on Cooperation in the field of Education The objectives of this MoU are creation of conditions for cooperation among academic institutions, faculties, researchers and students and by means of joint research projects; alignment of the higher education systems in the way that they relate to each other, to social and economic development, and to local communities; the strengthening of training and high-level professional development programmes; and enhancing the Prime Minister Manmohan Singh, Brazilian President Lula da Silva (right) and South African President Thabo Mbeki (c) before second IBSA Summit at Pretoria in South Africa. exchange of scientific information and specialized documentation among the three countries. The focus areas identified are Engineering, Computer Sciences and Mathematical Sciences; Biotechnology, Agriculture and Livestock; Sustainable Development; Social Transformation and Empowerment; and Higher Education Studies. MoU on Cooperation in the Field of Social Issues This MoU envisages cooperation in the field of social development, poverty eradication, social security, social policy, monitoring and evaluation, institutional capacity building, micro-finance, and co-operation in multilateral fora. MoU on Cooperation in Wind Resource The areas of cooperation under this MoU are wind power resource assessment, standards, testing facilities and certification procedures for wind resource systems, subsystems, and components; deployment of wind power systems; and design and development of wind power systems, especially for low wind regimes. MoU on Cultural Cooperation This MoU aims to promote the exchange of cultural activities and expertise; develop cooperation in areas of preservation of historic, artistic, cultural heritage and as well as development of creative industries; encourage travel among three countries; and increase awareness amongst peoples of the concerned countries regarding IBSA as a brand name through cultural exchanges. INDO-AFRICAN BUSINESS 22

19 OUT-COME The Lisbon Summit, bringing together the European Union and Africa, has offered us a unique opportunity jointly to address the common contemporary challenges for our continents, in the year that we celebrate the 50th anniversary of the European integration and the 50th anniversary of the beginning of the independence of Africa. We have come together in awareness of the lessons and experiences of the past, but also in the certainty that our common future requires an audacious approach, one that allows us to face with confidence the demands of our globalizing world. Since our first gathering in 2000 in Cairo, much has changed. In Africa we have witnessed the creation of the African Union, which offers a new continental framework for addressing African issues and has become a recognised voice for the continent, and of its economic instrument, NEPAD. In Europe, the EU has grown in membership and scope, deepening its process of integration and acquiring new responsibilities in the world. On a global scale, we have today an increased understanding of our vital interdependence and are determined to work together EU-Africa Summit: Lisbon Declaration in the global arena on the key political challenges of our time, such as energy and climate change, migration or gender issues. In recognition of our ambitions, and of all that we share today and have shared in the past, we are resolved to build a new strategic political partnership for the future, overcoming the traditional donor-recipient relationship and building on common values and goals in our pursuit of peace and stability, democracy and rule of law, progress and development. We will develop this partnership of equals, based on the effective engagement of our societies, in order to achieve significant results in our fundamental commitments, namely: the attainment of the Millennium Development Goals; the establishment of a robust peace and security architecture in Africa; the strengthening of investment, growth and prosperity through regional integration and closer economic ties; the promotion of good governance and human rights; and the creation of opportunities for shaping global governance in an open and multilateral framework. We are determined to give this new strategic partnership the necessary means and instruments that will enable it to fulfil the Joint Strategy and the Action Plan that we have adopted today, and to do so we have created a comprehensive and effective follow-up mechanism that can deliver on these goals and show us the results on the occasion of the Third Summit that shall be held in We believe that this Summit will be remembered as a moment of recognition of maturity and transformation in our continent to continent dialogue, opening new paths and opportunities for collective action for our common future. INDO-AFRICAN BUSINESS 24

20 FACE-TO-FACE Infrastructure Key to Indo-African JVs Thierry Delonguemar, Vice-President, Finance, African Development Bank (ADB), believes that infrastructure is would be the key area of collaboration between Indian and African companies. India has great capability if the field of infrastructure, especially the railway. In an interview with Dinesh Chandra, Delonguemar says that India, with its experience, could help Africa build its railways and other transport infrastructure. What prospects do you see for India- African Development Bank (ADB) cooperation in the coming years? The cooperation between India and ADB is not entirely new. India has been a member of ADB for a number of years. While India is a recipient of aid, it is one of the few countries which are providers of aid also. By providing aid India is helping African countries in accelerating their development of the region. One way to do this is to enhance cooperation with the local development institutions, including the ADB and the African Opportunities Galore Africa has a total area of 30 million sq. km with a develop and sustain a longterm export growth. Under population of 811 billion. The region accounts for less the programme, the Government of India extends than three per cent of world trade and less than 2.0 per assistance to exporters, Export Promotion Councils, etc. cent of world GDP. With a supportive global economic to visit these countries, organise trade fairs and invite environment, rise in global prices and strong regional African trade delegations to visit India. export growth, Africa's foreign trade has witnessed a sharp rise, almost doubling during , The Government of India has signed a Technical reflected in growth of both exports as well as imports. Cooperation Agreement with the ADB and African Exports rose from US$ bn to US$ 270 bn Development Fund (ADF) to enable the utilisation of between , while imports rosefrom US$ Indian consultancy firms for identified programmes and bn to US$ bn during the same period. activities of the ADB Group with the objective of Intra-regional trade accounted for about 8.9 per cent contributing to the economic development and social of total exports in the region. progress of the African member states of ADB. For this purpose, GOi has placed with ADB, funds amounting India is one of the 24 non-regional member countries to US$ 3.3 million equivalent of Indian Rupees of the ADB. India's subscription to ADB as of December million for the execution of studies and provision of 31, 2005 was UA 59.3 million. India holds 4,538 technical assistance for the preparation and votes, which translates into per cent of total voting power. India has traditional and close trade implementation of development projects of the Bank relations with all African countries. However, the growth and the Fund in the territories of regional members. This of trade and investment between India and Africa is not fund has a sectoral, regional and activity based focus. much, particularly with French-speaking francophone Based on requests received from ADB, GOI approves countries. inclusion of specific proposals under the Agreement. In addition, to that the Ministry of Commerce and Exim Bank has been assigned the responsibility of Industry, Government of India (GOI) as part of its EXIM identifying a panel of consultants who could be Policy has launched an integrated considered by ADB for such assignments. Exim Bank programme, "Focus Africa". The programme launched works closely with the Ministry of Finance and Company to tap the tremendous potential in the region, aims to Affairs, GOI to facilitate the utilisation of appropriate reduce uncertainty in the business environment and Indian consultants. INDO-AFRICAN BUSINESS 25