South Africa’s corporate and investment bank, RMB, yesterday said the Indo-Africa trade corridor had surged to a staggering $95 billion (R1.75 trillion) in size, showcasing a dynamic and growing economic partnership between the regions.
Ritesh Sharma, head of foreign investment and trade for RMB’s India team, said this marked a significant increase from only $5 billion in 2002, highlighting the corridor's impressive trajectory.
Sharma noted that while the initial trade focus was on energy products, the corridor had witnessed remarkable diversification in recent years.
He said: “By our estimation, we expect the value of trade in the corridor to hit $100bn next year
“India's exports to Africa now encompass a wider range of products, including agri-products like rice, wheat and meat ($8bn), pharmaceuticals ($4.5bn) and automobiles ($4.2b). Projects, machines, iron and steel, electronics and yarn/clothes are other significant and growing categories.”
RMB said Africa's exports to India had also grown significantly, having reached $45bn.
The key contributors were the energy basket comprising crude, gas and coal ($21 bn), metals ($16bn), soft commodities such as cashew nuts, pulses ($8bn), and diamonds ($2bn).
“We anticipate continued growth in the Indo-Africa trade corridor, fuelled by factors like rising populations, increasing consumer spending, and growing income levels across both regions,” Sharma said.
He said that despite the promising outlook, navigating the complexities of African markets came with inherent risks.
“We see three main challenges: political, economic, and operational risks. The continent's vastness, with 54 countries and varying credit ratings, presents a diverse risk environment,” Sharma said.
“Businesses need to understand the importance of mitigating these risks.”
Commercial Banks and Export Credit Agencies (ECAs) that understand the African market were able to facilitate various risk mitigation solutions, which buyers and sellers on both sides of the Indo-Africa trade corridor could capitalise on.
With its deep understanding of the African market and a comprehensive suite of risk mitigation solutions, Sharma said RMB was well-positioned to support businesses looking to thrive within the dynamic Indo-Africa trade corridor.