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India’s G20 Presidency opens up trade opportunities to African Union as a permanent member

NewsIndia’s G20 Presidency opens up trade opportunities to African Union as a permanent member


India’s G20 Presidency on Saturday witnessed a transformative change with the induction of the African Union as a permanent member of the grouping, a move which will strengthen the G20 and also strengthen the voice of the Global South, of which India has been a staunch advocate. “The African Union has been made a permanent member of the Group of 20 countries,” Prime Minister Narendra Modi said on Saturday in opening remarks at the 18th G20 Leaders’ Summit, as he invited the AU, represented by Chairperson Azali Assouman, to take a seat at the table of G20 leaders as a permanent member.

Bringing in the African Union—a bloc of 55 countries from the African continent that was launched in 2002—as a member of G20, has been a key India objective to fructify during the ongoing G20 summit. In June 2023, Modi said that he had written to G20 counterparts to provide the African Union with full membership at this G20 Summit. The move has since been gaining traction with Minister of Commerce & Industry Piyush Goyal making a strong pitch for India and Africa to work together to build more robust, diverse and resilient supply chains, redefine the parameters of engagement and explore newer sectors for cooperation, at a recent industry conclave on the India-Africa growth partnership, organised by EXIM Bank and CII.

The two partners are opportunely placed with India committed to deepening trade and investments with Africa and increasing knowledge and technology transfer with the region. The India-Africa trade volume that stood at nearly USD 100 billion in 2022-23, has the capacity to go beyond doubling the trade volume to USD 200 billion by 2030, considering that both regions together have 3 billion population with very favourable demographics.

The induction of AU in the G20 comes amidst implementation of the Africa Continental Free Trade Area (AfCFTA) agreement, which complemented with the strong transportation and logistics networks, will help boost bilateral trade flows between the two sides. The Secretary-General of African Continental Free Trade Agreement (AfCFTA) Secretariat Wamkele Mene points out that the establishment of the AfCFTA not only promotes continental trade and economic integration in Africa but also supports economic integration and trade facilitation between Africa and the rest of the world as the objective of the agreement is to increase both intra-African trade and trade with the rest of the world in made-in Africa goods and services”.

Markus Engels, Secretary General of the Global Solutions Initiative feels that the current and upcoming G20 presidencies present a major opportunity for progress, since the Indian presidency will be followed by Brazil and South Africa. “As the focus of the G20 shifts to the Global South, we need to ensure that southern voices, perspectives and issues are right at the top of the global agenda – especially for problems like climate change that disproportionately affect nations from the Global South. Both regions need to work together if we want to have an impact,” says Engels. Furthermore, with India, Brazil and South Africa at the helm of the G20 from 2023 to 2025, it will also be crucial to build bridges between the G7 and G20, Engels adds.

According to Secretary General of CUTS International Pradeep Mehta, AfCFTA is a tremendous milestone in the decades-long effort of the African Union to integrate the economies of member states and boost both intra-Africa trade and trade with the rest of world. The AfCFTA has the potential to change the fortunes of the African continent, according to Mehta who points out the G20/B20’s Council for Africa’s Economic Integration’s work which can help AfCFTA create a common market in Africa.

The continent has huge opportunities for India and the rest of G20 to explore. With African countries eying higher growth rates, there will be greater demand for financing trade, infrastructure and development, as per IMF, Africa’s financing gap is estimated to be around USD 345 billion and the India backed Lines of Credit extended by India Exim Bank is helping by augmenting finance for development projects. Sustainable development of infrastructure holds the key to African economic resurgence. According to African Development Bank, the infrastructure deficit in Africa is estimated to be around USD 100 billion.

In the area of renewable energy India could come in to establish inter-connected grids served by clean energy, agrees Hugues Judicael Mbadinga Madiya, Minister of Investment Promotion and PPPs of Gabonese Republic. The renewable energy sector opens up newer avenues for investments and Indian companies are actively engaged in the country across sectors including infrastructure development, mining, agriculture and education, according to Madiya. Malawi has initiated key steps to unlock the potential of the SME sector and the Trans-Gambia Corridor project is creating new investment opportunities for Indian companies.

Christian Kastrop, Managing Partner of the Global Solutions Initiative points to the climate issue. Existing SDGs and development finance is insufficient in terms of volume, process, and targeting. This also requires strengthening the role of the Global South at the G20, such as including the African Union. This could develop a non-arbitrary new global finance source with continual growth to finance the global commons/SDGs.

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