India-Based Companies Turning to Africa, Consumer Businesses

India-Based Companies Turning to Africa, Consumer Businesses

Now that Africa — and specif counties within the continent — have been deemed as the fastest growing on the globe, more and more nations are developing businesses and projects which will enable them to benefit from the flourishing emerging market.

Bolstering natural resources and agricultural products, SMEs in India have increasingly expressed interest in doing business in Africa, according to The Economic Times.

“Companies have asked us to help them acquire or invest in high growth companies in Africa. We expect the India-Africa corridor to grow manifold in coming years,” Hasnen Varawalla, Barclays Africa banking investment head said in the report.

India-based entities have however been informed about the unpredictable business climate that comes along with most emerging markets — especially in underdeveloped regions in Africa.

“We are aware that deals take a longer time to transact and there are a lot of risks between signing and closing a deal due to a lot of local factors,” Varawalla added.

Through business investments and acquisitions, according to The Economic Times, at least twelve large-scale India-Africa business deals are expected to take place this year.

Demographic stats in the report note that by 2015, India-Africa trade is expected to almost double in a stretch to hit the $90 billion benchmark. Trade between India and Africa currently stands at $57 billion.

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In addition, SME interest spikes in consumer companies and arable African land have peaked. Currently, India is the largest foreign leaser of farmland in Ethiopia, the report said.

“India is just as investment-hungry as China, demonstrating interest in Africa’s mining resources, as well as the continent’s burgeoning trade and consumer sectors. Over the last four years, our Africa-India business has grown at a compound annual growth rate of 60 percent,” Diana Layfield, Standard Chartered Africa CEO told The Economic Times.

“Indian companies are seeking higher margin returns as their domestic market becomes more competitive — and Africa is one continent which presents such upside opportunity.”