elsenburg louw pienaar country analysis part i: trade into africa

Elsenburg

Louw Pienaar

COUNTRY ANALYSIS PART I: TRADE INTO AFRICA

© Western Cape Government 2012 | 2Market Access

Structure

• Introduction• Why is Africa important• Trade Perspective• Trade into Africa• Product Focus• If Exporting to Africa, where?• Identifying attractive markets


Introduction

Africa is important on various levels.

Everyone is talking about Africa

Trade, Investment, value-adding, Resources, human capital, Land etc.

How do we use Agriculture

Aim of the researchIntroduce the topicStimulate discussionHelp develop strategy

Understand your

position

Identify your target market

Understand your target

market

Get to the target market

Export readyCurrent SituationTrade balancesWC focusProduct specificationRegional TradeAfrica Focus

Market Scan Market DemandMarket accessCompetitionDistanceRiskMAI

Market ZoomEconomyPopulationGovernanceTradeAgricultureWaterInfrastructureTechnologyConsumptionInvestment

Market EntryDeveloped a strategy

What?Where?Why?How?

Country AnalysisR

ob

ust S

trate

gy

Market Access 4


1) Why is Africa Important?

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20120

100

200

300

400

500

600

700

0

10

20

30

40

50

60

70

Total Imports

FDI Inflows

Valu

e of

Impo

rts

(USD

Bill

ion)

Valu

e of

FD

I (U

SD B

illio

ns)

Source: Global Trade Atlas, 2013



2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

2014*

2015*

-6

-4

-2

0

2

4

6

8

World Sub-Saharan Africa Advanced Economies

GD

P G

row

th ra

te (%

)

Source: Global Finance, 2013



19501960

19701980

19902000

20102020

20302040

20500

5

10

15

20

25

30

0

10

20

30

40

50

60Africa (% of World) Africa (% of Urban Pop)

Popu

latio

n (%

of w

orld

)

Popu

latio

n (%

of U

rban

Pop

ulati

on)

Source: UNCTAD, 2013

© Western Cape Government 2012 |

Regional Trade: Fresh ProductsRSA

Aggregate Group

Exports

%

Europe 58.1

Asia 24.6

Africa 9.7

America 7.1

Market Access 8

Trade Perspective


South African Agricultural Export to Africa

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20120

500

1000

1500

2000

2500

Total Agricultural Exports

Total Agricultural Imports

Trade Balance

Valu

e in

USD

mill

ions

Source: World Trade Atlas, 2013


RSA Exports to Africa by type of product

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

Fresh produce Semi processed Processed


South African Exports of Fresh goods to Africa

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

50000

100000

150000

200000

250000

Apples & pears Citrus fruit Potatoes Grapes, fresh or driedSoft Citrus

Valu

e in

USD

(mill

ions

)


South African Exports of processed goods to Africa

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

20000

40000

60000

80000

100000

120000

140000

160000

180000

Fruit & veg juices Wine Preserved fruitsCut flowers Dried fruit Frozen fruits & nuts


Why is Trade Important to the Western Cape?

Role in the Economy• Link to Economic Growth• Development• Production increases• WC Exports in goods have grown from R25.1 billion in 2001 to

R54.7 billion in 2011 (annual compounded rate of 9.3%)

Agriculture• The most dominant export sector in the province• Contributes to 4% of GDP, together with linkages 10-12%• Employment: Agriculture employs 6.5% of regional workforce• WC Exports 30% of it’s annual production• In 2011, close to 50% of total Exports were Agricultural products


Product focus: Market Attractiveness Index

ProcessedAfrica Import

Value 2011 (‘000)RSA Export to Africa

Value 2011 (‘000)5-year annual growth rate

1 Wine: 220421 311770 45442 14.172 Fruit juices: 200990 150987 27054 15.103 Nuts preserved: 200811 41885 1693 14.584 Orange Juice: 200919 47114 8771 43.885 Fruit & plants nes: 200899 28757 1497 30.83

Fresh Africa Import Value

2011 (‘000)RSA Export to Africa

Value 2011 (‘000)5-year annual growth rate

1 Apples: 080810 380052 98159 25.122 Oranges: 080510 45034 16136 4.883 Potatoes: 070190 82680 16626 17.174 Grapes: 080610 40038 9612 20.905 Pears: 080820 29969 6928 26.51

Africa as Export Destination

Identifying Attractive Markets in Africa


Market Attractiveness Index

• ITC methodology used to create composite index

• Combines the following Trade related statistics into one index

Market DemandMarket Access

“A Composite index is formed when individual indicators are compiled into an single index, on

the basis of an underlying model of multi-dimensional concept that is being measured”

OECD

MAI

Product/market Specific Country Specific

Import Value

Import Growth

Tariff Advantage

World Imports

Trademap

Total Exports

Distance Advantage

Bilateral TariffsTariffs Applied to competitors

CEP II

MacMap

Bilateral distance

Distance of competitors

Indicators Used: MAI

Country Risk

Coface

Market Access 18


Steps in the MAI

Current Markets

New Markets

Most Attractive Markets

1) Market Size2) Market Dynamism3) Competition4) Market Openness5) Distance6) Cultural Proximity

Market Scan

AlgeriaAngolaBeninBotswanaBurundiCameroonCape VerdeCAR…… 53

All African Importing Markets

Results: Fresh products

Angol

a

Alger

ia

Kenya

Benin

Ghana

Moz

ambi

que

Nig

eria

Zimba

bwe

Mau

ritiu

s

Camer

oon

52.00

54.00

56.00

58.00

60.00

62.00

64.00

66.00

MA

I In

dex

Results: H080810: Apples, FreshAngola: Favourable access and distance advantage

Algeria has massive import demand, new market?

Top ten had exceptional import growth

Market Access 21

Results: H080510: Oranges

Angol

a

Mau

ritiu

s

Suda

n

Kenya

Con

go

Zambi

a

Moz

ambi

que

Zimba

bwe

Congo

Mad

agas

car

52.00

54.00

56.00

58.00

60.00

62.00

64.00

66.00

68.00

Angola: Top on Market Access index.

Sudan: Risky Market, big import market

RSA export growth to Kenya 38%

Market Access 22

Moz

ambi

que

Angol

a

Zimba

bwe

Sene

gal

Kenya

Côte

d'Iv

oire

Zambi

a

Congo

Mau

ritiu

s52.00

57.00

62.00

67.00

72.00

77.00

MA

I In

dex

Zimbabwe fast growing importer of potatoes and distance advantage

Results: H080510: Potatoes

Mozambique: Distance; access and import growth of 43%

Senegal is the biggest importer of 24 million USD in Value

Market Access 23

Angol

a

Mau

ritiu

s

Ghana

Zimba

bwe

Moz

ambi

que

Alger

ia

Côte

d'Iv

oire

Kenya

Zambi

a

Camer

oon

52.0054.0056.0058.0060.0062.0064.0066.0068.0070.0072.00

MA

I In

dex

Results: H080610: Grapes FreshAngola has highest market access index and import growth of 45%

Ghana, even though distance disadvantage in 3rd place

Algeria biggest importer

Market Access 24

Alger

ia

Angol

a

Mor

occo

Zimba

bwe

Moz

ambi

que

Benin

Mau

ritiu

s

Zambi

a

Nig

eria

Sene

gal

52.00

54.00

56.00

58.00

60.00

62.00

64.00

66.00

68.00

70.00

MA

I In

dex

Algeria and Morocco is non-existing markets

Algeria: Highest country demand

Results: H080820: Pears

Angola, Zim and Mozam had > 40% growth

Market Access 25

Results: Processed Goods


Results: H220421: Wine

Zambi

a

Moz

ambi

que

Angol

a

Nig

eria

Ghana

Mau

ritiu

s

Zimba

bwe

Congo

Kenya

Mad

agas

car

52.00

54.00

56.00

58.00

60.00

62.00

64.00

66.00

68.00

70.00

72.00

MA

I In

dex

Angola highest import average; easy access

Zambia: Highest demand growth (70%); favourable access conditions

All of these are existing markets


Results: H200990 : Fruit juices

Angola

Mozam

bique

Zambia

Ghana

Kenya DRC

Zimbab

we

Senega

l

Mau

ritius

Mau

ritan

ia0

10

20

30

40

50

60

70

80

90

MA

I Ind

ex

Angola: Distance, growth and access conditions


Results: H200811: Nuts preserved

Nigeria

Angola

Algeria

Egypt

Mau

ritius

Kenya

Tanzan

ia

Mad

agasc

ar

Zambia

Seyc

helles

0

10

20

30

40

50

60

70

80

90

MA

I Ind

ex

Nigeria is currently the biggest importer with except growth


Results: H200919: Orange Juice

Angola

Mozam

bique

Senega

l

Algeria

Zambia

Zimbab

we

Nigeria

Côte d'Ivoire

Sudan

Kenya0

10

20

30

40

50

60

70

80

MA

I Ind

ex

Angola: Distance, growth and access conditions


Results: H200899 preserved fruit NES

0

10

20

30

40

50

60

70

80

90

MA

I Ind

ex

Angola massive import growth (87.2%)

Mozam and Mauritius favourable access conditions


Aggregate Approach: Average MAI

Importer MAIMarket Access Index

Country Demand

IndexCountry

RiskImport growth

2007-2011 %

Growth in RSA trade with

Partner 2007-2011 %

Zambia 72.10 82.39 61.82 6 44.89 24.5

Angola 72.06 80.58 63.55 6 20.85 21.9

Mozambique 71.15 89.19 53.10 6 17.43 5.2

Zimbabwe 69.93 64.01 75.85 7 75.09 63.9

Benin 67.71 67.15 68.27 5 41.97 31.2

Ghana 66.67 72.03 61.32 5 33.91 25.5

Nigeria 66.10 73.90 58.29 7 21.68 18.9

Mauritius 66.06 80.77 51.34 3 17.14 12.2

Kenya 63.79 68.83 58.74 6 32.94 19.6


Conclusion

• Trade is important in the Western Cape and the Agri-sector play prominent role in the economy

• Dependence on Traditional markets, these are slowing down: looking at alternatives

• Africa has capacity increase to import products.• South African products have seen good growth

over the last 5 years.• Attractive markets have been identified:

Angola, Zambia, Mozambique, Nigeria and Ghana stand out for every product.

Next step is to analyse the specific countries in more detail

Thank you

Tel: Fax:

www.elsenburg.com

Contact Us

Louw PienaarMacro and Resource Economics

021 808 5023

[email protected]

elsenburg louw pienaar country analysis part i: trade into africa

Documents

africa market access

africa slide

africa trade

western cape government

introduction market

africa value

structure market access

market access role