Vying for Africa: India needs to tap its diaspora to match China

Can India do a China in the continent of unlimited resources? China’s big foray into the African continent has grabbed global attention. But

there are many - such as Harvard professor Tarun Khanna - who believes that India has an edge in Africa because of its deep diaspora. “The fact that the Indian diaspora is deeply entrenched and spread across Africa and knows its way around is a big advantage,” feels Dr Khanna, Jorge Paulo Lemann professor at the Harvard Business School, who has specialised in research on India and China.

Ask Nimisha Madhvani, the Ugandan high commissioner to India, who belongs to a family that owns and runs one of the biggest business conglomerates in East Africa. “The Indian government has not really focused on the Indians in Africa which is why many of the big Indian business groups of Indian origin in that continent do not look at putting their money in India but instead tap business opportunities in Europe and America.

However, if certain restrictions were eased and some steps taken by the government, India could attract a lot of investment from this segment,” she says. She also feels that in view of the historic ties between India and many of the African countries and the bridges that have been built by the diaspora over the years, India doesn’t really need to feel competitive about China’s plans in the neighbourhood.

And like her, the chairman of the Confederation of Indian Industry’s Africa committee and chairman & MD of Kirloskar Brothers, Sanjay C Kirloskar, too believes that to take the India-Africa relationship to the next level, re-engaging with the diaspora is very important. “The engagement of Indian companies in the African continent is different from China because there’s local skills development involved and often transfer of technology.

India and Africa are natural allies because of a similar past and the influential people of Indian origin running businesses in Africa. Some of the important sectors where partnerships are possible include infrastructure, agriculture agro-processing, automotive and IT,” he says.

Similarly, N K Somani, CEO of one Nigeria’s most diversified business conglomerate Danote Group feels that even though there has been initiatives on both the sides to forge a strong business relationship, a lot needs to be done in terms of government measures. “A lot needs to be done on the promotional and incentives level by the Indian government, as Nigeria has a very high potential for trade with India,” he says. Referring to the recent visit of an Indian business delegation to Nigeria, Mr Somani said that initiatives taken should be seen through and concluded as soon as possible to ensure optimal utilization of resources in both sides.

There are big business houses from India such as the Tatas, Essar, Vedanta, and Kirloskar who have embarked on the African safari and in many cases engaged with the Indian diaspora there, including talented professionals of Indian origin. Says S. Kuppuswamy, advisor group finance and special projects of construction giant Shapoorji Pallonji and former chairman of CII’s task force on Africa: “In certain countries - such as Kenya - the Indian diaspora can play a more meaningful role if the Indian government taps them to strengthen its ties with Africa.”

He adds that in the area of skills enhancement, even small companies from India are now making a big impact in Africa. “As the engagement

increases there will also be a big movement of Indian professionals to different African countries,” he says. And that is already happening - from telecom experts in Ghana to healthcare workers in Uganada, the new generation of skilled Indian professionals too are now adding to the numbers of the Indian diaspora. “Traditionally, the Gujarati community has had a big presence in Africa - but now there are also professionals from states such as Kerala and Tamil Nadu who are moving to East Africa.

Most of them are very comfortable culturally and are choosing to settle down in the region,” says Nimisha Madhvani. Of course, prominent members of the Indian business community in Africa feel that there’s not enough being done on the part of the Indian government to engage with them, even as India reaches out to people of Indian origin in the West in a much bigger way.

Mayur M. Madhvani, senior director of the Madhvani group and joint MD, Kakira Sugar Works in Uganda, feels that India should take advantage of its deep diaspora in Africa and use it far more effectively as a platform to cement closer ties between the two regions. “There are opportunities that exist in Africa for Indian businesses. We are already seeing instances of business houses similar to ours strengthening ties with India through possible joint ventures and increased trade through purchase of plant, machinery and various equipment from India as well as giving opportunities to Indian expatriates, who provide valuable skills in our business,” he says.

Vimal Shah, CEO of Bidco Oil in Kenya, too, feels that the Indian government is not doing enough to gain an advantage through the Indian business community in Africa. “The Chinese government is far more engaged in different regions in Africa, while India seems to lack policy initiatives. The Indian high commissions, for instance, are usually not able to provide us with adequate information about doing business in India,” he says.

And echoing his thoughts, Indian diplomats, too, feel that a lot more could be done to tap into the vast knowledge and experience of the Indian business community in Africa. “The Indian community plays a prominent role in different African countries and should be tapped to build a foundation for us. In fact, India could be in a bigger league in the relationship with many African countries than China through sustained foreign policy,” says a senior Indian diplomat with many years of experience in the region.

A policy-led Indian foray into the African continent could well build on the ‘feel good factor’ that comes from the influential Indian diaspora not just in Africa but globally. “Many of the Indians in Africa immigrated to the West following the political upheaval in Uganda and some of them are very successful in UK, US and Canada. Some are back in Africa and also exploring opportunities in India. It is time to tap this segment and carry out confidence building measures,” says Sanmit Ahuja, chief executive of London-based g investments firm ETI Dynamics.

Dr Manu Chandaria, well-known Kenyan businessman and philanthropist, too underscores the need for confidence building measures on the part of the Indian government. “China is gaining in terms of infrastructure investments in the Africa thanks to its government policy initiatives. There’s a huge opportunity for the Indian financial services sector in eastern Africa which can be tapped with the help of initiatives on the part of the Indian government,” he says.

ndia can help in medical services

The Mehta Group which traces its history back to 1900 when its founder, Nanji Kalidas Mehta, set up a little trading post in the Ugandan village of Kamuli - today has a turnover of $500 million and is geared to achieve $1 billion in the next five years.

“My father, the founder of Mehta Group, Nanji Kalidas Mehta, had contributed a lot in developing Uganda. Starting with a duka (shop), he went into cotton growing and processing largely for the Indian and Japanese market. He then went into edible oil, sugar, tea, real estate development and into textile and subsequently cement in India,” Mahendra N. Mehta, chairman of the Mehta Group says. Today the group has a presence across the world in India, Kenya, Uganda, Europe, Bermuda, Canada and the US. Mr Mehta himself joined the family business way back in 1951 and took charge of African operations in 1954.

The real challenge for the family came when dictator Idi Amin expelled all non-indigenous people from Uganda in 1972. Mr Mehta had to leave the country with just two suitcases of personal belongings. However, he later became one of the first to again opt for Ugandan nationality after the dictatorship was overthrown in 1980 and was elected a member of Parliament in the first parliament of independent Uganda.

He now feels that in the last decade, lots of changes have taken place both in India and in the continent of Africa. “New regimes in Africa have realised that unless they encourage private foreign investment in their country, they cannot achieve the kind of economic growth required to eliminate poverty. India’s economy is liberalised and the private sector is looking at opportunities for investment in other parts of the world. Africa offers enormous opportunities in fields such as mining, agriculture development, food processing and IT,” he says.

Mr Mehta believes that like China, India too will have to look at the enormous resources available in the continent of Africa. “China has a policy for Africa. The government is going all out to provide financial assistance to various governments in Africa and in return is obtaining concessions on mining and mineral development. Chinese traders are also coming and establishing small business all over the African continent,” he says.

As for India, the few concessions which Indian private enterprises have obtained in Africa are entirely due to initiative taken by the business houses and not as a result of government support and its ability to influence African governments, he says. “Assistance by India in financial, technical, educational, medical and infrastructural development fields can go a long way in helping the development of the economies and at the same time earning goodwill and developing a spirit of partnership to enable Indian entrepreneurs avail better opportunities and concessions from governments in Africa,” Mr Mehta adds.

Right from the start, the group founder, N.K. Mehta, believed in giving back to his country of origin after setting up a successful business in Uganda. He invested in India in textile, cement and other ventures and contributed generously to a number of educational, religious and social institutions. Today, in India, group companies Saurashtra Cement and Gujarat Sidhee Cement produce 3 million tonnes of cement at two plants.

Need to build on historic ties

The Madhvani Group is the largest conglomerate in Uganda with a total asset base of over $200 million. The group has investments in Uganda, Rwanda, Sudan, Tanzania, the Middle East, India and north America. “Ties between India and Africa have been historically in existence for over a century. Currently, there are over 2.5 million overseas Indian families that have settled in Africa and in the region of east Africa alone there are over 300,000 families,” says Mayur M. Madhvani, senior director, Madhvani Group and joint managing director, Kakira Sugar Works - which is the flagship of the group.

The Madhvani group is among the largest diversified enterprises in east Africa, with a turnover in Uganda of over $100 million. It has a presence in sectors such as agriculture and agro-processing, floriculture, packaging, steel, hotels & tourism, insurance, IT, construction and distribution of industrial products and consumer durables.

And now the group is looking at India for investment opportunities and tie-ups. “A group such as ours can definitely help India forge economic relations within the countries of Africa and the Indian private sector and government should take advantage of these opportunities. Meanwhile, our group is actively pursuing investment opportunities in India in the hospitality sector and we have already acquired land in several strategic areas and have commenced construction of the facilities.

We hope to launch our brand soon in various parts of the country,” says Mr Madhvani whose late father went to Africa in 1912. “His vision of seeing the early signs of potential that exist in Africa has resulted in our building our family business, to its current level, where we are one of the largest private sector investors in the country employing over 10,000 individuals and contributing substantially towards the GDP of Uganda,” he says.

Like other Indian business families in Uganda, the Madhvanis too were a victim of political unrest when Idi Amin expelled all Asians in 1972. “However, things are changing in the continent of Africa and democracy is slowly taking roots and as a result, the long term stability for business houses such as ours, is being assured. Trade barriers have been substantially reduced in many African countries and movement of capital and goods, is now extensively free,” says Mr Madhvani.

East Africa is a big market to be tapped

East Africa is a huge market that Indian companies can tap, feels Vimal Shah, the CEO of Bidco Oil Refineries, a leading manufacturer of edible oils, fats and hygiene products in the region. He adds that the local ground knowledge of companies such as Bidco in East Africa could be tapped by Indian players looking at partnerships in the region.

Bidco was started about 35 years ago in Kenya - and is often seen as the Unilever of Africa. The company sees itself as an African company, deeply rooted in East Africa, acting regionally but thinking globally. “We don’t have any plans to enter the Indian market just now, because we have huge expansion plans in the African continent.

However, culturally we are very connected to our country of origin. In Nairobi, we often celebrate festivals such as Holi and Diwali more traditionally than people in Mumbai,” says Shah, who was himself born in Africa. His father, who was among the early Gujaratis in Kenya, was the founder of Bidco, which entered the edible oils and fats business in 1991 in Kenya and is today in a leading position in the segment in East and Central Africa.

In Uganda, the company is creating a fully integrated edible oil business with an investment of over $130 m spread over five years. The company is also building a presence in Tanzania. “I travel to India very often and we source a lot of our equipment from there,” says Mr Shah. For him, the overseas citizenship of India (OCI) card that has been introduced by the ministry of overseas Indian affairs is a confidence building measure among the people of Indian origin in East Africa. “We all have the OCI cards now and it helps us to stay connected with India,” he says.

There’s lack of policy level engagement

Dr Manu Chandaria, the chairman and patriarch of the Kenya-based Chandaria group, a family business that operates across 45 countries worldwide, is today more concerned over philanthropy and building value in the social sector in countries where his group runs businesses. The family’s Comcraft group produces steel, plastics, and aluminium products in Kenya, Tanzania, Uganda, Ethiopia, and outside of Africa as well. It also manufactures and markets various consumer and building products.

“We are a privately held group, but we believe in professionally run group companies globally. As promoters, we like to keep a low profile and leave the management affairs to the managers. We put in maximum effort in building up the social sector and supporting the building up of communities in countries such as Nigeria, Ghana and Ethiopia, where we have operations,” says Dr Chandaria, who is also the chairman of the family’s Chandaria Foundation and a recipient of the Pravasi Samman given by the Indian government.

He also received the Order of the British Empire in 2006 in recognition for his work in the community and his promotion of Kenyan-British economic interest in Kenya. The group has investments in India and China as well and prefers to maintain a low-profile as far as day to day operations of the companies are concerned. “Our group companies in India include Aegis Logistics and Toonz Animation. In China, too, we employ a large local workforce,” says Mr Chandaria, whose father started the family business in Nairobi with a corner store in 1916.

“Besides social service, big businesses can also contribute towards the local economy through building stronger foundations for business and by promoting corporate governance values,” says Dr Chandaria. He adds that the Indian government and Indian businesses need to put in more efforts to take the ties between India and the African countries to the next level. “There are many Indian business groups operating across the continent from Ethiopia to South Africa. But somehow the broader links are not yet being built and there seems to be a lack of policy level engagement by the Indian government in Africa,” he says.

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* This article was originally published in the Economic Times on January 31, 2010.
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