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Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by

EXIM Bank of India

PROJECT REPORT ON

STUDY ON BUSINESS OPPORTUNITIES FOR STC IN WEST


AFRICAN MARKETS UTILIZING LOC SANCTIONED BY EXIM
BANK OF INDIA

SUBMITED TO

STATE TRADING CORPORATION OF INDIA LTD.

BY

VIKASH KUMAR

SRI BALAJI SOCIETY’S

BALAJI INSTITUTE OF INTERNATIONAL BUSINESS(BIIB)

S NO-5/2-7,TATHAWADE,WAKAD,PUNE,41103
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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

STUDY ON BUSINESS OPPORTUNITIES FOR STC


IN WEST AFRICAN MARKETS UTILIZING LOC
SANCTIONED BY EXIM BANK OF INDIA

SUMMER PROJECT REPORT

SUBMITTED BY

VIKASH KUMAR

IB1715261

In partial fulfillment of the requirement for the award of the Post Graduate

Diploma in Management

PGDM(MARKETING)

IN

Balaji Institute of International Business(BIIB)


S.NO 55/2-7,Tathawade,Wakad,Pune-411033

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

ACKNOWLEDGEMENT
I dedicate this page to all those who have silently or actively left an
indelible mark on my project report, so that they may be given credit which
they richly deserve.

I would like to take this opportunity to thank my project mentor, Mr


VIRENDER BEJOTRA Chief Manager (Marketing) & Mr. Ramesh Kumar
Ram Deputy Manager (General) for mentoring me throughout the project and
adding valuable inputs.

I would like to thank all the staff members of STATE TRADING


CORPORATION OF INDIA LTD. for providing me a very good working
atmosphere which helped me to complete the assignment project within the
scheduled time.

I would also like to thank Nitesh Behare Associate Professor (BIIB),


who is our internal mentor and Mr Mihir Badiani, who is our external mentor
for helping me throughout the project.

I would like to express my sincere thanks to Prof. Col. A.


Balasubramanian, Dean, BIIB and Dr. Suresh Chandra Padhy, Director, BIIB,
for guidance and support in the project without whom, this project would not
have been complete.

VIKASH KUMAAR

IB1715261

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

TABLE OF CONTENT

Sr. No. Title Page No.


1 Executive Summary 5
2 Company profile 7-8
3 Indian economy overview 8-9
4 West African economy overview 10-11
5 EXIM Bank introduction & LOC 11-16
6 Objective of study 17-18
7 Research methodology 19-21
8 Analysis of GOI LOCs to West African Countries 22-24
9 Country wise analysis 25-48
10 SWOT analysis of STC for export under LOC 49
11 Finding & Recommendation 51-53
12 Bibliography 54
13 Appendixes 55

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

EXECUTIVE SUMMARY

Title of the project: - “Study on Business Opportunities for STC in West African
Markets Utilizing LOC Sanctioned by EXIM Bank of India”.
Objective of the project: -
Primary Objective: -
▪ To find out the market attractiveness for STC in West African
markets utilizing EXIM Bank Line of credit.
Secondary Objective: -
I. To analyze insight of trade in west African market.
II. To understand EXIM Bank line of credit (LOC) procedure.
III. To analyze insight of trade in Indian market.
IV. To recommend the best possible opportunities available for STC in
West African market.
I intended to find out the business opportunities for STC in West African market utilizing
EXIM Bank Line of Credit (LOC). This will help STC to make reach in new market and
also helps Indian exporters who want to expand their business in West African market.
This project is completed by collecting the secondary and primary data. Secondary data is
collected from the various internal and external source.
Primary data is collected with the help of doing discussion with company employee and a
questionnaire was mailed to various industry and their responses was recorded.
Finding: -
▪ Most of the countries in West African region are underdeveloped so
all of them are seeking towards infrastructure development.
▪ Almost all of the countries importing commodities that STC can
supply from India.
▪ Most of the country don’t have stable banking system so EXIM
Bank’s LOC can play a vital role.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Chapter – 1
INTRODUCTION

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

1.1 Company Profile: -


The State Trading Corporation of India Ltd. (STC) is a premier International trading
company of the Government of India engaged primarily in exports, and imports operations.
It was set up in 1956 primarily with a view to undertake trade with East European Countries
and to supplement the efforts of private trade and industry in developing exports from the
country. The corporation is registered as an autonomous company under the companies
Act, 1956 and functions under the administrative control of the Ministry of Commerce &
Industry, Govt. of India.As a result of liberalization of foreign trade by the Govt. of India
since mid-1991, all export and import items earlier canalized through STC were
decanalised. This adversely affected the turnover and profitability of the Corporation
requiring reorientation of the entire business profile of the Corporation.
Presently, there is no item export or import of which is canalized exclusively through STC.
The present business handled by STC can broadly be classified into three categories viz.

1) Import of items like edible oils, pulses and fertilizers on behalf of the Govt. of
India.
2) Business carried out on behalf of business associates on back-to-back basis.
3) Direct buying and selling in items like tea, soybean seed, Chana, etc.

Imports on behalf of the Govt. are arranged by STC through floating of global tender and
imported quantities are either handed over to the agency (such as FCI, Department of
Fertilizers) nominated by the Govt. or sold in the domestic market through tenders. In the
case of back-to-back business, the terms of trade are finalized in consultation with the
business associate and STC charges a fixed trade margin in the range of 1 to 1.5%.
Thus, today STC undertakes exports/imports of a diverse range of items to/from
countries all over the world. Its export basket includes wheat, rice, tea, coffee, cashew,
extractions, castor oil/seed, sugar, spices, jute goods, iron ore, chemicals, pharmaceuticals,
light engineering goods, construction materials, consumer goods, processed foods, textiles,
garments, jewellery, leather ware, etc. The Corporation also monitors counter trade
commitments against Government purchases.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Major items of import by STC include gold, silver, edible oils, sugar, pulses, fertilizers,
metals, minerals, ores, hydro-carbons, petro-chemicals and raw materials for the Indian
industry. It also undertakes import of technical and scientific equipment on behalf of
Forensic Science Laboratories, State Police and Intelligence Departments and Paramilitary
Organizations, etc.

Vision
"To be a leading world class organisation, continuously diversifying and delivering
excellence in all areas of its operation thereby enhancing stakeholder's value."

Mission
"To consistently take advantages of upcoming business opportunities and trends
with proactive enterprising spirit thereby delivering substantial year on year growth and
contribute to enhancing India's share in world trade”.

1.2 Indian Economy Overview


1.2.1 India Export:
India exported goods worth $274.6 billion in 2016-17, 4.7% higher than $262.2
billion in FY16. Trade deficit in 2016-17 was $105.7 billion. India’s exports grew at its
fastest pace in five years by 4.7% to $274.65 billion during the financial year 2016-17,
despite the demonetisation drive that slowed domestic economic activity since November.
Exports from India increased 5.17% year-on-year to USD 25.91 billion in April of 2018,
rebounding from a 0.7% drop in March. Sales increased for organic and inorganic
chemicals (38.5%), plastic and linoleum (30%), engineering goods (17.6%), cotton yarn,
handloom products (15.7%), drugs and pharmaceuticals (13.6%) but fell for petroleum
products (-4.5%) and gems and jewelry (-17%). Exports in India averaged 5186.12 USD
million from 1957 until 2018, reaching an all-time high of 30541.44 USD million in March
of 2013 and a record low of 59.01 USD million in June of 1958.

1.2.2 India Main Export are:


Pearls, precious and semi-precious stones and jewelry (16 %of total shipments),
mineral fuels, oils and waxes and bituminous substances (12 %), vehicles, parts and
accessories (5 %), nuclear reactors, boilers, machinery and mechanical appliances (5 %),

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

pharmaceutical products (5 %) and organic chemicals (4 %). India’s main export partners
are: United States (15 %of the total exports), United Arab Emirates (11 %), Hong Kong (5
%), China (4 %), Singapore (4 %) and United Kingdom (3 %). Out of total export India
have only 8.2% export with African Continent.

1.2.3 India Import:


Cumulative value of imports for the period April-March 2016-17 was US$ 380.367
Billion. Imports to India rose 4.6% year-on-year to USD 39.63 billion in April of 2018,
lower than a 7.2% gain in March. Purchases went up for petroleum, crude and products
(13.5%), transport equipment (33.2%), coal, coke and briquettes (20.4%), organic and
inorganic chemicals (18.4%) and machinery, electrical and non-electrical (9.1%). Out of
total import India have Imported 8.1% from African Continent.

1.2.4 India main imports are:


Mineral fuels, oils and waxes and bituminous substances (27 % of total imports),
pearls, precious and semi-precious stones and jewelry (14 %), electrical machinery and
equipment (10 %), nuclear reactors, boilers, machinery and mechanical appliances (8 %),
and organic chemicals (4 %). India’s major import partners are: China (16 % of total
imports), the United States (6 %), United Arab Emirates (6 %), Saudi Arabia (5 %) and
Switzerland (5 %), Nigeria.
India had imported 213.93 million tons (MT) of crude oil 2016-17 for USD 70.196
billion or Rs 4.7 lakh crore. For 2017-18, the imports are pegged at 219.15 MT for USD
87.725 billion (Rs 5.65 lakh crore), according to the latest data available from oil ministry’s
Petroleum Planning and Analysis Cell (PPAC).

Financial Year Export In US$ Import In US$ % Growth


2015-2016 262.3 B 381.06 B 4.71
2016-2017 274.66 B 380.36 B -0.17
Table No. 1.2.4.1 India Export & Import value

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

1.3 THE WEST AFRICAN ECONOMY:


Average GDP growth in West Africa stalled in 2016, after several strong years, to
0.5 %. It rebounded in 2017 to 2.5 % and was projected to rise to 3.8 % in 2018 and 3.9 %
in 2019. Countries’ performance varied, but because Nigeria contributes about 70 % of
regional GDP, its patterns largely shape regional ones. The service sector’s share in the
economy is the largest in most countries, and manufacturing’s share is the smallest in all
of them. Demand in the economies comes primarily 70% on average from private
consumption, but gross capital formation is expected to be the fastest growing area of
demand in the next couple of years.
Between 2012 and 2015, many West African countries experienced high growth.
But in 2016, growth slowed, averaging about 0.5 %. The 2016 slowdown was widespread,
with Nigeria and Liberia recording negative growth, though some countries had very high
growth, such as Côte d’Ivoire at almost 9 %. The slowdown in Nigeria, because of that
economy’s size relative to the region, meant a considerable decline in West Africa’s
average. In 2017, regional growth rebounded, averaging about 2.5 %. In 2018, it is
projected to increase to 3.6 %, and in 2019 to 3.8 %. Nigeria’s projected performance drives
these trends, too. The other major economies in the region, Côte d’Ivoire and Ghana,
together contributed about 11 % of the total regional GDP in 2017, and their projected
growth in 2018–19 will reinforce Nigeria’s recovery. The positive outlook for the region
is premised on oil price recovery and oil production increases for Nigeria and Ghana, and
on strong agricultural performance. Services are the dominant sector in West Africa, since
in the key countries, services contribute most to GDP (in Liberia and Sierra Leone,
however, agriculture remains dominant). Across all countries in the region,
manufacturing’s share in GDP is the lowest of any sector. Manufacturing’s highest share
in the region is in Côte d’Ivoire about 18 % of GDP in 2017.
In most West African countries, manufacturing is confined to light industry
processing primary products and producing consumer goods. Inflation challenges many
developing economies, including Africa’s. Persistent, uncontained inflation distorts
economic growth. From 2014 to 2017, average inflation in West Africa rose from 8.2 % to
13.3 % (figure 5), while average inflation in Africa rose from 7.4 % to 13 %. West African
inflation is projected to decline moderately but stay in double digits 11.6 % in 2018 and

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

11.0 % in 2019. The high inflation projections reflect unfavorable macroeconomic


developments in key economies such as Nigeria, with 2017 inflation estimated at 16.8 %,
Ghana at 17.5 %, and Sierra Leone at 19.3 %. Inflationary pressure came from exchange
rate depreciation and domestic imbalances during declines in commodity prices and global
demand. Since most West African countries depend on imports, (especially for factor
inputs), higher import prices raised production costs, translating into high consumer prices.
Budget deficits, which went up (except for Togo and Cape Verde) due to expansionary
fiscal policy, may also have increased average inflation in the region. Francophone
countries, however, reported average inflation well below the regional average, and some
had disinflation.
So, from above information we can say that India have very less export & import
with African countries. India export is less than import. So, in order to balance the economy
India, need to focus more on export by exploring the new market in the world. India should
focus on expanding its trade with African market.

As we know that in West African countries economy is growing rapidly so it can be a good
market for STC to expand business.

1.4 Assessing STC’s Opportunity for Exports through GOI Supported


EXIM Bank Line of Credit (LOC): -

1.4.1 About EXIM Bank:


Export-Import Bank of India is the premier export finance institution in India fully
owned by the Government of India. Since its inception, EXIM Bank of India has been both
a catalyst and a key player in the promotion of cross border trade and investment.
Commencing operations as a purveyor of export credit, like other Export Credit
Agencies in the world, EXIM Bank of India has, over the period, evolved into an institution
that plays a major role in partnering Indian industries in their globalization efforts, through
a wide range of products and services offered at all stages of the business cycle, starting
from import of technology and export product development to export production, export
marketing, pre-shipment and post-shipment and overseas investment.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

1.4.2 EXIM Bank LOC Highlights/Objectives:

➢ EXIM Bank LOC is a proactive mechanism to promote exports of goods and


services from India to target countries.
➢ EXIM Bank LOC is a financing mechanism that provides a safe mode of non-
recourse financing option to Indian exporters, especially to SMEs, and serves as an
effective market entry tool.
➢ EXIM Bank extends export LOC to overseas financial institutions, regional
development banks and foreign governments and their agencies.
➢ Enable recipient countries to import Indian projects, technologies and equipment
on concessional terms.
➢ Creates visible socio-economic impact in LOC recipient country.
➢ Promotes long term economic and political relations with LOC recipient countries.
➢ EXIM Bank has 209 LOCs, covering 59 countries in Africa, Asia, Oceania, LAC
and CIS with credit commitments of over US$ 15.69 bn.
➢ During FY 2017, 15 LOCs amounting to US$ 2.27 billion were extended.

Fig No. 1.4.2.1 LOC Share as per Continent (Source EXIM Bank’s)

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Fig No. 1.4.2.2 Sectoral Utilization of LOC

1.4.3 Financing Programs of EXIM Bank:


Concessional Lines of Credit are provided by EXIM Bank or any other Public-Sector Bank/
Lending Agency approved for this purpose by the Ministry of Finance, Government of
India.

Fig No. 1.4.3.1 EXIM Bank’s Financial Program (Source EXIM Bank)

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

1.4.4 What is Line of Credit (LOC):


Lines of Credit (LOC) are a financial mechanism extended by the Export-Import
(EXIM) Bank of India. In order to promote bilateral, regional and commercial relations,
the EXIM Bank extends LOCs to support export of eligible goods on deferred payment
terms. Under the Indian Development Initiative (IDI) formulated in 2003, the Government
extends LOCs to share India’s development experience through capacity building, trade,
and infrastructure development. The IDI is presently known as Indian Development and
Economic Assistance Scheme (IDEAS). The guidelines for IDEAS were revised by the
Narendra Modi government in 2015 which is applicable till 2019-2020.
Under the new guidelines, countries have been classified into three categories; Low
and Lower Middle Income (L& LMI) countries with a minimum binding concessional
requirement, Low and Lower Middle Income (L& LMI) with no minimum binding
concessional requirement, and other developing countries. The revised terms of credit are
shown below.

L& LMI
countries with L& LMI countries with
minimum binding no minimum binding
Country concessional concessional Other developing
classification requirement requirement countries
Rate of interest 1.5 % 1.75% Libor+1.5 %
Maturity 25 years 20 years 15 years
Moratorium 5 years 5 years 5 years
Grant element* 37.48 % 31.37 % 24.31%

Table No. 1.4.4.1 revised terms of credit (Ministry of External Affairs, GOI)

LOCs extended in FY 2017 were to Ghana, Guyana, Kenya, Malawi, Mauritius, Mongolia,
Nepal, Nicaragua, Niger, Senegal, Sierra Leone and Tanzania.
EXIM Bank extends LOCs on its own and also with the support of Government of India.
Basically, LOC is the fund or loan provided to developing or poor countries for their
development project. Interest rate is very low and time period for credit is around 20-25
years depending upon the type of project.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

1.4.4.1 GOI LINE OF CREDIT FLOW CHART:

Flow Chart NO. 1.4.4.1 Govt. of India LOC Procedure

The process for approving LOCs is simple. First, the host-country requests for an LOC,
along with a pre-feasibility report and an estimated cost of the project. Then, the Indian
Mission in the partner country forwards the proposal along with its recommendations to
the Ministry of External Affairs (MEA) in New Delhi. The MEA then recommends the
proposal to the Foreign Trade Division in the Department of Economic Affairs, Ministry
of Finance for appraisal. After examining and accepting the proposal, the Ministry of
Finance conveys its approval of the LOC and terms (interest rate, credit period) to the
Export-Import (EXIM) Bank of India. The EXIM Bank then conveys the terms and sends
the draft LOC agreement to the borrower government/institution which then can accept the
terms and draft of LOC and suggest changes to EXIM Bank. After the draft of the
agreement is finalized, the LOC agreement is signed between EXIM Bank and borrower
country/institution.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

1.4.4.2 Pre-requisite for host country for availing EXIM Bank’s LOC:
Goods and services for at least 85% value of the contracts covered under these
LOCs must be sourced from India.

➢ Advance payment of at least 10% of the value of the contract to be borne by the
LOC recipient/foreign buyer.
➢ LOCs may finance up to 90% value of contract on FOB/CFR/CIF/ CIP basis.
➢ Pre-shipment inspection of equipment / goods is mandatory.
1.4.4.3 Benefit of LOC:
▪ The LOCs enable the recipient countries to set up developmental projects in a
variety of sectors e.g. agricultural mechanization, rural electrification, power
generation, power distribution, sugar, cement, mini hydro-plants, transportation-
rail and road, infrastructure.
▪ The recipient countries can acquire Indian equipment and technology, which are
found to be appropriate, adaptive and affordable in developing countries of Africa,
Asia, Latin America & the Caribbean.
▪ Opens new market opportunities for Indian companies and generates goodwill for
India.
▪ Strengthen Bilateral Cooperation
▪ Help enable the private sector to leverage its strength
▪ LOC also contribute to increase India GDP.
▪ It also creates new job opportunities in Indian market.
▪ It also contributes to India mission of Make in India.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Chapter 2
OBJECTIVE OF THE STUDY

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

2.1) Research Problem: -


“Finding the business opportunities for STC in West African Countries”

2.2) Objective of Study: -

2.2.1) Primary Objective: -


▪ To find out the market attractiveness for STC in West African
markets utilizing EXIM Bank Line of credit.

2.2.2) Secondary Objective: -


I. To analyze insight of trade in west African market.
II. To understand EXIM Bank line of credit (LOC) procedure.
III. To analyze insight of trade in Indian market.
IV. To recommend the best possible opportunities available for STC
in west African market.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

CHAPTER 3

RESEARCH METHODOLOGY

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

3.1 INTRODUCTION: -
Research methodology is a way to systematically solve the research problem. It
may be understood as science of studying how research is done scientifically. In it we study
various steps that are generally adopted by a researcher in studying his research problem
along with logic behind them. In short research methodology act as a ladder for the whole
research.
3.2 RESEARCH DESIGN: -
Research design as a basic plan or strategy of the research study and the logic
behind it that makes it possible and valid to draw more general conclusions from it. Design
refers to the format and theoretical structure under which the study would be carried out,
that is how the worthiness and contribution of certain elements are.
3.2.1 Interview Method: -
The interview method of collecting data involves presentation of oral-verbal stimuli
and reply in terms of oral-verbal responses. This method was done through personal
interviews inside the allocated office.

3.2.2 Analytical Tool


Tabulation & pie charts.

3.2.3 Data Analysis Techniques


The entire analysis of data was done with the aid of Microsoft Excel programming.
Then tabulation, pie charts were drawn according to the responses.

3.3 Data Collection


3.3.1 Secondary Data: -
Secondary data means data that are already available i.e. they refer to the data which
have already been collected and analyzed by someone else. Usually published data are
available in: Various publications of the central, state/local governments or foreign
governments, technical and trade journals etc.
The secondary data involved in this project has been gathered from the company
journal, literatures and internet.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

3.3.1.1 SOURCES OF SECONDARY DATA: -


a) INTERNAL SOURCES:
Internal as the name implies is the organization or environment specific source and
includes the historical output and records available with the organization which might be
the backdrop of the study. The facts and information may be available (like the trade data
in the format where it can be directly used for data interpretation and analysis). Advantages
are that they are readily accessible and economical to use. Secondly, they are topical and
updated to the latest time period with a great amount of precision and details.

b) EXTERNAL SOURCES: -
Information that is collected and compiled by another source that is external to the
organization is referred to as external sources of data. There could be two kinds of
published data-one that is from the official and government sources-this could include
census data, policy documents and govt of India trade data. The other kind of data is that
which are prepared by individuals or private agencies or organizations. This could be in
the form of books, periodicals, industry data such as directories and guides for example
data from WTO and world bank.

3.3.2 Primary Data: -


Primary data is collected with the help of discussion with company employee
and a questionnaire was mailed to various industry and their responses was recorded.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Chapter: -4
Analysis of GOI LOCs to African Nations with focus on West
Africa

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.1 Background: -
The African continent over the years has remained a primary destination for the
government’s Lines of Credit (LOCs). The many success stories of Indian LOC funded
projects, which has been welcomed positively by Africa, indicates the point that African
countries have over the years remained the primary beneficiary of Indian development
assistance through LOCs. It is important to note that the extension of LOC by India to
African countries is different from that of other international financial organizations such
as IMF and World Bank. The funding of these global institutions is directly passed over to
the respective countries treasury, thereby opening lot of scope for theft and mishandling of
funds. Africa’s centrality in India’s foreign policy initiatives has consolidated over the
years, primarily driven by economic interests and the quest for international recognition.
Indian efforts to contribute developmentally to Africa have lately come to the forefront of
its policy engagement with these countries with a promise to become more central in the
years to come. India has a long-standing development cooperation policy. Four main
techniques embody India’s development cooperation, namely; capacity building and
training, lines of credit (LOC), grant assistance, and bilateral trade and investments. The
Government of India has been providing LOC to African countries since 1964 under Indian
Technical and Economic Cooperation (ITEC) and Special Commonwealth Assistance for
Africa Programme (SCAAP).

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.2 Current GOI LOCs Extended to West Africa: -

Country Amount (US$ Mn) Purpose


Purchase of railway equipment & Agriculture
Benin 72.61
equipment
Burkina Faso 77.5 Agriculture & rural electrification
Cote d’Ivoire 177.7 Transportation, agriculture & electrification
Tractor Plant, Infrastructure project &
Gambia 78.58
Electrification
Ghana 166.26 Electrification & Sugar plant
Guinea 35 Health System
Guinea Bissau 25 Electrification project
Mali 226 Electrification system & Agriculture project
Senegal 228.41 Electrification project and Transport
Niger 79.54 Solar Power project and Electrification project
Nigeria 120 Solar Power project and Electrification project
Sierra Leone 123 Agriculture & electrification project
Togo 110.1 Electrification project and agriculture

Sectoral utilization of LOC in West Africa: -

SECTOR WISE UTILIZATION OF LOC

Railway, 3.29%
Others, 16.40%
Agriculture, 20%
Transportation,
Railway
6.50%
Health Sector, Agriculture
2.30%
Electrification Project
Solar Project
Solar Project,
3.90% Health Sector
Transportation
Others

Electrification
Project, 47.59%

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.3 Country Wise Analysis


4.3.1 Ghana
Population - 29.6 million
Area - 238,533 sq. km
Literacy rate: -76.6%
Population below poverty line- 24.2%
Inflation rate: - 9.8%
Ease of doing business rank: -120
GDP Per Capita: - US$ 1707.7
GDP of Ghana:
The Gross Domestic Product (GDP) in Ghana was worth 42.69 billion US dollars
in 2016. The GDP value of Ghana represents 0.07 percent of the world economy. GDP in
Ghana averaged 10.21 USD Billion from 1960 until 2016, reaching an all time high of
47.81 UD Billion in 2013 and a record low of 1.22 USD Billion in 1960.

GDP (In USD Annual GDP %


Billion) Growth
60 4.17 4.229
4.5
47.81 4 3.497
50 42.69
38.62 37.54 3.5 3.015
40 3
2.188
2.5
30
2
20 1.5
1
10
0.5
0 0
2013 2014 2015 2016 2016 2017 2018 2019 2020

Graph No. 4.3.1.1 GDP of Ghana

Trade: - Total amount of export and import by Ghana in 2016 was US$ 22.0168B.
Export Commodities: -
Oil, gold, cocoa, timber, tuna, bauxite, aluminum, manganese ore, diamonds,
horticultural products. Out of total export 65% is Tin & Articles and rest 35% is Zinc.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Export Partners: - Switzerland 17.54%, India 14.62%, United Arab Emirates 13.40%,
China 8.84%, Vietnam 5.16%.
Import Commodities: -
▪ Vehicles other than railway, tramway of value USD1.7B.
▪ Machinery, nuclear reactors, boilers of value USD 1.51B.
▪ Electrical, electronic equipment of value USD 1.01B.
▪ Articles of iron or steel of value USD 514.82 M.
▪ Cereals of value USD 467.02M.

Import Partners: - China 17.29%, United Kingdom 9.16%, United State of America
7.76%, Belgium 5.06%, India 4.64%.

Export & Import by Ghana in USD M


20000
15000
10000
5000
0
2011 2012 2013 2016
Export 18146.652 15761.18404 12643.899 10655.796
Import 12602.676 13578.112 12787.233 11361.004

Export Import

Chart No. 4.3.1.2 Export & Import of Ghana

Amount of LOC allocated to Ghana: -

Amount of Credit (in USD mn)


200
150
150
100
60
50 25 27 25 21.72 35 24.54 30

0
2005-06 2007-08 2014-15

Chart No. 4.3.1.3 Amount of LOC sanctioned

26
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Purpose of Allocated LOC:


▪ Rural electrification, agricultural and transportation projects.
▪ Rural electrification project and construction of Presidential Office.
▪ Foreign Policy Training Institution, railway corridors and agro processing plant.
▪ Improved fish harvesting & fish processing project and waste management
equipment and management support project.
▪ Sugar Plant.
▪ Sugarcane development and irrigation project.
▪ Strengthening of Agriculture Mechanization Services Centres.
▪ Rehabilitation and Up-gradation of Potable Water System in Yendi,

4.4 International market attractiveness index calculation: -


Ghana Market Attractiveness can be computed by calculating International Market
Attractiveness Index and Country factors. Taking MA index on y axis and CA index on x
axis we can plot a point on 9 cell matrix, which tells us about the next move that the
company should take.

UNATTRACTIVE 0
NEUTRAL OR GOOD 50
VERY ATTRACTIVE 100

27
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.4.1 Ghana Market Attractiveness: -

Market Attractiveness Factors Importance Rating


Market Factor 40%
Level of need, want or desire for your product at your price 0.2 65
Size of market opportunity that could buy your product 0.3 70
Market potential: non-buyers that could buy your product 0.15 55
Degree to which your product is affordable in this market 0.2 80
Degree your product offers performance not availble in this
market 0.15 80
1 70.25
Country Factors 60%
Degree to which foreign businesses can operate in this market 0.25 60
Political stability and attitudes toward your country of origin 0.25 65
Language and reglious barriers that make success difficult 0.15 50
Cultural differences in values, attiditudes, customs that cause
failure 0.15 55
Degree to which a market infrastructure is in place 0.2 60
1 59
Market Attractiveness Score 63.5

From the above table we can see Ghana market attractiveness score is 63.50 which shows that
there is highly attractive market for Indian exporter as well as for STC.

28
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.5 Mali

Population: - 18 Million
Area: - 1,240,192 sq. km
Literacy rate: - 33.07% (Adult)
Population below poverty line: - 43.6%
Ease of doing business rank: - 143
GDP of Mali:
The Gross Domestic Product (GDP) in Mali was worth 14.03 billion US dollars in
2016. The GDP value of Mali represents 0.02 percent of the world economy. GDP in
Mali averaged 4.10 USD Billion from 1967 until 2016, reaching an all-time high of 14.38
USD Billion in 2014 and a record low of 0.28 USD Billion in 1967.

G DP
14.338
Annual GDP
14.5
14.03 Growth %
14
7
13.5 13.246 5.691 5.808
13.1 6 5.34
5.018 4.714 4.738
13 5
12.443
12.5 4
3
12
2
11.5 1
11 0
2012 2013 2014 2015 2016 2015 2016 2017 2018 2019 2020

Graph No. 4.5.1 GDP of Mali

Trade: - Total Amount of Export and Import by Mali in 2017 was US$ 3157.65
Million.

Export Commodities: -
Pearls, precious stones, metals, coins - (72%), cotton, fertilizers, edible fruits, nuts,
peel of citrus fruit, melons etc.
Export Partners: - South Africa 46.96%, Switzerland 15.04%, India 12.2%, UAE
7.61%, Cote d’Ivoire 5.98%, Burkina Faso 3.86%.

29
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Import Commodities: -
Mineral fuels, oils, distillation products, electrical, electronic equipment,
machinery, nuclear reactors, boilers, pharmaceutical products, tobacco and manufactures
tobacco substitutes, furniture, lighting signs, prefabricated buildings etc.

Import Partners: - Senegal 19.73%, China 15.62, Cote d Ivoire 9.82%, France 8.62%,
Germany 4.41%, India 3.2%.

Export & Import by Mali In USD M


4500
4000
3500
3000
2500
2000
1500
1000
500
0
Export Import
2016 2847.594 3845.405
2017 907.23 2250.42

2016 2017

Chart No. 4.5.2 Export & Import of Mali

Amount of LOC Allocated to Mali:

Amount of LOC sancationed in USD M


120 100
100
80
60 45
30 36
40 27
15
20
0
2005-06 2006-07 2007-08 2009-10 2009-10 2011-12

Chart No. 4.5.3 Amount of LOC Sanctioned to Mali

30
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Purpose of LOC:
▪ Rural electrification and setting up of agro machinery and tractor assembly plant.
▪ Electricity transmission and distribution project from Cote d'Ivoire to Mali.
▪ Completion of Mali-Ivory Coast Interconnection Link for integrating the national
power grids of the two countries.
▪ Agriculture and food processing projects.
▪ Power Transmission Project Connecting Bamako and Sikasso via Bougouni.

4.5.1 Market Attractiveness of Mali: -


Market Attractiveness Factors Importance Rating
Market Factor 40%
Level of need, want or desire for your product at your price 0.2 50
Size of market opportunity that could buy your product 0.3 45
Market potential: non-buyers that could buy your product 0.15 30
Degree to which your product is affordable in this market 0.2 45
Degree your product offers performance not availble in this market 0.15 60
1 46
Country Factors 60%
Degree to which foreign businesses can operate in this market 0.25 25
Political stability and attitudes toward your country of origin 0.25 30
Language and reglious barriers that make success difficult 0.15 35
Cultural differences in values, attiditudes, customs that cause
failure 0.15 30
Degree to which a market infrastructure is in place 0.2 40
1 31.5
Market Attractiveness Score 37.3

31
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

From the above table & GE matrix we can see Mali market attractiveness score is 37.3 which
shows that there is harvest/divest market. Which indicate Mali market is not good option for
Indian exporter as well as for STC.

32
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.6 Sierra Leone

Population: - 7.4 million


Area: - 72300 sq. km
Literacy rate: - 48.4% (Adult)
Poverty rate: - 52.9%
Ease of doing business rank: - 160
GDP Per Capita: - US$ 454.60
GDP of Sierra Leone:
The Gross Domestic Product (GDP) in Sierra Leone was worth 3.67 billion US
dollars in 2016. The GDP value of Sierra Leone represents 0.01 percent of the world
economy. GDP in Sierra Leone averaged 1.25 USD Billion from 1960 until 2016, reaching
an all-time high of 5.02 USD Billion in 2014 and a record low of 0.32 USD Billion in 1960.

GDP (In USD Annual GDP %


Billion) Growth
6 5 4.229
4.92 5.02 4.17
5 4.21 4 3.497
3.67 3.015
4
3 2.188
3
2
2
1 1

0 0
2013 2014 2015 2016 2016 2017 2018 2019 2020

Graph No 4.6.1 GDP of Sierra Leone

Trade: - Total amount of export and import by Sierra Leone in 2017 was 1423.52
Million.
Export Commodities: -
Meat, fish and seafood preparations, dairy products, eggs, honey, edible products,
milling products, malt, starches, wheat gluten, fish, crustaceans, molluscs, aquatics
invertebrates, wood and articles of wood, wood charcoal etc.

33
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Export Partners: - Cote d’Ivorie 34.69%, USA 31.01%, Belgium 19.34%, China
7.14%, Netherland 3.65%, India .38%.
Import Commodities: -
Cereals, machinery, nuclear reactors, boilers, salt, Sulphur, earth, stone, plaster,
lime and cement, pharmaceutical products, iron and steel, optical, photo, technical, medical
apparatus, dairy products, eggs, honey, edible products etc.
Import Partners: - Benin43%, China 7.1%, USA 5.5%, India 4.5%, UAE 4.1%,
Senegal 3.5%, Belgium 3.1%.

Export & Import in US$ Million


900
800
700
600
500
400
300
200
100
0
2013 2014 2015
Export 332.515 356.781 215.241
Import 726.367 768.743 606.295

Export Import

Chart No. 4.6.1 Export & Import of Sierra Leone

Amount of LOC Sanctioned: -

Amount of LOC Sanctioned (in USD M)


100
78
80

60

40 30 30
15 15
20

0
2008-09 2009-10 2013-14 2013-14 2015-16

Chart No. 4.6.2 Amount of LOC Sanctioned to Sierra Leone

34
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Purpose of LOC:
▪ Procurement of tractors and connected implements, harvesters, rice threshers, rice
mills, maize shellers and pesticide spray equipment.

▪ Rehabilitation of existing facilities and addition of new infrastructure to supply


potable water.

▪ Irrigation Development in Tomabum, Sierra Leone.

▪ Expansion of the ongoing projects for rehabilitation of existing potable water


facilities in four communities in Sierra Leone.

▪ Transmission Line and Substation in Sierra Leone.

4.6.2 Market Attractiveness for Sierra Leone: -


Market Factor 40%
Level of need, want or desire for your product at your price 0.2 45
Size of market opportunity that could buy your product 0.3 40
Market potential: non-buyers that could buy your product 0.15 30
Degree to which your product is affordable in this market 0.2 35
Degree your product offers performance not availble in this market 0.15 55
1 40.75
Country Factors 60%
Degree to which foreign businesses can operate in this market 0.25 25
Political stability and attitudes toward your country of origin 0.25 40
Language and reglious barriers that make success difficult 0.15 45
Cultural differences in values, attiditudes, customs that cause
failure 0.15 30
Degree to which a market infrastructure is in place 0.2 30
1 33.5
Market Attractiveness Score 36.4

35
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

From the above table & GE matrix we can see Sierra Leone market attractiveness score is
36.4 which shows that there is harvest/divest market. Which indicate Sierra Leone market
is not good option for Indian exporter as well as for STC.

36
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.7 Cote d'Ivoire

Area: - 322,462 sq. km


Population: - 23.70 Million
Literacy Rate: - 43.1%
Poverty Level: - 46.3% are below poverty line.
Ease of doing Business rank: - 139
GDP per Capita: - US$ 1563.4

Cote d'Ivoire GDP: -


The Gross Domestic Product (GDP) in Cote d’Ivoire was worth 36.16
billion US dollars in 2016. The GDP value of Cote d’Ivorie represents 0.06 percent of the
world economy. GDP in Cote d’Ivoire averaged 11.09 USD Billion from 1960 until 2016,
reaching an all-time high of 36.16 USD Billion in 2016 and a record low of 0.55 USD
Billion in 1960.

GDP in US$ Billion Annual GDP % Growth

40 35.37 32.83 36.16 5 4.17 4.229


31.27 3.497
27.02 4 3.015
30
3 2.188
20
2
10 1
0 0
2012 2013 2014 2015 2016 2016 2017 2018 2019 2020

Graph No. 4.7.1 GDP of Cote d'Ivoire

Trade: - Total amount of export & Import by Cote d'Ivoire in 2017 was US$ 18.21B.
Export Commodities: -
cocoa, coffee, timber, petroleum, cotton, bananas, pineapples, palm oil,
fish.

Export Partners: - Netherland (12%), USA (8.2%), Belgium, France (6.5%), Germany
(6.1%), India (4.2%).

37
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Import Commodities: -
Mineral fuels, mineral oils and products of their distillation, machinery, mechanical
appliances, nuclear reactors, boilers, cereals, pharmaceutical products etc.
Import Partners: - China (17.6%), France (12.8%), Nigeria (11.6%), India (4.45%),
USA (4.3%), Germany (2.5%).

Export & Import by Côte d'Ivoire in US$ Million


14000
12000
10000
8000
6000
4000
2000
0
2013 2014 2015 2016 2017
Export 12083.808 12985.053 11844.759 10631.006 10053.603
Import 12482.984 11177.66 9532.206 8405.917 8159.655

Export Import

Chart No. 4.7.1.1 Export & Import of Cote d'Ivoire

Amount of LOC sanctioned to Cote d’Ivoire: -

Amount of LOC sanctioned in US$ Million


80 71.4
70
60
50
40 30 30
26.8 25.5 24
30
20
10
0
2005-06 2007-08 2009-10 2009-10 2014-15 2016-17

Chart No. 4.7.1.2 Amount of LOC sanctioned to Cote d'Ivoire

38
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Purpose of LOC: -

▪ Renewal of urban transport system in Abidjan and for agricultural projects in the
field of vegetable oil extraction, fruits and vegetable chips production, production
of cocoa, coffee.
▪ Mahatma Gandhi IT and Biotechnology Park, Fisheries Processing Plant and
Coconut fiber processing plant.
▪ Transmission line between Cote d'Ivoire and Mali
▪ Rice production program.
▪ Electricity Interconnection Project between Cote d'Ivore and Mali.
▪ Upgradation of Military Hospitals.
4.7.2 Market Attractiveness for Cote d'Ivore: -

Market Attractiveness Factors Importance Rating


Market Factor 40%
Level of need, want or desire for your product at your price 0.2 30
Size of market opportunity that could buy your product 0.3 40
Market potential: non-buyers that could buy your product 0.15 25
Degree to which your product is affordable in this market 0.2 50
Degree your product offers performance not availble in this market 0.15 60
1 40.75
Country Factors 60%
Degree to which foreign businesses can operate in this market 0.25 30
Political stability and attitudes toward your country of origin 0.25 35
Language and reglious barriers that make success difficult 0.15 30
Cultural differences in values, attiditudes, customs that cause
failure 0.15 30
Degree to which a market infrastructure is in place 0.2 40
1 33.25
Market Attractiveness Score 36.25

39
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

From the above table & GE matrix we can see Cote d’Ivorie market attractiveness score is
36.25 which shows that there is harvest/divest market. Which indicate Cote d’Ivorie market
is not good option for Indian exporter as well as for STC.

40
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.8 Senegal

Population: - 15.41 Million


Area: - 196,722 sq. km
Literacy rate: - 55.6% (Adult)
Poverty rate: - 46.7%
Ease of doing business rank: - 140
GDP per capita: - US$ 1093.40
GDP of Senegal:
The Gross Domestic Product (GDP) in Senegal was worth 14.77 billion US dollars
in 2016. The GDP value of Senegal represents 0.02 percent of the world economy. GDP in
Senegal averaged 5.31 USD Billion from 1960 until 2016, reaching an all-time high of
15.31 USD Billion in 2014 and a record low of 0.79 USD Billion in 1960.

GDP (In USD B ) Annual GDP %


15.31
15.5
14.81 14.77
Growth
15
6
14.5 4.17 4.229
3.497
14 13.61 4 3.015
2.188
13.5
2
13
12.5 0
2013 2014 2015 2016 2016 2017 2018 2019 2020

Graph No. 4.8.1 GDP of Senegal

Trade: - Total amount of export & import by Senegal in 2017 was US$ 10.43 Billion.

Export commodities: -
Fish, crustaceans, molluscs, aquatics invertebrates, pearls, precious stones, metals,
coins, inorganic chemicals, precious metal compound, isotope, essential oils, perfumes,
cosmetics, toiletries, oil seed, elegiac fruits, grain, seed, fruits etc

Export Partners: - Mali 18%, Switzerland 11%, India 8.2%, Cote d’Ivorie 5.3%, China
5%, Spain 3.6%, Gambia 3.4%.

41
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Import Commodities: -
Mineral fuels, oils, distillation products, machinery, nuclear reactors, boilers,
cereals, electrical, electronic equipment, pharmaceutical products, iron and steel, paper and
paperboard, articles of pulp, paper and boar etc.

Import Partners: - France 17%, China 9.7%, Nigeria 7.9%, India 7.3, Netherland
5.6%, Germany 4.2%, Gambia 4%.

Export & Import by Senegal (In US$


Million)
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
2013 201 2015 2016 2017
Import 6552.182 6502.674 5595.355 5477.912 8573.01
Export 2660.989 2750.172 2611.672 2640.277 1857.211

Import Export

Chart No. 4.8.1.1 Export & Import of Senegal

Amount of LOC Sanctioned: -

Amount of LOC Sanctioned


100 88.95
90
80
70
60
50 41.96
40 32.87
27 25 27.5
30 19
20 11 10
10 5
0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2014-15

Chart No. 4.8.1.2 Amount of LOC Sanctioned to Senegal

42
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Purpose of LOC:
▪ Development of rural SME and purchase of agricultural machinery and equipment.
▪ Export of 350 buses and accessories and 85 pick-up vans
▪ Irrigation Project
▪ Supply of 70 multipurpose oil presses, 70 mini bakeries and 70 cereal and fruit
processing units for women poverty alleviation.
▪ Supply of 320 pickup vehicles and 80 station wagons for support of decentralized
administration.
▪ Rural electrification project and fishing industry development project.
▪ Supply of medical equipment’s, furniture and other accessories to four hospitals.
▪ Rice Self Sufficiency program in Senegal.

4.8.2 Market Attractiveness for Senegal:


Market Attractiveness Factors Importance Rating
Market Factor 40%
Level of need, want or desire for your product at your price 0.2 60
Size of market opportunity that could buy your product 0.3 55
Market potential: non-buyers that could buy your product 0.15 50
Degree to which your product is affordable in this market 0.2 60
Degree your product offers performance not availble in this market 0.15 70
1 58.5
Country Factors 60%
Degree to which foreign businesses can operate in this market 0.25 45
Political stability and attitudes toward your country of origin 0.25 50
Language and reglious barriers that make success difficult 0.15 40
Cultural differences in values, attiditudes, customs that cause
failure 0.15 50
Degree to which a market infrastructure is in place 0.2 55
1 48.25
Market Attractiveness Score 52.35

43
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

From the above table & GE matrix we can see Senegal market attractiveness score is 52.35
which shows that there is hold or average market. Which indicate Senegal market is not
good or not bad option for Indian exporter as well as for STC. In this type of market
investment is not that much risky but at the same time you can’t expect good return.

44
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.9 Cabo Verde

Area: - 4,033 sq. km


Population: - 560,899
Literacy Rate: - 86.69 % for adult (15-24)
Population below poverty line: - 35%
Ease of doing business rank: - 127
GDP Per Capita: - US$ 3,238
GDP of Cabo Verde: -
The Gross Domestic Product (GDP) in Cabo Verde was worth 1.62 billion US
dollars in 2016. The GDP value of Cabo Verde represents less than 0.01 percent of the
world economy. GDP in Cabo Verde averaged 0.78 USD Billion from 1980 until 2016,
reaching an all-time high of 1.86 USD Billion in 2011 and a record low of 0.13 USD Billion
in 1984.

GDP In US$ Billion Annual GDP % Growth


1.9 1.85 1.86 5
4.17 4.229
1.8 4 3.497
3.015
1.7 1.62 3 2.188
1.57
1.6 2

1.5 1

1.4 0
2013 2014 2015 2016 2016 2017 2018 2019 2020

Graph No. 4.9.1 GDP of Cabo Verde

Trade: - Total amount of export and import by Cabo Verde in 2016 was US$ 732.521M.
Export Commodities: -
Meat, fish and seafood preparations, fish, crustaceans, molluscs, aquatics
invertebrates, footwear, gaiters, toys, games, sports requisites, cereal, flour, starch, milk
preparations etc.

45
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Export Partners: - Spain (42%), Portugal (15%), Jamaica (12%), Senegal (3.4%),
Turkey (3%), India (.24%).
Import Commodities: -
Foodstuffs, machinery, mechanical appliances, nuclear reactors, boilers, transport
equipment, fuels, iron and steel, articles of iron or steel.
Import Partner: - Portugal (44%), Spain (13%), Italy (6.2%), China (5.5%),
Netherlands (4.7%), India (0.14%).

Export & Import by Cabo Verde in US$ Million


1000
800
600
400
200
0
2013 2014 2015 2016
Export 332.515 356.781 215.241 60.361
Import 726.367 768.743 606.295 672.16

Export Import

Chart No. 4.9.1.1 Export & Import of Cabo Verde


Amount of LOC sanctioned: - Total amount of LOC sanctioned by EXIM Bank’s
of India for Cabo Verde was US$ 5 Million in 2009/2010.
Purpose of LOC: -
➢ Technology park project.

46
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.9.2 Market Attractiveness for Cabo Verde: -

Market Attractiveness Factors Importance Rating


Market Factor 40%
Level of need, want or desire for your product at your price 0.2 55
Size of market opportunity that could buy your product 0.3 50
Market potential: non-buyers that could buy your product 0.15 45
Degree to which your product is affordable in this market 0.2 60
Degree your product offers performance not availble in this market 0.15 70
1 55.25
Country Factors 60%
Degree to which foreign businesses can operate in this market 0.25 60
Political stability and attitudes toward your country of origin 0.25 55
Language and reglious barriers that make success difficult 0.15 50
Cultural differences in values, attiditudes, customs that cause
failure 0.15 55
Degree to which a market infrastructure is in place 0.2 60
1 56.5
Market Attractiveness Score 56

47
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

From the above table & GE matrix we can see Cabe Verde market attractiveness score is
56 which shows that there is hold or average market. Which indicate Cabe Verde market
is not good or not bad option for Indian exporter as well as for STC. In this type of market
investment is not that much risky but at the same time you can’t expect good return.

4.10 Market Attractiveness Table for Above Mentioned Country: -


Country Name Market Attractiveness Score (%) Outcome
Ghana 63.5 Attractive /Growing
Mali 37.3 Harvest/Divest Market
Sierra Leone 36.4 Harvest/Divest Market
Cote d’Ivoire 36.25 Harvest/Divest Market
Senegal 52.35 Neutral
Cabo Verde 56 Neutral
Nigeria 55 Neutral

48
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.11 SWOT ANALYSIS OF STC OF INDIA LIMITED FOR EXPORT


UNDER EXIM BANK LOC
STRENGTHS WEAKNESSES
➢ STC is solely dependent on back-up
➢ More than 60 years of experience suppliers for exports.
in trading various commodities ➢ STC’s tie-up with back-suppliers for
agro & non-agro. non-agro commodities is limited.
➢ STC has network of offices spread ➢ Lack of warehousing facilities which are
across all strategic port towns of vital for STC.
India. ➢ STC don’t have office in any foreign
External

➢ Trust-worthiness in international countries.


markets.
➢ Wide range of export and import
items.
➢ Trade links with various parts of
the world.
➢ Support of Government of India.
➢ STC have experience of doing
export under LOC.

OPPORTUNITIES THREATS
➢ STC’s reputation as a Government ➢ STC’s Back-up suppliers may want to go
Organization and established solo and tie up with EXIM Bank and
trading company. recipient Governments for directly
➢ Proactive government at the Centre supplying the goods.
to promote exports through EXIM
Bank LOC & “Make in India”
programme.
➢ Government of India is financing
medium & long term EXIM Bank
Line of Credit worth Billions of
Internal

dollars for various projects in


developing countries across ASIA,
AFRICA and LAC.
➢ STC can use the LOC platform to
export project equipment and
manufactured goods through its
vast array of back-up suppliers to
other countries.
➢ Make in India Project by Govt. of
India.
➢ Sanction on Iran by USA.
➢ Trade opportunities arising from
bilateral trade negotiations.

49
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

4.11.1 Swot Analysis Summary: -


Line of credit creates an opportunity for Indian exporters/firms as the LOC terms
& conditions make it mandatory for the borrowing government/institutions to purchase
75% of goods and services from India. Among the goods exports, manufacturing exports
consist a major part. Manufacturing exports such as cars, buses, rolling stocks, transmission
lines, earth moving equipments, solar panels, agricultural and laboratory equipments, steel
plates etc are widely exported to least developing countries or underdeveloped countries
under LOC.
STC, by virtue of its establishment as trading company, has an expertise of 65 years
in handling exports and imports and has earned a reputation as Star Trading House.
Government of India supported LoC provides an opportunity for STC to further strengthens
its position in the area of trade and hence STC in collaboration with various stakeholders
such as Ministry, EXIM Bank and Manufacturers should focus on export of manufacturing
goods.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Chapter 5
Findings & Recommendations

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

5.1 Findings: -

➢ The Economic Community of West African States (ECWAS) organization makes


trade easy between all West African states.
➢ In West African region almost, all of the countries are dependent on import in order
to fulfill their basic and development related requirement.
➢ As per world bank West African economy growth rate will be high in upcoming
years so it can be an attractive for investor.
➢ Most of the countries in West African region are underdeveloped so all of them
are seeking towards infrastructure development.
➢ Most of the country don’t have stable banking system and also facing financial
crises which restrict them to invest in big development projects so EXIM Bank’s
LOC can play a vital role.
➢ Indian exporters have tough competition from USA and China in West African
markets.
➢ In West Africa almost all the countries have very low employment rate so there
are chances that traders can get skilled labor at very low price.
➢ Almost all of the countries are looking forward to invest in power projects, health
sector and agriculture.

52
Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

5.2 Recommendations
5.2.1 Primary Recommendations
➢ In order to hit West African market STC Should focus more on the following
countries-
I. Ghana
II. Senegal
III. Cabe Verde
IV. Nigeria
➢ Major sector to focus for export in West African Market are agriculture
equipment’s, electrification project related equipment, solar power products,
pharmaceuticals, railway equipment’s, processed oil etc.
5.2.2 Secondary Recommendations
➢ An annual supplier meet can be organized in order to develop strong and long-
lasting bond with the suppliers. Also, customer-dealer meets can be organized once
in each region in a year to ensure 100% customer satisfaction.
➢ STC Should participate in various trade meets organized by govt of India with
various African nations.
➢ STC should focus on search engine optimization (SEO) so that it can appear on top
in search result when an organization who wants to import from India search trading
company in India.

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Balaji Institute of International Business
Study on Business opportunities for STC in West African Markets Utilizing LOC Sanctioned by
EXIM Bank of India

Bibliography: -

➢ https://www.ciiblog.in/india-africa-trade-and-investment-
relations/
➢ https://tradingeconomics.com/burkina-faso/imports-by-category
➢ https://www.ibef.org/economy/trade-and-external-sector
➢ https://www.africa-business.com/features/stationery.html
➢ http://www.rogerjbest.com/nav.cfm?A=N&C=17&P=2
➢ http://commerce.gov.in/analytics/
➢ https://www.eximbankindia.in/
➢ http://www.stclimited.co.in/
➢ https://trends.google.com/trends/?geo=IN
➢ https://www.bbc.com/news/world-africa-13433790
➢ http://www.worldbank.org/en/country/ghana
➢ https://www.cia.gov/library/publications/the-world-
factbook/geos/gh.html
➢ https://www.trademap.org/Index.aspx

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Balaji Institute of International Business