Shishir Priyadarshi Director of the WTO Development Division

Trade is a powerful development tool

Many developing countries, particularly LDCs, lack the capacity to compete effectively in expanding regional and global markets

The Aid for Trade Initiative, launched in 2005 at the Hong Kong WTO Ministerial Conference, aims to make aid help trade

The Initiative has established a comprehensive framework for tackling these trade-related bottlenecks

Aid for trade flows have grown from the baseline average of 2002-05

Partners mainstream and prioritise trade in development strategies

Donors respond through Aid for Trade projects and programmes

This can be measured in four main thrust areas: Trade policy & regulation; Building productive capacity; Economic infrastructure; and Trade-related adjustment

The WTO, along with partners, assess the effectiveness of Aid for Trade through a monitoring framework that culminates into the biennial Global Review on Aid for Trade

Since inception in 2007, the Global Review of Aid for Trade has established itself as the preeminent multilateral forum exploring trade and development issues.

Past Global Reviews have examined how developing, and in particular LDCs, are seeking to integrate into the global economy, how development partners are supporting this process and the efficacy of this assistance

The 4th Global Review on Aid for Trade to be held at the WTO on 5-7 July this year takes its theme: “Connecting to Value Chains”

But why ‘Value Chains’?

Global trade is increasingly characterized by transactions within complex value chains, or nodes of activities that adds value to a final product or service, offering new opportunities for many developing countries

Value chains are not only among north-south firms, but increasingly characterised by complex regional and south-south trade

The aim of the 4th Global Review of Aid for Trade is to examine strategies to connect developing country and LDC firms to value chains

In the context of South-South partnerships, India-Africa trade and investment ties have grown phenomenally

This private sector-led development has been encouraging for African private sector to enter the international value chains

Since the 1st India-Africa Conclave in 2005, bilateral trade has been growing annually at 32.4%, even faster than China-Africa trade that grew at 27%

India-Africa trade has reached US$ 63 billion in 2011, up from US$ 5.3 billion in 2001

If annualised exports growth rates of India and Africa between 2001 and 2011 hold, bilateral trade could reach US$ 176 billion by 2015

Growing Indian investments and economic co-operation with many African countries

Africa has emerged as a major commodity exporter to India, particularly oil, in the last decade has overshadowed the strides it has made in increasing its value-added exports

Total technology exports from Africa to India increased from US$ 1.8 billion to US$ 9.8 billion in the past decade, growing annually 19%.

Africa’s Exports of; 2001 (US$ million)

Share in total exports

2011 (US$ million)

Share in total exports

High Technology (pharmaceuticals, electrical and optical equipment, aircraft)

16 0.7 65 0.2

Medium High Technology (chemicals, machinery and equipments, automobiles)

643 27.0 2,569 6.6

Medium Low Technology (refined petroleum, basic metals, mineral products)

1,037 43.5 6,845 17.6

Low Technology (food products, textiles and apparel)

68 2.9 352 0.9

Total Technology exports (TTE)

1,764 74.0 9,831 25.3

Agriculture and related products

400 16.8 1,670 4.3

Mining and quarrying, incl. crude oil and gas

219 9.2 27,428 70.5

Total Exports 2,384 100 38,929 100

India-Africa Trade: Emerging trendsIndia-Africa Trade: Emerging trends

Overall trade deficit, but India runs a trade surplus with 40 out of the 54

African countries

The increased South-South partnership between Africa and India, led by the private sector, has many success stories as well as lessons to make the partnership stronger

Monitoring and evaluation of global trade is an important component of the Global Review, and the 4th Global Review will examine strategies on how to better integrate private sector within the global South

With this in view, the CII, in collaboration with the WTO, sought to identify the barriers to greater bilateral trade and investments through a private sector survey

The aim of the survey exercise was threefold:Identify obstacles to expanding India-Africa trade and investments;Survey how to overcome these barriers; andExamine on-going activities to tackle the barriers and their effectiveness

Survey went to private sector in India and a pilot group of 7 African countries (Kenya, Nigeria, South Africa, Tanzania, Uganda and Zambia).

Some preliminary findings are presented here

Response

Count

Response

Share (%)

African Business or Business Association

29 46.0

Indian Business or Business Association

34 54.0

Total 63 100

Out of the African respondents, 9 were business associations mostly at the apex level. The Indian respondents were mostly from businesses with2 sector associations participating in the survey.

Firm/company's turnover in 2011 Response Count

Response Share (%)

Do not wish to disclose 11 21.2US$ 0 - less than US$ 0.5 million 5 9.6US$ 0.5 - less than US$ 2 million 6 11.5US$ 2 - less than US$ 10 million 7 13.5US$ 50 - less than US$ 250 million 7 13.5US$ 250 - less than US$ 500 million

3 5.8

US$ 500 million - less than 1 billion

5 9.6

More than US$ 1 billion 8 15.4Total 52 100

The business respondents from India and Africa were a representative sample across different scales of operations, starting from the small and medium enterprises (SMEs) sector to multinational companies (MNCs).

Most pressing issues not market access or tariff issues

infrastructure bottlenecks, underdeveloped capital markets, trade facilitation issues and information asymmetries are the major hurdles

Non-tariff barriers like informal controls and corrupt practices, customs delays and paperwork are some direct trade-related concerns that were raised

Business views on India’s role in providing assistance to Africa

Business views on India’s areas of comparative advantage as an assistance provider

62% of the businesses in India and Africa view India’s assistance to be central in Africa’s trade and development. Another 20% felt that India will have an increasing role even as assistance from traditional donors decline.

Businesses see India's development assistance to have a comparative advantage in many services sectors, including, ICT, education, vocational skills development, health and financial services.

It asserts India's rise as a global services power that could have development benefits for African South-South partners.

The survey that forms part of a CII-WTO Report on enhancing India-Africa Trade and Investment will be presented at the 4th Global Review on Aid for Trade. It will be showcased under the theme: South-South private sector cooperation.

The report is work-in-progress and has benefitted immensely from the deliberations here at the 9th India-India Africa Conclave.

The survey available for greater participation from Indian and African firms. This will strengthen the final findings that will inform discussions and key recommendations to be presented during the 4th Global Review.

CII and WTO are surveying Indian and African businesses to examine how trading ties can be further deepened.  Responses received will be used to draft recommendations on how to expand the already vibrant India-Africa trade partnership. 

Recommendations will examine how to expand the coverage of India-Africa trade and investment, in terms of the goods and services traded, and the number of businesses engaged and investments made. 

Results will be profiled by CII at the 4th Global Review of Aid for Trade, which will focus on "Connecting to Value Chains“, on 8-10 July 2013.

Deadline for completion of online survey submissions is Friday 5 April 2013.

Complete the survey at: https://www.research.net/s/INDIA_AFRICA_SURVEY