Hasnen Varawalla, managing director and head of investment banking for Barclays in Africa, spent a week meeting with Indian firms searching for prospects in Africa.

 

A growing number of small and medium-sized Indian businesses are looking for natural resources, new and rapidly developing consumer markets, and abundant agricultural land in Africa. 'Enterprises have requested us to assist them in acquiring or investing in high-growth African companies.' We expect the India-Africa corridor to develop significantly in the future years,' said Varawalla, who began his career with the Tata Group in India before moving overseas.

 

According to Barclays, there will be more than a half-dozen agreements in the last year when Indian corporations would go shopping in Africa. Some small to medium-sized businesses have successfully expanded in Africa through acquisitions.

 

Karuturi Global acquired Kenya-based Sher Agencies (now Sher Karuturi) from Dutch horticulturists Gerrit & Peter Barnhoorn, Kirloskar Brothers, one of the world's major makers of pumps and valves. Apollo Tyres, which acquired Dunlop Tyres International South Africa, currently offers its goods in over 33 African nations.

 

The demographics of the continent are rapidly evolving, which meets the demands of Indian firms trying to access additional markets and tie up their resources. Power and utility projects in Africa are being considered by infrastructure firms.

 

Better economic relations between India and nations such as Ethiopia and Sierra Leone have enticed firms to join agriculture by leasing enormous areas of land in Ethiopia. India is the most important foreign lessee of Ethiopian cropland. India-Africa commerce is now valued at around USD 57 billion and is expected to reach USD 90 billion.

 

'As their local market gets more competitive, Indian firms are seeking greater margin returns — and Africa is one destination that offers such upside prospect,' said Diana Layfield, CEO of Standard Chartered Bank in Africa.

 

Africa is now at the point where India was two decades ago. Africa is a growing market for consumer firms, with over 30,000 middle-class households added each month. Until far, multinationals like Godrej and Marico have established a presence in Africa mostly through purchasing strategic holdings in local firms. 'Consumer corporations are considering new brands, distribution networks, and market entry.' 'Indian enterprises are better equipped to cater to the pricing points in Africa,' added Varawalla. Mid-sized Indian enterprises looking for expansion are now exploring outside of India.

 

'India is just as interested in Africa's mineral riches as China is, as well as the continent's booming commerce and consumer industries.' 'Our Africa-India business has risen at a compound annual growth rate of 60% over the previous four years,' said Standard Chartered's Layfield.

 

Africa's policies governing multinational corporations and foreign investments are experiencing a fundamental shift. Though it has strict mining rules as a result of the developing tendency of resource nationalism, Indian enterprises find it simpler to enter such markets.