The Shape of Good Hope
(Roopen Roy is the MD of Deloitte Consulting in India. Views expressed are personal. This is the edited version of the article which appeared in the Financial Chronicle)
Here lies the great big hope
By Roopen Roy Jun 08 2010
IN the second half of the 15th century, the Europeans were desperately looking for a sea route to the Orient. The objective was to disintermediate the expensive middlemen in the land-route who stood between the European and the Oriental spice and silk traders. The discovery of the Cape of Good Hope, which is now part of the Republic of South Africa, was a key step to the opening up of a sea route to the Orient.
The first European to reach the Cape was the Portuguese explorer Bartolomeu Dias in 1488. Ten years later, Vasco Da Gama followed the same route and sailed to reach Calicut (now Kozhikode) in 1498.
In the flourishing trade between the West and the East, the continent of Africa has historically provided halting stations in the land route and landing points in the sea route. Yet, Africa is a vast continent. It has a billion people covering over 20 per cent of the planet’s land area. It has vast quantities of natural resources including coal, diamonds, gold, iron ore, cobalt, uranium, copper, bauxite, silver and petroleum.
In the African continent, South Africa has a strategic significance for India. It is not only a country with vast potential, it can also serve as a gateway to other African countries.
President Jacob Zuma of South Africa was in India last week and he announced the target of taking the annual bi-lateral trade to $12 billion by 2012. This goal will be easily achieved given our present run rate in trade. More importantly, foreign direct investments are flowing. To quote Zuma, “I am heartened by the participation of major Indian companies in South Africa with investment stock from India amounting to $6 billion. Companies such as the Tatas, Nalco, Cipla, Apollo, Godrej, Genpact, Aegis, Mahindra & Mahindra, Ashok Leyland and Aurobindo Pharmaceuticals feature among the key investors in South Africa.”
There are many others like the Jindals, Tega, Jet Airways and Reliance Adag, who are also venturing to expand in South Africa. And it is not a one-way traffic. There are world-class companies in So-uth Africa that are seeking new markets in India. Among them are Tiger Brands, Airports Company South Africa, Bidvest, SAB Miller, First Rand Bank and Old Mutual.
India and South Africa have close historical and cultural ties that form the foundation for our political friendship and economic cooperation. Gandhiji was a young 24-year-old, British-trained lawyer when he arrived in South Africa in 1893. Gandhi’s experience dramatically changed him, as he faced the discrimination directed at blacks and Indians. Gandhi inspired Nelson Mandela’s philosophy of non-violence and his vision of a “rainbow nation”. It was Mandela who said, “Gandhi was a South African and his memory deserves to be cherished now and in post-apar-theid South Africa. We must never lose sight of the fact that the Gandhian philosophy may be a key to human survival in the 21st century.”
There are over a million proud South Africans of Indian descent. Many of them have fought alongside African leaders against apartheid and suffered. For instance, Mac Maharaj and Ahmed Kathrada were fellow inmates of Nelson Mandela on the infamous Robben Island.
Many South Africans of Indian origin are remarkably successful. Their forefathers had been sent from India by the British as indentured labourers. One of my friends Vassi Naidoo whose grandfather was sent from Vishakapatnam to work in Natal rose to the very top of Deloitte in South Africa and is now a member of Deloitte’s global leadership team.
And South Africa has many of the problems that India has. There are problems of crime and corruption. We both have challenges of inclusive growth, education and skill development. The diversity of many tribes and races pose problems of integration. Unemployment and abject poverty dog the nation with 43 per cent of its population living on less than $ 2 a day. But South Africa is not another poor, underdeveloped African nation surviving on international aid. Do not forget that the first human heart transplant operation was successfully done in Cape Town. The country has a GDP exceeding $500 billion with rich and highly developed extractive industries and an infrastructure that resembles a first world more than a third world nation. Its per capita GDP surpasses $10,000 at purchase power parity. It has awesome research and innovation hubs, some of which I had the opportunity of visiting last week.
South Africa is hosting the football World Cup this time. The modern stadiums that have been newly constructed or refurbished at a cost of 15 billion-plus rand are simply great. And there is first-class infrastructure everywhere.
India has a unique opportunity to expand and scale cooperation, eliminating in many cases, the “middlemen” countries. India and South Africa’s research funds should be harnessed to fight hunger, poverty and diseases like malaria, TB, HIV and AIDS. Increase in trade and investment flows, improvement in air-links and promoting bilateral tourism are some of the obvious low-hanging fruits. Given the construct of the value chains, direct business ties could unleash synergies in gems and jewellery, IT, energy, entertainment and telecom. We have here an opportunity to shape a future full of good hope for both countries and beyond.