Tapping into India and Africa’s strengths to drive a financial revolution

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Vinesh Kassen, Head of India Client Coverage at Absa CIB, explores how successful digitisation projects have revolutionised the way that India and Africa interact with financial services, and why leveraging both regions’ capabilities will help deepen ties.

India and Africa are embarking on a new chapter. The newly appointed high commissioner of South Africa to India, Anil Sooklal, has been flying the flag for the India-Africa relationship on the global stage, commenting in a recent speech that the two regions share a “special relationship that has so much potential at every level”. The connection between the two continents is more than just a bilateral relationship; it is a partnership with the capability to shape the future of global trade.

In many ways, Africa and India are like mirror images of each other. With large working-age populations, rapid urbanisation, growing startup ecosystems, and a shared colonial history, there are many striking similarities between the regions – both in their past and future potential.

However, both regions also have unique assets that will put them on the front foot, as they continue on their pathways of rapid growth and development. India and Africa have both experienced fast development of their digital infrastructure and financial services ecosystems, setting them in a prime position to better engage in overseas and intraregional trade.

With both regions poised to experience steady GDP growth and job creation, they must lean on each other, tap into their strong suits, and cement their relationship to spur the next phase of economic development. Understanding where these strengths lie, and how best to leverage them, is key to helping drive mutual growth.

India’s digital revolution poses inspiration for Africa

Digital partnerships are becoming increasingly important in shaping the future of trade relations between India and Africa. India has developed leaps and bounds in its digital infrastructure, offering huge potential for Africa to learn from these advancements and replicate its success.

Cashless payments have boomed in India over the past decade, progress spearheaded by multiple user-friendly initiatives to ease the transfer of money. For instance, India launched its Aadhaar card – an individual identification number issued by the government which banks and financial institutions use to streamline the process of verifying citizens when opening a bank account or applying for financial products. This has given a digital identity to over a billion Indian citizens, many of whom were previously “off-grid” and may have struggled to access financial services.

The Aadhaar card has revolutionised India’s banking sector, encouraging widespread financial inclusion and creating a near-cashless society through competitive payment providers.

India has also pioneered the Unified Payments Interface (UPI) as part of its digital payment revolution: a simple, unified platform that enables users to transfer money instantly between accounts. From street stalls to strategic investments, the UPI had recorded 83.75 billion transactions by the end of 2023 as India increasingly moves away from cash payments – driven by a need to remove friction, reduce costs, and improve efficiency.

Transforming Africa’s trade ecosystem

Strides are also being made in the adoption and promotion of digital solutions across Africa. Major projects have been underway to transform the trade landscape, implementing advanced technologies to make trade faster, more transparent, and more secure. For instance, South Africa has greatly advanced its electronic trading infrastructure in recent years, attracting Indian investors requiring connectivity across the African continent.

The Johannesburg Stock Exchange (JSE) introduced Colocation 2.0 in 2023, which removes connectivity barriers to entry into South Africa for various types of firms looking for easy entry into the marketplace. This solution offers comprehensive connectivity to exchange services at a minimal monthly cost. Many African exchanges are taking steps to roll out electronic trading capabilities further, helping investors to access lucrative, yet often untapped, markets.

What’s more, Africa is also seeing improvements in the rollout of digital payments. M-PESA is Africa’s largest and most successful mobile money service – opening up doors to financial services for millions of people. This rollout has already begun to integrate advanced technologies into less developed markets, where we’ve seen a tenfold increase in data usage in regions previously lacking digital infrastructure. While there is still progress to be made, this rapid uptake signals a huge opportunity for Africa to learn from India’s digital success and drive further growth.

The prospects at hand

This presents huge opportunities for Africa and India. With the right expertise, initiatives to strengthen digital infrastructure can be tailored to local contexts, helping to leverage the success of mobile money and expand the reach of digital payments across the continent.

It creates a significant role for India to help plug the infrastructure gaps and support the development of Africa’s digital revolution.

Africa continues to have significant infrastructure needs. However, a shared recognition of the challenges and opportunities facing both regions is key to unlocking the full potential of the India-Africa trade relationship. Indian investors are increasingly stepping in to provide not just capital, but also technical expertise and innovative solutions, that boost digital infrastructure and fuel connectivity across the continent. With knowledge-sharing of their own digital infrastructure rollout, Indian investors can act as strategic advisers in helping African nations launch their own digital identity and payment systems – serving as the foundation for secure and accessible digital payments.

Preparing for the long run

Attention is now turning towards not only increasing trade, but also addressing the challenges that both continents have faced. Many Indian investors are committing to Africa for the long haul, recognising that long-term engagement puts them in the best position to reap the benefits from their investments. Where investment may have previously been designed with extraction in mind, rather than growth, investment in Africa is now focused on creating enduring partnerships that will grow over generations.

Easing the challenges of doing business in Africa is improving, but there is a long road ahead to deepen the ties between both regions further. The regulatory divergence in Africa – with each African country having its own distinct set of rules and regulations – can create barriers when implementing digitisation projects across the continent.

However, there is enormous scope to build long-term cooperation between Africa and India. They sit on a unique opportunity to embrace each other’s strengths, creating a collaboration where shared successes can fuel a lasting partnership.