According to the review by the Export-Import Bank of India (Exim Bank), the investments represented 26 foreign direct investment (FDI) projects that supported creation of nearly 4,000 jobs.
Titled: “Indian Investments in East Africa: Recent Trends and Prospects”, the study lists the top recipient of the FDI as the hospitality and communication sectors. The major business activities attracting Indian investment during the period were the construction industry as well as manufacturing, ICT and internet infrastructure.
“Tanzania received US$829 million Indian investment representing 26 FDI projects and supporting 3,689 jobs during 2007 to 2016. The major sectors receiving investment are hotel and tourism (US$154 million), communication (US$150 million), industrial machinery, equipment and tools (US$99 million), financial services (US$99 million) and healthcare (US$72 million),” reads the report.
The study also has it that major Indian companies and brands present or operating in Tanzania include Bank of Baroda, Bank of India, Canara Bank, Tata International Limited, Bharti Airtel, National Mineral Development Corporation, insurance companies (LIC, NIC, United India, etc), Kamal Group of Industries, Escorts, Ashok Leyland, Eicher, Bajaj, TVS, Kirloskar, Shapoorji Pallonji, Larsen & Toubro, and Godrej.
“The major business activities in Tanzania attracting Indian investment during 2006 to 2017 are construction (US$224 million), manufacturing, ICT and Internet Infrastructure (US$150 million), business services (US$108 million ) and extraction (US$ 50 million),” it adds.
According to Tanzania Investment Centre (TIC), investments in the country with Indian interest between 1990 and May 2017 cumulatively amounted to US$2.13 billion representing 420 projects/companies that supported employment for about 54,406 Tanzanians.
The agency says that major areas of investment from India during the period were manufacturing, transport, agriculture, tourism, construction, services, energy, financial, natural resources, telecom, human resources, broadcasting and computer. Separately, an amount of US$ 518.66 million has been invested by Indian companies in export and special processing zones across the country, supporting 3644 jobs in 18 companies.
Local enterprises have also begun to make investment inroads into the Indian market. In a recent economic update, the Indian High Commission to Tanzania lists three organisations that have invested in India.
These are Export Trading Group, which has processing plants for pulses in Maharashtra and Gujarat and Techno Brains that has an IT office in Hyderabad while Zanzibar Tourism Promotion Centre operates in Mumbai.
Figures in the Exim Bank study put the value of Indian investments in the EAC bloc during 2007-2016 at US$3.86 billion of which US$2.1 billion was invested in Kenya. The capital injection was made in 111 FDI projects that supported creation of 16,556 jobs.
Indian investments in EAC peaked in 2009 at US$808.7 million. The total amount of capital investments received by EAC from India during 2007 to 2016 represented 10.3 per cent of total Indian FDI in Africa.
Kenya accounted for the largest share of Indian investment during the period with a share of 54.1 per cent among the EAC countries, followed by Tanzania, Uganda, Rwanda and Burundi
“During 2007 to 2016, Kenya has received Indian investment amounting to US$2.1 billion in 50 FDI projects, supporting 9,851 jobs in the country. The major sectors receiving Indian investment during 2007-2016 in Kenya are coal, oil and natural gas (US$558 million), communications (US$474.6 million), real estate (US$307.1 million ), automotive OEM (US$ 213.8 million) and chemicals (US$ 168.4 million ),” the bank notes in the report.
“Over 60 major Indian companies have invested in various sectors including manufacturing, real estate and construction, pharmaceuticals, telecom, IT & ITES, banking and agro-based industries. Indian investments have resulted in creation of thousands of direct jobs to Kenyans. Indian pharmaceutical companies have a substantial presence in Kenya,” it adds.
To promote commercial ties between them, Kenya and India signed a bilateral Double Taxation Avoidance Agreement (DTAA) in 1989. Its revised version was signed in July 2016 and came into force on August 30, 2017.
Indian investments in Uganda have been mainly in manufacturing, trade, agro-processing, banking, sugar, real estate, hotels, tourism and information technology. Major Indian firms present in Uganda include Bharti Airtel, Devyani International Pvt. Ltd., and A2Z Maintenance & Engineering Services Ltd.
Uganda received Indian investments amounting to US$ 699.4 million covering 26 FDI projects and supporting 1,928 jobs during the period. The major sectors attracting in which the Indians invested were communications (US$483.5 million), healthcare (US$61.1 million), non-automotive transport OEM (US$60.6 million), financial services (US$44 million) and leisure and entertainment (US$38.1 million).
“Major business activities receiving Indian investments in Uganda are ICT & Internet infrastructure (US$413 million), retail (US$110.8 million), manufacturing (US$60.6 million), construction (US$49.4 million) and business services (US$46.9 million)
In Rwanda, the Indians invested a total of US$ 227 million during the review period that went to eight capital investment projects that have supported 1,056 jobs. The major sectors receiving Indian investment in Rwanda have been communications (US$106 million), pharmaceuticals (US$ 65 million), healthcare (US$44 million), and financial services (US$11 million).
Eastern African countries have historically enjoyed close economic ties with India and much of it is through investment-led trade, in sectors like textiles, agribusiness and in natural resources. Factors attracting Indian investors to the region include macroeconomic stability, its strategic location and the size of the regional market.
Last year, the EAC bloc recorded a growth rate of 5.3 per cent surpassing the average growth rate of the continent at 2.2 per cent. The region, which also has the largest number of regional economic communities (RECs) and inter-governmental regional bodies, offers a market access to a population of over 145.5 million and has a combined GDP of US$147.5 billion.
Its other competitive edge is qualification of the EAC partner states for duty-free access to the United States market under the African Growth and Opportunity Act (AGOA) as well as EU’s “Everything But Arms” initiative, under which all products from LDCs except arms and ammunitions have preferential access to the EU market.
“East Africa is one of the economically vibrant regions of Africa. The proximity of East Africa to Indian Ocean provides an added advantage to increasing trade and investment relation with India,” reads the Exim Bank report.
“The current scale and pace of India’s investment flows with East Africa is unprecedented even though it constitutes a very small part in comparison to few other regions and the world economy,” it adds.
The study has it that during 2016/17, Indian direct investments in the East African Community (EAC) countries stood at US$12.9-million. Kenya received highest outward investment in the region accounting for 60.5 per cent of Indian direct Investment to the region, followed by Uganda (25.6 per cent) and Rwanda (12.4 per cent).