Africa-India economic partnership

Gov’t advised to formulate a strategic plan to rake in benefits.

President John Kufour returned from India where he attended an Indo-Africa Summit with excited news that several Indian businesses have expressed strong interest in establishing a base in Ghana.

Press Secretary to the President, Andrews Awuni announced proudly that Ghana was “the toast of the business community in India” and interested companies are looking for avenues in the housing, tourism and other key sectors of the economy.

This should be good news for all Ghanaians, but some economists and policy analysts say rather than start rejoicing, government must quickly formulate plans to rake in the benefits without hurting the fortunes of its businesses.

A Research Fellow at the Institute of Statistical, Social and Economic Research (ISSER) Dr. Robert Darko Osei told the dailyEXPRESS in his office at Legon that “you need to understand the players that are coming in, are they using here as a launch pad?”

Ghana and India have had historical ties dating back to post-colonial periods. The two countries were not only colonised by Britain but are also members of the Commonwealth and share ideas in that respect. The common ties continue to fuel the increasing numbers of Indian business interests in Ghana.

One of India’s biggest banks, Bank of Baroda has recently begun operation in the country, targeting the growing number of Indian businesses here.

At the Indo-Africa Summit, the Indians pledged to invest millons of dollars in development projects on the continent in an attempt to boost its presence in Africa, where China, seen as their economic rival, continues to invest billions of dollars. Indian Prime Minister Manmohan Singh intimated that his country will provide more than US$500 million (€320 million) over the next five to six years in grants for development projects. Premier Singh said India will also allow duty-free imports from the world’s poorest nations, including Ghana. "India shall unilaterally provide preferential market access for exports from all 50 least-developed countries, 34 of which are in Africa," he announced. Two-way trade between India and the African continent totals about US$30 billion (€19 billion) a year, having grown sixfold in the last five years, Indian Junior Minister for External Affairs Anand Sharma is quoted to have said. This however falls below the investment China has made in Africa. Trade between China and Africa surged from US$55 billion in 2006 to US$73.3 billion last year, according to China's official Xinhua News Agency. Premier Wen Jiabao said in 2006 that China should strive to bring the trade volume to US$100 billion by 2010. The intention of India to counter Chinese influence in Ghana is already on course with the on-going construction of a presidential palace. That maybe not any significant project compared to the road works and the Bui dam construction currently being executed by the Chinese. India is however equally interested in the recent discovery of oil in Ghana.

But what are the real underpinnings of India’s interest in Africa and Ghana? Dr. Darko Osei says while Ghana’s stable economic environment might be a draw, it is also possible that the country or economy has great opportunities that the Indians have identified but which are oblivious to Ghanaians.

He is of the view that the presence of more companies from India and elsewhere would provide alternative routes of employment for the increasing numbers of unemployed youth in the country. The danger however is ensuring that India, like China and other countries don’t use Ghana as a dumping ground for their surplus products.

A number local industries have already folded up as a result of the uneven competition with cheap imported products from especially China. These include small scale companies and the textile industry, which have been worse victims. Industry has consistently called on government to introduce a form of regulation to ensure a reduction in the importation of the items. Dr. Darko Osei supports the call for regulation but maintains that any country or business that wants to invest or export products into Ghana must be supported to do so. Their operations must however ensure fair competition.

“If its fair competition and the products are of high quality then, we should not raise qualms.”

He noted that government has the responsibility of ensuring that local industries are protected to keep them in business, advocating that government conducts proper background checks on companies wanting to invest in the country. That will ensure that their presence impacts positively on the economy.

In order to prepare for Indians and other countries interested in Ghana, Dr. Darko Osei says government must put in place a strategic plan that will ensure that the country benefits from a skill transfer. Asking whether government already has any such plans, the ISSER Research Fellow said the plan must make it possible for Ghanaians to be sent out to these countries to learn about their system, come back and utilise them here.

He said India, one of the poorest countries in the world, sent its nationals abroad over a certain period to Europe and America where they understudied the ICT industry in those countries and are today using their own products for the benefit of their economy. Dr. Darko Osei wondered why Ghana can’t do same. He debunked arguments that those who are sent abroad may not come back. According to him, these arguments are out forward because there are no tested strategic plans to ensure that Ghana begins to move away from bringing in foreign experts at higher costs, when trained Ghanaians could do the same job at a reduced cost.

He cited the public sector as one place where such an exercise could be carried out. He said the sector lacks qualified people to undertake their work but do not see the value in spending to improve on their human resource.