Ethiopia and India have been trading since the ancient Axumite days of the 6th century. There is also a symbiotic political relationship when Indian troops helped Ethiopia in 1868 as soldiers of Robert Napier, the British Commander-in-Chief in Bombay and in 1935 when fascist Italy invaded the country.
When India achieved its Independence in 1947, it sent a goodwill mission here and diplomatic relations were established in 1948. Sardar Sant Singh became India’s first Ambassador to Ethiopia when relations were formalized in 1950.
In an interview with Capital’s Teguest Yilma and Kirubel Tadesse, the Indian Ministry of External Affairs Additional Secretary (East and South Africa) Ambassador Gurjit Singh, who paid an official visit to Ethiopia earlier this week, says the two countries’ relations has become “exemplary” with booming trade flow and Ethiopia’s leading access of credit lines coming from New Delhi.
Capital: What brings you to Addis Ababa?
Ambassador Gurjit Singh: I am here this time for the second India-Ethiopia foreign office consultations. We agreed to do this in 2007 during the visit of the Indian Foreign Minister and the first of this meeting took place in 2010. This is the second round and in between two important things took place; first a joint commission meeting between the Deputy Prime Minister and Foreign Affairs Minister of Ethiopia and the Foreign Minister of India followed by the state visit of the Indian Prime Minister to Ethiopia in May, 2011.
So, this is the first structured dialogue after the state visit. The main purpose was to review our growing diversified and vigorous relationship to see how we can continue to guide it and facilitate more constant and better engagement.
Capital: How vigorous would you say the relationship is?
Singh: In our meeting this week we described it as exemplary and as one of the models which many countries now wish to follow. Our political relations are very good and we are diversifying into larger areas of discussions and constant interactions both internationally at the United Nations, international conferences like the one on Climate Change and at G-20 meetings and at the regional level through the Intergovernmental Authority on Development (IGAD) as well as bilaterally.
Similarly on the trade and commerce side there is a substantial movement. Investment in Ethiopia continues to be an area Indians are interested in. And there is also a growing engagement with regard to lending. Today Ethiopia is the largest recipient of India’s lines of credit in Africa.
Capital: How much has Ethiopia received so far?
Singh: The first loan was 65 million dollars for rural electrification in 2006. Between 2007 and 2011 we had five parts of a sugar project loan for 640 million dollars. I am very happy to let you know that the final amount has been offered to Ethiopia so our commitment of 640 million dollars is complete. We are now discussing the implementation of a new loan of 300 million dollars to support the new Ethio- Djibouti railway. I had talks with Ethiopia on how that process will be implemented and how India, Ethiopia and Djibouti can continue to work together.
Capital: This railway project is part of the Ethiopian government’s five year economic plan; do you think the loan will be fully disbursed during the next three or four years to realize the project on schedule?
Singh: The support on the railway is part of India’s support to regional integration in Africa. This is the first time we are doing a project, which covers more than one country; that is why we are going through the procedures rather carefully. The disbursement depends on how the project is implemented which will be in the hands of the Ethiopian and Djiboutian railway corporations. So we are just facilitating and working with them on the feasibility study and from that we will discover how our part of the implementation will come through. Once all that is settled and the project goes on stream, we see no difficulty in periodic and timely disbursements.
Capital: The Ethiopian Transport Minister Diriba Kuma said that since the railway projects are multi-million dollar investments, Ethiopia will solicit more funding from development partners and it will ask for an additional 300 million dollars from India; how are you responding to this request?
Singh: Yes we have received that as well. We have explained earlier this week that at the highest level India has expressed a commitment to the project and whatever India can do for it, we will try and do. But all these are based on technical discussions; so the political commitment is there but we have to make sure the technical discussions goes through smoothly and they lead to practical implementation. That is what we are now focusing on.
Capital: The balance of trade between Ethiopia and India is growing but still favors India; what can be done to further propel it?
Singh: We see trade as an important component of the overall economic matrix. The matrix has three large components and the biggest is investment. The second is Indian loans and the third is trade.
Regarding the trade volume, we set a target in 2006 of about 500 million dollars which was achieved almost entirely through Indian exports. But in 2008 Ethiopian exports to India were 12 million dollars. I am happy to tell you up to 2011 it has become nearly 120 million dollars. The overall trade balance remains in India’s favor since there are so many Indian investors; so many people want to buy Indian machines, goods and services; India is a natural partner of choice for many Ethiopian corporations both public and private. As you grow, you will need more machines, goods, pharmaceuticals and they come from India. At the same time what is happening is your export to India within the span of three years has grown tenfold. One hundred twenty million dollars is of course not giant but it is much bigger than 12 million dollars. So we are very happy that the Duty Free Tariff Preference (DFTP) scheme to which Ethiopia was among the earliest adherents is paying good dividends and enhancing Ethiopia’s exports.
Capital: Is India pushing for a free trade agreement with Africa?
Singh: We have proposed to Common Market for Eastern and Southern Africa (COMESA) a joint study for either a free trade or a preferential trade agreement. We had a meeting of Indian and African regional economic communities in November at which time intense discussions on the issue took place. The term of reference exchanged has been almost agreed to. This is between India’s Ministry of Commerce and Industry and COMESA. COMESA also briefed us that they are now working on tripartite talks with the East African Community (EAC) and Southern African Development Community (SADC).
We have said that when we do the study it should take into account all things which are happening in Africa which COMESA should lead. We will then listen and contribute to the study on how the mutuality can be developed. So this is at a study stage.
Capital: Currently most of the exports to India from Africa are agricultural products and India’s taxes on such products are very high – 30 to 50 percent. How do you see this working for Africa?
Singh: In India nearly 60-70 percent of people are agriculturalists. So whatever we do in international trade we have to make sure that their livelihood isn’t affected. Having said that, India is such a large market that there are many commodities like chickpeas, lentils, pulses, sesame seeds and many others which come from all over the world and now they are coming from Africa thanks to the DFTP scheme. We believe this scheme in small areas where perhaps direct African exports do not benefit today are not hurdles to growing African trade with India. I have given the growth figure of Ethiopia, there are so many African countries which have benefited from the DFTP scheme and beyond. The sheer size of India’s market allows so many exports that trade incentives are not the only way to grow. While certainly we like to be responsive to the African desire for more trade, I believe the trade cannot only be incentive led. It has to be market driven and I believe that is happening.
Capital: Recently we are seeing a large number of foreign businesses coming to Ethiopia particularly to Gambella to lease, sometimes controversially, very massive sizes of land for commercial farms. India’s companies take the biggest share from the arriving organizations; how do you see this?
Singh: I think these questions are better addressed to Ethiopian authorities because India has no policy of promoting investment only in one particular sector. We are in favor of more Indian investments into Africa. It is for African countries to choose where that investment is possible.
We are aware that the Ethiopian government has put aside a certain amount of land for foreign investors. They have done this under their own law and ideas. I understand that a large proportion of the land given so far has been to Indian investors. The Ethiopian government has told that they find Indian investors reliable, and keeping their promise and time schedule; so be it, we are happy that investment is coming. We are fulfilling Ethiopian expectations of investment in the sector they have chosen. We advise the companies who are investing in the agriculture sector that they must abide by Ethiopia’s rules. They must abide by all the rules and lease agreements and follow sustainable agriculture practices and I am quite certain this is going to happen. We have read from time to time about some controversies; we have a dialogue with our companies and they give us their point of view. I am reasonably satisfied that a good dialogue is going on between the companies and the government of Ethiopia and to an extent us because we are only playing a facilitating role. We think this should be amicably handled but ultimately it is between the Indian investors and the government of Ethiopia.
Capital: What would you say are the main trade barriers between India and Africa?
Singh: Traditionally much of African trade has been geared to partners under trade incentive schemes. We are trying to say that trading with India means first creating a complementary relationship with regard to exports. Many of the things Africa exports are also what India exports; the complementary can be established by cross Indian investment to increase your export to third countries. So don’t just see India-Africa trade or Ethiopia- India trade as bilateral trade but also see how Indian investment enters Ethiopia to help you grow exports to third countries.
Secondly we believe that we should not look at only incentive driven trade, we should look at market oriented trade. If African countries study the Indian market and what we are exporting and reoriented their production, like it is happening with chick peas, green pea, green grams and many others, you find more and more exports to India. I see a very good prospect. In fact if you see the overall India-Africa trade, it is in Africa’s favor. South Africa and Nigeria are the biggest but exports from other African countries’ such as from Malawi, Mozambique, Benin, Tanzania, Ethiopia and Kenya are growing up.
Capital: What opportunities are there in India for Ethiopian businesspeople?
Singh: Food processing is one; food you grow and process here. For instance sesame should not be sent only as a seed but as oil as well. Palm as palm oil, growing rice and setting up a processing center and sugar factories as well. And you are also a big producer of leather as well setting up more tanneries here is an area we are encouraging investments.
Capital: Ethiopia is trying to accede to the World Trade Organization (WTO) which should allow it to access more markets. However some WTO members are expressing concerns over Ethiopia’s policy in the telecom and financial sectors; what is India’s assessment on Ethiopia’s policy on the two sectors and its ambition to accede the WTO?
Singh: India is a constant supporter of Ethiopia’s accession to the WTO. We are contributing to capacity building; there are training programs in India to which Ethiopian negotiators have been invited to participate and talk to our people. We have received a request for some Indian experts to come which have discussed earlier this week in our meeting and we are working on how they come and help. This is only the tactical and strategic side; if some partners of Ethiopia consider the financial and telecom sectors are problems, I think Ethiopia will need to address issues as well. They are both relevant; one is the capacity building and the other is actually dealing with the issues and both will need to be tackled at the same time.
We believe that every country should be given a reasonable time to accede to what is required; it cannot be done at once. You cannot say you do this or I won’t let you in; it should be more like ‘let’s work on a plan’ and the plan has to be engaged by everyone. That is the broader policy we follow and we are in favor of bringing Ethiopia to the WTO.
Capital: In what other capacity building programs is India assisting Ethiopia and Africa in general?
Singh: India at the two India-Africa Summits has committed almost 1.2 billion dollars for capacity building in Africa. This includes establishing nearly 100 new institutions in Africa. With Ethiopia we are establishing a vocational training center which should be functional by the end of 2012. We are also working to establish a new IT center on which technical discussions are to begin soon. You may recall the very successful pilot program in Ethiopia of rural women solar engineers trained in India with Barefoot college. Now I believe there is a sufficient core of them in Ethiopia; we want those trained women to become trainers so Ethiopians can train themselves. We are looking to civil society to build a center for them here.
We also have a rapidly growing engagement with IGAD. In November we signed an India-IGAD memorandum of understanding on cooperation. We also are planning to establish some institutions with IGAD. For example they are consulting us about a farm science center to help rural agriculture based on scientific research. That should be established in Ethiopia and we worked on plans for its creation this week. There are several large centers which we have asked the African Union to find locations which include India-Africa integrated textile, and food processing clusters, academy for rural governance and administration, pan African university for life sciences, civil aviation academy and medium term extension. So East Africa and Ethiopia are free to bid for those; those discussions are ongoing.
Besides these we have rapidly increased high technology positions available to Ethiopia; I think they are more than 120. We also increased scholarships and special agriculture scholarships are open to Ethiopia; also I think eight Ethiopians have been accepted for post doctorial agriculture research this year for a second round. And we have a large number of special training programs for Africa under which a large number of Ethiopians are coming to India. India is now offering about 22,000 such scholarships over the period of three years and we are encouraging Ethiopia to make a great utilization of it.
Capital: What are the next steps for the Africa-India commitments on the pipeline?
Singh: India is going to have the India-Africa Technology Ministerial Conference in India on the 1st and 2nd March, Ethiopia is also invited. We are also going to have the India-Africa Trade Ministers’ Conference for the same set of Trade Ministers who met at the Summit to which Ethiopia will be invited on 17th of March.
On the 17th of March we will also propose to launch the India-Africa joint business council which was proposed at the Summit. And 18th March onwards for three days will be the India-Africa conclave; so you can see a lot is happening.