Role of MSMEs in enhancing Intra-COMESA trade

COMESA 2018 Special Report, By Ambassador V B Soni*

COMESA 2018 Special Report

Skill development is intricately linked with manufacturing growth. Over the last ten years, Indian Government and Industry have taken strident steps to fast-track the country’s manufacturing growth.

The Common Market for Eastern and Southern Africa (COMESA) is fast proving to be the engine of growth within its member states across diverse fields. Through its think tanks and strategic planners, it is in the forefront preparing blueprint for member states to follow to make it a cohesive bloc during its forward march.

I feel privileged to share my experience of being directly involved with Africa for almost 14 years on this important subject. As former Ambassador of India to Senegal, Mali, Mauritania, Guinea Bissau, Cape Verde and High Commissioner to the Gambia concurrently (1990-94), I gained deep insight into the prevailing economic situation of these countries, especially in the western region, as well as the other challenges confronting countries of the continent.

Later on, as Chairman of the Overseas Infrastructure Alliance (OIA) India Pvt. Ltd. for close to a decade (2005-2015), I understood priorities of individual countries in the task of nation-building. These came to the fore during my many close interactions with the Presidents/Prime Ministers, senior Ministers/planners/decision makers/top functionaries and business leaders across the African continent. The countries in COMESA were my top priority.

Based on that insight, I propose to dwell on how to harness people’s power in COMESA region through human resource skill development and entrepreneurship, and to furthur suggest how the Indian experience can be of direct interest in the matter.

Let me start with ‘Skill Development’. Everybody agrees that African countries need to develop their physical infrastructure, modernise their manufacturing and farming sectors, introduce capacity building initiatives, and expand education and healthcare services.

At the India-Africa Forum Summit held in 2015, India offered Africa concessional credit of $10 billion over the next five years. A grant assistance of $600 million was also offered, including an India-Africa Development Fund of $100 million and an India-Africa Health Fund of $10 million. It is necessary that our partnership is properly aligned with critical goals like UN’s Sustainability Development Goals, Food Security, Energy Security, Climate Change Mitigation, etc.

Skill development facilitates the conversion of a young working-age population – that is in the 15-64 years bracket – into productive human assets.

India and Africa, together, account for nearly a third of the global population today. The majority of our populations are in the working age-group. India’s working age population is estimated at about 65 percent of the total population as of 2013.

Likewise, Africa has the youngest population in the world with an estimated 200 million people aged between 15 and 24. It is also estimated that this number will double by 2045. If this trend continues, the continent’s labour force will become the largest in the world, surpassing that of both China and India, according to a 2010 report by the McKinsey Global Institute.

Through massive skill development initiatives, this large working-age population can be developed into a highly skilled industrial workforce to power rapid industrialisation and manufacturing growth.

The Government of India, under Prime Minister Narendra Modia, has accorded high priority to skill development. In July 2015, the ‘Skill India’ mission was launched whereupon particular emphasis was laid on the need to provide the large and youthful manpower with the necessary skills and abilities needed to tackle global challenges.

The PM, in this regard, has famously states that if the 20th century saw India's foremost technical institutes – the IITs – making a name for themselves globally, the 21st century will see India's ITIs (Industrial Training Institutes) acquiring global recognition for producing quality skilled manpower. Under this Mission, the Government of India has set a target of training 402 million people by 2022.

I would like to believe that the fundamentals of ‘Skill India’ Mission will have great relevance for Africa. It is about creating a largely skilled manpower that can be absorbed in the manufacturing sector or moulded for entrepreneurship.

Skill development is intricately linked with manufacturing growth. Over the last ten years, Indian Government and Industry have taken strident steps to fast-track the country’s manufacturing growth. The Government aims to raise the manufacturing share of India’s GDP from 16-17 percent to 25 percent by the year 2025. While manufacturing growth is key to creating large-scale employment, it can happen only if there is a large pool of skilled manpower that can support different industrial activities.

Therefore, the importance of skill development in terms of manufacturing growth can hardly be overstated.

Manufacturing growth is vitally important for Africa’s economic progress. While the majority of African economies are agrarian and primary producers of metals and minerals, it is extremely important for them to move up the global production value chain, which can happen with focused attention on manufacturing growth and excellence.

Massive skill development initiatives, therefore, assume critical significance for the African economies and societies. COMESA, through its forum and business leaders, can forge partnerships in the area of skill development.

Moving on to the second dimension, that of ‘Entrepreneurship’, I am happy to state that India has maintained a sharp focus on this vital aspect too. The government of India has launched the high decibel ‘Startup India’ action plan with the express purpose of facilitating single window clearances for start-ups and easy financing for these businesses.

Also, taking cognisance of the challenges seen in the financing of Micro, Small & Medium Enterprises (MSMEs), Government of India set up the MUDRA bank that extends collateral-free loans to MSMEs. MSMEs account for over 40 percent of India’s industrial output, employment, and exports. It is important that entrepreneurship in the MSME space is promoted in a big way.

The government of India and Indian industry have also established various innovation and incubation labs to support entrepreneurship development. These entrepreneurship development initiatives, too, will have great relevance in the African context where MSMEs have key roles cut out in the overall development matrix.

I am happy to state that India has been actively engaged in various capacity building initiatives in Africa. Under the long-standing Government of India’s ITEC programme, a large number of young African students have been receiving professional and technical training at Indian universities and other centres of learning for decades.

India is fully committed to establishing specialised technical training institutes in different parts of Africa.

Indian industry has also created internship opportunities for young African professionals and skilled workers from time to time.

While the bilateral initiatives taken to forge partnerships for skill development and entrepreneurship development are commendable, there is much more to be done in this space, keeping in view the demographics of both regions.

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