India Sees Enormous Economic Potential in the Resurgence of East Africa

East African nations are located along the Indian Ocean shoreline and have historically seen significant migration of Indian traders over the centuries. (PTI)

By Amb Soumen Ray, IFS (Retd)

Sub-Saharan Africa, often referred to as SubAfrica, is partitioned into four distinct regions, although there exists considerable overlap within these conventional divisions. These divisions encompass the Great Lakes region, the Sahel (a strip of land immediately south of the Sahara spanning the continent), the rainforest region, and the Democratic Republic of Congo (DRC), which boasts the largest land area in SubAfrica. Facilitating developmental analyses, East Africa is typically delineated into thirteen countries. This roster includes Somalia, Djibouti, Ethiopia, Eritrea, South Sudan, Kenya, Uganda, Rwanda, Burundi, the Democratic Republic of Congo (DRC), Tanzania, as well as the island nations of Comoros and Seychelles.

Positioned within the Horn of Africa and the Great Lakes region, these countries lack substantial reserves of mineral resources, with the exception of the DRC. However, the DRC’s vast wealth has been exploited through centuries of colonialism, the plundering by its former monarchy, and the protracted civil strife spanning decades, leaving little room for meaningful utilization of its natural riches.

East African nations are located along the Indian Ocean shoreline and have historically seen significant migration of Indian traders over the centuries. Furthermore, British colonial authorities brought Indian laborers experienced in railway construction to establish the Kenya-Uganda railway line. Many of these laborers chose to remain in East African countries after their contracts ended, contributing to the region’s diversity and development.

Throughout the area, multi-generational Indian businessmen are visible, having become integral to local communities while retaining a deep connection to their Indian heritage. These entrepreneurs initially engaged in trade using small dhows, eventually progressing in the economic hierarchy to become crucial drivers of economies in countries like Kenya, Tanzania, and Uganda.

Paradoxically, despite East Africa’s vast agricultural wealth and productive livestock, the region remains plagued by poverty. The fertile lands yield copious amounts of milk and food crops such as maize, millet, rice, bananas, papayas, and more. However, due to challenges like limited mechanization, inadequate modern farming tools, and lack of value addition, local populations struggle to capitalize on these resources.

The key obstacles to sustainable development include traditional small-scale farming, insufficient access to modern agricultural technology, and the absence of effective value addition, branding, and marketing strategies. While numerous international organizations and think tanks have proposed solutions, their impact on the ground remains limited. Notably, the East African Community (EAC) was formed in 2000 to address these issues and promote economic cooperation among its partner states.

With a combined population of around 300 million and a GDP of approximately $315 billion, the EAC has become one of the world’s fastest-growing economic communities. The EAC’s focus lies in capacity building and the establishment of Small and Medium Scale Enterprises (SMEs) to foster sustainable economic development and job creation.

One primary area of emphasis is mechanized large-scale farming and agro-processing. By introducing modernized farming techniques and leveraging India’s expertise, Indian enterprises could play a pivotal role in facilitating a “Green Revolution” in East Africa. Similarly, the establishment of SMEs in agro-processing for both non-perishable and perishable goods could significantly contribute to economic growth.

Efforts to utilize local resources, such as papyrus reeds and banana stems, for paper production, as well as extracting Cellulose nanofibers (CNF) from yellow thatching grasses, present innovative opportunities for industrial expansion. Additionally, the dairy industry offers potential, provided that local expertise is involved to navigate complex certification processes and supply chain challenges.

To succeed, Indian businessmen must collaborate with local entrepreneurs, manage raw material value chains, bridge gaps in technical and managerial knowledge, and enhance branding and marketing efforts. The potential is substantial, and Indian entrepreneurship could be a catalyst for successful economic transformation in the region and beyond, leveraging the technological expertise and strategies that have previously eluded Western-funded initiatives.

The author is a former Indian Ambassador and High Commissioner who has served extensively in Gulf, West Asia, and Eastern & Southern African countries. It may please be noted that this is not a prescriptive article but based on the author’s personal experience working in the region as an Indian diplomat.

Disclaimer: Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited.