By Our Correspondent | Africa Guardian
India and Africa are entering a dynamic new phase in their relationship. Anil Sooklal, the newly appointed High Commissioner of South Africa to India, has been a vocal advocate for the burgeoning ties between the two regions. In a recent speech, he highlighted the “special relationship” shared by India and Africa, emphasizing its vast potential on a global scale. This partnership is not just about bilateral cooperation but holds the promise of reshaping the future of international trade.
In many respects, India and Africa mirror each other. Both regions boast large working-age populations, rapid urbanization, thriving startup ecosystems, and a shared colonial history. These similarities hint at a future brimming with potential, yet each region also possesses unique strengths that could give them a competitive edge as they continue their rapid development.
India and Africa have made significant strides in developing their digital infrastructure and financial services ecosystems, positioning them favorably for enhanced overseas and intraregional trade. As both regions anticipate sustained GDP growth and job creation, it is crucial that they leverage each other’s strengths to fuel the next phase of economic development. Identifying and utilizing these strengths effectively will be key to driving mutual progress.
India’s Digital Revolution: A Model for Africa
Digital partnerships are becoming increasingly central to the evolving trade relationship between India and Africa. India’s advancements in digital infrastructure offer valuable lessons for Africa, which can replicate and adapt these innovations to achieve similar success.
India has witnessed a surge in cashless payments over the past decade, driven by initiatives that have simplified money transfers. One such initiative is the Aadhaar card, a government-issued identification number that banks and financial institutions use to streamline the verification process for opening bank accounts or applying for financial products. This system has provided digital identities to over a billion Indians, many of whom were previously excluded from formal financial services.
The Aadhaar card has transformed India’s banking sector, promoting widespread financial inclusion and contributing to the creation of a near-cashless society through competitive payment platforms.
Another significant innovation is India’s Unified Payments Interface (UPI), a unified platform that facilitates instant money transfers between accounts. From local vendors to large-scale investments, the UPI recorded 83.75 billion transactions by the end of 2023, reflecting India’s shift away from cash payments toward more efficient, cost-effective digital solutions.
Transforming Africa’s Trade Ecosystem
Africa, too, is making significant progress in adopting and promoting digital solutions to enhance its trade landscape. Major initiatives are underway to implement advanced technologies that make trade faster, more transparent, and secure. For example, South Africa has significantly advanced its electronic trading infrastructure, attracting Indian investors seeking connectivity across the African continent.
In 2023, the Johannesburg Stock Exchange (JSE) launched Colocation 2.0, a solution designed to lower connectivity barriers for firms entering the South African market. This initiative provides comprehensive connectivity to exchange services at minimal cost, facilitating easier market access. Other African exchanges are also working to expand their electronic trading capabilities, unlocking opportunities in lucrative, yet often untapped, markets.
Digital payments are also gaining traction across Africa. M-PESA, the continent’s largest and most successful mobile money service, has provided millions with access to financial services. This expansion of digital infrastructure is beginning to integrate advanced technologies into less developed markets, where data usage has surged tenfold in some regions. While challenges remain, Africa’s rapid adoption of digital solutions presents a tremendous opportunity to learn from India’s success and drive further growth.
Seizing the Opportunities
The growing digital partnership between India and Africa presents significant opportunities. With the right expertise, digital infrastructure initiatives can be tailored to local contexts, leveraging the success of mobile money and expanding the reach of digital payments across Africa.
India has a crucial role to play in addressing Africa’s infrastructure needs. Indian investors are increasingly stepping in to provide not only capital but also technical expertise and innovative solutions that bolster digital infrastructure and enhance connectivity across the continent. By sharing their experience in rolling out digital infrastructure, Indian investors can serve as strategic advisors, helping African nations develop their own digital identity and payment systems, which are essential for secure and accessible financial services.
Building a Long-Term Partnership
The focus is now on not only boosting trade but also tackling the challenges that both continents have faced. Many Indian investors are committed to long-term engagement in Africa, recognizing that sustained involvement offers the best chance to maximize returns. Unlike previous investment strategies that prioritized extraction, today’s investments are centered on fostering enduring partnerships that will thrive for generations.
While the ease of doing business in Africa is improving, there is still a long way to go to strengthen ties between the regions further. Africa’s regulatory diversity, with each country having its own distinct set of rules and regulations, can pose challenges when implementing digitization projects across the continent.
However, the potential for long-term cooperation between India and Africa is vast. By embracing each other’s strengths, the two regions have a unique opportunity to forge a partnership where shared successes fuel sustained growth.