• Harshita Chaarag

A Summary of India's Investments in Africa

Updated: Mar 30


The African continent is home to many States with whom India has close ties, socially as well as economically. Trade between India and a lot of African countries has been booming, even more so in the industries related to textiles, natural resources and agriculture. While investments in Africa is lesser as compared to other regions, what makes this a relevant issue is the fact that these investments have gone up considerably over the last few decades. The numbers are fast rising, and unparalleled.

India initially looked towards Africa for investment as a source of fulfilling its energy needs. As a fast rising economy that relies significantly on industries and factories, India’s energy crisis has been severe. When the Oil and Natural Gas Corporation Videsh Limited (OVL) was established in 1996, it was seen by many as the Indian foreign policy, making this shift to countries abroad for securing energy[1]. African States formed one of the first such destination for Indian companies. This shift has also been taken by the private sector; private corporations like Bharti Airtel, TATA Group, Reliance and Essar Groups have invested heavily in the African continent along with other small and medium enterprises.

The 21st century has seen the African continent developing itself and becoming stronger. Several African countries like Ethiopia, Rawanda, Democratic Republic of Congo, etc. have had their economies undergo major changes. At the same time, historically Africa has been known to be rich in terms of natural resources, more specifically energy related resources. In 2016, the FDI inflows received by Africa were worth US$ 54.1 billion[2]. Until recently, the countries in the Middle East were the primary source for oil and natural gas, however, the Gulf region has lately become unstable, making a lot of world economies move towards the African reserves. While they may have been harder to access in the past, since they were available offshore, technology has stepped in to make extraction from offshore reserves easier than it was. On top of this, the resources extracted from Africa are cheaper to refine in comparison to those available in the Gulf[3]

Taking a cumulative of India’s investments into certain African countries, between April 1996 and December 2016, it was found that wholly owned subsidiaries as well joint ventures for equity, guarantees issues and loans accounted for 0.1% of India’s global investment overseas (US$ 416 million)[4]. In fact in the year 2015-16 the FDI outflows to African countries stood at US$ 34.6 million[5]. The World Investment Report for the year 2016 has also found that India was the eighth largest in source of investment for Africa[6].

To make bilateral trade easier and to encourage further investments in Africa, the Export-Import Bank of India (Exim Bank) has established several Lines of Credit; the aim is to promote specific sectors even more so which fall in line with the Government of India’s planned sectors for cooperation. In addition to these, the Exim Bank has other commercial Line of Credits which can used by financial institutions and other organizations in Africa to facilitate trade and investment. As on December 31, 2016, the total number of operative LOCs extended to Africa stood at 154, covering 44 African countries and amounting to US$ 7.7 billion. Of these, 149 LOCs aggregating to US$ 7.6 billion, extended to 41 countries are guaranteed by GOI[7]. As on December 31, 2016, Exim India through its overseas investment finance program has supported 37 Indian companies in 12 countries in Africa with an aggregate sanction of Rs. 47.7 billion[8].

African Development Bank: India is an active member of the African Development Bank (AfDB). The AfDB group has funded many projects by Indian groups. The Exim Bank in its work with the AfDB has provided additional services varying from information to support and advisory services.

Association of African Development Finance Institutions: The organization is a forum of banks and other institutions with the aim of furthering the development of financial institutions in the African continent. This is another platform that has been utilized by Indian companies to further their financial interests and make advancements.

Global Network of Exim Banks and Development Financial Institutions: The Exim Bank has entered into Memorandum of Understanding (MOU) with 4 separate Exim Banks and Development Financial Institutions, launched in 2006. This is also a platform that India has utilized to further its presence in the African Financial scenario[9].

There are several other instances and institutions that Indian companies have been a part of. These institutions have been used by Indian companies to strengthen their presence in the African economy.


1. Energy Security: As stated earlier, a bulk of the trade activity between India and the African continent has been in energy security. India has faced problems in the energy security sector, and the dependence on foreign imports for securing energy has been a constant part of India’s policy. For the year 2010-11 for crude oil, India’s dependence on foreign imports stood at 79%, for coal at 18% and for natural gas at 15%[10]. One aspect that makes Africa a close partner for importing resources is its proximity to India. The African continent and India are divided by just a water body. Not only is the distance between the two lesser than the distance between India and the Gulf countries, the sea is also easier to transport over, making Africa a more attractive option for India. Public sector corporations in the energy sector (ONGC Videsh limited and Oil India Limited) have already made significant investments in Mozambique since the State has approximately 100 trillion cubic feet of proved natural gas resources[11].

On the matter of energy security, the relationship between India and African countries is reciprocal; India supports the African nations through technologies using renewable energy. India has extended credit lines to facilitate the construction of power transmission lines in Kenya, rural electrification projects, and solar photovoltaic module manufacturing plants in Mozambique.[12] More than 160,000 people have received solar electrification through the 'Barefoot Approach’[13].

2. Food Security: Since 2000, the two regions of India and Africa have increased their cooperation in the food security sector as well. Both areas are fast developing and are home to a population that has low levels of literacy as well as extremely low income levels Therefore, food security is big issue with alarmingly high number of people suffering malnutrition.

To improve matters, Prime Minister Modi entered into a long term agreement with Mozambique on procuring pulses. Pulses form a large portion of the Indian dietary habits however, the produce is lower than the consumption. Production is unlikely to rise therefore it is estimated that the gap between the production levels and the consumption rate is only likely to rise. Tanzania is yet another nation that India trades with for pulses. The agreement with Mozambique, however, is a much better model since it helps India to further food security and at the same time helps the farmers in Mozambique as well since India will provide them better seeds and farming technologies. The Farmers there get a good deal since the get familiar with newer technology and are paid at favourable prices since the produce is to be procured at a rate not less than the minimum support price offered to Indian farmers[14].

Similarly, with Kenya and Tanzania, India cooperates in the dairy sector. Here too, Indian tech know-how has been made available to the dairy farmers in the region, with special information on India’s White Revolution through knowledge exchange programs.[15] In 2010, India also sent a batch of 288 tractors to Tanzania to improve the agricultural produce there[16]

The cooperation between India and Africa for better food security has been helped by the International Crop Research Institute for the Semi-arid Tropics (ICRISAT) and International Livestock Research Institute (ILRI).

3. Maritime Security: For India, maritime security is a key area for improvement. The Indian Ocean formers a large part of India’s maritime frontier. The Ocean is also used by India for many imports and exports with Africa and other areas of the world as well. About 89% of India's oil imports are routed through the Indian Ocean region[17]. Security concerns arise from armed robberies and piracy, more specifically the Somalian pirates. India has maintained a presence of the Navy to counter them and ensure better protection in the area.

India signed a defence agreement with Mozambique in 2006 and since then the Indian Navy organises regular patrols off Mozambique's coast and supplies it with arms and services.[18] During his visit to Kenya in 2016, PM Modi mentioned the need for greater maritime cooperation between India and Kenya and signed a defence cooperation agreement to promote greater staff exchanges, sharing of expertise and experiences, training and institution building, cooperation in hydrography, and supply of equipment[19].

Many scholars and policy makers have also argued that in the field of maritime security, it would be ideal for India to cooperate with South Africa since the State is a leader in the region. At the same time, India can also learn from South Africa on the matter of Blue Economy where the State has made good progress. India has begun to consider the blue economy as an area where good developments can be made. According to the estimates of the South African government, oceans have the potential to contribute 177 billion rands (approx. US$ 12.8 billion) to the South African GDP and create about 1 million jobs by 2033[20]. Therefore, this is an area where India can take input and use tactics to our benefits.


The largest portion of Indian investment is attracted by East Africa, standing at 63%. Thereafter, North Africa comes next with 22%, Southern Africa with 9%, Western Africa with 5% and Middle Africa in the end with a mere 1% (as per RBI Database) from the year 2008-16[21].

Mozambique: With the exception of Mauritius, Mozambique is the biggest destination for Indian investments with 52.9%[22]. FDI outflows to the State stood at US$ 2.6 billion for the years 2008-16. Out of this entire investment, 99% is held by OVL. In the year 2014, the OVL made a purchase in the Rovum gas field accounting for 70trillion cubic feet of gas. Between April-June2018, another investment decision for Mozambique is expected on an LNG project where construction will begin following a construction period of 4 years[23]. Coal India Africana Limited (CIAL) is a subsidiary of Coal India Limited; the CIAL has made investments worth US$ 5.1 million in Mozambique in the year 2008-16.

Egypt: The FDI outflows for this state stood at US$ 602.9 million from 20018-16, accounting for 12% of the Indian investment, making it the second largest. This country too invites investment in the energy sector mostly. OVL and Gujarat State Petroleum Corporation are the largest investors; the former has investments as heavy as US$ 227.5 million in 2008. With Egypt, the energy sector is wider, going beyond simply oil an gas to even solar energy. Indian private sector company Shapoorji Pallonji Capital Company Ltd. Has invested as much as US$ 6.8 million in a solar power plant[24]. Glenmark Pharma has also made invested about US$ 7.6 million in Egypt in 2008 and 2011, making pharmaceuticals another attractive sector.

Rwanda: Indian investment in Africa have stood at US$ 25.5 million in the years 1996-2016. The manufacturing sector couts for 5% of the investment. Bulk of it is in the Agriculture, hunting, forestry and fishing sector with 94% and 1% in other sectors[25].

South Africa: The investments made to South Africa are varied, not restricted to the energy sector. Additionally, these investments have mostly been by private sector companies. TATA International has made investments worth US$ 63 million while TATA Steel has invested US$ 65.3 million; their Indian Hotels chain has further invested US$ 93.8 million. Other companies to have invested here include Larsen and Toubro, Infotech, Marico Industries, etc.

Tunisia: Most of the Indian investment to Tunisia have been made by Gujarat State Fertilizers and Chemicals (GSFC) and Coromandel International. These two formed a joint venture in collaboration with a state owned company from Tunisia (Groupe Chimique Tunisienand Compagnie Des Phosphates De Gafsa); the venture is called Tunisian Indian Fertilizers (TIFERT). The plant opened by TIFERT will help to secure a better flow of phosphoric acid for Indian agriculture sector.

Tanzania: For the time between 1996-2016, Indian investment in Tanzania stood at a total of US$ 74.8 million. Bulk of the investment has been made in the manufacturing sector, standing at 69% followed by agriculture and mining at 15% and community, social and personal services at 12%. Companies to have invested here include Bank of India, Bank of Baroda, Tata International Ltd., LIC, United India, Reliance Industries Ltd, Bharti Airtel, Eicher TVS, Godrej, Ashok Leyland, Bajaj, etc.

Kenya: 82 countries invested in Kenya in 20018-16 in the manufacturing sector. Interlabel industries, a private sector corporation is the largest investor in the country.

Zambia: This country once again invites investment from the private sector company, in a wide range of sectors varying from manufacturing to construction and even finance, banking and insurance. TATA Power holds the largest share at 33.6% and Varun beverages the second largest with 18.7%. Other companies to have invested there include PLR Projects, Manjeet Cotton Private Limited and Chetak Enterprises.

Ethiopia: 92% of the Indian investments in Ethiopia has been made in the manufacturing sector. 64 companies have invested there. Kanoria Africa Textiles, a wholly owned subsidiary of Kanoria Chemicals and Industries, has set up a denim unit near Addis Ababa with an investment of about US$ 36.1 million[26]. This project is likely to be a big boost to both States as it will lead to large employment opportunities in Ethiopia; for India it opens access to duty-free quota free access to EU and US markets. Indagro Foods, Frigerio Conserva Allana Limited and Allana Group are companies from the food processing sector that have made investments in Ethiopia.

Sudan: The investments here are limited to oil and OVL accounts for 999% of the investments made. Other countries such as Bhola Shri Marketing Pvt. Ltd, BLS International Services Ltd., RAMCO Systems, etc.


The private sector has a strong role to play in the economy of a developing nation. It has been acknowledged that the private sector can contribute to overcoming challenges faced by development due to higher role of innovation, technology, income and promotion possibilities it offers. When the policies of a State cooperate with the private sector it usually witnesses strong growth and development.

With reference to the issue of the paper, Indian investment in Africa, it must be noticed that here private companies can come into play only if both Indian policies as well as policies of the African states make attractive offers. For example, countries like Gabon, Zambia and Nigeria have seen strong incoming FDIs from India. For Zambia, this is believed to be due to the efforts of the government there to attract Indian investors.


Indian investments have been focused primarily on oil and natural gas resources, however the continent offers good prospects for investments in agriculture, manufacturing, tourism and horticulture. The economy of the countries in the continent has witnessed a great growth rate in the last few decades, and it is projected to keep rising. Therefore foreign investors like Indian businesses should be encouraged to take these opportunities. Given below are a few key areas for select countries that Indian companies can explore[27]

For Burundi the energy sectors remains a prime option. Electricity generation through geo-thermal energy and hydropower are great options to be considered. Agriculture and related processing and mining and allied activities is another sector that holds potential.

For Ethiopia the leather industry and textile industry hold potential for growth. Manufacturing and horticulture are two more sectors that would be good for investing into.

For Kenya infrastructure projects would be the best option for businesses to invest in. Finance & banking, tourism, energy and manufacturing are also sectors that can prove to be beneficial.

For Rwanda the investment opportunities are enormous and varied. Infrastructure, agriculture, construction material, textiles, pharmaceuticals, energy, toiletries and vehicle assembly are all good prospects.

For Tanzania potential sectors for investment would include: chemical and bio-chemicals, transportation, manufacturing (including agro-processing), export processing and special economic zones (EPZ), and mining.

For Uganda potential sectors for investment would include: agriculture/agribusiness, tourism, oil and gas, renewable energy, ICT, financial services, education and healthcare.


India has not played a strong role in promoting companies from the private sector to invest in Africa. The continent holds strong financial possibilities for investments made there. The African continent has seen an astounding growth rate which is what has attracted FDI from various countries to it in the first place. Therefore, the Indian policies should encourage foreign investments to Africa. Given below are a few recommendations that can be used by the government as well as the private sector to increase investments in Africa and have a much better chance at succeeding while doing so.

  • Government must promote investments by targeting companies in separate sectors. Development projects would be one of the best places for India to invest in and this where the government should encourage companies to invest.

  • The creation of a separate division within the Ministry of Finance – Overseas Investment Promotion Council (OPIC) is something that has been recommended by many scholars to promote overseas investments by Indian enterprises[28].

  • The private sector should be encouraged to provide inputs for developmental cooperation. A company will be better equipped to provide the necessary information n the sectors it is working on. Including corporations into strategy making is a good way to make them feel involved. If a company feels that it is involved in the initial stages, it is more likely to go ahead with investments.

  • Not all investment ventures in Africa have succeeded. Sometimes, credit lines have failed and companies have had to suffer losses. It is recommended that a proper study is conducted into why the credit lines have failed. This will help to figure out what has gone wrong and will also help companies to come up with better mechanisms that will give them proper results.

  • Corporations must be encouraged to establish plans and investment projects that will be beneficial to not just India and Indian companies, but also the African countries and their citizens. The African continent faces several problems such as poverty illiteracy. It is but natural that the establishments there will only welcome those ventures that will benefit them, therefore, the companies must be encouraged to better thought and look at their projects from a social welfare perspective as well.

  • Investments must not be encouraged blindly. There should be a higher emphasis on projects that are development friendly. As a continent full of developing or under-developed countries, all plans must be targeted to benefit them as well since that will help increase cooperation with their governments and the locals.

  • Goals of sustainable development must be kept in mind when any plans are made. It is important to remember that African countries do not necessarily have the resources and tech know-how that India holds, therefore conservation and sustainability should be important factors to be taken into account.


Indian investments in the African continent have been on a rise for the last few decades. The region has witnessed unprecedented growth. The area currently holds strong trade with India in the energy sector, however there is outstanding potential in other sectors such as manufacturing, agriculture and processing, textiles etc.

Private corporations have played a strong role in strengthening the relationship between Africa and India, however, it is mostly small investments by small and medium enterprises. Only big players like TATA and Reliance have made large investments. Most of the other investment has been made by public sector companies like OVL.

The largest investment destination has been Mauritius however most scholars believe that this is because it acts as a tax haven and therefore is often not included for calculations. Therefore the focus automatically shifts to Mozambique which is the second largest destination.

If the Indian companies take social welfare more importantly then they would gain much more than they already do and the relationship between India and Africa would stand much stronger. The Government has been laying emphasis on improving our relations with other States and trade relations are one of the best ways of doing so, therefore all necessary measures must be taken to ensure that this relationship remains as strong as it is currently and make it better since there is plenty scope for improvement.


[1] Sanjay Kumar Pradhan, “India and Africa: Quest for Oil and Gas”, Indian Foreign Affairs Journal 7, no 3 (2012), 284.

[2] “World Investment Report 2016,” (Geneva: United Nations, 2016).

[3] Supra note 1.

[4] India’s Investments in Select East African Countries: Prospects and Opportunities, Export-Import Bank of India, March 2017.

[5] Ibid at 12.

[6] Supra note 2.

[7] Ibid at 13.

[8] Ibid at 14.

[9] Ibid at 55.

[10] The Energy and Resources Institute.”Energy Security Outlook: Defining a Secure and Sustainable Energy Future for India", TERI Press, 2015.

[11] U.S. Energy Information Administration, Available at: https://www.eia.gov/beta/international/ analysis.cfm? iso=MOZ (Last accessed on 21st Nov 2017).

[12] Malancha Chakrabarty, ‘Contemporary Aspects of India’s Relations with East and South Africa’, 9, ORF Issue Breif No. 168, Jan 2017.

[13] Barefoot College, “Solar Mamas of Africa to meet Prime Minister Narendra Modi on his visit to Tanzania,” Available at: http://www.barefootcollege.org/solar-mamas-of-africa-to-meet-prime-ministernarendra-modi-on-his-visit-to-tanzania/ (Last accessed on 21st Nov 2017).

[14] Supra note 12 at 11.

[15] Michael Wong, “How Tanzania Learned from India's White Revolution”, Available at: http://knowledgesharingfordev.org/Data/wbi/wbicms/files/drupal-acquia/wbi/document_ repository/art_of_knowledge_exchange_-_case_study_-_tanzania.pdf (Last accessed on 21st Nov 2017).

[16] Arnauld Bebian, “Tanzania-India: A Rewarding Relationship,” Inter Press Service News Agency, May 27 2011 Available at: http://www.ipsnews.net/2011/05/tanzania-india-a-rewarding-relationship/ (Last accessed on 20th Nov 2017).

[17] Alex Vines, “India's security concerns in the western Indian Ocean” in India in Africa: Changing geographies of Power, eds. Emma Maudsley and Gerard McCann (Pambazuka Press, 2013), 187-202.

[18] Supra note 12 at 12.

[19] Press Statement by Prime Minister during his visit to Kenya, July 11 2016, Available at: http://mea.gov.in/ outoging-visit-detail.htm?27008/Press+Statement+by+Prime+Minister+during+his+visit+ to+Kenya+July+11+2016 (Last accessed on 21st Nov 2017).

[20] DepartEgypt holds a share ment of Environmental Affairs. “Operation Phakisa-Oceans Economy”, Government of South Africa, https://www.environment.gov.za/projectsprogrammes/operationphakisa/oceanseconomy.

[21] Malancha Chakrabatry, ‘Indian Investments in Africa: Scale, Trends and Policy Recommendations’, 6, ORF Working Paper, May 2017.

[22] Ibid at 7.

[23] David Rowlands, “FID on Mozambique LNG project expected in April – June 2018”, LNG Industry, April 6, 2017, Available at: https://www.lngindustry.com/liquefaction/06042017/fid-on-mozambique-lng-project-expected-inapril-june-2018/ (Last accessed on 22nd Nov 2017).

[24] Supra note 21 at 7.

[25] Supra note 4 at 51.

[26] Supra note 21 at 9.

[27] Supra note 4.

[28] S Prahalathan et al, Outward Direct Investment from India: Trends, Objectives and Policy Perspectives”, Occasional Paper No. 165. Export-Import Bank of India, 2014.

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