Africa and India’s G20 presidency

For decades, Africa has remained the world’s final frontier for business expansion. However, the perspective on encouraging investments in Africa has shifted beyond mere business growth. Under India’s G20 presidency, a significant step has been taken – the Indian Prime Minister’s advocacy for African Union membership within the group. This move highlights the growing importance of Africa in the global economy and the need for diversified supply chains.

Significance of Africa’s Potential in the Global Economy

Investing in Africa now extends beyond mere business expansion. The continent’s potential lies in offering diversified supply and value chains, contributing to a more robust and shock-resistant global economy. Recognizing, supporting, and leveraging these benefits can unlock substantial value chains for global businesses.

Africa’s Resource Reserves

Africa hosts 30% of global mineral reserves, 12% of world oil, and 8% of natural gas reserves. These vast resources form a cornerstone for future economic growth, serving as a foundation for various industries and value chains.

Demographic Dividend and Consumer Base

With over half of the world’s projected population growth of 1.7 billion by 2050, Africa presents a young workforce, expanding consumer base, and rising disposable incomes. This demographic dividend sets the stage for substantial economic growth and market potential.

Africa’s Potential: Collaborative Efforts Required

Realizing Africa’s potential necessitates a collective effort from global stakeholders – governments, businesses, and civil society. Currently contributing less than 3% to global manufacturing and trade, Africa’s capacity as a valuable investment market needs broader recognition. This shift requires integrating the continent into an inclusive and stable international economic order, with regional economic integration as a key aspect.

Historic G20 Decision: India’s Role

African Union’s Inclusion in G20: Under India’s G20 leadership, a significant stride has been taken with the push for African Union membership. Aligned with India’s commitment to global inclusion, the establishment of a Business-20 (B20) Action Council focuses on “African Economic Integration: An Agenda for Global Business.”

B20 Action Council Priorities for African Economic Integration

• Strengthening Healthcare and Education: Emphasizing healthcare and education is vital to harness Africa’s demographic dividend. Comparable to India, Africa’s youth will play a pivotal role in its economy, necessitating investments in healthcare and education systems.
• Revitalizing Agriculture and Food Systems: With 70% of the population employed in agriculture, improving the sector’s productivity is crucial. Addressing challenges such as inadequate financing, inputs, and value addition can transform African agriculture and food systems.
• Driving Industrialization: Like other emerging economies, Africa should balance resource-based activities with industrialization to enhance productivity. The African Union’s Agenda 2063 advocates manufacturing-based industrialization, better utilizing the continent’s rich natural resources.
• Implementing African Continental Free Trade Agreement (AfCFTA): The AFCFTA stands as a transformative initiative, bolstering economies and attracting investments through improved integration with global value chains. Accelerating trade facilitation through technological support from G20 nations is essential.
• Physical and Digital Infrastructure: Robust connectivity, both physical and digital, forms the backbone of a thriving economy. Strengthening infrastructure through private investments in roads, railways, and air links can propel Africa’s economic growth.

Future Prospects: A Solid Logistic Foundation

India’s call for African Union inclusion signifies progress, but realizing Africa’s potential demands a solid logistical foundation. This foundation involves comprehensive investment in infrastructure, trade facilitation, and policy harmonization.

UPSC Mains Questions

1. How does Africa’s abundance of resources position it as a potential hub for global economic growth?
2. How can private investments contribute to strengthening healthcare and education in Africa, considering its demographic dividend?
3. In what ways can the implementation of the African Continental Free Trade Agreement (AfCFTA) transform Africa’s trade landscape and its integration into global value chains?