A F R I C A T R A D E 3 I S S U E 1 , 3 R D Q U A R T E R , 2 0 1 3

Commerce plays an important role in the creation of wealth, the stimulation of growth and in economicdevelopment. In spite of many efforts over some 50 years of independence, Africa continues to struggleas 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 flagrantlack 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 Conferenceon Trade and Development (UNCTAD) the proportion of value added (manufactured) products in Africanexports 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 abilityto process and to diversify its exports, the continent cannot make the best of the marketsthat are open to it (African Growth and Opportunity Act, EU-ACP).

This state of affairs is truly alarming. Yet, it is in this unfavourable context that we are wit-nessing 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 lessthan that between African countries and other nations.

China holds a prominent spot in the list of trading nations and its presence is growing. Ac-cording to China’s Ministry of Commerce, since the first Forum on China-Africa Cooperationtook place in the year 2000, Beijing has injected 117.1 billion Yuan (14.7 billion Euros) inAfrica (figures for 2009). China is now Africa’s largest trading partner. Annual trade has risenfrom 10 billion dollars in 2000, to 166.7 billion dollars in 2011. In fact, emerging nationsare 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 launchAfrica Trade. This magazine’s principal mission is to present and to explain key issues in world trade andto show how the emergence of Africa’s economy depends largely on its success in finding a place amongthe major actors in international commerce. It is difficult to overlook the many studies that suggest thatif African countries were to increase external trade by just 1%, this would represent some 200 billion dol-lars 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 pro-motes 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 onpage 22). Imagine for a moment what it will mean if this target is reached. The impact on the continent’sdevelopment will be profound and Africa will be forever transformed. However, for now, many challengesstand in the way of this dream.

Surely, the largest challenge is to transform the economic structure of African countries so that addedvalue is created and its benefit are retained on the continent. In other words, Africa must develop the in-frastructure and the skills to transform raw materials into finished or semi-finished products. The presentsituation is intolerable. It leads to nothing but the impoverishment of the continent. The following sta-tistics are striking: according to the International Coffee Organization, in the last decade or so, Africancoffee producing nations brought in approximately 5.5 billion dollars in annual revenues, while the valueof the product at retail exceeded 70 billion dollars!

Another challenge involves the elimination or reduction of obstacles to intra-African trade. The nationsof Sub-Saharan Africa impose more non-tariff barriers on trade amongst themselves, than they do ontrade with other countries. The lack of adequate infrastructure is also an obstacle to trade. The AfricanDevelopment Bank (ADB) estimates that the countries of Africa need to invest more than 90 billion dollarsper 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 chan-ging demands of global commerce? What will be the cost and what will be the results? Africa Trade willbring you regular assessments, as well as clear and concise answers to these and many other questionsas the evolution of the “emerging continent” unfolds.

Malam GerbaPublisher

WHY AFRICA TRADE? FIR

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THE PA R ADOX O F 12 Africa is said to be entering a “super cycle” of petroleum and N ATUR A L R E SOUR C E S mineral development. Super for whom?

HOW DO YOU L I K E T H EM 14 Africa is home to two thirds of the world’s arable land and it is TOMATO E S? a net food importer.

OB AMA I N A F R I C A – 16 Witney Schneidman of The Brookings Institution examines “R EMEMBER ME? ” Washington’s efforts to regain its footing on the continent.

C AN AD A - A F R I C A 18 “Hello, I must be going”. Canada’s waning participation in R E L AT I O N S LOOK I NG Africa’s sustainable development. B A C K , LOOK I NG AHE AD

A FREX IMBANK : 20 “The Trade Finance Bank of Africa” lives up to its name.20 Y EAR S OF F I NANC I NGA FR I C AN TRADE

EX C L U S I V E INT E RV I EW 22 Jean-Louis Ekra, Chairman and President, African Export-Import Bank (Afreximbank)

A FRE X IMBANK : 24 Working the weakest links in a precious chain.BU I LD I NG ADDED VA LUEFOR BU S I N E S S

THE EU AND A F R I C A – 28 What we have here is a failure to achieve consensus on WH EN E CONOM I C opening markets.PA RTN E R SH I P A G R E EMEN T SD I V E RG E

THE S I N O - J A PAN E S E 30 Japan ups the ante. R I VA L R Y I N A F R I C A

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CÔTE D’IVOIRETHE ROAD TO A NEW IVOR I AN M IRA C L E

6 Forty years ago, Côte d’Ivoire was vauntedfor its excellent economic performance and it may happen again.

E CONOM I C S CORE CARD : CÔTE D ’ IVO I R E7

THE MORE PROM I S I NG S E C TOR S FORINVE S TMENT IN CÔTE D ’ IVO I R E

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Publisher: MALAM GERBA

General manager: AMINA GERBA

Editor: YVAN HUNEAULT

Assistant editor: LEOPOLD NSÉKÉ

Correspondents: BADJANG BA NKENJEAN SÉBASTIEN AVICHECK KONÉ

Art direction and design: SERGE PATENAUDE

Published by: GERAM COMMUNICATIONS INC.

President: MALAM GERBA

Vice-President: AMINA GERBA

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Legal deposit:BIBLIOTHÈQUE NATIONALE DU QUÉBEC, 2013LIBRARY AND ARCHIVES CANADA, 2013ISSN 2292-0110

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A F R I C A T R A D E 4 I S S U E 1 , 3 R D Q U A R T E R , 2 0 1 3

A F R I C A T R A D E 5 I S S U E 1 , 3 R D Q U A R T E R , 2 0 1 3

ERN S T & YOUNG ON 38 Enough with the persuading, concentrate on enabling says E&Y.A F R I C A : S TO P M I ND I NGTH E “A F RO - SK E P T I C S ”

N I G E R I A – F E RT I L E 40 The “Giant of Africa” is among the more popular destinations GROUND FOR I N V E S TOR S for direct foreign investors.

UN S AY S M A L AY S I A L E A D S 42 Malaysian investors are no pikers, but China’s shadow is long.CH I N A I N FD I - O TH E R SA R E NO T SO SUR E

F O R E I G N I N V E S T M E N T

INV E S TMEN T B ANK I NG 32 Examples of who’s making a difference.AND M I C RO F I N A N C EI N A F R I C A

A F R I C A ’ S E VO LV I N G 34 The path of least resistance has run its course.I N DU S T R I A L S E C TO R

I N D U S T R Y R E P O R T

A F R I C A ’ S FA S T E S T -GROW I NG 44 Capital is flowing and barriers are falling at home.FOR E I G N D I R E C TINV E S TOR I S A F R I C A

INTR A - A F R I C A N 46 An overview in numbers.CONTR I B U T I O N S TO FD I

E COB ANK TR AN SN AT I O N A L : 4 8 A pioneering bank sets its own course.DR I V I N G CH ANG E I NI N T R A - A F R I C A NI N V E S TMEN T

I N T R A - A F R I C A N I N V E S T M E N T

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ED I T O R ’ S V I EW 51 Playing it smart.

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C A P E TOWN HOS T S TH E 53 A tally of the most recent resolutions and agreements.WOR LD E CONOM I CFORUM ON A F R I C A

CHE C K PO I N T : WOR LD 54 A look at its raison d'être and its accomplishments.E CONOM I C FORUMM I L E S T ON E S I N A F R I C A

C H E C K P O I N T

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