At the third edition of the India-Africa summit on Thursday, India promised a new credit line of $10 billion to Africa over a period of the next five years.
But the past does not inspire confidence when it comes to the disbursal of India’s line of credit. The government now says that it will put in place a review mechanism to ensure funds are released on time and projects meet their deadlines.
A line of credit (LOC) is a financing mechanism through which the Exim Bank (Export-Import Bank of India) extends support for the export of projects, equipment, goods and services from India. Exim Bank extends LOCs on its own and also at the behest and with the support of the government of India.
Since the first India-Africa summit in New Delhi in 2008, India has pledged $7.4 billion in LOC. But it has disbursed only $3.5 billion and given approval for a total of $6.8 billion.
“We hope that with a better review mechanism, we would be able to disburse the money in time. Every country acknowledged the importance of a review mechanism at the summit and we will be putting it in place very soon,” a government official said.
This concessional credit is responsible for the creation of about 137 projects in 41 countries, but many of them are far from over.
“We have our own regulatory mechanism in disbursal of funds and we have a policy of taking up projects that the countries in the continent want us to do. All these processes need to be streamlined,” said an official.