The country’s premier export finance institution Exim Bank, which is looking to disburse $10 billion to Africa in the next three years, wants the credit which has a mix of concessional and commercial rates to be used for boosting India’s services exports to that continent.
This is a shift from Exim Bank’s credit disbursal strategy to Africa — which was mainly to help build infrastructure and industrial projects.
“Infrastructure building is something that China has been doing in Africa. With its huge financial resources, China probably has greater capacity to do it than India,” said Exim Bank Chairman and Managing Director, Yaduvendra Mathur.
“India’s strength is in services, especially in sectors such as healthcare, information technology, education and even agriculture-related services. So we want to help in increasing India’s services exports to Africa.”
The change in approach follows the government giving a greater say to Exim Bank in identifying India’s best interests while it promotes economic diplomacy.
Mr. Mathur — who is leaving for Africa to be there when President Pranab Mukherjee inaugurates Exim Bank’s office in Cote d’Ivoire (or Ivory Coast) on Tuesday — said as part of the new strategy, it is also important to encourage more Indians to move to Africa on short-term projects in services sectors.
Exim Bank has been extending credit to Africa through concessional Lines of Credit, Buyer’s Credit (meant to finance imports of overseas buyers, in this case African buyers, from India) and through other lending mechanisms.
Exim Bank’s new office in Ivory Coast is to service West Africa. It has an office in Addis Ababa (Ethiopia) for the Eastern and Central African region, in addition to the one in Johannesburg to take care of the needs in Southern Africa.
Exim Bank has set up Kukuza Project Development Company (KPDC) in Nairobi (Kenya), along with IL&FS Group, African Development Bank and State Bank of India, to ensure greater Indian participation in infrastructure projects in Africa.
The aim now is to kick-start KPDC’s operations by the time Prime Minister Narendra Modi undertakes his African visit in July covering Kenya, South Africa, Mozambique and Tanzania, Mr. Mathur said.
Exim Bank has extended around $300 million to finance the setting up of electric transmission lines in West Africa and is ready to give another $200 million for the same, he said. It is also helping African countries import vehicles and automobile equipments from India and in setting up of sugar factories.
India-Africa goods trade in 2014 was around $75 billion with Africa exporting $40 billion to India and India exporting around $35 billion to that continent, according to International Trade Centre data.
This had fallen to about $60 billion in 2015 with Africa exporting $34 billion and India exporting $26 billion, data showed.