India-Africa

Indian investments in Africa: Scale, trends, and policy recommendations

Indian investments in Africa, from both public and private sector entities, have increased considerably in the last decade. Yet despite the growing importance of Indian investments in Africa, only a few empirical studies have been carried out on the subject. This paper undertakes a disaggregated analysis of Indian foreign direct investment outflows to Africa from 2008 to 2016, and presents three main findings. First, it confirms earlier analyses that the bulk of Indian investments in Africa are directed to Mauritius, a tax haven. Second, energy security is the main pull factor behind public-sector investment in Africa. Third, the Indian private sector has also invested in a range of non-energy sectors, including manufacturing. This paper also finds, however, that the correlation between India’s development cooperative initiatives and its investments in Africa is currently weak. It recommends the establishment of an institutional vehicle to promote development-friendly Indian investments in Africa.

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Malancha Chakrabarty