CONSTRAINTS TO INDIA AFRICA TRADE

1) Limited Access to Trade Finance:

Due to limited trade and project finance options, stringent regulatory requirement and higher compliance cost, the
trade finance gap is estimated nearly above US$ 120 Billion. This has forced withdrawal of many international banks
and correspondent banking relationships from Africa.
2) Weak Infrastructure and Supply Side Capacity:
With huge infrastructure deficit in Africa like lack of roads and other transport facilities, logistic and storage
facilities, and energy and water supply, exporters don’t get proper channel to market their products. This makes the
cost of transportation, logistics and insurance very high in African regions. Hence Indian exporter transfer the risk of
higher transaction cost to buyer by selling theme on FOB basis instead to CIF basis. Even the export growth is
affected in India due to infrastructural problems like weak communication, breakdown disrupting production
schedule and power shortages.
3) Weak Trade Complimentary:
India Africa complement each other in trade as raw materials are produced by Africa which is used to manufacture
intermediate goods in India. With moving up the commodity value chain, the trade complimentary is weakened.
4) Market Access Issues:
India generally faces problems in accessing the African market. But on the other side, due to less awareness about
DFTP Schemes offered by India to 26 African countries, export from Africa are not in full potential. Commercial wings
of high commission in Africa and Indian embassies in Africa are trying to increase the reach of the scheme.
 ROLE OF EXIM AND AFREXIM BANK

1) Promoting trade between Africa and India

Numerous programs by Exim india have been helping in the development of Africa
Exim india has offices in Abidjan, Coted’ivoire, addis, ababa, Ethiopia and Johannesburg
The two banks have collaborated on the Africa-India trade promotions for different bi lateral trade

2) Lines of credit and Co-Financing

LOCs have helped to enhance the bilateral trade and investment relations
The facilities help the buyers in overseas to finance multiple development projects’ equipment and other goods
EXIM india also extends its own commercial LOCs to financial institutions such as TDB , BOAD, Indo-Zambia Bank etc

3) Project Finance
Exim india provides smooth support to new projects in engineering, construction or procurement business
During 2017-18 more than 20 projects amounting over US $7 billion covering over 17 countries in Africa were undertaken
Afrexim bank export program supports decommoditization of entire continent’s exports

4) Buyers credit
The product mentioned above under BC-NEIA was introduced in April 2011
Exim India sanctioned an aggregate US$1.86 billion under BC-NEIA for 15 projects in Africa
5) Finance for joint ventures overseas
Exim India supports Indian companies for their overseas operations by this product
Support includes loans and guarantee and equity finance as well
Till 2018 Exim india has supported 48 indian companies in 12 African countries (Rs 51.3 billion)

6) Joint collaboration with AfDB

Exim India supports projects which align with AfDBs “High Fiver” priority goals
Both fund and non fund based supporting is provided by Exim india to indian companies

7) Exim India’s Country Mission

The mission endeavours India’s engagement in countries for commercial engagement while assisting countries for
development objectives