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Tuesday, May 30, 2023

Co-Investment: India, UAE and Africa

India and UAE join forces to invest in Africa.

India has been an active investor in Africa for decades. Its $74 billion in stock amassed between 1996 and 2021 makes it one of Afria’s leading inbound investors, and that participation is growing as China pulls back. According to government statistics, India’s bilateral trade with Africa will grow from $56 billion in 2021 to $89.5 billion in 2022, from $56 billion the year before.

In comparison, the United Arab Emirates (UAE) is a latecomer; but it has considerable financial strength. Its initial investments in Africa have been focused on agriculture and driven by food security concerns. Now it is looking to expand its involvement and is doing so in partnership with India.

This makes perfect sense. Indian TNCs investing in Africa are mainly concentrated in sectors such as agribusiness, pharmaceuticals, information and communication technology, and energy. India has a well-trained workforce involved and has a relatively transparent record in its dealings with Africa. In the case of the UAE, it is a regional financial center with expertise in energy, transport and logistics.

The skills of the two countries are complementary. Their ties have recently strengthened with the comprehensive economic partnership agreement between India and the UAE coming into force last May. India is currently the UAE’s second-largest trading partner, while the UAE is India’s third-largest trading partner.

A notable example of close cooperation was the joint India-UAE healthcare mission to Tanzania last August. The government-led task force focused on healthcare, particularly the establishment of a new diagnostic centre, and explored the possibility of joint action with Tanzanian government officials and local healthcare providers.

Accompanying the delegation was a large group of private sector companies seeking to explore investment opportunities in Africa. These include Apollo Hospitals, Fortis Healthcare, Medanta and NephroPlus from India; while companies based in the UAE include G42 Healthcare and Tamouh Healthcare.

There is also growing international pressure to shift some vaccine production to Africa in the wake of the Covid-19 pandemic. India and South Africa are leading moves to give up certain intellectual property rights in order to increase vaccine production in Africa, said Stephen Karingi, director of the African Regional Integration and Trade Division at the United Nations Economic Commission.

India’s expertise in generic drug manufacturing is “vital” for this to happen, he said, adding, “India says healthcare delivery will be key to its inclusive and transparent development model with Africa.” .”

Another example of closer cooperation between India and the UAE on investment in Africa is a multibillion-dollar plan to transform the Tanzanian capital Dar es Salaam into a leading transport and logistics hub. The key players are AD Ports Group, an Abu Dhabi-based logistics, industry and trade facilitator; Adani Ports and Special Economic Zone, India’s largest integrated transport utility; the two signed a Memorandum of Understanding (MoU) in August. ) to explore co-investment opportunities in Africa.

Mohamed Juma Al Shamisi, Group CEO of AD Ports, said in a statement, “This MoU has significant implications for Tanzania’s ability to transform itself into an African trade hub and our ability to further develop global capabilities and connections Bringing goods to market more efficiently.”

However, the joint investment in the Tanzanian port all but collapsed in late January when a report by U.S. short-seller Hindenburg Research triggered a massive sell-off in Adani shares, just as Indian billionaire Gautam Adani’s Flagship Group completes $2.4 billion public fundraising prior to maturity.

In response, Abu Dhabi International Holding Company (IHC) committed to invest US$400 million for a 16% stake offered by Adani Enterprises. This is the basis for IHC’s AED7.3 billion (US$2 billion) investment in Adani last April.

But a last-ditch effort by IHC and several Indian billionaires to salvage the deal did not sway international or domestic retail investors; at the last minute, Adani called off the public offering to protect investors.

While the group’s listed companies, including Adani Ports, lost more than $100 billion in market value at the time, the billionaire insisted it “would not have any impact on existing businesses and future plans”.

Dar es Salaam’s prospects as Africa’s trading hub now depend heavily on Adani’s damage-limiting skills and his ability to deliver on his commitments.

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