As Per Ram Sir.pdf

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

A 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 1 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 A 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

2 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

3 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

11

Finding & Recommendation

12

Bibliography

54

13

Appendixes

55

49 51-53

4 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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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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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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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 %), 8 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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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 10 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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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 nonrecourse 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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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) 13 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.

Country classification

L& LMI countries with minimum binding concessional requirement

L& LMI countries with no minimum binding concessional Other developing 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

31.37 %

24.31%

Grant element* 37.48 %

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. 14 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. 15 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, transportationrail 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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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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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. II.

To analyze insight of trade in west African market. 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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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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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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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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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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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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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)

Benin

72.61

Burkina Faso Cote d’Ivoire

77.5 177.7

Gambia

78.58

Ghana Guinea Guinea Bissau Mali Senegal Niger Nigeria Sierra Leone Togo

166.26 35 25 226 228.41 79.54 120 123 110.1

Purpose

Purchase of railway equipment & Agriculture equipment Agriculture & rural electrification Transportation, agriculture & electrification Tractor Plant, Infrastructure project & Electrification Electrification & Sugar plant Health System Electrification project Electrification system & Agriculture project Electrification project and Transport Solar Power project and Electrification project Solar Power project and Electrification project Agriculture & electrification project Electrification project and agriculture

Sectoral utilization of LOC in West Africa: SECTOR WISE UTILIZATION OF LOC

Others, 16.40%

Railway, 3.29% Agriculture, 20%

Transportation, 6.50% Health Sector, 2.30%

Railway Agriculture Electrification Project Solar Project

Solar Project, 3.90%

Health Sector Transportation Others

Electrification Project, 47.59%

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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 Billion)

Annual GDP % Growth

60 50

47.81 38.62

40

42.69 37.54

30 20 10 0 2013

2014

2015

2016

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

4.17

4.229

2019

2020

3.497 3.015 2.188

2016

2017

2018

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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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 Export Import

2011 18146.652 12602.676

2012 15761.18404 13578.112 Export

2013 12643.899 12787.233

2016 10655.796 11361.004

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 50

60 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

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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

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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

0.15

55

0.2

80 80 70.25

Country Factors

0.15 1 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 Cultural differences in values, attiditudes, customs that cause failure

0.15

50

0.15

55

0.2 1

60 59 63.5

Market potential: non-buyers that could buy your product Degree to which your product is affordable in this market Degree your product offers performance not availble in this market

Degree to which a market infrastructure is in place Market Attractiveness Score

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 14.03

14

7

13.246

13.5 13

Annual GDP Growth %

14.338

14.5

13.1

6

5.691 5.808

5.34

5

12.443

5.018 4.714 4.738

4

12.5

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 2847.594 907.23

2016 2017

Import 3845.405 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 40

45 27

30

2005-06

2006-07

36 15

20 0 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

0.15

60

1

46

Degree your product offers performance not availble in this market

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 Cultural differences in values, attiditudes, customs that cause failure

0.15

35

0.15

30

0.2

40

1

31.5

Degree to which a market infrastructure is in place

37.3

Market Attractiveness Score

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 Billion) 6

4.92

Annual GDP % Growth 5

5.02

5

4.21 3.67

4

4 3

3

4.17

4.229

2019

2020

3.497 3.015 2.188

2

2

1

1 0

0 2013

2014

2015

2016

2016

2017

2018

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 332.515 726.367

Export Import

2014 356.781 768.743 Export

2015 215.241 606.295

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 20

30

30

15

15

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

0.15

55

1

40.75

Degree your product offers performance not availble in this market

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 Cultural differences in values, attiditudes, customs that cause failure

0.15

45

0.15

30

0.2

30

1

33.5

Degree to which a market infrastructure is in place

36.4

Market Attractiveness Score

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. Annual GDP % Growth

GDP in US$ Billion 40 30

27.02

31.27

35.37 32.83 36.16

5

4.17 4.229

4 3

20

3.015

3.497

2.188

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 70 60 50 40 30 20 10 0

71.4

26.8

25.5

2005-06

2007-08

30

30

2009-10

2009-10

24

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

0.15

60

1

40.75

Degree your product offers performance not availble in this market

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 Cultural differences in values, attiditudes, customs that cause failure

0.15

30

0.15

30

0.2

40

1

33.25

Degree to which a market infrastructure is in place

36.25

Market Attractiveness Score

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 ) 15.5 15 14.5 14 13.5 13 12.5

Annual GDP % Growth

15.31 14.81

14.77 6 13.61

4

2.188

3.015

3.497

4.17

4.229

2019

2020

2 0 2013

2014

2015

2016

2016

2017

2018

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 Import Export

2013 6552.182 2660.989

201 6502.674 2750.172

2015 5595.355 2611.672

Import

2016 5477.912 2640.277

2017 8573.01 1857.211

Export

Chart No. 4.8.1.1 Export & Import of Senegal

Amount of LOC Sanctioned: -

Amount of LOC Sanctioned 100 90 80 70 60 50 40 30 20 10 0

88.95

41.96 32.87

27

27.5

25 11

10

19 5

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

0.15

70

1

58.5

Degree your product offers performance not availble in this market

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 Cultural differences in values, attiditudes, customs that cause failure

0.15

40

0.15

50

0.2

55

1

48.25

Degree to which a market infrastructure is in place

52.35

Market Attractiveness Score

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 1.9

1.85

Annual GDP % Growth

1.86

5

1.8

4

1.7

1.62 1.57

1.6

3

3.015

4.17

4.229

2019

2020

3.497

2.188

2 1

1.5

0

1.4 2013

2014

2015

2016

2016

2017

2018

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

0.15

70

1

55.25

Degree your product offers performance not availble in this market

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 Cultural differences in values, attiditudes, customs that cause failure

0.15

50

0.15

55

0.2

60

1

56.5

Degree to which a market infrastructure is in place

56

Market Attractiveness Score

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

External

STRENGTHS

WEAKNESSES

➢ More than 60 years of experience in trading various commodities agro & non-agro. ➢ STC has network of offices spread across all strategic port towns of India. ➢ Trust-worthiness in international 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.

Internal

OPPORTUNITIES

➢ STC is solely dependent on back-up suppliers for exports. ➢ STC’s tie-up with back-suppliers for non-agro commodities is limited. ➢ Lack of warehousing facilities which are vital for STC. ➢ STC don’t have office in any foreign countries.

THREATS

➢ STC’s reputation as a Government Organization and established trading company. ➢ Proactive government at the Centre 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 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.

➢ STC’s Back-up suppliers may want to go solo and tie up with EXIM Bank and recipient Governments for directly supplying the goods.

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.

50 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

51 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 countriesI.

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 longlasting 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.

53 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-investmentrelations/ ➢ 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-worldfactbook/geos/gh.html ➢ https://www.trademap.org/Index.aspx

54 Balaji Institute of International Business