An African century, facilitated by India
Africa's abundance of resources and demographics present tremendous opportunities, but challenges like poverty and climate crisis persist.
The recent G20 summit presided over and hosted by India marks a critical turning point for economic prospects in Africa. As the emerging leader of the Global South, India marked its presidency of the G20 by adding the African Union as a permanent member. India’s move goes beyond diplomatic symbolism. Given India’s leadership in creating Digital Public Infrastructure (DPI) and fostering financial inclusion for inclusive development of its citizens, India can play a catalytic role in empowering inclusive development in Africa.
Thabo Mbeki, at his inauguration as president of South Africa in 1999, spoke of entering “the African century”. Africa, with 60% of the world’s uncultivated arable land, is well-positioned to feed a burgeoning global population, projected to reach 11 billion by the end of this century. Africa boasts an abundance of natural resources, including 8% of the world’s oil reserves, 7% of its natural gas, 18% of its gold, 53% of its diamonds, and 75% of its platinum.
The continent leads in the production of industrial metals such as copper and iron ore, controlling approximately one-third of the world’s remaining mineral resources. Africa’s vast repositories of rare earth elements, essential for cell phones, LED screens, energy infrastructure, and defence technologies, make it a global powerhouse.
More than two-thirds of the world’s cobalt, crucial for lithium-ion batteries, is found in Congo, while around 35% of the world’s bauxite, a key component in aluminium production, is located in Guinea. Africa’s demographics complement this promising picture. Seventy per cent of sub-Saharan Africa is under the age of 30, representing a market dream for companies seeking new consumers and entrepreneurial talent.
Africa’s population is expected to double in the next 35 years, comprising nearly 30% of the world’s population by 2050, which would exceed the combined population of China and India. The abundance of arable land, mineral resources, demographics, and diverse cultures that attract tourists, make Africa an epicentre of tremendous opportunity.
However, it’s essential to recognise the challenges that Africa faces. In 2021, about 490 million people lived under the poverty line of 1.90 PPP$/day in Africa.
In 2013, sub-Saharan Africa was home to over half of the world’s poorest people, with 389 million individuals living on less than $2 per day.
In 2021, Africa contributed approximately 3.6% of global Gross Domestic Product (GDP), 2.7% of world exports, and 3.8% of inward foreign direct investment. UNDP estimates that growth has not been inclusive in most African economies. The climate crisis poses an increasing threat, particularly to the agricultural sector.
A fifth of Africans suffer from chronic hunger, exacerbated by flooding. While Africa’s contribution to global emissions remained below 3% between 1850 and 2020, the continent lost between 5% and 15% of its GDP each year due to the climate crisis. Security concerns persist, with four of the world’s six deadliest countries in Africa accounting for 77.3% of total terrorism deaths in 2021.
To enable inclusive development in Africa, India’s leadership in Digital Public Infrastructure and digital financial inclusion holds immense significance. It provides an opportunity to address the digital divide and empower African nations with the knowledge and tools to embark on their digital journeys. India’s resounding success in financial inclusion through the Pradhan Mantri Jan Dhan Yojana (PMJDY) is a testament to the transformative power of financial access.
The PMJDY has facilitated over 500 million bank accounts for marginalised individuals, demonstrating that financial inclusion is not an abstract ideal but a tangible reality. In Africa, where economic inclusion and poverty alleviation are paramount, India’s expertise in financial inclusion offers invaluable guidance. By emulating India’s achievements, African nations can extend financial services to their most vulnerable populations, unlocking economic opportunities and fostering entrepreneurship at scale. India’s success story in Digital Public Infrastructure (DPI), exemplified by Aadhaar, UPI, and CoWin, is inspiring. DPI provides the rails upon which user-friendly digital products and services are built, benefiting entire populations.
This infrastructure has enabled India to streamline governance, boost financial inclusion, and respond effectively to crises like the pandemic. Aadhaar, India’s biometric identification system, has provided over 1.2 billion citizens with a unique digital identity, streamlining access to government services. Unified Payment Interface (UPI) accounts for 68% of all payment transactions by volume in India.
In January 2023 alone, eight billion transactions worth nearly $200 billion occurred, involving 300 million people and 50 million merchants. CoWIN, a critical component in India’s pandemic response, managed the world’s largest vaccination programme, showcasing the scalability of DPI.
The economic impact of DPI is substantial, with Digital ID alone capable of unlocking economic value equivalent to 3–13% of GDP, averaging a 6% improvement for emerging economies. During the pandemic, the Indian government served its entire population of beneficiaries through digital cash transfers, compared to just 16% for other countries.
In conclusion, as India welcomes the African Union to the G20 and showcases its digital prowess, it is poised to facilitate a transformative journey for Africa. India’s digital infrastructure not only has the potential to bridge the digital divide, but also to empower African nations to chart their course towards inclusive prosperity.
Krishnamurthy Subramanian is executive director, International Monetary Fund. The views expressed are personal
Continue reading with HT Premium Subscription
