Expert Speak India with Africa
Published on Mar 06, 2019
Assessing Indian investments in West Africa

West Africa, comprising 15 members of Economic Community of West African States (ECOWAS) and Mauritania, is the largest region in Africa with highest number of countries, and is a region enriched with vast amount of mineral resources, and is among the fastest growing regions in African continent. The region accounts for 25% of total GDP of Africa. Major mineral resources available in the region includes; gold, clay, cement, limestone, crude petroleum, bauxite, diamond, manganese, natural gas, aluminum, iron ore, steel, uranium etc. The macroeconomic performance of the region has been good, with many West African economies witnessing high growth rates. However, in 2016, regional growth moderated, as countries like Nigeria and Liberia recorded negative growth, outweighing the high growth achieved by countries like Guinea, Senegal, Cote D’Ivoire, and Sierra Leone. As per African Economic Outlook 2018, regional growth is expected to jump 3.6% in 2018, and further to 4.1% in 2019, mainly due to expected oil price recovery, increase in oil production in Nigeria and Ghana, and strong agricultural performance.

Recent reforms and investment incentives in West Africa:

To attract more investments, many West African countries have introduced investment incentives in the form of protection against expropriation, reparation of profits, and nondiscrimination between foreign and domestic investors, and have also set up dedicated investment promotion agencies to promote FDI into these countries.

According to Doing Business 2018, West African countries have started various reforms in recent years by making starting a business easier and less costly. Benin has created a one-stop shop for investment, eliminated need to notarize company bylaws, reduced minimum capital requirement. Burkina Faso has reduced the paid-in minimum capital required to register a company, and has cut cost of soil survey in half and time to process a building permit application by a third. The Gambia has eliminated the requirement to pay stamp duty. Liberia has eliminated the business trade license fees. Nigeria has started allowing electronic stamping of registration documents, and has improved online government portals. Senegal has reduced notary fees for company incorporation, and has reduced minimum capital requirement. Togo has eliminated the requirement to obtain an economic operator card, and has reduced the time and registration costs.

Indian investments in West Africa:

Traditionally, Indian investments in Africa, both public and private, remained limited to Eastern and Southern African countries, mainly due to its geographical proximity and high number of Indian diaspora in these countries. However, in last decade, Indian investments in Africa have expanded considerably, both in geographical spread and in the coverage of various sectors.

West African region has emerged as an important partner for India, both as export market and as import source. This is reflected in the synergy in bilateral trade relations wherein India’s total trade with West African countries US$ 13.5 billion to US$ 21.6 billion during the decade 2008-09 to 2017-18. India’s exports to the region amounts to US$ 6.4 billion, and imports from the region amounts to US$ 15.3 billion during 2017-18. However, despite efforts to boost bilateral relations, West Africa’s participation as an investment partner to India remains relatively limited.

Table 1: India’s Approved Overseas Direct Investment in West African Countries (US$ million)

Country April 1996 to March 2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 April 1996 to March 2018
Benin 0.1 - - - - 1.0 0.1 0.01 1.2
Burkina Faso 0.1 - - - 0.002 - 0.3 0.8 1.2
Cote D’Ivoire 15.6 - - 0.1 - - 9.2 0.1 25.0
The Gambia 30.6 - - - - - 0.2` - 30.7
Ghana 27.5 17.4 8.9 24.4 2.2 2.0 2.1 6.5 91.0
Guinea - 0.1 0.2 0.2 0.3 0.6 3.0 0.2 4.7
Liberia 191.0 0.4 0.4 0.3 0.2 - - 0.02 192.3
Mali 0.3 1.2 1.4 4.1 1.4 0.1 0.2 0.3 8.9
Mauritania 1.7 1.4 2.9 0.2 - - - 0.4 6.5
Niger 0.7 0.2 0.01 - - - - - 0.9
Nigeria 75.3 16.3 7.1 6.6 12.7 0.6 5.0 4.3 128.4
Senegal 23.3 - 1.1 - 0.01 - 0.03 - 24.4
Sierra Leone 0.02 - - 0.02 - - - - 0.04
Togo - - - - - - 0.1 1.2 1.3
India’s FDI outflows to West Africa 366.2 37.0 22.6 35.9 16.8 4.3 20.2 13.8 516.5
FDI outflows to Africa 25,562.6 7,510.0 4,717.5 7,492.5 4,790.2 3,970.5 5,520.9 1,651.6 61,215.9
West Africa’s share in India’s FDI outflow to Africa (%) 1.43% 0.49% 0.48% 0.48% 0.35% 0.11% 0.37% 0.84% 0.84%

Note: ‘-‘denotes not available/negligible

Source: RBI and EXIM Bank Analysis

The RBI data only captures only the approved overseas investments rather than the actual flow of funds and the destination of these funds. Therefore, data collated by the Financial Times, through its online database tracking cross-border Greenfield investments, viz. fDi Markets, provides a clearer picture of the trends in Indian investments in West Africa (see Table 2).

Table 2: Trends in Indian Investments in West Africa

Year Capital Expenditure (US$ million) Projects No. of jobs created
2008 266.9 7 2,221
2009 48.2 1 401
2010 3,011.9 13 6,243
2011 133.4 8 2,286
2012 1,144.8 10 1,847
2013 1,703.4 10 2,447
2014 94.0 4 478
2015 43.7 7 5,108
2016 41.8 6 168
2017 177.3 4 234
West Africa 6,665.4 70 21,433
Africa 36,639.1 385 102,269
Share in Africa (%) 18.2 18.2 21.0

Source: fDi Markets online database (accessed on 27.02.2019) and EXIM Bank Analysis

An analysis of Table 2 indicates that Indian investments in West Africa peaked in 2010 at US$ 3 billion, with Nagarjunga Fertilizers and Chemicals investing US$ 1.1 billion in Nigeria and Rashtriya Chemicals & Fertilizers investing US$ 1.5 billion in Ghana in pesticides, fertilisers, and other agricultural chemicals sector. In terms of sectors of investment, chemicals sectors receives the highest investment, followed by communications, coal, oil and natural gas, and automotive original equipment manufacturers (OEM).

EXIM Bank’s role in promoting investments in West Africa:

In West Africa, EXIM Bank has representative offices in Abidjan, Cote D’Ivoire, apart from offices in Addis Ababa and Johannesburg. The bank has extended Lines of Credit (LOC) in the region at competitive rates and has also signed Memorandum of Understandings (MoUs) and Memorandum of Cooperation (MoCs), through the Government of India with governments in West Africa to promote trade and investment. It has also financed various Indian joint ventures in the region.

In West Africa, as on August 31, 2018, EXIM Bank has 62 GOI-supported operative LOCs valued at US$ 2,862.5 million, covering 15 countries and ECOWAS Bank for Investment and Development (EBID). For details, see Table 3 below.

Table 3: EXIM Bank LOCs in West Africa and focus sectors of investment

Country No. of EXIM Bank LOCs Sectors/Avenues Select focus sectors of investment with major potentials
Benin 3 Supply of railway, agriculture equipment, tractor assembly plant, water supply and cyber city project, etc ·          Agriculture, Agro-processing, Animal Husbandry, Fisheries ·          Tourism and Culture
Burkina Faso 3 Rural electrification, agricultural projects including acquisition of tractors, harvesters, low cost housing, etc ·          Energy sector ·          ICT
Cote D’Ivoire 6 Renewable of urban transport system in Abidjan, IT & biotechnology park, fisheries & coconut processing plant, etc ·          Real Estate ·          Energy Infrastructure
The Gambia 5 Setting up of tractor assembly plant, national assembly building complex, rice production programme, etc ·          Energy sector ·          Tourism sector
Ghana 6 Rural electrification, agriculture, construction project, sugar plant, fish harvesting and processing, sugarcane development, irrigation, etc ·          ICT and Telecommunications ·          Mineral Processing
Guinea - LOCs for strengthening of health systems ·          Agriculture and  Fisheries ·          Energy and Hydraulic sector
Guinea-Bissau - Electricity project, food processing unit, purchase of tractors and water pumps, etc ·          Agriculture and agro industry ·          Tourism
Liberia - LOC for power transmission and distribution ·          Healthcare ·          Road transportation
Mali 6 Rural electrification, setting up of agro machinery and tractor assembly plant, food processing projects, etc ·          Energy ·          Agriculture
Mauritania - Potable water project and agricultural development project ·          Hydrocarbon sector ·          Fisheries
Niger 4 Acquisition of transport equipment, transformers, motor pumps, flourmills, solid waste management, etc ·          Transport infrastructure ·          Energy sector
Nigeria - LOCs for various projects ·          Manufacturing ·          Healthcare
Senegal 12 Supply of medical equipment, furniture, supply of busses, railways and coaches, rehabilitation of healthcare system, setting up meat processing and cold storage, IT, women poverty alleviation programme, etc ·          Agriculture ·          Tourism
Sierra Leone 3 Procurement of tractors, infrastructure to supply potable water, and transmission lines ·          Telecommunications ·          Agriculture
Togo 4 Rural electrification project, power transmission line, farming and cultivation projects ·          Infrastructure ·          Energy sector

Note: ‘-‘denotes various    

Source: “Indian Investments in West Africa: Recent Trends and Prospects” EXIM Bank Working Paper 82, October 2018, p.130, New Delhi. Accessed on February 27, 2019.

Looking Forward:

Undoubtedly, with its experience, expertise, and technologies, India can play an important role in assisting economies of West African countries to diversify their resource-focused economies, and promote industrialisation and manufacturing through value-addition and technology transfer. To achieve India-West Africa’s investment potential, the prevailing infrastructure gap needs to be bridged urgently through concrete initiatives and policy changes. West African counties must look to avail the opportunities presented by India’s Duty Free Tariff Preference (DFTP) scheme, in order to increase their exports to India.

Priority must be given on forging closer tie-ups in Small and Medium Enterprises (SMEs). Renewable energy is the next big frontier of India-West Africa partnership to promote green growth. The ECOWAS region should look to access more funds from GOI’s US$ 10 billion credit promised to African countries, out of which US$ 2 billion have been earmarked for solar projects under International Solar Alliance (ISA). Going forward, India-West Africa partnership can be a perfect tie-up between resources and talented people of West Africa with Indian skills and expertise.

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.


Abhishek Mishra

Abhishek Mishra

Abhishek Mishra is an Associate Fellow with the Manohar Parrikar Institute for Defence Studies and Analysis (MP-IDSA). His research focuses on India and China’s engagement ...

Read More +