New business partners for international investment in Africa
Turkey, U.A.E., China & India, the new players in the African trade
In recent years, more and more countries have started to look with great interest at Africa and have decided to tighten economic and diplomatic ties with the African continent.
Until not so long ago, the main trade partners of Africa were the European Union and The United States but emerging economies like Turkey, the United Arab Emirates, China, and India have started to invest massively in Africa.
The majority of these emerging economies are not only interested in Africa’s raw materials but are also looking at the growth potential, the dynamic economies, and the young population of the continent. Important oil and gas reserves have recently been discovered in countries like Mauritania and Senegal and many countries like DR Congo, Zambia and Sierra Leone have minerals that these emerging economies need.
Diplomacy, Infrastructure and Finished Products – The Investment Triangle in Africa
The principle of win-win is the argument put forward by the Turkish authorities in their relations with the African continent. For proof, the partnership between Turkey and Africa has seen important growth in Turkish investments in the continent, trade volumes have increased from around 5 billion US$ to 25 billion US$ in 2020. Turkish Airlines has regular flights to 42 countries in Africa and since 2003, the number of Turkish diplomatic representations in Africa has increased from 10 to 44 countries today.
The United Arab Emirates, Africa’s 5th largest trading partner, has seen an exponential increase in exports to Africa of around 700%, excluding oil products. DP World for example has become involved in various sub-sectors of the logistics sector in Africa, ranging from port management to e-commerce. The new port of Ndayane in Senegal, the development of Berbera port in Somaliland, a dry port in Rwanda, railway development in Zimbabwe, and many other projects linked to terminals like Banana in DR Congo or Luanda and Maputo. Dubai has become a logistics hub for the whole Middle East region, Emirates Airlines flies to 20 countries in Africa via Dubai airport and there is 24 UAE diplomatic representatives in Africa today.
India, although already present for decades in some countries especially in East Africa and the Indian Ocean islands, has also strengthened its presence on the African continent, particularly in agribusiness.
Today, the face of this partnership between the continent and India is also reflected in the strong presence of ARISE Integrated Industrial Platforms (ARISE IIP), a company active in the establishment of SEZ (Special Economic Zones) to support the continent in its quest to transform African raw materials into finished products before export, which can partly solve the problem of unemployment of African youth who could now participate in the segments of raw materials supply, their processing, and marketing. The fiscal year 2020-2021 estimates trade between Africa and India at $89.5 billion compared to $56 billion the previous year. India with its important diaspora and businesspeople active in the continent has already opened 44 diplomatic representations in Africa and is planning to open 4 more soon (Cabo Verde, Guinea Bissau, Somalia, and Chad).
China and Russia's role in Africa
Considered the world’s factory, a status that was highlighted during the Covid-19 health crisis due to the disruption of global supply chains, China is a trading partner that is extremely interested in the African continent, particularly in its natural resources, which are essential to produce manufactured goods. In 2021, trade between China and the African continent has been boosted by 35% to a record 254.3 billion US$. From 2000 to 2017, the Chinese government, banks, and contractors extended $143 billion dollars in loans to African governments to fund infrastructure projects built by Chinese companies.
Top 10 African countries & loans (Nigeria, Ghana, Congo Brazzaville, South Africa, Cameroun, Sudan, Zambia, and Kenya totalizing $47.8 billion, Ethiopia $13.8 billion, and Angola $42.8 billion). China has diplomatic representations in 53 nations in Africa. Many African young people are learning Chinese; indeed, China is also promoting the learning of the Chinese mandarin language and has opened 42 Confucius Institutes in 29 countries in Africa.
Russia has had strong links with Africa for decades, particularly with some countries during the communist era, nowadays it is still a strong partner with diplomatic representations in 40 countries in Africa and is active especially in the defense/security and mining sectors as it has a shortage of some minerals such as manganese, bauxite, and chromium, all of which are important for its industry.
New opportunities and new horizons in Africa
The United States are focussing mainly on the Asia Pacific area showing little interest in Africa and European Union countries have lost a lot of “market share” in Africa to these fresh players who do not have a painful colonial history with Africa and do not interfere in the continent’s political and internal affairs as much as some European Union countries.
Despite the Covid years which slowed down the continent’s growth, there is hope that new markets will be created by relying on the establishment of the African Continental Free Trade Area (AfCFTA) to boost trade on the continent and to bring out national champions who will fill the trade deficit in Africa.
Some countries had excellent GDP growth in 2021 like Kenya 7.6%, Botswana 7.5%, Niger 6.9%, Uganda 6.3%, Zambia 6.0%, Côte d’Ivoire 6.0%, Guinea Conakry 5.6%, Senegal 5.2% to name a few countries. These numbers clearly reflect the potential of the African continent and confirm what we, at ACS Africa Container Shipping, believe in the enormous development potential of Africa, which fully justifies our strong investments in the continent, opening branches in different African countries and establishing alliances with local companies.
At ACS Africa Container Shipping we are determined to grow in Africa and contribute to the competitiveness of the continent.
