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Country Analysis Part I: Trade into Africa

Country Analysis Part I: Trade into Africa . Louw Pienaar. Elsenburg. Structure. Introduction Why is Africa important Trade Perspective Trade into Africa Product Focus If Exporting to Africa, where? Identifying attractive markets. Introduction. Africa is important on various levels.

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Country Analysis Part I: Trade into Africa

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  1. Country Analysis Part I: Trade into Africa • Louw Pienaar • Elsenburg

  2. Structure • Introduction • Why is Africa important • Trade Perspective • Trade into Africa • Product Focus • If Exporting to Africa, where? • Identifying attractive markets Market Access

  3. 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 Market Access

  4. Country Analysis Robust Strategy Market Access

  5. 1) Why is Africa Important? Source: Global Trade Atlas, 2013 Market Access

  6. 2) Why is Africa Important? Source: Global Finance, 2013 Market Access

  7. 3) Why is Africa Important? Source: UNCTAD, 2013 Market Access

  8. Regional Trade: Fresh Products Market Access

  9. Trade Perspective

  10. South African Agricultural Export to Africa Source: World Trade Atlas, 2013 Market Access

  11. RSA Exports to Africa by type of product Market Access

  12. South African Exports of Fresh goods to Africa Market Access

  13. South African Exports of processed goods to Africa Market Access

  14. 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 Market Access

  15. Product focus: Market Attractiveness Index Market Access

  16. Africa as Export Destination Identifying Attractive Markets in Africa

  17. 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 Market Access

  18. Indicators Used: MAI • Bilateral Tariffs • Tariffs Applied to competitors • World Imports • Bilateral distance • Distance of competitors Tariff Advantage Import Value Import Growth Total Exports Distance Advantage Country Risk MacMap CEP II Trademap Coface Market Access

  19. Steps in the MAI Market Access

  20. Results: Fresh products

  21. Results: H080810: Apples, Fresh Angola: Favourable access and distance advantage Algeria has massive import demand, new market? Top ten had exceptional import growth Market Access

  22. Results: H080510: Oranges Angola: Top on Market Access index. Sudan: Risky Market, big import market RSA export growth to Kenya 38% Market Access

  23. Results: H080510: Potatoes Mozambique: Distance; access and import growth of 43% Senegal is the biggest importer of 24 million USD in Value Market Access

  24. Results: H080610: Grapes Fresh Angola has highest market access index and import growth of 45% Ghana, even though distance disadvantage in 3rd place Algeria biggest importer Market Access

  25. Results: H080820: Pears Algeria: Highest country demand Angola, Zim and Mozam had > 40% growth Market Access

  26. Results: Processed Goods

  27. Results: H220421: Wine Zambia: Highest demand growth (70%); favourable access conditions All of these are existing markets Market Access

  28. Results: H200990 : Fruit juices Market Access

  29. Results: H200811: Nuts preserved Market Access

  30. Results: H200919: Orange Juice Market Access

  31. Results: H200899 preserved fruit NES Market Access

  32. Aggregate Approach: Average MAI Market Access

  33. 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 Market Access

  34. Louw Pienaar • Macro and Resource Economics • 021 808 5023 • louwpp@elsenburg.com

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