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India must work out a mechanism to be part of Africa’s mega trade deal

A new dawn in Africa's: Mega trade deal is expected to boost the continent's economy

As the African Continental Free Trade Area (AfCFTA) officially kicked off in January, India must now proactively make a strong pitch to be able to get access to the member countries for expansion of bilateral trade, experts said.

Touted as one of the biggest trade deals in the world, the AfCTA aims to create a single market comprising 1.3 billion people with a combined GDP of about $3.4 trillion. This is expected to provide a huge economic boost to Africa, especially in the post Covid 19 phase.

At a time when China has slowed its investments into the continent, India has an opportunity. The continent will also play an important role as the geopolitical thrust shifts towards the Indo Pacific.

Also read: With China on the backfoot in the perception war, India needs to step up its game in Africa

“India has increased its economic activities in Africa, its investments have risen significantly in the last few years but now New Delhi must work out a mechanism with the AfCFTA to be able to expand bilateral trade further,” Pradeep S Mehta, Secretary General, CUTS International told India Narrative.

Mehta pointed out that India has traditionally maintained good relations with Africa. "India has remained politically aligned with the African countries and that gives an edge to New Delhi," Mehta said.

Also read: China digs in Africa with an eye on its coastline for military bases

Earlier, a report published by Observer Research Foundation (ORF) said that the AfCFTA provides a number of opportunities for the Indian firms and investors to tap into a larger, unified, simplified and more robust African market. “It is critical for India to view Africa not just as a destination for short-term returns but as a partner for medium and long-term economic growth,” the report said.

AfTCA has been signed by 55 countries of which 54 are members of the African Union, which was instrumental in weaving the deal.

According to the World Bank, the AfCFTA presents a major opportunity for African countries to bring 30 million people out of extreme poverty and to raise the incomes of 68 million others who live on less than $5.50 per day.

Also read: The African Continental Free Trade Area

The African Report, in November last year, noted that China, which has “incurred significant losses on the loans it granted to multiple countries” will be selective in extending financial assistance to countries in Africa.

That apart several African countries including Angola, Ethiopia, the Republic of Congo and Zambia, which received loans from China “are no longer in a position to repay the debt they owe” leading to rising concerns of a debt trap.

India is now Africa’s third largest trading partner.

“Africa, will be critical to India’s growth story in the remainder of this century. Eastern Africa especially is also growing in importance as India pursues its Indo-Pacific strategy,” the Financial Express quoted Ambassador Anil Trigunayat as saying.

In 2017-18 India accounted for 6.4 per cent of Africa’s total trade touching $ 62.6 billion. However, in the same year, trade between China and Africa stood at around $185 billion. Similarly, China’s investment in Africa as of 2020 amounted to $147.66 billion.

Africa can become a major source of raw materials including minerals and rare earth. “However, with the Chinese influence most of the mining companies are now owned by them,” Rao Narender Yadav, founder, India-Africa Today —a platform fostering co-operation and camaraderie between the two, said.