The World Bank Study on Africa-Asia Trade and Investment Relations

Patterns of Africa-Asia Trade and Investment:
Preliminary Findings

Synthesis Paper(Discussion Draft)

September 2003

This discussion draft highlights the initial findings from the ongoing World Bank study on
Africa-Asia trade and investment relations to foster basic understanding of and facilitate
discussion on the subject, taking the opportunity of the Third Tokyo International Conference on
African Development (TICAD III). Readers should be advised that the draft is still preliminary
and will be finalized with additional analytical work and the discussion at TICAD III. The
findings, interpretations, and conclusions expressed here are those of the author(s) and do notnecessary reflect the views of the Board of Executive Directors of the World Bank or thegovernments they represent. The World Bank cannot guarantee the accuracy of the data includedin this draft.

∗

This discussion draft has been prepared by the core team of the World Bank headed by Toshihiro Toyoshima. Yutaka
Yoshino has provided essential analytical support. Other members include Demba Ba, Jeffrey Katz, Francois
Nankobogo, and Chad Leechor. Brian Ngo, Claire Thirriot, and Francis Ng provided valuable insights to the team.
The draft has incorporated the analytical work conducted by Mitsubishi Research Institute and the joint team of
PADECO and UFJ Institute under the study projects on Africa-Asia trade and investment relations funded by Japan
Consultant Trust Fund. Inquiries on this draft can be sent to Toshihiro Toyoshima (ttoyoshima@worldbank.org) or
Yutaka Yoshino (yyoshino@worldbank.org).

Contents
Executive Summary

1

1. Introduction

3

2. Trade Environment for Africa

5

3. Structure and Patterns of Current African Exports

7

3.1 Key Features in All Africa’s Export Structure
3.2 Subregional Features of Africa’s Exports
3.3 External Trade Regimes and Cross-Country Analysis

4. Overview of Structure of Africa’s Exports to Asia

16

4.1 Basic Characteristics of Africa’s Exports to Asia
4.2 Major Trade Partners in Asia for Africa’s Exports

5. Implications of Africa-Asia Trade Relationsin Africa’s Trade Strategies

22

5.1 Contribution to Overall Export Expansion
5.2 Contribution to Market Diversification in Primary Commodity Exports
5.3 Contribution to Product Diversification in Manufacturing Sectors
5.4 Integration of Trade and Investment Relations

6. Key Findings and Future Directions

36

6.1 Summary of Key Findings
6.2 Future Directions

References

41

Appendix I

43Appendix II

44Executive Summary
Trade data show that Asia has emerged as an important partner in Africa’s trade anddevelopment. Africa’s exports to Asia have grown in both proportion and absolute value during
the 1990s. Of Africa’s total export earnings, estimated to be about US$130 billion per year
(1999–2001 average), 16 percent are from sales to Asia. The rate of increase in export values toAsia (10 percent per year) has been higher than the rate to the European Union (EU) and theUnited States during the past decade. Asia’s developing economies have increased their imports
from African countries significantly during the same period. The data indicate that some Asian
countries have significantly increased their reliance on African imports.
Africa’s exports to Asia are mainly driven by primary commodities and related products. Similar
to the case of exports to the EU and the United States, oil and its related products account for alarge share of Africa’s exports to Asia. However, other primary commodities such as agriculturaland fishery products and minerals and crude materials are also increasingly exported to Asia.
Exports of mineral fuels and other raw materials such as mineral and mining products havedemonstrated strong growth in African exports to Asia because of rising manufacturing sectors inAsia, particularly in China, India, Korea, Taiwan, and the Association of Southeast Asian(ASEAN) countries. Although only a limited number of countries are endowed with mineral andmining resources, a wide range of non-oil producing countries also benefit from other types ofraw materials and processed raw materials such as cotton, woods, and leather, as well as food andagricultural commodities, for expanding their export potentials. The growth in African exports offood and agricultural commodities to Asia can be explained by the large populations withgrowing income levels in Asian countries, which have increased the demand for African exports.
Non-essential foods such as coffee, cacao, tea, and nuts will find stronger growth in Asia than in
the already saturated markets of developed countries.
Therefore, Asia could become a strategic target for diversifying the markets for African products.
Demand from Asian markets potentially fits well with the existing supply base of traditional
primary commodities in Africa. By recognizing such linkage and by establishing new customer
relations with Asian countries, African exporters could significantly expand their exports oftraditional primary commodities—Africa’s stagnated core businesses.
Market diversification is not the only benefit of deepened trade relations between the two regions.
This study indicates that Asia can also contribute to Africa’s quest for product diversification inits export structure. Asian countries are providing essential inputs for Africa’s growing
manufacturing sector, most notably in the textile and apparel sectors. There is a positive
relationship between Africa’s growth in manufacturing exports to the EU and the United Statesand growth in imports from Asia.
Although developed countries have made active efforts to grant preferential trade treatments,
such as tariff-free and quota-free accesses, this study has observed that these treatments alone do
not guarantee the full benefits of export expansion: The response of African countries is critical.
Successful African exporters tend to proactively engage in improving their business environment
both in terms of governance and infrastructure, and strengthening their supply-response capacity
to seize opportunities arising from the external environment such as preferential trade treatments.
The sectoral analysis of the foreign direct investment (FDI) of several Asian countries to Africa
has revealed that the relations between Asian investors and host countries in Africa are deeply
motivated by the trade relations between the two regions. Asian investment to Africa can be
categorized into three different types. The first type is investment targeted toward products to be1

sold in Asia, typically natural resources and processed raw materials (for example, food), both ofwhich are highly demanded by Asian manufacturers and consumers. Macro-instabilities in hostcountries have often hampered the flow of investment of this kind to Africa in the past, but now,
driven by growing demand from Asia, there are signs that such investment may regain
momentum. The second type of investment targets Africa’s domestic markets, which have been
constrained by the small size of local markets and the high transaction costs of its inefficient
infrastructure. In the absence of effective regional integration and infrastructure services, theprospects of this type of investment are limited. The third type is targeted to the global market,
typically third countries. This type of investment most effectively integrates production activities
in Africa to global supply chains. In less developed countries, there tends to be investment in the
textile and apparel sectors or service sectors, which is largely motivated by either low labor costs
and/or favorable trade regimes provided by the third countries. In addition, there is notabledevelopment in countries such as South Africa that have attracted more sophisticatedmanufacturing/service investment. Such investment is genuinely attracted to the potential
productivity increase of these countries.
The subregional export structures seem to indicate that African countries could enhance theirexport opportunities by improving intraregional mobility of goods and services, particularly
between land-locked and coastal countries. The study recognizes that improvement in regional
infrastructure, such as transportation or telecommunications, needs to be properly addressed informulating policies to enhance the supply-response capacity of African countries.
The trade data indicate the existence of significant potential for expanding trade relations between
Africa and Asia. To realize the full benefits from trade expansion, the following three proposals
will help.
First, the knowledge base on Africa-Asia trade and investment relations needs to be strengthened
to facilitate the discovery of market opportunities and to better understand to how the market
works between the two regions. Such a knowledge base should be strengthened by accumulating
a series of in-depth analytical studies to identify existing potential to expand trade and investment
relations and to identify geographical and manmade constraints and other impediments inpromoting trade and investment activities between the two regions. Such studies will provide thebases for formulating effective measures to improve connectivity to the global supply chains.
Second, an institutional arrangement will be needed to enhance strategic dialogue between
African and Asian countries and to raise awareness of emerging business opportunities among
businesses in the two regions. Building on the current framework of the Tokyo International
Conference on African Development (TICAD), such an arrangement should enable broad-based,
consolidated policy dialogues to take place between African and Asian countries—both theirgovernments and their businesses.
And third, African countries and international donors need to recognize the importance of an
enabling environment for business activities, which is essential for economic growth. Partnership
coordination, such as under TICAD, has the potential to orient development supports to economic
growth that is essential for African countries to be able to achieve the Millennium Development
Goals (MDGs).

2

1.

Introduction

The main objective of this report is to build a basic understanding of the potential of Africa-Asia
trade and investment relations—a recognized priority area in the Tokyo International Conferenceon African Development (TICAD). As one of the co-organizers of TICAD, the World Bank has
been undertaking a series of studies on this subject with funding support from the Japan
Consultant Trust Fund.
The importance of South-South trade has been recognized for some time; however, there has been
no in-depth study specifically conducted on Africa-Asia trade relations in the past. Two major
reasons why little research attention has been paid to this issue are the lack of data availability
and the relatively small size of the trade flow between the two regions. Many African countries
have failed to maintain proper reporting of their trade data, and the only alternative for suchcountries has been using the data from their trade counterparts, which requires substantial work.
Also, the small size of Asia-Africa trade flows relative to other important trade flows involving
either the United States or European markets has limited the analytical attention of theresearchers. According to International Monetary Fund (IMF) data, African exports to Asia
account for only 0.3 percent of world trade.1
Furthermore, in the past, Africans have tended to view trade with European countries as more
important than trade with other regions. After all, only recently, after its introduction of the Africa
Growth and Opportunity Act (AGOA), has the United States started to receive extra attention as apotential trade partner. Likewise, Asians have tended to view the amount of imports from Africa
as relatively insignificant (African imports account for only 1.4 percent of their total imports).
Despite such traditional perceptions, the importance of Africa-Asia trade should not be
underestimated, especially for its potential to contribute to the economic development of African
economies. In reality, the relatively small amount of trade in Asia equates to a considerable
amount in Africa. The IMF trade data show Asia-destined exports have grown rapidly in the past
decade and made up 14.2 percent of total African exports in 2000, up from 7.7 percent in 1990.
The average annual growth rate of African exports to Asia throughout the 1990s was 10.4
percent, much higher than 3.7 percent for the EU or 4.6 percent for the United States (Figure 1.1).

Figure 1.1 Africa’s Exports to Asia (1990-2000)
2 0 .0Dollar Amount:

18 .0$ 6.4 billion (90) to $17.2 billion(00)16 .0billion dollars

14 .0

Share of Asia in Total African Export:
7.7% (90) to 14.2% (00)12 .0Annual Growth Rate (90-00)

10 .0
8 .0

EU

3.7%

6 .0

US

4.6%

4 .0

Asia 10.4%

2 .0
0 .0
90

1

91

92

93

94

95

96

97

98

99

00

International Monetary Fund (IMF), Direction of Trade Statistics.

3

    

For this reason, we believe that it is particularly timely to study the contents of the trade flows
between the two continents. The IMF data, however, do not breakdown the exports by productcompositions.2 In our analysis, we tried to identify the changes in the patterns of African trade in
the 1990s, mainly using the United Nations’ COMTRADE database through WITS (World
Integrated Trade Solution), the World Bank’s data access software package. UN COMTRADE isthe only database with global coverage, containing each country’s export and import data bydestination, by product type, and over a series of years.3 One shortcoming of this database is thelimited availability of the data for some African countries that have not done routine reporting.4
In such cases, we used the import data from trade counterparts to proxy the country’s exports.
Despite some inconsistencies in data treatment, overall the data compiled from UN COMTRADE
show patterns similar to those of other trade data, such as IMF Direction of Trade Statistics orthe World Trade Organization’s (WTO) International Trade Statistics, and we hope thispioneering work will contribute to the promotion of African exports in the future with the
deepening of Asia-Africa trade relations.

2

Also, the IMF data occasionally incorporate IMF estimates to maintain consistency within the data.
Statistics Canada has recompiled the UN trade data (industry-specific data in SITC Rev. 2 coding system) into World Trade Analyzer(WTA) dataset. By using partner-side data, the dataset controls for statistical discrepancies between export and import data. Also it isreported to have significantly high data coverage (87% of bilateral trade information and 98% of single direction flow information).
However, Statistics Canada has recompiled the UN data so that it better matches with Canadian trade and industry classifications.
Also, the data is available only up to 1997.
4
Even for the countries with sufficient data submission, the data are not always complete because governments sometimes suppress
trade statistics of individual products in individual trade flows for various reasons. Because UN COMTRADE is a compilation of data
sets submitted by the governments, it is not possible to identify such cases automatically in the data. We treat such cases as zero tradein our study.
3

4

2.

Trade Environment for Africa

World trade dramatically expanded in the 1990s—a decade well characterized by the term
globalization. Globalization has been facilitated by various factors such as the end of Cold War;the establishment of WTO, which sets a new momentum for trade expansion; and more
important, the unprecedented development of information and communication technology, which
helped recreate worldwide division of labor in production. From 1950s to 1994, the volume ofworld trade increased at an annual rate of slightly more than 6 percent and world output by closer
to 4 percent. More than a quarter of national output of goods and services in 1998 was soldabroad, compared to just 8 percent in 1950.5 Economic globalization affects developing countries,
which have significantly increased their share of worldwide trade during the 1990s. For example,
the developing country share of world exports increased by 4 percentage points during the decadeto 27.4 percent in 1999. In 1999, the rate of exports expansion from developing countries was
twice as high as the rate for the world as a whole. Undoubtedly, trade has increasingly significant
implications in the context of development.
The importance of trade for development has been widely recognized and vastly discussed fromvarious aspects. In general, trade contributes to economic development through helping
developing countries to• garner foreign exchanges indispensable for servicing their external debts• improve domestic economic efficiency by reallocating resources toward sectors in which
they have comparative advantages• promote technological innovation domestically• overcome size constraints of domestic markets• capture benefits from economies of scale• create new employment• reduce poverty
The Doha Round of the WTO will play a key role in promoting integration of developing
countries—including African countries—into the world trade system and enhancing their accessto world markets. However, the multilateral framework of international trading system alone
cannot guarantee success in trade-led development of African countries and their integration to
the world market. Although significant, the framework is but one of the necessary conditions thatcharacterize the external environment for African countries in trading with other regions. In
parallel with the initiatives under the auspices of WTO, there have been accelerated moves insome developed countries to extend preferential trade treatments to African countries or to form
bilateral free trade agreements, which further complicate the environment. These preferential
treatments contain various rules and restrictions in areas such as rules of origin or eligibility inproducts. Although these rules and restrictions should preferably be subsumed under themultilateral framework in a long run, they generate some unique dynamics in the short run bymotivating various actors, including the third countries, to gain from opportunities throughreallocating some of their capital to Africa in a form of foreign direct investment (FDI).6
In the context of Africa’s trade relations, it is therefore important to analyze how Africancountries have seized or can seize the opportunities arising from their external environment and to
5

WTO, International Trade Statistics.
For example, AGOA exempts the least developed among eligible countries from its strict rules of origin that require countries toexport products produced only from materials made in other AGOA eligible countries or the United States to receive duty-free benefits
under AGOA. This exemption scheme, however, will expire in the fall of 2004.

65

draw specific policy prescriptions based on such analysis. And in doing so, more efforts need tobe made to identify specific African products or sectors that are growing already or have thepotential to grow further, and to strategize export promotion of such products by pooling together
interregional supply and demand potentials. There is no panacea in trade policies. Best policies
for individual countries need to be tailored to the existing supply and external demand potentials
as well as to the environment they face. Individual African countries, with support from theinternational community, need to build supply capacity to effectively respond to the rising
opportunities from external demand or from changes in the external environment. The strategy forsuch supply-response capacity building also needs to be formulated specifically for individual
countries.
From a macro perspective, African economies have been unfavorably affected by their tradeduring the past decades. Although the absolute decline in trade volume experienced in the 1980s
was halted in the 1990s, Africa’s export market shares were still falling throughout the 1990s.
Africa’s share of world exports declined from over 3.5 percent in 1970 to about 1.5 percent by theend of the 1990s. The dramatic decline in Africa’s exports over the last three decades represents astaggering income loss of US$68 billion annually, equivalent to 21 percent of regional GDP andfive times larger than the current level of official development assistance (ODA) they receive.7
As competition heats up in the world trade market, the divide is widening between the countries
that have successfully integrated into globalization and those that have not—a phenomenon often
described as marginalization. The international community must take appropriate measures toenhance Africa’s trade relations in the context of multilateral framework, but separate attention isneeded to halt the stagnation in Africa’s trade by identifying uncovered potentials for Africancountries to expand their trade activities and by analyzing the ways in which these countries canacquire sufficient supply-response capacity to seize the rising opportunities.

7

WTO Official Web site: www.wto.org

6

3.

Structure and Patterns of Current African Exports

In this section, we conduct a preliminary analysis on the current export structure of Africa byconstructing a matrix of export shares for product groups and destinations from a set of crosssectoral bilateral trade data compiled under UN COMTRADE. The products are grouped
according to the SITC (Standard International Trade Classification) product classification system(Revision 2).8 Although a number of studies have reported the structure of Africa’s exports byhighlighting some specific aspects—such as oil versus non-oil or primary commodities versus
manufacturing products—for analytical purposes, only a limited number of studies have tried toanalyze the structure of Africa’s exports based on standardized product groups. Here we also try
to link the analysis on general structure of African exports with information on specific products
at highly disaggregated levels (SITC 3-digit and 4-digit).9
Based on this matrix, we first analyze the export structure of the entire Africa region (or All
Africa) and briefly discuss subregions. We then turn to external trade regimes for Africancountries, conducting a cross-country analysis using country-specific export matrices for all 53
African countries in the study.

3.1

Key Features in All Africa’s Export Structure

Table 3.1 shows the export matrix for all Africa, which is compiled from the data from 77 of
Africa’s trade partners (see Appendix I for the list of partners), and gives an overview of changing
patterns in and the composition of Africa’s exports by product group and regions of destination.
The reason for using trade partners’ data is that only a few African countries have submitted theirtrade data to the UN COMTRADE database consistently in the 1990s. The 77 countries havebeen chosen on the basis of consistent data availability in the 1990s.10
Three major features of African exports are identified from the table: (1) Africa’s highdependency on exports to the EU market and the high growth in exports to the Asian markets, (2)the dependency on primary commodities, and (3) small but promising growth in the export ofmanufactured products.
High Dependency on EU Market and High Growth to the Asian Markets
The matrix shows that in 2000 Africa as a region exported approximately US$129 billion to theworld, 52.23 percent of which went to the EU, 19.07 percent to the United States, 16.43 percent
to Asia, and 3.42 percent to Africa.11 A comparison of annual rates of change among Africa’s
trading partner regions, however, shows another dimension of the export pattern. African exports
to Asia experienced a 10.06 percent average annual increase in value throughout the 1990s, which
was significantly higher than 1.28 percent for the EU and 5.14 percent for the United States overthe same period. The limited increase in Africa’s exports to EU could be partly explained by
EU’s increasing reliance on imports from Eastern European and CIS countries. Among EU’s
8
Although SITC Rev. 2 is not the newest classification system, it has the largest coverage for the trade data submitted to the United
Nations by African countries.
9
Ng and Yeats (2002) studied the patterns of African exports at similarly disaggregated levels using UN COMTRADE with more indepth analysis on traditional exports of African countries. This study, however, places more focus on specific inter-regional traderelations, namely trade relations between Africa and Asia, analyzes Africa’s imports from Asia as well as exports to Asia, anddiscusses implications of promoting inter-regional, South-South trade.
10
UN COMTRADE reports imports on c.i.f basis (i.e., inclusive of insurance and freight costs) while reports exports on f.o.b. basis(that is,, excluding these costs).
11
Calculated as 1999–2001 averages. The figure is basically consistent with the figures obtained from the IMF data.

7

total imports from developing countries, the share of imports from Africa declined by 6
percentage points during the 1990s (17 percent in 1989–1991 average to 11 percent in 1999–2001
average), and the share of imports from East Europe and Central Asia increased by 8 percentage
points (from 23 to 31 percent) during the same period.12
Table 3.1 Export Matrix of Africa
Food and live animals

SITC
CODE
0

Beverages and tabacco

1

Crude materials, inedible, except
fuels
Mineral fuels, lubricants and relatedmaterials
Animal and vegetable oils, fats andwaxes
Chemicals and related products,
n.e.s.
Manufactured goods classified
chiefly by material
Machinery and transport equipment2

Miscellaneous manufactured articles

8

Commodities and transactions notclassified elsewhere in the SITC
Total

9

Product

34567Africa
0.44%
8.42%
0.06%
7.55%
0.29%
3.08%
1.46%
10.45%
0.02%
3.42%
0.29%
2.57%
0.46%
-0.83%
0.27%
3.25%
0.12%
8.72%
0.01%
-12.57%
3.42%($4,410,552)
5.64%

EU

US

6.60%
1.99%
0.57%
5.28%
3.81%
-0.31%
21.97%-0.49%
0.26%-1.72%
1.19%
1.33%
6.31%
2.55%
3.29%
14.25%
6.07%
6.73%
2.11%
-3.96%
52.23%($67,384,822)
1.28%

0.63%
4.23%
0.06%
-0.11%
0.62%
2.23%
13.28%
4.11%
0.01%
8.12%
0.29%
15.69%
2.21%
5.37%
0.49%
24.23%
1.20%
17.05%
0.29%
14.48%
19.07%($24,599,106)
5.14%

Asia
1.41%
4.01%
0.18%
2.55%
2.47%
5.68%
6.84%
21.14%
0.01%-3.26%
0.72%
2.30%
3.07%
5.51%
0.62%
13.99%
0.08%
12.28%
1.02%
12.34%
16.43%($21,200,571)
10.06%

Others
0.77%
7.82%
0.12%
12.89%
0.74%
3.53%
4.73%
9.19%
0.01%
11.16%
0.51%
4.49%
0.73%
3.73%
0.50%
1.32%
0.14%
8.58%
0.61%
49.61%
8.85%($11,414,817)
7.77%

World
9.84%
2.99%
0.99%
5.05%
7.93%
1.90%
48.28%
3.26%
0.32%-1.02%
3.00%
3.01%
12.79%
3.56%
5.16%
11.77%
7.61%
7.96%
4.03%
1.51%
100.00%($129,009,869)
3.68%

Figures:

Top: Share in total export to the world (1999-2001 averages)
Middle (displayed only in the last row)Absolute export volume (US$’000)
Bottom: Average annual change; Average annual changes are calculated by computing changes between 19901992 averages and 1999-2001 averages, and then annualizing these changes.
Figures are based on partners’ import data.
Colors:=high share, high annual change,=low share, high annual change,=high share, low annualchange, where high share is above 2% (20% in the last row and 10% in the last column) and high annual change
is above 2%.
Source: UN COMTRADE Database

Dependency on Primary Commodities
African exports depend heavily on primary commodities. SITC groups 0-5 account for about a 70
percent share of Africa’s total exports. Among these product groups, “mineral, fuels, lubricants,
and related materials” (SITC 3), in particular, accounts for an overwhelming 48 percent share of
total exports, reflecting Africa’s high reliance on petroleum exports. Other minerals include gold,
silver, platinum, pearls, and diamonds.13 Also, “food and live animals” (SITC 0) is anothercategory of commodities important for non-oil exporting countries, accounting for approximately
10 percent of total exports. This group includes fruits and nuts, fishery products, tea, cocoa,
coffee, and spices.
The trend in the export amounts of these commodities has been largely subject to the changes incommodity prices. Reflecting the downward trend in major commodity prices in the late 1990s,
average annual rates of increase of SITC 0-5 have remained mediocre from –0.02 percent to 5.05
percent for the period between 1990 and 2000. These figures, in general, illustrate the stagnationof African exports. For this reason, fostering diversified and competitive industries that are lessdependent on natural resources has been considered a policy priority for many African countries.

12
13

IMF, Direction of Trade Statistics.
Gold is classified under SITC 9 under SITC Rev.2.

8

A regional breakdown of the commodity exports, however, gives different view. Although mostcommodity exports destined to the EU show relatively stagnated or even decreasing trends,
exports destined to Asia, though relatively small in size, have in most items increased sharply.
Exports of “minerals fuels, lubricants, and related materials” (SITC 3) and “crude materials,
inedible, except fuels” (SITC 2) to Asia have shown impressive annual rates of increase at 21.14
percent and 5.68 percent, respectively, suggesting that the rapid industrialization taking place in
Asian countries has created increased import demands in petroleum and raw materials fromAfrica.
Promising Growth in Manufactured Products
In 2000, export of manufactured products as shown in SITC groups 6-8 altogether represented 26
percent of total African exports. In the export matrix, “manufactured goods classified chiefly bymaterial” (SITC 6), which contains silver, platinum, aluminum, pig iron, copper, diamonds,
leather, and textile yarn, demonstrated relatively significant growth to all EU, U.S., and Asianmarkets. Closely observing manufactured items on the SITC 3-digit level reveals that apparel andtextile products have come to account for sizable shares in relation to the EU and the UnitedStates (see Table 3.2).
Table 3.2 Current Major Exports from All Africa to Asia, EU and US (SITC 3 digit)
!

:8




  
  
     !"  "# $  % $  !
& '     !"  "# $  % $  !
&' 00' &&) *  "   +) ((' &
, -!"%!.     "/ % !
,,&' 
0 "1  #   ! % 1   1, ' 00) !"1  !#!1 ! !" 2 .2 0,' ,,&0   ((' ,,    1!"%
,
((&& 3    !" / !#!!
 ,0' (
, 4  !"2 5!"%/ %$!
&,' (
00)
00,    (' 0
() - # !     !"%!  &0' 0,()0)  "!1!"!1  "  ! & )' )
,& 4  !"5!"%/ %$ !
&()' ),&,) 4 2     +!6 & (,' )&  &(&' 
)&0  !  !   ! !"%!"  "% 7
& ,(' &&  " 1&)' 
,&
&&  " 1& ,' ) *  "   +0' 0),    1!"% (' ,0 8  !"      )' 
&)
&0&  11 ))' &,( 4  !    !" 0' &&& 3       !
 0(' 0  !  !  ! !"%!"  "% 7&' ,0,() - # !     !"%!   0,' ,, -!"%!   "  % 7
&&' ,,,(&) 4!     ! %$! !" !
 ((' (0 "1  #  ! %1   1
(' ())0000) !"1  !#!1 ! !"2 .2  ,)' 0)  %%  %%! $!  !
(' 0),)&( :!!
 &' )&) 4!     ! %$! !" !
' ))) 1!"$  ! %  !  !
 ,' 0,   )' &)&,0  12    1! 2 2!  &' ),  1!# 1!! !"%!#$ 2!"  % !
)' 0,&, -!"%!   "  % 7 &' &&, ; "!1+2  " 2+!1! %2
0' &(&& 1" ' &)) :6 1  %  ! $  +' &),&&0)& 3 !  1+% !" %  !  &' &&) !!  !"% !1   %1!!# !
' &&(&&&), 9   ' &) -!"  !  !   ! !"11 1!
)' &,&,&) -7!"  )0' &,0)  "!1!"!1  "  ! 0' &,
0),&())0 9  "  #1    !" $!"1!
 0' &(
(, = $ "%!" "% 7.1!> !" $!
(' &(
&&0
0 ?!  % !$! !1+ + 0' &0&,) 4 2    +!6 )(' &00
&)(0& -7!" %  0(' &)
0    +)&' &))
0' &&0    + ()' && 1"
()0)' &&)  %%  %%! $!  !
 (&' && -   1 ! %0
0(' 
&& ;!  ! 1  %  !  (&' &&   $ !"!
)(0' , -!"%!.     "/ % !
 (&' (0& -7!" % 0)
(' &
&0), 8!!"1 ! ! !" %  !  (' &
&0  0)&
(,' 0   (' & 4!#    ! %1  ! !>2! "! 10((,' ,,)&   (' ,,, 8  ! %/ %$ !
&&(&' (
(&) 4   !
 ,)' (
& 3       !
(0&(' 0
0&&& 4! !   !% "2  $  ,,' 0(&& 3    !"/!# !!
&&)&  % !$! 2!  ! 1" !
 ,&' )0  !"$   "2"! ,' )0(0  !"$   "2"!  ,' ) 1!"$  ! %  !  !
,)' &) !!  !"%  !1   %1!!# !
 ,' ))0 9  "  #1    !" $!"1!
,)' (,0) 3  ! $!" !"!"!1!#!  !
 (' ,( - 2,(' ,),&)  "!  
 (' ,), !# !! ! %)&&")")&")
,' ,&(,&)( 1 !
 ' ,&,& -/  $ !"! %"  "% .1 %
,' ,&&),( - "1! " % 11 !
 ' ,0( 9/ +,&' ,
0,,( <+  $ !!"#  #  !
 &' ,,
& ?  %!1   !"%!"   % 7' ,,)
,((& 4    !
 &)' ,(0), 8!!"1 ! ! !" %  ! 0' ,(
(,0& < ! !!/ 1 % !!"2 &)' ,0))& : 11 ! !!2 !"+!"% !!"1 !(' ,00,,)0( 9/ + &0' ,)
), 9   ' ,)&,,(0 4     !
 &,' ,( - "1! " % 11 !
&' ,
(0,&&   $ !"!
 &&' ,0, =!"1+2 "1    !   2
' ,)&((&   !"1 !"1   !"# 
 &&' (&) -7!" ' (0($  $  
, ,'
&,'

Figures:
Colors:
Source:8    !" "# $ % $  !
   1 !"%
"1  #  ! %1   1-!"%!.     "/ % !
!"1  !#!1 ! !" 2 .2 
4  !    !" 
4  !"2 5!"%/ %$ !
 
4  !"5!"%/ %$ !
 "!1!"!1  "  ! 
4!     ! %$!  !"!
 % !$! 2!  ! 1" !
8  !"      
8  ! %/ %$ !
9  " #1    !" $!"1 !
 1!# 1!! !"%!#$ 2!" % !
!!  !"% !1  %1!!# !
4   !
  <+  $ !!"# #  !
 !# !! ! %)&&")")&")
3      !" / !# !!
-!"%!   "   % 7
8!!"1 ! ! !"%  ! 1"?!  % !$! !1 +  +
 %%  %%! $!  !
- # !     !"%!     +
1 !
3  ! $!" !"!"!1!#!  !
3 !  1+% !"%  ! -  !"  $ !"  !
- 7!" %   $$ />  $$#!   !
9/ +-   1 ! %! 1   1 !"!#  !
@2+"  !!    %1  !
:!!- 7!" ; ! % "  !1 !# 6 !
*  "   +- "1! " % 11 !
=!"1+2 "1    !   2
; "!1+2  " 2+!1! %2= $ " !# $!"11 .1! "!
?  !% !1  % !. !
?  1 !"2 +. %+ %/  !
$  
((&'
&'
((,'
'
('
('
,&'
,'
&'
('
'
)'
00'
,'
,)'
,'
'
'
)'
('
,'
'
'
&'
&'
&'
&)'
&)'
&,'
&,'
&'
&'
&'
&'
'
'
'
'
)'
0'
0'
0'
0'
0'
('
,'
'
&'
&'
&'
,'

The share figures are out of total Africa’s exports to each partner region/country. For Asia, shares are based on average of
1998-2000. For US and EU, shares are based on averages of 1999-2001. All figures are based on partners’ import data.
=products in the SITC 7 group; =products in the SITC 8 group
UN COMTRADE Database

9

3.2

Subregional Features of Africa’s Exports

Next, we will take a brief look at the subregional features of Africa’s exports by comparing
patterns in and the composition of exports at the subregional level. For this purpose, we divide
Africa into five subregions—Northern, Eastern, Western, Central, and Southern Africa.14

Product Groups
Table 3.3 compares the five subregions in terms of compositions of SITC product groups in theirexports. In all subregions except for Eastern Africa, “minerals fuels, lubricants, and relatedmaterials” (SITC 3) scores significantly high shares in overall African exports. In fact, major oil
exporters are distributed widely across Africa: Egypt, Libya, and Algeria in Northern Africa;
Sudan in Eastern Africa; Cameroon, Central African Republic, Congo Republic, Democratic
Republic of Congo, Equatorial Guinea, and Gabon in Central Africa; Guinea, Niger, and Nigeria
in Western Africa; and Angola in Southern Africa.
Table 3.3 Current Subregional Export Structures by SITC Product Group
Product

Product Name

0
1
2
3
4
5
6
7
8
9
Total

Food and live animals
Beverages and tobacco
Crude materials,inedible,except fuels
Mineral fuels,lubricants and related
t i land vegetable oils,fats andAnimalChemicals and related products,n.e.s.
Manufactured goods classified chiefly byt i l and transport equipments
MachineryMiscellaneous manufactured articles
Commodities and transactions n.e.s.
Total Trade

Northern

Eastern

Western

CentralSouthern

45,526,559 (US$,000)
6,605,728 (US$,000) 26,940,901 (US$,000)
10,509,432 (US$,000)
39,427,248 (US$,000)
1.69%
4.80%
2.16%
41.56%
3.02%
14.49%
0.45%
5.56%
2.54%
8.26%
0.02%
0.07%
0.07%
1.43%
0.01%
0.04%
0.01%
0.08%
0.88%
2.87%
1.04%
2.95%
0.57%
10.98%
1.90%
9.11%
1.35%
16.70%
3.14%
10.24%
21.66%
61.57%
0.78%
15.04%
13.90%
66.72%
5.13%
63.47%
6.48%
21.12%
0.19%
0.53%
0.01%
0.11%
0.10%
0.46%
0.00%
0.03%
0.03%
0.08%
1.68%
4.77%
0.05%
1.05%
0.19%
0.90%
0.03%
0.43%
1.20%
3.91%
1.55%
4.40%
0.21%
4.06%
0.88%
4.22%
1.01%
12.43%
9.11%
29.68%
1.65%
4.70%
0.09%
1.78%
0.58%
2.78%
0.05%
0.60%
2.77%
9.03%
5.24%
14.90%
1.18%
22.63%
0.09%
0.42%
0.02%
0.20%
1.03%
3.35%
0.46%
1.32%
0.07%
1.36%
0.18%
0.86%
0.04%
0.49%
3.52%
11.47%
35.17%
100.00%5.20%
100.00%20.83%
100.00%8.09%
100.00%30.71%
100.00%
Left: share in total African exports
Right: share in total subregional exports

All
129,009,869 (US$,000)
952 9.86%
9.86%
0.99%
0.99%
8.00%
8.00%
47.96% 47.96%
0.31%
0.31%
3.15%
3.15%
12.76% 12.76%
5.14%
5.14%
7.55%
7.55%
4.27%
4.27%
100.00% 100.00%

Over 25% share in total subregional exports
10-25%
Under 10%Figures: The share figures are based on averages of 1999-2001. The figures for all subregions are slightly different from All
Africa figures in Table 3.1 largely due to round-up errors.
All figures are based on partners’ import data.
Source: UN COMTRADE Database

The relative importance of mineral fuels, however, sharply differs among subregions. Northern,Western, and Central Africa depend on mineral fuels for more than 60 percent of their exports.
In Eastern Africa, where oil exports are much smaller than in other subregions, “food and live
animals” (SITC 1) and “miscellaneous manufactured products” (SITC 8) have prominent shares.
(SITC 1 products include textile and apparel products in Mauritius, Madagascar, Kenya, andothers; SITC 8 products include tea, fruits, nuts, spices, and fishery products from various
countries in the subregions). In Southern Africa, “manufactured goods classified chiefly bymaterials” (SITC 6)—including silver, copper, platinum, aluminum, diamonds, leather, andtextile yarn from various countries in the subregion—have a higher share than SITC 3 products.
Southern Africa—considered the most industrialized and fastest growing region in Sub-SaharanAfrica—scores high shares in various groups such as “crude materials, inedible, except for fuels”(SITC 2, which includes iron ore), “machinery and transport equipments” (SITC 7, which
includes automobiles from South Africa), “miscellaneous manufactured articles” (SITC 8, which
14

See Appendix I for the lists of countries in individual subregions.

10

includes textile and apparel products from countries such as South Africa and Lesotho), and“products and commodities not else classified” (SITC 9, which includes gold from South Africa
and Zimbabwe).
Even in the three subregions where oil dominates the exports, other groups of products also havesignificant shares. Northern Africa, for example, has a significant share of exports in“miscellaneous manufactured goods” (SITC 8), reflecting established supply bases for textile andapparel products. Similar to Southern Africa, Northern Africa also exports a wide range ofmanufactured products. In Central and Western Africa, however, manufacturing products are notas diversified as in Northern and Southern Africa, but they do have tangible non-oil exports suchas “food and live animals” (SITC 0), “crude materials, inedible, except for fuels” (SITC 2), and“manufactured goods classified chiefly by materials” (SITC 6). These groups include suchproducts as cocoa, fruits and nuts, fishery products, cotton, diamonds, woods, leather, andaluminum.

Destined Markets
Turning to the question of how subregions differ in terms of export destinations, Table 3.4
compares the five subregions in terms of shares of their major trade partner regions in total
African exports as well as average annual changes in exports per trade partner during the 1990s.
It is easily observed that the EU is the leading destination of exports for all five subregions,confirming our earlier findings. Northern, Eastern, and Southern Africa score significantly highshares of exports to the EU out of total African exports. Northern Africa, with over 70 percent of
its export earnings from sales to the EU, shows the highest dependence on the EU market, areflection of its geographical proximity to Europe. Eastern Africa also receives more than a halfof its export earnings from the EU market. All other subregions receive over 35 percent of theirexport earnings from the EU. The large shares of exports to the EU are rather steady for Africa asa whole, but Southern Africa is increasing its exports to the EU rather rapidly as a result of thefree trade agreement between the EU and South Africa.

Table 3.4 Current Subregional Export Structures by Partner Regions
Northern

Eastern

45,526,559 (US$,000)

Western

6,605,728 (US$,000)

CentralSouthern

26,940,901 (US$,000) 10,509,432 (US$,000)

39,427,248 (US$,000)

All
129,009,869 (US$,000)

Africa

0.75%
2.43%

2.14%

0.19%
1.79%

3.62%

1.21%
13.19%

5.79%

0.11%
-2.79%

1.35%

1.29%
4.18%

4.21%

3.55%
5.68%

3.55%

EU

25.34%
1.38%

72.07%

2.71%
2.59%

52.06%

7.79%-1.29%

37.38%

3.19%-2.08%

39.49%

12.77%
3.94%

41.56%

51.80%
1.28%

51.80%

3.06%

8.70%

0.54%

10.48%

7.02%

33.71%

2.29%

28.28%

6.00%

19.52%

18.91%

18.91%

US

3.80%

7.47%

4.02%

5.91%

6.91%

5.14%

Asia

1.93%
4.59%

5.48%

1.46%
11.73%

28.03%

2.80%
10.96%

13.42%

2.22%
21.57%

27.43%

8.57%
9.15%

27.90%

16.97%
10.06%

16.97%

Others

4.08%
10.00%

11.61%

0.30%
6.78%

5.81%

2.02%
5.30%

9.70%

0.28%
0.91%

3.45%

2.09%
7.97%

6.80%

7.77%

8.77%

World

35.16%
2.47%

100.00%

5.20%
5.20%

100.00%20.83%
2.63%

100.00%

8.09%
3.36%

100.00%30.72%
5.99%

100.00%100.00%3.70%

100.00%

Left Upper: share in total African exports
Left Lower: annual average increase (1989-2001)
Right: share in total subregional exports

Figures:
Source:Over 50% share in total subregional exports
10-50% share
Under 10% share

Annual average increase over 3% in bold

The share figures are based on averages of 1999-2001. All figures are based on partners’ import data.
UN COMTRADE Database

Other bilateral relations with significantly high shares in total Africa’s exports include Westernand Southern Africa with exports to the United States, and Southern Africa with exports to Asia.

11

Comparing the degrees of reliance on the U.S. and Asian markets among the subregions, weobserve that Western and Central Africa receive more than a quarter of their export earnings fromthe United States, and Eastern, Central, and Southern Africa receive more than a quarter of theirexport earnings from Asia. Although the degree of reliance on Asian markets is not comparable tothe degree of reliance on the EU for all subregions, the average increase in export values in thetable indicates that all subregions are increasing their reliance on Asian markets as their destined
markets, consistent with our earlier findings. Central Africa, in particular, is increasing its exports
to Asia most rapidly. Although crude oil exports from such countries as Equatorial Guinea,
Republic of Congo, and Gabon are the principal drivers for such growth, cotton exports from
Chad also contribute significantly to the growth.
In all subregions, the shares of intra-Africa trade are limited to much smaller numbers comparedto other partner regions. Given that the most of the most of the subregions contain a large
number of land-locked countries, establishment of regional infrastructure, which connects landlocked countries with major sea ports in coastal countries, is a critical condition for expanding
their trade opportunities. Success in regional infrastructure projects such as Chad-Cameroon
Pipeline is strongly hoped for. Also, regional integration conducive to trade enhancement need tobe achieved through effective regional integration agreements (RIAs) (see Box 3.1).
Box 3.1 Regional Integration Agreements in Africa
Regional integration agreements (REIs) have evolved considerably in the African region. There are currently ten important REIs in
Africa, which are summarized in Table 3.5. Several major automobile plants already operate in South Africa targeting neighboringmarkets in addition to South Africa itself. In 2002, two Japanese electrical appliance manufacturers for refrigerators and airconditioners established assembling factories in Egypt, as an entry point into the market of COMESA. Although there are still
remaining issues in the practical effectiveness of those regional economic zones and infrastructure within zones, the global trend issuggesting a direction for regional integration under the WTO framework. One of the strategies would be to develop a regional hub
with sufficient infrastructure for accommodating FDI with concentration of services in trade, finance, transportation, communicationand other service infrastructure. South Africa has already taken a hub role in Southern Africa, as has Egypt in Northern Africa.
USAID is assisting in its program, Trade for African Development and Enterprises (TRADE), in developing so-called Regional
Hubs for Global Competitiveness in three regional missions of USAID: Acra (Ghana), Nairobi (Kenya), and Gaborone (Botswana).
Overall, viable regional integration would help African countries to overcome capacity constraints of small domestic markets inindividual countries. Regional integration broadens the scope of market-based economic development of small African countries,
each of which has a very fragmented domestic market of factors and goods. Through regional integration, these countries can havebetter allocation of resources and economies of scale. To have regional integration more conducive to trade enhancement in Africa,
the regional integration agreements needs to have more outward-looking trade orientation and to avoid unnecessary overlapping andinconsistency among different agreements. Adequate infrastructure and appropriate governance over the infrastructure system arealso essential for effective regional integration.
Table 3.5 Subregional Arrangements in Africa
Regional Integration
Agreement

Acronym / Formation
Date

Members

Comments

Cross-Border Initiative

CBI (1992)

Burundi, Comoros, Kenya, Madagascar, Malawi, Mauritius,
Namibia, Rwanda, Seychelles, Swaziland, Tanzania, Uganda,
Zambia, Zimbabwe

East African Community

EAC (1999)

Kenya, Tanzania, Uganda

Focus on regional integration of trade and investment policy,
monetary and fiscal policy, and labor and capital markets.

Economic and Monetary
Community of Central
Africa

CEMAC (1994)

Cameroon, Central African Republic, Chad, Congo, Gabon,
Equatorial Guinea

Aims to promote harmonious development of member states
within the framework of economic and monetary union.

Economic Community ofWest African States

Benin, Burkina Faso, Cape Verde, Cote d’Ivoire, The Gambia,
Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger,
Nigeria, Senegal, Sierra Leone, Togo

Promotes economic integration in all fields of economic activity.

ECOWAS (1975)

Common Market for Easternand Southern Africa

COMESA (1993)

Angola, Burundi, Comoros, Djibouti, Egypt, Ethiopia, Kenya,
Lesotho, Malawi, Mauritius, Mozambique, Rwanda, Somalia,
Sudan, Swaziland, Uganda, Zambia, Zimbabwe

Promotes intraregional trade through removal of all internal tariffs
and non-tariff barriers (NTBs) to trade.

India Ocean Commission

IOC (1984)

Comoros, Madagascar, Mauritius, Seychelles

Supports cooperation in economic and trade co-operation,
agriculture, fisheries, and ecosystems.

Southern African
Development Community

SADC (1980)

Angola, Botswana, Democratic Republic of the Congo, Lesotho,
Malawi, Mauritius, Mozambique, Namibia, Seychelles, South
Africa, Swaziland, Tanzania, Zambia, Zimbabwe.

Formerly Southern African Development Coordination
Conference (SADCC)

West African Economic andMonetary Union

WAEMU (1994)

Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger,
Senegal, Togo.

Aims to create a common market based on the free movement ofgoods, services, capital and persons.

Southern African Customs
Union

Botswana, Lesotho, Namibia, South Africa, Swaziland
SACU (1910)

Aims to maintain free trade between member countries, and acommon external tariff and a common excise tariff to the customs
area.

Source: Japan Center for International Finance (2003)

12

A voluntary framework agreement for the implementation of trade andinvestment policies.

3.3

External Trade Regimes and Cross-Country Analysis

Here we provide an overview of external trade regimes and how preferential arrangements by
their trading partners have contributed to expansion of African exports. It is preferable that somespecific attributes or measures are found to correlate with export growth, but it is hard to identify
any such correlation in direct ways.
Appendix II provides comprehensive data on the multilateral, bilateral, and regional trade
institutions with which African countries are affiliated. The data also include countries’ eligibility
status on several preferential treatments provided by major industrialized countries. WTO
membership has been extended to 41 of 53 countries in Africa. Even though membership in the
WTO is expected to provide these countries with preferable conditions for promoting trade interms of most favored nation (MFN) status, the membership itself does not necessarily guarantee
growth in export earnings for all African countries because most African countries have alreadybeen granted with preferential treatments under the Generalized System of Preferences (GSP)
with tariff rates much lower than MFN tariff rates.
Based on the understanding that export growth will contribute to development in Africa,
developed countries have extended preferential market access measures to African countries withthe aim of promoting Africa’s external trade and thereby facilitating the integration of Africa into
the global economy. In particular, the EU and the United States have implemented various
measures to facilitate exports from the region. The EU currently extends preferential access to its
market under the Cotonou Agreement and the Everything but Arms (EBA) initiative (see Box3.2). The Cotonou Agreement, which replaced the Lomé Convention for ACP (Africa, theCaribbean, and the Pacific) countries, covers all Sub-Saharan African countries, whereas EBA
covers all African least developed countries.
Box 3.2 EU and US Preferential Trade Measures for African Countries
In 2001, the “Everything but Arms” (EBA) initiative was introduced by the EU. The EBA regulation grants duty-free access toimports of all products from the least developed countries, with the exception of arms and munitions, and without any
quantitative restrictions. Liberalization was immediately implemented except for three products: fresh bananas, rice, and sugar,
whose tariffs will be gradually reduced to zero. Prior to the EBA initiative, the Generalized System of Preferences (GSP) and the
Lomé Convention, which has been replaced by the Cotonou Agreement in 2000, had existed to grant developing countries,
including African countries, preferential trade access to the EU. Under these schemes, all industrial products from Africa enter
the EU duty- and quota-free, and most of the agricultural products have been completely liberalized or enjoy preferential accesssuch as duty-free quotas.
The African Growth and Opportunity Act (AGOA) was signed into U.S. law in 2000. It is the latest in a series of regional
initiatives in U.S. trade policy toward Sub-Saharan African countries. It aims at broadly promoting economic development in
Africa, enabling countries to embrace globalization and securing durable political and economic stability. It offers increased
preferential access for African exports to the United States. AGOA benefits are not, however, automatically extended to all thesecountries. AGOA establishes a series of eligibility criteria in terms of economic reforms, the rule of law, protection of humanrights, labor rights, corruption, and other matters. Countries are required to meet such criteria to be designated eligible for the
program.
The impact of AGOA is very significant for the textile and apparel sector, because these items are exported by nearly all SubSaharan African countries and because their tariff and quota barriers are relatively high. However, AGOA countries enjoy thepreferences only if they meet strict rules of origin. Basically, apparel products assembled and even further processed from fabrics
and yarns that are made in the United States are unrestricted, whereas those assembled from regional fabric that is made from
U.S. or African yarn is subject to a cap of 1.5 percent of overall U.S. apparel imports, growing to 3.5 percent until 2008.
However, for least developed countries with per capita GNP under US$1,500, unrestricted access has been granted even forapparel assembled in those countries using foreign fabric or yarn until 2004. Thereafter, those countries will have to follow thesame restrictions mentioned above. Thus, at least until 2004, least developed countries in Africa can enjoy duty-free access to the
U.S. apparel market as long as their products are assembled in their own countries.
Source: United States (2003)

13

Table 3.6 summarizes the coverage of these preferential treatments and average annual changesof export values of African countries in the past decade. As shown in the table, the extension ofpreferential treatments itself does not seem to be directly correlated with increases in exports
from Africa to the EU. Of course, the current high share of EU-destined exports in Africa’s totalexports can be partly attributed to these preferential treatments. However, overall, Africa’s
exports to the EU have been stable over the past decade. Furthermore, one World Bank report
points out that the introduction of the EBA has had little effect on increasing trade because allindustrial and most agricultural and fishery products exported to the EU had already enjoyedpreferential access.15

Table 3.6 Preferential Measures by EU and Changes in African Exports
Ranking

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53

Figures:
Source:Country

Niger
EritreaEquatorial Guinea
Botswana
Seychelles
Tanzania
RwandaBurkina Faso
ZambiaCongo, Rep.
Sao Tome and Principe
Ghana
Ethiopia
Namibia
MoroccoSouth Africa
Tunisia
Sudan
Kenya
Mozambique
Mauritania
Algeria
Guinea
Mauritius
Madagascar
AngolaEgypt
Cape Verde
Cameroon
Benin
Zimbabwe
ChadCentral African Republic
Liberia
Congo, Democratic Rep.
SenegalCote d'Ivoire
Malawi
Nigeria
UgandaDjibouti
Guinea-Bissau
Libya
Sierra Leone
Togo
GambiaComoros
Gabon
BurundiSomalia
Mali
LesothoSwaziland

Average Annual
Change of Total
Export Value towards
the EU

Cotonou
Agreement

EBA(Everything But Arms)

FTA

113.19%39.61%
33.73%
29.27%
22.64%
20.69%
18.89%
18.29%
14.73%
14.00%
11.86%
10.98%
9.14%
8.58%
8.05%
6.80%
5.87%
5.40%
3.59%
2.19%
1.90%
1.57%
1.51%
0.84%
0.76%
0.50%
-0.01%-0.25%-0.38%-0.67%-1.03%-1.58%-1.92%-2.37%-2.37%-3.62%-3.63%-3.83%-4.34%-4.75%-7.42%-7.52%-7.88%-8.70%-10.27%-13.42%-14.49%-15.73%-20.49%-22.34%-22.54%-27.33%-73.42%The share figures are based on averages of 1999-2001. All figures are based on partners’ import data.
UN COMTRADE Database

The
United States enacted the AGOA in 2000 with the aim of assisting economic development andpolitical stability in the region. Overall, the impact of the tariff-free and quota-free part of thisinitiative has been limited because, as in the case of the EU, most African products entering theUnited States already had preferential access. The apparel and textiles sector benefits under
AGOA, however, have had tangible effects on attracting foreign investment, especially from
Asia, and on promoting trade in the sector.
15

Breton (2003).

14

Table 3.7 ranks countries by export growth of garment products categorized under SITC 842-6,
highlighting the countries eligible for AGOA’s apparel and textiles benefits. Because AGOA wasintroduced in the year 2000, changes, if any, should be observed between the years before andafter its introduction. As the table shows, changes have clearly occurred in some countries after
the year 2000. Growth of apparel and textiles exports from Namibia, Tanzania, and Botswana
turned from negative to positive from 2000–01 to 2001–02 and Ethiopia, Kenya, and Lesotho
have registered high rates of positive changes from 1999 to 2002. The U.S. government hasreported that these countries have increased exports under the AGOA apparel and textiles
benefits.
The apparel and textiles benefits of the AGOA have had such tangible impacts because generaltariff and quota barriers are relatively high for these products. Additionally, many Africancountries had been exporting apparel and textile products before the year 2000, and so Africa
already had some industrial bases in the sector.16 Looking at the countries that have taken
advantage of the AGOA’s apparel and textiles benefits, it is observed that most of those countries
are located in Southern and Eastern Africa. Presumably, this has some correlation with the rapid
inflow of FDI from Asian economies such as India, China, and Taiwan in response to theintroduction of the AGOA.17 The geographical proximity and the language factor (that is,
Anglophone) may have attracted Asian investment more to Southern and Eastern Africa than toCentral and Western Africa.

Table 3.7 Preferential Measures by US and Changes in African Exports) *% +,
 


































16
17

 , - .




!
"#$%&'!
#(
)!*+(,&,
!#$
.#!-/01!
.%!2!-!

3&#+#$45
&,(
6!
"3*%#&55
6$
6
7(!
&-35
+!!3,+! !!
3!.!
3!
&#+,
83-
!
.39:!5#5;!%
7
-"#!
.!#,45;!%,5
6
+!*5$!,,!
+-
,3!
3,
.$.
.39;!%:<#
"'#,6!
6! 
*;(-
+!-=5%!

              !  " ! #    

 
 
 
 
 
 

 
 
 
 
 




 
 
 

 

 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 

 
 

 
  
 
 
 

 
 
 
 
 

 
 

 

 
 
 
 
 
 
 
 
    
 
 

 
 
 
 
 



 
 
 
 
 
 
 
 
 
 
 



 

$     %
&  %!
#   $ ' ( $   
 
 
 

 
 
 
 
 
 
  
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 

 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 

 

Figures:

Source:The share figures are based on averages of
1999-2001. All figures are based on
partners’ import data.
UN COMTRADE Database

Among them, South Africa and Mauritius have been the major exporters since pre-AGOA period.
This point will be analyzed more in depth in Section 5.

15

4.

Overview of Structure of Africa’s Exports to Asia

In the previous section, we provided the overall picture of the export structure of Africancountries based on the export matrixes. One of the basic findings is that Africa’s exports to Asia
have grown rapidly during the past decade, mostly driven by crude oil and other primarycommodities. Here, we take a closer look at the pattern of trade between Africa and Asia
throughout the 1990s.

4.1

Basic Characteristics of Africa’s Exports to Asia

Figure 4.1 illustrates the trends in Africa’s export values to Asia for each product group (SITC 1
digit level). Although the figure confirms our earlier findings, a particular drive for growth during
the 1990s is found in SITC 3 (crude materials), which dramatically increased throughout the
decade.18 Another significant group is SITC 9, which includes gold. A group of primarycommodities—non-fuel inedible crude materials (SITC 2) that include cotton and woods—has
also increased significantly since the beginning of the decade. In contrast, the figure shows that a
few traditional commodity exports from Africa—food and live animals (SITC 0)—thoughshowing a steady increase, do not share the same magnitude of increase.
Figure 4.1 Trend in Africa’s Exports to Asia in the 1990s: By SITC Product Group12000
0: Food and live animals

10000
1:Beverages and tobacco
2: Crudematerials,inedible,except f uels

million $US

8000

3: Mineral f uels,lubricants andrelated materials
4: Animal and vegetableoils,f ats and w axes

6000

5: Chemicals and related
products,n.e.s.
6: Manuf actured goods
classif ied chief ly by materials

4000

7: Machinery and transport
equipments
8: Miscellaneous
manuf actured articles

2000

9: Commodities andtransactions n.e.s.

Figures:
Source:

19
99

97
19

95
19

19
93

91
19

19

89

0

The share figures are based on averages of 1998-200. All figures are based on partners’ import data.
UN COMTRADE Database

Of the total US$21 billion in Africa’s exports to Asia today, a large share is concentrated in a
relatively small number of countries in Africa. Table 4.1 shows the major African countries with
exports to Asia, both in terms of share of total African export values and average annual increase18
Because the Government of India did not report the country’s crude oil imports for 2000, UN COMTRADE is not able to provide
more accurate figures regarding Asian imports from Africa in SITC 3 and the aggregate Asian imports from Africa. The statistics used
for this paper therefore do not include Indian crude oil imports for 2000.

16

in export values. Of the 53 African countries this report covers, the five largest exporters—South
Africa (39.5 percent), Nigeria (11.9 percent), Angola (7.7 percent), Republic of Congo (6.1
percent), and Morocco (4.7 percent)—account for more than two-thirds of total African exports toAsia. The reason for such concentration in few countries is that mineral fuels, especially crudeoil, account for one-third of the total export values. South Africa, however, which has begun its
path of industrialization, contributes to the region’s exports to Asia in a number of other products,
including manufactured products. The table shows that in terms of the average annual rate ofincrease in exports to Asia, a better mix of countries has recorded strong increases in export
values to Asia during the 1990s.
Table 4.1 Major African Exporters to Asia: Share and Rate of Change
Share (%)
South Africa
Nigeria
AngolaCongo, Rep.
Morocco
Egypt
Sudan
Gabon
Zimbabwe
Cameroon
ZambiaKenya
Cote d'Ivoire
Tunisia
Tanzania
Eq. Guinea
Algeria
Liberia
Niger
Ghana
Figures:
Source:

39.46
11.91
7.68
6.12
4.71
4.02
2.72
2.28
1.84
1.72
1.36
1.33
1.21
1.19
1.18
1.17
0.99
0.86
0.84
0.82

rate of change p.a. (%)
Eq.Guinea
Congo, Rep.
Niger
AngolaNigeria
Djibouti
GuineaCape Verde
Cameroon
Benin
Mauritius
Guinea-Bissau
Sao Tome and Principe
Sudan
South Africa
UgandaComoros
Gabon
Egypt
Kenya

116.75
72.51
59.52
45.55
38.63
31.75
25.12
20.58
15.79
15.62
15.27
14.59
14.45
13.83
13.17
10.90
10.66
10.14
9.36
6.55

The share figures are based on averages of 1998-2000. The rates of changes were computed by taking annual averagechanges between the averages of 1989-1991 and those of 1998-2000. All figures are based on partners’ import data.
UN COMTRADE Database

Table 4.2 presents a detailed list of the major African exports to Asia, identified at a highly
disaggregated level (SITC 4-digit) and ranked according to the value shares in total Africa’s
exports to Asia (three-year-averages from 1998–2000). The table also shows the major exporters
and importers of those products to provide a detailed picture of the pattern of Africa’s exports to
Asia.
The table helps us understand more than just the 1-digit level characteristics of African exports toAsia. As expected, crude oil (SITC 3330) and gold (SITC 9710) top the list. These two products
characterize the basic patterns we saw for the corresponding 1-digit groups (SITC 3 and 9) in
Figure 4.1. A few countries line up as crude oil exporters to Asia, with the largest exporters being
Nigeria (33.92 percent), Angola (23.31 percent), and Republic of Congo (17.32 percent). On theimport side, China, Korea, India, and Taiwan almost evenly import the most crude oil from17

Table 4.2 Africa’s Major Exports to Asia (SITC 4 digit)

Figures:
Source :18

The major exports were selected based on the shares in total Africa’s exports to Asia.
The share figures are based on averages of 1998-2000. All figures are based on partners’ import data.
UN COMTRADE DatabaseAfrica.19 The major non-fuel inedible crude materials exports include cotton (SITC 2631) andsawlogs and veneer logs (SITC 2472), both of which have varieties of African countries leadingin their export. Although exports in agricultural products are not prominent at the 1-digit level,
the table includes some agricultural commodities such as crustaceans and mollusks (SITC 0360),
nuts (SITC 0577), and tea (SITC 0741). Importers of these products in Asia seem to beconcentrated in specific countries, catering to particular tastes and food culture of consumers inthose countries (for example, fishery products to Japan, nuts to India, tea to Pakistan). Besides oil
and gold, there are some more mineral and mining products prominent in the table, such as ironore (SITC 2815), coal (SITC 3222), copper (SITC 6821), and diamonds (SITC 6672).
Additionally, Africa exports heavy manufactured products, such as aluminum (SITC 6841) andferro-alloys (SITC 6716), to Asia.
The major exports from Africa to Asia can roughly be categorized into three groups. The firstgroup is minerals and mining products, including mineral fuels such as oil, which are exported bya handful of countries rich in these natural resources. The second group of exports is agriculturaland fishery products. Although relatively small in values compared to the first group, theseproducts constitute a significant part of exports by non-oil-exporting countries. And the last groupof exports is heavy manufacturing products, mainly produced by the rapidly growing economy ofSouth Africa. Although limited to very few countries such as South Africa so far, thesemanufacturing products already provide significant export earnings to the region.

4.2

Major Trade Partners in Asia for Africa’s Exports

By looking at the Asian side, we notice from Table 4.2 that a good mix of countries is represented
as leading importers for each product. Although Japan’s position in the region as the leading
trading country is unchanged as long as overall trade with the world is concerned, clearly that it is
not the case for Africa-Asia trade relations specifically. Countries such as China, India, Korea,
and Taiwan contribute significantly in many products that have high shares among Asian imports
from Africa. In fact, as can be seen in Figure 4.2, the increase of African exports to Asia is
mainly driven by exports to those four countries. Japan was the largest importer of African
products in early 1990s, but India and China have now surpassed Japan in since the mid-1990s.20
Table 4.2 shows that China, Korea, India, and Taiwan are the largest importers of crude oil fromAfrica. And the share of mineral fuels in Asia’s overall imports from Africa has grown most
rapidly since the beginning of the 1990s. It is important to note, however, that Asia’s large oil
importers do show increasing imports of non-oil products from Africa during the same period.
Various trade and investment initiatives have been undertaken by the governments of Asian
countries to promote trade and investment activities by their national businesses with Africancountries. Box 4.1 examines such initiatives by three major Asian importers of African
products—India, China, and Japan.

19With more accurate figure for 2000 Indian statistics, the share of India is likely to be higher.
In terms of non-oil exports of Africa, Japan has maintained its dominance as the major importer of African products throughout the
1990s.
20

19

Figure 4.2 Trend in Africa’s Exports to Asia: By Importer

Value of Imports from Africa (US$ million)

7000
6000
5000

China
India

4000

Japan
Korea
Taiwan

3000
2000

ASEAN 5

1000

Note:
Figures:
Source:

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

0

ASEAN 5 consists of Indonesia, Malaysia, Philippines, Singapore, andThailand.
All figures are based on partners’ import data.
UN COMTRADE DatabaseBox 4.1 Asian Countries’ Trade Initiative for Africa
India
India’s trade with Sub-Saharan Africa has increased during the past decade. According to statistics by the Government ofIndia, trade between India and Sub-Saharan Africa has increased from US$893 million in 1991–92 to US$7,014 million in
2000–2001. The growth rate of exports from Sub-Saharan Africa to India has been rapid: In 1991–1992, India imported
US$458 million of goods and services, but in 1999-2000 India imported as much as US$5,517 million.
Faced with such a trend, the Government of India came to see the potential for developing India-Africa trade and recently
launched a program called FOCUS: AFRICA from 2002 to 2003. The main focus of this program is to increase interactions
between the two regions by identifying areas of bilateral trade and investment. India has decided to place emphasis on
selected Sub-Saharan African countries, namely, Nigeria, South Africa, Mauritius, Kenya, Ethiopia, Tanzania, and Ghana.1
In terms of commodities, India mainly imports various kinds of material- and mineral-based products, such as crude oil andits related products, gold and silver, pearls, coal, wood, cotton, iron and steel, fertilizers, and so on.
The Government of India states four reasons why it is pursuing enhanced trade with Sub-Saharan Africa. First, SubSaharan countries have been liberalizing their markets, and their economies are growing. Second, shares of India-Africa
trade are still minimal; India’s exports to Sub-Saharan Africa constitute a mere 4.08 percent of total exports to the region.
Similarly, imports from Sub-Saharan African countries constitute only 3.18 percent of India’s total imports in 2000–2001.
Third, direct shipping lines between India and South Africa have been established recently. Fourth, language barriers can besurmounted with the help of business software for quick translation between English and prominent African languages.
In the FOCUS: AFRICA program, there are several measures to be implemented by the Government of India as well as the
Export Credit Guarantee Corporation (ECGC), the Ex-Im Bank, and Chambers of Commerce and Industry. Measures
undertaken by the Government of India are fourfold: (1) enhanced interaction, (2) institutional mechanisms, (3) trade
missions, and (4) trade promotion measures. In regard to institutional mechanisms, India has already had Joint Trade
Committees with Senegal, Kenya, Zimbabwe, Ghana, Uganda, Côte d’Ivoire, Namibia, and Ethiopia, and it aims to initiate
the same kinds of committees with the remaining focus countries. Concerning trade promotion measures, the India Trade
Promotion Organization is to undertake various measures such as participation in specialized and commodity specific fairs
and exhibitions in Sub-Saharan African countries, special promotion and publicity in the Sub-Saharan African countries,
and organizing buyer-seller meetings.

20

Box 4.1 Asian Countries’ Trade Initiative for Africa (continued)
China
Since the 1950s, China has signed trade treaties with a substantial number of African countries on the establishment of diplomatic
relations. Some of these treaties were occasionally suspended or inactivated due to unstable political situations, primarily on the
African side. Morocco and Egypt were the first to have trade relations with China. At present, 39 African countries have signed
trade agreements, and four countries have concluded agreements to prohibit double taxation. In conjunction with the recent
economic development in China and African countries, trade agreements seem to have accelerated the growth of trade between
them. Currently 14 African countries have trade volumes in excess of US$100 million with China.
To the benefit of African development, some African countries have enjoyed export surpluses with China. Angola, for example,
signed a trade agreement with China in 1984 and formed a committee on trade and economy in 1988. Trade volume between thetwo countries has drastically increased since then. China’s imports from Angola, in terms of annual growth rates, registered 131
percent and 418 percent in 1999 and 2000, respectively. A major export from Angola to China is crude oil, which has created alarge trade deficit for China. The trade agreement between Sudan and China has a long history. The two countries first concluded
the agreement in 1962 and transformed it in 1993 into a kind of agreement for economic, trade, and technological cooperation,
which was accompanied by supplementary agreements for protecting investments and prohibiting double taxation. South Africa
has an equal trade relationship with China with little trade deficit or surplus. South Africa’s major exports are crude materials andmanufactured goods classified chiefly by material, whereas China exports miscellaneous manufactured goods such as apparelproducts.
Such close trade relations between Africa and China have, to a large extent, been realized through FDI by the private sector.
China’s FDI in Africa registered nearly US$100 million for 54 projects in 1999, which brought the cumulative investment
volume to US$440 million for 351 projects. In terms of sectors, China’s investments have been directed toward manufacturing,which includes apparel, medicine, electric appliances, and other miscellaneous goods. Interestingly, African investors, however,
have been increasing their investment in many areas of China’s economy, including petrochemical, electric machinery, chemicaland pharmaceutical products, agriculture development, and service industries. It is reported that Africa’s cumulative investment
in China reached US$520 million as of 1999.
Source: Government of People’s Republic of China, Ministry of Foreign Trade and Economic Cooperation (official website).

Japan
The trade volume between Africa and Japan has decreased somewhat since 1995. In recent years, exports from Africa to Japandecreased by 8.2 percent year-on-year to US$4.57 billion by 2001. Imports from Japan to Africa also dropped by 12.1 percent to
US$4.45 billion over the same period. The decrease in some exports has been partially compensated by an increase in otherexports. For instance, the rapid growth of automotive exports from South Africa compensates for the decline of base metal
exports from the African continent. Similarly, exports of wood-related products from South Africa have increased, whereas
exports of unworked metal materials have decreased for all of Africa. Moreover, a decrease in exports of fish, mainly from
northwest Africa, has been offset by an increase in exports of crude oil from Sudan.
In fiscal year 2002, the Japanese Ministry of Finance decided to expand the coverage of preferential tariff treatments for import
goods from the least developed countries with a view to extending economic cooperation upon discussions at the Group of 7
Summit Meetings as well as preparing for a new round of negotiations in the WTO. The newly revised preferential tariff
treatments for these countries are expected to play a positive role in accelerating exports from Africa. In particular, agriculturaland fishery goods, a sector that had been less liberalized, benefited from the treatment.
Japan’s preferential trade treatment is twofold: general preferential tariffs in a form of reduced tariff rates vis-à-vis MFN tariff
rates, which are widely extended to developing countries; preferential tariff treatments in a form of duty-free and quota-freetreatment, which are extended to the least developed countries. Under the current general preferential tariff treatments, 221 out of
1,600 agricultural and fishery products and 3,284 out of 4,400 industrial products are granted preferential treatment. Furthermore,
the current least developed country preferential tariff treatments cover an additional 77 agricultural and fishery products and1,035 industrial products. Under the new revision of these treatments, a major focus is placed on the expansion of preferential
tariff treatments for agricultural and fishery products, under which Japan will extend general preferential tariff coverage to an
additional 118 goods and extend preferential tariff coverage to an additional 102 goods such as prawns and apricots.
Among African countries, Mauritania, Gambia, Angola, Tanzania, Zambia, Angola, and Malawi have ample track records ofexports to Japan and are anticipated to be major beneficiaries under the revised least developed country preferential tariff
treatment. Similarly, South Africa and Morocco will be major beneficiaries of the revised general preferential tariff treatments.
According to statistics published by the Japanese Ministry of Finance, Japanese FDI in Africa totalled US$193 million for 13 newprojects in the fiscal year 2001—3.6 times as much as the previous year. This increase was due in part to Japanese FDI in Liberia
and South Africa related to ship ownership and the manufacture of industrial goods. On addition, the rapid increase in exports ofautomobile-related products from South Africa is related to Japanese FDI in the South African manufacturing sector.
Source: Government of Japan, Ministry of Finance (official website) and Japan External Trade Organization (2002)

21

5.

Implications of Africa-Asia Trade Relations in Africa’s Trade Strategies

5.1

Contribution to Overall Export Expansion

In the previous two sections, we provided the overall picture of the export structure of Africancountries and the basic patterns of trade between Africa and Asia. As indicated in the export
matrix in Table 3.1, Africa’s total trade values in nominal terms increased by 3.7 percent on anannual basis over the period 1990–2001. Exports from All Africa to Asia grew by 10.06 percent
annually over the same period. Figure 5.1 shows the change in the share of exports from All
Africa consumed by each trading partner group between the periods 1990–1992 and 1999–2001.
Based on the 1990–1992 average, Asia accounted for 10 percent of total exports from Africa,
which increased to 16 percent when calculated based on the 1999–2001 average. The increase inrelative weight of Asia as Africa’s export partner remains true even when oil is excluded. All
non-oil exports from Africa to Asia amount to US$13 billion (1999–2001 average), which isabout 20 percent of Africa’s total non-oil exports, increasing from 15 percent in the early 1990s.
The above picture clearly shows that Asia contributes to the expansion of Africa’s exports interms of aggregate values. Because the most immediate benefit from exports is the opportunity
they give the countries to earn foreign exchanges, a trade expansion in absolute terms should beundertaken because of the importance of exports to Africa’s overall trade structure. Moreover,
Asia’s increase in share as a destination of African exports implies that it is increasingly
important to understand the pattern of Africa-Asia trade in the overall export expansion of
African countries. Africa-Asia trade relations need to be interpreted from both directions of trade
to be able to understand their impact on the overall export diversification of African countries.
Setting aside the issue of terms of trade, an increase in exports in terms of value is basically an
increase in export earnings, which should be considered as a viable first step toward promoting
more growth-oriented trade relations between the two regions.
Figure 5.1 Distribution Share of Exports from All Africa





 

 







 



 
 
 







 
 







   

 




 

   

22

Figures:
Source:All figures are based on partners’
import data.
UN COMTRADE Database

5.2

Contribution to Market Diversification in Primary Commodity Exports

Overall export expansion brings an immediate benefit from foreign exchange earnings, but thenext question is how such earnings from trade can be expanded in more structural ways. By
analyzing the contents of the Asian contribution to the overall export expansion of Africancountries, we see that Asia contributes to Africa’s export diversifications in two important ways:
in terms of destined markets (market diversification) and in terms of products (productdiversification).
Market diversification is particularly relevant to primary commodity exports, which arecommonly considered the traditional exports of most African countries. Although unfavorable
decreases in the prices of those commodities over the past decades have lessened the magnitude
of export earnings of primary commodity exporters in Africa, African countries have also
experienced difficulty in expanding their exports in real terms because of the stagnant demand intheir existing export destinations. However, by exploring markets among Asian countries, where
there is unsaturated rising demand for primary commodities, and by establishing new market
relations with them, African exporters can find new opportunities to expand their exports of theseproducts. In fact, the data indicate that such expansion has already started taking place. As wehave seen earlier, the expansion of Africa’s exports to Asia during the 1990s was mainly driven
by exports in primary commodities, which top the list of major African exports to Asia in termsof shares (Table 4.1). It is therefore quite logical to form an export expansion strategy for Africancountries that diversifies their destined markets by targeting untapped demands for products forwhich Africa already has established supply bases. There is no doubt that the increase in demandin terms of the number of trade partners as well as the amount brings enormous benefits to the
suppliers. And such an increase in demand will be forthcoming, if African suppliers effectively
connect themselves to emerging markets in Asia, including in countries such as China and India.
There are two ways in which African exporters can effectively meet the rising demand in Asia.
First, Africa is an important supplier of raw materials and fuels to Asian industries. Endowedwith rich natural resources, Africa supplies essential minerals and mining products to the growing
manufacturing sectors in Asia that have an increasing demand for products such as raw materials
and energy resources for their manufacturing production. Second, Africa is an important supplierof consumption goods such as food to the rising consumer populations in Asia. Asia is the mostpopulated region in the world, and the average income level of its population is increasing more
rapidly than in the other developing regions of the world. Growing purchasing power in Asia
provides a new set of opportunities for African food producers to expand their exports.

Supplying Raw Materials and Energy Resources to the Manufacturing Sectors in Asia
Natural resource–based products, such as minerals and mining products, have relatively low
differentiability on the supply side because of their nature as endowed resources and have highsubstitutability on the demand side because of the presence of alternative resources andtechnological advancement. This difference between supply and demand makes the market
mechanism more demand-driven. And although this characterization of these products remains
valid, exporters of such products could still implement proactive strategies from the supply side
by exploring new markets with untapped potentials, thereby broadening their customer base. Thisis an effective way to offset negative impacts from more established trade relations withtraditional customers in industrialized countries. This could be interpreted as a way to diversify
risk associated with economic fluctuation among partner countries, but by diversifying the typesof customers, exporters could locate additional unsaturated demand for their products. Just like23

income level, production techniques and technology vary among countries. What is obsolete inindustrialized countries is not necessarily obsolete in developing countries. As Asia’s industrial
sectors continue to grow, they will need a seamless supply of raw materials and energy resources.
African exporters can use this window of opportunity to develop new Asian markets for theircommodities.
One widely accepted view is that countries should not put excessive reliance on exports in theseproducts because of unpredictable price changes and the risk of loss in export earnings. Thoughvalid, this concern should not make countries shy away from opportunities to attract foreign
investment and expand exports in such sectors. As the cases of Botswana (diamonds) and South
Africa (gold) clearly exhibit, resource-rich countries can use their natural resources as the first
viable step to increase export earnings, attract foreign investment, and effectively reallocate
economic resources for other sectors to diversify the structure of production and exports. These
countries have successfully maintained good governance and management policies over theirnatural resources (see Box 5.1). They also implement sound macroeconomic policies, such as
avoiding external debt and excessive public investment during boom periods, which help theireconomies reallocate export earnings from natural resources to strengthening production sectors.
Box 5.1 Governance in Natural Resource Management
Recent World Bank research on the causes of conflict and civil war finds that the countries most likely to be blighted byconflict are those whose economies depend heavily on natural resources. Proper governance in natural resource
management is critically important for such countries to avoid political instability and to facilitate efficient reallocationof earnings from natural resources to longer-term development programs.
The existing cases of Africa’s natural resource policies suggest two key elements in successful governance of natural
resources: One is transparency in revenue information; the other is involvement of international organizations, such as
the World Bank and IMF, in developing their policies.
Botswana is a primary example of how a government’s fairly open disclosure policy of revenue information from natural
resources (that is, diamonds) has supported stable governance over the resources, allowing the country to reallocate theearnings from natural resources to longer-term development programs.
Angola borrowed heavily during the last decades at a premium on international market, using future oil revenue as
collateral. The growing debt burden turned the Angolan government to IMF and the World Bank. Angola’s “oildiagnostic” program involved IMF to monitor the Angolan government’s oil revenues, improving transparency of thegovernment’s oil development policy.
The Chad-Cameroon Petroleum Development and Pipeline Project is one example in which conditionality has been used
to attract foreign investment on a natural resource development project. One of the Majors has agreed to invest on thecondition that the Chad government sign an agreement with the World Bank and IMF arranging for a large portion of thegovernment’s oil revenues to go to priority development projects. As a result, the government passed a law that requires
10 percent of revenue to be invested in a future generations fund, and 80 percent to health, education, and vital
infrastructure.
Source: Bannon and Collier (2003).

Supplying Food and Other Consumption Goods to the Rising Consumer Populations in Asia
Agricultural, fishery, and other food-related commodities have characteristics of highhomogeneity compared to manufactured products. Thus, exporters of such commodities faceconstraints in expanding their exports in the saturated markets of industrialized countries. Foodrelated commodity producers could still explore the possibility of expanding exports in suchmarkets by differentiating the product characteristics, by exporting products at more processed
levels, or by developing production process catering for emerging tastes in high-income countries

24

(for example, organic foods). However, the scope of such differentiation is often limited in a shortrun because of the established structure of industry organization. Many exporters also lacksufficient capacity to develop more differentiated products.
As in the case of natural resource commodities, establishing new trade relations with Asia—
thereby diversifying their destined markets—is an effective way for African exporters of foodrelated commodities to expand exports. Food products are usually characterized as products with
low income elasticity, an economic term that means that the demand for the products increases ata much slower rate than income increases. Low income elasticity is often considered as theprimary reason for stagnant demand for primary commodities exported by African countries. As
mentioned earlier, consumers in the developing countries in Asia are rapidly increasing theirpurchasing power. Building new trade relations with such countries can help African exporters
overcome the constraint of low income elasticity. Given the low income elasticity of fooddemand, expansion of new trading partners in Asia will have more significant consequences than
expansion of sales within existing saturated markets. Figure 5.2 presents an illuminating pictureof how Asian countries, particularly India and the five ASEAN countries, are already increasing
their imports of food from Africa.
Figure 5.2 Trend in Asia’s Food Imports from All Africa

Food Imports from Africa (US$ million)

1400
1200
1000

China
Japan

800

India
Korea

600

Taiwan

Note:

ASEAN

400

Figures:200

Source:ASEAN 5 consists of Indonesia,
Malaysia, Philippines, Singapore,
and Thailand.
All figures are based on partners’
import data.
UN COMTRADE Database

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

0

The agricultural commodities that appear in the list of major African exports are non-essential or
exotic products such as nuts and tea. Among food-related primary commodities, non-essential
agricultural commodities such as coffee and cacao, or exotic commodities such as fruits and nuts,
tend to be more elastic to income than essential food items such as cereals. Demand for suchproducts rises as income grows. And it rises more rapidly when the absolute level of income isrelatively low. Using the example of coffee, Box 5.2 discusses in more detail how Asian countries
provide potential market opportunities for African exporters. Potentials exist not only in countries
such as Japan, where people with a higher level of income than other Asian countries consume
more coffee per capita, but also in countries such as China and India, where people’s demand forcoffee is rising faster.

25

Box 5.2 Per Capita Coffee Imports of Asian Countries
Coffee is one of the major agricultural commodities that Africa exports to the world. It is a nonessential food item and has
more income elastic demand than essential food items, so the demand rises as income rises. Moreover, the demand for coffee
still has income elasticity decreasing with the level of income. In other words, the marginal increase in demand for coffee withan increase in income is larger when the absolute level of income is lower. To illustrate this point, annual per capita coffee
imports by Asian countries from 1980 to 2001 were plotted against the levels of per capita income of corresponding countries
in corresponding years in Figure 5.3. The figure clearly exhibits the pattern of decreasing income elasticity: The demand forcoffee increases as countries become richer, with a caveat that the growth of coffee demand is “faster” when the level ofincome is low. (The slope of the curve in Figure 5.3 represents income elasticity of demand for coffee imports.)
Coffee imports by Japan are in a mature phase in the sense that coffee has low income elasticity. However, Japanese imports aswell as increases in imports come with significantly higher amounts in absolute terms than the rest of Asia. India and China,
however, have imported much less but have demand increasing more rapidly as their income increases. Countries such as
Korea, Taiwan, and the ASEAN countries lie in between. The export expansion strategy for coffee exporters would target both
lower income segment of consumers, where the demand increases rapidly, and the higher income segment, where the demand
increase is not rapid but comes with higher order. Other agricultural and food products on average have lower income
elasticity than products such as coffee. This means that the income elasticity decreases faster or the curve in the Figure 5.3 isflatter than in the case of coffee. Export strategy for food products other than coffee targeted at the higher segment ofconsumers would not yield as much expansion as would coffee. However, the expansion strategy targeted at the lower segmentof consumers remains effective, and the marginal increase in aggregate demand for such exports is significant.

LN Per Capita Coffee Imports

Figure 5.3 Income Elasticity of Coffee Imports among Asian Countries
18
16
14

China
India
Japan
Korea
Taiwa
ASEAN

12
10
8
6
4
2
0
0

2

4
6
8
LN Per Capita GDP

10

12

Note: Data points are the respective countries’ figures from 1980 to 2001.
ASEAN consists of Singapore, Malaysia, Indonesia, Thailand, and the Philippines.
Source: UN COMTRADE, World Bank World Development Indicators, IMF Commodity Price Statistics

26

Table 5.1 Africa’s Major Import Products from Asia (SITC 4 digit)

Figures:
Source:The major imports were selected based on the shares in total Africa’s imports to Asia.
The share figures are based on averages of 1998-2000. All figures are based on partners’ import data.
UN COMTRADE Database

27

5.3

Contribution to Product Diversification in Manufacturing Sectors

Another important aspect of Asia’s partnership with Africa in diversifying exports is related tothe more traditional concept of diversification, namely diversifying the line of export products
away from concentrated exports in primary commodities. Asia contributes to Africa’s productdiversification in the export structure through supplying necessary materials and capital goods for
growing manufacturing sectors. Africa’s total export earnings from manufacturing products havedoubled during the 1990s to US$31 billion (1999–2001 average). Europe and the United States
have been significant markets for Africa’s manufactured products. Currently, the EU accounts forabout 65 percent of total African manufacturing exports, and the United States accounts for about
12 percent. Although the EU share is dominant, African exports to the United States have grownby 236 percent during the 1990s. As mentioned earlier, the EU and the United States now provide
enhanced market access opportunities to African countries through their preferential measures
such as AGOA and EBA. Although those measures have wide coverage for eligible products, it iscommonly viewed that basic, labor-intensive, manufactured products such as textile and apparelproducts are among the first group to take advantage of these opportunities.
Africa’s exports of manufactured products to Asia are not comparable in size to its exports to
Europe or the United States. However, it should not be interpreted automatically that Africa-Asia
trade relations are not catering to product diversification in Africa’s export structure. In fact, Asia
is emerging as an important partner of Africa’s quest for product diversification in two ways. The
first and most important way is that Asia is helping bring Africa to the global supply-chain
mechanism in manufacturing products. Asian countries are important suppliers of necessary
inputs for Africa’s manufacturing sectors, particularly the textile and apparel sectors. Table 5.1 inthe previous page identifies major exports from Asia to Africa at a highly disaggregated level(SITC 4-digit). From this table, it is clear that the raw and intermediate materials of textile andgarment products figure prominently among major Africa’s imports from Asia. China, Taiwan,
India, Pakistan, and Korea provide a significant amount of various fabrics to Africa. Also, Asia
exports motor vehicle parts and telecommunication equipment to Africa to be assembled at plants
owned by Japanese or Korean enterprises.
These industries are generally characterized as global supply-chain industries, often managed bymultinational corporations. Global supply-chain industries have emerged as rapid innovation incommunication technology takes place at the global scale and as the world economy becomes
more integrated. They have effectively invested in the locations where they can process theirproductsmost cost-effectively using inputs from home or from the third countries and where they
have better access to large consumer markets usually in developed countries (intermediary trade
or indirect trade). In many cases, these are located in developing countries where the local
industries receive generous preferential treatments from developed countries in accessing theirmarkets. Countries such as Mauritius, Madagascar, and Lesotho actively promote inward foreign
investment in those industries by establishing FDI-targeted industrial zones and promoting
export-oriented, private sector development through establishing export-processing zones (EPZs).
As a result, they have achieved high growth in the production and exports of textile and apparelproducts (see Box 5.3).
Figure 5.4 illustrates how Africa’s imports from Asia are integrated with Africa’s manufacturingexports in trade statistics by plotting value-increases in manufacturing exports from individual
African countries to the EU and the United States during the 1990s and value-increases in theirimports from Asia. On average, an African country with a large increase in manufacturing exports
to the EU and the United States has also experienced a similarly large increase in imports from
Asia, irrespective of the size of domestic markets. In the case of textile and apparel products, the28

positive linkage between Asian inputs is more vivid because many African countries now
embrace Chinese and Taiwanese investors to build garment factories to export their products tothe EU and the United States (see Box 5.4).

Box 5.3 What Has Contributed to Growth of Mauritius’s Apparel Exports?
In Sub-Saharan Africa, few countries have gained a high standard of living. However, Mauritius is the notable
exception. Between 1973 and 1999, Mauritius’s real GDP averaged 5.9 percent annual growth, compared to 2.4
percent for Sub-Saharan Africa as a whole. The average income of Mauritanians has more than tripled over the 30year period, while that of Africans as a whole increased by only 32 percent. It is considered that the textile andgarment industries, the largest single sector of exports totaling 65 percent of all exports in 1999, contributed to
Mauritius’s strong GDP growth.
There are three possible explanations for the impressive growth of Mauritius’s apparel exports: (1) a strategic trade
policy to set up an export-processing zone, (2) strong domestic institutions, and (3) the ethnic diversity of Mauritius’s
society.
Because of the introduction of an export-oriented manufacturing strategy, Mauritius has experienced remarkablesuccess in expanding its manufacturing industry and export base since the early 1980s. After having failed to pursue apolicy of import-substitution in the years immediately following independence, the government focused on promoting
exports and creating an export-processing zone. Mauritius’s openness to FDI, facilitated by the creation of an exportprocessing zone, attracted FDI from India and China and later Europe, especially in the textile industry. Investors
have various incentives, such as import-duty exemptions and zero taxation of dividends, if they locate theirsubsidiaries in Mauritius. In addition, investors are not required to establish joint ventures with the Mauritius
government, unlike in other African countries.
Second, strong domestic consultation mechanisms have contributed to the growth of Mauritius’s apparel industry to asignificant extent. In the early 1980s, macroeconomic adjustment policy was set forth by three different governmentsof varying ideological beliefs. Literally, adjustment preconditioned a national consensus among different opinions,which accordingly necessitated workable consultation mechanisms. Further, a Mauritanian culture of transparency andparticipatory politics approved the early economic warning and feedback system, allowing emerging economic
problems to be dealt with at an early stage.
In addition to the two factors mentioned above, there is another factor specific only to Mauritius in Sub-Sahara Africa,
which may also have played an important role: the country’s ethnic diversity and how it was managed so far by the
Mauritius government. In Mauritius society, descendants of indentured workers from India make up about 60 percentof the population and the rest of the population is comprised of black Americans, Creoles (native to the region),
Chinese, and Europeans. Such ethnic diversity has contributed to Mauritius’s economy by maintaining the country’s
economic ties with the roots of its diverse ethnic groups and attracting investments from them. For instance, theChinese community has attracted investment from Hong Kong entrepreneurs who were looking for overseas locations
for their textile operations to avoid the textile quotas imposed on Hong Kong.
Such a mixture of various factors, especially ethnic diversity, will not easily be replicated by other African countries.
However, the case of Mauritius vividly shows that good governance and appropriate economic policies, which havebeen regarded as important conditions for development, are ideal factors for achieving export gains as well.
Source: Subramanian (2001), Basu and Srinivasan (2002)

29

Figure 5.4 Africa’s Manufacturing Exports to EU and US
Exports to US

10

Increase in Manufacturing
Exports to US(US $million in Log)

Increase in Manufacturing
Exports to EU(US $ million in Log)

Exports to EU

8
6
4
2
0
0

2

4

6

8

10

-2

Source:

8
6
4
2
0
-2 0

2

4

6

8

10

-4
-6
-8

Increase in Imports from Asia (US $million
in Log)Increase in Imports from Asia (US $million in Log)

Note:

10

Increase is an absolute increase of respective statistics from early 90s (89-91 average) and late 90s (99-01 average or 98-00 average).
Data points are African countries with positive increases in imports from Asia and manufacturing exports to EU and US.
UN COMTRADE DatabaseBox 5.4 AGOA Textile Benefit and Textile Yarn and Fabrics from Asia
The introduction of AGOA has promoted a number of foreign investors to invest in the apparel sector of Sub-Saharan Africancountries, and moreover, many of the investors are from Asian countries. In Namibia, a Malaysian-based firm has invested over$200 million in a textile and garment-manufacturing plant that generated over 4,200 jobs. In Mauritius, a Chinese firm has begun
to construct a $60 million cotton yarn spinning mill, and an Indian firm started to build a spinning mill to take advantage of
AGOA’s textile and apparel benefits. In Swaziland, there are currently 20 Taiwanese investing companies since AGOA went into
effect (only three Taiwanese companies were operating prior to AGOA). Taiwanese entrepreneurs have also invested large
amounts in South Africa and Lesotho.
Figure 5.5 plots AGOA textile beneficiary countries according to their volumes of garment exports to the United States and theshare of Asia in total imports of raw materials, that is, textile yarn and fabrics (SITC 65). In general, countries with high volumesof garment exports tend to rely more on imports of fabric from Asian countries.

Current Apparell Exports to US(thousand US$ in Log)

Figure 5.5 AGOA Apparel and Textiles Beneficiaries and Fabric Yarn Importe r

14
12
10
8
6
4
2
0
0

0.5

1

1.5

Share of Asian Productsin Total Imports of Textle Yarn and Fabrics(SITC 65)
Note:
Source:Data is based on the 1990-2001 averages. Data points are individual African countries eligible for apparel and textiles
benefits under AGOA.
UN COMTRADE Database

30

The second way that Asia contributes to Africa’s product diversification is in its role in providing
important capital goods for the manufacturing sectors. Table 5.1 lists many products from the
SITC 7 group—passenger motorcars, motor vehicles for transportation, mass transit passenger
motor vehicles, and construction and mining machinery. With an exception of “ships, boats, andother vessels” (SITC 7932), which is for the purpose of registering fleets in Liberia, theseproducts are exported to Africa to support African manufacturing activities such as production,transportation, and communication. Although Africa imports finished products such as passenger
cars and trucks, Africa also imports parts of those products and complementary products such as
tires.
An import substitution strategy was once popular among developing countries to develop their
manufacturing sectors. However, as shown earlier in Table 3.2, which lists major exports ofAfrica to major trade partners, we cannot observe among growing African manufacturing exports
to the EU or the United States any trace of past import substitution strategies undertaken by
African countries. Under the import substitution policies, the countries invested in various
manufacturing sectors and supported various industries, inviting foreign capital to expand
domestic production capacity markets that were often accompanied with the high tariff
protections. History shows that such policies often resulted in inefficient rent-seeking behaviors
by the protected industries. As countries started implementing more liberalized trade policies,
those industries have found themselves unable to compete against more cost-competitive foreignimports in the domestic market. Moreover, many African countries do not have domestic markets
large enough for import substitution strategies to take effect. As shown in Figures 5.4 and 5.5,
Africa’s strategy for product diversification is more prominent in global supply-chain industries
such as textile and apparel than in inward-looking import substitution industries. And Asia has
been playing an integral role in Africa’s development in global supply-chain industries by
providing intermediate materials as well as capital and skills.

5.4

Integration of Trade and Investment Relations

As mentioned in the previous section, Asian exports related to Africa’s manufacturing exports
often take the form of direct investment by Asian firms to African countries. Such investment has
been based on the motivation of Asian entrepreneurs to strategically participate in the global
supply chains that are growing rapidly due to the combination of increased information
technology, market liberalization, and preferential market access measures taken by someindustrialized countries. In fact, this is one manifestation of how trade and investment activities
become integrated and their strategies necessarily become seamlessly linked.
Asian investment in Africa takes three different forms, if categorized by the targeted market of
their goods produced by the invested industries. The first form (Type 1) is investment targeted to
producing goods to be sold in the investors’ own countries in Asia. Typical examples of suchinvestment include natural resources extractive industries for mineral and mining products, aswell as food processing projects such as fish cannery plants. Investment in extractive industries islarge scale, based on the initial governmental agreements followed by private sector engagement,
which includes some degree of technical transfer. Although Asian firms have invested in suchprojects in the past, unpredictable changes in local governments’ policies and macroinstability
have often hampered the flow of investment of this kind to Africa. The potential investors are
trading houses, resource suppliers, and a group of plant construction companies. Korean
investment in Angola is a typical case in oil resources, which requires substantial amount ofinvestment for processing plant (see Box 5.5). ODA loan and export credit are powerful policy
instrument to support this investment cum trade project. Investment projects for food and agro-

31base products processing requires smaller amount of investment, compared to mining and energy
resource projects, while the specification of the products are to be carefully controlled to themarket’s quality needs. Trading companies frequently become investors with their interest in
expanding both export and import trade.
The second form of investment (Type 2) is targeted to Africa’s domestic markets. Examples
include investments by Japanese entrepreneurs in home electronic appliance and textile plants in
the 1980s, which aimed at Africa’s local markets protected by the high tariffs under the importsubstitution policies by the governments. However, regional economic integration and importliberalization by the local governments have placed such investment in uncompetitive positions
against imported products. As such, accessing even more competitive global markets has been outof reach for those protected industries in most cases. In various ways, such investment has beenbound by the constraints of small local markets and high transaction costs. Because of small sizeof domestic market, a mass production business model, common in industrialized countries, is notsuitable. However, there are cases in which small and medium-size production is feasible, as
being shown by the Korean investment in Nigeria and Malawi (see Box 5.5). The investor in thiscase is a trade and industrial engineering firm that uses a human network in the respective Africancountries to minimize risk, rather than the government support as seen in Type 1.

The third form of investment (Type 3) is targeted to third countries, especially countries in otherindustrialized regions such as the EU and the United States. Investment of this type is often
conducted by multinational corporations based on global supply chains. It can be divided further
according to other characteristics. First, there are footloose industries in textile and apparelsectors or in service sectors (for example, data service and telemarketing service outsourced to
Africa) that are largely motivated by the low labor costs in Africa and the existing trade policies
in third countries where their products and services are destined. The Taiwanese enterpriseinvestment in Swaziland is one such case motivated by AGOA (see Box 5.5). The size ofinvestment is limited, but such investment has effectively generated employment in local
economies. There is also a type of more forward-looking investment that is genuinely attracted tothe potential productivity increase within Africa. To seize future potentials in the region, major
automobile companies have established plants in South Africa, which is rapidly becoming a key
economic hub in Africa.
In the context of Africa-Asia trade relations, natural resource–based investment (Type 1) andglobal supply-chain investment (Type 3) are critically linked to the strategy for Africa’s customer
diversification and product diversification in its exports. Tables 5.2-5.5 present the sector-specific
FDI data from four Asian countries to Africa either in flow or cumulative stock values. Fromthese tables, we observe that a significant amount of FDI went to mining industries or resource
development (22.8 percent from Korea and 27.5 percent from China). At the same time, contrary
to the 1970s when over 30 percent of investment went to these industries, Japanese investment in
Africa’s mining industries in the 1990s is of limited scale. It is important to analyze more
carefully the experiences of Asian investment in mining industries (Type 1) to draw lessons fromboth successful and unsuccessful cases.
Global supply-chain investment (Type 3) is made in a more vivid way. In the case of Japan, large
major manufacturing investment started to flow to Africa’s transport product sector in the 1990s.
Most of the investment went to South Africa, where a major Japanese automobile manufacturer
started assembling cars, some of which are exported to the European market. Korean data do notreveal much about how its manufacturing investment is divided among sectors. However, thetelecommunications sector has definitely generated assembly of telecommunications equipment32

in countries such as South Africa and Ghana. China and Taiwan made a large part of theirinvestment in the textile and apparel sectors in South Africa, Lesotho, Swaziland, and Mauritius.
Although Type 2 investment is not visible in the tables, an investor for this type of investment islikely to be found in Asian countries where small and medium enterprises (SME) are active, suchas Korea and Taiwan.
Box 5.5 Case Studies on Asian Investment to Africa
Type 1: Firm A (Korea) in Angola
With economic reforms under way in Angola, foreign investors have found increasing business opportunities in the energy, mining,telecommunications, manufacturing, agriculture, and fishing industries. The fact that Angola is ranked third in the world for new oil
discoveries and is Sub-Saharan Africa’s second largest oil producer will accelerate new business ventures. Angola is now Korea's second
largest trading partner in Africa and its seventh largest supplier of crude oil. In the year 2000, Korea imported $654 million in oil from
Angola and exported $17 million in cars and auto parts. In 2000, Firm A won a $4.4 billion contract in Angola to build an oil refinery andoffshore exploration platforms. The $2.7 billion oil refinery will produce 200,000 barrels per day, mainly for export markets. The firm has
also contracted to build oil and gas production platforms and storage facilities worth $1.7 billion. This contract was facilitated by a bilateralagreement between Multilateral Investment Guarantee Agency (MIGA) and the Korea Export Insurance Corporation (KEIC), where both
agencies will cooperate in reinsuring and coinsuring projects in order to share risks and increase the availability of insurance for Korean
investors. It is pointed out that the above agreement originated from the desire of Firm A to seek coverage for its intended resource-based
projects in Central and West Africa, mainly for oil projects in Angola. An official of KEIC said that one of the reasons for a conclusion of
the agreement between MIGA and KEIC was the need for additional coverage and risk sharing in view of the large-scale project.
Type 2: Firm B (Korea) in Nigeria and Malawi
Firm B is a medium-size engineering and trading firm, established in 1983. The company diversified into industrial engineering for smalland medium-scale projects. New additions to its major scope of business were then made including international trading for general importand export, manufacturing of industrial equipment and machinery, as well as consulting engineers for various development projects not onlyin the domestic market but also in developing countries. Firm B has six local subsidiary companies in Sub-Saharan Africa: Senegal, Ghana,
Nigeria, Malawi, Namibia, and Madagascar, dealing in medium- and small-scale trade and investment activities. Its main strength lies ininvestment in manufacturing a variety of daily product needs, which target the domestic market. For instance, in 1986 they established asubsidiary in Nigeria, which aimed at dealing with trading, engineering and consulting. In Malawi, another subsidiary was founded in 1994
for manufacturing tableware. According to the president of Firm B, around 40 percent of its annual sales are generated by the African
market. The success of these businesses in Africa is partly the result of the president’s wide acquaintances in African diplomatic circles.
Type 3a: Firm C (Taiwan) in Swaziland
Firm C is a powerful apparel company in Taipei, founded in 1978, and listed on the Taiwan Stock Exchange in December 1998. Recently,
Firm C has been focusing on research and development of cotton products. Its product “Ultra Mercerized Cotton Color Yarn” won the
products competition held by the Taiwanese government. Sales subsidiaries have been established in Los Angeles and New York, and a raw
material procurement company was recently founded in China, in addition to a number of production factories abroad. Firm C founded two
factories in Swaziland in 2001 and 2002. The products of this factory are exported to the United States. The main reason for investing in
Swaziland was to obtain benefits from the African Growth and Opportunity Act (AGOA). The third factory was established in March 2002.
Since the local procurement of raw materials will become compulsory by AGOA after October 2004, Firm C decided to set up the spinning
factory in Swaziland. The products are sold domestically and will be sold to their factory in South Africa. About 60 Taiwanese companies
operating in Swaziland, mainly in the apparel industry, have organized a corporate union and the President of the firm was appointed as
Chair of this union. The union can negotiate with the Government of Swaziland on behalf of the textile industry of Swaziland.
Type 3b: Firm D (Japan) in South Africa
As one of the few countries with the capacity to develop its automobile industry, South Africa has enjoyed tremendous success in recent
years. Exports of automotive components and 1500-3000 cc automobiles increased dramatically by 60 percent from 2001 to 2002. At
present, Germany is the main export market (40 percent of total auto exports), reflecting how South African component makers have been
integrated into the global production networks of German car makers, all of which assemble cars in South Africa for exports to Europe andother overseas markets. The free trade agreement between EU and South Africa has accelerated this type of exports. Japan has consistently
been among South Africa’s top four automobile trading partners. In the past, South Africa mainly exported primary commodities,
particularly minerals, to Japan, and Japan exported manufactured goods to South Africa in exchange. However, the emergence of South
Africa as a major automobile assembly location has triggered major Japanese car manufacturers such as Firm D to increase its investment toSouth Africa. Firm D established its subsidiary plants in South Africa in 1962, the first of two plants the firm has in Africa. The plant inSouth Africa has been the main assembly plant for cars and trucks to be sold in South Africa and elsewhere in Africa. Recently, however,the firm’s headquarters announced its greater involvement in the operations in South Africa by increasing its shares from 35.7 to 74.9
percent. By 2004, the firm plans to develop a strategy to empower its global supply system for its pick-up trucks, multi-purpose vehicles, aswell as parts, effectively linking all of its overseas production hubs around the world. The firm aims to use its South African production hub
to expand its sales to the European market as well as to the African market. Out of 60,000 vehicles it aims to produce in South Africa, a half
would be exported to Europe and elsewhere in Africa.

33

Table 5.2 Japanese FDI to Africa by Industry

Food
T e x t ile
L u m b e r & P u lp
C h e m ic a l
M e ta l
M a c h in e r y
E le c t r ic a l
T ran sp orto th e rs
M a n u fa c t u r in g T o t a l
F a r m in g & F o r e s t r y
F is h e r y
M in in g
C o n s t r u c t io n
T rad eF in a n c e & I n s u r a n c e
S e r v ic e
T ra n sp o rta tio n
R eal E stateo th e rs
N o n - M a n u fa c t u r in g T o t a l
TOTAL

197 1-8 0
0 .2
1 .6
0 .0
1 .0
1 .3
0 .0
0 .2
0 .4
0 .4
5 .3
0 .4
3 .6
3 0 .5
1 .5
0 .1
0 .0
1 .6
5 6 .60 .0
0 .0
9 4 .5
1 0 0 .0

19 81-9 0
0 .0
0 .0
0 .0
0 .2
2 .5
0 .0
0 .1
0 .2
0 .0
3 .1
0 .0
1 .1
2 .5
0 .1
0 .3
0 .8
1 6 .17 3 .81 .6
0 .6
9 6 .9
1 0 0 .0

( u n it : % )1 9 9 1 -0 2
2 .3
0 .1
0 .0
0 .4
1 .8
0 .2
0 .1
1 0 .02 .7
1 7 .5
1 .9
1 .0
1 .0
0 .2
1 .1
3 .9
1 .6
7 1 .20 .0
0 .5
8 2 .41 0 0 .0

Note: share in cumulative value in each period
Source: Ministry of Finance, Japan

Table 5.3 Korea’s FDI to Africa by Industry(Unit: Million US$, As of 30 April 2003)

No. of Proj.
Amount ($ million)
Construction
7(5.0%)
1(0.1%)
Mining12(8.5%)
166(22.8%)
Finance & Insurance
0(0.0%)
0(0.0%)
Agriculture & Fishery15(10.6%)
7(1.0%)
Trade & Retail30(21.3%)
124(17.0%)
Real estate & Service
16(11.3%)
6(0.8%)
Hotel & Restaurant
7(5.0%)
228(31.3%)
Transport and warehouse2(1.4%)
1(0.1%)
Manufacturing
50(35.5%)
175(24.0%)
Telecom.
2(1.4%)
20(2.7%)
Others0(0.0%)
0(0.0%)Total
141 (100.0%)728 (100.0%)
Notes: Figures are cumulative total from 1968 to 2002.
Figures in parentheses indicate share in total number/amount.
Source: The Export-Import Bank of Korea

34

Table 5.4 China’s FDI in Africa by Industry(cumulative value 1979–2000)


Service
Manufacturing
Machinery
Electric appliances
Light industries
Spinning and weaving
OthersAgriculture
Resource development
Others
Total

Number of projects
200
230
20
36
82
58
34
22
44
3
499

(40.1)(46.1)(4.0)(7.2)(16.4)(11.6)
(6.8)
(4.4)
(8.8)
(0.6)


Amount invested($ million)
124.5(18.3)
315.27(46.3)
16.06
(2.4)
25.4
(3.7)
86.54
(12.7)
101.6(14.9)
85.67(12.6)
48.13
(7.1)
187.6
(27.5)
5.85(0.9)
681.35
Note: Figures in parentheses indicate shares in total number/amount.
Source: Ministry of Commerce, PRC

Table 5.5 Taiwan’s FDI in Africa by Major Country and Industry(cumulative value until Dec. 2002)(unit: $ million)
CountrySouth Africa
Lesotho

Cases
620
30

Value
Type of business
1,500 Spinning, plastic processing, shoes, trade and distribution
600 Spinning and apparel

Swaziland

20

45 Apparel, restaurant, entertainment and mold manufacturing

Mauritius
Ivory Coast
Ghana
SenegalMalawiAfrica total

8
9
12
4
9
712

20 Hotel, apparel, shoes, food processing and pottery manufacturing
11 Steel, restaurant, trade and vegetables
8 Steel, car part import, farm and trade
3 Battery, fishery and trade
23 Apparel, lumber processing, metal goods and trade
2,209

Source: Ministry of Economic Affairs, Taiwan

35

6.

Key Findings and Future Directions

Here we summarize the key findings from the analyses presented in this report, and then, on thebasis of these findings, we set forth tangible policy recommendations for promoting more tradeand investment between Africa and Asia.

6.1

Summary of Key Findings

Key findings derived from discussions in the preceding sections that provide useful hints fordeveloping Africa-Asia trade and investment relations and are summarized as follows.

Finding 1:
Africa’s exports to Asia have been growing both in proportion and in absolute value during the
1990s. Currently, 16 percent of Africa’s export earnings are achieved from sales to Asia.
Moreover, the rate of increase in export values to Asia (10 percent per year) has been the higher
than the rates to the EU and the United States. Asia has therefore emerged as an importantpartner in Africa’s trade and development.

Finding 2:
Asia’s developing economies import more from Africa than they did in past decades. Countries
such as India, China, and Taiwan have significantly increased their overall dependency rate on
African imports.

Finding 3:
Africa’s exports to Asia are mainly driven by primary commodities and related products, linked
to either industrial growth or emerging consumer populations in Asia. Oil and its related products
account for a large share, but other primary commodities such as agricultural and fishery products
and minerals and crude materials are also increasingly exported to Asia.


Exports of mineral fuels and other raw materials such as mineral and mining products
have demonstrated strong growth in African exports to Asia as a result of the rising
manufacturing sectors in Asia, particularly in China, India, Korea, Taiwan, and theASEAN countries. Although only a limited number of countries are endowed withmineral and mining resources, a wide range of non-oil producing countries also benefit
from other raw materials and their processing in sectors such as cotton, woods, andleather.



Growth in Africa’s exports to Asia in food and agricultural commodities can be explainedby the large populations with growing income levels in Asian countries. Non-essential
foods such as coffee, cacao, tea, and nuts will find stronger growth in Asia than in thesaturated markets of developed countries.

36

Finding 4:Thus, Asia could become a strategic target for diversifying the markets of African products as
described in Finding 3. Demand from Asian markets potentially has a good fit with the existing
supply base of traditional primary commodities in Africa. By recognizing such linkage and by
establishing new consumer relations with Asian countries, African exporters could significantly
expand their exports of traditional primary commodities, which are Africa’s stagnated corebusinesses.

Finding 5:
Asia can contribute to Africa’s quest for product diversification in its export structure. Asian
countries are providing essential inputs for Africa’s growing manufacturing sector, most notably
the textile and apparel sectors. There is a positive relationship between Africa’s growth inmanufacturing exports to the EU and the Untied States and growth in imports from Asia.

Finding 6:
Although active efforts to grant preferential trade treatments, such as tariff-free and quota-freeaccesses, have been made by developed countries, these efforts alone have had only limited
effects on increasing Africa’s exports. The response of African countries is equally critical.
African exporters that are successful tend to have proactive engagement to improve their businessenvironment both in terms of governance and infrastructure, and to strengthen their supplyresponse capacity to seize opportunities arising from the external environment such aspreferential trade treatments.

Finding 7:
FDI from several Asian countries to Africa has revealed that relations between Asian investors
and host countries in Africa are deeply motivated by the trade relations between the two regions.
Asian investment to Africa takes three different forms:•

Investment targeted to products to be sold in Asia, typically natural resources andprocessed raw materials (for example, food), both of which are highly demanded by
Asian manufactures and consumers. Macroinstabilities in host countries have often
hampered flow of this kind of investment to Africa in the past, but driven by growing
demand from Asia, there are signs that such investment may regain momentum.

•

Investment targeted to Africa’s domestic markets. Such investment has been
constrained by the small size of local markets and the high transaction costs caused bylack of efficient infrastructure. In the absence of effective regional integration andinfrastructure services, the prospects of such investment are limited.

•

Investment targeted to the global market, typically the third countries. This type ofinvestment most effectively integrates production activities in Africa to global supply
chains. In less developed countries, there tends to be investment in industries in the37

textile and apparel sectors or service sectors, which are largely motivated by either low
labor costs and/or favorable trade regimes provided by the third countries. In addition,
there is notable development in countries such as South Africa that have attracted moresophisticated manufacturing/service investment. Such investment is genuinely attracted
to the potential productivity increase in these countries.

Finding 8:
The subregional export structures seem to indicate that African countries could enhance theirexport opportunities by improving intraregional mobility of goods and services, particularly
between land-locked and coastal countries. Improvement in regional infrastructure in areas suchas transportation or telecommunications needs to be properly addressed in formulating policies toenhance the supply-response capacity of African countries.

6.2

Future Directions

Based on these findings, it is clear that there is significant potential for expanding trade relations
between Africa and Asia. To realize the full benefits from trade expansion between these tworegions, three proposals need to be implemented: (1) strengthen the knowledge base on AfricaAsia trade and investment relations, (2) ensure an appropriate institutional framework forstrategic dialogue between the two regions, and (3) promote understanding of the criticalelements of an enabling environment for business activities and refocus development assistanceto foster economic growth.

Direction 1:
The knowledge base on Africa-Asia trade and investment relations needs to be strengthened tofacilitate the discovery of market opportunities between Africa and Asia and to better understandhow the market works between the two regions.
Such a knowledge base can be strengthened by accumulating a series of in-depth
analytical studies (1) to identify existing potentials to expand trade and investment
relations between the two regions, (2) to identify the geographical and manmade
constraints and other impediments to promoting trade and investment activities, and (3)to promote better understanding of global supply chains and the way to improveconnectivity to them. The World Bank will continue its efforts to contribute to theanalytical work in these areas in cooperation with other organizations.

Direction 2:
An institutional arrangement will be needed to enhance strategic dialogue between African andAsian countries and to raise awareness of emerging business opportunities among businesses inthe two regions. Building on the current framework of TICAD, such an arrangement should
enable broad-based, consolidated policy dialogues to take place among African and Asian
countries—both their governments and their businesses.

38

There are many countries and economies in the two regions. Fragmented andspontaneous talks between individual African and Asian countries are often complicatedand inefficient for promoting effective policy dialogues. It is important to maintain acontinuous path of dialogues to exchange market views and information and to overcome
existing negative perceptions between the two regions. Such dialogues will better enable
individual African and Asian countries to take new high-level policy actions to promotetrade and investment relations on an individual basis.
An institutional arrangement for such dialogues is an effective channel for Africancountries to improve their external relations with their economic partners in Asia andcondition the ground for more proactive policy interactions in actual trade relations. Suchforums can also identify necessary support mechanisms for African industries to develop
a stronger supply-response capacity.

Direction 3:
Finally, it is important for both African countries and the international donors to recognize theimportance of an enabling environment for business activities—the essential element foreconomic growth. Partnership coordination efforts such as TICAD have the potential to orient
the development supports to economic growth, which is critically needed for African countries toachieve the Millennium Development Goals (MDGs).

The international donors have various policy instruments to assist African countries infostering an enabling environment for business activities in Africa and to facilitate active
business exchanges among countries through trade and investment (see Box 6.1).
Bilateral as well as multilateral official development assistance (ODA) has a critical roleto play in fostering enabling environment in particular in such areas as infrastructureservices in transportation and telecommunication. Export credit and insurance schemes
and investment guarantee systems are effective tools for the international donors to
support private sector to build trade and investment channels between African countries
and other regions. An international forum such as TICAD provides a significant
opportunity for the international community to refocus its attention to the need to support
African countries in building enabling business environment in their domestic economies
and to design and coordinate effective public support schemes to facilitate enhancebusiness transactions between African countries and other regions.

39Box 6.1 Bilateral Aid and Other Policy Instruments for Trade and Investment
Several Asian countries provide official development assistance (ODA) and promotional policy to support their enterprises for tradeand investment activities in Africa. Given that many enterprises in Asian countries are not very familiar with the business environmentin Africa, Asian governments’ initiatives are quite effective in bringing their private sector to unknown business opportunities with richresources and new markets. ODA supports to Africa’s infrastructure also enable the Asian private sector to expand their businessscope in Africa. Furthermore, export credit and insurance schemes are indispensable government support to minimize risk in unknown
non-commercial risk in trade and investment. Table 6.1 indicates the policies and ODA programs by major Asian countries.
Although various development assistance and other public support schemes are considered effective, only 0.3 percent of ODA bilateral
disbursements from DAC countries are directed toward trade and tourism programs in Africa. As shown in Figure 6.1, even that small
proportion has declined significantly. ODA assistance to Africa has shifted from economic programs to social programs and policies
supporting poverty-reduction strategies. Beginning in 1999, international development institutions have shifted their focus fromcorrective macroeconomic policies and market distortion remedies to poverty-reduction policies and strategies for low-income
countries. In Africa, there has been a clear shift from the allocation of a significant share of ODA to the region directed to economic
sectors to one directing a growing share to social sectors. Figure 6.2 shows that the distribution of economic sectors has shifted fromover 60 percent in the early 1990s to about 40 percent in the early part of this decade.
Table 6.1 Main Promotion Policy and Official Development Assistance (ODA) by Asian Countries
CountryJapan

Promotion Policy
Duty-free and quota free access to LDCs’ products,
export credit and insurance, trade fair, missions
Export credit and insurance, trade fair and missions

Korea

China

Chinese Trade and Investment Development Centersin 11 African countries. Credit facility for private
corporation and special fund scheme for joint venture.
Financial support for Taiwanese enterprises
investment in African countries with diplomatic
relations.

TaiwanSingaporeODA
ODA to Africa accounts for 10% of Japanese ODA informs of grant, technical assistance and loan.
Technical assistance in training and experts. ODA
loans tied to Korean enterprises, shares 11% of theentire loan
Agreements on economic and technical cooperation
with 53 African countries.
Technical assistance and grants in field of agriculture
for countries with or likely to have diplomatic
relations. Finance and investment to specificprojects.
Technical assistance for granting training program indevelopment experience, particularly for export
development.
Economic, technical, scientific and cultural
cooperation agreement with 20 African countries.

Double tax deduction for costs for expanding
overseas market and investment, international
exhibition program.
Malaysia
Double tax deduction for export promotion, export
credit refinancing, market development grant.
Malaysian South-South Association for promotion of
trade and investment.
India“Focus Africa Program” to increase interactions with
Special Commonwealth African Assistance Plan for
7 major African partners for Joint Trade Committee,
technical assistance to 34 African countries.
Joint Business Councils and Export Promotion.
Source: Results of interviews to the respective authority by PADECO/UFJI Team
Figure 6.1 Share of ODA from DAC Donors Directed at Trade and Tourism
0.6%
0.5%
0.4%
0.3%
0.2%
0.1%
0.0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Source: OECD Database

Figure 6.2 Africa: Social versus Economic Allocation of ODA
1990

Social Allocation

Economic Allocation

2001

Social Allocation

Economic Allocation

40

Source: OECD DatabaseReferences
Bannon, Ian, and Paul Collier, eds. 2003. “Natural Resources and Violent Conflict: Options andActions.” World Bank, Washington, D.C.
Basu, Anupam, and Krishna Srinivasan. 2002. “Foreign Direct Investment in Africa: Some Case
Studies.” IMF Working Paper 02/61, International Monetary Fund, Washington, D.C.
Biggs, Tyler, Gail R. Moody, Jan-Hendrik van Leeuwen, and E.Diane White. 1994. “African Can
Compete!: Export Opportunities and Challenges for Garments and Home Products in the U.S. market.”World Bank Discussion Papers Africa, Africa Technical Department Series No. 242, World Bank,
Washington, D.C.
Breton, Paul. 2003. “Integrating the Least Developed Countries into the World Trading System: The
Current Impact of EU Preferences under Everything But Arms.” World Bank Policy Research Paper
No. 3018. World Bank, Washington, D.C.
Commission on Capital Flows to Africa. 2003. “A Ten-Year Strategy for Increasing Capital Flow to
Africa.” Institute of International Economics, Washington, D.C.
Du Ling. 2003. “Taiwan Investment Spurs Growth in Africa.” Taiwan Government Information Officewebsite (http://publish.gio.gov.tw)
Harrold, Peter, Malathi Jayawickrama, and Deepak Bhattasali. 1996. “Practical Lessons for Africa from
East Asia in Industrial and Trade Policies.” World Bank Discussion Papers, Africa Technical
Department Series No. 310, World Bank, Washington, D.C.
Hernández-Catá, Ernesto. 2000. “Raising Growth and Investment in Sub-Saharan Africa: What Can be
Done?” IMF Policy Discussion Paper 00/4, International Monetary Fund, Washington, D.C.
Japan, Ministry of Finance. Official website (www.mof.go.jp).
Japan Center for International Finance. 2003. “World Economic Zone.” Tokyo.
Japan External Trade Organization. 2002. JETRO White Paper on International Trade and Foreign Direct
Investment 2002. Tokyo.
India, Ministry of Commerce. “FOCUS: AFRICA – A Programme for Enhancing India’s Trade with the
African Region.” Ministry of Commerce’s official website (http://commerce.nic.in/focus_africa.htm).
International Monetary Fund. 2002. Direction of Trade Statistics Yearbook 2002. Washington, D.C.
Lall, Sanjaya, and Samuel Wangwe. 1998. “Industrial Policy and Industrialisation in Sub-Saharan Africa.”
Journal of African Economies 7 supplement 1: 70-107.
Mattoo, Aaditya, Devesh Roy, and Arvind Subramanian. 2002. “The Africa Growth and Opportunity Act
and Its Rules of Origin: Generosity Undermined?” IMF Working Paper 02/158, International
Monetary Fund, Washington, D.C.
Morissset, Jacques. 2000. “Foreign Direct Investment in Africa: Policies Also Matter.” Policy ResearchWorking Paper No. 2481, Foreign Investment Advisory Service of the World Bank and theInternational Finance Corporation.
Ng, Francis, and Alexander J. Yeats. 2000. “On the Recent Trade Performance of Sub-SaharanAfrican Countries: Cause for Hope or More of the Same?” Africa Region Working Paper Series No.
7, World Bank, Washington, D.C.

41

—————. 2002. “What Can Africa Expect from Its Traditional Exports?” Africa Region
Working Paper Series No. 26, World Bank, Washington, D.C.
People’s Republic of China, Ministry of Foreign Trade and Economic Cooperation. “50-Year History of
China-Africa Economic and Trade Development.” Ministry of Commerce’s official website
www.mofcom.gov.cn
Pigato, Miria A. 2000. “Foreign Direct Investment in Africa: Old Tales and New Evidence.” Africa
Region Working Paper Series No. 8, World Bank, Washington, D.C.
Ramachandran, Vijaya, and Manju Kedia Shah. 2000. “Foreign Ownership and Firm Performance inAfrica: Evidence from Zimbabwe, Ghana and Kenya.” Regional Program on Enterprise Development(RPED) Discussion Paper No. 81, World Bank, Washington, D.C.
Rogoff, Kenneth, and Carmen Reinhart. 2003. “FDI to Africa: Role of Price Stability and Currency
Instability.” IMF Working Paper 03/10. International Monetary Fund, Washington, D.C.
Roelofsen, Hendrik and Sonia Srivastava. 1997. “Supply and Demand Surveys: A Tool for Promoting
South-South Trade.” International Trade Forum 2/1997: 16-28.
Subramanian, Arvind. 2001. “Mauritius: A Case Study.” Finance and Development Vol. 38 No. 4.
United Nations. 1996. “Japanese Foreign Direct Investment in Africa.” New York.
United Nations Conference on Trade and Development. 1999. “Foreign Direct Investment in Africa:
Performance and Potential.” United Nations, Geneva.
—————. 2003. “The African Growth and Opportunity Act: A Preliminary Assessment.”
UNCTAD/ITCD/TSB/2003/1 Geneva.
United States. 2003. “2003 Comprehensive Report on US Trade and Investment Policy Toward SubSaharan Africa and Implementation of the African Growth and Opportunity Act: The Third of Eight
Annual Reports.” Washington, D.C.
World Bank. 2000. “Can Africa Claim the 21st Century?” Washington, D.C.
—————. 2003. African Development Indicators 2003. Washington, D.C.
—————. 2003. World Development Indicators 2003. Washington, D.C.
World Trade Organization. 2002. International Trade Statistics 2002. Geneva.

42Appendix I: List of Country Groups
A: Africa’s Sub-Regions
Northern Africa

Algeria, Egypt, Libya, Morocco and Tunisia

Eastern Africa

Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Mauritius,
Rwanda, Seychelles, Somalia, Sudan, Tanzania, and Uganda

Western Africa

Benin, Burkina Faso, Cape Verde, Cote d’Ivoire, Gambia, Ghana,
Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria,
Senegal, Sierra Leone, and Togo
Burundi, Cameroon, Central African Republic, Chad, Democratic
Republic of Congo, Republic of Congo, Equatorial Guinea, Gabon,and Sao Tome and Principe
Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, South
Africa, Swaziland, Zambia, and Zimbabwe

Central Africa
Southern Africa

B: Africa’s Trade Partners
AfricaEuropean Union
United States
Asia

OthersWorld

Algeria, Benin, Cameroon, Egypt, Ghana, Kenya, Madagascar,
Malawi, Mauritius, Morocco, Nigeria, Senegal, South Africa, Togo,
Tunisia, and Zimbabwe
Austria, Belgium, Denmark, Germany, Finland, France, Ireland, Italy,
Greece, Luxembourg, Netherlands, Portugal, Spain, Sweden, and theUnited Kingdom
United States
China, Hong Kong, Malaysia, India, Indonesia, Japan, Korea, Pakistan,Philippines, Singapore, Taiwan, and Thailand
Argentina, Australia, Barbados, Bolivia, Brazil, Canada, Chile,
Colombia, Costa Rica, Cyprus, Ecuador, El Salvador, Guatemala,Honduras, Iceland, Jordan, Malta, Mexico, New Zealand, Nicaragua,
Norway, Oman, Panama, Paraguay, Peru, Poland, Romania, Saudi
Arabia, St. Lucia, Trinidad and Tobago, Turkey, Uruguay, andVenezuela
All of the above

Note: Countries selected here are based on their data availability in UN COMTRADE database for the entire period from 1989 to
2001 in SITC Rev. 2 classification.

43

Appendix II: International Trade Regimes for African Countries4445