India backs launch of firm to support African infrastructure projects

The bank’s deputy managing director David Rasquinha said the Kukuza Project Development Company (KPDC), which will become operational in the first quarter of 2016, "is expected to provide specialist project development expertise to take infrastructure projects from the concept stage to commissioning".

Other shareholders in KPDC will be Infrastructure Leasing & Financial Services Ltd, one of India's leading infrastructure development and finance companies, the African Development Bank and the State Bank of India.

The new company was announced at the third India-Africa Forum summit in New Delhi which ended on 29 October.

Exim Bank, which has representative offices in Addis Ababa in Ethiopia and Johannesburg in South Africa, said the KPDC will focus on infrastructure projects that have "specific strategic interest" to India, "provide the entire gamut of project development expertise" and draw on the expertise of its partner companies to "establish a bankable and sustainable implementation format based on an in depth understanding of the concerns of all the stakeholders".

The secretary for the department of economic affairs in India’s finance ministry, Shaktikanta Das, told the summit that his country had lines of credit worth more than $7 billion in Africa as it tries "to strengthen and build up economic and political relationships" with African nations.

An Exim Bank study published earlier this year (161-page / 2.82 MB PDF) said that as of 31 March 2015, 59 ongoing project contracts secured by Indian exporters in West Africa were worth the equivalent of around $1.6bn. Of these, 49 project contracts valued at the equivalent of around $423 million were supported by Indian government-backed lines of credit (LOCs).

According to the study, the projects ranged from electrification schemes and related infrastructure works in Burkina Faso, Cote d’Ivoire and Nigeria, the design, procurement and construction of a railway line in Ghana and the modernisation and expansion of network infrastructure for the Sierra Tel telecoms company in Sierra Leone.

In June 2015, the bank extended a fourth LOC of more than $268m to Tanzania’s government to finance the extension of the Lake Victoria pipeline project.

Last month, India’s government directed the bank to provide a $24m LOC to finance an electricity interconnection project between Cote d’Ivoire and Mali. The bank said the deal brought the number of LOCs it has in place to 200, covering a total of 63 countries with combined credit commitments of more than $12.22bn available for financing exports from India.

Under the LOCs, the bank said it would reimburse "100% of contract value to Indian exporters, upfront upon the shipment of goods / provision of services".

Bilateral India-Africa trade grew by nearly 32% annually between 2005 and 2011, including through the global economic crisis, according to a Confederation of Indian Industry-World Trade Organization report published in 2013 (80-page / 5.5 MB PDF). The report said India-Africa trade is projected to reach $90bn by this year.