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A New Afro-Indian Trade Partnership
India’s presidency of the 2023 G20 New Delhi summit delivered one of the most groundbreaking shifts in global legislation in the last 10 years: representation for 1.4 billion citizens at one of the world’s premier economic coordination bodies. The summit brokered permanent membership of the body for the African Union, with the potential to create a growth system for the continent over the next decade. Despite inferences of the end of globalization, world trade has maintained its resilience in the face of repetitive setbacks — most notably the Covid-19 pandemic and the war in Ukraine. Buoyed by inflation, global trade was up 26% in 2022 on pre-pandemic 2019 numbers. But while 2023 may be experiencing a downcast due to central banks battling inflation and the Chinese economy slows, international trade will remain resilient, even if hindered by global politics and the complexity of trade agreements.
In the midst of all these intricacies within international trade scope, an opportunity has risen for both the continent of Africa and the country of India. Despite a combined population of 2.8 billion people, the two areas inhabit a relatively small share of global trade: 2.8% for India and 3% for Africa respectively. (For comparison, China records 14%, the US records 8%, and Germany record 7%). For a 16-year span, trade between Africa and India increased from $7.2 billion to almost $60 billion. However, this is only the start of what this pair may have in store. When it comes to trade agreements, relations between these two global powers have not changed much in the last decade. India imports mostly fuel and chemicals from Africa. It also exports fuel and pharmaceutical products to Africa, as well as to five countries. However, the growth of the next 25 years will be much more ecofriendly, and much more digitally sound. With the increasing incomes and population trends of both India and Africa, the pair could become significant markets.
More importantly, they could potentially become major suppliers to the rest of the world with both intermediary and finished products in ecofriendly cars, housing, fertilizer, renewable energy and digital infrastructure. That is an estimated global opportunity worth more than $20 trillion between now and 2040. To make the most of it, both India and Africa should begin the implementation of a plan to double their share of world trade by 2030.
Contributor: Jordan Peterman
Source: https://www.ft.com/content/c04006fb-0ce2-4b65-ac47-974891d09b9b
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