COUNTRY ANALYSIS PART I: TRADE INTO AFRICA Elsenburg Louw Pienaar Structure • • • • • • Introduction Why is Africa important Trade Perspective Trade into Africa Product Focus If Exporting to Africa, where? • Identifying attractive markets © Western Cape Government 2012 | Market Access 2 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 research Introduce the topic Stimulate discussion Help develop strategy © Western Cape Government 2012 | Market Access 3 Country Analysis Understand your position Identify your target market Get to the target market Export ready Market Scan Market Zoom Market Entry Current Situation Market Demand Economy Developed a strategy Trade balances Market access Governance WC focus Competition Product specification Distance Regional Trade Africa Focus Risk MAI Population Trade What? Agriculture Where? Water Why? Infrastructure How? Technology Robust Strategy Understand your target market Consumption Investment Market Access 4 1) Why is Africa Important? 600 500 70 Total Imports FDI Inflows 60 50 400 40 300 30 200 20 100 10 0 Value of FDI (USD Billions) Value of Imports (USD Billion) 700 0 Source: Global Trade Atlas, 2013 © Western Cape Government 2012 | Market Access 5 2) Why is Africa Important? 8 6 GDP Growth rate (%) 4 2 0 -2 -4 -6 World Sub-Saharan Africa Advanced Economies Source: Global Finance, 2013 © Western Cape Government 2012 | Market Access 6 3) Why is Africa Important? Africa (% of World) Africa (% of Urban Pop) 60 25 50 20 40 15 30 10 20 5 10 0 0 Population (% of Urban Population) Population (% of world) 30 Source: UNCTAD, 2013 © Western Cape Government 2012 | Market Access 7 Regional Trade: Fresh Products RSA Aggregate Group Exports % Europe 58.1 Asia 24.6 Africa 9.7 America 7.1 © Western Cape Government 2012 | Market Access 8 Trade Perspective South African Agricultural Export to Africa 2500 Total Agricultural Exports Value in USD millions 2000 Total Agricultural Imports Trade Balance 1500 1000 500 0 © Western Cape Government 2012 | Market Access Source: World Trade Atlas, 2013 10 RSA Exports to Africa by type of product 1000 900 Value in USD (Millions) 800 700 600 500 400 300 200 100 0 Fresh produce Semi processed © Western Cape Government 2012 | Market Access Processed 11 South African Exports of Fresh goods to Africa Value in USD (millions) 250 200 150 100 50 0 Apples & pears Citrus fruit Grapes, fresh or dried Soft Citrus © Western Cape Government 2012 | Market Access Potatoes 12 South African Exports of processed goods to Africa 180 160 Value in USD (millions) 140 120 100 80 60 40 20 0 Fruit & veg juices Wine Preserved fruits Cut flowers Dried fruit Frozen fruits & nuts © Western Cape Government 2012 | Market Access 13 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 © Western Cape Government 2012 | Market Access 14 Product focus: Market Attractiveness Index Africa Import Value RSA Export to Africa 2011 (‘000) Value 2011 (‘000) Fresh 1 2 3 4 5 1 2 3 4 5 Apples: 080810 Oranges: 080510 Potatoes: 070190 Grapes: 080610 Pears: 080820 380052 45034 82680 40038 29969 98159 16136 16626 9612 6928 Africa Import RSA Export to Africa Processed Value 2011 (‘000) Value 2011 (‘000) Wine: 220421 311770 45442 Fruit juices: 200990 150987 27054 Nuts preserved: 200811 41885 1693 Orange Juice: 200919 47114 8771 Fruit & plants nes: 200899 28757 1497 © Western Cape Government 2012 | Market Access 5-year annual growth rate 25.12 4.88 17.17 20.90 26.51 5-year annual growth rate 14.17 15.10 14.58 43.88 30.83 15 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 Demand Market 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 © Western Cape Government 2012 | Market Access 17 Indicators Used: MAI MAI Product/market Specific Import Value Import Growth World Imports Country Specific Tariff Advantage Total Exports Bilateral Tariffs Tariffs Applied to competitors Distance Country Risk Advantage Bilateral distance Distance of competitors MacMap Trademap Market Access CEP II Coface 18 Steps in the MAI All African Importing Markets Algeria Market Scan Angola 1) Market Size Benin 2) Market Dynamism Botswana 3) Competition Burundi 4) Market Openness Cameroon 5) Distance Cape Verde CAR Most Attractive Markets Current Markets New Markets 6) Cultural Proximity …… 53 © Western Cape Government 2012 | Market Access 19 Results: Fresh products Results: H080810: Apples, Fresh Angola: Favourable access and distance advantage 66.00 64.00 MAI Index 62.00 Algeria has massive import demand, new market? Top ten had exceptional import growth 60.00 58.00 56.00 54.00 52.00 Market Access 21 Results: H080510: Oranges Angola: Top on Market Access index. 68.00 66.00 Sudan: Risky Market, big import market RSA export growth to Kenya 38% 64.00 62.00 60.00 58.00 56.00 54.00 52.00 Market Access 22 Results: H080510: Potatoes Mozambique: Distance; access and import growth of 43% 77.00 Zimbabwe fast growing importer of potatoes and distance advantage MAI Index 72.00 67.00 Senegal is the biggest importer of 24 million USD in Value 62.00 57.00 52.00 Market Access 23 Results: H080610: Grapes Fresh MAI Index Angola has highest market access index and import growth of 45% 72.00 70.00 68.00 66.00 64.00 62.00 60.00 58.00 56.00 54.00 52.00 Market Access Ghana, even though distance disadvantage in 3rd place Algeria biggest importer 24 Results: H080820: Pears Algeria: Highest country demand 70.00 68.00 MAI Index 66.00 64.00 Algeria and Morocco is non-existing markets Angola, Zim and Mozam had > 40% growth 62.00 60.00 58.00 56.00 54.00 52.00 Market Access 25 Results: Processed Goods Results: H220421: Wine MAI Index Zambia: Highest demand growth (70%); favourable access conditions 72.00 70.00 68.00 66.00 64.00 62.00 60.00 58.00 56.00 54.00 52.00 All of these are existing markets Angola highest import average; easy access © Western Cape Government 2012 | Market Access 27 Results: H200990 : Fruit juices 90 80 Angola: Distance, growth and access conditions 70 MAI Index 60 50 40 30 20 10 0 © Western Cape Government 2012 | Market Access 28 Results: H200811: Nuts preserved 90 80 Nigeria is currently the biggest importer with except growth MAI Index 70 60 50 40 30 20 10 0 © Western Cape Government 2012 | Market Access 29 Results: H200919: Orange Juice 80 70 Angola: Distance, growth and access conditions MAI Index 60 50 40 30 20 10 0 © Western Cape Government 2012 | Market Access 30 Results: H200899 preserved fruit NES 90 80 70 MAI Index 60 Angola massive import growth (87.2%) Mozam and Mauritius favourable access conditions 50 40 30 20 10 0 © Western Cape Government 2012 | Market Access 31 Aggregate Approach: Average MAI Importer MAI Market Country Import Country Access Demand growth Risk Index Index 2007-2011 % Growth in RSA trade with Partner 20072011 % 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 6 32.94 19.6 Kenya 63.79 68.83 58.74 © Western Cape Government 2012 | Market Access 32 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 © Western Cape Government 2012 | Market Access 33 Thank you Contact Us Louw Pienaar Macro and Resource Economics Tel: 021 808 5023 louwpp@elsenburg.com www.elsenburg.com Fax: