This state of affairs is truly alarming. Yet, it is in this unfavourable context that we are witnessing significant changes in the way Africa trades with the rest of the world. 20 years ago, Europe accounted for 60% of Africa’s external trade. Today that figure is 30%, which less than that between African countries and other nations. China holds a prominent spot in the list of trading nations and its presence is growing. According to China’s Ministry of Commerce, since the first Forum on China-Africa Cooperation took place in the year 2000, Beijing has injected 117.1 billion Yuan (14.7 billion Euros) in Africa (figures for 2009). China is now Africa’s largest trading partner. Annual trade has risen from 10 billion dollars in 2000, to 166.7 billion dollars in 2011. In fact, emerging nations are responsible for a growing volume of trade with Africa. It is to report on this pivotal phenomenon and how it will transform Africa, that we decided to launch Africa Trade. This magazine’s principal mission is to present and to explain key issues in world trade and to show how the emergence of Africa’s economy depends largely on its success in finding a place among the major actors in international commerce. It is difficult to overlook the many studies that suggest that if African countries were to increase external trade by just 1%, this would represent some 200 billion dollars a year - approximately five times the amount Africa receives annually in foreign aid. Africa can achieve this and more. The African Export-Import Bank (Afreximbank), which finances and promotes intra and extra-African trade, has a stated goal of increasing Africa’s share of world trade to 10% in the next two decades (see our interview with Afreximbank President and Chairman Jean-Louis Ekra on page 22). Imagine for a moment what it will mean if this target is reached. The impact on the continent’s development will be profound and Africa will be forever transformed. However, for now, many challenges stand in the way of this dream. Surely, the largest challenge is to transform the economic structure of African countries so that added value is created and its benefit are retained on the continent. In other words, Africa must develop the infrastructure and the skills to transform raw materials into finished or semi-finished products. The present situation is intolerable. It leads to nothing but the impoverishment of the continent. The following statistics are striking: according to the International Coffee Organization, in the last decade or so, African coffee producing nations brought in approximately 5.5 billion dollars in annual revenues, while the value of the product at retail exceeded 70 billion dollars! Another challenge involves the elimination or reduction of obstacles to intra-African trade. The nations of Sub-Saharan Africa impose more non-tariff barriers on trade amongst themselves, than they do on trade with other countries. The lack of adequate infrastructure is also an obstacle to trade. The African Development Bank (ADB) estimates that the countries of Africa need to invest more than 90 billion dollars per year in order to upgrade their infrastructure. Right now, they’re investing about half that amount. How will Africa fare in its quest for a larger presence in world trade? Will it be able to cope with the changing demands of global commerce? What will be the cost and what will be the results? Africa Trade will bring you regular assessments, as well as clear and concise answers to these and many other questions as the evolution of the “emerging continent” unfolds.
Malam Gerba Publisher AFRICA TRADE
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ISSUE 1, 3RD QUARTER, 2013
WORD
Commerce plays an important role in the creation of wealth, the stimulation of growth and in economic development. In spite of many efforts over some 50 years of independence, Africa continues to struggle as it seeks to find its place in world commerce. To this day, the continent accounts for no more than 3% of global business. The figure for trade among African countries is 10%. More important is the flagrant lack of diversification in African exports, most of which are made up of raw materials (fuels and minerals) that contain very little in the way of value added products. According to the United Nations Conference on Trade and Development (UNCTAD) the proportion of value added (manufactured) products in African exports fell between 1995 and 2012, while it rose in Asia and in Latin America. This dependence on natural resources leaves Africa very vulnerable to external shocks and because of its limited ability to process and to diversify its exports, the continent cannot make the best of the markets that are open to it (African Growth and Opportunity Act, EU-ACP).
FIRST
WHY AFRICA TRADE?
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CONTENTS COUNTRY REPORT
C ÔTE D ’I VOIRE THE
AMINA GERBA
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ROAD TO A NEW 6
BADJANG BA NKEN JEAN SÉBASTIEN AVI CHECK KONÉ
MIRACLE
Forty years ago, Côte d’Ivoire was vaunted for its excellent economic performance and it may happen again.
ECONOMIC SCORECARD: CÔTE
D’IVOIRE
7
LEOPOLD NSÉKÉ
Correspondents:
IVORIAN
THE
MORE PROMISING SECTORS FOR INVESTMENT IN CÔTE D’IVOIRE 8
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Distribution: MESSAGERIES DYNAMIQUES
TRADE THE PARADOX OF N AT U R A L R E S O U R C E S
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Africa is said to be entering a “super cycle” of petroleum and mineral development. Super for whom?
HOW DO YOU LIKE THEM T O M AT O E S ?
14
Africa is home to two thirds of the world’s arable land and it is a net food importer.
OBAMA IN AFRICA – “REMEMBER ME?”
16
Witney Schneidman of The Brookings Institution examines Washington’s efforts to regain its footing on the continent.
CANADA-AFRICA R E L AT I O N S L O O K I N G BACK, LOOKING AHEAD
18
“Hello, I must be going”. Canada’s waning participation in Africa’s sustainable development.
AFREXIMBANK:
20
“The Trade Finance Bank of Africa” lives up to its name.
EXCLUSIVE INTERVIEW
22
Jean-Louis Ekra, Chairman and President, African Export-Import Bank (Afreximbank)
AFREXIMBANK:
24
Working the weakest links in a precious chain.
THE EU AND AFRICA – WHEN ECONOMIC
28
What we have here is a failure to achieve consensus on opening markets.
30
Japan ups the ante.
20 YEARS OF FINANCING AFRICAN TRADE
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All rights reserved for all countries. Reproduction prohibited without the written permission of the editors. AFRICA TRADE
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ISSUE 1, 3RD QUARTER, 2013
INDUSTRY REPORT 32
INVESTMENT BANKING AND MICROFINANCE IN AFRICA
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Examples of who’s making a difference.
A F R I C A’ S E V O LV I N G INDUSTRIAL SECTOR
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The path of least resistance has run its course.
ERNST & YOUNG ON AFRICA: STOP MINDING THE “AFRO-SKEPTICS”
38
Enough with the persuading, concentrate on enabling says E&Y.
NIGERIA – FERTILE GROUND FOR INVESTORS
40
The “Giant of Africa” is among the more popular destinations for direct foreign investors.
U N S AY S M A L AY S I A L E A D S CHINA IN FDI - OTHERS
42
Malaysian investors are no pikers, but China’s shadow is long.
FOREIGN INVESTMENT
40
12
ARE NOT SO SURE
INTRA-AFRICAN INVESTMENT A F R I C A’ S FA S T E S T- G R O W I N G 4 4 FOREIGN DIRECT INVESTOR IS AFRICA
Capital is flowing and barriers are falling at home.
INTRA-AFRICAN CONTRIBUTIONS
46
An overview in numbers.
48
A pioneering bank sets its own course.
51
Playing it smart.
THE
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A tally of the most recent resolutions and agreements.
C H E C K P O I N T: W O R L D ECONOMIC FORUM MILESTONES IN AFRICA
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A look at its raison d'être and its accomplishments.
TO
FDI
E C O B A N K T R A N S N AT I O N A L : DRIVING CHANGE IN INTRA-AFRICAN INVESTMENT
COLUMN
16
EDITOR’S
VIEW
CHECKPOINT CAPE TOWN HOSTS WORLD ECONOMIC FORUM ON AFRICA 53
AFRICA TRADE
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ISSUE 1, 3RD QUARTER, 2013