Study on Sourcing Opportunities in Benin by john williams

Dragon Sourcing Your Tailored Approach to Emerging Markets

Study on Sourcing Opportunities in Benin

Feb, 2020 www.dragonsourcing.com

Table of Contents −

Executive Summary

−

Benin– Macro Economics

−

Cotton

−

Edible Fruits and Nuts

−

Oilseeds

−

Vegetable Fats and Oil

−

Cement

−

Textiles

Executive Summary- Top Export Categories Category

Export Value(2018) in USD Thousands

Top Export Destinations

Import Duty into EU

Import Duty into US

Cotton

461,411

China, Bangladesh, Vietnam, Malaysia

Nil

Edible Fruits & Nuts

142,278

Somalia, Djibouti, Vietnam, Indonesia, Pakistan, UAE

Nil

Oilseeds

51,537

China, Israel, Vietnam, UAE, Turkey

Nil

Vegetable Oils & Fat

48,002

Nigeria, Malaysia, The Netherlands, China

Nil

Cement

19,894

Niger, Togo, Burkina Faso

Nil

Textile

796

Belgium, US, UK, France, Nigeria

Nil

Legend

More than 20 suppliers

Between 10-20 suppliers

Less than 10 suppliers

No of Suppliers

Sourcing Opportunities in Benin

MACRO ECONOMICS

Benin Overview – Stretching 670km from the Niger River to the Gulf of Guinea, Benin occupies a geo-strategic position in West Africa – Port of Cotonou, road network and development of economic, industrial and free trade zones are key to the region’s commerce – Located in the east part of Benin Republic and also situated at the east of Cotonou, Porto-novo is known as "the Political Capital of Benin" and is the traffic hub and material distribution center of road transport system in southeastern of Benin Republic and Federal Republic of Nigeria

– Benin is one of Africa's most stable democracies but the country is challenged by multiple economic and development factors and the country ranks 166 out of 187th countries on the Human Development Index – Economic growth is largely dependent upon agriculture and fluctuations in the volume of rainfall, the high cost of agricultural inputs, and the low level of mechanization impact the country’s food security.

Growth (2017)

5.6%

Value (2017)

USD 9.3 billion

COTTON

Cotton - Market Trends Benin- Export of HS 52 Series- Cotton in USD 1000s in 2018 461,411 430,000 358,582

380,000 330,000

307,504 273,112

280,000 230,000

186,693 180,000 2014

2015

2016

2017

2018

Top Export Products under HS 52 Series in USD 1000s in 2018 Cotton waste, incl. yarn waste

1,051

Combed cotton

5,056

Woven fabrics of cotton, containing >= 85% cotton by weight

9,866

Raw Cotton

−Franc Zone cotton production for year 2019/20 is forecast at a record 6.0 million bales, up 0.6 million bales or 11 percent from 2018. Harvested area is forecast a record 3.3 million hectares, up 0.3 million hectares or 10 percent from 2018. Benin was the leading cotton producer for the region 2018 and 2019 −The country produced 1.45 million 480 lb bales of cotton in 2019 with a 4% growth over the previous year −

445,433

−Cotton in Benin contributes 40 percent of foreign exchange earnings, 12 percent of GDP and about 60 percent of the national industrial fabric

Cotton- Supplier Landscape Top Importers of HS 52 Series from Benin in 2018 in USD 1000s and in %

Supplier Locations

56,875 , 12% 31,670 , 7% 36,457 , 8%

Bangladesh Viet Nam 216,067 , 47%

China Malaysia

39,680 , 9%

Egypt Rest of the World

80,661 , 17%

Source: International Trade Centre Source: Dragon Sourcing Supplier Survey

−DSL’s initial research shows there are more than 100 trading companies in the country

EDIBLE FRUITS & NUTS

Edible Fruits and Nuts - Market Trends − Benin is predominantly an agricultural country with about 55% of the economically active population engaged in the agricultural sector

HS 08 Edible Fruits and Nuts from Benin in USD 1000s

−The agricultural sector is challenged by poor infrastructure, availability of rural credit and insufficient use of fertilizer, insecticides, and seeds

142,278

150,000 130,000 110,000

95,294

90,123

89,413

−Crop production and export figures are often understated as smuggling and black marketeering is not uncommon −Main crops include food crops like manioc, yam, corn, sorghum, beans, rice, soy, sesame and sweet potatoes

90,000 70,000

55,131

50,000 2014

2015

2016

2017

2018

−Fruits include papaws, guavas, pineapple and bananas

Top Products under HS 08 exported from Benin in 2018 in USD 1000s Desiccated coconuts

Almonds, shelled

Cashew nuts, shelled

−Largest export from the country being nuts like Cashew, Almonds and Coconuts

402

−Benin produces 135,000 tons of Raw Cashew Nuts per year; 95% of these are exported to India for processing

3,861

9,765

Cashew nuts, in shell

127,940

Edible Fruits & Nuts – Supplier Landscape Supplier Locations

Top Importing Countries of HS 08 in USD 1000s and in % in 2018 9,741 , 2% 8,643 , 2% 8,705 , 2% 12,340 , 2% 16,883 , 3%

Somalia Djibouti

44,46 0 , 8%

Viet Nam Indonesia

21,858 , 4% 22,026 , 4%

216,540 , 40%

United Arab Emirates India

24,578 , 4%

25,754 , 5% 26,267 , 5% 32,912 , 6%

Pakistan

Kenya 67,658 , 13%

Iran, Islamic Republic of

Sudan

Source: International Trade Centre

Source: Dragon Sourcing Supplier Survey

−Cashew production is mainly limited to the northern part of the country where soil, climatic and geomorphological conditions are more favorable to the cultivation −The shell is made into oil by companies like Fludor (subsidiary of Nigerian TDI) and is exported to countries like India where it is used to produce brake linings, paint and lacquer © 2020 Dragon Sourcing. All rights reserved.

OILSEEDS

Oilseeds- Market Trends −Shea products in Benin are produced in a low-developed agro-industry, but they are seen to be the country’s third largest export

Benin- Export of HS 12- Oilseeds in USD 1000s 51,537

55,000 50,000

−Shea butter is made from the nuts of shea trees, which only grow naturally in the West African savanna belt

45,000 40,000

33,119

35,000 30,000

−Benin is the second largest Shea producer and the third largest exporter in West Africa- Shea is the largest exported product under this category followed by palm oil and groundnut (peanut) oil

25,000 20,000

12,195

15,000 10,000

6,829

5,780

2013

2014

5,000 2015

2016

−China is a major investor in the palm oil sector with investments close to $300 million

2017

Top Export Products under HS 12 in USD 1000s in 2018 Seeds, fruits and spores, for sowing

4,158

Plants kind used primarily in perfumery

7,146

Groundnuts

7,780

Soya beans Other oil seeds and oleaginous fruits

−Palmoil was Benin’s first export industry until 1980s, Oil exports have declined sharply since then

41,557 377,189

Oilseeds- Supplier Landscape Supplier Locations

Top Importers of HS 12 Series from Benin in 2018 in USD 1000s 18 % China Israel 4% 47%

Viet Nam

United Arab Emirates Turkey

United States of America 6%

Rest of the World 15%

Source: International Trade Centre Source: Dragon Sourcing Supplier Survey

â&#x2C6;&#x2019;There are more than 100 suppliers of Shea spread across the northern and southern parts of the country

VEGETABLE FAT & OIL

Vegetable Oils & Fat - Market Trends Benin- Export of HS 15- Vegetable Fat and Oil in USD 1000s in 2017 48,002 43,129

46,500

−The country was the largest producer of Palm oil in 2018 in the West African region

41,500 36,500 31,500

26,716

25,328

2015

2016

26,500

−Benin was also the largest exporter of Palm oil from the region- it exported 460,000 tons of palm oil in 2018 which was almost six times the Nigerian exports of the same

21,500 16,500 11,500

−Industrial palm oil production in Benin accounts for about 20% of total production in the sector and most of it is exported

6,846

6,500 2014

2017

2018

−Chinese investments in the industry has helped achieve a high yield and production

Top Export Products under HS 15 Series in USD 1000s in 2018 Palm oil and its fractions

Crude palm oil Fixed vegetable fats and oils and their fractions

−India, traditionally one of the largest consumers of Palm oil, starting strengthening imports from Benin in 2019 as it imposed embargo on Malaysian exports

3,486

9,226

10,675

Cotton-seed oil and its fractions

23,678

Vegetable Oils & Fat- Supplier Landscape Supplier Locations

Top Importers of HS 15 Series from Benin in 2018 USD 1000s and in % 1,076 , 2%

619 , 1%

369 , 1%

2,262 , 5%

Nigeria Malaysia

7,193 , 15%

Netherlands China 36,483 , 76%

India Rest of the World

Source: International Trade Centre Source: Dragon Sourcing Supplier Survey

−Palm oil producers are in the south of the country (in Ouemé, Zou and Mono). In the North, the land isn't so suitable for a farming palm. However, there are distributors and resellers in North Benin and along the Nigerian border.

CEMENT

Cement - Market Trends Benin- Export of Cement USD 1000s 45,000

−Benin is one of the largest producers of cement in West African Region

43,708 37,512

40,000

−Most of the Cement produced is exported to Niger and other parts of Africa

35,000 30,000 25,000

21,760 16,953

20,000

−Cement is one of the Industries that is privatized in the country which is profitable and developing well

19,894

−Lafrge is the largest producer of cement inSub Saharan Africa Region. The companyhas a 50% ownership and operates the second largest plant- by Lafarge Holcim, is the second-largest. It operates a 0.7Mt per year integrated plant in Cotonou

15,000 2013

2014

2015

2016

2017

Top Export Products under HS 25 Series in USD 1000s in 2018 Marble, travertine, ecaussine and other calcareous stone

Cement, incl. cement clinkers, whether or not coloured

−Benin has three integrated cement plants with a combined capacity of more than 2Mt per year. The country also has a grinding plant with a capacity of 0.2Mt per year

19,883

Cement – Supplier Landscape Supplier Locations

Top Importers of HS 25 Series from Benin in 2018 in USD 1000s and in % 899 , 5%

889 , 4% 5 , 0%

Niger Togo Burkina Faso Rest of the World 18,100 , 91%

Source: International Trade Centre Source: Dragon Sourcing Supplier Survey

−The largest producer in the country is Cimenterie du Benin, which operates 1.3Mt per year Masse plant. Société des Ciments d’Onigbolo − Heidelberg Cement subsidiary Cimbenin operates a 0.3Mt per yearr plant in Cotonou Reda Cimenterie also operates an integrated cement plant in Cotonou. −. Cement Plants are located in Cotonou and Onigbolo regions of the country © 2020 Dragon Sourcing. All rights reserved.

TEXTILES- An Upcoming Industry

Textiles- Market Trends −The textile industry is an upcoming industry in Benin, owing to the large quantity of cotton produced in the country and availability of cheap labour

Benin- Export of HS 61 & 62 Series- Textiles & Apparel in USD 1000s 800

796

791

700

−Textile companies account for about 30% of the labour in the cotton sector. The apparel and footwear markets in Sub-Saharan Africa is estimated to be worth $30 billion

600

503

500

432

420

400 300

2014

2015

2016

2017

2018

−Benin has tens of textile manufacturers spread across the country, with some of these companies specializing in textiles for export

Top Export Products under Textiles & Apparel Super Category in USD 1000s in 2018 Other made up textile sets

279

Non Woven Apparel

Knitted Apparel

477

Textiles- Supplier Landscape Supplier Locations

Top Importers of HS 61, 62 & 62 Series from Benin in 2018 in USD 1000s and in %

40, 8% 30, 6%

Belgium

36, 8%

182, 38%

United States of America United Kingdom France

85, 18%

Nigeria Rest of the World 106, 22%

Source: International Trade Centre

Source: Dragon Sourcing Supplier Survey

−Most producers are located in Cotonou in the South and Borgou in the North −Benin is good in Towel and Khaki production. The country also is known to export shoes

Dragon Sourcing Contact Information ASIAN Offices

EUROPEAN Offices

Dragon Sourcing Shanghai Suite 1502-1503, Jin Tian Di International Mansion 998, Renmin Road – Shanghai, 200021, P.R.China Tel: +86 21 61 41 39 55 Fax: +86 21 61 41 39 66 Email: contact.asia@dragonsourcing.com

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Dragon Sourcing Hong Kong 7/F Hong Kong Trade Centre 161-7 Des Voeux Rd Central, Hong Kong SAR Tel:+852 91 80 40 57 Fax: +852 25 80 24 26 Email: contact.asia@dragonsourcing.com

NORTH AMERICAN Office Dragon Sourcing Houston 4532 Plantation Colony Dr Missouri City, TX 77459 Phone: 832- 406-0281 Email: contact.us@dragonsourcing.com

Dragon Sourcing Vietnam C1A Cu Xa Tan Cang, Dien Bien Phu Street, Ward 25, Binh Thanh District, HCM City, Vietnam Tel:+84 8 35129390 Fax: +84 8 35129391 Email: contact.asia@dragonsourcing.com

LATIN AMERICAN Offices

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Dragon Sourcing Mexico Guadalajara, Mexico Dragon Sourcing Australia Phone:+1 (520) 463-5426 Level 4, 51 Queen St, Melbourne, Victoria 3000, Australia Email: contact.mexico@dragonsourcing.com Tel: 1300 293 816

AUSTRALIAN Offices

Mobile:+61 407 585 185 Email: contact.australia@dragonsourcing.com

Dragon Sourcing India 601 – A – Mota Mahal Lokhandwalla Complex, Andheri (West) Mumbai 400053 – India Mobile:+ 91 9867602535 Email: contact.india@dragonsourcing.com

Disclaimer The Analysis and Statements in this Report represent the considered views of Dragon Sourcing Ltd (DSL). The Report includes ‘forward looking statements’ and opinions based on the analyst’s current analysis and judgment of the Industry. Although DSL believes the outcomes expressed in such ‘forward looking’ statements are based on reasonable assumptions, such statements are not a guarantee of future performance and actual results or developments may differ materially from those in forward- looking statements. Factors that could cause actual results to differ materially from those in forward- looking statements include the general economic, environmental, market, business or government conditions. While DSL has made every reasonable effort to ensure the veracity of the information presented, it cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions. No part of this report may be distributed, copied or reused without prior written permission from Dragon Sourcing Ltd.