Saturday, September 18, 2004
Africa starts to share in Asia's trade boom
Reuters Singapore, September 17
Africa still barely flickers on Asia's economic radar screen, but two-way trade is experiencing a boom that is likely to be sustained as Asia's thirst for oil and commodities is matched by Africa's hunger for cheap manufactured goods, according to Standard Chartered Bank.
In a new report, the emerging-markets bank said Asia's demand for Africa's base metals, timber and oil was likely to stay high as China in particular continued to industrialise.
Africa's principal imports from Asia are cars and electronics, but Standard Chartered said rice and textiles were also likely to become increasingly important.
"The growing trade ties between Asia and Africa reflect a structural change, suggesting the trend for trade between the two regions is clearly up," StanChart economists Abah Ofon and Bill Xu wrote.
One of the structural changes is Africa's reduced reliance on trade with its former colonial powers in western Europe.
China, for instance, has now replaced France as the primary export market for Gabonese wood, StanChart said.
In the other direction, Africa has been Thailand's biggest rice market since 2000.
Two way-trade between Africa and the European Union, at $140 billion, still dwarfed trade with Asia of $45 billion in 2003.
But Asia's exports to Africa doubled between 1996 and 2003, while the EU's grew 40 per cent. Africa's exports to Asia increased 90 per cent over the same period, but were up only 48 per cent to the EU.
Fast-growing, resource-poor China is the main driving force behind the expansion in commercial ties: two-way trade between China and Africa reached $17.2 billion in 2003, more than 10 times greater than in 1991, StanChart said.
HUNTING FOR OIL
JPMorgan Chase's Ben Simpfendorfer noted that the non-Asia developing world in general was an increasingly important source of raw materials for China, as well as a growing export market.
The country's exports to the Middle East, Latin America and Africa grew at an average 21 per cent pace over the past three years, slightly faster than overall exports, he said in a report.
Ofon and Xu pointed to oil as one of the commodities that made Africa a natural trading partner for Asia as political uncertainties in the Middle East prompt governments to scout for alternative sources of supply.
For example, earlier this year Gabon -- again -- signed its first deal to export crude oil to China.
"In 2003, 17.5 per cent of Chinese oil imports were from Africa. We expect this proportion to move higher as China tries to lock in more suppliers from Africa for its national energy security plan," Standard Chartered said.
Still, for Africa, ravaged by disease and poor governance, the trade picture is not uniformly positive.
The continent's share of world trade shrank to 2.1 per cent in 2003 from three per cent in 1990, and Razeen Sally, a trade specialist with the London School of Economics, said poor infrastructure and other supply-side constraints would limit export opportunities in many countries.
Sally said one exception was South Africa, the biggest African exporter to Asia. In 2003, South Africa sold $5.19 billion worth of metals, iron ore, diamonds and other goods to non-Japan Asia, up from $3.29 billion in 2001.
© HT Media Ltd. 2004.