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Is Africa next hub for Indian firms?

business Updated: Mar 26, 2012 23:07 IST
Vivek Sinha
Vivek Sinha
Hindustan Times
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Africa is fast emerging as Corporate India's next growth destination as companies queue up to invest in the continent where firms from populous neighbour China have already made significant strides.

Richard Fenning, global CEO of Control Risks told HT that Africa is a "profoundly changed place from what it was five years ago." Control Risks is a global consultancy firm that advices companies on investment risks across the world.

Fenning conceded that Chinese firms had a head start in grabbing investment opportunities across Africa but added that Indian firms can well catch up. "The race is not over yet." He said that sub-Saharan Africa is expected to grow at 8% which is more than in the BRIC (Brazil, Russia, India and China) economies. Countries on the eastern coast such as Kenya and Mozambique are also attractive investment hot spots.

The African Economic Outlook estimates that China and India account for 3% of FDI (foreign direct investment) in ten African nations, with India's share being larger than China's.

So, the sectors that offer investment opportunities include oil & gas, telecom, infrastructure and information technology. In fact, Indian companies have been making investments in Africa for quite some time now. Two years ago Bharti Airtel grabbed limelight when it acquired African assets of Kuwaiti telecom firm Zain for $10.7 billion.

Fenning cautioned that it would be wrong to assume that all kinds of risks have vanished across Africa. Control Risks in its Risk Map 2012 has marked several regions in Africa as high to medium risk zones with political and security risks. "Risks and opportunities go hand-in-hand. If Africa were perfectly safe with no political instability then it would not present the opportunities present today. Indian investors need to look at the countries they are investing and look at the specifics of the deal." he said.