Saturday, October 27, 2012

A hard, tough lesson for Indian companies in Africa ..

Indian leaders with Ethiopian Finance Minister 
Last year when PM Dr Manmohan Singh visited Africa, especially Ethiopia, he had signed agreements between Ethiopian govt and Indian private investors who were ready to invest anything upto $ 5 billion in Africa to help it grow. News was also rife that while the 17th and 18 th century were the times that Europe colonised the rest of the world, including US, the 21 st century is for Asia to colonise Africa and possibly Europe. Tata and Mittal taking over the world's top stellar companies were an instance at point.

The Hindu news item where Ethiopian Govt welcomed Indian PM and Indian companies.  
There was heavy international condemnation of how native farmlands in Africa were being grabbed by greedy Indian companies in the guise of helping Ethiopia and Africa develop.  Click here for link ..

Sadly the news we read these days is that these companies are facing tough times in Africa, especially Ethiopia. Initially these companies had plans to grow Jetropa, a plant used for the extraction of biofuel, which could revolutionise the world fuel demand. But sadly, the first year the results were not that encouraging and companies like Emami have come out of Jetropa cultivation and gone into other plants which require more water.
Arid land becoming green, courtesy Guardian UK.   

Water scarcity is the greatest factor that is threatening Indian companies in Africa. While Chinese companies have also invested heavily in colonising Africa, it is known what their experience has been.

Some of the reasons cited for the slow development of the area is

1. non-availability of water, being an extension of the Saharan Africa, water still remains the greatest threat to this land
2. Non-availability of right modes of transport, the available ones often expensive
3. Poor infrastructure connecting towns and regions and within these places for health, education etc.
4. Absence of trained labour
5. poor transportation infrastructure
6. Government inefficiency, resulting in poor decision making, lack of planning and vision, non-uniform development of different regions
7. high costs of equipment by way of taxes, duties, service charges, maintenance etc. to help in mechanisation.
8. A hostile local administration and people is being silently mentioned as an important factor behind the slow pace of growth and development of the area.

We find all these point to the poor development of the area.

I believe the companies which hold on to Africa, in spite of all these disadvantages and inconveniences will emerge stronger and capable at the end. In the long run, it is not how smart one is that matters, but how persistent and hard working one is, that matters.


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