U.S. International Trade Commission

Robert A. Rogowsky

Director of Operations

COMMISSIONERS

Address all communications to

Secretary to the Commission

United States International Trade Commission

Washington, DC 20436

Jennifer A. Hillman

Deanna Tanner Okun, Vice Chairman

Stephen Koplan, Chairman

Charlotte R. Lane

Daniel R. Pearson

Shara L. Aranoff*

Robert B. Koopman

Director of Economics

* Commissioner Shara L. Aranoff was sworn in on September 6, 2005, and did not participate in this

investigation. Commissioner Marcia E. Miller, whose term ended on September 5, 2005, participated in

this investigation.
U.S. International Trade Commission

Washington, DC 20436

October 2005

www.usitc.gov

Publication 3785

Export Opportunities and Barriers in

African Growth and Opportunity

Act-Eligible Countries

Investigation No. 332-464
This report was principally prepared by

Country and Regional Analysis Division

Arona M. Butcher, Chief

Nannette Christ, Project Leader

Laura Polly, Deputy Project Leader

Team Leaders

Heidi Colby-Oizumi, John Davitt, and George Serletis, Office of Industries

James Stamps, Office of Economics

Office of Economics

Kelly Clark, Cindy Cohen, Michael Ferrantino, Kelly Jones, Selamawit Legesse, and Marinos Tsigas

Office of Industries

Angela Calarco, Eric Forden, Kimberlie Freund, Renee Johnson, Jackie Jones, Christopher Mapes,

Elizabeth Nesbitt, Seamus O’Connor, Erick Oh, Kim Olsen, Karen Taylor, Alan Treat, and Ralph Watkins

Office of Investigations

Russell Duncan

Primary Reviewers

Robert Carr, Office of Industries

William Deese, Office of Economics

Review Assistance was provided by:

Office of Industries

Edmund Cappuccilli, Jonathan Coleman,

David Lundy, Deborah McNay, Karl Tsuji, and Judith-Anne Webster

Office of Economics

Judith Dean, James Fetzer, Joanne Guth, and Ted Wilson

Supporting Assistance was provided by:

Office of Industries

Phyllis Boone, Monica Reed, and Catherine Rylyk

Office of Economics

Nicholas Grossman, Sara Nunley, Kelly Popelas,

Patricia M. Thomas, Shakira Van Savage, and Philip Schrader
i

ABSTRACT

On November 10, 2004, the United States Trade Representative (USTR) requested that the

U.S. International Trade Commission (Commission) prepare a report under section 332(g)

of the Tariff Act of 1930 (19 U.S.C. 1332(g)) that identifies, for each AGOA-eligible

country, (1) the major economic sectors with the greatest potential for growth in export sales

and (2) domestic and international barriers that impede trade growth in such sectors. In

addition, the USTR requested that the Commission's report identify, to the extent possible,

private-sector initiatives and technical assistance programs that attempt to address such

barriers. The USTR requested that the Commission submit its report no later than

June 30, 2005. This study is related to the 2004 AGOA Acceleration Act (AGOA III), which

was signed by the President on July 13, 2004. As of June 30, 2005, the 37 AGOA-eligible

countries were: Angola, Benin, Botswana, Burkina Faso, Cameroon, Cape Verde, Chad,

Djibouti, Democratic Republic of the Congo, Ethiopia, Gabon, The Gambia, Ghana, Guinea,

Guinea-Bissau, Kenya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius,

Mozambique, Namibia, Niger, Nigeria, Republic of the Congo, Rwanda, São Tomé and

Principe, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Uganda,

and Zambia.

For the purposes of this study, sectors or products exhibiting potential export growth include

(1) currently exported products with potential for export growth through improved

productivity or product quality; (2) products that reflect a country’s endowment strengths,

but have not been exported in significant quantities; and (3) downstream products of existing

export products. Another avenue for increased exports is diversification or increased

penetration of markets. 

Barriers to increasing exports can arise from international and/or domestic policies, as well

as geographic trade-related and/or regional features. Commission research in selected

AGOA-eligible countries cited domestic impediments (e.g., infrastructure, utilities, and

domestic trade policy) as the major barriers to increased exports. Hence, in this report, the

examination of barriers that limit export growth focus primarily on domestic barriers and

impediments.

The identification of potential export products or sectors and domestic and international

barriers or impediments is based on statistical analysis of export data (revealed comparative

advantage analysis and market concentration measures); information obtained from

fieldwork in selected AGOA-eligible countries; business environment, economic freedom,

and infrastructure indicators; and public sources. This information was also supplemented

with a review of primary and secondary sources. The 37 AGOA-eligible countries have been

categorized into 9 country groups based on similar export patterns.
ii
iii

CONTENTS

Page

Abstract ................................................................. i

Abbreviations and Acronyms ........................................ xvii

Executive Summary ................................................... xxi

Chapter 1: Introduction ............................................. 1-1

Chapter 2: Petroleum-exporting countries ....................... 2-1

Angola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3

Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-13

Gabon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-27

Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-37

Republic of the Congo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-49

Chapter 3: Predominantly mineral-exporting countries ....... 3-1

Botswana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3

Democratic Republic of the Congo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-19

Guinea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-29

Zambia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-41

Chapter 4: Moderately mineral-exporting countries ........... 4-1

Mozambique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3

Niger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-17

Rwanda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-25

Sierra Leone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-35

South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-43

Chapter 5: Cotton-exporting countries ............................ 5-1

Benin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3

Burkina Faso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-13
iv

CONTENTS—Continued

Page

Chapter 5: Cotton-exporting countries—Continued

Chad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-23

Mali . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-31

Chapter 6: Fish-exporting countries ............................... 6-1

The Gambia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-5

Mauritania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-15

Namibia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-25

São Tomé and Principe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-37

Senegal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-47

Tanzania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-59

Chapter 7: Coffee, tea, and spice-exporting countries .......... 7-1

Ethiopia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3

Kenya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-13

Uganda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-25

Chapter 8: Other agricultural-exporting countries ............. 8-1

Ghana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3

Guinea-Bissau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-17

Malawi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-25

Swaziland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-35

Chapter 9: Apparel-exporting countries ........................... 9-1

Lesotho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3

Madagascar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-13

Mauritius . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-27

Chapter 10: Transport services-exporting countries ............ 10-1

Cape Verde . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-3

Djibouti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-11

Seychelles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-19
v

CONTENTS—Continued

Page

Appendix

A. Request letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

B. Federal Register notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3

C. Trade- and economics-related terms, unilateral trade preference programs, and

regional trade agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-3

D. Description of quantitative analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-3

E. Revealed comparative advantage analysis by country . . . . . . . . . . . . . . . . . . . . . . . . . . . E-3

F. Standard data definitions and sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3

Figures

1-1. Map of sub-Saharan Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2

AN-1. Angola: Composition of GDP (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4

CM-1. Cameroon: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-14

GN-1. Gabon: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-28

NG-1. Nigeria: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-38

RC-1. Republic of the Congo: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-50

BT-1. Botswana: Composition of GDP (2002/03) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4

DR-1. Democratic Republic of the Congo: Composition of GDP (2001) . . . . . . . . . . . . . . . . . 3-20

GU-1. Guinea: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-30

ZM-1. Zambia: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-42

MZ-1. Mozambique: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4

NI-1. Niger: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-18

RW-1. Rwanda: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-26

SL-1. Sierra Leone: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-36

SA-1. South Africa: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-44

BN-1. Benin: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-4

BF-1. Burkina Faso: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-14

CH-1. Chad: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-24

ML-1. Mali: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-32

GM-1. The Gambia: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-6

MT-1. Mauritania: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-16

NM-1. Namibia: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-26

ST-1. São Tomé and Principe: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-38

SN-1. Senegal: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-48

TZ-1. Tanzania: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-60

ET-1. Ethiopia: Composition of GDP (2002/03) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-4

KN-1. Kenya: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-14

UG-1. Uganda: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-26

GH-1. Ghana: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4

GB-1. Guinea-Bissau: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18

MW-1. Malawi: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-26

SW-1. Swaziland: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-36

LS-1. Lesotho: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-4
vi

CONTENTS—Continued

Page

Figures—Continued

MD-1. Madagascar: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-14

MR-1. Mauritius: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-28

CV-1. Cape Verde: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-4

DJ-1. Djibouti: Composition of GDP (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-12

SY-1. Seychelles: Composition of GDP (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-20

Tables

ES-1. Summary of findings: Potential export growth sectors and domestic and international

barriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii

2-1. Angola, Cameroon, Gabon, Nigeria, and Republic of the Congo, 1999-2003 average

share of total exports, by sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1

AN-1. Angola: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4

AN-2. Angola: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6

AN-3. Angola: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6

AN-4. Angola: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-7

AN-5. Angola: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10

AN-6. Angola: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10

AN-7. Angola: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-11

CM-1. Cameroon: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-13

CM-2. Cameroon: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-16

CM-3. Cameroon: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-16

CM-4. Cameroon: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-18

CM-5. Cameroon: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22

CM-6. Cameroon: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22

CM-7. Cameroon: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-23

GN-1. Gabon: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-28

GN-2. Gabon: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-30

GN-3. Gabon: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-31

GN-4. Gabon: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-31

GN-5. Gabon: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-33

GN-6. Gabon: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-34

GN-7. Gabon: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-35

NG-1. Nigeria: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-38
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NG-2. Nigeria: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-40

NG-3. Nigeria: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-40

NG-4. Nigeria: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-42

NG-5. Nigeria: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-46

NG-6. Nigeria: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-46

NG-7. Nigeria: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-47

RC-1. Republic of the Congo: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-49

RC-2. Republic of the Congo: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003,

percent of 2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . 2-52

RC-3. Republic of the Congo: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003,

percent of 2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . 2-53

RC-4. Republic of the Congo: Leading export markets, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 2-53

RC-5. Republic of the Congo: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-56

RC-6. Republic of the Congo: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-56

RC-7. Republic of the Congo: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . 2-57

3-1. Botswana, Democratic Republic of the Congo, Guinea, and Zambia, 1999-2003

average share of total exports, by sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1

BT-1. Botswana: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4

BT-2. Botswana: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7

BT-3. Botswana: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-8

BT-4. Botswana: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-8

BT-5. Botswana: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-12

BT-6. Botswana: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13

BT-7. Botswana: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-15

DR-1. Democratic Republic of the Congo: Basic economic indicators . . . . . . . . . . . . . . . . . . 3-20

DR-2. Democratic Republic of the Congo: Leading 2003 exports by HS 2-digit, 1994, 1999,

2003, percent of 2003 total, and compound annual growth rate (CAGR) . . . . . . . . . 3-22

DR-3. Democratic Republic of the Congo: Leading 2003 exports by HS 4-digit, 1994, 1999,

2003, percent of 2003 total, and compound annual growth rate (CAGR) . . . . . . . . . 3-23

DR-4. Democratic Republic of the Congo: Leading export markets, 1994, 1999, 2003,

percent of 2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . 3-23

DR-5. Democratic Republic of the Congo: Business environment . . . . . . . . . . . . . . . . . . . . . . 3-26

DR-6. Democratic Republic of the Congo: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . 3-26

DR-7. Democratic Republic of the Congo: Infrastructure-related indicators . . . . . . . . . . . . . . 3-27

GU-1. Guinea: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-30
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GU-2. Guinea: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-31

GU-3. Guinea: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-32

GU-4. Guinea: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-33

GU-5. Guinea: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-36

GU-6. Guinea: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-36

GU-7. Guinea: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-37

ZM-1. Zambia: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-42

ZM-2. Zambia: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-45

ZM-3. Zambia: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-45

ZM-4. Zambia: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-46

ZM-5. Zambia: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-51

ZM-6. Zambia: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-51

ZM-7. Zambia: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-52

4-1. Mozambique, Niger, Rwanda, Sierra Leone, and South Africa, 1999-2003 average

share of total exports, by sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1

MZ-1. Mozambique: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4

MZ-2. Mozambique: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 4-6

MZ-3. Mozambique: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 4-6

MZ-4. Mozambique: Leading export markets, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7

MZ-5. Mozambique: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-13

MZ-6. Mozambique: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-13

MZ-7. Mozambique: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14

NI-1. Niger: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-17

NI-2. Niger: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-20

NI-3. Niger: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-20

NI-4. Niger: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-21

NI-5. Niger: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-22

NI-6. Niger: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-23

NI-7. Niger: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-23

RW-1. Rwanda: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-26
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RW-2. Rwanda: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-28

RW-3. Rwanda: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-28

RW-4. Rwanda: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-29

RW-5. Rwanda: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-32

RW-6. Rwanda: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-32

RW-7. Rwanda: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-33

SL-1. Sierra Leone: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-36

SL-2. Sierra Leone: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-38

SL-3. Sierra Leone: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-38

SL-4. Sierra Leone: Leading export markets, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-39

SL-5. Sierra Leone: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-41

SL-6. Sierra Leone: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-41

SL-7. Sierra Leone: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-42

SA-1. South Africa: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-43

SA-2. South Africa: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-46

SA-3. South Africa: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-47

SA-4. South Africa: Leading export markets, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-47

SA-5. South Africa: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-53

SA-6. South Africa: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-53

SA-7. South Africa: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-55

5-1. Benin, Burkina Faso, Chad, and Mali, 1999-2003 average share of total exports, by

sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1

BN-1. Benin: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-4

BN-2. Benin: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6

BN-3. Benin: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6

BN-4. Benin: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-7

BN-5. Benin: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-9

BN-6. Benin: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-9

BN-7. Benin: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-10

BF-1. Burkina Faso: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-14
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BF-2. Burkina Faso: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 5-16

BF-3. Burkina Faso: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 5-16

BF-4. Burkina Faso: Leading export markets, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-17

BF-5. Burkina Faso: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-20

BF-6. Burkina Faso: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-21

BF-7. Burkina Faso: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-22

CH-1. Chad: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-24

CH-2. Chad: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-25

CH-3. Chad: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-26

CH-4. Chad: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-27

CH-5. Chad: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-28

CH-6. Chad: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-29

CH-7. Chad: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-29

ML-1. Mali: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-32

ML-2. Mali: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-34

ML-3. Mali: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-34

ML-4. Mali: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-35

ML-5. Mali: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-38

ML-6. Mali: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-38

ML-7. Mali: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-39

6-1. The Gambia, Mauritania, Namibia, São Tomé and Principe, Senegal, and Tanzania,

1999-2003 average share of total exports, by sector . . . . . . . . . . . . . . . . . . . . . . . . . 6-1

GM-1. The Gambia: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-5

GM-2. The Gambia: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 6-8

GM-3. The Gambia: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 6-8

GM-4. The Gambia: Leading export markets, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-9

GM-5. The Gambia: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-11

GM-6. The Gambia: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-11

GM-7. The Gambia: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-12

MT-1. Mauritania: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-15
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MT-2. Mauritania: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-18

MT-3. Mauritania: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-18

MT-4. Mauritania: Leading export markets, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-19

MT-5. Mauritania: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-21

MT-6. Mauritania: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-21

MT-7. Mauritania: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-22

NM-1. Namibia: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-25

NM-2. Namibia: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-28

NM-3. Namibia: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-29

NM-4. Namibia: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-29

NM-5. Namibia: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-33

NM-6. Namibia: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-33

NM-7. Namibia: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-34

ST-1. São Tomé and Principe: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-38

ST-2. São Tomé and Principe: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003,

percent of 2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . 6-39

ST-3. São Tomé and Principe: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003,

percent of 2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . 6-40

ST-4. São Tomé and Principe: Leading export markets, 1994, 1999, 2003, percent of 

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 6-40

ST-5. São Tomé and Principe: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-43

ST-6. São Tomé and Principe: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-43

ST-7. São Tomé and Principe: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . 6-44

SN-1. Senegal: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-48

SN-2. Senegal: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-50

SN-3. Senegal: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-50

SN-4. Senegal: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-51

SN-5. Senegal: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-55

SN-6. Senegal: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-55

SN-7. Senegal: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-56

TZ-1. Tanzania: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-59

TZ-2. Tanzania: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-62

TZ-3. Tanzania: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-62
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TZ-4. Tanzania: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-64

TZ-5. Tanzania: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-67

TZ-6. Tanzania: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-67

TZ-7. Tanzania: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-70

7-1. Ethiopia, Kenya, and Uganda, 1999-2003 average share of total exports, by sector . . . 7-1

ET-1. Ethiopia: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3

ET-2. Ethiopia: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-6

ET-3. Ethiopia: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-7

ET-4. Ethiopia: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-7

ET-5. Ethiopia: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-10

ET-6. Ethiopia: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-10

ET-7. Ethiopia: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-12

KN-1. Kenya: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-14

KN-2. Kenya: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-16

KN-3. Kenya: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-17

KN-4. Kenya: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-18

KN-5. Kenya: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-21

KN-6. Kenya: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-22

KN-7. Kenya: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-22

UG-1. Uganda: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-25

UG-2. Uganda: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-28

UG-3. Uganda: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-28

UG-4. Uganda: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-30

UG-5. Uganda: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-34

UG-6. Uganda: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-35

UG-7. Uganda: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-35

8-1. Ghana, Guinea-Bissau, Malawi, and Swaziland, 1999-2003 average share of total

exports, by sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1

GH-1. Ghana: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4

GH-2. Ghana: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6

GH-3. Ghana: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6
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GH-4. Ghana: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-8

GH-5. Ghana: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-12

GH-6. Ghana: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-12

GH-7. Ghana: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-14

GB-1. Guinea-Bissau: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-17

GB-2. Guinea-Bissau: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 8-20

GB-3. Guinea-Bissau: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 8-20

GB-4. Guinea-Bissau: Leading export markets, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-21

GB-5. Guinea-Bissau: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-23

GB-6. Guinea-Bissau: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-23

GB-7. Guinea-Bissau: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-23

MW-1. Malawi: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-25

MW-2. Malawi: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28

MW-3. Malawi: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28

MW-4. Malawi: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-29

MW-5. Malawi: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-32

MW-6. Malawi: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-32

MW-7. Malawi: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-33

SW-1. Swaziland: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-35

SW-2. Swaziland: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-37

SW-3. Swaziland: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-38

SW-4. Swaziland: Leading export markets, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-39

SW-5. Swaziland: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-41

SW-6. Swaziland: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-41

SW-7. Swaziland: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-42

9-1. Lesotho, Madagascar, and Mauritius, 1999-2003 average share of total exports, by

sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1

LS-1. Lesotho: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3

LS-2. Lesotho: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-6

LS-3. Lesotho: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-7

LS-4. Lesotho: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-7
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LS-5. Lesotho: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-10

LS-6. Lesotho: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-10

LS-7. Lesotho: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-11

MD-1. Madagascar: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-13

MD-2. Madagascar: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 9-16

MD-3. Madagascar: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 9-17

MD-4. Madagascar: Leading export markets, 1994, 1999, 2003, percent of 2003 total,

and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-18

MD-5. Madagascar: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-23

MD-6. Madagascar: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-23

MD-7. Madagascar: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-24

MR-1. Mauritius: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-27

MR-2. Mauritius: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-30

MR-3. Mauritius: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-31

MR-4. Mauritius: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-32

MR-5. Mauritius: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-36

MR-6. Mauritius: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-37

MR-7. Mauritius: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-39

10-1. Cape Verde, Djibouti, and Seychelles, 1999-2003 average share of total exports, by

sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1

CV-1. Cape Verde: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-3

CV-2. Cape Verde: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) ........................... 10-5

CV-3. Cape Verde: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-6

CV-4. Cape Verde: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-6

CV-5. Cape Verde: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-8

CV-6. Cape Verde: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-8

CV-7. Cape Verde: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-9

DJ-1. Djibouti: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-11

DJ-2. Djibouti: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of

2003 total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . 10-14

DJ-3. Djibouti: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-14

DJ-4. Djibouti: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-15

DJ-5. Djibouti: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-17

DJ-6. Djibouti: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-17
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DJ-7. Djibouti: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-17

SY-1. Seychelles: Basic economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-19

SY-2. Seychelles: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-22

SY-3. Seychelles: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003

total, and compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-23

SY-4. Seychelles: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-23

SY-5. Seychelles: Business environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-27

SY-6. Seychelles: Economic freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-27

SY-7. Seychelles: Infrastructure-related indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-28

C-1. Unilateral trade preference programs and regional trade agreements . . . . . . . . . . . . . . . C-11

D-1. Makeup of lower- and middle-income economies (LMI) and rest of the world

(ROW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-9

D-2. Concordance for summary trade categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-12

E-1. Angola: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-5

E-2. Benin: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-6

E-3. Botswana: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . E-7

E-4. Burkina Faso: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . E-8

E-5. Cameroon: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . E-9

E-6. Cape Verde: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . E-10

E-7. Chad: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-11

E-8. Democratic Republic of the Congo: Revealed comparative advantage analysis . . . . . . . E-12

E-9. Djibouti: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-13

E-10. Ethiopia: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-14

E-11. Gabon: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-15

E-12. The Gambia: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . E-16

E-13. Ghana: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-17

E-14. Guinea: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-18

E-15. Guinea-Bissau: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . E-19

E-16. Kenya: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-20

E-17. Lesotho: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-21

E-18. Madagascar: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . E-22

E-19. Malawi: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-23

E-20. Mali: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-24

E-21. Mauritania: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . E-25

E-22. Mauritius: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . E-26

E-23. Mozambique: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . E-27

E-24. Namibia: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-28

E-25. Niger: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-29

E-26. Nigeria: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-30

E-27. Republic of the Congo: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . E-31

E-28. Rwanda: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-32

E-29. São Tomé & Principe: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . E-33
xvi

CONTENTS—Continued

Page

Tables—Continued

E-30. Senegal: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-34

E-31. Seychelles: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . E-35

E-32. Sierra Leone: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . E-36

E-33. South Africa: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . E-37

E-34. Swaziland: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . E-38

E-35. Tanzania: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . E-39

E-36. Uganda: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-40

E-37. Zambia: Revealed comparative advantage analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-41

F-1. Standard data definitions and sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
OMB No.: 3117--0188

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Export Opportunities and Barriers in African

Growth and Opportunity Act--Eligible

Countries
xvii

Abbreviations and Acronyms

ACP African, Caribbean, and Pacific Countries

AfDB African Development Bank

ADF African Development Fund

AGOA African Growth and Opportunity Act

ATC Agreement on Textiles and Clothing

AU African Union

AVE Ad Valorem Equivalent

BIT Bilateral Investment Treaty

BPO Business Process Outsourcing

CAGR Compound Annual Growth Rate

CAP Common Agricultural Policy (EU)

CBI Cross Border Initiative

CEMAC Communauté Economique et Monétaire de l’Afrique Centrale

CET Common External Tariff

CFA Communauté Financière Africaine

CIA Central Intelligence Agency

CILSS Comité Permanent Inter–Etats de Lutte Contre La Sécheresse dans le Sahel

COMESA Common Market for Eastern and Southern Africa

DOC United States Department of Commerce

DROC Democratic Republic of the Congo

EAC Eastern African Community

EBA Everything But Arms

EBRD European Bank for Reconstruction and Development

EC European Community

ECOWAS Economic Community of West African States

EEC European Economic Community

EIU Economist Intelligence Unit

EPZ Export Processing Zone

ERP Effective Rate of Protection

ESAP Economic and Social Action Plan

EU European Union

Ex-Im Bank Export-Import Bank of the United States

FAO Food and Agriculture Organization, United Nations

FAS Foreign Agricultural Service, U.S. Department of Agriculture

FDI Foreign Direct Investment

FOREX Foreign Exchange

FTA Free Trade Agreement/Area

FTZ Free Trade Zone

GDP Gross Domestic Product

GMO Genetically Modified Organism

GNP Gross National Product

GSP Generalized System of Preferences

HIPC Heavily Indebted Poor Countries
xviii

Abbreviations and Acronyms—Continued

HS Harmonized Commodity Description and Coding System

HTS Harmonized Tariff Schedule

IADD Intergovernmental Authority on Drought and Development

IBRD International Bank for Reconstruction and Development (World Bank)

ICSID International Center for the Settlement of Investment Disputes

ICT Information and Communication Technologies

IDA International Development Association

IDZ Industrial Development Zone

IF Integrated Framework for Trade-Related Technical Assistance

IFC International Finance Corporation

IFI International Financial Institution

IGAD Intergovernmental Authority on Development

IMF International Monetary Fund

IOC Indian Ocean Commission

IP Intellectual Property

ISI Import Substitution Industrialization

ITC U.S. International Trade Commission 

JITAP Joint Integrated Technical Assistance Program for Selected Least Developed

Countries

LDBC Least Developed Beneficiary Countries

LDC Least Developed Country (UN Definition: 49 countries)

LMI Lower- and Middle-Income Countries

MCA Millennium Challenge Account

MCC Millennium Challenge Corporation

MFA Multifiber Arrangement

MFN Most-Favored-Nation

MIGA Multilateral Investment Guarantee Agency

MOU Memorandum of Understanding

MRU Mono River Union

NEPAD New Partnership for Africa’s Development

NGO Nongovernmental Organization

NTB Nontariff Barrier

NTM Nontariff Measure

ODA Official Development Assistance

OECD Organization for Economic Cooperation and Development

OHADA Organisation pour l’Harmonization en Afrique de Droit des Affaires

OPEC Organization of Petroleum Exporting Countries

OPIC Overseas Private Investment Corporation (United States)

PEAP Poverty Eradication and Action Plan

PRGF Poverty Reduction and Growth Facility

PRSP Poverty Reduction Strategy Paper

PTA Preferential Trade Arrangement

R&D Research and Development

RCA Revealed Comparative Advantage

RIFF Regional Integration Facilitation Forum
Abbreviations and Acronyms—Continued

xix

ROO Rules of Origin

ROW Rest of World

RTA Regional Trade Arrangement/Agreement

SACU Southern Africa Customs Union

SADC Southern Africa Development Community

SAF Structural Adjustment Facility

SME Small- and Medium-sized Enterprises

SMME Small, Medium, and Micro Enterprises

SOE State-owned Enterprise

SPS Sanitary and Phytosanitary Measures

SRCA Symmetric Revealed Comparative Advantage Index

SSA Sub-Saharan Africa

TA Technical Assistance

TBT Technical Barriers to Trade

TCB Trade Capacity Building

TDA Trade Development Agency, U.S. Department of Commerce

TIFA Trade and Investment Framework Agreement

TRAINS Trade Analysis and Information System (UNCTAD)

UEMOA Union Economique et Monétaire Ouest Africaine

UK United Kingdom

UN United Nations

UNCTAD United Nations Conference on Trade and Development

UNDP United Nations Development Program

UNECA United Nations Economic Commission for Africa

UNIDO United Nations Industrial Development Organization

USAID United States Agency for International Development

USDA United States Department of Agriculture

USDOC United States Department of Commerce

USDOE United States Department of Energy

US&FCS U.S. and Foreign Commercial Service

USITC United States International Trade Commission

USTR United States Trade Representative

VAT Value-Added Tax

WAEMU West African Economic and Monetary Union

WAMZ West Africa Monetary Zone

WB World Bank

WFP World Food Program

WITS World Integrated Trade Solution

WTO World Trade Organization

Source: Nathan Associates, “Acronyms Used in International Trade,” compiled for USAID/Support for

Trade Capacity, June 2002; edited and supplemented by USITC staff.
xx
xxi

EXECUTIVE SUMMARY

On November 10, 2004, the United States Trade Representative (USTR) requested that the

U.S. International Trade Commission (Commission) prepare a report under section 332(g)

of the Tariff Act of 1930 (19 U.S.C. 1332(g)) that identifies, for each African Growth and

Opportunity Act (AGOA)-eligible country, (1) the major economic sectors with the greatest

potential for growth in export sales and (2) domestic and international barriers that impede

trade growth in such sectors. In addition, the USTR requested that the Commission's report

identify, to the extent possible, private-sector initiatives and technical assistance programs

that attempt to address such barriers. The USTR requested that the Commission submit its

report no later than June 30, 2005. This study is related to the 2004 AGOA Acceleration Act

(AGOA III), which was signed by the President on July 13, 2004. Section 9 of AGOA III

directs the President to conduct a study on each AGOA-eligible sub-Saharan African (SSA)

country, which (1) identifies economic sectors with the greatest potential for growth, (2)

identifies domestic and international barriers that are impeding growth in such sectors, and

(3) makes recommendations on how the U.S. government and the private sector can provide

technical assistance to these countries to assist in both dismantling such barriers and in

promoting investment in such sectors. There are 48 sub-Saharan African (SSA) countries,

of which 37 are AGOA-eligible. As of June 30, 2005, the 37 AGOA-eligible countries were:

Angola, Benin, Botswana, Burkina Faso, Cameroon, Cape Verde, Chad, Djibouti,

Democratic Republic of the Congo, Ethiopia, Gabon, The Gambia, Ghana, Guinea,

Guinea-Bissau, Kenya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius,

Mozambique, Namibia, Niger, Nigeria, Republic of the Congo, Rwanda, São Tomé and

Principe, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Uganda,

and Zambia.

The Commission employed multiple approaches in addressing the USTR’s request. The list

of identified potential export sectors and domestic and international barriers provided in this

report is based on Commission research, including fieldwork to selected AGOA-eligible

countries. For the purposes of this study, sectors or products exhibiting potential export

growth include: (1) existing exported products that a country could increase through

improved productivity or product quality; (2) products that reflect a country’s endowment

strengths, but have not been exported in significant quantities; and (3) products that represent

downstream processing of existing export products.

The identification of potential export products or sectors and domestic and international

barriers or impediments is based on statistical analysis of export data, information obtained

from fieldwork in selected AGOA-eligible countries, and public sources. Given that the

greatest potential for increased exports for many AGOA-eligible countries is in currently

exported products, the country profiles discuss exports at the aggregated (2-digit level) and

disaggregated (4-digit) levels, as well as significant trends in these exports. These data form

the basis for the revealed comparative advantage analysis and market concentration measures

in identifying potential export sectors and products. Information on domestic and

international barriers to exports was compiled from a variety of sources, including the World

Bank “Doing Business in 2005" survey, the Heritage Foundation “2005 index of Economic

Freedom Database,” and the World Bank “World Development Indicators” database. The

U.S. Trade Representative did not specify the types of barriers or impediments the

Commission should consider in its research. Rather, the barriers and impediments reported

reflect the concerns raised by the exporters, governments, and other sector participants.

Therefore, not all reported barriers or impediments apply equally to all countries and sectors
xxii

and some reported barriers or impediments may not, in fact, limit export growth for a

particular sector.

The information on barriers included in this report reflects the views of industry,

government, and other sources as to what they perceive to be the greatest impediments to the

ability of AGOA-eligible countries to increase exports. Such barriers may result from a

number of sources, including international and/or domestic policies and from geographic or

regional features. The Commission has defined international barriers to include factors

within each AGOA-eligible country that impede export growth. As discussed further in

chapter 1, international barriers, which can be imposed by either the exporting or importing

country, directly affect the terms on which international transactions take place. International

barriers reported to the Commission include, for example, tariffs, quotas, tariff-rate quotas,

and export taxes. Domestic barriers can affect exports by raising the cost of production.

Domestic barriers reported to the Commission include, for example, labor market policies,

domestic price regulation, certain business regulations, and inability to meet international

standards. Commission research in selected AGOA-eligible countries, especially through

interviews of company, association, and government representatives, as well as secondary

sources, indicates that domestic barriers represent the greatest impediment to increasing

AGOA-eligible country exports. Hence, in this report, the examination of barriers that limit

export growth focuses primarily on domestic barriers and impediments.

Primary research involved gathering information through fieldwork, stakeholder interviews,

and communication with the U.S. Department of State, including U.S. Embassies in the 37

countries. Fieldwork in 11 AGOA-eligible countries (Botswana, Cameroon, Malawi, Mali,

Mauritius, Mozambique, Senegal, South Africa, Tanzania, Uganda, and Zambia) was

conducted to obtain information from in-country businesses, private-sector associations, and

multinational companies regarding potential export sectors and products, as well as barriers

and impediments encountered in exporting from SSA. Commission staff also interviewed

African government officials regarding these topics, as well as efforts they have made to

support and expand exports. In addition, Commission staff interviewed African government

representatives in the United States, as well as officials of associations that are regularly

involved in SSA trade-related issues, including the Africa Coalition for Trade. Secondary

sources included publications from various U.S. government agencies, international

organizations, and research institutions that deal with SSA trade-related issues. 

In addition to the three elements discussed earlier, export growth may also result from

market diversification or from further penetration of existing export markets. For example,

China’s growing demand for natural resources such as petroleum, timber, cotton, and

minerals and metals has benefitted African countries exporting these products.

Predominantly agricultural commodity-exporting countries could increase exports by

shipping to developing and emerging economies which have been identified as potential

markets for raw agricultural commodities, minimally processed products, and lightmanufactured items. For the most part, exports of high-value horticulture, floriculture, or

organic agricultural products have typically targeted markets in the European Union and

United States. 

The 37 AGOA-eligible countries have been categorized into 9 country groups based on

similarities in export patterns. Table ES-1 provides a summary of Commission findings for

each of the 37 AGOA-eligible countries with regard to sectors with the greatest export

growth potential, domestic barriers, and international barriers. 
xxiii

Table ES-1Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countriesPetroleum-exporting countries.—These predominantly petroleum-exporting countries are located on the Atlantic coast. Their GDPs range from $3.5 b

Congo) to $50.2 billion (Nigeria). These countries' petroleum reserves are predominantly offshore, and there is a varying level of refining capacity in eac

exports are the most diversified, and include, in addition to petroleum, wood, bananas, cocoa, aluminum, cotton, coffee, and natural rubber. Republic of 

also export wood, and Angola and the Republic of the Congo export diamonds. Agriculture is important in Nigeria, accounting for nearly one-third of GDP employment.Angola Leading Export Sectors • Energy-related, including crude petroleum

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including fish, coffee, and wood• Energy-related, including liquified natural gas• Services, including transportation services

Reported DomesticBarriers and Impediments

• Governance, including political instability• Infrastructure, including poor roads and railways • Uncertain business environment, including institutional weakness, lack of a skilled workforce nec

more skill-intensive sectors, high cost of capital, and difficulties obtaining business permits

Reported InternationalBarriers and Impediments

• Geographic trade-related barriers, including regional instability

Cameroon Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including hardwood lumber and logs, banana

• Energy-related, including petroleum

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including hardwood lumber and wood produ

cotton, coffee, and processed fruits and vegetables

• Energy-related, including downstream petroleum products• Manufacturing, including light industrial products• Minerals and metals, including aluminum• Services, including tourism

Reported DomesticBarriers and Impediments

• Governance, including lack of government and judicial transparency• Infrastructure, including inadequate rural roads, lack of electricity and fixed line telecommunicati

a deep-water port 

• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors• Uncertain business environment, including high cost of capital, low volume capacity, and lack of 

management knowledge

Reported InternationalBarriers and Impediments

• Nontariff measures, including standards and developed-country agriculture support programs • Tariffs, including tariff peaks and tariff escalation• Geographic trade-related barriers, including certification necessary for direct flight access to pote

direct flights

Gabon Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including logs and timber

• Energy-related, including petroleum

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including lumber and wood products, seafoo• Energy-related, including petroleum• Minerals and metals, including manganese
xxiv

Table ES-1—ContinuedSummary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countriesPetroleum-exporting countries.—Continued

Gabon–Cont. Reported Domestic

Barriers and Impediments

• Governance, including lack of government transparency• Infrastructure, including inadequate and poorly maintained road network• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors and l

Reported InternationalBarriers and Impediments

• Geographic trade-related barriers, including few direct regional and international flights to potent

Nigeria Leading Export Sectors • Energy-related, including petroleum and liquified natural gas

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including cocoa, cashews, sesame, shrimp a• Energy-related, including petroleum and liquified natural gas

• Manufacturing, including leather products• Minerals and metals, including tantalum and niobium

Reported DomesticBarriers and Impediments

• Governance, including pervasive unofficial payments• Infrastructure, including inadequate road and rail networks and port facilities and high cost of uti

• Labor, including labor market rigidity and lack of skilled labor necessary to diversify into more sk

• Regulatory, including lack of government transparency in development and implementation of re

burdensome regulations

• Trade policy, including export taxes and high import tariffs• Uncertain business environment, including limited access to capital, high cost of inputs, and dist

Reported InternationalBarriers and Impediments

• Nontariff measures, including changing regulations in EU markets

Republic of theCongo

Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including wood and wood products

• Energy-related, including petroleum

Sectors with GreatestExport Growth Potential

• Energy-related, including petroleum and electricity• Manufacturing, including processed wood products• Minerals and metals, including magnesium and gold

Reported DomesticBarriers and Impediments

• Governance, including internal insecurity• Infrastructure, including inadequate road network and port facilities• Regulatory, including burdensome regulations and limited contract enforcement

• Trade policy, including high import tariffs• Uncertain business environment, including high cost of inputs, high cost and limited supply of cr

utilities

Reported InternationalBarriers and Impediments

• Nontariff measures, including sanitary and phytosanitary standards
xxv

Table ES-1—ContinuedSummary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countriesPredominantly mineral-exporting countries.—With the exception of Guinea, which is in western Africa, these countries are in south-central Africa. Th$3.6 billion (Guinea) to $7.4 billion (Botswana). The products mined in these countries include aluminum, copper, nickel, cobalt, and diamonds. DemocraCongo and Guinea also export petroleum, and agricultural exports are important to Botswana (beef), Guinea (fish), and Zambia (cotton, tobacco, and suBotswana Leading Export Sectors • Minerals and metals, including diamonds 

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including beef, ostrich products, and hides a

• Manufacturing, including glass and jewelry• Minerals and metals, including gold, base metals, and diamonds• Services, including tourism and financial services outsourcing

Reported DomesticBarriers and Impediments

• Infrastructure, including high utility costs and supply constraints, insufficient telecommunications 

transportation costs

• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors• Regulatory, including restrictive labor laws, land lease restrictions, and restrictive industry struct

• Uncertain business environment, including low-volume production capacity

Reported InternationalBarriers and Impediments

• Nontariff measures, including standards• Geographic trade-related barriers, including regional instability, land-locked status that requires 

country infrastructure, distance to current or potential markets, and regional infrastructure constr

DemocraticRepublic of theCongo

Leading Export Sectors • Energy-related, including petroleum and hydroelectricity

• Minerals and metals, including diamonds

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including coffee• Energy-related, including hydroelectricity• Minerals and metals, including copper, diamonds, cobalt, sulphites, zinc products, and tantalum

Reported DomesticBarriers and Impediments

• Governance, including political instability, lack of transparency, and lack of government control o

producing territories

• Infrastructure, including inadequate road, port, and telecommunications networks• Uncertain business environment, including collapse of banking system, insecure property rights, 

business, and difficulties enforcing contracts

Reported InternationalBarriers and Impediments

• Nontariff measures, including standards• Geographic trade-related barriers, including regional conflicts and costly air freight

Guinea Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including fish, cocoa, coffee, and natural rub

• Energy-related, including crude petroleum• Minerals and metals, including aluminum ores, concentrates, and oxides; diamonds; and copper 

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including frozen and processed fish, cocoa b

pineapples, and cashews

• Minerals and metals, including iron ore; aluminum ores, concentrates, and oxides; diamonds; co

concentrates; and gold

Reported DomesticBarriers and Impediments

• Governance, including lack of transparency• Infrastructure, including poor roads and ports, high utility costs, and insufficient telecommunicati• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors• Regulatory, including restrictive regulatory framework• Trade policy, including delays in value-added tax refunds
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxvi

Predominantly mineral-exporting countries.—ContinuedGuinea–Cont. Reported International

Barriers and Impediments

• Tariffs, including EU tariffs on agricultural products

• Geographic trade-related barriers, including regional instability and regional road taxes

Zambia Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including cotton and tobacco

• Minerals and metals, including copper and cobalt

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including horticulture and floriculture product

honey, coffee, and logs

• Energy-related, including electricity• Manufacturing, including leather products, textile and apparel, and handicrafts• Minerals and metals, including copper, gemstones, niobium, and tantalum

Reported DomesticBarriers and Impediments

• Infrastructure, including inadequate road and railway networks, and high cost of telecommunicat• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors• Trade policy, including high import tariffs• Uncertain business environment, including high inflation rates, high cost of utilities, burdensome 

capital, outdated technology, and high tax rates

Reported InternationalBarriers and Impediments

• Nontariff measures, including rules of origin and developed-country support programs• Tariffs, including high tariffs in regional markets

• Geographic trade-related barriers, including land-locked status necessitating use of neighboring 

and regional instability
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxvii

Moderately mineral-exporting countries.—These countries are not geographically close together, and they have a wide range of GDPs, from $793 mi

$159.9 billion (South Africa). While they export a significant amount of minerals and metals, their export base is diversified. For example, agricultural expMozambique (crustaceans), Rwanda (coffee), and Sierra Leone (cocoa), and South Africa exports a number of manufactured products, including motor 

countries, with the exception of Sierra Leone, export significant amounts of fossil fuels. Mozambique Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including seafood

• Minerals and metals, including aluminum

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including seafood, fresh fruits and vegetable• Energy-related, including electricity• Manufacturing, including wood products• Minerals and metals, including aluminum and titanium• Services, including tourism

Reported DomesticBarriers and Impediments

• Governance, including inefficient judicial system and domestic security issues

• Infrastructure, including lack of paved roads, high transportation costs, high utility costs, inadequ

infrastructure, and inadequate electrical supply

• Labor, including low labor productivity and lack of skilled labor necessary to diversify into more s

• Regulatory, including burdensome corporate laws, complex and restrictive labor laws, land rights 

delays

• Trade policy, including delays in value-added tax refunds• Uncertain business environment, including low-volume production capacity, lack of standards ca

technologies 

Reported InternationalBarriers and Impediments

• Nontariff measures, including standards, developed-country agricultural policies, and rules of ori

Niger Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including livestock and fresh vegetables

• Minerals and metals, including uranium 

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including livestock, meat, gum arabic, and s• Energy-related, including crude petroleum, coal, and electrical power

• Minerals and metals, including gold and phosphate

Reported DomesticBarriers and Impediments

• Infrastructure, including poor roads and inadequate communications infrastructure

• Labor, including low literacy rate, lack of skilled labor necessary to diversify into more skill-intens

managerial training

• Trade policy, including taxes on all exports except minerals and burdensome export procedures

Reported InternationalBarriers and Impediments

• Nontariff measures, including standards, developed-country agriculture support programs, and m

support programs

• Geographic trade-related barriers, including land-locked status necessitating use of neighboring 

Rwanda Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including coffee and tea

• Minerals and metals, including tin, gold, coltan, and tungsten

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including coffee, tea, fruit, and fish• Manufacturing, including textiles and apparel and downstream chemicals• Minerals and metals, including tin, gold, beryllium, kaolin, and peat• Services, including tourism
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxviii

Moderately mineral-exporting countries.—Continued

Rwanda–Cont. Reported Domestic

Barriers and Impediments

• Governance, including lack of security• Infrastructure, including limited railroad network and dilapidated road network • Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors• Uncertain business environment, including limited technology use, limited access to credit, high 

burdensome regulations and bureaucracy

Reported InternationalBarriers and Impediments

• Nontariff measures, including rules of origin• Geographic trade-related barriers, including land-locked status necessitating access to neighbor

Sierra Leone Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including cocoa

• Minerals and metals, including diamonds, bauxite, and rutile

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including cocoa and cocoa-based products a• Energy-related, including petroleum and gas• Manufacturing, including jewelry• Minerals and metals, including diamonds, bauxite, rutile, and iron• Services, including tourism

Reported DomesticBarriers and Impediments

• Governance, including lack of judicial transparency and domestic security issues• Infrastructure, including congested and inefficient port and impassable rural roads

• Labor, including low literacy rate, lack of skilled labor necessary to diversify into more skill-intens

managerial training

• Regulatory, including burdensome agricultural-sector and domestic trucking regulations

• Uncertain business environment, including volatile exchange rate; relatively high rates of inflatio

start-up, licensing, and registration procedures and costs; outdated technology; and low-volume 

Reported InternationalBarriers and Impediments

• Tariffs, including tariff peaks on footwear and apparel products• Geographic trade-related barriers, including international security risk or regional instability, cert

direct flight access to potential markets, and lack of direct flights

South Africa Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including citrus fruit and wine

• Energy-related, including coal• Manufacturing, including motor vehicles• Minerals and metals, including platinum-group metals, diamonds, and gold• Services, including financial services and tourism

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including fresh fruits and vegetables, canned 

cut flowers, wine, and ostrich products 

• Manufacturing, including motor vehicles, engines, and parts• Minerals and metals, including ores and concentrates, precious and semiprecious stones, wroug

alloys

• Services, including information and communication technologies, business process outsourcing

and commercial film
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxix

Moderately mineral-exporting countries.—Continued

SouthAfrica–Cont.

Reported DomesticBarriers and Impediments

• Governance, including difficulties with organized crime• Infrastructure, including congested and inefficient ports and poor road and rail infrastructure• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors, imm

rigid labor laws

• Regulatory, including Broad-Based Black Economic Empowerment rules and mining legislation t

direct investment, burdensome agricultural-sector regulations, inefficient passenger aviation sys

• Trade policy, including export control and licensing requirements• Uncertain business environment, including volatile exchange rate, limited access to finance for s

enterprises, low-volume production capacity, lack of confidence to invest in expanding output, anknowledge

Reported InternationalBarriers and Impediments

• Nontariff measures, including standards, bans on imports of certain products, difficulties with for

procedures, and developed-country and middle-income country agricultural support programs

• Tariffs, including tariff peaks in certain markets• Geographic trade-related barriers, including regional road fees, difficulties in transporting produc

handling or refrigeration, and lack of direct flights to certain markets
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxx

Cotton-exporting countries.—These four countries share the semiarid grassland and woodland climate of the Sahel region of West Africa in at least pa

GDPs range from $2.6 billion (Chad) to $4.3 billion (Mali). Exports other than cotton that are typical of these countries include cashews, cigarettes, oilsee

leather.Benin Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including cotton 

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including cotton, cashews, and leather• Energy-related, including petroleum• Manufacturing, including yarn and textiles• Minerals and metals, including gold, phosphates, iron ore, marble, and clay

Reported DomesticBarriers and Impediments

• Governance, including lack of government and judicial transparency• Infrastructure, including unreliable electricity, telecommunications, and water; and inadequate ru

• Labor, including labor force rigidity• Regulatory, including burdensome labor laws• Uncertain business environment, including volatile exchange rate, relatively high rates of inflatio

Reported InternationalBarriers and Impediments

• Nontariff measures, including developed-country agriculture support programs

• Tariffs, including tariff peaks on textiles

Burkina Faso Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including cotton, livestock, and hides and sk

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including shea butter• Manufacturing, including cotton yarn and handicrafts• Minerals and metals, including gold• Services, including tourism

Reported DomesticBarriers and Impediments

• Infrastructure, including inadequate transport infrastructure, inefficient railway operations, and hi

utility costs

• Labor, including low literacy and life expectancy rates and lack of skilled labor necessary to dive

intensive sectors

• Uncertain business environment, including outdated technologies, employment market rigidity, a

operating costs

Reported InternationalBarriers and Impediments

• Nontariff measures, including developed-country agriculture support programs• Geographic trade-related barriers, including land-locked status necessitating use of neighboring 

Chad Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including cotton and gum arabic

• Energy-related, including petroleum

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including cattle, cotton, gum arabic, onions, • Energy-related, including petroleum• Manufacturing, including textiles

Reported DomesticBarriers and Impediments

• Governance, including lack of judicial transparency and domestic security issues• Infrastructure, including lack of paved roads and railroads• Labor, including low literacy rate and lack of skilled labor necessary to diversify into more skill-in

• Regulatory, including burdensome agricultural-sector regulations and domestic trucking regulatio

• Uncertain business environment, including extensive business start-up, licensing, and registratio

associated costs
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxxi

Cotton-exporting countries.—ContinuedChad–Cont. Reported International

Barriers and Impediments

• Nontariff measures, including developed-country cotton support programs

• Geographic trade-related barriers, including land-locked status necessitating use of neighboring 

certification requirements for direct flight access to potential markets, and lack of direct flights

Mali Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including cotton and livestock

• Minerals and metals, including gold

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including cotton, cereals and grains, fruits an

food, and livestock

• Minerals and metals, including gold• Services, including tourism

Reported DomesticBarriers and Impediments

• Governance, including high levels of government intervention in the economy and limited proper• Infrastructure, including inadequate and expensive transportation costs and high utility costs• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors• Regulatory, including labor market rigidity• Trade policy, including high import tariffs• Uncertain business environment, including high cost to start a business, high cost of capital, and 

meet sanitary and phytosanitary requirements

Reported InternationalBarriers and Impediments

• Geographic trade-related barriers, including land-locked status necessitating use of neighboring 

and regional instability disrupting export outlets
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxxii

Fisheries-exporting countries.—These countries all have access to ocean resources, four in the north Atlantic ocean, one in the south Atlantic, and on

Their GDPs range from $53.7 million for São Tomé and Principe to $9.9 billion for Tanzania. Nonfisheries exports for these countries include iron ore (M

(Tanzania), cocoa (São Tomé and Principe), and shipping services (The Gambia and Senegal).The Gambia Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including groundnuts and fish

• Services, including tourism and re-exports

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including groundnut products, fish, flowers, f• Energy-related, including offshore petroleum• Manufacturing, including textiles and ceramic tiles• Services, including tourism and re-exports

Reported DomesticBarriers and Impediments

• Governance, including domestic security • Infrastructure, including poor roads and inadequate telecommunications• Trade policy, including coffee export tax, inefficient export processing zone incentives, and delay

refunds

• Uncertain business environment, including extensive business start-up, licensing, and registratio

outdated technology; and low-volume production capacity

Reported InternationalBarriers and Impediments

• Nontariff measures, including standards• Geographic trade-related barriers, including international security risk and regional instability

Mauritania Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including fisheries products

• Minerals and metals, including iron ore

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including fisheries products• Energy-related, including crude petroleum• Minerals and metals, including diamonds• Services, including tourism

Reported DomesticBarriers and Impediments

• Infrastructure, including poor and deteriorating roads• Labor, including low literacy rate, lack of skilled labor necessary to diversify into more skill-intens

managerial training

• Uncertain business environment, including difficulties with respect to contract enforcement and o

costly water and energy

Reported InternationalBarriers and Impediments

• Nontariff measures, including standards, testing, and technical requirements 

• Tariffs, including high regional tariffs

Namibia Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including fresh and processed meat and fish

• Manufacturing, including textiles and apparel• Minerals and metals, including diamonds, uranium oxide, and unprocessed minerals

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including fresh and processed meat and fish• Manufacturing, including textiles and apparel• Minerals and metals, including diamonds, uranium oxide, and unprocessed minerals
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxxiii

Fisheries-exporting countries.—Continued

Namibia–Cont. Reported Domestic

Barriers and Impediments

• Governance, including state ownership of water, electricity, telecommunications, and air transpo

• Infrastructure, including frequent transport bottlenecks• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors and l

• Regulatory, including royalties and differential tax rates on natural resources, quota entitlement a

levels in fisheries, and control boards

• Trade policy, including export control and licensing requirements and customs inefficiencies

• Uncertain business environment, including standards capacity

Reported InternationalBarriers and Impediments

• Nontariff measures, including quality and standards requirements, customs requirements, and d

agricultural programs

• Tariffs, including tariffs on some agricultural products

São Tomé andPrincipe

Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including cocoaSectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including cocoa, cocoa products, coffee prod• Energy-related, including crude petroleum• Services, including tourism and logistics services

Reported DomesticBarriers and Impediments

• Governance, including domestic political instability• Infrastructure, including insufficient transportation infrastructure and utility constraints• Labor, including a small labor pool and lack of skilled labor necessary to diversify into more skill-• Regulatory, including inability to own land• Uncertain business environment, including low-volume production capacity and outdated or ineff

technologies

Reported InternationalBarriers and Impediments

• Geographic trade-related barriers, including additional costs of air transport associated with islan

Senegal Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including fish and crustaceans and peanut a

• Minerals and metals, including phosphates• Services, including tourism

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including fish and crustaceans, peanut and p

and vegetables, and processed food products

• Energy-related, including petroleum• Services, including tourism and information technology

Reported DomesticBarriers and Impediments

• Infrastructure, including degrading railway and road networks and insufficient port facilities• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors, espe

business management skills

• Regulatory, including labor market rigidity and burdensome business regulations• Uncertain business environment, including high cost to start, register, and run a business; and h

Reported InternationalBarriers and Impediments

• Geographic trade-related barriers, including certification necessary for direct flight access to pote
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxxiv

Fisheries-exporting countries.—Continued

Tanzania Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including fish and coffee

• Minerals and metals, including gold• Services, including tourism

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including fish, coffee, spices, horticulture an

and processed and packaged food

• Energy-related, including petroleum• Manufacturing, including textiles and apparel, processed wood products, and leather products• Minerals and metals, including gold• Services, including tourism

Reported DomesticBarriers and Impediments

• Infrastructure, including an inadequate port and poor road and rail networks• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors

• Regulatory, including excessive regulations, especially in the agriculture and mineral sectors

• Trade policy, including high import tariffs and export taxes• Uncertain business environment, including high cost of capital, inputs, utilities, and transport; lac

knowledge; and lack of technical capacity to meet international standards

Reported InternationalBarriers and Impediments

• Geographic trade-related barriers, including lack of direct flights to U.S. market
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxxv

Coffee, tea, and spice-exporting countries.—These three countries are geographically similarly situated (East Africa) and have similar elevated semia

Valley suitable for coffee production. Although Ethiopia and Uganda have similar GDPs ($6.6 billion and $6.2 billion, respectively), Kenya’s GDP is more countries combined, at $13.8 billion. Exports other than coffee, tea, and spices include cut flowers; oilseeds, leather, and precious metals (Ethiopia); pet

apparel (Kenya); and fish, tobacco, cotton, and hides (Uganda).Ethiopia Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including coffee and oilseeds

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including coffee, animal-related products, an

• Energy-related, including hydropower and geothermal energy• Manufacturing, including textiles and apparel, leather goods, and jewelry• Services, including tourism, air transportation, and publishing

Reported DomesticBarriers and Impediments

• Governance, including lack of transparency, social instability, civil unrest, famine, and population • Infrastructure, including inadequate roads and telcommunications systems• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors• Trade policy, including high tariffs on inputs• Uncertain business environment, including structural issues in the banking sector, lack of marke

technology, and limited access to finance

Reported InternationalBarriers and Impediments

• Nontariff measures, including agricultural support programs and standards• Tariffs, including peaks in agricultural tariffs

Kenya Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including coffee, tea, and cut flowers

• Energy-related, including refined petroleum products• Services, including tourism

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including coffee, tea, cut flowers, fresh fruit, 

• Services, including tourism

Reported DomesticBarriers and Impediments

• Governance, including lack of transparency in government procurement and lack of security• Infrastructure, including poor roads, poor railways, unreliable electrical power, and inadequate te

network

• Regulatory, including lack of regulatory transparency and onerous customs procedures• Trade policy, including high tariffs and export taxes on hides, skins, and scrap metal

• Uncertain business environment, including high taxes, lack of security, and large informal econo

Reported InternationalBarriers and Impediments

• Geographic trade-related barriers, including certification necessary for direct flight access to pote

Uganda Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including coffee, fish, tobacco, vanilla beans

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including coffee, fish, vanilla, cut flowers, an• Energy-related, including petroleum• Minerals and metals, including cobalt and gold• Services, including tourism

Reported DomesticBarriers and Impediments

• Governance, including lack of judicial and tax transparency and lack of security

• Infrastructure, including inefficiencies in utilities and transportation• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors and l• Regulatory, including inefficient customs procedures• Trade policy, including coffee export tax and weak export institutional framework• Uncertain business environment, including high cost of capital, lack of technology, outdated equ

information, and lack of scale economies
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxxvi

Coffee, tea, and spice-exporting countries.—Continued

Uganda–Cont. Reported International

Barriers and Impediments

• Nontariff measures, including customs procedures and valuations, standards and labeling requir

support programs

• Tariffs, including high tariffs in agricultural products

• Geographic trade-related barriers, including land-locked status necessitating use of poor regiona

inadequate rail and air transport 
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxxvii

Other agriculture-exporting countries.—These countries are located in western and southern sub-Saharan Africa, and export a range of agricultural p

range from $235.7 million (Guinea-Bissau) to $7.7 billion (Ghana). Other important exports include aluminum and wood (Ghana); petroleum (Guinea-Bisapparel (Malawi); and apparel and citrus (Swaziland).Ghana Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including cocoa and processed cocoa produ

pineapples 

• Manufacturing, including wood products and fish products

• Minerals and metals, including gold, bauxite and aluminum products, and manganese• Services, including tourism

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including fresh cut flowers, processed cocoa 

processed fruits and vegetables

• Manufacturing, including ceramics, cosmetics, electrical equipment, handtools, and jewelry• Minerals and metals, including diamonds and downstream aluminum products

• Services, including tourism, diamond cutting and polishing, and offshore data processing

Reported DomesticBarriers and Impediments

• Infrastructure, including congested ports, inadequate and insufficient road network, unreliable en

undercapitalized tourism sector with a shortage of hotels

• Labor, including shortage of certain skilled labor necessary to diversify into more skill-intensive s

• Regulatory, including complex land tenure system• Trade policy, including delays in drawback and value-added tax refunds• Uncertain business environment, including lack of domestic credit

Reported InternationalBarriers and Impediments

• Nontariff measures, including sanitary and phytosanitary measures and developed-country agric

• Tariffs, including tariffs assessed by ECOWAS members on exports that should be duty free• Geographic trade-related barriers, including poor road connections with neighbors

Guinea-Bissau Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including cashews and fish and crustaceans

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including cashews, mangoes, cotton, downs

existing exports such as processed cashews or fish, and processed wood products

• Energy-related, including petroleum

Reported DomesticBarriers and Impediments

• Governance, including internal instability• Infrastructure, including expensive and inadequate utilities and destroyed road network• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors

• Regulatory, including burdensome regulations and limited property rights• Uncertain business environment, including high cost and limited access to capital and lack of tes

capacity to meet standards requirements

Reported InternationalBarriers and Impediments

• Tariffs, including high tariffs on fish in export markets
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxxviii

Other agriculture-exporting countries.—Continued

Malawi Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including tobacco, sugar, and tea

• Manufacturing, including apparel

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including cotton, coffee, macadamia nuts, gr

associated oils, fruit juices, cut flowers, and paprika

• Manufacturing, including textiles and apparel• Minerals and metals, including bauxite and titanium• Services, including medical, accounting, and architectural services

Reported DomesticBarriers and Impediments

• Governance, including governmental transparency• Infrastructure, including inadequate transportation infrastructure, erratic electricity supply, lack o

and low levels of irrigation

• Regulatory, including foreign exchange conversion requirements and restrictive trucking regulati

• Uncertain business environment, including high cost and lack of capital and technical and volum

Reported InternationalBarriers and Impediments

• Nontariff measures, including standards and developed-country agricultural support programs• Tariffs, including tariff-rate quotas• Geographic trade-related barriers, including land-locked status necessitating use of neighboring 

Swaziland Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including cane sugar, chemical wood pulp, c

• Manufacturing, including apparel• Services, including tourism and supplying fresh water to neighboring countries

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including cane sugar, food preparations, che

fruit, and meat 

• Manufacturing, including artificial waxes, bookbinding machinery, textiles and apparel (woven co

and watch straps

• Services, including tourism

Reported DomesticBarriers and Impediments

• Infrastructure, including inadequate domestic energy generation• Labor, including high emigration, declining population growth rate, and delays in obtaining work 

workers

• Regulatory, including ambiguous land tenure regulations, lack of land ownership security, and d

sanitary and phytosanitary standards

Reported InternationalBarriers and Impediments

• Geographic trade-related barriers, including land-locked status necessitating use of ports in Moz

and high shipping costs
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xxxix

Apparel-exporting countries.—These countries have been significant beneficiaries of the textile and apparel provisions of the AGOA program. Lesotho 

Madagascar and Mauritius, and, with a GDP of $1.1 billion, has about one-fifth the GDP of the other two countries. Other important exports include diamfish and seafood, cloves, and fruit (Madagascar); and sugar, fish, diamonds, and tourism (Mauritius).Lesotho Leading Export Sectors • Manufacturing, including apparel

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including cereals, animal hair, fruit juices, m

peaches and asparagus

• Manufacturing, including apparel• Minerals and metals, including diamonds• Services, including tourism 

Reported DomesticBarriers and Impediments

• Infrastructure, including poor roads and inadequate container terminal and airport cargo-holding 

• Labor, including HIV infection rates, wage restrictions, labor productivity, and lack of skilled labo

into more skill-intensive sectors

• Regulatory, including land ownership limits and cumbersome mining regulations• Trade policy, including export tax on diamonds• Uncertain business environment, including business start-up time and number of procedures to 

Reported InternationalBarriers and Impediments

• Nontariff measures, including rules of origin• Geographic trade-related barriers, including transportation issues relating to land-locked status

Madagascar Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including vanilla and fish

• Manufacturing, including apparel• Services, including tourism

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including vanilla, cloves, fish and crustacean• Energy-related, including refined petroleum• Manufacturing, including textiles and apparel• Minerals and metals, including metals and metal minerals, industrial minerals, dimension stone, 

stones

• Services, including tourism and business process outsourcing

Reported DomesticBarriers and Impediments

• Governance, including lack of judicial, tax, and customs transparency 

• Infrastructure, including poor road, rail, and port facilities; high port fees; unreliable and costly ai

telecommunications and electricity systems

• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors, labo

difficulty in obtaining visas for foreign workers

• Regulatory, including high taxes, ill-defined property rights, and inefficient customs procedures• Trade policy, including delays in value-added tax refunds• Uncertain business environment, including access to capital and high interest rates, and difficult

certification, and quality control

Reported InternationalBarriers and Impediments

• Nontariff measures, including standards• Geographic trade-related barriers, including long distance to markets, lack of flights, and costly f
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xl

Apparel-exporting countries.—Continued

Mauritius Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including sugar

• Manufacturing, including apparel• Services, including tourism, financial services, and information and communication technologies

Sectors with GreatestExport Growth Potential

• Services, including tourism, financial services, information and communication technologies, and 

Reported DomesticBarriers and Impediments

• Infrastructure, including high telecommunications costs• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors• Regulatory, including lack of competitive air transport policy and strict control of passenger visits• Uncertain business environment, including the lack of raw materials and low-volume production 

Reported InternationalBarriers and Impediments

• Nontariff measures, including sanitary and phytosanitary measures• Geographic trade-related barriers, including lack of regional purchasing power 
Table ES-1—Continued

Summary of findings: Potential export growth sectors and domestic and international barriers in AGOA-eligible countries

xli

Transport services-exporting countries.—These countries are all located along strategic transportation routes and, consequently, are important countport, and logistical services. All three have relatively small GDPs ranging from $625.0 million (Djibouti) to $831.1 million (Cape Verde). Important mercha

apparel, electronic components, and footwear (Cape Verde); salt, live animals, wheat, and gold (Djibouti); and fisheries products (Seychelles).

Cape Verde Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including fish and bananas 

• Manufacturing, including apparel, footwear, and electronic components• Services, including tourism and transportation support

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including seafood• Manufacturing, including apparel, footwear, and electronics• Services, including tourism and transportation support

Reported DomesticBarriers and Impediments

• Infrastructure, including limited fish processing and refrigeration facilities and high utility costs• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors• Regulatory, including high cost of capital and burdensome and ambiguous administrative proced

cost and time of doing business

Reported InternationalBarriers and Impediments

• Geographic trade-related barriers, including the cost of transportation because of remote locatio

countries

Djibouti Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including livestock, hides, skins, and salt

• Services, including port-related services

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including fisheries products, livestock, salt, a• Services, including port-related services

Reported DomesticBarriers and Impediments

• Infrastructure, including poor roads, inadequate telecommunications network, and few refrigerate• Labor, including lack of skilled labor necessary to diversify into more skill-intensive sectors, espe

managerial skills

Reported InternationalBarriers and Impediments

• Geographic trade-related barriers, including regional instability and U.S. security restrictions 

Seychelles Leading Export Sectors • Agriculture, forestry, fisheries, and agroprocessing, including prepared or preserved fish and froz

• Services, including tourism, logistics, and offshore business services

Sectors with GreatestExport Growth Potential

• Agriculture, forestry, fisheries, and agroprocessing, including prepared or preserved fish and froz• Services, including tourism and offshore business services

Reported DomesticBarriers and Impediments

• Infrastructure, including high transportation costs, high utility costs, and capacity constraints

• Labor, including high labor costs and a limited labor pool• Regulatory, including price controls, exchange rate policy, lack of foreign exchange, and limited 

• Trade policy, including relatively high ad valorem duties• Uncertain business environment, including the lack of domestically available inputs, the limited s

high capitalization requirements

Reported InternationalBarriers and Impediments

• Nontariff measures, including rules or origin and the requirements of international monitoring bod

Source: Compiled by the Commission.
xlii
 1

 The USTR letter is in app. A, and the Commission’s notice of investigation, published in the

Federal Register of Dec. 13, 2004 (69 F.R. 72217), is in app. B.

 2

 Commission sources, both primary and secondary, identified few examples of private-sector

initiatives specifically targeting the alleviation of domestic and international impediments to

increased exports. In-country interviews suggested that existing private-sector efforts consist

primarily of addressing broader issues regarding the removal of domestic barriers to business

development.

1-1

CHAPTER 1

Introduction

Purpose and Scope

On November 10, 2004, the United States Trade Representative (USTR) requested that the

U.S. International Trade Commission (Commission) prepare a report under section 332 (g)

of the Tariff Act of 1930 (19 U.S.C. 1332(g)) that identifies, for each AGOA-eligible country,

(1) the major economic sectors with the greatest potential for growth in export sales and (2)

domestic and international barriers that impede trade growth in such sectors.1

 In addition, the

USTR requested that the Commission’s report identify, to the extent possible, private-sector

initiatives and technical assistance programs that attempt to address such barriers.2 The USTR

requested that the Commission submit its report no later than June 30, 2005.

This study is related to the 2004 AGOA Acceleration Act (AGOA III), which was signed by

the President on July 13, 2004. Section 9 of AGOA III directs the President to conduct a study

on each AGOA-eligible sub-Saharan African (SSA) country, which (1) identifies economic

sectors with the greatest potential for growth, (2) identifies domestic and international barriers

that are impeding growth in such sectors, and (3) makes recommendations on how the U.S.

government and the private sector can provide technical assistance to these countries to assist

in both dismantling such barriers and in promoting investment in such sectors.

As of June 30, 2005, the 37 AGOA-eligible countries were: Angola, Benin, Botswana,

Burkina Faso, Cameroon, Cape Verde, Chad, Djibouti, Democratic Republic of the Congo,

Ethiopia, Gabon, The Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Madagascar,

Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Republic of the

Congo, Rwanda, São Tomé and Principe, Senegal, Seychelles, Sierra Leone, South Africa,

Swaziland, Tanzania, Uganda, and Zambia (figure 1).
1-2

Named countries represent all 48 sub-Saharan African countries. Shaded

countries are AGOA-eligible. The illustration of the map in this figure is an

artistic representation of the countries of sub-Saharan Africa. It is not drawn

to scale, nor is it intended to depict political or geographical boundaries.
 3

 The extent of discussion of specific constraints across the country profiles reflects the degree

of recognition they received in the information gathered from public sources and from fieldwork.

In addition, this report does not provide a comparative analysis across countries. Such assessment

requires a detailed analysis of the potential revenue effect of increased exports and reduced

barriers for each AGOA-eligible country. Such an analysis is beyond the scope of this study.

 4

 The identification of potential export products and sectors in this study is not proffered as a

recommendation or an assessment, and the identification of impediments does not suggest support

for any specific policy to address impediments. Government policy to support exports or to

alleviate barriers should be contingent on additional study. The danger of using the identified

products and sectors other than for initial guidance for policy objectives has been cited by

researchers. For example, Blackhurst and Layakurwa note that an assessment of the prospects for

nontraditional exports that does not provide an in-depth analysis of product-specific domestic

conditions “inevitably involves a large element of attempting to ‘pick winners’. [There] certainly

is no empirical basis for claiming that this is a promising route to developing internationally

competitive exports.” Richard Blackhurst and William Layakurwa, “Markets and market access

for African exports: Past, present and future directions,” World Trade Organization: Framework

Papers, Collaborative Research Project, CRC-3-3, p.18, found at

www.aercafrica.org/DOCUMENTS/Lyakurwa.pdf, retrieved Apr. 25, 2005.

 5

 This period could be considered as short to medium term, with one business cycle of

approximately 4 to 5 years. Theoretically, any country could export an almost-infinite variety of

products in the long term, if inputs and technology can be acquired. As endowments, government

policies, and domestic and international trade environments change, so may a country's potential

export products and sectors. For additional definitions of economic terms employed in this study,

see app. C.

 6

 This study focuses on countries that are eligible for the AGOA preferential trade program,

which is specific to the United States. However, in identifying potential export sectors and

domestic and international barriers related to these countries, all export markets were considered.

1-3

Approach

The Commission employed multiple approaches in addressing the USTR’s request. This

section describes the criteria and approach employed to identify potential export growth

sectors and domestic and international barriers. The list of identified potential export sectors

and domestic and international barriers provided in this report is based on Commission

research, including fieldwork conducted in selected AGOA-eligible countries. The export

sectors, products, and barriers that have been identified may not be exhaustive, nor are they

ranked according to their relative significance.3

Identification Criteria4

This study focuses on the potential for export growth over the course of several business

cycles.5

 The criteria used to identify potential export growth sectors or products include:6

1. existing exported products that a country could increase through improved

productivity or product quality;

2. products that reflect a country’s endowment strengths, but have not been

exported in significant quantities; and

3. products that represent downstream processing of existing export products.
 7

 For the theory of multiple international and domestic distortions operating simultaneously, see

Jagdish Bhagwati and V.K. Ramaswami, “Domestic Distortions, Tariffs and the Theory of

Optimum Subsidy,” Journal of Political Economy, 71, Feb. 1963; and Jagdish Bhagwati, “The

Generalized Theory of Distortions and Welfare,” in Jagdish Bhagwati, Ronald Jones, Robert

Mundell, and Jaroslav Vanek, eds., Trade, Balance of Payments, and Growth: Papers in

International Economics in Honor of Charles P. Kindleberger (Amsterdam: North-Holland,

1971).

 8

 Analysis of tariff and nontariff barriers for each AGOA-eligible country on market-by-market

and tariff line-by-tariff line bases is beyond the scope of this study.

1-4

In addition to these criteria, export growth may result from market diversification or from

further penetration of existing export markets. For example, China’s growing demand for

natural resources such as petroleum, timber, cotton, and minerals and metals has benefitted

African countries exporting these products. According to Commission fieldwork,

predominantly agricultural commodity-exporting countries could increase exports by shipping

to developing and emerging economies, which have been identified by government officials

as potential markets for raw agricultural commodities, minimally processed products, and

light-manufactured items. In general, officials in countries that have been promoting increased

exports of high-value horticulture, floriculture, or organic agricultural products have targeted

primarily the EU and U.S. markets. 

International and domestic barriers are broadly defined to include impediments related

directly to international transactions, as well as domestic factors within each AGOA-eligible

country that impede export growth. International barriers, which can be imposed by either the

exporting or importing country, directly affect the terms on which international transactions

take place. Domestic impediments can indirectly affect markets for exports by affecting

factors of production (labor, land, natural resources, and capital) or raise the cost of

production by hampering the business environment. In general, the effects of impediments

caused by international policies and those of domestic policies mimic each other, both

adversely affecting a country’s international competitiveness.7

 The barriers mentioned below

are observed in many SSA countries. International barriers imposed by importing countries

include:8

• tariffs; 

• quotas; 

• tariff-rate quotas;

• nontariff barriers such as sanitary and phytosanitary standards, which may serve

a legitimate domestic policy objective, but are impediments to trade as exporting

countries may be limited in their technical capacity to comply with the standards;

and

• domestic subsidies.
 9

 On the effects of improved transportation links, see USITC, Logistic Services: An Overview

of the Global Market and Potential Effects of Removing Trade Impediments, inv. No. 332-463,

USITC pub. 3770, May 2005.

1-5

International barriers imposed by exporting countries include:

• high and uneven import tariffs, which distort the transmission of international

prices to the domestic economy;

• export taxes and prohibitions; 

• overvalued exchange rates, which systematically make exports artificially

expensive and imports artificially inexpensive, and generally require foreign

exchange rationing; 

• export marketing boards that affect relative prices; and

• restrictions on foreign direct investment.

Domestic impediments that may limit SSA exports include:

• labor market policies that induce rigidity and prevent labor from moving from

less to more profitable activities;

• rigidities in markets for land, particularly the inability of farmers to obtain full

marketable title to land, which can prevent investment in both human and

physical capital in agricultural export crops;

• government policies that artificially raise the cost of capital;

• domestic price regulation; 

• business regulations that impair ease of entry and exit;

• government policies that establish or tolerate monopolies (other than natural

monopolies) or business collusion;

• failures of the rule of law, contract enforcement, property rights, as well as lack

of government transparency in the administration of any policy, which impairs

all economic activity, including exports;

• lack of technical capacity to meet international standards such as sanitary and

phytosanitary standards;

• inadequate infrastructure such as a lack of inland road and railroad transport, or

inadequate seaport and airport service for exports, which makes it difficult to

access export markets;9

 inadequate telephone or Internet service, which increases

the cost of accessing information to conduct transactions; and expensive and/or

unreliable utilities, which increase the cost and risk of conducting business; and

• protracted domestic civil unrest, which increases risk and reduces investment.
 10 For a review of the importance of domestic impediments in limiting export growth,

particularly the remnants of import-substitution-industrialization policies, see Francis Ng and

Alexander Yeats, “What Can Africa Expect From Its Traditional Exports,” World Bank, Africa

Region Working Paper Series No. 26, Feb. 2002; Economic Commission for Africa, Economic

Report on Africa 2004: Unlocking Africa’s Trade Potential, UNECA, 2004; and Ernesto

Hernandez-Cata, Klaus Schwab, and Augusto Lopez-Claros, The Africa Competitiveness Report

2004, World Economic Forum, 2004.

 11 Ng and Yeats, “What Can Africa Expect From Its Traditional Exports,” p. vi.

1-6

Geographic trade-related impediments that may limit SSA exports include:

• land-locked position, which can increase the cost of exporting products that can

only be efficiently transported by land via neighboring countries;

• regional instability or civil unrest in neighboring countries; and

• recurring drought, famine, or other environmental adversities.

Commission research in selected AGOA-eligible countries, especially interviews of company,

association, and government representatives, as well as secondary sources, cited domestic,

rather than international impediments as the major barriers to increased exports.10 Hence, this

report focuses primarily on domestic barriers that impede export growth. For most

AGOA-eligible countries, sectors with the greatest potential for increased exports are existing

export sectors that are hampered by domestic impediments. For example, one study

examining SSA trade trends found that domestic policies were the primary impediment to

export growth and diversification. The authors note that “it is unlikely that major shifts in the

composition of exports can occur in the short to medium term. As such, the removal of

general anti-export biases in African countries' domestic policies, as well as initiatives to

promote more competitive (low cost) prices for traditional exports, still require immediate

attention.”11

Research and Analysis

The identification of potential export products or sectors and domestic and international

barriers or impediments is based on statistical analysis of export data, information obtained

from fieldwork in selected AGOA-eligible countries, and public sources. As mentioned

above, given that the greatest potential for increased exports for many AGOA-eligible

countries is in current exports, the country profiles discuss current sector- and productspecific exports, as well as significant trends in these exports. These data form the basis for

the revealed comparative advantage analysis and market concentration measures in

identifying potential export sectors and products. In addition to its fieldwork, the Commission

also identified domestic and international barriers and impediments based on an analysis of

business environment, economic freedom, and infrastructure indicators. This information was

also supplemented with a review of primary and secondary sources (see below).
 12 In practice, the RCA method is a well-established type of statistical analysis. Valentine and

Krasnik applied the RCA method to six South African Development Community (SADC)

countries’ exports and found that, although most SADC countries have a comparative advantage in

agricultural and mineral products, an improvement in their comparative advantage in

nontraditional products has taken place since 1985. (See N. Valentine and G. Krasnik, “SADC

Trade with the Rest of the World: Winning Export Sectors and Revealed Comparative Advantage

Ratios,” The South African Journal of Economics, 2000, 68(2), pp. 266-285.) More recently,

Krakoff also applied the RCA methodology to SADC export statistics. (See Charles Krakoff, The

Services Group for USAID, “Key Potential Export Markets and the Market Access Barriers Facing

Southern African Exporters,” Nov. 2003.) The RCA methodology has also been applied by the

Commission in its estimation of the economic effect of a free trade agreement between the United

States and Korea. In that particular case, a detailed RCA analysis complemented a broader modelbased analysis. (See USITC, U.S.-Korea FTA: The Economic Impact of Establishing a Free Trade

Agreement (FTA) Between the United States and the Republic of Korea, inv. No. 332-425, USITC

pub. 3452, Sept. 2001.)

 13 A description of the RCA analysis and market concentration measure is in app. D; the results

of the RCA analysis are in app. E.

 14 The averaging process takes out some of the transitory supply shocks.

 15 It is possible that offsetting positive and negative changes could result in no change.

1-7

The Commission conducted a revealed comparative advantage (RCA) analysis12 to assess the

relative efficiency of AGOA-eligible country exports. This analysis provided RCA indices13

that were used to identify sectors or products where AGOA-eligible countries were

internationally competitive or were increasing in international competitiveness. Products with

strong or rapidly improving RCA indices, therefore, likely have the potential for increased

exports. Using diamond exports from Botswana as an example, the RCA index is equal to the

share of diamond exports in Botswana’s total exports relative to the share of diamond exports

in total world exports, or:

(Botswana diamond exports/Botswana total exports)/

(World diamond exports/World total exports). 

When Botswana’s diamond exports as a share of its total exports is greater

(less) than global diamond exports as a share of total global exports,

Botswana is said to have a revealed comparative advantage (disadvantage)

in diamonds.

For ease of interpretation, the RCA index was converted into a Symmetric RCA index

(SRCA). The RCA index can range from 0 to infinity, whereas the SRCA ranges from -1 to

1. For the main exports of each AGOA country, information is presented on the average

SRCA index (00-03), the average yearly change in SRCA, the average growth in world

markets, and the normalized standard deviation of market share from the global market share.

The average SRCA is an indicator of a country’s comparative advantage.14 For example,

values of the SRCA between 0 and 1 suggest that the country may have a comparative

advantage in the commodity, whereas values between -1 and 0 suggest a lack of a

comparative advantage in the commodity under consideration. The average yearly change in

the SRCA shows the stability of the SRCA index; positive average change generally

represents increasing export opportunities, negative change generally represents decreasing

export opportunities, and little change generally indicates stability.15 The average growth in

world markets is a measure of world demand for the good. The normalized standard deviation

(last column in appendix E tables) is an indicator of the dispersion of a country’s exports of
 16 The seven markets are Australia, Canada, the European Union (EU-15), Japan, lower- and

middle-income countries, the United States, and rest of world. For a list of the component

countries in “lower- and middle-income countries” and “rest of world,” see table D-1.

1-8

a particular product over different markets. Large values suggest that the exports of the good

in question are concentrated in a few markets. There is not necessarily a relationship among

these indicators. For example, products with large SRCAs may have either low or high

normalized standard deviations. That is, although a country may be a major exporter of a

particular commodity, it may only sell it in a limited number of markets. In order to make an

assessment of potential export growth for each country, evaluation of the above-mentioned

indices was supplemented with information gathered from public sources, interviews with

industry and government representatives in selected AGOA-eligible countries, and African

government representatives in the United States.

The Commission also developed export market concentration measures to assess the degree

of product concentration in specific markets. This analysis resulted in a market concentration

index that was used to highlight products where countries might be able to increase exports

by penetrating new markets. The export market concentration measure is first determined by

calculating the share of a specific product’s imports in seven export markets.16 Again using

Botswana diamond exports as an example, a value of “4.85" in the EU market means that the

European Union’s imports of diamonds from Botswana represent 4.85 percent of total EU

imports of diamonds. Then, using the shares for all seven markets, the Commission calculated

the extent to which a country’s exports were highly concentrated in one or two markets. High

export market concentration measures suggest products for which exports may be increased

by penetrating additional markets. The extent to which the RCA analysis or export market

concentration measures either complemented or supplemented information from primary and

public sources varies by country. 

An assessment of domestic impediments to increased exports is also provided by the

indicators representing the state of the business environment, economic freedom, and

infrastructure in each of the AGOA-eligible countries. Commission sources, both primary and

secondary, have identified these measures as reliable indicators of the types of barriers faced

by exporters. Business environment indicators highlight the difficulties of establishing and

conducting business, including export-oriented business, in a country. Three frequently-cited

domestic impediments were tariffs on imported inputs to production, the high cost of capital,

and lack of government transparency. These impediments are, in part, reflected in the degree

of economic freedom scores generated by the Heritage Foundation. For example, the “trade

policy score” indicator measures the extent to which a country’s own trade policy may inhibit

export growth; the “banking and finance score” indicator measures the openness of the

country’s banking and financial system; and the “informal market activity score” indicator

measures the degree of government transparency. As identified by Commission research, a

significant constraint to increased exports in AGOA-eligible countries is inadequate

infrastructure, including transport, communications, and utilities. The infrastructure-related

indicators provide measures that underscore these infrastructure deficiencies. For consistency

and completeness, all data are provided for all countries, if available; however, discussion of

indicators is based on their relative appropriateness determined by Commission research and

fieldwork.
 17 The 11 countries are Botswana, Cameroon, Malawi, Mali, Mauritius, Mozambique, Senegal,

South Africa, Tanzania, Uganda, and Zambia.

 18 The Commission scheduled a public hearing in connection with this investigation for

Mar. 1, 2005. The hearing was canceled due to lack of participation; however written submissions

were received. Information from the submissions was incorporated as appropriate in the country

profiles.

 19 The database accessed via WITS is the Commodity Trade Statistics database (UN Comtrade),

which is maintained by the United Nations Statistics Division (UNSD). UN Comtrade contains

annual trade flows–imports and exports–reported by more than 140 countries or areas with

commodity-by-partner detail at 6-digit level of various commodity nomenclatures. For more

detailed information on the underlying sources and definitions of WITS or UN Comtrade data, see

Internet addresses http://wits.worldbank.org/witsweb/default.aspx or

http://unstats.un.org/unsd/comtrade/, respectively.

1-9

Fieldwork and Data Sources

Primary research included gathering information through fieldwork, stakeholder interviews,

and communication with the U.S. Department of State, including U.S. Embassies in the 37

countries. Fieldwork was conducted to obtain information from in-country businesses, private

sector associations, and multinational companies regarding potential export sectors and

products, as well as barriers and impediments they have encountered in exporting from subSaharan Africa. Commission staff also interviewed African government officials regarding

these topics and efforts their governments have made to support and expand exports. Staff

traveled to 11 AGOA-eligible countries,17 which varied according to: (1) economic size, (2)

trade regimes, (3) access to trade infrastructure, and (4) business and investment

environments. In addition, Commission staff interviewed African government representatives

in the United States, as well as officials of associations that are regularly involved in SSA

trade-related issues, including the Africa Coalition for Trade.18

Secondary sources included various U.S. government agencies, international organizations,

and research institutions that deal with SSA trade-related issues. Such institutions include the

U.S. Agency for International Development, the U.S. Department of Agriculture, the U.S.

Trade and Development Agency, the World Bank, the World Trade Organization, the

International Trade Centre (Geneva), the United Nations, the UN Economic Commission for

Africa, the African Development Bank, the International Monetary Fund, the Economist

Intelligence Unit, and the Heritage Foundation.

The Commission collected merchandise trade data at the HS 2-digit and 4-digit levels from

the World Integrated Trade Solution (WITS) database.19 RCA analysis is based on countryspecific export data at the HS 4-digit level. To increase data accuracy and coverage,

merchandise export values were based on trading partners’ import values. For example, the

value of exports for Angola is the reported imports from Angola by its trading partners. As

services trade data are unavailable by country, source, and sector, the analysis of current and

potential services sector exports is primarily qualitative. Economic and infrastructure

measures were assembled from the World Bank’s World Development Indicators database;

business environment measures were collected from the World Bank’s Doing Business

database and the World Trade Organization; and the economic freedom measures were drawn

from the Heritage Foundation database. The Commission considered all collected

information; however, depending on the completeness and consistency of available

information, the emphasis given to certain sources and analysis differs across country profiles.
 20 The country groups are based on similarity of the overall trade pattern across all trade

categories. Thus, the sector with the largest share of trade may be different for countries in the

same country group. For additional information on the cluster analysis used to identify these

country groups, see app. D.

1-10

Attempts have been made to provide standard and consistent data for defined measures for

each country. However, information for the 37 AGOA-eligible countries may not be fully

comparable because of varying statistical methods and data limitations, coverage, and

practices across countries and sources. Consequently, the statistical information should be

treated as indicative, and emphasis should be placed on broad trends over time. Frequentlyused terms in the report such as Category 1 certification, informal sector/activity, Kimberley

Process/Certification, Multifiber Arrangement, and trade capacity are defined in appendix C.

Data definitions and sources for standard indicators and measures used in the report are

provided in appendix F.

Organization

The 37 AGOA-eligible countries have been categorized into 9 country groups based on

similar export patterns.20 As current exports generally represent products for which the

AGOA-eligible countries have a comparative advantage, grouping countries based on similar

export patterns informs the reader about potential export sectors and international and

domestic barriers or impediments for similarly-endowed countries. Each country assessment

is, however, intended to be a separate and distinct country-specific review. Consequently,

country profiles address topics and issues frequently and prominently cited by Commission

sources. The nine country groups are represented in Chapters 2 through 10 and are: 

• Petroleum-exporting countries (Angola, Cameroon, Gabon, Nigeria, and

Republic of the Congo);

• Predominantly mineral-exporting countries (Botswana, Democratic Republic of

the Congo, Guinea, and Zambia);

• Moderately mineral-exporting countries (Mozambique, Niger, Rwanda, Sierra

Leone, and South Africa);

• Cotton-exporting countries (Benin, Burkina Faso, Chad, and Mali);

• Fish-exporting countries (The Gambia, Mauritania, Namibia, Senegal, Tanzania,

and São Tomé and Principe);

• Coffee, tea, and spice-exporting countries (Ethiopia, Kenya, and Uganda);

• Other agriculture-exporting countries (Ghana, Guinea-Bissau, Malawi, and

Swaziland);

• Apparel-exporting countries (Lesotho, Madagascar, and Mauritius); and

• Transport services-exporting countries (Cape Verde, Djibouti, and Seychelles).
1-11

For each country in each group, the following are provided: (1) an economic overview, (2) an

export profile, (3) identification of potential export sectors or products, and (4) identification

of domestic and international barriers and impediments. Following the text of the report, there

are six appendices: (A) request letter from the USTR; (B) Federal Register notice; (C) list of

trade- and economics-related terms, and table of major unilateral trade preference programs

and regional trade agreements; (D) description of quantitative analysis; (E) RCA indices

tables by country; and (F) list of definitions and sources for standard indicators and measures

provided in the study.
1-12
2-1

CHAPTER 2

Petroleum-Exporting Countries: 

Angola, Cameroon, Gabon, Nigeria, and

Republic of the Congo

The five countries included in this chapter are all located on the Atlantic coast of Africa,

around the Bight of Benin, and have a petroleum sector that accounts for a large share of their

total exports (table 2-1). The petroleum reserves of these countries are both onshore and

offshore. The extent to which crude petroleum is refined in the country in which it is extracted

varies among countries, with most countries exporting a small quantity of refined products.

Except for Nigeria, exports of liquified natural gas are minimal. A summary of findings with

respect to potential export growth sectors and domestic and international barriers for each of

the five countries is provided below.

Table 2-1

Angola, Cameroon, Gabon, Nigeria, and Republic of the Congo, 1999-2003 average share of total exports, by sector

Sectors Angola Cameroon Gabon Nigeria

Republic of

the Congo

 –––––––––– Shares of total exports, 1999-2003 (percent) ––––––––

Fish and related products . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 0.2 0.6 0.5 0.2

Coffee, tea, and spices ............................. (1

) 3.0 (1) (1) 0.4

Cocoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 7.6 (1) 1.5 (1)

Other agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 9.8 0.1 1.0 0.8

Forest-based products ............................. (1

) 25.6 17.9 0.5 6.2

Minerals, metals, and metal products . . . . . . . . . . . . . . . . . . 7.1 4.8 4.9 0.5 5.1

Fuels and electrical energy . . . . . . . . . . . . . . . . . . . . . . . . . . 92.0 43.8 75.4 95.4 86.6

Textiles and fibers ................................ (1

) 4.1 (1) 0.2 (1)

Apparel and related articles ......................... (1

) 0.1 (1) (1) (1)

Other manufactures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 1.1 1.2 0.4 0.6 1

 Average share of less than 0.05 percent during 1999-2003.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Angola

Agriculture and fisheries appear to have the greatest export potential. As Angola continues

to recover from its long civil war, it has the potential to become a regional exporter of

agricultural products, as well as the potential to move into food processing. The government

also considers natural gas a potential export, although export quantities are likely to be

relatively small for the foreseeable future. International investment is expected to play a key

role in the development of Angola’s natural gas industry. Inadequate transport infrastructure,

high transport costs, and the general lack of a business environment conducive to

nonpetroleum investment will continue to inhibit growth of potential export sectors.

Regional instability continues to be an international impediment to export growth.
2-2

Cameroon

Sectors with the greatest potential for export development include the primary agricultural

and forestry product sectors, processed agricultural products and processed wood products,

light manufactured goods, certain mineral products, and tourism. Major domestic barriers

to increased exports include the country’s infrastructure deficiencies, the general business

environment, financial sector constraints, and lack of government and regulatory

transparency. International barriers to increased exports include destination-market standards

that are difficult to meet, tariff escalation on processed agricultural products, and developedcountry agricultural support programs.

Gabon

Gabon’s economy is dependent on the petroleum and timber sectors. Given an expected

decline in petroleum reserves, the identification of potential alternative exports is of

particular significance. Potential exports include processed wood products, which have

begun to emerge in importance, fish and crustaceans, and products previously exported such

as palm oil. The main barriers to export are domestic, including the lack of government

transparency and good governance, a noncompetitive business environment, lack of skilled

labor, and inadequate transportation infrastructure.

Nigeria

Although once a large agricultural products exporter and still a largely agriculture-based

economy, Nigeria’s predominant exports are crude petroleum and liquified natural gas.

Aside from petroleum, products identified as having export growth potential include

cashews, sesame, shrimp and prawns, tantalite and certain other minerals, cocoa beans, and

leather products. General barriers to increased exports are primarily domestic, including

inadequate infrastructure (including transport and telecommunications), high cost of capital,

expensive and unreliable utilities, high cost of inputs, high tariffs on imported inputs, and

burdensome regulations. Sector-specific barriers in the agricultural sector include high taxes

on agricultural exports and insufficient irrigation systems. 

Republic of the Congo

Republic of the Congo is a major regional producer of crude petroleum. The country also

exports a variety of other primary products, including wood, sugar, coffee, cocoa, diamonds,

gold, and potash. Republic of the Congo could eventually become an exporter of electricity,

magnesium ores and concentrates, and gold ores and concentrates, and could expand its

exports of wood and wood products. Barriers to increased exports include a damaged

infrastructure; unexploited mining opportunities; insufficient investment in several sectors,

including agriculture; and an inability to meet sanitary and phytosanitary standards in many

potential export markets.
 1

 Prepared by Alan Treat, Office of Industries.

 2

 World Bank, Transition Support Strategy for the Republic of Angola, Mar. 4, 2003, found at

www.worldbank.org, retrieved Mar. 4, 2005, pp. 4-5. The National Institute for Statistics defines

the poverty line as approximately $40 per month, and the extreme poverty line is defined as

$14 per month.

 3

 African Development Bank (AfDB) Group, Country Strategy Paper 2002-2004 – Angola,

May 2003, p. iii, found at www.afdb.org, retrieved Apr. 15, 2005.

 4

 U.S. Department of Energy, Angola Country Analysis Brief, Jan. 2005, found at

www.eia.doe.gov/cabs/angola.html, retrieved Mar. 4, 2005.

 5

 European Community, “Country Strategy Paper and Indicative Programme for the Period

2002-2007,” found at http://europa.eu.int, retrieved Apr. 13, 2005.

 6

 Republic of Angola, Monograph of the Republic of Angola, Third United Nations Conference

on Least Developed Countries, Brussels, May 14-20, 2001, p. 36, found at

www.ccia.ebonet.net/docs/aconf191cp45ang.en.pdf, retrieved Apr. 2, 2005.

 7

 Economist Intelligence Unit (EIU), Angola Country Profile, 2004, p. 23.

 8

 Other than agriculture, employment is largely in the informal sector and the government. U.S.

Department of State telegram, “Angola Export Opportunities and Barriers for USITC Study,”

message reference No. 00215, prepared by U.S. Embassy, Luanda, Feb. 18, 2005.

 9

 Republic of Angola, Monograph of the Republic of Angola, p. 13.

2-3

Angola1

Economic Overview

Angola is a petroleum- and mineral-rich country on Africa’s southwest coast, with a

population of 13.5 million, GDP of $13.2 billion, and GDP per capita of $977 in 2003

(table AN-1). Angola is rich in natural resources, but over two-thirds of the population lives

in poverty, and almost one-third in extreme poverty.2

 After gaining independence in 1975,

Angola experienced a protracted civil war until April 2002. The civil war has had a

pronounced negative impact on infrastructure, the population distribution, and the ability of

the government to institute sound policies.3

 A staff-monitored program with the IMF was

signed in 2000 with the objective of creating macroeconomic stability, ensuring sound and

transparent budgetary management practices, and reducing poverty and other distortions

leading to corruption and increased inefficiencies.

Angola’s economy depends on crude petroleum, which accounts for 53.6 percent of GDP

(figure AN-1) and about 96 percent of export earnings. Crude petroleum production has

quadrupled since 1980, reaching 902,000 barrels per day in 2003.4

 However, there are few

linkages between the capital-intensive petroleum sector and the rest of the economy.5

 Less

than 1 percent of the workforce is employed in the petroleum sector.6

 Nonpetroleum sector

growth has been limited, as a result of “persistent macroeconomic instability, poor fiscal

discipline, corruption, war, structural distortions including poor contractual and property

rights, and a weak banking sector.”7

The agricultural sector employs approximately 60 percent of the population, although it

accounts for only 8.0 percent of GDP.8

 Staple food crops, livestock, and small animals are

the main focus of agricultural production, and the main subsistence crops are maize (corn),

cassava, massango, massambala, beans, and sweet potatoes.9

 Agricultural production
2-4

Table AN-1

Angola: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 13,189.2

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 4.5

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 1.4

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... 98.2

External debt, total (current US$, millions, 1999) ....... ....... ....... ....... ....... ....... ....... ..... 10,134.3

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... .... 10.0

Exports of goods and services (percent of GDP, 1999) ....... ....... ....... ....... ....... ....... ....... 71.3

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 138.1

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 74.6

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 13.5

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 3.0

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 6.3

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 45.7

Literacy rate, adult total (percent of people ages 15 and above, 1999) ....... ....... ....... ....... ....... . . 74.0

Primary school enrollment ratio, total (percent, 1999) ....... ....... ....... ....... ....... ....... ....... . 18.0

Secondary school enrollment ratio, total (percent, 1999) ....... ....... ....... ....... ....... ....... ...... 2.4

Land use, arable land (percent of total, 1999) ....... ....... ....... ....... ....... ....... ....... ....... 32.2

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 32.2

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 11.7

Foreign direct investment, net inflows (percent of GDP, 1999) ....... ....... ....... ....... ....... ....... . 6.5

 Most recent year for which data are available between 1999 and 2003. 1

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure AN-1

Angola: Composition of GDP (2001)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 10 AfDB Group, Country Strategy Paper 2002-2004 – Angola, p. 3.

 11 Republic of Angola, Monograph of the Republic of Angola, p. 12.

 12 Ibid., p. 13.

 13 EIU, Angola Country Profile, p. 33.

 14 World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/

dataonline, retrieved Feb. 1, 2005.

 15 EIU, Angola Country Profile, p. 31.

 16 Ibid., p. 36.

 17 Ibid., p. 37.

2-5

decreased significantly during the civil war, as people were either displaced or they

abandoned agricultural activities in rural areas in order to move to urban areas.10 Angola is

currently a net importer of food.

Services accounted for 9.8 percent of GDP and mining (principally diamond extraction)

accounted for 5.8 percent. Angola is the fourth-largest producer of diamonds in the world,

by value,11 although official production figures likely do not reflect actual values because

they do not include a large number of diamond mines that operate illegally.12 Manufacturing

accounted for 3.8 percent of GDP and is dominated by a few small state-owned firms that

produce consumer goods and building materials, as well as metal working and assembly for

the petroleum sector.13

Net foreign direct investment (FDI) steadily increased from $180 million to $2.5 billion

during 1996-99, and fluctuated between $879 million and $2.1 billion during 2000-02.14

Angola was ranked as the second-largest recipient of FDI in sub-Saharan Africa (SSA) in

2003, and the largest recipient of FDI overall between 1999 and 2003. Investment is

concentrated in the petroleum and mining sectors. 

Export Profile

Angola is SSA’s second-largest petroleum exporter, after Nigeria. In 2003, crude petroleum

represented approximately 94 percent of Angola’s exports, which totaled $8.6 billion

(tables AN-2 and AN-3). Gem-quality diamonds are the second-largest export from Angola,

and constitute approximately 3 percent of Angola’s total exports. The country is the fourthlargest diamond producer in the world after Botswana, Russia, and South Africa, and is

widely considered to be a promising region for increased diamond exploitation.15 Other

principal exports include petroleum oils, crustaceans and other aquatic marine life, industrial

minerals, and dimension stone such as granite. Agricultural exports include coffee, maize,

sisal, bananas, beans, sugar, and palm oil. 

The United States is Angola’s principal export market, accounting for 52.6 percent of its

total exports in 2003 (table AN-4) and about 60 percent of its crude petroleum exports since

the 1990s.16 Other large single-country markets for exports in 2003 were China

(25.7 percent), France (8.1 percent), South Korea (3.1 percent), and Belgium (3.0 percent).

Despite efforts to increase economic integration within the region, Angola has limited

commercial ties with its neighbors.17 Intraregional trade between Angola and members of

the Southern African Development Community (SADC) and the Common Market for
2-6

Table AN-2

Angola: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars –––––––––– ––––– Percent –––––

27 Mineral fuels, mineral oils and products of their 

distillation; bituminous substances; mineral waxes . . 3,008,346.9 4,174,179.5 8,215,619.3 95.9 11.8

71 Natural or cultured pearls, precious or semiprecious 

stones, precious metals; precious metal clad

metals, articles thereof; imitation jewelry; coin . . . . . . 16,195.2 551,142.3 277,232.4 3.2 37.1

73 Articles of iron or steel. . . . . . . . . . . . . . . . . . . . . . . . . . . 217.2 231.9 13,085.3 0.2 57.7

90 Optical, photographic, cinematographic, measuring,

checking, precision, medical or surgical instruments 

and apparatus; parts and accessories thereof ...... 420.5 2,105.9 10,836.6 0.1 43.5

84 Nuclear reactors, boilers, machinery and mechanical

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . 2,157.4 6,256.8 10,599.9 0.1 19.3

25 Salt; sulfur; earths and stone; plastering materials,

lime and cement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,810.6 1,513.0 8,686.0 0.1 19.0

03 Fish and crustaceans, molluscs and other aquatic 

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,221.3 24,140.4 5,195.0 0.1 -15.7

85 Electrical machinery and equipment and parts thereof; 

sound recorders and reproducers, television

recorders and reproducers, parts and accessories . . 283.0 1,070.7 3,386.1 0.0 31.8

76 Aluminum and articles thereof. .................... 135.6 301.4 2,063.1 0.0 35.3

88 Aircraft, spacecraft, and parts thereof .............. 964.3 299.7 1,972.9 0.0 8.3

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,167.8 26,791.0 18,850.9 0.2 4.1

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,067,919.8 4,788,032.7 8,567,527.5 100.0 12.1

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table AN-3

Angola: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars –––––––––– ––––– Percent –––––

2709 Petroleum oils and oils from bituminous minerals, 

crude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,896,709.7 4,069,154.8 8,046,167.0 93.9 12.0

7102 Diamonds, whether or not worked, but not 

mounted or set . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,190.4 551,131.0 277,206.2 3.2 37.1

2710 Petroleum oils and oils from bituminous minerals 

(other than crude) and products therefrom, 

nesoi, containing 70% (by weight) or more of 

these oils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,002.0 90,143.2 161,321.6 1.9 6.1

7308 Structures (excluding prefab buildings of heading 

 9406) and parts thereof (bridges, towers etc.),

including prepared shapes etc., of iron or steel . . . . 15.2 24.8 12,642.8 0.1 111.1

9015 Surveying, hydrographic, oceanographic,

 hydrological, meteorological or geophysical

 instruments etc. nesoi; rangefinders; parts

 and accessories ............................ 336.9 1,078.9 9,407.3 0.1 44.8

2516 Granite, porphyry, basalt, sandstone and other 

 building etc. stone, whether or not roughly 

trimmed or merely cut by sawing etc. . . . . . . . . . . . . 1,495.6 1,489.2 8,666.1 0.1 21.6

2711 Petroleum gases and other gaseous hydrocarbons . . . 16,635.3 14,881.6 7,832.7 0.1 -8.0

0307 Molluscs & other aquatic invertebrates nesoi, live, 

fresh, chilled, frozen, dried, salted or in brine;

flours, meals & pellets of aqua invertebrates fit

for human consumption . . . . . . . . . . . . . . . . . . . . . . 1,772.3 1,831.2 3,461.7 0.0 7.7

8431 Parts of machinery of headings 8425 to 8430 covering 

derricks, fork-lift trucks, conveyers, self-propelled

bulldozers, graders, snowplows, etc ............ 168.6 745.2 2,113.8 0.0 32.4

7602 Aluminum waste and scrap . . . . . . . . . . . . . . . . . . . . . 78.3 295.1 2,023.3 0.0 43.5

 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,515.6 57,257.8 36,685.0 0.4 -0.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,067,919.8 4,788,032.7 8,567,527.5 100.0 12.1

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 18 For additional information on regional organizations, see app. C.

 19 U.S. & Foreign Commercial Service, “Oil and Gas in Angola,” Jan. 2003, found at

http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr113713e.html, retrieved Dec. 29, 2004.

Increases in the value of crude petroleum exports from Angola are mostly attributable to increases

in crude petroleum prices. For example, crude petroleum export quantities from Angola remained

relatively constant at 699 million barrels during 2000-01; however, crude petroleum prices

increased from $9.90 per barrel to $24.00 per barrel during that period.

2-7

Table AN-4

Angola: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

 9-year

CAGR

-–––––––––––– 1,000 dollars –––––––––––– ––––– Percent ––––––

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,209,201.7 2,574,613.8 4,506,200.9 52.6 8.2

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,985.3 355,651.2 2,205,934.9 25.7 53.0

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,117.1 92,946.7 693,932.1 8.1 21.3

Korea, Rep. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,600.4 646,411.1 267,633.8 3.1 15.8

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 534,882.1 258,082.7 3.0 (2)

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,305.1 9,558.2 202,128.5 2.4 5.6

Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 52.2 94,802.1 1.1 (2

)

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,253.6 9,108.4 83,658.1 1.0 26.3

Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,949.3 0.0 64,496.0 0.8 -0.9

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,946.0 104,367.7 58,850.0 0.7 -10.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,561.3 460,441.5 131,808.3 1.5 -6.9

Total 3,067,919.8 4,788,032.7 8,567,527.5 100.0 12.1

1

 Not available.

2

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Eastern and Southern Africa (COMESA)18 is minimal compared with exports to the United

States, the European Union, and China.

Angola’s exports increased by 56 percent during 1994-99, and by 79 percent during

1999-2003. Much of the export growth is attributable to increases in crude petroleum

exports. China and Japan have been the fastest-growing major export markets for Angola

during the past 10 years. During 1994-2003, Angola’s total exports to China and Japan

increased at a compound annual growth rate (CAGR) of 53.0 percent and 26.3 percent,

respectively. Crude petroleum exports to China increased by more than 400 percent in 2001,

while exports to South Korea, which had a 9-year CAGR of 15.8 percent, increased by more

than 500 percent to $588 million during 1998-99.19

Nearly all of Angola’s top 10 export products, as listed by 4-digit HS, have grown

significantly during the past 10 years. The 9-year CAGR was 12.0 percent for exports of

crude petroleum and 37.1 percent for diamonds, although exports of diamonds declined by

about 50 percent to $277.2 million during 1999-2003.

Sectors with the Greatest Export Growth Potential

Agriculture and fisheries appear to have the greatest export potential. Arable land is widely

available and fertile, and about 90 percent remains uncultivated. As agricultural production

continues to recover following the civil war, Angola has the potential to transform itself once
 20 Prior to independence, Angola was a net food exporter. For example, Angola was the fourthlargest coffee producer in the world. Civil war, abandoned farms, and the subsequent creation of

inefficient state farms contributed to the collapse of commercial agriculture. EIU, Angola Country

Profile, p. 25.

 21 U.S. Department of State telegram, “Angola’s FY 2005 BFIF Proposals,” message reference

No. 000054, prepared by U.S. Embassy, Luanda, Jan. 13, 2005.

 22 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 23 U.S. Department of State telegram, “Angola Export Opportunities and Barriers for USITC

Study;” and U.S. Department of State telegram, “Angola’s FY-2005 BFIF Proposals.” 

 24 Republic of Angola, Monograph of the Republic of Angola, p. 15.

 25 U.S. Department of Energy, Angola Country Analysis Brief.

 26 EIU, Angola Country Profile, p. 32.

2-8

again into a net food exporter,20 although the country will need modern farm equipment and

inputs to do so.21 If intraregional infrastructure is improved, Angola has the potential to

become a regional exporter of agricultural products and attract nonpetroleum foreign

investment directed toward food processing. Based on a high average yearly change in the

revealed comparative advantage22 (RCA) index from 1998 to 2003, as well as positive

average growth in world market share, buckwheat/millet is an agricultural product that

shows export growth potential (appendix E, table E-1), although it is not currently exported

in substantial amounts. In addition, between 1993 and 2003, world trade in tomatoes grew

by 11.3 percent, and represent another agricultural product export with growth potential.

Coffee and wood have been cited as other potentially exportable products.23

Angola has one of the richest and most diverse maritime coasts in Africa. Mackerel, sardines,

tuna, and other fish are common.24 Frozen fish exports grew by 5.1 percent in world trade

during 1993-2003, and represent a potential downstream export product. World trade in

seafood such as lobster, shrimp, and crab, as well as oysters, scallops, and mussels, have

experienced average yearly growth rates of 4.8 percent and 6.1 percent, respectively, yet

maintain relatively small percentages of Angola’s trade (0.3 percent and 0.1 percent,

respectively).

The government views natural gas, and its eventual conversion to liquified natural gas

(LNG), as a potential export in the long term, although the country will continue to

emphasize crude petroleum production for the foreseeable future. Sonangol, Angola’s

national oil company, and Chevron Texaco are developing a project to convert flared natural

gas from offshore oilfields to LNG. The project was originally scheduled for completion in

2005, but has been delayed to 2007.25 Sonangol has collaborated with several other

multinational petroleum companies through joint ventures and production-sharing

agreements to develop and exploit additional crude petroleum deposits.

Although most mining activity is currently limited to the extraction of diamonds, marble, and

granite, Angola has the potential to diversify its mining activities by exploiting iron ore,

gold, phosphates, manganese, copper, lead, zinc, tin, tungsten, vanadium, titanium, chrome,

beryllium, koalin, quartz, gypsum, and uranium deposits.26

Despite the fact that the United States and the European Union grant Angola preferential

treatment, the greatest potential for Angola’s exports may exist outside traditional markets

such as the United States, the European Union, and China, which are already major

consumers of its petroleum and mineral exports. Regional markets, including SADC and
 27 AfDB Group, Country Strategy Papers 2002-2004 – Angola, p. 7.

 28 Ibid. 

 29 EIU, Angola Country Profile, p. 13.

 30 U.S. Department of State telegram, “Angola: 2005 Investment Climate Statement,” message

reference No. 00098, prepared by U.S. Embassy, Luanda, Jan. 27, 2005.

 31 AfDB Group, Country Strategy Papers 2002-2004 – Angola, pp. 8-9, found 

www.afdb.org/en/country_operations/central_west/country_strategy_papers, retrieved

Apr. 15, 2005.

 32 Republic of Angola, Monograph of the Republic of Angola, p. 14.

 33 U.S. Department of State telegram, “Angola Export Opportunities and Barriers for USITC

Study,” message reference No. 000215, prepared by U.S. Embassy, Luanda, Feb. 18, 2005.

 34 EIU, Angola Country Profile, 2004, p. 17.

2-9

COMESA, represent significant potential export destinations for agricultural products if

intraregional infrastructure is improved. Furthermore, by rehabilitating and modernizing its

communications and railway infrastructure, as well as its airports, Angola has the potential

to become a transport center in the region and to provide exports of transportation services.27

The economic integration of Angola, as well as increased intraregional trade between Angola

and its neighbors, depend in large part on internal political and economic developments

within the country.28

Domestic and International Barriers

Enforcement inefficiencies and a lack of government transparency are widespread problems

in Angola. Contractual and property rights are poor, and are considered a major problem in

the country.29 The business environment in Angola is generally worse than regional averages,

and well below OECD averages (table AN-5). For example, Angola scored well below

regional averages regarding the time and number of procedures required for contract

enforcement, as well as the time and cost associated with starting a business. In 2004, the

World Economic Forum ranked Angola 103 out of 104 countries in terms of global business

competitiveness, and the World Bank identified Angola as one of the most time-consuming

countries in the world to establish a business.30 Although the Heritage Foundation did not

assess Angola’s economic freedom in 2005, 1995 and 2000 indices are well below regional

and OECD averages (table AN-6). The principal obstacles to private-sector development and

business competitiveness in Angola include political uncertainty; lack of governance;

problems associated with market regulations; difficulties of acquiring business permits;

insufficient loan guarantees for financial services; high costs of capital and access to credit;

a constraining administrative, legal, and judicial environment; and high transport, electricity,

and telecommunications costs.31

As a result, only 10.4 percent of the 51,429 kilometers of roads are paved. According to the

Government of Angola, the road networks have deteriorated because of war, poor

maintenance, and insufficient investment since the country’s independence (table AN-7).32

Infrastructure disrepair, as well as the widespread presence of land mines from the civil war,

greatly increase the cost of transporting inputs to farms and agricultural products to market.33

The three main rail lines are in poor condition, although limited sections have been opened

up following rehabilitation.34 The northern rail link to the port of Luanda is not operational,

while the Benguela railroad, which formerly ran 830 miles across Angola’s central region

to Democratic Republic of the Congo’s copper belt, currently runs 96 miles from the ports
2-10

Table AN-5

Angola: Business environment

Business process Angola

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 1.2 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 6.9 41.8 5.2

Getting credit: Credit information index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 7.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.0 35.0 19.0

Enforcing contracts: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,011.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 11.0 13.2 4.9

Registering a property: Time (days) ....................................... 335.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 884.6 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 64.4 254.1 44.1

Starting a business: Time (days).......................................... 146.0 63.0 25.0

Employment: Difficulty of firing index ....................................... 100.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.0 53.2 26.2

Employment: Firing costs (weeks)......................................... 116.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

Country data not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness/, retrieved Jan. 25, 2005; and

WTO, “Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile/, retrieved Apr. 5, 2005.

Table AN-6

Angola: Economic freedom

Angola

Regional

average1

OECD

 average

–––––– Heritage Foundation indicators ––––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 3.7 2.2

2005 Overall score ................................................... (2

) 3.4 2.2

Trade policy score ............................................... (2

) 3.9 2.2

Fiscal burden of government score .................................. (2

) 3.9 3.6

Government intervention in the economy score ......................... (2

) 2.6 2.5

Monetary policy score ............................................ (2

) 2.4 1.5

Capital flows and foreign investment score ............................ (2

) 3.2 2.0

Banking and finance score ......................................... (2

) 3.2 1.9

Wages and prices score ........................................... (2

) 2.8 2.1

Property rights score ............................................. (2

) 3.7 1.6

Regulation score ................................................ (2

) 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2

) 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 35 U.S. Department of State telegram, “Angola Export Opportunities and Barriers for USITC

Study.”

 36 U.S. Department of State telegram, “Angolan Economic Roundup – Dec. 04,” message

reference No. 001474, prepared by U.S. Embassy, Luanda, Dec. 23, 2004.

 37 U.S. Department of State telegram, “Angola Export Opportunities and Barriers for USITC

Study.”

 38 Republic of Angola, Monograph of the Republic of Angola, p. 15.

 39 U.S. Department of State telegram, “Angola Export Opportunities and Barriers for USITC

Study.”

 40 AfDB Group, Country Strategy Papers 2002-2004 – Angola, p. 8.

 41 Ibid. 

 42 Republic of Angola, Monograph of the Republic of Angola, p. 15.

2-11

Table AN-7

Angola: Infrastructure-related indicators

MRY1

Roads, total network (km, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,429.0

Roads, paved (percent of total roads, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4

Transport services (percent of service exports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6

Transport services (percent of service imports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.4

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6

Energy imports, net (percent of commercial energy use, 2001)........................................... -415.2

 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

of Lobito and Benguela to the foothills of Planalto.35 The government plans to spend $4

billion over the next 11 years to build and reconstruct major railways in the country, and

plans to have rail lines operational for travel between Lobito and Cuito, a distance of

approximately 300 miles, by the end of 2006.36

Imported food products are often cheaper than domestic products from the interior because

of high land transport costs.37 However, Angola’s main ports suffer from a lack of

maintenance and investment.38 Poor market information and weak commercial networks

also reduce potential market opportunities.39

The agricultural and fisheries sectors face a number of additional constraints caused by the

destruction of rural infrastructure, including wells, other sources of water, and roads during

the civil war.40 Other constraints include difficulties of commercialization, the lack of seeds

and other agricultural inputs, and insufficient credit.41 Although the government has made

efforts to rebuild the fishing fleet and rehabilitate existing fish-processing factory units, these

efforts have failed to attract investment and have had a negligible effect on the sector.42

The main international impediment to potential export growth has been regional instability.

Although domestic civil unrest in Angola has subsided, regional instability continues to

hamper export growth potential. In particular, the regional instability negatively affects

nonpetroleum sector investment.
2-12
 43 Prepared by George S. Serletis, Office of Industries.

 44 Earthtrends Country Profiles, “Cameroon, Ecosystems by areas by type,” found at

http://earthtrends.wri.org/pdf_library/country_profiles/For_cou_120.pdf, retrieved Mar. 31, 2005,

p. 1.

2-13

Cameroon43

Economic Overview

Cameroon, located on the west-central coast of Africa just north of the equator, possesses

abundant natural resources and a diverse ecosystem, including dense tropical rainforests,

mountains, grassland savannah, and semidesert.44 Cameroon has highly fertile agricultural

areas, extensive forestry resources, natural parks, regional port facilities, minerals, and

petroleum reserves. The economy is heavily dependent on the country’s resource

endowments, such that petroleum, forestry, and agricultural commodity exports account for

a significant portion of the nation’s output. Cameroon’s GDP totaled $12.4 billion and

expanded by 4.2 percent in 2003 (table CM-1).

Table CM-1

Cameroon: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,448.7

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5

Inflation, consumer prices (annual percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8

External debt, total (current US$, millions, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,502.5

Total debt service (percent of exports of goods and services)............................................ (2

)

Exports of goods and services (percent of GDP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.6

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.0

Official exchange rate (local currency unit per US$, period average, 2003) ................................. 581.2

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.4

Literacy rate, adult total (percent of people ages 15 and above, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67.9

Primary school enrollment ratio, total (percent, 2000)

3 .................................................. 108.0

Secondary school enrollment ratio, total (percent, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

3

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school

age.

Note.— Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.
 Economist Intelligence Unit (EIU), “Cameroon: Economy: Background,” Oct. 28, 2004, 45

found at www.viewswire.com, retrieved Apr. 5, 2005.

 EIU, “Cameroon: Historical Data - Production of cash crops,” Aug. 1, 2004, found at 46

www.viewswire.com, retrieved Apr. 5, 2005.

 Ibid. 47

 For additional information on regional organizations, see app. C. 48

 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 22, 2005. 

49

2-14

Agriculture, including forestry, livestock, and fishing, is the economy’s most important

sector, supporting an estimated 70 percent of the population and employing about one-half

of the nation’s workers. The sector accounts for 27.9 percent of GDP (figure CM-1). About

90 percent of nonforestry agricultural output is produced on small-scale farms; the balance

is accounted for primarily by large-scale commercial banana, palm oil, and rubber

plantations. Other important cash crops include cocoa, cotton, coffee, and pineapple.

45 46

Leading food crops include cassava, plantains, corn, sorghum, and peanuts.47

Cameroon’s industrial sector employs 15 percent of the labor force and accounts for just

under one-third of the country’s GDP. Its main components are the manufacturing and

petroleum sectors. The manufacturing sector is diversified and includes agroprocessing and

light industrial production. Cameroon imports and assembles various manufactured

components principally for domestic consumption, but some of these goods are exported to

regional members of the Economic Community of Central African States. Principal 48

manufactured products include food and beverages, aluminum, iron, steel, wood products,

paint, alcohol, and cement. Although domestic ownership in the manufacturing sector is 49

Figure CM-1

Cameroon: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 50 EIU, Cameroon Country Profile, 2004, p. 31.

 51 “Cameroon,” African Energy, found at www.africa-energy.com/html/public/data/

cameroon.htm, retrieved Apr. 10, 2005.

 52 EIU, “Cameroon: Economy: Background.” 

 53 The pipeline is jointly owned and managed by Texaco/Chevron, Exxon/Mobil, and Petronas.

EIU, Cameroon Country Profile, p. 32.

 54 Export official, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 55 While hardwood lumber is technically a renewable resource, there is little coordinated effort

to replant forests that have been logged. Industry officials, interviews by USITC staff, Douala,

Cameroon, Mar. 22-23, 2005. Officially, exports of unprocessed logs are prohibited; however,

there are exceptions to the ban. “Cameroon Ban on Endangered Hardwoods, But with a

Loophole,” found at http://forests.org/archive/africa/cambanse.htm, retrieved Apr. 25, 2005.

2-15

reportedly expanding, the sector is dominated by 30 large foreign-owned companies and

several small and medium enterprises (SMEs).50

The petroleum sector accounts for 6.3 percent of GDP and has been Cameroon’s leading

export commodity and the dominant foreign exchange earner since it was first commercially

exploited in 1978. However, production of petroleum is declining as Cameroon’s existing

fields are depleted.51 In addition to crude petroleum, Cameroon produces downstream

products including gasoline, lubricants, and other petroleum-based products.

The services sector accounts for the largest share of GDP and employs one-third of the

population. The sector is composed of government activities, construction, financial and

banking services, transportation, communications, hotel and restaurant services, and other

private-sector activities. Although not officially calculated into Cameroon’s GDP figures,

the informal sector is estimated to account for as much as 35 percent of the country’s

economic activity, reportedly employing three-quarters of the population in urban areas.52

Despite Cameroon’s ample resources, foreign direct investment (FDI) is low. Cameroon is

classified as an “underperformer” in attracting FDI by the UN Conference on Trade and

Development. Recent FDI increases were primarily directed to the petroleum sector,

targeting the Chad-Cameroon petroleum pipeline.53 Cameroon also has attractive export

processing zone (EPZ) laws, and currently, 12 companies operate under the EPZ designation,

with 2 more scheduled to begin operations soon. However, investment in the program has

been limited since its implementation in 1992.54

Export Profile

Cameroon’s exports, valued at $2.5 billion in 2003, were concentrated among a small

number of primary commodity goods (tables CM-2 and CM-3). Nearly two-thirds of exports

($1.5 billion) consisted of nonrenewable resources including petroleum (42.8 percent) and

hardwood lumber and logs55 (21.2 percent). Nonforestry agricultural commodity exports,

principally tropical agricultural products, accounted for another 30 percent of merchandise

exports and included bananas (9.8 percent), unprocessed cocoa beans (8.5 percent), cotton

(4.1 percent), and rubber (2.6 percent) in 2003. Aluminum (3.1 percent) was the only

significant industrial export.
2-16

Table CM-2

Cameroon: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

–––––––––– 1,000 dollars –––––––––– –––– Percent ––––––

27 Mineral fuels, mineral oils and products of their 

distillation; bituminous substances; mineral waxes .... 618,545.8 724,145.1 1,069,317.9 42.8 6.3

44 Wood and articles of wood; wood charcoal ............ 504,183.4 560,445.1 530,195.9 21.2 0.6

18 Cocoa and cocoa preparations. ..................... 114,023.3 161,927.1 269,795.8 10.8 10.0

08 Edible fruit and nuts; peel of citrus fruit or melons ....... 133,109.9 177,618.2 248,471.9 10.0 7.2

52 Cotton, including yarns and woven fabrics thereof . . . . . . 58,990.6 95,769.9 104,215.4 4.2 6.5

76 Aluminum and articles thereof ..................... 102,998.4 109,568.0 81,369.7 3.3 -2.6

40 Rubber and articles thereof . . . . . . . . . . . . . . . . . . . . . . . 56,433.8 36,511.1 66,988.8 2.7 1.9

09 Coffee, tea, mate and spices ...................... 144,755.7 99,376.0 42,569.4 1.7 -12.7

84 Nuclear reactors, boilers, machinery . . . . . . . . . . . . . . . . . 889.7 2,827.4 9,360.0 0.4 29.9

71 Natural or cultured pearls, precious or semiprecious

stones, precious metals; precious metal clad 

metals, articles thereof; imitation jewelry; coin . . . . . . . . 785.1 6,843.6 4,842.6 0.2 22.4

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,666.3 67,742.6 68,476.3 2.7 0.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,799,382.0 2,042,774.0 2,495,603.7 100.0 3.7

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table CM-3

Cameroon: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––– 1,000 dollars ––––––––– –––– Percent –––––

2709 Petroleum oils and oils from bituminous minerals, crude 590,387.1 669,518.6 1,066,753.8 42.7 6.8

4407 Wood sawn or chipped lengthwise, sliced or peeled, 

more than 6 mm (.236 in.) thick ................... 110,924.1 211,108.6 346,420.4 13.9 13.5

0803 Bananas and plantains, fresh or dried ................ 131,926.3 173,065.0 244,207.0 9.8 7.1

1801 Cocoa beans, whole or broken, raw or roasted ......... 100,614.8 122,444.8 212,313.9 8.5 8.7

4403 Wood in the rough, whether or not stripped of bark or 

sapwood, or roughly squared ..................... 363,161.5 305,050.5 124,619.7 5.0 -11.2

5201 Cotton, not carded or combed . . . . . . . . . . . . . . . . . . . . . . 50,433.2 88,998.2 102,198.3 4.1 8.2

7601 Aluminum, unwrought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,231.9 99,467.6 77,528.4 3.1 -2.0

4001 Natural rubber, balata, gutta-percha, guayule, chicle

and similar natural gums, in primary forms or in

plates, sheets or strip . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,048.8 36,295.7 64,746.5 2.6 1.8

1803 Cocoa paste, whether or not defatted . . . . . . . . . . . . . . . . 7,664.7 32,108.8 46,460.4 1.9 22.2

0901 Coffee, whether or not roasted or decaffeinated; 

coffee husks and skins; coffee substitutes 

containing coffee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,289.3 99,259.1 42,507.7 1.7 -12.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,700.4 205,457.0 167,847.7 6.7 1.1

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,799,382.0 2,042,774.0 2,495,603.7 100.0 3.7

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 56 EIU, Cameroon Country Profile, p. 48.

 57 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 22, 2005.

2-17

Cameroon’s leading export, crude petroleum, increased in value by a compound annual

growth rate (CAGR) of 6.8 percent during 1994-2003, primarily due to steep increases in the

price of crude petroleum during the period. However, during 2000-03, exports of petroleum

declined by 20 percent and are expected to continue to fall as Cameroon’s petroleum

reserves are exhausted.56 Exports of forestry products displayed two contrasting trends.

Shipments of logs fell by 66 percent during the decade, the result of government policy

limiting the export of unprocessed logs. In contrast, exports of lumber (sawn wood)

increased by more than 200 percent as the forestry sector shifted to more value-added trade

during the period. 

Exports of bananas and cocoa, the third- and fourth-most valuable exports, both posted

strong growth, which nearly doubled during 1994-2003. Exports of cotton, an important and

growing export commodity, also trended upward, registering a CAGR of 8.2 percent during

the period. Exports of Cameroon’s leading agricultural downstream product, cocoa paste,

also increased during the period, reaching over $46 million in 2003. Exports of aluminum

declined slightly as a result of shortages in electricity. Shipments of coffee fell steeply as

declining world coffee prices caused Cameroon’s production to contract during the period.

EU countries, representing 7 of Cameroon’s top 10 export markets, were by far the leading

destinations accounting for $1.8 million, or nearly three-quarters of the nation’s merchandise

exports (table CM-4). Europe is an appealing destination for Cameroon’s exports because

of close historical, cultural, and commercial ties, and an established shipping network. EU

markets are also major consumers and downstream processors of Cameroon’s commoditybased products. Regionally, Cameroon’s exports to other sub-Saharan African (SSA)

countries, totaled $293 million in 2003, more than doubling during 1994-2003. Although the

main exports were petroleum products (44 percent), other product exports were diversified

and relatively balanced among a variety of goods including food products and light industrial

products. There is also a significant amount of unofficial trade along Cameroon’s borders

with its neighbors, particularly on the northwest frontier with Nigeria where trade in

contraband goods is thriving.57 Cameroon’s exports to China increased significantly, by a

CAGR of 32.5 percent during the last decade, and represented its fastest-growing export

destination among leading markets. Principal exports to China were petroleum, lumber, and

cotton.
 58 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 59 African Development Bank (AfDB)/Organization for Economic Cooperation and

Development (OECD), “Cameroon,” African Economic Outlook, 2004, p. 96.

 60 EIU, “Cameroon Economy, The Government moves to revive the cocoa export.”

Jan. 11, 2005, found at www.viewswire.com, retrieved Apr. 4, 2005.

 61 Export official, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

2-18

Table CM-4

Cameroon: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

 of total

9-year

CAGR

–––––––––––––– 1,000 dollars –––––––––––– ––––––– Percent –––––––––

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314,399.5 238,675.1 541,962.9 21.7 6.2

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314,387.2 419,739.2 404,449.9 16.2 2.8

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429,272.9 367,892.8 302,318.2 12.0 -3.8

Netherlands ......................... 134,168.2 146,811.0 280,647.8 11.2 8.5

United States . . . . . . . . . . . . . . . . . . . . . . . . 60,966.0 83,795.7 225,910.6 9.1 15.7

United Kingdom . . . . . . . . . . . . . . . . . . . . . . 53,474.4 69,342.9 159,625.7 6.4 12.9

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,138.6 76,313.8 115,222.5 4.6 32.5

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 69,408.2 89,107.7 3.6 (2)

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,142.0 67,936.0 64,826.0 2.6 -6.4

Korea, Rep. . . . . . . . . . . . . . . . . . . . . . . . . . 65,117.0 66,397.1 55,570.0 2.2 -1.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301,316.4 436,462.2 255,962.4 10.3 -1.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . 1,799,382.0 2,042,774.0 2,495,603.7 100.0 3.7

1

 Not available.

2

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

Cameroon’s export profile is highly correlated with its leading revealed comparative

advantage58 (RCA) indices. Seven of the top 10 products, as ranked by the RCA index, are

leading export commodities, including mainly tropical agricultural and forestry products:

bananas, cocoa, coffee, cotton, rubber, lumber, and other articles of wood (appendix E, table

E-5). Most of these sectors are operating well below capacity,59 and have potential for

expansion. A major initiative of the government is to diversify the country’s economic base

away from its reliance on the petroleum sector; both the government and the Cameroon

business community believe that Cameroon has promising potential for export growth in

downstream products. The potential exports indicated by the RCA analysis also corresponds

with the sectors identified by Cameroonian business participants. In addition to agricultural

products, Cameroon has potential exports in the manufacturing, mining, and services sectors.

Cameroon’s diverse agricultural sector is fundamental to the country’s export growth

potential. Although agricultural commodity products represent the majority of nonpetroleum

exports, the sector has been operating well below capacity, resulting from a lack of

investment and years of public-sector mismanagement.60

Cameroon’s leading agricultural commodity export, cocoa, represents good potential for

further export development. Because of its climate and low-acid volcanic soil, Cameroon

produces high-quality cocoa beans, that are highly valued in the international market.61
 62 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 24, 2004.

 63 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 24, 2004.

 64 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 24, 2004. 

 65 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 24, 2004. 

 66 “International success in cotton through local partnerships,” found at

www.worldreport-ind.com/cameroon/cotton.htm, retrieved, Apr. 15, 2005.

 67 Business executive panel, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005; trade

panel, interview by USITC staff, Douala, Cameroon, Mar. 24, 2005; United Nations Development

Programme, “Rattan To Grow - Cameroon,” July 2004, found at

www.tve.org/ho/doc.cfm?aid=1526&lang=English, retrieved Apr. 23, 2005.

 68 Business executive panel, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 69 Business executive panel, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 70 Business executive panel, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

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Output has stagnated for several decades because of lack of investment. The government

recently invested $73 million to provide technological and extension support to farmers,

improve infrastructure, renew the aging plant-stock, improve pest control, and diversify plant

varieties. Additional funding will support increased domestic processing of cocoa beans for

export.

Cameroon produces and exports both robusta (85 percent) and arabica (15 percent) coffee

beans. Cameroon’s potential for increasing both the volume and value of exports depends

on improving the quality of robusta production and increasing the cultivation of high-quality

arabica coffee beans. There is also potential to produce and export certified organic and

“rainforest-friendly products” that could command higher market prices.62 The key to

increased coffee exports is farmers receiving prices that will provide incentives to continue

to produce quality beans.63 The goal of Cameroon’s coffee producing sector is to increase

exports of processed coffee products, including roasted and packaged coffee.64 The industry

already roasts, grinds, and packages coffee, primarily for the domestic and regional markets.

A Cameroonian coffee sector representative commented that the sector could significantly

increase exports of both beans and downstream coffee products, provided it can access

marketing and technical assistance.65

Given the recent privatization of the banana company and new investment to increase

mechanization and to upgrade plantations, Cameroon’s leading agricultural export by

volume, bananas, also represents potential for increased exports. Cotton exports have trended

upwards over the last decade. Given government plans to privatize the state-owned cotton

company and increasing competitiveness in the sector, there is substantial potential for

increased exports in the short to medium term.66 Other potential agricultural exports

identified by domestic industry representatives include soybeans, which reportedly grow

well in coffee growing regions; natural rubber, which is increasingly being demanded for use

in sporting goods products; and mangoes, papaya, beef, lamb, pork, fresh and salt water fish,

and rattan.67

Cameroon’s current production of fruits and vegetables could potentially be further

processed. The government and private sector reported that processed products are

particularly promising because they are less perishable and are generally subject to less

restrictive sanitary and phytosanitary (SPS) requirements than fresh products.68 The greatest

potential for these products exists in developing niche markets.69 For example, fruit juices,

including pineapple and mango juices, were identified as prospective specialty and organic

exports.70 Other agricultural commodities with potential for increased processed exports

include green beans and processed tropical fruit. Cameroon currently processes green beans,
 71 Export official, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 72 Export official, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 73 Business executive panel, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 74 Trade panel, interview by USITC staff, Douala, Cameroon, Mar. 24, 2005.

 75 Cameroon Chamber of Commerce, Industry, Mines and Crafts, “The Forestry Field,”

brochure provided to USITC staff, Douala, Cameroon, Mar. 23, 2005.

 76 Export official, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 77 Export official, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 78 EIU, Cameroon Country Profile, p. 31.

 79 AfDB/OECD, “Cameroon,” p. 95.

 80 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 22, 2005; and trade

panel, interview by USITC staff, Douala, Cameroon, Mar. 24, 2005.

 81 Industry officials, interview by USITC staff, Douala, Cameroon, Mar. 22, 2005.

 82 West African Trade Hub, “WATH Focuses on Selected Sectors,” found at

http://www.watradehub.com/program/agoa_export.htm, retrieved, Apr. 22, 2005.

 83 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 22, 2005

 84 For additional information on the Multifiber Arrangement and the end of textile and apparel

quotas in 2005, see app. C.

2-20

and it was reported that there is enough demand for processed green beans to warrant a

second factory.71 Cameroon also has potential for producing tropical fruit pulp products that

can be used in processed food applications.72 In addition, Cameroon’s leading processed

agricultural export, cocoa butter, is expected to continue its export growth.73 Other identified

potential processed agricultural exports include shea butter, cigar wrapper tobacco, and

processed meat.74

Cameroon’s forested area, covering 40 percent of the country’s land area, is the third largest

in Africa and offers enormous potential for development of exports. Consisting of tropical

and deciduous forest, Cameroon has 17 million hectares of potentially exploitable

woodlands,75 and potential exports include lumber and processed wood products such as

furniture, wood veneers, wood flooring, and high-quality plywood.76 In addition to

traditional forest product exports, other forest resources with potential export applications

include barks, medicinal plants, and essential oils.77

Although potential exports in Cameroon’s manufacturing sector are limited because of

increasing competition from imports and capacity constraints,78 the leading manufactured

export, aluminum, has potential for expanded exports if electricity shortages can be

addressed. A new diesel electricity plant in Limbe is expected to supply the industry with

adequate electricity to increase production.79 There is also potential for Cameroon to increase

exports of certain light industrial products to regional markets.80 These light-manufactured

goods representing potential for export growth include handicrafts such as wood carvings,

articles of bronze, embroidered fabrics, jewelry, and straw bags.81

Textiles and apparel products (particularly small niche-market products and hand-woven

textiles)82 were also identified as potential manufacturing sector exports. Although the

country currently does not export significant quantities of textiles or apparel, industry

officials identified hospital scrubs, underwear, bed sheets, upholstery, and T-shirts as

potential exports, if producers can make use of existing preferential trade agreements, such

as AGOA.83 The potential for such exports is dampened, however, by the increased global

competition presented by removal of textile and apparel quotas in 2005.84
 85 Cameroon Chamber of Commerce, “The Mining Field,” brochure provided to USITC staff,

Douala, Cameroon, Mar. 23, 2005.

 86 Export official, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 87 Cameroon Chamber of Commerce, “The Mining Field;” and EIU, Cameroon Country

Profile, p. 31.

 88 Ibid.

 89 Trade panel, interview by USITC staff, Douala, Cameroon, Mar. 24, 2005.

 90 Cameroon Chamber of Commerce, “The Mining Field.” 

 91 Cameroon Chamber of Commerce, “The Tourism Field,” brochure provided to USITC staff,

Douala, Cameroon, Mar. 23, 2005. 

 92 Ibid.

2-21

Cameroon’s numerous underexploited mineral resources present potential for expanded

exports. Such minerals include rutile (titanium oxide); Cameroon reportedly has the world’s

second-largest deposits after Australia.85 Cameroon’s extensive bauxite reserves have

potential for export growth.86 Cameroon also has confirmed exploitable deposits of iron,

cobalt, and nickel ores. The government is exploring the possibility of extracting other

minerals such as cassiterite (used to produce tin), gold (with potential production of 1 metric

ton per year), diamonds (with a potential of 7,000 carats per year),87 marble, and limestone.88

It was also reported that Cameroon’s littoral sand could be of an ideal quality for glass

production.89

Although Cameroon’s petroleum reserves are declining, the country has the refining capacity

to process petroleum coming from Chad through the Chad-Cameroon pipeline. Refined

petroleum products have been an important segment of Cameroon’s exports to the region,

and the increased supply of crude petroleum provides an opportunity to expand those

exports. Cameroon also has underexploited reserves of natural gas that could be exported.90

Within the services sector, tourism offers an opportunity for increased exports. Although the

current level of tourism is small–only about 250,000 tourists visited Cameroon in

200291–Cameroon’s diverse ecosystems represent a potential for increasing the number of

tourists. Cameroon possesses five diverse natural parks that have an abundance of wildlife

and extensive tropical rainforests, which hold great potential for ecotourism. Cameroon also

offers tropical beach areas on the Atlantic Ocean and cultural tourism opportunities in

traditional tribal areas.92

Domestic and International Barriers

Cameroon lags behind SSA averages in business environment indices in a number of areas

such as attaining credit, enforcing contracts, and employment rigidity (table CM-5).

Cameroon ranks below SSA economic freedom averages for most categories, including

trade policy, government intervention, and banking and finance (table CM-6). Since the

recession in the mid-1980s and continuing through the present, Cameroon’s systems of

transportation, telecommunications, and electricity generation (table CM-7) have been in

need of investment. These impediments substantially lower the export sector’s productivity

and international competitiveness. The lack of an environment conducive to business has

prompted some potential entrepreneurs to operate in the informal sector. Cameroon’s

informal market activity score is higher than the average for SSA.
2-22

Table CM-5

Cameroon: Business environment

Cameroon

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 21.4 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 87.6 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 1.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.4 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 585.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 18.8 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 182.5 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) .............. 232.0 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Cameroon, applied rate, 2001)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.0

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table CM-6

Cameroon: Economic freedom

Cameroon

Regional

average1

OECD

 average

––––– Heritage Foundation indicators –––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 93 Industry official, interview with USITC staff, Douala, Cameroon, Mar. 24, 2005; and EIU,

Cameroon Country Profile, p. 33.

 94 EIU, Cameroon Country Profile, p. 17.

 95 Ibid., p. 18.

 96 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 22, 2005. 

 97 Infrastructure management official, interview by USITC staff, Douala, Cameroon,

Mar. 24, 2004.

 98 Infrastructure management official, interview by USITC staff, Douala, Cameroon,

Mar. 24, 2004.

2-23

Table CM-7

Cameroon: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,300.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5

Transport services (percent of service exports, BoP) ................................................... (2

)

Transport services (percent of service imports, BoP) ................................................... (2

)

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.7

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.7

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.7

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -93.7 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Cameroon’s transportation system is a significant impediment to developing the country’s

economic resources.93 A lack of road networks connecting it with its neighbors also limits

Cameroon’s ability to trade with the region. Bridge infrastructure is in need of repair and

replacement. For example, on the highway that connects Cameroon’s rich agricultural

province of Limbe with the port at Douala, a colonial-era bridge collapsed in early 2004 and

has yet to be replaced. The Bonaberi bridge over the Wouri river, which connects the two

halves of Cameroon commercial center in Douala, also is dilapidated, causing major traffic

jams in the country’s most important commercial center. Other transportation systems are

also deficient. Cameroon’s rail system, though privatized and reportedly receiving FDI, has

only 1,000 kilometers of track and is hampered by inefficiency, old rolling stock, and poor

safety systems. Cameroon’s national airline suffers from a lack of capital and does not have

regular flights.94 Moreover, Cameroon’s access by air to its major trading partners in the

European Union and within the region is relatively limited. 

Cameroon’s main outlet for exports is the port of Douala, which handles 95 percent of the

country’s external trade.95 Although the port promotes itself as a transportation hub for entral

Africa, a number of factors limit its role as a regional hub.96 The port is located 25 miles

from the Atlantic Ocean on the Wouri estuary, which is prone to silt buildup. Therefore, the

port requires expensive dredging, making it unsuitable for the largest sea-going ships.97

Although the port has some new facilities, it has a number of old storage depots, outdated

infrastructure,98 and needs additional cold storage facilities for perishable agricultural

commodities. Until recently, the container facility was slow to process cargo containers.

However, privatization has reportedly increased efficiency and improved turn-around times
 99 Infrastructure management official, interview by USITC staff, Douala, Cameroon,

Mar. 24, 2004.

 100 Infrastructure management official, interview by USITC staff, Douala, Cameroon,

Mar. 24, 2004.

 101 AfDB/OECD, “Cameroon,” p. 95.

 102 EIU, Cameroon Country Profile, p. 20.

 103 Ibid., p. 18.

 104 Ibid., p. 19.

 105 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 21, 2005. 

 106 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 21, 2005. 

 107 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 21, 2005. 

 108 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 24, 2005.

 109 Trade official, interview by USITC staff, Douala, Cameroon, Mar. 24, 2005.

2-24

for container processing.99 Cameroonian port authority officials stated that a new deep-sea

port will be constructed on the coast at Limbe, which should alleviate current capacity

problems. However, the facility will not be operational until 2008.100

Cameroon is using only an estimated 2 percent of its hydroelectric potential and lacks

sufficient electric power generating capacity.101 Over 90 percent of the country’s electricity

is generated from hydroelectric stations. During the last 4 years, electric generating capacity

fell by 35 percent because of low rainfall,102 resulting in frequent cuts in power and high

electricity rates. A new thermal power station in Limbe is expected to increase the

availability of electricity to agricultural and manufacturing businesses in the region.

Cameroon’s fixed-line telecommunications system reportedly has outdated equipment that

causes irregular service in many parts of the country.103 Although mobile phones have better

service and 10 times the subscriber base, the cost of service is high.104

Quality control, inadequate technical capacity, and lack of government and institutional

support were also cited as impediments to export development. There is reportedly a limited

understanding of global market quality requirements, particularly for large developed

markets such as the United States.105 In addition, domestic firms are unable to fulfill the

volume requirements of importers in developed-country markets. With the exception of

Cameroon’s EPZ program, the institutional framework for developing export businesses is

lacking.106 The country’s EPZ policies are reportedly very favorable.107 

It has been suggested that the government should provide additional regulatory and tax

policy incentives to improve the business environment, so that businesses that serve the

domestic market can expand into exports.108 There are also significant bureaucratic

requirements such as complicated paperwork and time-consuming approval procedures that

must be followed when establishing a business. Cameroon requires twice the number of

procedures must be undertaken to start a business as compared with OECD countries. SMEs

in particular face a number of challenges in Cameroon that make it difficult to establish a

new business. There is no investment promotion agency and no framework to facilitate or

promote exports by SMEs. For example, the government has yet to establish certain

procedures for businesses wanting to take advantage of opportunities in the AGOA

program.109

The lack of available capital was cited by Cameroon business participants as a leading

obstacle to the development of export industries. In terms of indices for getting credit,

Cameroon ranks below SSA averages in most categories, and well below OECD averages
 110 Export official, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 111 EIU, Cameroon Country Profile, p. 32.

 112 U.S. Department of State telegram, “Cameroon Investment Climate Statement 2005,”

message reference No. 250356, prepared by U.S. Embassy, Yaoundé, Jan. 5, 2005.

 113 Industry officials, interview by USITC staff, Douala, Cameroon, Mar. 22, 2005.

 114 “Corruption at the Douala Port, A Special Report,” posted Jan. 6, 2005, found at

www.postnewsline.com/special_report_corruption_at_douala_port, retrieved Apr. 25, 2005.

 115 U.S. Department of State telegram, “Cameroon Investment Climate Statement 2005.” 

 116 Ibid.

 117 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 24, 2005; and U.S.

Department of State telegram, “Cameroon Investment Climate Statement 2005.” 

 118 U.S. Embassy official, interview by USITC staff, Douala, Cameroon, Mar. 21, 2005; and

“Africa’s rainforest depend on cutting out corruption,” Environmental Media Resources, found at

www.ems.org/nws/2005/02/05/africas_rainfore, retrieved May 1, 2005.

 119 For example, for the Chad-Cameroon petroleum pipeline, a large number of welders from

India came to Cameroon because there were not sufficient numbers of domestic welders to work

on the project. Export official, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

2-25

(table CM-5). A contributing factor is that the country has no investment banks that provide

long-term, low-interest loans. Commercial banks operating in Cameroon provide short-term,

high-interest loans primarily to large companies that can make substantial collateral

commitments.110 Because interest rates are high, reportedly averaging 20 percent, most

commercial loans are used to finance short-term capital projects, or to finance trade

transactions, instead of long-term business development. Consequently, large sectors of

Cameroon’s economy do not have access to capital. The scarcity of credit is particularly

acute for SMEs.111

According to the U.S. Department of State, corruption is endemic in Cameroon.112 Despite

various anticorruption campaigns by the government, lack of transparency is prevalent at

many levels. Lack of transparency in judicial and customs regulations were regularly cited

as factors constraining export growth. Timely movement of goods through customs,

particularly through the port of Douala, requires unofficial payments in the form of

additional “taxes” and “fees.” For example, exporters of traditional crafts are required to pay

a customs fee of 5 percent, but to “expedite” the shipment, additional taxes must be paid to

customs agents.113 Generally, fees must be paid to meet with customs personnel, to check on

shipments, and to inspect cargo containers.114

The U.S. Department of State also notes that the “dysfunctional judiciary severely disrupts

the development of Cameroon’s economy and society.”115 Local businesses reportedly exert

financial and political pressure to influence judges.116 Accordingly, enforcing contracts in

Cameroon takes more time and requires more procedures than the regional SSA average.

Reportedly, widespread fraud within the judiciary is a critical factor limiting FDI.117 The lack

of transparency reportedly extends beyond the judicial system to criminal and transportation

enforcement by the police, and to regulations governing the exploitation of natural

resources.118

Another often-identified impediment is the lack of skilled technical labor necessary for

diversification into more skill-intensive industries. In some cases, skilled technical workers

have to be imported to work on large or sophisticated projects,119 as there are not enough

technical and vocational schools to train the personnel necessary to meet the country’s needs.

Other less-frequently identified impediments include a lack of global business management
 120 Industry executive, interview by USITC staff, Douala, Cameroon, Mar. 24, 2004; business

executive panel, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005; industry official,

interview by USITC staff, Douala, Cameroon, Mar. 22, 2005; and trade panel, interview by

USITC staff, Douala, Cameroon, Mar. 24 2005.

 121 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 21, 2005.

 122 Industry official, interview by USITC staff, Douala, Cameroon, Mar. 21, 2005.

 123 Cameroon Chamber of Commerce, “The Forestry Field.” 

 124 Export official, interview by USITC staff, Douala, Cameroon, Mar. 23, 2005.

 125 U.S. Department of Agriculture, Economic Research Service, “Market Access for HighValue Foods,” found at www.ers.usda.gov/publications/aer840/aer840.pdf, retrieved

Apr. 12, 2005.

 126 U.S. Ambassador to Cameroon,“Ambassador Marquardt: ‘Trade is Africa's Greatest Hope

for Prosperity’,” Op-Ed article, Apr. 16, 2005, found at http://usembassy.state.gov/Yaounde/

wwwhamb_oped.html, retrieved Apr. 25, 2005.

2-26

knowledge, over-reliance on the French language, lack of coordination by companies within

industries, and a lack of security.120

Although textiles and apparel were cited as potential exports, there is reportedly a lack of

quality inputs, including yarn, fabric, and apparel-making equipment.121 Moreover, no

domestic manufacturers supply shipping and packaging material appropriate for the

international apparel business.122 In the forestry sector, there is a lack of processing capacity,

as a result of too few large-scale sawmills, plywood manufacturing plants, and factories to

construct other downstream wood products including flooring, wood veneer products, and

furniture.123 There is also a shortage of skilled furniture designers and craftsmen that can

manufacture furniture demanded by the world market.124

Finally, the lack of tourist-quality hotels, resorts, and other associated infrastructure, the poor

state of Cameroon’s road networks, and a lack of personal security, particularly in major

urban areas, may dissuade tourists from visiting the country. The lack of regularly-scheduled

domestic air service is also a major hindrance to increased tourism.

Cameroon’s agricultural commodity-based exports face international barriers, including SPS

requirements and certification standards in important export markets such as the European

Union, the United States, and Japan. These technical market requirements increase the cost

of business and limit export growth. Although many tariffs for primary commodities are

generally low, tariffs on processed agricultural products can be high. In some of Cameroon’s

potential markets, two of Cameroon’s leading exports, coffee and cocoa, face tariff

escalation, whereby higher tariffs are placed on processed products as compared with their

corresponding commodity inputs. This tariff structure limits trade to low-value commodities

and discourages exports of downstream products. Certain processed fruits and vegetables

may also be affected by tariff escalation.125 In addition to nontariff measures and tariffs,

observers have cited agricultural support programs in developed countries as barriers to

increased exports of products such as cotton.126
 127 Prepared by Karen Taylor, Office of Industries.

 128 U.S. Department of State, “Background Note: Gabon,” Jan. 2005, found at www.state.gov,

retrieved Mar. 8, 2005.

 129 World Bank, What Happens When a Country Does Not Adjust to Terms of Trade Shocks? -

The Case of Oil-Rich Gabon, Sept. 2004, p. 9. 

 130 An estimated 80 percent of Gabon’s oilfields contain fewer than 5 metric tons of reserves.

Economist Intelligence Unit (EIU), Gabon Country Profile, 2004, p. 33.

 131 Ibid., p. 23.

 132 Ibid., p. 29.

2-27

Gabon127

Economic Overview

Gabon has a well-developed petroleum sector and is one of the richest countries in subSaharan Africa. In 2003, its GDP was $5.6 billion, and GDP growth was 3.4 percent (table

GN-1). However, Gabon’s dependence on petroleum revenues makes its economy vulnerable

to fluctuations in petroleum prices. Although Gabon’s per capita GDP of $4,312 is relatively

high, wealth distribution is highly uneven; about 5 percent of the population owns over

90 percent of the wealth.128

The petroleum industry accounts for 41.9 percent of GDP (figure GN-1). The main crude

petroleum field at Rabi is nearing the end of its productive life, with some sources estimating

a 50-percent drop within the next 10 years.129 Gabon has used several strategies to slow the

decline in petroleum production, including improvements in technology that have enabled

production from marginal fields. Gabon’s attempts during 1999-2001 to encourage foreign

investment in deep-water offshore exploration were mostly unsuccessful. Gabon now focuses

on attracting companies skilled in exploiting the more numerous, marginal petroleum

fields.130 Nevertheless, unless new fields are discovered, Gabon faces the inevitable depletion

of its petroleum reserves.

The services sector accounts for 37.4 percent of GDP, and is dominated by services

associated with the petroleum industry and the public sector (the largest employer in the

formal sector).131 The manufacturing sector accounts for 13.7 percent of GDP and includes

construction, electricity, water, and other utilities. Important manufacturing activities include

production of canned and bottled drinks, cement, soap, industrial gas, cigarettes, textile

printing, flour mills, and coffee hulling. 

The agriculture, fisheries, and mining sector accounts for 7.0 percent of GDP and are

dominated by manganese mining and the timber industry. Small-scale farms cultivate crops

such as cassava, yams, and plantains. The traditional cash crops are palm oil and peanuts,

which have experienced reduced activity since the petroleum boom of the 1980s.132 
2-28

Table GN-1

Gabon: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... 5,605.3

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 3.4

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ..... 1.2

Inflation, consumer prices (annual percent, 2000) ....... ....... ....... ....... ....... ....... . . 0.5

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ... 3,533.5

Total debt service (percent of exports of goods and services, 1999) ....... ....... ....... ....... . . 18.8

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ..... 67.4

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 111.8

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ... 581.2

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... . 1.3

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... . 2.2

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... . 0.6

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... . 44.7

Literacy rate, adult total (percent of people ages 15 and above) ....... ....... ....... ....... ..... ( )2

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ......

3

144.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... .... 60.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ..... 1.3

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ... 31.3

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ...... 31.3

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ...... 2.5

 Most recent year for which data are available between 1999 and 2003. 1

 Not available. 2

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary 3

school age.

Note.— Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved

Jan. 25, 2005; and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure GN-1

Gabon: Composition of GDP (2003)

Note.—Primary is defined as agriculture, fisheries, mining, and quarrying, secondary is defined as manufacturing, construction,

electricity, water, and other utilities; and tertiary is defined as primarily services activities such as retail, financial, real estate, and

government services.

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 133 Ibid., pp. 29-30.

 134 U.S. Department of State telegram, “Gabon: 2005 Investment Climate Statement,” message

reference No. 00010, prepared by U.S. Embassy, Libreville, Jan. 2005. 

 135 EIU, Gabon Country Profile, pp. 31 and 35.

 136 “China Customs Information Network,” found at http://english.china-customs.com/,

retrieved Apr. 5, 2005.

 137 The Institute for the Analysis of Global Security, Chinese Quest for Crude Increases Focus

on Africa, Nov. 15, 2004, found at www.iags.org/n1115044.htm, retrieved Mar. 30, 2005. 

 138 EIU, Gabon Country Profile, pp. 35 and 39.

2-29

Employment in the timber industry–Gabon’s second-largest employer–grew at a rate of

5.8 percent annually during 1996-2000. However, employment growth in this sector has

been unable to absorb the estimated 10,000-15,000 annual labor force entrants.133 The

employment rate is low, at 44.7 percent. Employment in the public sector, Gabon’s largest

employer, is decreasing. The petroleum boom increased wages in urban areas, causing a

migration from the countryside to urban areas that adversely affected agriculture by reducing

the rural labor supply. 

Net inflows of foreign direct investment (FDI) were 2.5 percent of GDP in 2003 and have

generally increased since 1998. France accounts for about 70 percent of FDI in Gabon.

Gabon is considered to have a good investment climate as compared with neighboring

countries. Foreign firms operate on an equal basis with Gabonese firms and there are no

known cases of discrimination against or expropriation of foreign firms.134

Export Profile

Over 90 percent of Gabon’s exports are generated from only two sectors: petroleum and

forestry (tables GN-2 and GN-3). Petroleum exports accounted for 77.5 percent of exports

in 2003 and consisted primarily of crude petroleum. The large proportion of GDP accounted

for by petroleum has lessened the government’s incentive to develop other export sectors,

despite the fact that production and revenues peaked in 1997. Forestry accounted for

16.5 percent of exports and consists almost entirely of logs and timber. Two tropical species,

okoume and ozigo (used for plywood), represent one-half of this sector’s exports. Gabon

engages in little downstream processing of petroleum and timber sector products. Manganese

production accounted for 3.7 percent of exports.135

Gabon’s has few major trading partners, with three countries accounting for 73.4 percent of

total exports (table GN-4). The United States is the main market for Gabon’s petroleum and

accounting for 59.1 percent of Gabon’s total exports. China, with a 8.6-percent share, is the

second-largest market and the main market for Gabon’s timber products. China is a major

consumer of commodities to fuel its industrialization. Gabon’s exports to China–entirely

petroleum and wood products–have more than tripled during 1994-2003.136 The state-run

Chinese company Sinopec, Total Gabon (France), and the Gabonese government signed

several agreements that guarantee China a steady flow of Gabonese petroleum.137

The third-largest market is France, accounting for 5.7 percent of Gabonese exports. The

strong French participation in the mining sector (primarily manganese ore) accounts for

France’s export market share.138 For example, the French company Eramet is a joint owner

of the parastatal company Comilog, which extracts and processes manganese. Trinidad and
 139 Ibid., p. 31.

2-30

Tobago is the fourth-largest export market. Exports to Trinidad and Tobago have grown

considerably in recent years and consist almost entirely of crude petroleum. 

Even with declining petroleum production, the value of exports increased by more than

$1 billion during 1994-2003 because of petroleum price increases. Given the predominance

of petroleum in Gabon’s exports, total export growth during 1994-2003 (4.1 percent

compound annual growth rate (CAGR)) has been driven by petroleum sector value growth

(4.7 percent CAGR) (table GN-2). Notably, although overall wood exports (HS 44) have

grown at a CAGR of 3.4 percent, downstream products such as plywood, sawn wood, and

veneered wood (HS 4407, 4408, and 4412) have increased at much faster rates, indicating

an expansion of downstream wood processing. Gabon has been attempting to increase

downstream processing of wood and approved a new forestry code in 2002 providing tax

incentives for capital investments in the forestry sector.139 This strategy appears to be

successful, because downstream wood products are the two fastest-growing exports. Finally,

two sectors that have experienced decreasing rates of growth are manganese and petroleum

oils (excluding crude). 

Table GN-2

Gabon: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars ––––––––– ––––– Percent –––––

27 Mineral fuels, mineral oils and products of their

distillation; bituminous substances; mineral waxes . . . . . . 1,807,052.5 1,870,901.9 2,721,759.2 77.5 4.7

44 Wood and articles of wood; wood charcoal .............. 425,911.7 511,814.9 577,840.8 16.5 3.4

26 Ores, slag and ash ................................. 163,618.2 152,982.0 128,766.6 3.7 -2.6

03 Fish and crustaceans, molluscs and other aquatic

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,315.0 14,550.4 19,141.6 0.5 8.3

88 Aircraft, spacecraft, and parts thereof . . . . . . . . . . . . . . . . . . 1,535.4 7,821.7 17,529.5 0.5 31.1

90 Optical, photographic, cinematographic, measuring,

checking, precision, medical or surgical instruments

and apparatus; parts and accessories thereof . . . . . . . . . . 1,563.0 1,673.5 5,302.0 0.2 14.5

84 Nuclear reactors, boilers, machinery and mechanical

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . 2,106.4 6,781.9 4,952.4 0.1 10.0

40 Rubber and articles thereof . . . . . . . . . . . . . . . . . . . . . . . . . . 2,184.4 4,937.6 2,601.6 0.1 2.0

97 Works of art, collectors' pieces and antiques ............. 441.7 2,207.6 2,371.9 0.1 20.5

85 Electrical machinery and equipment and parts thereof;

sound recorders and reproducers, television recorders 

and reproducers, parts and accessories . . . . . . . . . . . . . . 1,359.4 3,550.2 1,050.7 0.0 -2.8

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,273.1 99,816.8 29,496.3 0.8 -1.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,447,360.7 2,677,038.6 3,510,812.6 100.0 4.1

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
2-31

Table GN-3

Gabon: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––––– 1,000 dollars ––––––––––– –––– Percent –––––

2709 Petroleum oils and oils from bituminous minerals,

crude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,782,447.5 1,851,389.8 2,710,284.6 77.2 4.8

4403 Wood in the rough, whether or not stripped of 

bark or sapwood, or roughly squared .......... 412,312.6 463,444.0 425,624.7 12.1 0.4

2602 Manganese ores and concentrates, including

ferruginous manganese ores and concentrates

with a manganese content of 20% or more,

based on dry weight . . . . . . . . . . . . . . . . . . . . . . . 163,430.8 152,980.2 128,635.5 3.7 -2.6

4408 Veneer sheets and sheets for plywood and other

wood sawn lengthwise, sliced or peeled, not

more than 6 mm (.236 in.) thick .............. 228.6 16,943.2 79,747.1 2.3 91.6

4407 Wood sawn or chipped lengthwise, sliced or

peeled, more than 6 mm (.236 in.) thick . . . . . . . . 1,605.8 13,536.4 47,976.7 1.4 45.9

4412 Plywood, veneered panels and similar laminated

wood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,597.1 17,556.3 20,192.1 0.6 6.4

0306 Crustaceans, live, fresh, chilled, frozen etc.; 

crustaceans, in shell, cooked by steam or 

boiling water; flours, meals, & pellets of

crustaceans, fit for human consumption . . . . . . . . 7,669.8 12,657.5 18,027.9 0.5 10.0

8802 Aircraft, powered (for example, helicopters,

airplanes); spacecraft (including satellites)

and spacecraft launch vehicles . . . . . . . . . . . . . . 1,500.0 7,803.2 17,453.8 0.5 31.3

2710 Petroleum oils and oils from bituminous 

minerals (other than crude) and products

therefrom, nesoi, containing 70% (by weight)

or more of these oils . . . . . . . . . . . . . . . . . . . . . . . 24,588.7 19,215.6 11,456.3 0.3 -8.1

7209 Flat-rolled iron or nonalloy steel products, 

600 mm (23.6 in.) or more wide, cold-rolled,

not clad, plated or coated . . . . . . . . . . . . . . . . . . . 0.0 0.0 7,158.6 0.2 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,979.8 121,512.4 44,255.3 1.3 0.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,447,360.7 2,677,038.6 3,510,812.6 100.0 4.1 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table GN-4

Gabon: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

 of total

9-year

CAGR

–––––––––––– 1,000 dollars ––––––––––– ––––– Percent ––––––

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,237,783.8 1,619,066.4 2,074,571.0 59.1 5.9

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,703.7 279,117.3 300,603.3 8.6 14.8

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408,354.2 209,520.1 199,625.5 5.7 -7.6

Trinidad and Tobago . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 8.3 197,349.4 5.6 (1

)

Japan ......................................... 202,231.3 43,564.3 165,941.0 4.7 -2.2

Korea, Rep. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,418.7 86,615.0 120,009.7 3.4 16.5

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,207.4 65,860.1 69,429.7 2.0 2.4

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,009.1 30,678.6 56,651.1 1.6 8.6

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,903.1 7,715.3 38,666.4 1.1 23.2

Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,386.9 24,963.4 31,308.2 0.9 2.4

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367,362.4 309,929.7 256,657.2 7.3 -3.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,447,360.7 2,677,038.6 3,510,812.6 100.0 4.1

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 140 Trinidad and Tobago Ministry of Energy and Industry, Petrotrin to upgrade, found at

www.energy.gov.tt/applicationloader.asp?app=newsarticles&cmd=view&articleid=103, retrieved

Mar. 30, 2005.

 141 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 142 Sun Shangwu, “Presidents Promote Growth with Gabon,” China Daily, Sept. 9, 2004, found

at www.chinadaily.com.cn/english/doc/2004-09/09/content_372815.htm, retrieved Mar. 30, 2005.

 143 Trinidad and Tobago Ministry of Energy and Energy Industries, Petrotrin to Upgrade. 

 144 World Trade Organization, Trade Policy Review: Gabon, May 2001, found at www.wto.org,

retrieved Mar. 30, 2005, p. 73.

2-32

Although the United States is by far Gabon’s leading export market, other countries have

rapidly increased their imports from Gabon, including China (14.8 percent 9-year CAGR),

Korea (16.5 percent), and the United Kingdom (23.2 percent) (table GN-4). Gabon’s

petroleum exports to Trinidad and Tobago increased from zero in 1994 to almost

$200 million in 2003, nearly matching France’s market share. Trinidad and Tobago has

excess capacity at its refinery, and therefore requires imports of crude petroleum to run

efficiently. Total crude petroleum imports in Trinidad and Tobago increased by 140 percent

during 1999-2003.140

Sectors with the Greatest Export Growth Potential

Wood and wood related products reveal relatively strong and stable revealed comparative

advantage141 (RCA) indices, suggesting future potential export growth for this sector

(appendix E, table E-11). The concentration of these exports to a few countries, including

the European Union and lower- and middle-income countries, indicates potential

opportunities to expand to other high-income export markets. Potential for the mining sector

is reflected in the fact that several manganese-related products show the greatest average

yearly growth in the RCA index.

China’s demand for Gabon’s wood and petroleum products is likely to grow, as China and

Gabon signed an agreement on economic cooperation in 2004.142 Trinidad and Tobago may

be another growth market for petroleum. Petrotrin, Trinidad’s state-owned oil company, can

refine 160,000 barrels of crude petroleum per day, but only 60,000 barrels per day of

domestic crude petroleum are available for refining. Petrotrin must source crude petroleum

in foreign markets to fully make use of its excess refining capacity.143 

Timber processing is the largest manufacturing sector outside of petroleum processing.

Although veneer sheets and sawn wood make up a small share of total exports (2.3 and

1.4 percent, respectively), Gabon had significant and stable RCA indices for both products

during 2000-03. Densified wood products are ranked highly based on change in the RCA

index, indicating increasing relative efficiency. International trade in densified wood has also

shown significant growth.

Fish and crustaceans, included in Gabon’s top 10 exports, also have export growth potential.

Gabon has an 800-kilometer coastline with plentiful fish stocks consisting primarily of small

pelagic fish (230,000 metric tons), groundfish (140,000 metric tons), and shrimp

(2,000 metric tons). Crabs and deep-water shrimp are not yet heavily harvested, and

therefore may have greater potential than other types of seafood.144
 145 EIU, Gabon Country Profile, p. 29.

 146 U.S. Department of State telegram, “Gabon: 2005 Investment Climate Statement.”

2-33

Palm oil was a substantial export product before the petroleum boom. The previously

government-owned palm oil company, Agrogabon, was unprofitable for years due in part

to poor management.145 Given the 2003 privatization of Agrogabon, the potential for the reemergence of palm oil as a potential export has improved substantially.

Domestic and International Barriers

Impediments to increased exports include lack of government transparency, poor

infrastructure, and the lack of skilled labor necessary to diversify into more skill-intensive

industries. High tariff rates on imported products raise the cost of production (table GN-5).

Poor management of public finance provides opportunities for government officials to obtain

unofficial income.146 Lack of transparency is especially high with respect to the procedures

for bidding on government contracts. The lack of transparency also hurts the overall business

climate, and, in particular, deters investment. As shown in table GN-6, Gabon’s 2005 overall

economic freedom indicator was equal to the region’s average; however, while the region’s

economic freedom rating improved between 2000 and 2005, Gabon’s economic freedom

rating deteriorated. Notably, of all the economic freedom indicators, Gabon’s worst

performing 2005 component score was trade policy.

Table GN-5

Gabon: Business environment

Country data not available.

Import tariffs Simple average of ad valorem duties

(Gabon, applied rate, 2002)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.3

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness/, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile/, retrieved Apr. 5, 2005.
 147 Ibid. 

 148 EIU, Gabon Country Profile, p. 17.

 149 Ibid., p. 19.

 150 Ibid., pp. 19-20.

 151 U.S. Department of State telegram, “Air Gabon to Resume Flights to Europe,” message

reference No. 00791, prepared by U.S. Embassy, Libreville, Dec. 2004.

2-34

Table GN-6

Gabon: Economic freedom

Gabon

Regional

average1

OECD

 average

––– Heritage Foundation indicators –––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 

Labor factors and education represent an impediment to economic development and export

growth. There are shortages of highly skilled workers.147 In addition, labor costs are high in

the formal sector because of labor market rigidities and excessive regulations. Immigrant and

migrant workers perform most of the work requiring low-skilled, low-paid labor. Low public

spending on education is a factor in the skilled-labor shortage. Education is also disrupted

by strikes over delays in salary payments to teachers. The migration of families from the

country to urban areas has resulted in overcrowded urban schools. Although the government

provides limited technical training in agriculture and tourism, quality education is only

provided by the private sector. Most Gabonese cannot afford private education.148

Another impediment to export growth is the poor state of Gabon’s transportation

infrastructure. Only 10 percent of the total road network is paved (table GN-7), and there is

no direct road to Libreville, the capital, or the main seaport, Port-Gentil.149 The harsh climate

deteriorates roads quickly, and road maintenance is poor. Difficult terrain near many urban

areas and low population density, and large distances from agricultural areas to small urban

markets make it difficult to improve the infrastructure. The inadequacy of the roads

encourages use of the domestic airports and increases transportation costs. There are five

domestic airports, three of which can handle international traffic, and many small airfields.150

The state-owned airline, Air Gabon, has been unprofitable since 1994. Its financial

difficulties caused it to cancel flights to Europe in 2004.151 The only other airline with a

Gabon-Europe route is Air France, which is relatively expensive, and, consequently, inhibits

the export of low-value, high-volume products. 
 152 EIU, Gabon Country Profile, p. 16.

 153 Ibid., p. 37.

 154 Ibid., p. 19.

2-35

Table GN-7

Gabon: Infrastructure-related indicators

MRY1

Roads, total network (km, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,464.0

Roads, paved (percent of total roads, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9

Transport services (percent of service exports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.9

Transport services (percent of service imports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.2

Fixed line and mobile phone subscribers (per 1,000 people, 2002)........................................ 239.7

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.2

Mobile phones (per 1,000 people, 2002) ............................................................ 215.0

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.7

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8

Energy imports, net (percent of commercial energy use, 2001)........................................... -768.9

 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

The manufacturing sector, with the exception of oil refining and timber processing, is

adversely affected by high labor costs, a lack of skilled labor, and poor infrastructure.152

Construction depends primarily on government-sponsored projects, which declined after

1999 because of the decline in petroleum revenues.153 In the agricultural sector, large

distances from agricultural areas to small urban markets hamper efforts to diversify away

from petroleum.154 Compared to domestic impediments, international factors have not

emerged as significant impediments to export growth of Gabon’s most important exports,

petroleum and wood products. 
2-36
 155 Prepared by Elizabeth Nesbitt, Office of Industries.

 156 U.S. Department of State telegram, “USITC Study on Export Opportunities and Barriers in

African Growth and Opportunity Act (AGOA)-Eligible Countries,” message reference No. 00276,

prepared by U.S. Embassy, Abuja, Feb. 22, 2005; and Central Intelligence Agency, “Nigeria,”

World Factbook 2005, found at www.cia.gov/cia/publications/factbook/geos/ni.html#People,

retrieved May 24, 2005.

 157 “Nigeria Economy on Track,” Afrol News, Aug. 13, 2004, found at

www.afrol.com/articles/13704, retrieved Feb. 27, 2005.

 158 Economist Intelligence Unit (EIU), Nigeria Country Profile, 2004, p. 51.

 159 The Centre for Petroleum Information, “Frequently Asked Questions,” last updated

Jan. 2004, found at www.petroinfonigeria.com/faq.html, retrieved Mar. 8, 2005; and Energy

Information Administration (EIA), “Nigeria Country Analysis Brief,” found at

www.eia.doe.gov/emeu/cabs/nigeria.html, retrieved Feb. 27, 2005.

 160 Alexander’s Gas & Oil Connections, “Nigeria to Earn $6bn from LNG by 2007,”

Dec. 22, 2004, found at www.gasandoil.com/goc/news/nta45104.htm, retrieved Mar. 25, 2005.

2-37

Nigeria155

Economic Overview

Nigeria is bordered by Benin, Cameroon, Chad, Niger, and the Gulf of Guinea. Nigeria’s

population was 135.6 million in 2003 (table NG-1). About 70 percent of the country’s labor

force was employed in agriculture, 20 percent in services, and 10 percent in industry.156 The

country’s GDP was valued at $50.2 billion in 2003, an increase of 10.6 percent over 2002;

the corresponding increase in GDP per capita was 8.3 percent. The large increase in GDP

was attributed primarily to higher world petroleum prices, increased revenues from

nonpetroleum exports, and judicious economic policies.157 Exports of goods and services

represented a little more than one-third of GDP in 2003.

Crude petroleum and natural gas accounted for 33.4 percent of Nigeria’s GDP in 2003

(figure NG-1). The petroleum industry in Nigeria developed in the late 1960s and has

accounted for a major share of the country’s exports since that time. The production of crude

petroleum during 1998-2002 fluctuated around 2 million barrels per day,158 with more than

95 percent of the country’s production accounted for by joint ventures between the Nigerian

National Petroleum Corporation (NNPC) and Nigerian subsidiaries of several major

multinational petroleum companies.159 Nigeria also has large reserves of natural gas, some

associated with the country’s petroleum reserves. Natural gas production more than doubled

during 1998-2002, and Nigeria’s revenues from liquified natural gas (LNG), valued at

$569 million in 2004, are projected to increase to more than $6 billion in 2007, matching

expected revenue levels of crude petroleum.160 In addition to crude petroleum and natural

gas, Nigeria’s mineral and mineral fuel reserves include coal, iron ore, cassiterite, lead, zinc,

manganese, gold, tantalite, gemstones, gypsum, kaolin, phosphates, limestone, marble, and

columbite.

Agriculture accounted for about 31.3 percent of GDP in 2003. Nigeria has been traditionally

largely agrarian. Prior to the emergence of the petroleum industry, its leading exports were

cocoa beans, groundnuts (peanuts), palm kernels, rubber, cotton, and timber. As crude

petroleum began to represent an increasing share of exports, however, agricultural exports
2-28

Table GN-1

Gabon: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... 5,605.3

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 3.4

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ..... 1.2

Inflation, consumer prices (annual percent, 2000) ....... ....... ....... ....... ....... ....... . . 0.5

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ... 3,533.5

Total debt service (percent of exports of goods and services, 1999) ....... ....... ....... ....... . . 18.8

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ..... 67.4

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 111.8

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ... 581.2

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... . 1.3

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... . 2.2

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... . 0.6

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... . 44.7

Literacy rate, adult total (percent of people ages 15 and above) ....... ....... ....... ....... ..... ( )2

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ......

3

144.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... .... 60.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ..... 1.3

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ... 31.3

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ...... 31.3

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ...... 2.5

 Most recent year for which data are available between 1999 and 2003. 1

 Not available. 2

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary 3

school age.

Note.— Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved

Jan. 25, 2005; and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure GN-1

Gabon: Composition of GDP (2003)

Note.—Primary is defined as agriculture, fisheries, mining, and quarrying, secondary is defined as manufacturing, construction,

electricity, water, and other utilities; and tertiary is defined as primarily services activities such as retail, financial, real estate, and

government services.

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 161 “2004 Budget Speech by His Excellency President Olusegun Obasanjo at the Joint Session

of the National Assembly,” Dec. 18, 2003, p. 8; EIU, Nigeria Country Profile, p. 31; and Embassy

of Nigeria, written submission in connection with USITC inv. No. 332-464, Export Opportunities

and Barriers in African Growth and Opportunity Act-Eligible Countries, Mar. 1, 2005, pp. 3-6.

 162 EIU, Nigeria Country Profile, pp. 36-37.

 163 Federal Office of Statistics, Federal Republic of Nigeria, Nigeria Statistical Fact Sheets on

Economic & Social Development, 1999-2003, Apr. 2004, found at www.cenbank.org/out/

publications/statbulletin/pid/2004/Nigeria%20statistical%20factor%20sheets%20on%20econs%2

0&%20social%20development.pdf, retrieved Mar. 8, 2005.

 164 World Bank, “World Development Indicators,” found at http://devdata.worldbank/

dataonline, retrieved Feb. 1, 2005.

 165 Ernest Hirsch, “Investors Start to Eye Africa,” Africa Renewal, Jan. 2005, vol. 18, No. 4,

p. 20.

 166 U.S. Department of State telegram, “Trade and Investment Climate Statement, Nigeria,”

prepared by U.S. Embassy, Abuja, Jan. 27, 2005; and Dr. Julius Bala, Director, Policy Advocacy

and External Relations, Nigerian Investment Promotion Commission,“The Challenges and

Opportunities of the Investment Environment in Nigeria,” presented at the International Meeting

for the Promotion of Investment to Africa, organized by the Ministry of Foreign Affairs of Japan,

Feb. 26, 2003, pp. 7 and 9.

 167 U.S. Department of State telegram, “USITC Study on Export Opportunities.”

 168 Nigeria bans exports of raw hides and skin, including wet blue and all unfinished leather.

U.S. Department of State telegram, “USITC Study on Export Opportunities.”

2-39

waned; cocoa, rubber, and palm became the primary crops exported. The sector is considered

a key economic driver that accounts for a major share of national employment and generates

the majority of nonpetroleum export revenue.161

Manufacturing accounted for only about 4.4 percent of the country’s GDP in 2003. Textiles,

beverages, cigarettes, soaps, and cement represented almost two-thirds of total

manufacturing production.162 Production levels of sugar, cement, beer, and cotton fabric

increased significantly during 2001-03.163

Inflows of foreign direct investment (FDI) during 1999-2002 averaged about $1.3 billion per

year.164 Much of the FDI in 2003 was in the energy sector, particularly crude petroleum.165

Smaller amounts of FDI reportedly were invested in the telecommunication services and

manufacturing sectors.166 Companies investing in the manufacturing sector during the last

few years include British American Tobacco; Guinness Nigeria Plc; Nigerian Bottling Co.

Plc, a subsidiary of Coca-Cola International; Nigerian Breweries, a subsidiary of Heineken

Breweries; Procter and Gamble; and Unilever Plc. Although these operations currently

produce only for domestic consumption, their products could potentially be exported.167

Export Profile

Nigeria’s exports in 2003 were $23.9 billion (table NG-2). Major product groupings were

mineral fuels (largely crude petroleum and natural gas), 94.6 percent; cocoa and cocoa

preparations, 2.2 percent; tanned hides and skins, 0.7 percent;168 and crustaceans, 0.3 percent.

Nigerian exports of crude petroleum and natural gas were $20.7 billion and $1.3 billion,

respectively, in 2003 (table NG-3). The value of such exports fluctuated during 1999-2003,

largely as a result of fluctuations in the price of the commodities. The 9-year compound
2-40

Table NG-2

Nigeria: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––– 1,000 dollars ––––––––––– –––– Percent ––––

27 Mineral fuels, mineral oils and products of their 

distillation; bituminous substances; mineral waxes . . . 10,600,947.2 13,813,945.3 22,558,196.7 94.6 8.8

18 Cocoa and cocoa preparations. .................... 195,627.4 259,500.9 524,518.1 2.2 11.6

41 Raw hides and skins (other than furskins) and leather . . 129,140.2 90,693.0 161,921.0 0.7 2.5

03 Fish and crustaceans, molluscs and other aquatic 

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,687.8 54,256.2 70,720.9 0.3 5.2

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . 18,649.7 34,791.8 59,020.3 0.2 13.7

44 Wood and articles of wood; wood charcoal . . . . . . . . . . . 44,247.6 101,593.7 54,725.4 0.2 2.4

26 Ores, slag and ash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,373.8 16,515.8 48,239.9 0.2 23.2

52 Cotton, including yarns and woven fabrics thereof. . . . . . 10,567.4 27,533.6 34,510.3 0.1 14.1

12 Oil seeds and oleaginous fruits; miscellaneous grains, 

seeds and fruits; industrial or medicinal plants; 

straw and fodder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,869.8 24,460.6 32,918.8 0.1 23.7

40 Rubber and articles thereof. . . . . . . . . . . . . . . . . . . . . . . . 94,201.1 17,429.7 25,610.1 0.1 -13.5

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,400.7 218,095.9 283,130.4 1.2 3.1

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,316,712.7 14,658,816.5 23,853,511.9 100.0 8.6

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table NG-3

Nigeria: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––––– 1,000 dollars ––––––––––– –––– Percent ––––

2709 Petroleum oils and oils from bituminous minerals, 

crude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,219,171.3 12,962,365.4 20,681,610.5 86.7 8.1

2711 Petroleum gases and other gaseous hydrocarbons .... 180.3 220,990.3 1,339,256.5 5.6 169.2

2710 Petroleum oils and oils from bituminous minerals 

(other than crude) and products therefrom, 

nesoi, containing 70% (by weight) or more

of these oils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381,032.1 620,417.2 523,422.0 2.2 3.6

1801 Cocoa beans, whole or broken, raw or roasted ....... 174,174.8 223,958.1 491,857.7 2.1 12.2

4106 Tanned or crust skins of animals nesoi, without wool

 or hair on, whether or not split, but not further

prepared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,089.6 42,190.5 82,520.0 0.3 1.8

4105 Tanned or crust skins of sheep or lamb, without wool 

on, whether or not split, but not further prepared . . . 50,871.8 43,279.2 74,410.1 0.3 4.3

0306 Crustaceans, live, fresh, chilled, frozen etc.;

 crustaceans, in shell, cooked by steam or boiling 

water; flours, meals, & pellets of crustaceans, fit

for human consumption . . . . . . . . . . . . . . . . . . . . . . . 41,622.0 48,992.6 66,075.1 0.3 5.3

2609 Tin ores and concentrates . . . . . . . . . . . . . . . . . . . . . . . 5,045.4 7,714.5 27,040.4 0.1 20.5

1804 Cocoa butter, fat and oil . . . . . . . . . . . . . . . . . . . . . . . . . 20,097.4 29,997.6 26,727.8 0.1 3.2

8431 Parts of machinery of headings 8425 to 8430 

covering derricks, fork-lift trucks, conveyers, 

self-propelled bulldozers, graders, snowplows, etc. 1,555.7 764.7 24,706.9 0.1 36.0

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352,872.2 458,146.4 515,884.9 2.2 4.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,316,712.7 14,658,816.5 23,853,511.9 100.0 8.6

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 169 World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

 170 Chemonics International Inc., “Subsector Assessment of the Nigerian Cashew Industry,”

prepared for USAID, Sept. 2002, pp. 19-23.

 171 Nigeria’s exports of crude petroleum to the European Union declined because of petroleum

production in the North Sea. EIU, Nigeria Country Profile, p. 41.

 172 Ministry of Commerce of the People’s Republic of China, Foreign Market Access Report:

2005, p. 162.

2-41

annual growth rate (CAGR) of natural gas exports amounted to 169.2 percent versus

8.1 percent for crude petroleum. 

Although dwarfed by exports of crude petroleum, Nigeria’s nonpetroleum exports are an

increasingly important factor in the country’s economy. Nigeria’s top three markets for

cocoa beans and cocoa products in 2003 were the Netherlands (36 percent), France

(16 percent), and Belgium (14 percent),169 all manufacturers of chocolate. The European

Union was also a major market for the country’s exports of leather and leather products. In

2003, Italy and Spain accounted for about 92 percent of such exports, or $148 million. The

top five export markets for fish and crustaceans in 2003 were France, the Netherlands,

Belgium, Spain, and the United States, together accounting for 93 percent of total Nigerian

exports of these products. In 2002, Nigeria reportedly exported about one-third of its output

of raw cashew nuts to major processing countries such as India, Brazil, and Vietnam. Major

markets for Nigerian cashew kernel exports are the United States and the United Kingdom.170

Major markets for Nigerian exports in 2003 were the United States (45.9 percent), Spain

(9.0 percent), and Brazil and France (6.4 percent and 5.9 percent, respectively) (table NG-4).

Exports to these four countries, mainly of crude petroleum, accounted for 67.2 percent of

total exports in 2003.171 The markets with the largest 9-year CAGRs were Japan

(52.8 percent), Indonesia (47.4 percent), and Brazil (22.5 percent). China is also an

expanding market for Nigeria, particularly for crude petroleum and certain minerals.

Nigerian exports to China increased by 546.4 percent in 2004 to $460 million.172 Nigeria’s

major regional markets in 2003 were Côte d’Ivoire, South Africa, Senegal, and Cameroon.

Exports to these countries were valued at $1.4 billion, or almost 6 percent of total Nigerian

exports. Crude petroleum and natural gas accounted for 99 percent of the country’s exports

to these regional markets.
 173 Institute for the Analysis of Global Security, “Chinese Quest for Crude Increases Focus on

Africa,” Nov. 15, 2004, found at www.iags.org/n1115044.htm, retrieved Mar. 14, 2005; and Karby

Leggett, “China Flexes Economic Muscle Throughout Burgeoning Africa,” The Wall Street

Journal, Mar. 29, 2005, p. 1.

 174 Ibid.

 175 As of 2003, only the United States consumed more petroleum products than China

worldwide. Institute for the Analysis of Global Security, “Chinese Quest for Crude Increases

Focus on Africa.”

 176 The EIA defines flared natural gas as “gas disposed of by burning in flares usually at the

production sites or at gas processing plants.” EIA, “Glossary,” International Energy Annual 2002,

found at www.eia.doe.gov/emeu/iea/glossary.html#F, retrieved May 24, 2005.

 177 The Centre for Petroleum Information, “Frequently Asked Questions.” 

 178 Alexander’s Gas & Oil Connections, “Nigeria to Earn $6bn from LNG by 2007.”

2-42

Table NG-4

Nigeria: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––––––– 1,000 dollars –––––––––––––– ––––– Percent –––––

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,705,887.5 4,631,929.9 10,948,543.8 45.9 9.8

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,072,730.2 1,188,481.5 2,146,585.1 9.0 8.0

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246,101.6 769,271.2 1,524,405.9 6.4 22.5

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,087,875.4 752,489.0 1,401,653.6 5.9 2.9

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,712.2 195,794.9 896,624.3 3.8 52.8

Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,246.5 188,310.5 861,968.6 3.6 47.4

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 951,100.0 206,295.0 756,004.0 3.2 -2.5

Portugal ................................. 384,493.4 324,998.4 752,851.0 3.2 7.8

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236,585.8 243,939.0 521,930.8 2.2 9.2

Côte d'Ivoire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 396,334.7 509,812.7 2.1 (1

) 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,585,980.1 5,760,972.5 3,533,132.1 14.8 3.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,316,712.7 14,658,816.5 23,853,511.9 100.0 8.6

1

 Undefined.

Note.—Although these figures represent official WITS data, they deviate substantially from other sources.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

Although crude petroleum currently accounts for a major share of national GDP and export

earnings, it is likely that the sector will continue to develop market share in countries

worldwide. For example, China, already a major investor, has been developing stronger ties

with most African counties,173 including Nigeria,174 in an effort to expand its resource base

and secure supplies of crude petroleum and energy technology to satisfy its continuously

increasing energy needs.175 Growth in the natural gas industry is also expected during the

next 5 years, particularly given the 2008 deadline set by the government to cease the flaring

of natural gas.176 Nigeria’s natural gas reserves are said to amount to 159 trillion cubic feet

of gas, the ninth-largest natural gas reserves worldwide.177 Nigeria’s revenues from LNG are

expected to increase to an estimated $6 billion annually by 2007.178
 179 Embassy of Nigeria, written submission, p. 1.

 180 Chemonics International Inc., “Industry Action Plan for Nigerian Shrimp and Prawns,”

prepared for USAID, Nov. 2002, p. 7; Chemonics International Inc., “Overview of the Nigerian

Sesame Industry,” prepared for USAID, Nov. 2002, various pages; and Chemonics, “Subsector

Assessment of the Nigerian Cashew Industry,” p. 14.

 181 Chemonics, “Industry Action Plan for Nigerian Shrimp and Prawns,” p. 7; and Chemonics,

“Subsector Assessment of the Nigerian Cashew Industry,” p. 14.

 182 Chemonics, “Subsector Assessment of the Nigerian Cashew Industry,” pp. 19-23.

 183 “Kwara Acquires N95m Loan,” Nigerian Newsday, Nov. 29, 2004, found at

www.nasarawastate.org/ newsday/news/economy/11129121723, retrieved Mar. 25, 2005. The

plant, funded by a loan provided by the Nigerian Export-Import Bank, will employ about

2,000 employees and will use locally produced inputs.

 184 Chemonics, “Overview of the Nigerian Sesame Industry,” various pages. Downstream

derivatives of sesame include sesame oil (for cooking purposes or for use in industrial applications

such as medicinal products, soaps, paints, and certain aerosol products), sesame paste, and sesame

meal. 

 185 Chemonics, “Industry Action Plan for Nigerian Shrimp and Prawns,” p. 7; and Chemonics,

“Subsector Assessment of the Nigerian Cashew Industry,” p. 14.

2-43

The Nigerian government states that the agricultural, manufacturing, and minerals sectors

are considered most likely to experience export growth.179 Agricultural product exports that

could be further developed with increased investment include cocoa, cashews (particularly

downstream products such as cashew kernels and cashew nut shell liquid), sesame, and

shrimp and prawns.180 Potential markets for increased agricultural exports include the United

States and India,181 as well as regional markets.

Nigeria has a strong revealed comparative advantage (RCA) index in cocoa beans, a product

that accounted for about 2 percent of total Nigerian exports in 2003, or more than

$500 million (appendix E, table E-26). Moreover, average annual growth in world cocoa

bean markets during 1993-2003 was almost 14 percent. Major markets for the country’s

exports of cocoa beans in 2003 were the European Union (cocoa bean imports from Nigeria

accounted for approximately 12.4 percent of total EU cocoa bean imports); Canada

(7.7 percent); and the United States (1.8 percent). The country’s high RCA index, market

penetration, and the recent world growth in sales of cocoa beans would appear to indicate

that export sales of the product could increase.

Nigeria currently exports about 30,000 metric tons of cashew nuts annually, primarily to

India, Brazil, and Vietnam, all major processing countries. In line with the ongoing emphasis

on developing downstream processing, cashew kernels were identified as having substantial

export potential, particularly to the United States. Nigeria currently exports only about

25 percent of its production of cashew nut kernels, mainly to the United States and the

United Kingdom.182 Moreover, exports of cashew kernels and cashew nut shell liquid may

increase when an export-oriented cashew nut processing facility comes onstream in Kwara

State.183 With regard to sesame, it has been suggested that development of the Nigerian

industry could result in increased exports of sesame and sesame oil, particularly to countries

in Asia.184

The global market for shrimp and prawns is said to be increasing by 3 percent per year,

largely as a result of increased consumption in the United States, Europe, and Japan.

Development of a shrimp and prawns farming industry in Nigeria, intended to serve

domestic and international consumption, could be valued at a total of $384 million over the

course of 10 years.185
 186 Alexander’s Gas and Oil Connections, “Nigeria Hopes that Minerals Will become

Alternative Revenue Earners,” Oct. 2, 2003 found at www.gasandoil.com/goc/news/nta34023.htm,

retrieved Mar. 24, 2005; and Chief (Dr.) J.O. Sanusi (CON), Governor, Central Bank of Nigeria,

“Overview of Recent Economic Developments and Investment Potentials in Nigeria,”

Feb. 20, 2003, p. 6, found at www.cenbank.org/out/speeches/2003/govadd-20FEBB.pdf, retrieved

Mar. 8, 2005.

 187 Tantalum, extracted from tantalite, is used in medical applications as well as in electronics

(capacitors) and alloys. 

 188 Philip Mobbs, “The Mineral Industry of Nigeria,” U.S. Geological Survey Minerals

Yearbook-2000, p. 24.2.

 189 Another factor cited as a possible explanation for increased exports of tantalum in 2001 was

a buildup in inventory by electronics industry buyers concerned about possible supply shortages.

“What is the Market Outlook for Tantalum,” Infomine-africa.com, found at

www.infomine-africa.com/afrinfogen.asp#What%20is%20the%20

market%20outlook%20for%20Tantalum?, retrieved Mar. 29, 2005.

 190 “Central African Mining & Exploration Plc Interim Results,” Fillyaboots.com,

Dec. 29, 2004, found at www.fillyaboots.com/_fybArc1/000003ef.htm, retrieved Mar. 24, 2005.

 191 According to information supplied by Mr. Philip Mobbs, Country Specialist,

U.S. Geological Survey, “Exploration of Tantalite in Ekiti to Cost N20b,” The Guardian, found at

www.guardiannewsngr.com/business/ article05, retrieved Aug. 26, 2004. The joint venture, valued

at $200 million, involves Trans Afrik Nigeria and CME, a Canadian company.

 192 Pinnacle Resources, Inc., “Tantalum Project,” found at www.pnrr.net/tant_proj.html,

retrieved Mar. 25, 2005.

 193 Mr. Philip Mobbs, Country Specialist, U.S. Geological Survey, telephone interview by

USITC staff, Mar. 25, 2005. Niobium is used in several applications, including the formation of an

extremely strong steel alloy and in the manufacture of capacitors.

2-44

RCA analysis shows that Nigeria is relatively internationally efficient in goat and sheep skin

leather exports. Whereas such exports accounted for less than 1 percent of total Nigerian

exports in 2003, or about $157 million, average annual growth in the world markets for goat

and sheep skin leather during 1993-2003 was 10 percent and 6 percent, respectively,

suggesting that further development of the sector could result in expanded export

opportunities for these products.

The Nigerian government is emphasizing the development of the largely unexploited mining

sector, with the expectation that it could prove to be a major source of export revenues.186

On a product-specific basis, Nigeria has a relatively high RCA index for the product

grouping consisting of niobium, tantalum, vanadium, and zirconium. The 9-year CAGR for

these products was almost 17 percent; exports of these products represented, on average,

only 0.2 percent of total Nigerian exports during the period. Tantalum,187 which accounted

for a significant share of trade and investment in the sector in recent years, possibly as a

result of efforts by the Nigerian Mining Corp. to encourage investment in tantalite mining

operations, could show expanded export growth.188 Investments made by Marubeni

Corporation in 2001 in the exploration and extraction of tantalite could have been a

contributing factor in the increased exports in that year.189 More recently, Central African

Mining & Exploration Plc, which has been operating in the country since 2004, is said to be

exploring potential reserves of tantalum, gold, and columbite (a source of niobium).190 In

addition, a Nigerian company, Trans Afrik Nigeria, was reportedly licensed in August 2004

to explore for tantalite.191 Also in 2004, Pinnacle Resources, Inc. identified Nigeria as a

possible source of tantalite ore feedstock for its tantalum pentoxide production in South

Africa.192 Export growth in tantalite and niobium ores is also likely to be spurred by the

recent increases in prices for these minerals.193
 194 According to Transparency International’s 2004 index, Nigeria is ranked as the third most

corrupt country in the world. Transparency International, “Transparency International Corruption

Perceptions Index 2004,” found at www.transparency.org/surveys/index.html, retrieved

Mar. 10, 2005. 

 195 U.S. Department of State telegram, “USITC Study on Export Opportunities.”

 196 “2004 Budget Speech,” p. 3; and Bala, “The Challenges and Opportunities,” pp. 3 and 5.

 197 Numerous road repair projects were initiated in 2003 in conjunction with the creation of the

national Road Maintenance Agency. Federal Office of Statistics, Federal Republic of Nigeria,

Nigeria Statistical Fact Sheets, p. 87.

 198 EIU, Nigeria Country Profile, p. 21. It has been noted, however, that the ports used and

maintained by the multinational energy companies are in better shape.

 199 EIU, Nigeria Country Profile, p. 23.

2-45

Domestic and International Barriers

General constraints inhibiting Nigerian exports include high financing costs; poor

infrastructure, including inadequate electrical, water, and telephone services, deteriorating

road conditions, and rundown railroads; corruption;194 and an uncertain operating climate

stemming from changing government regulations and policies.195

Whereas some business environment indicators are significantly better than the regional

average (e.g., the time to close a business, the number of procedures in enforcing contracts,

the minimum capital needed to start a business, and multiple employment indicators), others

are significantly worse, including the time needed to enforce contracts and to register

property (table NG-5). Import tariffs are also high, averaging 30 percent on all goods.

Moreover, Nigeria’s economic freedom score worsened during 1995-2005, from 3.4, which

was similar to the regional average, to 4.0 (table NG-6). Nigeria’s trade policy and informal

market sector activity scores lagged particularly far behind regional and OECD averages.

During the past few decades, Nigeria’s infrastructure has been neglected, leading to

deterioration in the state of the country’s roads, railway, and ports.196 Although

approximately 31 percent of Nigerian roads are paved (table NG-7),197 a fairly high

proportion compared with other sub-Saharan African countries, much of the network is in

disrepair. Inadequate equipment at the country’s ports results in delays in loading and

offloading, and has been cited as an impediment to transporting goods. In addition, “frequent

policy changes and the multiplicity of authorities in ports mean that corruption and delays

are common.”198

Another operating constraint has been a shortage of national energy supplies. Nigeria’s

power comes from downstream petroleum products, natural gas, hydroelectricity, and

thermal power.199 In the petroleum sector, the poor performance of the national refineries and

the reported smuggling of petroleum products to regional markets stemming from
2-46

Table NG-5

Nigeria: Business environment

Nigeria

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 33.2 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 20.7 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.2 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 730.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 27.2 13.2 4.9

Registering a property: Time (days) ....................................... 274.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0 11.0 6.0

Starting a business: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . . . . 95.2 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 59.4 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Nigeria, applied rate, 2002)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.0

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.9

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.3

 1

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and 

WTO, “Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005. 

Table NG-6

Nigeria: Economic freedom

Nigeria

Regional

average1

OECD

average

–––––––– Heritage Foundation indicators ––––––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . 4.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 200 Ibid.; and International Monetary Fund (IMF), Nigeria: Selected Issues and Statistical

Appendix, Aug. 2004, p. 100.

 201 IMF, Nigeria: Selected Issues and Statistical Appendix, p. 115.

 202 Chief (Dr.) J.O. Sanusi (CON), Governor, Central Bank of Nigeria, “Overview of Recent

Economic Developments and Investment Potentials in Nigeria,” Feb. 20, 2003, p. 6, found at

www.cenbank.org/out/speeches/2003/govadd20FEBB.pdf, retrieved Mar. 8, 2005.

 203 EIU, Nigeria Country Profile, p. 32; and “Minister Canvasses Viable Body for Cassava

Stakeholders,” The Guardian (Online), July 20, 2004, found at www.sdnetwork.kabissa.org/

sdnnewsarchivejuly2004.htm, retrieved Mar. 8, 2005.

 204 “Shell Cuts Nigerian Exports,” CNN.com, Dec. 23, 2004, found at

www.cnn.com/2004/WORLD/africa/12/ 23/nigeria.shell, retrieved Feb. 27, 2005.

 205 Embassy of Nigeria, written submission, pp. 6-7. 

 206 EIU, Nigeria Country Profile, p. 36.

2-47

Table NG-7

Nigeria: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999).................................................................. 194,394.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.9

Transport services (percent of service exports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0

Transport services (percent of service imports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.2

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0

Energy imports, net (percent of commercial energy use, 2001).......................................... -116.9 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

domestic price controls on petroleum products resulted in shortages of petroleum

derivatives.200 Supplies of electricity have been limited and inconsistent, a situation largely

attributed to underutilization of power generation capacity and needed improvements in

electricity distribution.201 Electric power transmission and distribution losses amounted to

approximately 38 percent of output in 2001.

In addition to the economywide constraints identified above, the agriculture, petroleum,

manufacturing, and mineral sectors face sector-specific impediments that hamper export

growth. About 30 percent of Nigeria’s available land is arable, of which, in 2003, only about

50 percent was cultivated.202 Constraints to expanding agricultural exports include

inadequate infrastructure in rural areas, limited technical assistance, distorted exchange rates,

high taxes on agricultural exports, insufficient irrigation systems, inadequate distribution of

fertilizer and other inputs, high production and transportation costs, and lack of technical

capacity to meet product quality and packaging requirements.203 Continued social unrest in

the Niger River Delta, a major petroleum production site in Nigeria, has been a constraint

to petroleum exports. Most recently, such unrest in December 2004 caused Shell to suspend

exports for an indefinite period, potentially forgoing exports of about 2 million barrels.204

Constraints to export growth in the manufacturing sector include lack of knowledge

regarding implementation of local content requirements, and lack of engineering and

technical knowledge, training, and support.205 The generally low output of nonenergy-related

minerals in Nigeria is largely attributable to lack of capital to invest in equipment

maintenance and upgrades.206 Other impediments include a need to complete a countrywide
 207 Embassy of Nigeria, written submission, p. 10; and “2004 Budget Speech,” p. 8.

 208 New World Chocolate Society, “News: The New Taste of Chocolate in Europe,”

Aug. 11, 2004, found at www.newworldchocolatesociety.com/index.php/nwcs/

comments/news-eurochoctaste/, retrieved Mar. 31, 2005.

 209 Ibid.

2-48

survey of mineral reserves which, when completed, is expected to promote private-sector

investment, and generally inadequate mining infrastructure.207

An identified international impediment is preference loss in the agricultural sector resulting

from the implementation of a new regulation in the European Union in 2003 allowing for

replacement of up to 5 percent of cocoa butter used in the production of chocolate with

“replacement” or “substitute” fats. This new regulation may hinder growth of Nigerian cocoa

exports to the European Union.208 According to the International Cocoa Organization, this

regulation is expected to result in a decline of about 20 percent in export earnings for cocoa

exporting countries such as Nigeria.209
 210 Prepared by Elizabeth Nesbitt, Office of Industries.

 211 Energy Information Administration (EIA), “Congo-Brazzaville,” EIA Country Analysis

Brief, Sept. 2004, found at www.eia.doe.gov/emeu/cabs/congo.html, retrieved Feb. 27, 2005.

 212 EIA, “Congo-Brazzaville.” 

 213 African Development Fund (ADF), “Republic of Congo Policy Reform Programme:

Appraisal Report,” Oct. 2004, p. 4.

2-49

Republic of the Congo210

Economic Overview

The Republic of the Congo is bordered by Cameroon, Central African Republic, Democratic

Republic of the Congo, Gabon, and the Atlantic Ocean. In 2004, Republic of the Congo was

the fifth-largest producer of crude petroleum in Africa after Nigeria, Angola, Gabon, and

Equatorial Guinea,211 and has the third-largest reserves of natural gas in the region, exceeded

only by Nigeria and Cameroon.212 Republic of the Congo’s several periods of instability,

including 1993, 1997, 1998-99, and again in 2002, caused significant damage to the

Congolese infrastructure and eroded its economic base, resulting in a slowing of GDP

growth during these periods. With the cessation of hostilities, several sectors posted

economic gains during 2000-02, particularly the agricultural, forestry, commercial, and

transport sectors.213 The growth rate then slowed to 1.0 percent in 2003 following increased

instability in 2002 (table RC-1). Crude petroleum, including natural gas production, was one

of the main exceptions to this cycle, as much of the industry is located offshore and was less

directly affected by internal social instability.

Table RC-1

Republic of the Congo: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,510.0

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.7

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0.8

External debt, total (current US$, millions, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,152.3

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.4

Trade (percent of GDP, 2003) .................................................................... 132.9

Official exchange rate (local currency unit per US$, period average, 2003) ................................. 581.2

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.6

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.8

Primary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.5

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0

 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005; and

African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 
 U.S. Department of State, “Background Note: Republic of the Congo,” April 2005, found at 214

www.state.gov/r/pa/ei/bgn/2825.htm, retrieved May 4, 2005.

 Economist Intelligence Unit (EIU), Congo (Brazzaville) Country Profile, 2004, pp. 41-42. 215

 International Monetary Fund (IMF), Republic of Congo: Selected Issues and Statistical 216

Appendix, July 2004, pp. 4, 53, and 69.

 EIA, “Congo-Brazzaville.” 217

 Central Intelligence Agency (CIA), “Republic of the Congo,” World Factbook, last updated 218

Apr. 21, 2005, found at www.cia.gov/cia/publications/factbook/geos/cf.html, retrieved

May 4, 2005. 

 “China’s Rise Disrupts Tropical Country Efforts to Increase Domestic Log Processing,” 219

Hardwoodmarkets.com, Aug. 2004, p. 2, found at www.hardwoodmarkets.com/sample/

aug_04.pdf, retrieved Mar. 16, 2005.

2-50

Services, including government, accounted for the largest share of Republic of the Congo’s

GDP in 2003, or 41.2 percent (figure RC-1). Activities in the services sector include 214

banking and retail operations, both of which have been negatively affected by the ongoing

instability, and a nascent tourism industry, development of which will depend largely on

continued peace in the country. The petroleum sector accounted for the second-largest 215

share (35.5 percent). The remainder was accounted for by the agriculture and fisheries sector

(11.3 percent), industry and mines (8.1 percent), and utilities, construction, and public works

sector (3.8 percent). According to the IMF, public administration, which represented about

12 percent of the country’s GDP in 2003, is a relatively large sector in Republic of the

Congo, employing more than 66,000 people. Regarding the petrochemical industry, the 216

closure of Republic of the Congo’s only refinery during 1997-2000 resulted in the

importation of needed petroleum products, largely from Democratic Republic of the

Congo. In the manufacturing sector, cement, lumber, sugar, palm oil, soap, flour, and 217

cigarettes account for a majority of production. Production of logs and sawn lumber 218

increased in Republic of the Congo during 2001-02, by 24.4 percent and 35 percent,

respectively. During 2002-03, however, production levels remained unchanged, possibly 219

Figure RC-1

Republic of the Congo: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 220 United Nations Economic Commission for Europe, “Forest Products Annual Market

Analysis, 2002-2004,” Timber Bulletin, vol. LVI (2003), No. 3, p. 102.

 221 EIU, Congo (Brazzaville) Country Profile, p. 37.

 222 EIA, “Congo-Brazzaville.”

 223 ADF, “Republic of Congo Policy Reform Programme,” p. 10 of Annex III.

 224 Ibid.

 225 Embassy of the Republic of the Congo officials, interview by USITC staff, Washington, DC,

Feb. 15, 2005. 

 226 World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

 227 EIU, Congo (Brazzaville) Country Profile, p. 43.

 228 ADF, “Republic of Congo Policy Reform Programme,” pp. 1 and 8 of Annex III. The report

describes the country as having “enormous forestry potential.”

 229 “China’s Rise Disrupts Tropical Country Efforts to Increase Domestic Log Processing,” p. 8.

2-51

reflecting the ongoing internal instability in 2002.220 Republic of the Congo’s major

subsistence crops are cassava, plaintains, rice, and groundnuts (peanuts). Its major cash crops

are coffee, cocoa, and sugar.221

Much of the foreign direct investment is in the country’s energy sector, largely generated by

the operations of major multinational petroleum companies.222 Sectors identified by the

government as priorities for investment include the industrial sector, agroprocessing,

forestry, construction, metals, electricity, and the petrochemical industry.223 Among other

initiatives to encourage domestic and foreign investment, Republic of the Congo

implemented a national investment program in 2003, reduced taxes, implemented customs

exemptions, and streamlined procedures related to corporate operations in the country.224

Export Profile

Republic of the Congo’s exports totaled $2.2 billion in 2003 (tables RC-2 and RC-3). The

country’s major exports–mostly primary products, a function of the country’s natural

resource endowment–are petroleum, wood, sugar, coffee, cocoa, diamonds, gold, and

potash.225 Crude petroleum accounted for 72.0 percent of the value of total exports in 2003

and natural gas accounted for 2.5 percent of the total.226 Much of Republic of the Congo’s

trade with China, the United States, and the European Union is in crude petroleum.227

The second-largest product grouping in Republic of the Congo’s export portfolio is wood

and wood products, reflecting the country’s forest resources that cover over 50 percent of

its terrain.228 Exports of hardwood logs accounted for about 8 percent of the total value of

Congolese exports. Combined, exports of downstream products such as hardwood lumber,

veneer, flooring, siding, and molding accounted for 2.4 percent of total exports. Republic of

the Congo’s exports of logs and sawn timber increased significantly during 1998-2003;

exports of sawn timber alone increased by 126 percent.229 Although Republic of the Congo

exports wood to the United States, in 2003, the largest export markets for wood and articles
 230 Embassy of the Republic of Congo officials, interview by USITC staff, Washington, DC,

Feb. 15, 2005. 

2-52

of wood were China, France, Italy, Portugal, and Spain.230 Japan, Hong Kong, Korea, and

Vietnam are also significant markets.

The 9-year compound annual growth rates (CAGR) for Republic of the Congo’s exports of

ores, slag, and ash, and coffee were the highest for all of Republic of the Congo’s exports,

amounting to 89.2 percent and 65.4 percent, respectively. The CAGRs for copper and sugar

were 30.2 percent and 14.1 percent, respectively.

Despite the fluctuations in export levels, exports to several markets increased substantially

during 1992-2003 (table RC-4). The CAGR for exports to China was 95.2 percent during

1994-2003, most likely reflecting China’s recent emergence as a substantial market for

Congolese exports of crude petroleum. Brazil had the next-highest CAGR during the period,

at 18.7 percent. The United States, France, and Portugal exhibited relatively low, but

positive, CAGRs. In contrast, exports to Italy and Spain decreased significantly during the

10-year period, by CAGRs of 18.5 percent and 7.9 percent, respectively.

Table RC-2

Republic of the Congo: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total percent of 2003 total,

and compound annual growth rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

 ––––––––– 1,000 dollars –––––––––– ))–– Percent ––)))

27 Mineral fuels, mineral oils and products of their 

distillation; bituminous substances; 

mineral waxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 874,750.5 1,574,646.2 1,687,710.7 78.2 7.6

44 Wood and articles of wood; wood charcoal .......... 151,153.5 119,820.7 215,998.6 10.0 4.0

71 Natural or cultured pearls, precious or semiprecious 

stones, precious metals; precious metal clad

 metals, articles thereof; imitation jewelry; coin . . . . . 19,572.5 68,404.1 55,910.7 2.6 12.4

26 Ores, slag and ash. ............................ 114.7 7,172.4 35,947.4 1.7 89.4

17 Sugars and sugar confectionery. . . . . . . . . . . . . . . . . . . 4,631.2 13,939.4 15,225.1 0.7 14.1

81 Base metals nesoi; cermets; articles thereof . . . . . . . . . 506.0 20,695.6 14,165.2 0.7 44.8

74 Copper and articles thereof. ...................... 917.2 7,850.5 9,851.5 0.5 30.2

09 Coffee, tea, mate and spices. . . . . . . . . . . . . . . . . . . . . . 94.9 13,321.6 8,806.3 0.4 65.4

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . 3,023.8 3,786.0 6,186.4 0.3 8.3

03 Fish and crustaceans, molluscs and other aquatic 

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,743.2 1,994.7 4,185.9 0.2 1.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,097.5 28,889.9 103,984.7 4.8 9.2

 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,105,605.1 1,860,521.1 2,157,972.5 100.0 7.7

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
2-53

Table RC-3

Republic of the Congo: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual

growth rate (CAGR)

HS 4 Description 1994 1999 2003

2003

share

of total

9-year

CAGR

–––––––––––– 1,000 dollars –––––––––– ))))Percent ))))

2709 Petroleum oils and oils from bituminous 

minerals, crude . . . . . . . . . . . . . . . . . . . . . . . . . . . . 798,846.1 1,420,935.5 1,553,549.7 72.0 7.7

4403 Wood in the rough, whether or not stripped of bark

or sapwood, or roughly squared ............... 112,779.8 83,362.6 165,362.1 7.7 4.3

2710 Petroleum oils and oils from bituminous minerals

(other than crude) and products therefrom,

nesoi, containing 70% (by weight) or more of 

these oils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,904.4 87,210.4 153,932.9 7.1 8.2

7102 Diamonds, whether or not worked, but not

mounted or set . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,922.0 64,624.2 55,606.6 2.6 13.4

2711 Petroleum gases and other gaseous 

hydrocarbons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 66,500.0 54,184.6 2.5 (1

) 

4407 Wood sawn or chipped lengthwise, sliced or

 peeled, more than 6 mm (.236 in.) thick . . . . . . . . . 14,143.3 23,471.1 43,649.6 2.0 13.3

2605 Cobalt ores and concentrates . . . . . . . . . . . . . . . . . . . 0.0 267.0 22,810.7 1.1 (1

) 

1701 Cane or beet sugar and chemically pure sucrose, 

in solid form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,631.2 13,931.6 15,225.1 0.7 14.1

8105 Cobalt mattes and other intermediate products of 

 cobalt metallurgy; cobalt and articles thereof, 

 including waste and scrap ................... 506.0 20,186.6 14,140.0 0.7 44.8

0901 Coffee, whether or not roasted or decaffeinated; 

 coffee husks and skins; coffee substitutes 

 containing coffee . . . . . . . . . . . . . . . . . . . . . . . . . . 91.1 13,318.9 8,806.3 0.4 66.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,781.2 66,713.4 70,704.8 3.3 -1.5

 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,105,605.1 1,860,521.1 2,157,972.5 100.0 7.7

 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table RC-4

Republic of the Congo: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

Market 1994 1999 2003

2003 share

 of total

9-year

CAGR

-––––––––––– 1,000 dollars –––––––––– )))–)) Percent )))))))

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,977.7 59,930.1 814,658.7 37.8 95.2

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434,530.7 438,249.4 457,189.3 21.2 0.6

Korea, Rep. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 287,684.9 368,501.1 17.1 (1

) 

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,000.0 47,797.9 85,843.0 4.0 3.0

Trinidad and Tobago . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 68,747.5 3.2 (1

) 

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,924.6 7,285.1 65,219.9 3.0 18.7

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2

) 14,443.3 42,856.9 2.0 (1) 

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,915.4 25,596.2 39,756.3 1.8 4.0

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,630.1 43,903.3 33,321.9 1.5 -18.5

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,524.9 34,765.1 25,637.0 1.2 -7.9

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297,101.7 900,865.9 156,240.8 7.2 -6.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,105,605.1 1,860,521.1 2,157,972.5 100.0 7.7

 1

 Undefined.

 2

 Not available.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 231 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 232 “China’s Rise Disrupts Tropical Country Efforts to Increase Domestic Log Processing,” p. 8.

 233 ADF, “Republic of Congo Policy Reform Programme,” p. 10 of Annex III; and George J.

Coakley, “The Mineral Industry of Congo (Brazzaville),” U.S. Geological Survey Minerals

Yearbook-2002, p. 9-1. An Italian company, S.E.M.I. SA is reportedly developing the Yangadou

gold mine following the withdrawal of a Canadian company. 

 234 Carnallite is a magnesium-potassium hydrated chloride mineral that is an important source

of magnesium and potash.

 235 “Kouilou Magnesium Project-Set for Success: Solution-Mining Carnallite in the Republic

of Congo,” Light Metal Age, Aug. 2004, found at www.magalloy.com/reports/articles.asp,

retrieved Mar. 17, 2005; MagIndustries Corp., “Shareholders’ Approve Change of Name to

MagIndustries Corp.,” press release, Jan. 28, 2005, found at www.magalloy.com/press/050128.asp,

retrieved Mar. 17, 2005; and MagAlloy Corp.,“MagAlloy Taps Into INGA, One of the World’s

Largest Hydro-sites,” press release, Nov. 1, 2004, found at www.magalloy.com/press/041101.asp,

retrieved Mar. 17, 2005.

 236 EIU, Congo (Brazzaville) Country Profile, p. 31; ADF, “Republic of Congo Policy Reform

Programme,” p. 10 of Annex III; and Embassy of the Republic of Congo officials, interview by

USITC staff, Washington, DC, Feb. 15, 2005.

 237 EIA, “Congo-Brazzaville;” and “Construction du Plus Grand Barrage Hydroélectrique du

Congo,” CongoPage.com, Dec. 23, 2002, found at www.congopage.com/

imprimersans.php3?id_article=649, retrieved Feb. 27, 2005.

2-54

Sectors with the Greatest Export Growth Potential

Revealed comparative advantage231 (RCA) analysis shows that although Republic of the

Congo has a comparative advantage in the production of hardwood logs, the slow average

annual growth in the world market during 1993-2003 of only 0.7 percent would likely make

exports from this sector less advantageous (appendix E, table E-27). Although Republic of

the Congo had a lower RCA index in sawn tropical hardwood, the average annual growth

in the world market during 1993-2003 was about 4 percent. The government reportedly is

encouraging an increased share of processed wood in total wood exports.232

Mining opportunities related to gold are said to remain largely unexploited,233 but significant

investment has been made in the production of magnesium in recent years. The Kouilou

Magnesium Project, currently in the construction phase, has been under development by

MagIndustries Corp. since 1997. The project is expected to include a carnallite mine;234 a

60,000 metric ton-per-year magnesium metal production facility; a central refining, alloying,

and casting facility; and a stand-alone potash plant.235 Potash production is expected to start

in 2007 and magnesium production in 2008.

Republic of the Congo could eventually become an exporter of electricity. Although

Republic of the Congo currently imports electricity, largely from Democratic Republic of

the Congo, increased investment in the power generation and transmission sector is expected

to result in enough power generation for local consumption and potentially exports.236

Examples of such investment include a natural gas-fired power plant, a joint venture between

AGIP and ChevronTexaco, that came onstream in December 2002, and the construction of

a hydroelectric dam on the Lefini River, started in 2003, which is expected to come online

within 5-6 years. Two Chinese companies are developing the Lefini River project with The

Government of Republic of the Congo.237 Existing power generation and transmission

networks are also being renovated, with one such project receiving Chinese technical support
 238 EIU, Congo (Brazzaville) Country Profile, p. 31.

 239 EIA, “Congo-Brazzaville.”

 240 Ibid.

 241 As of 2003, only the United States consumed more petroleum products than China

worldwide. Institute for the Analysis of Global Security, “Chinese Quest for Crude Increases

Focus on Africa,” Nov. 15, 2004, found at www.iags.org/n1115044.htm, retrieved Mar. 14, 2005.

 242 Institute for the Analysis of Global Security, “Chinese Quest for Crude Increases Focus on

Africa;” and Karby Leggett, “China Flexes Economic Muscle Throughout Burgeoning Africa,”

The Wall Street Journal, Mar. 29, 2005, p. 1.

 243 The Ministry of Foreign Affairs of the People’s Republic of China, “China and Congo,”

Oct. 12, 2003, found at www.fmprc.gov.cn , retrieved Mar. 17, 2005.

 244 “China Hopes to Expand Trade, Cooperation with Congo: Official,” Xinhua Online, found at

www.chinaview.cn, retrieved on Mar. 16, 2005.

 245 “China’s Rise Disrupts Tropical Country Efforts to Increase Domestic Log Processing,”

pp. 4-5.

2-55

and funding.238 Also, declining crude petroleum production levels at mature fields are

expected to be offset as new fields are tapped, particularly ultradeep-water fields.239

Although much of Republic of the Congo’s natural gas is currently unused, this is likely to

change as a result of a government initiative to use gas to generate electrical power.240

China, reportedly interested in expanding its resource base and in securing supplies of crude

petroleum and energy technology to satisfy its increasing energy needs,241 has been

developing stronger ties with most African counties.242 Republic of the Congo’s major

exports to China include crude petroleum since 2001,243 and wood. Trade between the two

countries nearly doubled in 2004.244 Moreover, exports to China could potentially increase

if Republic of the Congo is able to increase production and exports of downstream forestry

products such as tropical hardwood plywood and veneer. China’s production of tropical

plywood has reportedly increased to the third-highest level in the world to satisfy domestic

consumption and export needs. Moreover, China’s imports of tropical hardwood sawn

lumber increased by approximately 40 percent during 2002-03.245

Domestic and International Barriers

Although certain aspects of doing business in Republic of the Congo are favorable,

companies operating in the country face some complications. While 6 of the business

environment indicators are better than the regional average (i.e., the credit information index,

the time to register a property, the number of procedures needed to start a business, the time

needed to close a business, the minimum capital to start a business, and firing costs), 14 are

lower, including procedures and time needed to enforce contracts; costs incurred to create

collateral, register a property, and start a business; public credit registry coverage; and most

of the employment indicators (table RC-5). Republic of the Congo scored at the regional

average with respect to the cost of enforcing contracts and the number of procedures needed

to register property. Also, import tariffs average 18.0 percent for all goods, and 22.3 percent

on agricultural products. These tariff rates increase the cost of production by making inputs

more costly. Although Republic of the Congo’s overall economic freedom score in 2005 was

on par with the regional average, most of the individual scores were worse than the average

with the exception of the country’s monetary policy and wages and prices scores

(table RC-6).
2-56

Table RC-5

Republic of the Congo: Business environment

Republic of

the Congo

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 10.4 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) ............ 151.1 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 1.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.0 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 560.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 22.5 13.2 4.9

Registering a property: Time (days) ....................................... 103.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 317.6 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) .............. 244.6 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Rep. of the Congo, applied rate, 2002)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.3

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4

 1

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table RC-6

Republic of the Congo: Economic freedom

Republic of

the Congo

Regional

average1

OECD

 average

–––––––––– Heritage Foundation indicators ––––––––––

1995 Overall score ........................................... (2

) 3.6 2.5

2000 Overall score ........................................... (2

) 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . 4.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . 4.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9

 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 246 ADF, “Republic of Congo Policy Reform Programme,” p. 10 of Annex III.

 247 Embassy of the Republic of Congo officials, interview by USITC staff; Washington, DC,

Feb. 15, 2005.

 248 EIU, Congo (Brazzaville) Country Profile, p. 30.

 249 ADF, “Republic of Congo Policy Reform Programme,” p. 10 of Annex III.

 250 “Africa: Congo Brazzaville,” Hardwoodmarkets.com, Aug. 2004, found at

www.hardwoodmarkets,com/sample/aug_04.pdf, retrieved Mar. 16, 2005.

 251 Embassy of the Republic of Congo officials, interview by USITC staff, Washington, DC,

Feb. 15, 2005.

 252 “Africa: Congo Brazzaville.”

2-57

Republic of the Congo’s transport sector, including the transportation infrastructure, has

been characterized as being “in a state of advanced deterioration” and is no longer

considered adequate for the country’s needs.246 Less than 10 percent of Republic of the

Congo’s roads were paved (table RC-7). Insufficient electricity generation has also been

identified as a constraint to increased manufacturing investment in Republic of the Congo.247

According to one source, “the potential for hydroelectric power generation in Republic of

the Congo is vast, but it has only barely been exploited because of the lack of regional

markets and investment to finance new generating capacity.”248 Electric power transmission

and distribution losses as a percent of output have been fairly high, decreasing from

82.9 percent in 1999 to approximately 60-65 percent during 2000-01. Other impediments in

the electricity sector include infrastructure damage from the periods of internal and regional

instability and outdated equipment.249

Table RC-7

Republic of the Congo: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,800.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.6

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.9

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67.2

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.3

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1,368.1

 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Constraints to increased exports of wood and wood products include increased tax rates in

2003 and the country’s inadequate infrastructure.250 The main mode of freight transport

between Brazzaville and the port at Pointe Noire is the Congo-Ocean Railway. Given that

the main north-south road is not paved in its entirety, logs and wood products intended for

export are usually barged down the river from the north and then transferred to the rail line

at Brazzaville for transport to the port.251 However, barging product down the river can only

be done 8 months of the year.252
 253 Embassy of the Republic of Congo officials, interview by USITC staff, Washington, DC,

Feb. 15, 2005.

2-58

Lack of technical capacity to meet phytosanitary and hygiene standards in world markets

were also cited as international impediments. Improved food handling procedures and more

widespread and readily accessible laboratory testing could help ensure that Congolese

agricultural exports meet such standards, potentially allowing for increased exports.253
3-1

CHAPTER 3

Predominantly Mineral-Exporting

Countries: Botswana, Democratic Republic

of the Congo, Guinea, and Zambia

The countries included in this chapter have well-developed mining sectors, and mineral

products account for a large share of their total exports (table 3-1). The materials that are

mined vary by country. Diamonds are the largest export of Botswana and Democratic

Republic of the Congo, and are a significant export of Guinea as well. The predominant

export of Guinea is aluminum, and of Zambia is copper. The other three countries also export

copper. Democratic Republic of the Congo and Guinea also export small quantities of crude

petroleum. Nickel exports are significant for Botswana, as is cobalt for Democratic Republic

of the Congo and Zambia. Botswana and Zambia have downstream operations that produce

wire for export. A summary of findings for each of the four countries with respect to potential

export growth sectors and domestic and international barriers is provided below.

Table 3-1

Botswana, Democratic Republic of the Congo, Guinea, and Zambia, 1999-2003 average share of total exports, by sector 

Sectors Botswana

Democratic

Republic of

the Congo Guinea Zambia

–––– Shares of total exports, 1999-2003 (percent) ––––

Fish and related products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.2 4.1 0.4

Coffee, tea, and spices ....................................... (1

) 1.6 2.0 1.4

Cocoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 0.1 0.8 (1)

Other agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 1.0 0.8 12.6

Forest-based products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 2.3 1.4 0.5

Minerals, metals, and metal products . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90.7 78.6 79.4 73.4

Fuels and electrical energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 15.1 9.8 0.2

Textiles and fibers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 (1

) 0.9 8.3

Apparel and related articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 (1

) (1) 0.1

Other manufactures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 1.2 0.8 3.1 1

 Average share of less than 0.05 percent during 1999-2003.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Botswana

Botswana is heavily dependent on its mining sector, which is likely to provide for future

growth in exports, both in terms of basic commodities and downstream sectors. Likewise,

Botswana’s established beef industry and growing services sectors offer additional

opportunities for expansion and diversification of exports if the country can address the

various infrastructure, labor, resource, and structural barriers that currently constrain the

country’s competitiveness. An international impediment to increased exports is the inability

to meet sanitary and phytosanitary standards in developed-country markets.
3-2

Democratic Republic of the Congo

With Democratic Republic of the Congo’s rich mineral resources, there is substantial room

for growth in mineral production. Diamonds, the country’s main export, have shown strong

growth over the last 10 years and improved export performance is expected. Several new

mining projects are in place that could increase mineral exports in the short term. In addition,

the Kimberley Process has substantially reduced the smuggling of diamonds out of the

country, which should increase legitimate diamond exports by the formal sector.

Hydroelectric power also has great potential and development of this resource has begun.

Coffee is an historically important export that has declined, but may again also show potential

export growth if political stability can be achieved and if the coffee wilt disease can be

controlled. The main barriers to export growth are the less competitive macroeconomic and

business environments, as well as a lack of governance, due in part to regional and domestic

instability. Another serious barrier to trade for Democratic Republic of the Congo is the

country’s poor infrastructure, including the poor road system that forces exporters to use

much more expensive air transport to export their goods. An international impediment to

increased exports is the inability to meet sanitary and phytosanitary standards in certain

markets.

Guinea

Increasing demand for bauxite and related products is expected to support expansion of this

main export. Additionally, there is the potential for export development of iron ore, diamonds,

gold, frozen and processed fish, cocoa beans, mangoes, and pineapples. The main barriers to

export growth are lack of skilled labor, high costs of utilities, inadequate regulatory structure,

lack of government transparency, and deteriorated roads and ports. International impediments

to expanded exports include regional instability and tariff escalation for processed products

in key markets.

Zambia

Zambia has extensive natural resources, including minerals (copper, other metals, and

gemstones), and arable land. Traditionally focused on copper mining and related exports,

Zambia’s economic base is currently structured around agriculture, manufacturing, mining,

and tourism. Potential export growth sectors include agricultural and horticultural products

(e.g., flowers, honey, tobacco, and high-value products such as paprika), wood products (e.g.,

timber, logs, and handicrafts), mineral products (e.g., copper, gemstones, niobium, and

tantalum), leather products, and electricity. Domestic export barriers include macroeconomic

conditions, high production and transport costs, high cost of capital, insufficient technical

knowledge, high energy costs, and low production capacity. Tariff and nontariff barriers such

as rules of origin, regional instability, and the cost associated with accessing neighboring

country transport infrastructure are cited as international barriers to increased exports.
 1

 Prepared by Heidi Colby-Oizumi, Office of Industries.

 2

 World Trade Organization (WTO), Trade Policy Review: Botswana, Apr. 1, 1998, p. 1.

 3

 For more information on country classification, see the World Bank’s classification of

economies at www.worldbank.org/data/countryclass/classgroups.htm.

 4

 U.S. Department of State, Bureau of African Affairs, “Background Note: Botswana,”

Feb. 2005, found at www.state.gov, retrieved Feb. 22, 2005.

 5

 Economist Intelligence Unit (EIU), Botswana Country Profile, 2004, p. 29; and Central

Statistics Office, “Estimated Number of Paid Employees by Sector and Economic Activity,” found

at www.cso.gov.bw, retrieved Apr. 22, 2005.

 6

 Based on the Botswana fiscal year, which runs from April to March. Figure represents the

percentage of growth from the previous fiscal Year. U.S. & Foreign Commercial Service

(US&FCS), “2005 Country Commercial Guide: Botswana,” found at www.stat-usa.gov, retrieved

Apr. 1, 2005.

 7

 Discover Botswana, “2002 Investors Guide to Botswana: Structure of the Economy,” found

at www.discover-botswana.com, retrieved Apr. 6, 2005.

 8

 Consisting of lodging facilities, safari operations, and travel agencies. US&FCS, “2005

Country Commercial Guide: Botswana.”

 9

 Data include hotel and restaurant employees and are for the year ending September 2003. 

Central Statistics Office, “Estimated Number of Paid Employees by Sector and Economic

Activity.” 

 10 The IFSC was created with the objective of making Botswana a strategically located regional

financial hub to provide cross-border financial services to companies headquartered in other

countries. Services include banking, investment funds, financial advisory services, information and

communication services, call centers, and back office processing services. A range of fiscal

incentives are provided to both financial and nonfinancial institutions to encourage them to

establish in the IFSC.

3-3

Botswana1

Economic Overview

Botswana is a land-locked country in the southernmost part of the continent, bordered by

Zambia, Zimbabwe, South Africa, and Namibia. Approximately 70 percent of the country’s

581,730 square kilometers is covered by desert.2

 The country is prone to drought, and less

than 1 percent of the land is arable (table BT-1). In 2003, GDP was $7.4 billion, and per

capita GDP was $4,346, making Botswana a middle-income country3

 and one of the most

prosperous nations in Africa. The country experienced uninterrupted growth averaging over

9 percent during the three decades following independence,4

 primarily driven by the discovery

of diamonds and development of the mining sector in the 1970s. 

The largest contributor to GDP at 46.1 percent is the services sector, which consists largely

of public-sector operations (government), followed by tourism and financial services (figure

BT-1). The public sector is one of the largest sources of employment in Botswana, accounting

for roughly one-half of total formal sector employment in central and local government

agencies and parastatal operations.5

 Tourism as a contributor to GDP has become increasingly

important, and the sector grew by 3.8 percent in 2003.6

 Tourism has become the country's

second-largest foreign exchange source, contributing $240 million per year.7

 The sector

consisted of 525 licensed tourist enterprises8

 and employed approximately 10 percent of the

workforce in 2003.9

 Botswana’s financial services sector has also developed rapidly,

particularly since establishment in 1999 of the International Financial Services Centre

(IFSC),10 a project initiated by the government and modeled after 
3-4

Table BT-1

Botswana: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 7,387.7

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 4.7

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 4.0

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... 9.2

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 479.9

Total debt service (percent of exports of goods and services, 1999) ....... ....... ....... ....... ....... .... 2.1

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... 53.1

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 91.8

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 4.9

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 1.7

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 0.6

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 0.8

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 45.2

Literacy rate, adult total (percent of people ages 15 and above, 2002) ....... ....... ....... ....... ....... . . 78.9

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... .

 2 108.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ...... 79.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 0.7

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 25.1

Gross fixed capital formulation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... 11.4

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 0.7

 Most recent year for which data are available between 1999 and 2003. 1

Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school 2 

age.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.

Figure BT-1

Botswana: Composition of GDP (2002/03)
 11 US&FCS, “2005 Country Commercial Guide: Botswana.”

 12 Ibid.

 13 EIU, Botswana Country Profile, p. 28. Data from the Central Statistics Office for 2003

indicate an even lower figure of less than 3 percent.

 14 U.S. Department of State, Bureau of African Affairs, “Background Note: Botswana.” 

 15 The Government of Botswana owns 7.5 percent of the company, the Lion Ore Mining

International Limited Group owns 7.5 percent, and Botswana RST Limited owns the remaining

85 percent. Botswana RST is a holding company that is 40-percent owned by the public,

30-percent owned by the Government of Botswana, 25-percent owned by Lion Ore Mining

International, and 5-percent owned by other interests.

 16 EIU, Botswana Country Profile, p. 36.

 17 FDI increased from net outflows in 1993, peaked in 1997 at $100.1 million, and trended

downward to $36.8 million in 2002. World Bank, “World Development Indicators,” found at

http://devdata.worldbank.org/dataonline, retrieved Feb. 1, 2005.

 18 U.S. Department of State, “2005 Investment Climate Statement: Botswana,” found at

www.state.gov, retrieved Apr. 22, 2005; and U.S. Department of State telegram, “Botswana

USITC Response,” message reference No. 0261, prepared by U.S. Embassy, Gaborone, Feb. 2005.

 19 Ibid.

3-5

the Dublin IFSC. Botswana is targeting financial services as a means to increase exports,

economic diversification, global integration, employment opportunities, and skilled labor

development. The market for both tourism and financial services is estimated to have doubled

during 2002-04.11

Mining is the primary industry in Botswana, contributing 34.8 percent to GDP in 2003 and

providing one-half of government revenues.12 In contrast to the services sector, the mining

industry accounts for less than 5 percent of total employment in the formal sector.13 This

capital-intensive sector is heavily dominated by the extraction of diamonds, with additional

production of copper-nickel mattes, soda ash, salt, and gold. Botswana is the largest exporter

of gem-quality diamonds in the world, with output of 31 million carats in 2004,14 and

diamond exports are the largest source of foreign exchange for the country. Debswana, an

equal partnership between the Government of Botswana and South Africa’s DeBeers, operates

four diamond mines in Botswana. Also partially owned by the government, Bamangwato

Concessions, Ltd. (BCL)15 is the second-largest mining company in Botswana and operates

copper-nickel and soda ash mines. 

Agriculture, largely cattle production and subsistence farming, was the primary economic

activity prior to development of the diamond industry. The sector now contributes only

2.4 percent to GDP, but remains an important industry and a mainstay in the rural community.

Cattle are valued in Botswana culture and the industry receives government support and

incentives. Currently, beef processing accounts for approximately 80 percent of agricultural

output.16

The Government of Botswana is interested in attracting investment to facilitate diversification

of the economy and lessen dependence on the mining sector. However, despite various

incentives, high sovereign ratings by Moody’s and Standard and Poors, and being ranked as

one of the least corrupt countries in Africa, foreign direct investment (FDI) as a percentage

of Botswana’s GDP is less than 1 percent.17 FDI inflows into Botswana have been largely

dominated by investment in manufacturing activity linked to the mining sector, which

accounted for 71.2 percent of total FDI inflows in 2002.18 The second- and third-ranked

sectors for investment were financial services and retail and wholesale operations.19 Europe
 20 U.S. Department of State, “2005 Investment Climate Statement: Botswana.”

 21 World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

 22 WITS data for exports from Botswana prior to 2000 are unavailable. However, data from

Botswana’s Central Statistics Office show that exports of diamonds have consistently been

Botswana’s top export commodity since 1980, followed by copper-nickel matte as the secondlargest export, and meat as the third-largest export. In 1994, exports of diamonds accounted for

nearly 75 percent of total exports, copper-nickel matte for just over 5 percent of exports, and meat

for close to 4 percent of exports from Botswana. In 1999, these commodities accounted for

79 percent, nearly 5 percent, and just under 2 percent of total exports, respectively. Central

Statistics Office, Exports by Principal Commodities, Ministry of Finance and Development

Planning, found at www.cso.gov.bw, retrieved Apr. 19, 2005.

 23 U.S. Geological Survey (USGS), “The Mineral Industry in Botswana,” Minerals Yearbook

2002, vol. III, p. 5.1.

 24 WTO, Trade Policy Review: Botswana, p. 54; and US&FCS, “2005 Country Commercial

Guide: Botswana.”

 25 Trade Law Centre for Southern Africa, “EU Bans Meat Imports from Botswana,”

Jan. 21, 2003, found at www.tralac.org, retrieved Mar. 1, 2005.

3-6

is the main source of foreign investment, contributing 51.4 percent of FDI inflows into

Botswana in 2002, followed closely by South Africa, which contributed 43.9 percent.20

Export Profile

Total exports from Botswana increased by 197 percent from $725 million in 200021 to nearly

$2.2 billion in 2003, and trade represented 91.8 percent of GDP in 2003 (table BT-1).

Botswana’s dependence on diamonds is evident in the country’s export profile. Exports of

rough diamonds accounted for 87.6 percent of total exports in 2003 (tables BT-2 and BT-3),

and grew by 278 percent during 2000-03.22 Such growth was driven by expansion of

Debswana’s Orapa mine, completed in 2000, which doubled the output capacity of the

facility. The bulk of diamonds are shipped to DeBeers’ London-based Diamond Trading

Company and, as a result, the United Kingdom was Botswana’s largest export market in 2003,

accounting for 84.0 percent of total exports (table BT-4). Thailand, which has emerged as one

of the larger diamond polishing centers in Asia, was the third-largest destination for

Botswana’s exports in 2003, primarily for rough diamonds.

Exports of nickel mattes, Botswana’s second-largest export item, accounted for 7.7 percent

of total exports and were shipped primarily to Norway, Botswana’s second-largest market,

for further processing. Exports of copper-nickel matte increased by 98 percent during 2000-

03, reflecting an increase in domestic capacity and production in the last year of the period.23

Agricultural products, namely meat and edible meat offal, round out Botswana’s top three

export categories. Such exports accounted for just 1.9 percent of total exports and consisted

primarily of fresh, chilled, or frozen beef. Botswana is a net exporter of beef, with

approximately 90 percent of production exported.24 The majority of exports go to the EU

market, where Botswana beef qualifies for preferential duty-free access under a quota of

approximately 19,000 metric tons per year. Outbreaks of foot and mouth disease (FMD) in

2002 and 2003, and subsequent bans on deboned beef from Botswana by South Africa and

the EU,25 were the likely cause of a 6-percent contraction in beef exports during 2000-03.
3-7

Table BT-2

Botswana: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––– 1,000 dollars –––––– ––––– Percent –––––

71 Natural or cultured pearls, precious or semiprecious stones,

precious metals; precious metal clad metals, articles thereof;

imitation jewelry; coin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 1,888,211.5 87.6 (2)

75 Nickel and articles thereof. ............................... (1

) (1) 166,627.8 7.7 (2)

02 Meat and edible meat offal ............................... (1

) (1) 41,955.7 1.9 (2)

85 Electrical machinery and equipment and parts thereof; sound

recorders and reproducers, television recorders and

reproducers, parts and accessories ...................... (1

) (1) 25,110.5 1.2 (2)

61 Articles of apparel and clothing accessories, knitted or

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 10,429.7 0.5 (2)

41 Raw hides and skins (other than furskins) and leather ......... (1

) (1) 5,004.3 0.2 (2)

62 Articles of apparel and clothing accessories, not knitted or

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 3,761.5 0.2 (2)

25 Salt; sulfur; earths and stone; plastering materials, lime and 

cement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 3,076.3 0.1 (2)

74 Copper and articles thereof. .............................. (1

) (1) 1,506.3 0.1 (2)

88 Aircraft, spacecraft, and parts thereof ...................... (1

) (1) 941.1 0.0 (2)

 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 7,917.1 0.4 (2)

 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 2,154,541.7 100.0 (2)

1

 Not available.

2

 Undefined.

Note.—Data for Botswana prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS.

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
3-8

Table BT-3

Botswana: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

–––––– 1,000 dollars –––––– ––––– Percent ––––––

7102 Diamonds, whether or not worked, but not mounted or set ...... (1

) (1) 1,888,182.7 87.6 (2)

7501 Nickel mattes, nickel oxide sinters and other intermediate

products of nickel metallurgy ........................... (1

) (1) 166,627.8 7.7 (2)

0201 Meat of bovine animals, fresh or chilled ..................... (1

) (1) 29,381.9 1.4 (2)

8544 Insulated wire, cable and other insulated electrical

conductors; optical fiber cables, of individually sheathed 

fibers, with conductors etc. or not ........................ (1

) (1) 23,601.3 1.1 (2)

0202 Meat of bovine animals, frozen ........................... (1

) (1) 12,566.8 0.6 (2)

6110 Sweaters, pullovers, sweatshirts, waistcoats (vests) and

similar articles, knitted or crocheted . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 6,146.7 0.3 (2)

4104 Tanned or crust bovine (including buffalo) and equine hides 

and skins, without hair on, whether or not split, but not

further prepared ..................................... (1

) (1) 5,002.2 0.2 (2)

6109 T-shirts, singlets, tank tops and similar garments, knitted or 

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 3,550.2 0.2 (2)

6204 Women's or girls' suits, ensembles, ........................ (1

) (1) 2,038.7 0.1 (2)

2501 Salt (incl. table & denatured salt) & pure sodium chloride, 

whether or not in aqueous solution or contain added

anticaking/free flowing agents; sea water ................. (1

) (1) 1,650.1 0.1 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 15,793.4 0.7 (2)

 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 2,154,541.7 100.0 (2) 1

 Not available.

2

 Undefined.

Note.—Data for Botswana prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS.

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table BT-4

Botswana: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars –––––––– –––––– Percent –––––––

United Kingdom ...................................... (1

) (1) 1,810,028.3 84.0 (2)

Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 161,536.8 7.5 (2)

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 77,493.2 3.6 (2)

Japan .............................................. (1

) (1) 20,058.0 0.9 (2)

Portugal ............................................ (1

) (1) 19,534.9 0.9 (2)

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 14,221.0 0.7 (2)

Canada ............................................. (1

) (1) 12,393.6 0.6 (2)

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 7,995.0 0.4 (2)

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 5,019.2 0.2 (2)

Greece . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 4,232.6 0.2 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 22,029.2 1.0 (2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 2,154,541.7 100.0 (2)

1

 Not available.

2

 Undefined.

Note.—Data for Botswana prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS.

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 26 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 27 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 28 “Mogae Opens Botswana’s First Gold Mine,” Business Report, Feb. 14, 2005, found at

www.businessreport.co.za, retrieved Apr. 4, 2005.

 29 EIU, Botswana Country Profile, p. 23; United Nations Conference on Trade and

Development, Growth and Diversification in Mineral Economies: Planning and Incentives for

Diversification, Nov. 2000, p. 17; and government officials, interview by USITC staff, Gaborone,

Botswana, Mar. 10, 2005.

 30 “Mogae Opens Botswana’s First Gold Mine.” 

 31 Government of Botswana, Minister of Finance and Development Planning, 2003 Budget

Speech, delivered Feb. 2005, found at www.sarpn.org.za, retrieved Apr. 25, 2005.

 32 EIU, Botswana Country Profile, p. 39.

 33 USGS, “The Mineral Industry in Botswana,” p. 5.1.

 34 Ibid.

 35 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

3-9

Sectors with the Greatest Export Growth Potential

In the short to medium term, Botswana is expected to rely heavily on its mining sector,

particularly diamonds, for export earnings. Botswana scores especially high in terms of the

revealed comparative advantage26 (RCA) index in many of the commodities it currently

exports, including diamonds, copper and nickel mattes, and salt (appendix E, table E-3).

Botswana’s ability to increase exports of these products is uncertain; however, there is

potential to develop other mined products and downstream processing. There is reportedly

potential for exploitation in numerous minerals and base metals. Botswana is considering

expanding into new areas such as industrial minerals and dimension stone, and is building a

database cataloging the country’s resources.27 In addition, Botswana’s first gold mine opened

this year, and output is forecast at 100,000 ounces per year over an expected life of not less

than 5 years.28 The government supports expansion, prospecting, and investment in new mine

development,29 in spite of its stated desire to curtail dependence on nonrenewable resources.30

In 1999, the Mining and Minerals Act was revised to increase private-sector investment in

mining exploration in remote areas. The government maintains and provides base geological

data to encourage exploration and reduce investor risk in mining ventures.31

In addition to mineral diversification, there may be potential to increase exports in established

commodities, and prospecting in such areas has increased. Although the Government of

Botswana has noted that diamond production will decline in the future, Debswana reportedly

has indicated that it may be possible for production to increase.32 Botswana’s current diamond

mines are expected to be able to produce significant output for the next 25-30 years.33 The two

copper-nickel mines are expected to remain viable until approximately 2011 and 2017,34 and

the introduction of advanced technologies in recovery and processing could enhance greatly

the performance of this sector. 

With its large supply of mineral resources, there is great potential and particular interest in

the downstream processing of these resources, including diamond polishing and glass

manufacturing. Botswana started cutting and polishing diamonds in the 1980s, and there are

currently three foreign-invested diamond cutting and polishing facilities in operation.

Botswana hopes to add one new facility per year through 2008.35 The industry has heretofore

focused on smaller stones of less than one-half carat, which reportedly has hindered growth
 36 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 37 “Glass Manufacturing,” draft industry sector analysis, U.S. Embassy in Botswana, received

Mar. 10, 2005.

 38 Ibid.

 39 WTO, Trade Policy Review: Botswana, p. 48.

 40 US&FCS, “2005 Country Commercial Guide: Botswana.”

 41 U.S. government officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005.

 42 Industry officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005.

 43 Industry officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005.

 44 Industry officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005.

 45 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005.

 46 Industry and policy analysts, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

3-10

and competitiveness; there is recognition that the industry must progress to the processing of

larger stones in order for the sector to grow.36

Additional processing sectors are also emerging. Although currently there is limited domestic

production, jewelry making is recognized as a potential sector for development, albeit on a

much smaller scale than downstream processing in the diamond sector. Likewise, while there

are no current producers, the glass manufacturing sector also holds potential for industrial

development and export diversification, as the basic chemical used in glass, soda ash, is

readily available. Foreign and local investors have indicated interest in glass manufacturing

joint ventures, and domestic demand exists that could provide a springboard to the

international market. In particular, there is reportedly a regional market for glass fibers, sheet

glass, and specialty glass, as well as potential international markets for exports of container

glass.37 As the domestic market is estimated to be small, manufacturers would likely target

external markets for their product.38

Similar to the mining sector, Botswana enjoys a high comparative advantage in fresh or

frozen beef, another of its major exports. Although some of the land in Botswana is conducive

to grazing, the large desert area, erratic rainfall, and poor soil conditions hinder cultivation

of agricultural crops.39 Prior to bouts of FMD in 2002 and 2003, the cattle population

increased by 19 percent to 2.9 million head during 2001-02.40 As a result of the disease and

drought conditions, the Botswana Meat Commission (BMC), a parastatal solely responsible

for the slaughter and marketing of beef exports, currently is operating at approximately

25 percent capacity;41 therefore, there is potential for increased exports if the industry

successfully addresses the impediments to sector growth. Another possible growth industry

is ostrich meat. While Botswana has the largest supply in Africa,42 it is currently a marginal

international producer, with only 2 of 43 farmers processing through to the slaughter stage.43

Since 2004, Botswana has exported small quantities of ostrich meat to the EU, where it is

valued for its low cholesterol content. There is potential to increase market share, as

Botswana’s product is reportedly competitive with that of other regional producers.44

There is also growth potential in downstream processing within the agricultural sector,

specifically the processing of bovine hides and skins and the manufacturing of leather

products. Botswana’s large cattle industry represents a source of raw material input. However,

because Botswana does not have the necessary processing facilities, hides and skins are

exported to Italy and South Africa for processing into car seats, furniture, or other specialty

leather products. After several years of attempting to establish a tanning industry, the

Botswana Development Corporation announced that it found a technical partner to assist in

the development of a leather-tanning project in Lobatse.45 In addition, reportedly there are

proposals for private-sector partnerships.46
 47 Elissa Leibowitz, “Hot Spots 2004,” The Washington Post, Jan. 4, 2004, as quoted in

“Tourism and Investment,” U.S. Embassy in Botswana, found at www.gaborone.usembassy.gov,

retrieved Apr. 25, 2005.

 48 EIU, Botswana Country Profile, p. 48.

 49 U.S. Department of State telegram, “Botswana’s Business Processing Outsourcing Strategy

to Target U.S. Market Faces Impediments,” message reference No. 1705, prepared by U.S.

Embassy, Gaborone, Oct. 2004.

 50 Ibid.

 51 Industry officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 52 U.S. Department of State telegram, “Botswana USITC Response;” and EIU, Botswana

Country Profile, p. 43.

 53 Industry officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

3-11

Botswana’s vast wilderness and wildlife give it a natural competitive advantage in tourism,

and the sector has significant growth potential. Botswana is home to large populations of

diverse wildlife species and the country maintains one of the largest protected areas in Africa.

Tourism is largely concentrated in the Okavango Delta and Chobe National Park. In 2004,

Botswana was rated as one of the best vacation spots worldwide.47 The Government of

Botswana is actively promoting the sector via project development, marketing and promotion,

infrastructure facilitation, support and funding for training, and the encouragement of private

investment. There are plans to establish a National Tourism Board, which will assist the

industry in marketing, regulating, and promotion. As the majority of tourists to Botswana are

from South Africa and Zimbabwe,48 there is potential to attract a greater volume of visitors

from outside of the region. 

The government is also targeting the financial services sector, specifically business process

outsourcing (BPO). Aided by government-backed incentives and estimates for sustained

growth in the market for BPO services over the next 5 years,49 the government plans to

increase exports of such services. A study commissioned by the IFSC identified short-term

growth potential in call centers, data entry, and salary processing; mid-term potential in

accounting, insurance processing, and desk support; and long-term growth in advanced

accounting, data mining, and transaction processing.50 Companies operating within the IFSC

benefit from an “enabling environment,”51 including incentives such as a guaranteed corporate

tax rate of 15 percent until 2020; exemption of withholding taxes on interest, commercial

royalties, or dividends paid by an IFSC company to a nonresident; tax exemption for

collective investment undertakings; and exemption from normal work permit regulations.52

Currently, the IFSC has 26 companies accredited to operate and 12 that are operational.53 The

English-speaking skills of the population, combined with rising costs and the inability of

traditional competitor nations such as India to meet global demand could provide

opportunities for the Botswana BPO sector, provided the industry can address the

impediments to performance and expansion.
3-12

Domestic and International Barriers

In general, the business environment in Botswana is relatively good. Botswana ranks better

than its neighbors and many OECD countries on a number of the processes involved in

operating a business (table BT-5). Botswana also compared favorably against regional and

OECD countries on most broad factors of economic freedom (table BT-6), indicating a

comparatively low level of government interference in the economy. Nonetheless, a number

of impediments remain to growth in current exports and the development of new export

industries. 

Table BT-5

Botswana: Business environment

Business process Botswana

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 50.9 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 2.0 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita).............. 309.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.8 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 154.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 5.0 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0 11.0 6.0

Starting a business: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . . . . 11.3 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 0.0 254.1 44.1

Starting a business: Time (days).......................................... 108.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Botswana, applied rate, 2002)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.
 54 Based on data published by the Joint United Nations Programme on HIV/AIDS, found at

www.unaids.org, retrieved May 2, 2005.

 55 Botswana and U.S. government officials, interviews by USITC staff, Gaborone, Botswana,

Mar. 10-11, 2005. 

 56 Botswana and U.S. government officials, interviews by USITC staff, Gaborone, Botswana,

Mar. 10-11, 2005. 

 57 U.S. government officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005.

 58 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 59 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

3-13

Table BT-6

Botswana: Economic freedom

Botswana

Regional

 average1

OECD 

average

–––––– Heritage Foundation indicators ––––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . 4.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 4.1 1.9

 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.

A key issue facing all industries in Botswana is HIV/AIDS and its effect on the workforce.

Botswana has one of the highest adult infection rates in Africa,54 and while the government

is proactive in its program to treat and prevent the disease, low labor productivity, the loss of

workers, absenteeism, high turnover, and the diversion of resources toward HIV/AIDS

treatment and prevention are a present reality affecting many businesses and further industrial

development.55 Such problems are also the result of a reported low work ethic among the

general population.56 Although education is largely free, the country lacks skilled labor

necessary for diversification into more skill-intensive industries such as tourism and BPO.

Difficulties in securing visas for foreign workers and specialists, together with strict labor

laws that essentially render shift work or overtime unfeasible, limit labor market flexibility.57

The distance and size of international markets is cited as a major constraint to Botswana’s

exports, as the country does not have extensive experience in international marketing, nor the

capacity to meet demand in many potential markets. Because of the large-volume orders

required by some purchasers, companies in Botswana find it difficult to meet demand even

if opportunities became available. Consequently, only large companies are taking advantage

of export opportunities.58 In addition, smaller producers find it difficult to join together to take

advantage of the economies of scale necessary to produce sufficient quantities, while

controlling production and quality.59

High utility costs are another impediment to industry development and export growth.

Generation costs for electricity are high, largely because of the small consumer base and lack
 60 Government and industry officials, interviews by USITC staff, Gaborone, Botswana,

Mar. 10, 2005. 

 61 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005. 

 62 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 63 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 64 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 65 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 66 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 67 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 68 EIU, Botswana Country Profile, p. 23.

 69 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 70 U.S. government officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005.

 71 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 72 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 73 US&FCS, “2005 Country Commercial Guide: Botswana.”

3-14

of industrial utility rates.60 Moreover, Botswana sources 70 percent of its electricity from

South Africa, which is expected to face its own shortages in the near future.61 The excess

supply of electricity available from South Africa is expected to cease in 2007,62 and 2009 is

the earliest that Botswana can bring on new capacity.63 

The country also faces water constraints. Botswana imports water, and as with electricity,

water costs are high. The large quantity of water necessary for mineral projects is particularly

problematic because of supply constraints, cost, and the competing need of the population for

potable water.64 Moreover, Botswana is limited in expanding its water resources. All potential

dam sights in the country have been dammed or are being dammed.65 Botswana is examining

the possibility of importing surplus water from countries in the region and desalination of

underground water, which is currently done in limited areas on a small scale.66 However,

desalination requires advanced technologies and is expensive. 6 7

The issue of Botswana’s distance to potential or target markets is exacerbated by

infrastructure constraints and high rates for the transportation of goods, which are cited as

impediments to growth in exports. Although the road system is comparatively good, with 55.0

percent of roads paved (table BT-7) and good linkages between major cities and surrounding

countries,68 the cost to transport goods by land is higher than that for air or sea freight.69

Botswana’s goods primarily ship from Durban, with a smaller percentage going through

Walvis Bay in Namibia. It reportedly costs the same to ship goods within the region as it does

to ship products between Durban, South Africa, and Hong Kong.70 As a land-locked country,

goods shipped by sea must be dispatched from neighboring countries’ ports, which adds time,

cost, and the potential for delays. In one instance, Botswana studied the possible exportation

of coal but ultimately abandoned the project because of the infrastructure costs and

constraints.71 The lack of sufficient capacity at ports in South Africa is also cited as an

impediment to increased exports.72

The beef and leather industries are highly constrained by the current structure of the industry.

The BMC holds a monopoly over beef exports, and farmers have no option but to sell beef

for export to the BMC at prices that may be lower than prices in the international market.

While this system ensures quality control and protects Botswana’s reputation in end markets,

it has slowed modernization and investment in the livestock and slaughter industry.73
 74 Government officials and industry and policy analysts, interview by USITC staff, Gaborone,

Botswana, Mar. 10, 2005.

 75 Off-take rate is the ratio of the number of animals slaughtered over some time (generally a

year) to the total size of the herd at some point in time (the number of head of livestock).

 76 This means that the country has not had an outbreak for the last 2 years, that vaccination has

not been practiced for at least 12 months, that barriers exist to separate the free zone from the

infected areas, and that since the time that vaccination ceased in the country, there have been no

imports of vaccinated animals.

 77 Industry and policy analysts, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 78 UN Integrated Regional Information Networks, “Botswana: Cattle Owners Still Recovering

from FMD Outbreaks,” Jan. 14, 2005, found at www.IRINnews.org, retrieved Mar. 1, 2005.

 79 Industry and policy analysts, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 80 U.S. Department of State telegram, “Botswana USITC Response.” 

 81 Industry and policy analysts, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005. 

3-15

Table BT-7

Botswana: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,217.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.0

Transport services (percent of service exports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.7

Transport services (percent of service imports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.0

Fixed line and mobile phone subscribers (per 1,000 people, 2002)........................................ 328.5

Internet users (per 1,000 people, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.7

Mobile phones (per 1,000 people, 2002) ............................................................ 241.3

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.2

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Favorable prices in overseas markets for unprocessed hides and skins has limited the domestic

supply of raw materials available for local downstream processing such as tanning and

finishing.74

Additional issues are the low cattle off-take rate75 and the need for consistent and rigorous

disease prevention and control. Botswana lost its status as an FMD-free country (granted in

2001) following two outbreaks in 2002 and 2003. Through fencing and vaccination, FMD

was brought largely under control, and Botswana was designated in 2003 as an “FMD-free

zone without vaccination.”76 However, while the EU will accept beef originating in areas

other than those with FMD, Japan, for example, will not allow beef imports from a country

that has FMD anywhere.77 Moreover, the outbreaks led to temporary closures, resulting in

reduced output and the destruction of approximately 16,781 infected cattle. The government’s

restocking programs replaced only about one-third of the depleted herds, largely because

many farmers chose financial compensation instead.78 Botswana currently does not have the

capacity to fill its quota for beef to the EU, and reportedly the country has never tried to

certify its beef for the U.S. market because it cannot begin to fill the size of potential orders.79

Moreover, the country’s ability to meet the stringent quality requirements and standards of

developed countries is limited because of inadequate testing infrastructure.80 The cost of

compliance with international standards is also a burden for Botswana producers.

Additional factors affecting the tanning and leather industries are the high cost of investment

necessary to establish tanning facilities,81 a lack of technical skills, and limited awareness of,
 82 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 83 The ComMark Trust/BIDPA, The Potential for Export Diversification in Botswana: Ostrich

Products Case Study, Dec. 2004, found at www.bidpa.bw/The%20ostrich%20sector.pdf, retrieved

May 26, 2005.

 84 Industry officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005.

 85 U.S. Department of State telegram, “Botswana’s Business Processing Outsourcing Strategy

to Target U.S. Market Faces Impediments,” message reference No. 1705, prepared by U.S.

Embassy, Gaborone, Oct. 2004; and government officials, interview by USITC staff, Gaborone,

Botswana, Mar. 10, 2005.

 86 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005.

 87 U.S. Department of State telegram, “Botswana’s Business Processing Outsourcing Strategy.”

 88 Ahmet Soylemezoglu, Botswana’s Financial Sector: Issues and Prospects (2005), pp. 21 and

29, found at www.bidpa.bw/Financial%20sector.pdf, retrieved May 26, 2005.

 89 U.S. government officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005.

 90 U.S. government officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005.

 91 U.S. government officials, interview by USITC staff, Gaborone, Botswana, Mar. 11, 2005. 

 92 Government officials, interview by USITC staff, Gaborone, Botswana, Mar. 10, 2005; and

EIU, Botswana Country Profile, p. 48.

 93 The World Bank and the Botswana Institute for Development Policy Analysis, Developing

Tourism in Botswana: Progress and Challenges, Dec. 2004, p. 80, found at

www.bidpa.bw/The%20tourism%20sector.pdf, retrieved May 26, 2005.

3-16

and experience with, changing styles in international markets for leather products.82 The

ostrich products sector faces high costs and supply constraints for breeding stock, which is

largely imported.83 Also, there is currently an export duty in place of approximately $6.50 per

bird for ostriches. There have been recommendations from research groups to remove the duty

to allow the industry and exports to expand.84

As noted, an insufficient pool of skilled labor prevents Botswana from having a comparative

advantage in service sector exports. With less than 88 telephone lines per 1,000 people, the

telecommunications infrastructure in Botswana is insufficient, which potentially affects all

industries, but is of particular significance with respect to BPO services. Telecommunications

costs are high and the information technology infrastructure is lacking in terms of bandwidth

and high-speed switching capability.85 The telecommunications industry is considering tailormade packages and pricing for companies with critical needs in the BPO sector.86 In addition,

delays in company certifications and work permit processing have deterred some service

providers from locating in Botswana.87 Wages in the financial services sector are also

reportedly up to 267 percent higher than in competitor countries such as Mauritius, India, and

South Africa, and the current regulatory environment is not sufficient to promote sustained

growth.88

The lack of a competitive air transport policy and land issues reportedly are constraints to

tourism sector expansion. For example, with respect to land rights, investors in the tourism

sector might only be able to get a 5-year lease, whereas investors in other sectors can get

20-year leases, and lease renewals in the sector are not automatic.89 Fees may increase

dramatically and unexpectedly,90 as the lack of transparency is reportedly a concern in the

tourism industry.91 Further, while the manufacturing and financial services sectors benefit

from preferential corporate tax rates, operators in the tourism sector do not receive such

incentives. Regionally, conflicts in Zimbabwe have hurt Botswana’s tourism sector, as

packages combining visits to Chobe (northern Botswana) and Victoria Falls (southern

Zimbabwe) have been a key source of income.92 Also, neighboring countries’ varying systems

and procedures for immigration and customs result in delays and added costs, which

discourage tourists from moving between countries in the region.93
 94 Botswana and U.S. government officials, interviews by USITC staff, Gaborone, Botswana,

Mar. 10-11, 2005.

3-17

While there are domestic constraints affecting the ability to meet sanitary and phytosanitary

standards, administrative issues in markets such as the United States and the EU exacerbate

the issue of getting products approved for export. In some cases, once documents are

submitted, it reportedly takes years to get approval, particularly in the United States. Also, the

technical specificity and detail required by U.S. and European agencies is difficult for

producers from countries such as Botswana, which have limited standards compliance

capacity.94
3-18
 95 Prepared by Karen Taylor, Office of Industries.

 96 Economist Intelligence Unit (EIU), Democratic Republic of Congo Country Profile, 2004,

p. 27.

 97 Phillippe Beaugrand, “Zaire’s Hyperinflation, 1990-1996,” IMF Working Paper WP/97/50,

Apr. 1997, pp. iii and 3.

 98 EIU, Democratic Republic of Congo Country Profile, pp. 29-35.

 99 Ibid., p. 34.

3-19

Democratic Republic of the Congo95

Economic Overview

Democratic Republic of the Congo (formerly known as Zaire), although rich in natural

resources, has experienced severe economic problems because of civil war, lack of good

governance, and economic mismanagement. From the late 1990s, economic problems

accelerated as the country experienced civil and regional unrest and economic instability. The

conflict in Democratic Republic of the Congo stems from the influx of Rwandan refugees and

regional conflict involving Angola, Uganda, and Zambia. Various rebel groups still control

some areas, including areas rich in natural resources such as minerals and coffee. Foreign

currency restrictions and government-created monopolies have adversely affected the

economy. However, despite economic instability, there is still a large external trade sector

driven primarily by diamond mining.

Real GDP declined by an average of 5.2 percent annually between 1996 and 2001 and is now

lower in real terms than at independence from Belgium in 1960.96 Although Democratic

Republic of the Congo’s GDP of $5.6 billion (table DR-1) is higher than that of many other

southern African countries, its per capita GDP (approximately $105) is the lowest in subSaharan Africa (SSA). Inflation, which peaked at 10,000 percent in 1994,97 was reduced to

31.5 percent in 2001 through monetary controls. Also in 2001, the government rescinded the

1999 restrictions on possession of foreign currency and conducting transactions in foreign

currency.

The agriculture and forestry sector accounted for 57.2 percent of GDP in 2001 (figure DR-1).

The main cash crops are coffee (15th-largest producer in the world), palm oil, cotton, cocoa,

rubber, and tobacco. Cash crop production has declined substantially, while subsistence crop

output (mostly cassava, rice, and plantains) has increased, a sign of political instability and

deteriorating economic conditions.98

Services accounted for 23.8 percent of GDP in 2001. An important component of the services

sector is financial services, which has suffered from the political and economic instability.

Many of the banks have accumulated unrecoverable loans, and loan credit has ceased except

for short-term trade finance. Consequently, most businesses finance their operations from

their own revenue or from the informal financial sector. Banks have maintained profitable

operations through high transaction fees.99

Mining contributed nearly 10 percent to GDP in 2001, although its contribution to GDP has

shrunk in recent years. The main minerals are copper, cobalt, zinc, and diamonds. The copper

industry was formerly the mainstay of the economy. However, there has been little 
3-20

Table DR-1

Democratic Republic of the Congo: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... .... 5,600.2

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... .... 5.0

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... . . 1.9

Inflation, consumer prices (annual percent, 2002) ....... ....... ....... ....... ....... ....... ....... ...... 31.5

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ....... 8,726.4

Total debt service (percent of exports of goods and services) ....... ....... ....... ....... ....... ....... .... ( )2

Exports of goods and services (percent of GDP, 1999) ....... ....... ....... ....... ....... ....... ....... . . 18.9

Trade (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... 40.9

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ....... 405.3

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 53.2

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ..... 3.0

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 22.0

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 41.8

Literacy rate, adult total (percent of people ages 15 and above) ....... ....... ....... ....... ....... ....... . . ( )2

Primary school enrollment ratio, total (percent) ....... ....... ....... ....... ....... ....... ....... ....... . ( )2

Secondary school enrollment ratio, total (percent, 1999) ....... ....... ....... ....... ....... ....... ....... . 18.4

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... . . 3.0

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... 13.8

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ... 13.8

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... ... 0.6

 Most recent year for which data are available between 1999 and 2003. 1

 Not available. 2

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure DR-1

Democratic Republic of the Congo: Composition of GDP (2001)

Note.—Secondary is defined as manufacturing, construction, electricity, water, and other utilities.

Source: EIU, “Economic Structure,” found at www. viewswire.com, retrieved Feb. 1, 2005.
 100 Gecamines is the acronym for La Générale des Carrières et des Mines.

 101 EIU, Democratic Republic of Congo Country Profile, p. 30.

 102 Producers and buyers were required to sell to IDI, generally at prices far below the

prevailing market rate. This change had the effect of driving the trade even further into the

informal sector and encouraging smuggling to neighboring Angola and Republic of the Congo.

The IDI monopoly was abrogated in April 2001. In April 2003, an export monopoly for diamonds

produced by the state-owned diamond company, Miniers de Bakwanga (Miba), was granted to a

private company, Emaxon. Because of concerns regarding the Emaxon management, in early

2004, Miba announced that it would abrogate the monopoly. For additional information, see

Partnership Africa Canada, Ottawa, and Canada Centre National d’Appui au Développement et à

la Participation Populaire (CENADEP), Kinshasa, Democratic Republic of the Congo Diamond

Industry Annual Review: Democratic Republic of the Congo 2004, found at www.pacweb.org,

retrieved Mar. 30, 2005. 

 103 See app. C or “Kimberley Process,” found at www.kimberleyprocess.com, for additional

information on the Kimberley Process. 

 104 “Kimberley Process Removes the Republic of Congo from the List of Participants,” press

release, July 9, 2004, found at www.kimberleyprocess.com, retrieved Mar.30, 2005.

 105 Partnership Africa Canada and CENADEP, Democratic Republic of the Congo Diamond

Industry Annual Review. 

 106 EIU, Democratic Republic of Congo Country Profile, p. 37.

3-21

investment in Gecamines (the parastatal mining company)100 since the country’s

independence. Production of copper decreased from an average of 500,000 metric tons per

year during 1980-87 to only 9,900 metric tons in 2003.101

The diamond industry better withstood the problems in the mining sector during the 1990s,

partly because two-thirds of production is privately owned, rather than controlled by

Gecamines. Democratic Republic of the Congo is the world’s third-largest diamond producer

by volume, although it ranks lower by value because 90 percent of its output is of industrial,

rather than gem-quality, stones. The diamond industry’s decline resulted from the nowrescinded prohibition on foreign currency transactions, and the government’s award of a

diamond buying monopoly to the Israeli company IDI Diamonds in 2000.102

Democratic Republic of the Congo was licensed to participate in the Kimberley Process103 in

2003 and established its own certification center to monitor diamond exports. Official

diamond exports grew in 2004 because Republic of the Congo, a country that does not

produce diamonds but sells imported diamonds, lost its license to export diamonds under the

Kimberley Process.104 The amount of diamonds from Democratic Republic of the Congo

smuggled to Republic of the Congo appears to have been substantially reduced.105

Export Profile

Democratic Republic of the Congo’s exports totaled $1.0 billion in 2003, with a 9-year

compound annual growth rate (CAGR) of 4.0 percent (table DR-2). According to official

data, diamonds accounted for 67.8 percent of Democratic Republic of the Congo’s exports

in 2003, with a CAGR of 20.5 percent (table DR-3). Petroleum is the second-largest export.

Exports of copper and coffee products have declined significantly during 1994-2003. Coffee

production has suffered from coffee wilt disease. A small amount of petroleum and electricity

is exported to the Republic of the Congo, South Africa, and Zambia.106 Large amounts of

trade, particularly in coffee, gold, diamonds, and columbo-tantalite, from areas under rebel
 107 EIU, Democratic Republic of Congo Country Profile, p. 37.

3-22

control, are being diverted to Rwanda and Uganda. Therefore, official trade statistics may be

inaccurate.

Exports are directed primarily to industrialized countries (table DR-4). Belgium, the former

colonial power, is the largest export market, largely because of its international diamond

market in Antwerp and its copper refining facilities. The United States is the second-largest

market for Democratic Republic of the Congo’s exports, most of which are crude petroleum.

These two markets accounted for 84.8 percent of Democratic Republic of the Congo’s exports

in 2003. Finland, the third-largest export market, processes the output of the Lubumbashi

base-metal tailings plant.107

Table DR-2

Democratic Republic of the Congo: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars –––––––– –––– Percent ––––––

71 Natural or cultured pearls, precious or semiprecious

stones, precious metals; precious metal clad metals,

articles thereof; imitation jewelry; coin . . . . . . . . . . . . . . . . . 132,353.5 840,018.8 695,952.3 67.9 20.3

27 Mineral fuels, mineral oils and products of their distillation; 

bituminous substances; mineral waxes ................ 121,720.3 114,071.0 139,828.9 13.6 1.6

26 Ores, slag and ash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,330.4 52,055.4 62,876.6 6.1 16.2

44 Wood and articles of wood; wood charcoal . . . . . . . . . . . . . . . 74,284.9 24,808.1 34,975.8 3.4 -8.0

81 Base metals nesoi; cermets; articles thereof . . . . . . . . . . . . . . 124,892.8 57,158.3 33,299.4 3.2 -13.7

97 Works of art, collectors' pieces and antiques . . . . . . . . . . . . . . 1,384.5 189.7 6,003.2 0.6 17.7

09 Coffee, tea, mate and spices. .......................... 107,123.4 41,614.6 5,479.1 0.5 -28.1

13 Lac; gums; resins and other vegetable saps and extracts . . . . 4,766.6 1,344.2 3,290.8 0.3 -4.0

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . 472.1 984.0 3,096.4 0.3 23.2

74 Copper and articles thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,447.0 16,294.4 2,795.9 0.3 -28.8

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,123.2 45,194.0 37,741.0 3.7 -8.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722,898.8 1,193,732.5 1,025,339.4 100.0 4.0

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
3-23

Table DR-3

Democratic Republic of the Congo: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and

compound annual growth rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––– 1,000 dollars –––––––– ––––– Percent ––––––

7102 Diamonds, whether or not worked, but not mounted 

or set . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130,040.4 837,592.3 695,562.1 67.8 20.5

2709 Petroleum oils and oils from bituminous minerals,

crude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121,596.1 110,368.0 90,618.9 8.8 -3.2

2605 Cobalt ores and concentrates . . . . . . . . . . . . . . . . . . . . . . . 9,797.5 50,649.7 54,339.7 5.3 21.0

2710 Petroleum oils and oils from bituminous minerals 

(other than crude) and products therefrom, 

nesoi, containing 70% (by weight) or more

of these oils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124.0 3,678.2 45,302.2 4.4 92.6

8105 Cobalt mattes and other intermediate products of 

 cobalt metallurgy; cobalt and articles thereof, 

 including waste and scrap ........................124,873.3 57,158.3 33,016.0 3.2 -13.7

4403 Wood in the rough, whether or not stripped of bark or 

sapwood, or roughly squared . . . . . . . . . . . . . . . . . . . . . . 44,324.3 13,880.9 16,316.1 1.6 -10.5

4407 Wood sawn or chipped lengthwise, sliced or peeled, 

more than 6 mm (.236 in.) thick . . . . . . . . . . . . . . . . . . . . 20,554.1 6,036.8 13,502.0 1.3 -4.6

2615 Niobium, tantalum, vanadium or zirconium ores and 

concentrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217.0 1.9 5,693.8 0.6 43.8

0901 Coffee, whether or not roasted or decaffeinated; 

coffee husks and skins; coffee substitutes

containing coffee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106,773.1 41,612.2 5,477.5 0.5 -28.1

4409 Wood, continuously shaped (tongued, grooved, 

molded, etc.) along any of its edges or faces . . . . . . . . . . 2,803.1 3,711.5 4,064.5 0.4 4.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161,796.0 69,042.6 61,446.7 6.0 -10.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .722,898.8 1,193,732.5 1,025,339.4 100.0 4.0

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table DR-4

Democratic Republic of the Congo: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual

growth rate (CAGR)

Market 1994 1999 2003

2003 share

 of total

9-year

 CAGR

––––––––––––– 1,000 dollars –––––––––– ––––––– Percent ––––––

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 796,560.0 686,019.4 66.9 (2)

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197,900.0 237,679.1 183,332.6 17.9 -0.8

Finland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,243.3 50,258.5 57,606.5 5.6 53.1

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,459.4 1,316.4 26,241.6 2.6 30.1

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,796.8 15,709.7 13,779.0 1.3 -18.0

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,226.0 5,859.9 12,586.0 1.2 -11.1

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,355.4 9,864.5 12,155.4 1.2 -8.6

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,804.1 37,453.7 11,851.7 1.2 -20.6

South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,484.3 2,540.4 4,020.8 0.4 -30.0

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,192.7 3,457.1 2,681.7 0.3 -19.6

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,436.7 33,033.2 15,064.7 1.5 -23.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722,898.8 1,193,732.5 1,025,339.4 100.0 4.0

1

 Not available.

2

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 108 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See chap. 1 and app. D

for a discussion of RCA indices.

 109 EIU, Democratic Republic of Congo Country Profile, p. 29.

3-24

Sectors with the Greatest Export Growth Potential

Many exports with the greatest revealed comparative advantage108 (RCA) indices are not

Democratic Republic of the Congo’s leading exports, indicating that there are products in

addition to the leading exports that show significant export potential (appendix E, table E-8).

Six of the top 10 products with the greatest increase in the average yearly RCA are in the

minerals sector (asbestos, zinc, tantalum, and other base metals), indicating that the mining

sector may have the most growth potential. For example, diamonds, the country’s leading

export product, have shown strong growth in the last 10 years, and improved export

performance is expected to continue. The Kimberley Process has substantially reduced

smuggling of diamonds out of the country, which could increase diamond exports by the

formal sector. Mining and agriculture represent historical trade sectors that could re-emerge

with stability, good governance, and improved infrastructure.

There are several mines with rich deposits of copper, cobalt, and zinc that are not now fully

exploited. One of the most important is the Kolwezi tailings project, which has the potential

to become the world’s largest and lowest-cost producer of copper and cobalt. Production will

begin in 2007 if financing is secured by Adastra Minerals. Another copper-rich deposit is the

Lonshi deposit; First Quantum Minerals obtained 30-year mining rights in 2003 and planned

to process over 900,000 metric tons of ore in 2004. The Tenke-Fungurme cobalt and copper

mine is estimated to have total copper and cobalt reserves of 22 million metric tons.

Development was halted in 1998, but the company and parastatal Gecamines are now

discussing restarting development. Gecamines and the Zinc Corp. of South Africa plan to

develop the Kipushi mine, which has estimated zinc and copper reserves of 26 million metric

tons. World growth in cobalt trade, according to RCA analysis, grew by about 54 percent

during 1993-2003, and cobalt ores and mattes rank first and second among products for which

Democratic Republic of the Congo has a comparative advantage. Democratic Republic of the

Congo also has comparative advantages in tin, tungsten, and niobium.

Coffee may also show potential export growth if political stability can be achieved and if the

coffee wilt disease can be controlled. Average annual growth in coffee trade worldwide

during 1993-2003 was 8.7 percent, but Democratic Republic of the Congo’s comparative

advantage declined by an annual average of almost 6 percent. Although once a significant

coffee exporter, coffee exports have declined largely because rebels control coffee-producing

areas in Equateur province.109

Democratic Republic of the Congo is bordered by the Congo River, which provides it with

a great potential for hydroelectric power. Electrical power is Democratic Republic of the

Congo’s fourth-largest export and its potential is largely untapped. Democratic Republic of

the Congo exports hydroelectricity to Republic of the Congo and South Africa. The Inga Dam

alone, near the mouth of the Congo River, has a potential capacity of 40,000-45,000

megawatts, sufficient to supply all of southern Africa’s electricity needs. However, only a

fraction of this amount has been developed. Total installed generating capacity at Inga was

estimated at 3,197 megawatts in 1998, of which hydroelectricity accounts for 98 percent.

Actual production is estimated to be no more than 650-750 megawatts, largely because two-
 110 Ibid., p. 22.

 111 U.S. Department of State telegram, “ESTH News Update from West and Central Africa

Regional Infrastructure Projects,” message reference No. 00752, prepared by U.S. Embassy,

Libreville, Nov. 2004. 

 112 EIU, Democratic Republic of Congo Country Profile, p. 21; and Embassy of Democratic

Republic of the Congo official, interview by USITC staff, Washington, DC, Feb. 14, 2005.

3-25

thirds of the turbines at Inga are not functioning.110 Five regional utilities in Angola,

Botswana, Democratic Republic of the Congo, Namibia, and South Africa are planning to

construct a third power-generation system at the Inga Dam with $400 million in funding from

the World Bank. The project will generate 3,500 megawatts of electricity targeted to the

South African market.111

Domestic and International Barriers

The greatest impediments to exports are political instability and lack of transparency and good

governance in the country, which contribute to low levels of foreign investment and its

inadequate state of infrastructure. Despite the rich supply of minerals and timber, foreign

investors are reluctant to invest in Democratic Republic of the Congo because of the domestic

conflict. During 1993-2002, Democratic Republic of the Congo experienced 4 years of

negative foreign direct investment (FDI) flows and near zero FDI in 2001. Because of the

ongoing conflict, the central government has limited control over several areas in the eastern

part of the country where some potential exports (for example, coffee and minerals) are

located. Although the Virunga National Park in North Kivu is best known as a home to

mountain gorillas, its location in the middle of a conflict zone limits its development as a

tourist site. 

Most business environment indicators reflect poorer commercial conditions in Democratic

Republic of the Congo than the regional average, particularly in the areas of getting credit,

starting a business, enforcing contracts, and difficulties in hiring and firing workers

(table DR-5). For example, the cost of starting a business is 603 percent of per capita income,

significantly greater than the regional average of 225 percent. The time it takes to enforce a

contract is 909 days while the regional average is 434 days. In Democratic Republic of the

Congo, the difficulty of hiring index is substantially higher than in the region as a whole.

Instability in the country limited the number of years the Heritage Foundation was able to

rank Democratic Republic of the Congo in its index of economic freedom (table DR-6).

However, the country’s economic freedom ranking for 2000 is worse than the regional

average and substantially worse than the OECD average.

The difficulty in shipping from the only major port, Matadi, is a substantial obstacle. The road

between the capital Kinshasa and Matadi is in poor condition, despite funding from the EU

and World Bank for its repair. Transport by ship is a relatively cheap method of transport.

However, without a port to ship from, exporters are forced to use other, more expensive

means of transport, frequently by airplane, which places weight limitations on what material

can be exported.112 The damaged infrastructure and low levels of information and

communication technologies use reflect the large extent to which domestic factors represent

the primary impediments to export (table DR-7).
3-26

Table DR-5

Democratic Republic of the Congo: Business environment

Democratic Republic

of the Congo

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . 1.9 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) ..... 130.0 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt)........................... 256.8 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . 51.0 35.0 19.0

Enforcing contracts: Time (days)................................... 909.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . 8.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . 10.1 13.2 4.9

Registering a property: Time (days) ................................ 106.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ................ 602.9 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) ....... 246.8 254.1 44.1

Starting a business: Time (days)................................... 155.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.0 56.0 34.4

Employment: Rigidity of hours index ................................ 100.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

Country data not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile/, retrieved Apr. 5, 2005.

Table DR-6

Democratic Republic of the Congo: Economic freedom

Democratic Republic

of the Congo

Regional

average1

OECD

 average

––––––––– Heritage Foundation indicators –––––––––––

1995 Overall score ........................................... (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 3.7 2.2

2005 Overall score ........................................... (2

) 3.4 2.2

Trade policy score ....................................... (2

) 3.9 2.2

Fiscal burden of government score .......................... (2

) 3.9 3.6

Government intervention in the economy score ................. (2

) 2.6 2.5

Monetary policy score .................................... (2

) 2.4 1.5

Capital flows and foreign investment score .................... (2

) 3.2 2.0

Banking and finance score ................................. (2

) 3.2 1.9

Wages and prices score ................................... (2

) 2.8 2.1

Property rights score ..................................... (2

) 3.7 1.6

Regulation score ........................................ (2

) 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2

) 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 
 113 Africa Development Bank/Organization for Economic Cooperation and Development,

“Democratic Republic of Congo,” African Economic Outlook 2004/2005, p. 186, found at

www.oecd.org/dev/aeo, retrieved May 24, 2005.

 114 Embassy of Democratic Republic of the Congo official, interview by USITC staff,

Washington, DC, Feb. 14, 2005.

3-27

Table DR-7

Democratic Republic of the Congo: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999)................................................................... 157,000.0

Roads, paved (percent of total roads) .............................................................. (2

)

Transport services (percent of service exports, BoP) .................................................. (2

)

Transport services (percent of service imports, BoP) .................................................. (2

)

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4.4 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Instability caused by civil war, hyperinflation in the 1990s, and foreign currency restrictions

are some of the factors adversely affecting the banking industry, which make it difficult to

conduct financial transactions in the country. Most transactions are said to take place on the

black market. Additionally, property rights in the country are insecure. However, the

government has approved new investment and mining codes, and has designed a new

commercial court in the past year. The goal of these initiatives is to attract investment by

providing fair and transparent treatment to private business.113

Although international barriers do not, in the short to medium term, represent the primary

barriers to export, Democratic Republic of the Congo government representatives have cited

foreign country sanitary and phytosanitary standards as a barrier to exports. Access to

developed countries is problematic because of the regulations and standards placed on

agricultural imports in these markets. Democratic Republic of the Congo reportedly has

access to the EU market, but finds it difficult to export agricultural products to the U.S.

market.114
3-28
 115 Prepared by Ralph Watkins, Office of Industries.

 116 However, Guinea’s Minister of Economy and Finance, Mady Kaba Camara, indicated to a

delegation of G-7 representatives that 70-80 percent of the Guinean government’s expenditures is

used to service the country’s external debt. U.S. Department of State telegram, “COG Paints Bleak

Fiscal Situation,” message reference No. 01246, prepared by U.S. Embassy, Conakry,

Sept. 30, 2004.

 117 Integrated Framework (IF), Guinea: Diagnostic Trade Integration Study, Aug. 2003, p. 2.

 118 Economist Intelligence Unit (EIU), Guinea Country Profile, 2004, p. 39.

 119 IF, Guinea: Diagnostic Trade Integration Study, p. 4.

 120 Ibid., p. viii.

3-29

Guinea115

Economic Overview

Guinea has a population of 7.9 million, with an annual GDP per capita of $459 (table GU-1).

Although its external debt ($3.4 billion) is slightly less than its annual GDP ($3.6 billion),

total debt service is the equivalent of only 13.6 percent of Guinea’s exports of goods and

services.116 Exports in 2003 amounted to slightly less than one-quarter of GDP and were

slightly smaller than total imports. Per capita GDP fell by 32 percent during 1996-2001,

largely owing to an influx of refugees fleeing armed conflict in Sierra Leone and Liberia, a

decline in world prices for Guinea’s exports of bauxite and alumina, and increasing prices

for imported petroleum.117

The tertiary sector, consisting primarily of service activities such as government services,

accounted for 46.4 percent of GDP in 2002 (figure GU-1). The secondary sector, represented

by manufacturing, construction, and utilities, accounted for 31.1 percent of GDP; and the

primary sector, a component of which is mining, accounted for 18.3 percent of GDP.

Manufacturing accounts for only 4 percent of GDP. All manufactured goods (processed

foods, apparel, and furniture) reportedly are sold in local markets.118

Guinea has 30 percent of the world’s known reserves of bauxite,119 and is a major producer

of bauxite and alumina. Alumina is formed by refining impure hydrated alumina found in

bauxite ore. The refining of alumina is a step in the production of aluminum metal, which

is formed by “reducing” the oxygen from alumina. There are no reduction facilities in

Guinea, so the bauxite and alumina must be exported for further processing into aluminum.

Guinea is also endowed with petroleum, copper, diamonds, gold, iron ore, and graphite

resources.

Guinea has a natural comparative advantage in diverse agricultural activities because of the

country’s significant variation in climates associated with changes in elevation, high soil

fertility, and plentiful water resources.120 Commercial crops include coffee, cocoa, and

rubber. Fishing and shellfish resources have led to the development of fish and crustacean

processing industries. 
3-30

Table GU-1

Guinea: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 3,625.7

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 2.1

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... -0.0

Inflation, consumer prices (annual percent) ....... ....... ....... ....... ....... ....... ....... ....... . . ( )2

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 3,400.9

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... .... 13.6

Exports of goods and services (percent of GDP, 1999) ....... ....... ....... ....... ....... ....... ....... 23.7

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 51.1

Official exchange rate (local currency unit per US$, period average, 2002) ....... ....... ....... ....... ..... 1,975.8

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 7.9

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 2.1

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 3.7

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 49.4

Literacy rate, adult total (percent of people ages 15 and above, 1999) ....... ....... ....... ....... ....... . . ( )2

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... . 67.0

Secondary school enrollment ratio, total (percent, 1999) ....... ....... ....... ....... ....... ....... ...... 13.8

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 3.6

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 14.4

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 14.4

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 0.1

 Most recent year for which data are available between 1999 and 2003. 1

 Not available. 2

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure GU-1

Guinea: Composition of GDP (2002)

Note.—Primary is defined as agriculture, fisheries, mining, and quarrying, secondary us defined as manufacturing, construction,

electricity, water, and other utilities; and tertiary is defined as primarily services activities such as retail, financial, real estate, and

government services.

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 121 Ibid., p. 5.

3-31

Export Profile

Guinea’s exports increased by 62 percent during 1994-99, but declined by 4 percent during

1999-2003 (table GU-2). Much of the increase during 1994-99 represented increased

diamond exports, principally to diamond processing operations in Antwerp. Variation in

export values often reflects changes in commodity prices rather than the quantity of exports.

Products from the mining industry (including alumina) accounted for 73.8 percent of

Guinea’s exports in 2003; crude petroleum, 10.5 percent; products from the fishing industry,

7.5 percent; and agricultural products, 5.8 percent. Articles with the most processing prior

to export, alumina and frozen fish, accounted for 22.2 percent of Guinea’s exports

(table GU-3).

Guinea supplied nearly one-third of the world’s total exports of bauxite during 2000-03.

Bauxite accounted for 42.9 percent of Guinea’s exports in 2003, with alumina accounting

for another 17.2 percent. Diamonds and copper concentrates accounted for another

7.6 percent and 5.8 percent, respectively, of Guinea’s exports in 2003. Because of reportedly

high levels of smuggling, possibly to avoid paying taxes, the value of Guinea’s diamond

exports may be significantly underreported.121

Table GU-2

Guinea: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

–––––––– 1,000 dollars –––––––– –––––– Percent ––––––

26 Ores, slag and ash ................................. 376,590.3 413,751.1 393,726.3 48.9 0.5

28 Inorganic chemicals; organic or inorganic compounds

of precious metals, of rare-earth metals, of radioactive 

elements or of isotopes . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,183.8 115,343.0 138,123.8 17.2 9.7

27 Mineral fuels, mineral oils and products of their distillation; 

bituminous substances; mineral waxes . . . . . . . . . . . . . . . 1,736.0 55,516.4 84,274.6 10.5 53.9

71 Natural or cultured pearls, precious or semiprecious

stones, precious metals; precious metal clad metals, 

articles thereof; imitation jewelry; coin . . . . . . . . . . . . . . . . 2,171.0 144,291.9 62,348.3 7.7 45.2

3 Fish and crustaceans, molluscs and other aquatic

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,613.4 29,569.4 60,013.3 7.5 11.5

18 Cocoa and cocoa preparations . . . . . . . . . . . . . . . . . . . . . . . 4,663.1 5,293.3 23,128.3 2.9 19.5

9 Coffee, tea, mate and spices . . . . . . . . . . . . . . . . . . . . . . . . . 24,643.0 28,592.6 19,297.4 2.4 -2.7

40 Rubber and articles thereof .......................... 112.8 596.1 10,026.2 1.2 64.6

44 Wood and articles of wood; wood charcoal . . . . . . . . . . . . . . 6,837.9 18,998.3 4,696.5 0.6 -4.1

52 Cotton, including yarns and woven fabrics thereof . . . . . . . . . 8,315.3 13,247.9 3,732.5 0.5 -8.5

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,235.7 16,644.5 5,424.5 0.7 -8.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520,102.4 841,844.4 804,791.7 100.0 5.0

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 122 Ibid., p. 35.

3-32

Table GU-3

Guinea: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––– 1,000 dollars ––––––––– –––––– Percent ––––––

2606 Aluminum ores and concentrates ..................... 367,189.2 406,337.9 344,987.8 42.9 -0.7

2818 Artificial corundum, whether or not chemically

defined; aluminum oxide; aluminum hydroxide . . . . . . . . 60,181.3 115,309.8 138,064.1 17.2 9.7

2709 Petroleum oils and oils from bituminous minerals,

crude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 53,840.9 81,515.8 10.1 (1

)

7102 Diamonds, whether or not worked, but not mounted or 

set . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,016.5 144,120.0 61,434.0 7.6 46.2

2603 Copper ores and concentrates . . . . . . . . . . . . . . . . . . . . . . . 9,401.1 7,412.2 46,445.1 5.8 19.4

0303 Fish, frozen, excluding fish fillets and other fish meat 

without bones; fish livers and roes, frozen . . . . . . . . . . . . 7,712.6 12,084.5 40,357.1 5.0 20.2

1801 Cocoa beans, whole or broken, raw or roasted . . . . . . . . . . 4,663.1 5,120.9 20,621.0 2.6 18.0

0901 Coffee, whether or not roasted or decaffeinated; coffee 

husks and skins; coffee substitutes containing coffee . . . 24,591.5 28,566.3 17,417.5 2.2 -3.8

0306 Crustaceans, live, fresh, chilled, frozen etc.; crustaceans, 

in shell, cooked by steam or boiling water; flours, meals, 

& pellets of crustaceans, fit for human consumption . . . . 2,811.4 4,101.3 12,142.1 1.5 17.7

4001 Natural rubber, balata, gutta-percha, guayule, chicle and 

similar natural gums, in primary forms or in plates,

sheets or strip . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.7 569.6 9,986.3 1.2 69.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,448.0 64,381.0 31,820.8 4.0 -2.9

 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520,102.4 841,844.4 804,791.7 100.0 5.0 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Leading exports from the fisheries sector were frozen fish (5.0 percent of total exports) and

crustaceans (1.5 percent). As with diamonds, Guinea’s exports of fish may be significantly

underreported because the number of foreign trawlers working Guinean waters far exceeds

the number of Guinean trawlers, and catches from these foreign trawlers are not unloaded

in Guinea, nor are they reported or taxed.122 Other important agricultural exports include

cocoa beans (2.6 percent), coffee (2.2 percent), and natural rubber (1.2 percent).

The EU is the leading market for exports from Guinea; however, the largest single-country

markets in 2003 were Korea (15.9 percent), Spain (12.2 percent), the United States

(10.8 percent), France (9.8 percent), and Russia (9.7 percent) (table GU-4). Guinea’s

merchandise exports are concentrated to certain markets. Bauxite accounted for nearly twothirds of Guinea’s exports to the United States in 2003 and the bulk of Guinea’s exports to

Russia. Russia also purchased over two-thirds of Guinea’s exports of alumina in 2003,

reflecting a Russian company’s joint-venture ownership of an alumina production facility

in Guinea. Korea imported all of Guinea’s exports of crude petroleum and copper
 123 Ibid., p. iv.

3-33

Table GU-4

Guinea: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

 of total

9-year 

CAGR

–––––––––––– 1,000 dollars –––––––––– –––––––– Percent ––––––––

Korea, Rep. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,092.1 41,025.7 127,941.8 15.9 51.2

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,502.4 79,708.6 98,207.3 12.2 3.0

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,115.3 144,228.1 87,247.9 10.8 -3.4

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,931.2 51,346.1 78,732.9 9.8 9.1

Russian Federation . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 65,704.8 77,684.6 9.7 (1

) 

Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,462.7 87,163.1 67,938.1 8.4 -1.0

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2

) 124,739.1 57,459.4 7.1 (1) 

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,381.0 42,661.8 49,288.0 6.1 0.9

Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 43,451.7 34,855.7 4.3 (1

) 

Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,643.2 5,873.6 26,987.3 3.4 7.0

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,974.6 155,941.8 98,448.7 12.2 -4.7

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520,102.4 841,844.4 804,791.7 100.0 5.0

1

 Undefined.

2

 Not available.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

concentrates in 2003, and over one-half of its exports of frozen whole fish. Spain imported

nearly all of Guinea’s exports of fish fillets, crustaceans, oilseeds, and cocoa waste. France

imported most of Guinea’s exports of fresh whole fish, pineapples, and natural rubber.

Morocco and France were the leading markets for Guinea’s exports of coffee, cotton, and

lumber. Canada was the top market for vanilla and cocoa beans. Belgium bought 84 percent

of Guinea’s diamond exports.

Although the value of Guinea’s exports of bauxite was slightly less in 2003 than in 1994, the

9-year compound annual growth rate (CAGR) for exports of alumina was 9.7 percent. The

CAGR for exports of frozen fish, another processed product, was 20.2 percent. That growth

was nearly matched by the 19.4 percent CAGR for copper concentrates and 17.7 percent and

18.0 percent CAGRs for crustaceans and cocoa beans, respectively. Although total exports

from Guinea fell by $37 million during 1999-2003, exports to Korea nearly tripled, rising

by $87 million. Large decreases in exports to the United States and Belgium were offset by

significant increases to other countries. Exports to France increased by $27 million

(53 percent); to Canada (mostly bauxite), by $21 million (359 percent); to Spain, by

$18 million (23 percent); and to Russia, by $12 million (18 percent). 

Sectors with the Greatest Export Growth Potential

The Government of Guinea has identified the development and promotion of exports as its

priority strategy for the reduction of poverty. Given the country’s natural resources and

labor, the government has identified agriculture, mining, fishing and shellfish, and tourism

as the sectors for which the country has a comparative advantage.123

Despite slow growth in the world market for bauxite during 1994-2003, the industry is

expected to remain important for Guinea’s export earnings because it has the highest
 124 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 125 U.S. Department of State, Bureau of African Affairs, “Background Notes: Guinea,”

Jan. 2005, p. 6, found at www.stat-usa.gov, retrieved Feb. 4, 2005.

 126 EIU, Guinea Country Profile, p. 35.

 127 U.S. Department of State telegram, “2005 Investment Climate Statement – Guinea,”

message reference No. 00047, prepared by U.S. Embassy, Conakry, Jan. 11, 2005.

 128 U.S. Department of State telegram, “Two U.S.-Affiliated Alumina Refineries in Guinea - Is

there Room for Both?” message reference No. 01644, prepared by U.S. Embassy, Conakry,

Dec. 21, 2004.

 129 U.S. Department of State telegram, “Guinea Markets in Hold Pattern,” message reference

No. 001461, prepared by U.S. Embassy, Conakry, Nov. 12, 2004.

 130 EIU, Guinea Country Profile, p. 37.

 131 IF, Guinea: Diagnostic Trade Integration Study, p. 45.

 132 U.S. & Foreign Commercial Service (US&FCS), “Guinea Country Commercial Guide, FY

2004,” found at www.stat-usa.gov, retrieved Feb. 4, 2005. Although Mt. Nimba in eastern Guinea

has the world’s largest known unexploited reserves of high-grade iron ore, the Government of

Guinea is reluctant to authorize mining there or construction of a rail link from Mt. Nimba to Port

Buchanan in Liberia because of concerns about tribal religious sensitivities, environmental

impacts, and potential conflicts with Liberia and Côte d’Ivoire over rights to profits from mining

operations. U.S. Department of State telegram, “Guinean Government Does Not Support

3-34

revealed comparative advantage124 (RCA) index among Guinea’s leading exports

(appendix E, table E-14). Moreover, growing demand in China will likely keep world prices

for bauxite elevated. Guinea’s export potential could benefit from increased investment in

alumina and aluminum smelting facilities. World demand for these downstream products is

growing faster than demand for bauxite.

Joint ventures in the aluminum industry include Compagnie des Bauxites de Guinée (CBG),

the country’s largest bauxite mining operation, which is a joint venture between the

government, Alcoa (U.S.), and Alcan (Canada); Dian Dian, a new joint venture between the

government and Ukraine that is expected to ship 1 million metric tons of bauxite annually;125

and Alumina Compagnie de Guinée, led by Reynolds Aluminum with investments from

Russki Alumina, which is the only company currently processing bauxite into alumina.126

In addition, Global Alumina (also known as GAPCO Corp., a consortium led by Marubeni

and Mitsubishi of Japan, as well as investors from Canada) began the first phase of a

$2-billion alumina refinery in December 2004.127 Halco, a Pittsburgh-based company owned

by Alcan and Alcoa, owns 51 percent of CBG, Guinea’s largest producer and exporter of

bauxite. Halco signed an agreement with the Government of Guinea to build and operate a

$1.5-billion alumina refinery. The facility will transform Guinea’s lower-grade,

nonexportable bauxite into higher-value, exportable alumina.128

Guinea’s top gold exporter is a joint venture between the Government of Guinea and Ashanti

Gold Fields of Ghana. Two gold mining companies, Société de Minière de Dinguiraye

(SMD) and Société Aurifère de Guinée made major investments in 2004, and SMD

announced plans for a $50-million expansion in 2005.129 A Canadian company, Semafo, has

been expanding production rapidly since its initial investment in 2002. Another Canadian

company, Cassidy Gold Corporation, is in the exploration phase.130 Recent foreign investors

in diamond mining operations include Trivalence Mining of Canada, Rio Tinto of the United

Kingdom, Dia Bras of Canada, and SearchGold of Canada. Copper ore is another sector for

which Guinea has a high RCA index and in which world demand is strong.131 Moreover, the

substantial iron ore and graphite resources located in Guinea have yet to be developed.132
Extension of Liberian Railroad from Buchanan to Mount Nimba,” message reference No. 00269,

prepared by U.S. Embassy, Conakry, Feb. 5, 2005.

 133 IF, Guinea: Diagnostic Trade Integration Study, p. 28.

 134 Ibid.

 135 Ibid., p. 31.

 136 U.S. Department of State telegram, “Host Country’s Trade and Investment Picture,”

message reference No. 00355, prepared by U.S. Embassy, Conakry, Mar. 14, 2005.

 137 IF, Guinea: Diagnostic Trade Integration Study, p. 32.

 138 U.S. Department of State telegram, “Host Country’s Trade and Investment Picture.” 

 139 IF, Guinea: Diagnostic Trade Integration Study, p. 42.

 140 U.S. Department of State telegram, “Host Country’s Trade and Investment Picture.” 

 141 For additional information on regional organizations, see app. C.

 142 IF, Guinea: Diagnostic Trade Integration Study, p. vi.

3-35

Guinea’s exports of cotton fibers and cashews are emerging.133 Prior to independence,

Guinea was an exporter of pineapples and bananas. Domestic policies and low commodity

prices have discouraged re-investment in these products.134 Rice and sugar are grown for

domestic consumption and have potential for export to regional markets. Guinea recently

began exporting Malacca beans and cashews to India, Guinea-Bissau, and Côte d’Ivoire.

Guinea is expected to encounter increasing international competition from cashew producers

in other African countries and India.135 Enterprise Works, a U.S. nongovernmental

organization, is establishing a cashew-processing industry with assistance in funding from

U.S. Agency for International Development. It is anticipated that the project will also train

Guinean cashew growers, introduce them to new technologies, and increase cashew yields.136

Natural rubber is also an emerging industry in Guinea. Guinea’s rubber is recognized

internationally for its high quality. Potatoes have recently been introduced to Guinea, and

growers have had significant success in the domestic market. During periods of surplus

supply, growers have had limited success exporting potatoes to Senegal.137 The Government

of Guinea has also introduced programs to increase production of coffee and shea butter.138

Twenty percent of Guinea’s workforce (1.4 million jobs) is engaged in the production of

crafts such as sculptures, weaving, traditional textiles, and leather goods. These products

have the potential to be sold to regional markets as well as to tourists.139 A Chinese company,

Linmian Shandong Chine, completed renovation of an abandoned textile factory in

September 2004 with the goal of exporting fabrics and apparel to regional markets.140

Domestic and International Barriers

In assessing the business environment, many of the indices for Guinea are better than for

sub-Saharan Africa as a whole (table GU-5). However, Guinea scored worse than the

regional average on a dozen indicators, notably access to credit, number of procedures

required to enforce contracts, minimum capital required to start a business, and number of

weeks required to fire an employee. Recent government actions to comply with West African

Economic and Monetary Union141 obligations have led to greater transparency in the

government’s operations and regional harmonization of regulations.142 By the Heritage

Foundation’s measures of economic freedom, Guinea performs better than the regional

averages in terms of government intervention in the economy, banking and finance, and

wages and prices (table GU-6). The leading obstacles to attracting foreign investment are 
3-36

Table GU-5

Guinea: Business environment

Guinea

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 22.2 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 31.7 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.6 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 306.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 15.7 13.2 4.9

Registering a property: Time (days) ....................................... 104.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 208.2 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) .............. 475.4 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67.0 53.2 26.2

Employment: Firing costs (weeks)......................................... 133.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Guinea, applied rate, 1998)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4

 1

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table GU-6

Guinea: Economic freedom

Guinea

Regional

average1

OECD

average

–––––– Heritage Foundation indicators ––––––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . 1.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.— Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 143 U.S. Department of State telegram, “2005 Investment Climate Statement – Guinea.” 

 144 US&FCS, “Guinea Country Commercial Guide, FY 2004.”

 145 U.S. Department of State telegram, “Host Country’s Trade and Investment Picture.”

 146 U.S. Department of State telegram, “2005 Investment Climate Statement – Guinea.”

 147 U.S. Department of State telegram, “International Coordination and Outreach on Maritime

Security - Guinea,” message reference No. 00389, prepared by U.S. Embassy, Conakry,

Mar. 22, 2005.

 148 U.S. Department of State telegram, “2005 Investment Climate Statement – Guinea.” 

3-37

lack of government transparency; insufficient regulation, especially judicial; infrastructure;

lack of skilled labor necessary for diversification into more skill-intensive industries; and

government laxity in payment for supplies and services.143

Protracted regional instability and the associated increases in government expenditures on

defense have reduced spending on infrastructure, hampering the competitiveness of Guinean

industry and dampening prospects for foreign investment.144 Insufficient development of

transportation and communications infrastructure also discourages foreign investment.145 For

example, only 16.5 percent of the country’s roads are paved, just 1.2 percent of the

population has a cell phone, and there are fewer than 5 telephone mainlines and Internet

users per 1,000 people (table GU-7). The Government of Guinea is seeking a buyer for the

national telecommunications company, Sotelgui, which was formerly operated by a

Malaysian telecommunications consortium. High licensing fees make Internet services very

expensive,146 limiting use for commercial purchases and adding to the cost of doing business

in Guinea.

Table GU-7

Guinea: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,500.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Guinea’s fishing industry has also been hampered by the government’s revenue constraints,

which have led to inadequate patrolling of coastal waters. Unlicenced fishing boats

frequently enter Guinean waters, fill their holds, and depart without paying duties and fees.

The Guinean fishing fleet has also been victimized by pirates who steal their catch and

sometimes murder the boat owners.147

Private companies that managed the production, distribution, and collection of fees for water

and electricity services left Guinea in June 2001, reportedly out of frustration with

inefficiency and lack of national and local government transparency.148 The national

electricity company, Sogel, has failed to keep the dam’s turbines in peak working order. A
 149 EIU, Guinea Country Profile, p. 21.

 150 US&FCS, “Guinea Country Commercial Guide, FY 2004;” and U.S. Department of State

telegram, “Host Country’s Trade and Investment Picture.”

 151 IF, Guinea: Diagnostic Trade Integration Study, p. v.

 152 US&FCS, “Guinea Country Commercial Guide, FY 2004.”

 153 According to M. Mouctar Barry, Director General of Guinea Electricity, most revenues to

operate the electrical grid come from foreign embassies, nongovernmental organizations, and

mining companies. Ordinary citizens reportedly do not pay their electric bill. Currently, the

electric company receives only 35 percent of the revenue it needs to supply the country with

electricity 24 hours per day. U.S. Department of State telegram, “Resources and Culture Dim

Conakry’s Lights,” message reference No. 001505, prepared by U.S. Embassy, Conakry,

Nov. 20, 2004.

 154 IF, Guinea: Diagnostic Trade Integration Study, p. 23.

 155 Ibid.

 156 Ibid., p. 37.

 157 Ibid., p. 30.

 158 Ibid., p. 11.

 159 Ibid., p. 25; and U.S. Department of State telegram, “Host Country’s Trade and Investment

Picture.” 

3-38

drought in 2003 and subsequent low water levels in the reservoir contributed to power

outages that year. The country has significant hydroelectric potential, but Guinea’s poor

record of fulfilling its contract obligations in the utilities sector has discouraged

investment.149 Chronic electricity shortages have forced many businesses to purchase power

generators and use relatively expensive diesel fuel. High-priced electricity increases the cost

of production, reducing the competitiveness of exports.150 A WTO report estimates that

demand for electricity exceeds supply by a factor of six, driving up costs for Guinean

companies producing for both the domestic and foreign markets. Small- and medium-scale

businesses reportedly have been substantially affected by power outages and increasing

electricity prices. Their higher costs have resulted in a loss of competitiveness with imports

and with other suppliers in foreign markets.151 Importantly, “Guinea’s failure to upgrade its

electric and water utilities has discouraged the development of several plants to process

alumina – refined bauxite which commands a higher price on the world market.”152 A

representative of Guinea Electricity indicated that the country has sufficient generating

capacity but lacks funds to purchase sufficient fuel to keep the generators operating,

especially during the dry season when the country depends on imported petroleum to

supplement the country’s hydroelectric plants.153

Guinea has two deep-sea ports, Conakry and Kamsar, with the latter used exclusively for the

export of bauxite.154 Most trade goes through Conakry, which suffers from poor management

and congestion that impairs Guinea’s export competitiveness.155 The port’s overcrowding

particularly discourages the expansion of frozen fish exports. Given the costly and inefficient

port services, some producers have switched to other products that can absorb the cost of air

transport. For example, the country has had recent success in the export of high-value fresh

fish by air to Europe.156 The poor condition of roads in Guinea makes it necessary to export

rubber through Liberia or Côte d’Ivoire.157 The price of locally-produced goods has also been

driven up by roadblocks that levy unofficial “taxes” that are estimated to exceed all other

domestic transportation costs combined.158

With respect to the agricultural sector, the deterioration of rural roads inhibits expansion of

exports and shipments of perishable products from rural areas to urban markets.159 To export

potatoes to neighboring markets, growers in Guinea reportedly need to invest in packaging,
 160 IF, Guinea: Diagnostic Trade Integration Study, p. 32.

 161 Ibid., p. 31.

 162 Ibid.

 163 U.S. Department of State telegram, “Host Country’s Trade and Investment Picture.”

 164 For additional information, see app. C.

 165 IF, Guinea: Diagnostic Trade Integration Study, p. 15.

 166 Ibid., p. v; and U.S. Department of State telegram, “Host Country’s Trade and Investment

Picture.”

 167 IF, Guinea: Diagnostic Trade Integration Study, p. 12.

 168 Ibid., p. 30.

 169 Ibid., p. v.

 170 Ibid., p. 30.

3-39

storage, and transportation infrastructure.160 Pineapple producers are faced with high costs

for air shipments to Europe or for refrigerated containers if shipping by sea. Pineapple

producers are also challenged by the high cost of imported equipment and inputs, high

domestic trucking expenses, and difficulty in gaining access to loading facilities at the port

of Conakry.161 Mangoes also must be shipped by air or refrigerated containers. High shipping

costs relative to shipping costs for comparable mangoes from Mali and Côte d’Ivoire have

slowed the growth in exports by Guinea’s only company that uses sea transport to Europe.

The two companies that ship organically grown mangoes by air have had greater success,

because the higher price for organic products is better able to absorb the transport costs.162

Export potential for the shipment of perishable agricultural products by air is inhibited by

the lack of adequate storage facilities at the airport. The lack of direct flights to the United

States eliminates the Untied states as a potential market for perishable agricultural

products.163

Although EU tariffs on Guinea’s 15 leading exports in 2001 were eliminated by the EU’s

Everything But Arms agreement,164 some products with export potential for Guinea (rice,

sugar, and bananas) are still subject to duties, which are expected to be phased out by

2009.165 Relatively high tariffs on EU imports of processed cocoa discourages the

development of a cocoa processing industry in Guinea. Although Guinea’s current export

portfolio is not limited by phytosanitary rules in the EU and United States, the growth of

future exports may be jeopardized because potential investors may avoid crops that may face

the associated high costs of compliance. 

Other obstacles to trade include an inefficient and arbitrary legal and regulatory

framework.166 Although producers are eligible for a value-added tax refund on exports, the

tax reportedly is seldom reimbursed.167 For example, there has been a recent surge in cotton

production, reflecting increased activity by one company, CGC, which has a legal monopoly

to gather seed cotton and distribute seeds. Delays by the government in repaying the valueadded tax credits to CGC for its exports of cotton fiber have threatened the company’s ability

to live up to its commitments to the cotton growers, and have discouraged farmers from

continuing to participate in cotton production, despite strong foreign demand for their highquality product.168

Regional conflict has severely hampered the development of regional trade.169 For example,

lack of security for the transport of rubber from harvesting areas in far eastern Guinea to

ports in Liberia or processing plants in Côte d’Ivoire has inhibited the development of the

emerging rubber industry in Guinea.170
3-40
 171 Prepared by Elizabeth Nesbitt, Office of Industries.

 172 Zambia’s economy was traditionally based on copper mining and related exports. During the

past decade, however, in an effort to offset copper’s dominance of export earnings and fluctuations

in the world price of copper, the Zambian government has emphasized the development of a

diverse mix of nontraditional exports such as agricultural and horticultural products (including

tobacco and roses), gemstones, timber, cement, electricity, chemicals, pharmaceuticals, processed

food (including sugar), and textiles. “Overview of Zambian Economy,” The Embassy of the

Republic of Zambia, found at www.zambiaembassy.org/business.html, retrieved Feb. 6, 2005; and

“Non-Traditional Exports Earned the Country US$292.8 million between January and August

2004,” Business CustomWire, Nov. 15, 2005, found at http://web32.epnet.com/, retrieved

Feb. 3, 2005.

 173 Economist Intelligence Unit (EIU), Zambia Country Profile, 2004, p. 31.

 174 Ibid., p. 51.

 175 Ibid., p. 43.

 176 “Coffee Production Increases by Over 500 percent,” Southern Africa Documentation and

Cooperation Centre, Mar. 9, 2005, found at www.sadocc.at/news/2005/2005-062.shtml, retrieved

Apr. 25, 2005.

 177 “Coffee on the Boil,” News From Zambia, The Zambia Society Trust, July 17-

Aug. 23, 2004, found at www.zambiasocietytrust.org.uk/newsfromzambia/

newsfromzambia778.htm, retrieved Apr. 23, 2005.

3-41

Zambia171

Economic Overview

Zambia is a land-locked country in southern Africa bordered by Angola, Botswana,

Democratic Republic of the Congo, Malawi, Mozambique, Namibia, Tanzania, and

Zimbabwe. It has extensive natural resources, including minerals (e.g., copper, other metals,

and gemstones) and arable land. Zambia’s economic base is currently structured around

agriculture, manufacturing, mining, and tourism. Zambia’s GDP reached $4.3 billion in

2003, growing by between 2.2 percent and 5.1 percent each year during 1999-2003

(table ZM-1). This growth was driven by ongoing government reforms, continued

privatization (particularly in the copper industry), higher export earnings from an

increasingly diverse mix of nontraditional exports,172 and higher levels of investment.

The services sector accounted for 56.9 percent of GDP in 2003; agriculture, forestry, and

fishing, 15.3 percent; manufacturing, 10.9 percent; and mining and quarrying, 7.8 percent

(figure ZM-1). Representing 36 percent of the services sector, wholesale and retail trade was

the largest component.173 As a result of increasing tourism, hotel- and restaurant-related

services was the fastest-growing component in 2003. The recent opening of two luxury

hotels in Zambia is expected to support further expansion of the sector.174

In the agricultural sector, subsistence crops include maize (corn), millet, sorghum, cassava,

and groundnuts (peanuts); cash crops include cotton, tobacco, sugar, vegetables, flowers, and

paprika.175 Tobacco output increased substantially during 1998-2003, from 3,706 metric tons

to 589,309 metric tons.

Coffee production increased more than fivefold during 1995-2004 to 6,500 metric tons.176

In 2003, 500 of the 570 coffee producers in Zambia were small-scale growers.177 Zambia is
3-42

Table ZM-1

Zambia: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 4,298.9

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 5.1

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 3.5

Inflation, consumer prices (annual percent, 2002) ....... ....... ....... ....... ....... ....... ....... .... 22.2

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 5,969.0

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... .... 27.1

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... 11.1

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 72.4

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 4,733.3

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 10.4

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 1.5

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 4.5

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 42.2

Literacy rate, adult total (percent of people ages 15 and above, 2002) ....... ....... ....... ....... ....... . . 79.9

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... . 78.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ...... 24.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 7.1

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 16.0

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 14.7

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 5.3

 Most recent year for which data are available between 1999 and 2003. 1

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure ZM-1

Zambia: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 178 “Central Bank of Kenya Publishes on the Sugar Sector,” Business CustomWire,

Dec. 29, 2004, found at http://web32.epnet.com/, retrieved Feb. 3, 2005; and Illovo Sugar, “About

Us,” found at www.illovo.co.za/about/groupprofile.htm, retrieved Apr. 19, 2005.

 179 Blackwell Publishing,“Zambia: Famine to Feast?” Africa Research Bulletin, Sept. 16-

Oct. 15, 2004, p. 2; U.S. Agency for International Development (USAID), USAID/Zambia Annual

Report FY 2004, June 1, 2004, p. 7; “Nigeria Welcomes White Farmers,” Finance CustomWire,

Feb. 23, 2005, found at http://web26.epnet.com, retrieved Feb. 28, 2005; International Monetary

Fund (IMF), Zambia: Selected Issues and Statistical Appendix, July 2004, p. 7; “Budget Address

by the Hon. Ng’Andu P. Magande, MP, Minister of Finance and National Planning, Delivered to

the National Assembly on Friday , 28th January, 2005,” p. 10; “The Monthly,” the Zambian

Central Statistical Office, Apr. 2004, p. 2, found at www.zamstats.gov.zm/monthly/apr04.pdf,

retrieved Mar. 26, 2005; EIU, Zambia: Country Profile, p. 41; and Embassy of the Republic of

Zambia official, interview by USITC staff, Washington, DC, Feb. 14, 2005.

 180 EIU, Zambia Country Profile, p. 22; “Zambia: Investment Opportunities in the Mining

Industry: Metals, Gemstones, Industrial Minerals, and Energy Resources,” found at

www.zambia-mining.com/economicright.html, retrieved Mar. 29, 2005; Bank of Zambia, Bank of

Zambia Statistics Fortnightly, Fortnight Ending Feb. 11, 2005 (2004 data), found at

www.boz.zm/Economics/Fortnightly/2005/number%201203/fortnight_ending_11_February_2005.

htm, retrieved Mar. 1, 2005; IMF, Zambia: Selected Issues and Statistical Appendix, pp. 24 and 28

(1999-2003; cites Bank of Zambia’s statistics); “Budget Address by the Hon. Ng’Andu P.

Magande, MP,” p. 3; “Investment Policy in Zambia: Performance and Perceptions,” CUTS Centre

for Competition, Investment & Economic Regulation Discussion Paper, 2003, found at

www.cuts-international.org/CR_zamAB.pdf, retrieved Apr. 23, 2005; “The Monthly,” the Zambian

Central Statistical Office, Apr. 2004, p. 2, found at www.zamstats.gov.zm/monthly/apr04.pdf,

retrieved Mar. 26, 2005; and “The Monthly,” the Zambian Central Statistical Office, Feb. 2005,

p. 3, found at www.zamstats.gov.zm/monthly/feb05.pdf, retrieved Mar. 26, 2005.

 181 “Zesco Reaps K30 billion from Power Export,” Zambia Daily Mail, found at

www.zamnet.zm, retrieved Feb. 16, 2005.

3-43

also one of the more efficient sugar producers in the region.178 The substantial rise in

agricultural sector productivity results from the emigration of many Zimbabwean farmers

to Zambia in recent years; effective government policies, including financial assistance

programs; good weather conditions; better access to agricultural inputs; increased private

investment; new agricultural technologies; and reinstatement of agricultural subsidies in

2001.179

Zambia has reserves of copper, cobalt, gemstones, aluminum, barium, calcium, chromium,

gold, iron ore, lead, manganese, nickel, tantalum, tin, uranium, and zinc. Annual growth rates

in the mining and quarrying sector in 2001 and 2002 reached 14 and 16 percent, respectively,

before slowing to 3 percent in 2003, reportedly because of lower production levels of copper,

cobalt, and coal. In 2004, the sector grew by 13 percent, reportedly as a result of higher

output of copper and coal combined with higher world prices for copper. Copper production

increased by nearly 40 percent during 1999-2003, largely as a result of the privatization of

the parastatal ZCCM, technological advancements, and increased sector investment.180

Major products produced by the Zambian manufacturing sector include processed food,

beverages, tobacco, fabricated metal products, and textiles (primarily yarn and unfinished

fabrics). Growth in the sector in 2003 was driven by growth in numerous subsectors,

including basic metals, nonmetallic products, wood and wood products, and food, beverages,

and tobacco. Zambia also has several hydroelectric facilities, producing sufficient

hydroelectric power to supply its domestic needs and to export electricity to several regional

markets.181
 182 “Zambian Economy Grows by 4.6 Percent in 2004,” Xinhua, Jan. 14, 2005, found at

http://web32.epnet.com, retrieved Feb. 3, 2005; “Rising Metal Prices Good for Zambia,” The

Times of Zambia, found at http://web32.epnet.com, retrieved Feb. 3, 2005; and U.S. & Foreign

Commercial Service (US&FCS), “Zambia Country Commercial Guide, Fiscal Year 2004,” found

at http://zambia.usembassy.gov/zambia/eguide.html, retrieved Feb. 9, 2005.

 183 The Export Board of Zambia, 2003 Exporter Audit Report, Executive Summary, p. 1.

However, according to U.S. Department of State telegram, “Zambia Information for USITC Study

on Export Opportunities and Barriers,” attachment entitled “Overview of Zambia’s Foreign Trade

Performance,” prepared by the Export Board of Zambia, the value of total nontraditional exports

was $432.2 million, an increase of 17 percent from 2002. 

 184 For additional information on regional organizations, see app. C.

 185 EIU, Zambia Country Profile, p. 53.

 186 U.S. Department of State telegram, “Zambia Information for USITC Study,” attachments

entitled “Investment Trends in the Export-Oriented, Traditional and Non-Traditional, Export

Sector for the Past 5 Years,” p. 8, and “Overview of Zambia’s Foreign Trade Performance,” p. 1.

 187 IMF, Direction of Trade Statistics Quarterly, Mar. 2005, pp. 389-390.

 188 U.S. Department of State telegram, “Zambia Information for USITC Study,” attachment

entitled “Investment Trends,” p. 4.

3-44

Export Profile

Zambia’s exports totaled $700.0 million in 2003 (table ZM-2). Exports of copper and related

products–refined copper, copper alloys, copper mill products, and copper wire–accounted

for just over one-half of the total, or $367.2 million. Most of the remaining exports were

cobalt mattes and intermediate products, cotton and cotton yarn, tobacco, cane or beet sugar,

cut flowers, natural/cultured pearls and precious gemstones, edible vegetables and certain

roots, copper ores and concentrates, and coffee. Whereas the 9-year compound annual

growth rates (CAGR) for traditional metal exports such as copper declined significantly, the

CAGRs for many of the individual nontraditional exports increased by almost 15 percent or

more (table ZM-3).

The value of copper exports grew significantly during 2004 as a result of increased domestic

production and high international copper prices.182 Together, the value of nontraditional

exports in 2003, including electricity, surpassed that of copper exports, reaching

$415 million versus $368 million in 2002, an increase of 13 percent.183 The rising value of

nontraditional exports was attributed to an increase in Zambia’s EU sugar quota, enhanced

market access under the Common Market for Eastern and Southern Africa (COMESA),184

the discovery of new deposits of gemstones, and increased tobacco planting.185

Nontraditional exports accounted for almost 40 percent of total exports in 2003.186 The share

of nontraditional exports accounted for by agricultural products increased to almost

30 percent in 2002 from almost 20 percent in 1995.

Data from the IMF and World Bank differ on which countries are Zambia’s most important

export markets. World Bank data (table ZM-4) report that Zambia’s major export markets

in 2003 were Saudi Arabia (19.3 percent of total Zambian exports), South Africa

(10.8 percent), Japan (9.8 percent), Thailand (7.5 percent), China (6.8 percent), and Korea

(6.6 percent). Copper products accounted for almost all of the Saudi imports. As cited by the

IMF, however, the country’s major export markets were the United Kingdom (27 percent),

South Africa (22 percent), Tanzania (14 percent), Switzerland (8 percent), and Democratic

Republic of Congo (4 percent).187 Whereas the largest markets for Zambia’s nontraditional

exports during the past few years were South Africa, Democratic Republic of the Congo,

and the United Kingdom,188 the value of Zambian nontraditional exports to markets such
3-45

Table ZM-2

Zambia: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––––– 1,000 dollars –––––––––– –––– Percent –––––

74 Copper and articles thereof. ................... 704,633.4 281,597.4 367,192.8 52.5 -7.0

81 Other base metals nesoi; cermets; articles

thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171,809.9 106,360.2 68,193.4 9.7 -9.8

52 Cotton, including yarns and woven fabrics

thereof. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,308.9 54,127.5 60,343.0 8.6 11.7

24 Tobacco and manufactured tobacco

substitutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,749.8 14,987.6 37,501.9 5.4 19.1

17 Sugars and sugar confectionery. . . . . . . . . . . . . . . . 6,124.4 5,279.8 26,459.3 3.8 17.7

06 Live trees and other plants; bulbs, roots and

the like; cut flowers and ornamental foliage . . . . . 4,186.0 18,395.7 19,538.1 2.8 18.7

71 Natural or cultured pearls, precious or

semiprecious stones, precious metals;

precious metal clad metals, articles 

thereof; imitation jewelry; coin . . . . . . . . . . . . . . . 20,321.4 13,226.4 17,797.3 2.5 -1.5

07 Edible vegetables and certain roots and tubers . . . . 2,154.3 9,379.6 15,576.9 2.2 24.6

26 Ores, slag and ash. ......................... 285.4 59,199.2 9,054.1 1.3 46.8

09 Coffee, tea, mate and spices. . . . . . . . . . . . . . . . . . . 3,652.9 9,225.4 8,928.9 1.3 10.4

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,089.8 89,002.7 69,419.9 9.9 6.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 981,316.2 660,781.4 700,005.7 100.0 -3.7

Note.—Although these figures represent WITS data, they deviate from other sources, possibly resulting from the similarity of country

codes for South Africa and Saudi Arabia.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table ZM-3

Zambia: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars ––––––––– ––––– Percent –––––

7403 Refined copper and copper alloys (other than

master alloys of heading 7405), unwrought ...... 647,717.9 235,786.1 257,988.5 36.9 -9.7

7409 Copper plates, sheets and strip, over 0.15 mm

(0.006 in.) thick . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,906.0 19,066.8 75,719.2 10.8 13.2

8105 Cobalt mattes and other intermediate products of

cobalt metallurgy; cobalt and articles thereof,

including waste and scrap ................... 171,628.5 106,360.2 68,193.4 9.7 -9.8

2401 Tobacco, unmanufactured (whether or not 

threshed or similarly processed); tobacco

refuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,749.8 14,987.6 37,347.5 5.3 19.1

5201 Cotton, not carded or combed . . . . . . . . . . . . . . . . . . 4,781.7 23,147.8 34,922.2 5.0 24.7

1701 Cane or beet sugar and chemically pure sucrose,

in solid form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,885.8 5,246.1 25,725.9 3.7 17.8

5205 Cotton yarn (other than sewing thread), containing

85% (by wt.) or more cotton, not put up for 

retail sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,245.4 29,332.3 23,162.1 3.3 4.8

0603 Cut flowers and buds suitable for bouquets or

ornamental purposes, fresh, dried, dyed, 

bleached, impregnated or otherwise prepared . . . . 4,088.9 18,353.5 19,526.2 2.8 19.0

7408 Copper wire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,773.8 13,942.4 19,195.0 2.7 3.0

7103 Precious and semiprecious stones (no diamonds), 

not strung, mounted etc.; ungraded precious and 

semiprecious stones (no diamonds) strung for 

transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,618.8 12,166.6 17,693.6 2.5 0.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,919.7 182,392.0 120,532.0 17.2 6.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 981,316.2 660,781.4 700,005.7 100.0 -3.7

Note.—Although these figures represent WITS data, they deviate from other sources, possibly resulting from the similarity of country

codes for South Africa and Saudi Arabia.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 189 Industry association official, interview by USITC staff, Mar. 14, 2005.

 190 For additional information on regional organizations, see app. C.

 191 “Trade Within the Region–Zambia,” Business CustomWire, Oct. 11, 2004, found at

http://web32epnet.com, retrieved Feb. 3, 2004; U.S. Department of State telegram, “Zambia

Information for USITC Study,” attachment entitled “Investment Trends,” p. 4; and “The

Monthly,” the Zambian Central Statistical Office, Jan. 2004, p. 5, found at

www.zamstats.gov.zm/monthly/jan04.pdf, retrieved Mar. 26, 2005.

3-46

Table ZM-4

Zambia: Leading exports markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––––––––– 1,000 dollars –––––––––––––– ––––––– Percent ––––––––

Saudi Arabia ...................... 116,804.8 41,791.6 134,855.6 19.3 1.6

South Africa . . . . . . . . . . . . . . . . . . . . . . 28,882.0 35,528.8 75,512.7 10.8 11.3

Japan ........................... 174,944.0 93,946.6 68,423.5 9.8 -9.9

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . 158,740.3 55,483.0 52,766.1 7.5 -11.5

China . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,110.6 17,623.2 47,881.5 6.8 41.5

Korea, Rep. . . . . . . . . . . . . . . . . . . . . . . 11,814.8 2,311.1 46,130.7 6.6 16.3

Egypt, Arab Rep. . . . . . . . . . . . . . . . . . . 40.1 227.9 34,796.0 5.0 112.1

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 40,725.1 34,676.2 5.0 (2)

United Kingdom . . . . . . . . . . . . . . . . . . . 19,982.7 24,569.8 26,137.1 3.7 3.0

Netherlands . . . . . . . . . . . . . . . . . . . . . . 9,170.7 21,602.5 21,518.7 3.1 9.9

Other . . . . . . . . . . . . . . . . . . . . . . . . . 458,826.2 326,971.9 157,307.5 22.5 -11.2

Total . . . . . . . . . . . . . . . . . . . . . . 981,316.2 660,781.4 700,005.7 100.0 -3.7

1

 Not available.

2

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, possibly resulting from the similarity of

country codes for South Africa and Saudi Arabia.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

as China is increasing. On a product basis, flower exports were exclusively marketed in the

Netherlands, the United Kingdom, and South Africa, and vegetable exports were primarily

shipped to the United Kingdom and South Africa.189

Zambia has increasingly focused on regional exports during recent years, particularly

COMESA and Southern African Development Community (SADC) countries.190 During

2001-03, the value of Zambia’s exports to COMESA and SADC countries combined was

higher than the value of its exports to the EU or Asia. In 2003, Zambia’s exports to its major

COMESA markets–Angola, Malawi, Namibia, Uganda, and Zimbabwe–increased largely

because of increased exports of energy products, sugar and related products, milled products,

cotton, and tobacco and related products. Exports to its major SADC markets–South Africa

and Zimbabwe–also increased in 2003, largely as a result of increased shipments of copper

and copper products, other metals, wood and wood products, and cotton.191

Sectors with the Greatest Export Growth Potential

Potential export sectors/products identified by the Zambian government as having growth

potential include floriculture, horticulture, cotton, cotton yarn, tobacco, honey, leather
 192 Industry association officials, interview by USITC staff, Lusaka, Zambia, Mar. 14, 2005;

and U.S. Department of State telegram, “Zambia Information for USITC Study,” attachment

entitled “Overview of Zambia’s Foreign Trade Performance,” p. 7.

 193 Ibid., p. 1.

 194 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 195 Embassy of the Republic of Zambia official, interview by USITC staff, Washington, DC,

Feb. 14, 2005.

 196 Government official, interview by USITC staff, Lusaka, Zambia, Mar. 18, 2005. 

 197 Embassy of the Republic of Zambia official, interview by USITC staff, Washington, DC,

Feb. 14, 2005; “While Probably Surging in Volume Terms, China's Textile and Apparel Exports

up 14% in January,” EmergingTextiles.com, Feb. 17, 2005, found at

www.emergingtextiles.com/?q=art&s=050217-mark&r=free, retrieved Apr. 19, 2005; and

“Textile Trade Faces Restrictions,” China Apparel, Apr. 7, 2005, found at

www.efu.com.cn/eng/onllinesales/promotion/allround/2005-4-7/8143.htm, retrieved Apr. 19, 2005.

For additional information on the Multifiber Arrangement and the end of textile and apparel quotas

in 2005, see app. C.

 198 U.S. Department of State telegram, “Zambia Information for USITC Study,” attachment

entitled “Overview of Zambia’s Foreign Trade Performance,” p. 8.

 199 Michael L. Humphrey and Didier de Senneville, Cargill Technical Services for USAID,

“Constraints and Opportunities for Improved Trade and Investment between African and U.S.

Companies in Selected Countries (Ghana, Lesotho, Senegal, South Africa, Uganda, Zambia),”

African Trade and Investment Policy Project, Sept. 2002, p. 16; and Embassy of the Republic of

Zambia official, interview by USITC staff, Washington, DC, Feb. 14, 2005.

 200 Blackwell Publishing, “Zambia: Famine to Feast?” p. 2.

3-47

products, gemstones, and high-value crops such as paprika.192 In addition, downstream

products of existing nontraditional exports offer export growth potential.193 Revealed

comparative advantage194 (RCA) analysis shows that Zambia has a high RCA index in each

of its top 10 export product groupings (appendix E, table E-37). Of these, copper wire;

cotton yarn; copper plates, sheet, and strip; and cobalt mattes registered the highest average

annual growth rates in world markets.

Cereal flours are a downstream product that offers potential. Zambia not only has a large

RCA index in cereal flours, but average annual growth in the world market for such products

during 2000-03 was almost 11 percent. Zambia also has high RCA indices in both cotton and

cotton yarn, and Zambia currently exports ginned cotton and cotton yarn to South Africa,

Mauritius, and Madagascar, which are major exporters of textiles and apparel to the United

States under AGOA.195 The South African and Chinese markets have potential to purchase

more Zambian cotton given AGOA-driven demand for South African apparel and China’s

growing consumption of cotton.196 The Chinese market for cotton has been expanding in line

with China’s increased exports of textiles and apparel to major world markets such as the

United States and Europe following the end of quotas in 2005.197

Certain agricultural and animal products have been identified as having export growth

potential. In the floricultural sector, although export earnings decreased during 2002-03,

investments made in 2003 are expected to increase export earnings.198 For example, exports

of cut roses and beans to the United States under AGOA are expected to increase once

phytosanitary standards are met.199 Increased maize exports to the region have also been

identified as an export growth opportunity.200
 201 U.S. Department of State telegram, “Zambia Information for USITC Study,” attachment

entitled “Overview of Zambia’s Foreign Trade Performance,” p. 10.

 202 U.S. Department of State telegram, “Zambia Information for USITC Study,” attachment

entitled “Overview of Zambia’s Foreign Trade Performance,” p. 14; and industry official,

interview by USITC staff, Lusaka, Zambia, Mar. 15, 2005.

 203 Industry official, interview by USITC staff, Lusaka, Zambia, Mar. 15, 2005; and industry

association officials, interview by USITC staff, Lusaka, Zambia, Mar. 14, 2005.

 204 Industry association officials and government officials, interviews by USITC staff, Lusaka,

Zambia, Mar. 14, 2005; “Rising Metal Prices Good for Zambia,” The Times of Zambia, found at

http://web32.epnet.com, retrieved Feb. 3, 2005; and IMF, Zambia: Selected Issues and Statistical

Appendix, p. 7.

 205 Pinnacle Resources, Inc., “Tantalum Project,” found at www.pnrr.net/tant_proj.html,

retrieved Mar. 25, 2005.

 206 Mr. Philip Mobbs, Country Specialist, U.S. Geological Survey, telephone interview by

USITC staff, Mar. 25, 2005.

 207 “Zesco Reaps K30 billion from Power Export.”

 208 Funding for the $300-million initiative will be provided by several organizations including a

strategic alliance formed by two Zambian companies (private-sector Copperbelt Energy Company

and the Zambian national power company Zesco), the World Bank, the Tanzanian government,

and the Kenyan government. Copperbelt Energy Company, considered an example of a “major

investment in Zambia,” is an electricity distribution company owned by Cinergy of Ohio, National

Grid of the UK, and the Government of Zambia. U.S. Department of State telegram, “2005

Investment Climate Statement–Zambia,” message reference No. 250356, prepared by

U.S. Embassy, Lusaka, Jan. 11, 2005.

3-48

Leather and leather products are potential exports for Zambia, particularly downstream

products.201 The Zambian government has banned the export of raw hides in an effort to

increase domestic processing of the hides into downstream leather products. The government

also identified export potential for honey, a traditional product of Zambia. Export-oriented

production of honey is projected to increase almost sevenfold to about 2,000 metric tons

annually. The EU is considered an expanding market for Zambian honey exports, given

increasing EU demand for natural sweeteners and the fact that Zambian honey already meets

EU standards. Other markets for expanded honey exports include Australia, Canada, the Far

East, and the Middle East.202 Coffee, particularly specialty coffee, also has export potential.

The government recently enacted legislation restricting the types of coffee that can be grown

in Zambia to encourage the development of specialty coffees intended for export.203

Based on the impact of increased copper prices in 2004, continued high international metal

prices through 2008 would be expected to support the growing upward trend in copper

exports. Increased copper and cobalt production expected during the next few years as the

result of technological advances and the start up of two new mines will likely result in

increased exports.204 Additional sector development may also be possible for minerals such

as niobium, tantalum, vanadium, and zirconium. For example, Pinnacle Resources, Inc.

identified Zambia as a possible source of tantalite ore feedstock for its tantalum pentoxide

production in South Africa.205 Export growth in tantalite and niobium ores is anticipated as

a result of rising international prices for these products.206

Zambia’s exports of electricity were estimated at approximately $6 million during August

2003-August 2004.207 Once the country’s electricity grid is connected to electricity grids in

Tanzania and Kenya in 2006, Zambia is expected to begin exporting electricity to those

countries with plans to increase the level exported when the transmission project is

completed in 2012.208 Additional hydroelectricity exports are expected with the completion
 209 EIU, Zambia Country Profile, p. 71; and “Zambia, Namibia Power Project to Start Soon,”

The Times of Zambia, Sept. 9, 2004, found at www.queensu.ca/msp/pages/In_The_News/2004/

September/Zam-Zim.htm, retrieved May 3, 2005. 

 210 Regional organization official, interview by USITC staff, Lusaka, Zambia, Mar. 15, 2005.

 211 “Zesco Reaps K30 billion from Power Export;” and “Zesco Signs $600m Deal with Chinese

Firm,” The Times of Zambia, Dec. 16, 2003-Dec. 26, 2003, found at www.zamnet.zm/newsys/news/

viewnews.cgi?category=3&id=1070868663, retrieved Feb. 16, 2005. 

 212 “Power Point,” World Report International Ltd., found at www.worldreport-ind.com/zambia/

energy.htm, retrieved Mar. 27, 2005; and “Zambia, Iran Sign Accord on Power Plant,” China

View, Sept. 14, 2004, found at http://news.xinhuanet.com/english/2004-09/14/

content_1980996.htm, retrieved Mar. 17, 2005.

 213 Regional markets assessed by the Zambian government in regard to potential exports include

Democratic Republic of Congo, Angola, Malawi, Uganda, and Kenya. Zambian officials,

interested in expanding their gemstones markets, also recently attended trade fairs in the United

States, India, China, and Hong Kong. Zambia currently markets gemstones in India, Mauritius,

and South Africa. Government official, interview by USITC staff, Lusaka, Zambia, Mar. 18, 2005;

and regional organization official, interview by USITC staff, Lusaka, Zambia, Mar. 15, 2005.

 214 Embassy of the Republic of Zambia official, interview by USITC staff, Washington, DC,

Feb. 14, 2005; regional organization official, interview by USITC staff, Lusaka, Zambia,

Mar. 15, 2005; USAID, USAID/Zambia Annual Report FY 2004, June 1, 2004, p. 7; and

U.S. Department of State telegram, “Zambia Information for USITC Study,” attachment entitled

“Overview of Zambia’s Foreign Trade Performance,” p. 8.

 215 U.S. Department of State telegram, “Zambia Information for USITC Study,” attachment

entitled “Investment Trends,” p. 10; Nathan Associates, Inc., supported by USAID, “Zambia

Export Opportunities and Barriers African Growth and Opportunity Act,” Zambia Trade and

Investment Enhancement Project, Feb. 2005, p. 8; and “Euro 4.7 million Set Aside for Export

Push,” The Times of Zambia, undated, found at www.zamnet.zm, retrieved Feb. 16, 2005. The EDP

provides assistance to the coffee, tobacco, textiles, horticultural, floricultural, leather, wood, and

organic products sectors. 

 216 Government official, interview by USITC staff, Mar. 18, 2005.

 217 “Russian Federation Sets Up Duty Free Mechanism for Imports From Africa,” Finance

CustomWire, Dec. 1, 2004, found at http://web32.epnet.com/, retrieved Feb. 3, 2005. The article

states that Russia’s embassy press attache, Igor Limanskiy, “reiterated” that Russia is interested in

enhancing its business relations with Zambia. According to a representative of the Embassy of

Zambia in Washington, DC, the idea of a Russian debt-for-equity swap has been considered for

many years and has been encouraged under both the Paris Club and economic reforms of the

World Bank and the IMF. It was stated, however, that such investment swaps have not proliferated

3-49

of a transmission line in 2005 connecting the Zambian and Namibian electricity grids209 and

pending the successful conclusion of ongoing discussions regarding potential exports of

power to Rwanda.210 Increased exports are also possible once new power generating capacity

is brought onstream as a result of China’s $600-million power generation project with

Zambia at the Kafue Gorge,211 and the recent memorandum of understanding between

Zambia and Farab International of Iran to build a new hydropower facility on the Kafue

River.212

The government also identified numerous countries as possible or expanded export

markets,213 including the United States, for agricultural products, handicrafts, semiprecious

stones, and timber/logs. Consistent with this expectation, pest-risk assessments have been

conducted on agricultural products intended for export to the United States to meet sanitary

and phytosanitary (SPS) regulations. Australia and New Zealand were also identified as

markets for Zambian exports, particularly vegetables.214 The EU and Russia are also potential

markets for increased exports given the EU’s Export Development Program,215 which offers

technical and financial assistance to promising export sectors,216 and Russia’s recent

implementation of a “preferential trade regime” for imports from developing

countries.217Asia, a relatively new market for Zambian exports, also holds potential.218 Japan
among other countries owed money by Zambia. Embassy of the Republic of Zambia official,

interview by USITC staff, Washington, DC, Feb. 14, 2005

 218 Regional organization official, interview by USITC staff, Lusaka, Zambia, Mar. 15, 2005.

 219 “Export Board Challenges Industries,” The Times of Zambia, June 19, 2003-June 27, 2003,

found at www.times.co.zm/news/viewnews.cgi?category=12&id=1056048664, retrieved

Mar. 27, 2005.

 220 Karby Leggett, “China Flexes Economic Muscle Throughout Burgeoning Africa,” The Wall

Street Journal, Mar. 29, 2005, p. 1.

 221 Ibid.; and “Zambia's Chambishi Copper Output Seen Rising,” Creamer Media’s Engineering

News Online, Mar. 11, 2005, found at www.engineeringnews.co.za/eng/

utilities/search/?show=64224, retrieved Mar. 30, 2005.

 222 “Chinese Copper Company in Zambia Starts Operation,” People’s Daily Online,

Mar. 13, 2003, found at http://english.people.com.cn/200303/13/eng20030313_113217.shtml,

retrieved Mar. 30, 2005.

 223 Sources of the cited constraints include U.S. Department of State telegram, “Zambia

Information for USITC Study,” attachment entitled “Overview of Zambia’s Foreign Trade

Performance,” p. 15; Nathan Associates, “Zambia Export Opportunities,” p. 14; international

financial assistance organization officials, interview by USITC staff, Lusaka, Zambia,

Mar. 14, 2005; industry official, interview by USITC staff, Lusaka, Zambia, Mar. 15, 2005;

industry association official, interview by USITC staff, Lusaka, Zambia, Mar. 14, 2005; industry

association officials, interview by USITC staff, Lusaka, Zambia, Mar. 14, 2005; regional

organization official, interview by USITC staff, Lusaka, Zambia, Mar. 15, 2005; and “SMEs

Hailed for GDP Attainment,” Business CustomWire, found at http://web32.epnet.com, retrieved

Feb. 3, 2005.

 224 U.S. Department of State telegram, “Zambia Information for USITC Study,” attachment

entitled “Overview of Zambia’s Foreign Trade Performance,” p. 18.

3-50

is an expanding market for numerous exports, including agricultural products (assuming

phytosanitary standards are met), largely as a result of its reduction and elimination of duties

in 2003 on numerous products imported from Zambia.219 Zambia’s exports to China are

likely to increase because of diversified Chinese investment in Zambia, China’s recent

elimination of duty rates on imports of nontraditional products from Zambia, and China’s

development of stronger ties with African countries to expand its resource base.220 For

example, China Non-Ferrous Metals Industries Foreign Engineering and Construction Group

bought Zambia’s Chambishi copper mine in 1998 and is adding additional processing

capability at the facility.221 The company shipped its first exports of copper concentrate to

a company in South Africa in March 2003.222 Moreover, China is said to be increasing its

consumption and imports of copper and cobalt and will likely be an expanding market for

Zambia’s exports of these products.

Domestic and International Barriers

Domestic export impediments include a high inflation rate, high production and transport

costs, the high cost of capital, insufficient technical knowledge, high energy costs, and low

production capacity.223 Additional technical training and assistance, as well as increased

private-sector participation, were also cited as necessary in order to expand Zambia’s export

sector.224 Overall, Zambia’s business environment indicators are better than regional

averages (table ZM-5). However, the average tariff rate of 14 percent on all goods, while

lower than some other sub-Saharan African countries, increases the cost of production and

decreases the competitiveness of potential exports. Zambia’s economic freedom score is on

par with the regional average (table ZM-6).
3-51

Table ZM-5

Zambia: Business environment

Zambia

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 19.4 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 19.2 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.7 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 274.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 9.2 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 11.0 6.0

Starting a business: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . . . . 22.8 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 2.7 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Zambia, applied rate, 2003)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.8

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2 1

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table ZM-6

Zambia: Economic freedom

Zambia

Regional

average1

OECD

average

 –––– Heritage Foundation indicators ––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.4 2.2

 Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 
 225 Regional organization official, interview by USITC staff, Lusaka, Zambia, Mar. 15, 2005;

and “Investment Policy in Zambia: Performance and Perceptions.” 

 226 EIU, Zambia Country Profile, p. 23.

 227 “The Monthly,” the Zambian Central Statistical Office, Mar. 2004, found at

www.zamstats.gov.zm/monthly/mar04.pdf, retrieved Mar. 26, 2005. 

 228 Zambia-European Community, Country Strategy Paper and Indicative Programme for the

Period 2001-2007, 2001, annex, p. 20.

 229 Embassy of the Republic of Zambia official, interview by USITC staff, Washington, DC,

Feb. 14, 2005; Charles Krakoff, The Services Group (TSG) for USAID, “Key Potential Export

Markets and the Market Access Barriers Facing Southern African Exporters,” Nov. 2003, p. 69;

and Nathan Associates, “Zambia Export Opportunities,” p. 15.

 230 Embassy of the Republic of Zambia official, interview by USITC staff, Washington, DC,

Feb. 14, 2005.

 231 Ibid.; and EIU, Zambia Country Profile, p. 23.

 232 IMF, Zambia: Selected Issues and Statistical Appendix, p. 20. In addition to shipping

constraints through countries undergoing regional conflicts, the report also cites several related

economic factors accruing from such conflicts that affected Zambia.

 233 S. African Countries to Launch Ambitious Development Corridor,” Xinhua, Dec. 14, 2005,

found at http://web32.epnet.com, retrieved Feb. 3, 2005.

3-52

Zambia’s competitiveness in international markets is reduced by transport costs, which often

equal as much as 60-70 percent of production costs.225 Higher domestic and international

transport costs are attributed not only to the country being land locked but also to

“inefficiencies and structural weaknesses in the transport network.”226 The main modes of

transport in Zambia are road, railroad, and air transport,227 with most products transported

via road.228 Just under one-quarter of roads were paved in 2001 (table ZM-7); an expanded

and improved network of highways would allow better and less expensive market access for

farmers in times of large harvests,229 and could also link newer areas of development.230

Table ZM-7

Zambia: Infrastructure-related indicators

MRY1

Roads, total network (km, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,440.0

Roads, paved (percent of total roads, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.0

Transport services (percent of service exports, BoP, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.2

Transport services (percent of service imports, BoP, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.3

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8

 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Zambia exports through ports in South Africa, Tanzania, Mozambique, and Angola.231 The

need to utilize other countries’ ports can result in higher transport costs. Moreover, regional

conflicts in several neighboring countries have had a negative effect on Zambia’s trade

flows.232 Zambia recently joined with Malawi, Mozambique, and Tanzania to launch the

Mtwara Development Corridor, a $2.6-billion project to generate production and trade levels

valued at approximately $2.4 billion annually, and to develop the transportation structure in

the four countries.233 Zambia also recently announced plans to upgrade the infrastructure in
 234 “Lobito Corridor Key to Zambia’s Exports,” The Times of Zambia, Oct. 7, 2004, found at

http://web32.epnet.com , retrieved Feb. 3, 2005.

 235 U.S. Department of State telegram, “Zambia Information for USITC Study,” attachment

entitled “Investment Trends,” p. 6.

 236 Blackwell Publishing, “Zambia: Famine to Feast?” p. 2.

 237 African Coalition for Trade, Inc., official, interview by USITC staff, Washington, DC,

Feb. 15, 2005; Embassy of the Republic of Zambia official, interview by USITC staff,

Washington, DC, Feb. 14, 2005; and Humphrey and de Senneville, “Constraints and

Opportunities,” p. 13.

 238 Nathan Associates, “Zambia Export Opportunities,” pp. 14-15; and U.S. Department of State

telegram, “Zambia Information for USITC Study,” attachment entitled “Overview of Zambia’s

Foreign Trade Performance,” p. 8.

 239 Nathan Associates, “Zambia Export Opportunities,” p. 16.

 240 “Quality Products Key to AGOA Market, SMEs Told,” Business CustomWire,

Jan. 10, 2005, found at http://web32.epnet.com, retrieved Feb. 3, 2005.

 241 The Zambian textile industry reportedly declined as a result of privatization in the sector.

The import of second-hand clothes also reportedly had a negative effect on the industry in that it

reportedly limited investment in the sector. Industry association officials, interview by USITC

staff, Lusaka, Zambia, Mar. 14, 2005; and regional organization official, interview by USITC

staff, Lusaka, Zambia, Mar. 15, 2005.

 242 Nathan Associates, “Zambia Export Opportunities,” p. 14.

 243 Humphrey and de Senneville, “Constraints and Opportunities,” pp. 9-11; and Nathan

Associates, “Zambia Export Opportunities,” p. 14.

 244 “Developments In the Tantalum Market,” presented by Judy Wickens, Secretary General of

the Tantalum-Niobium International Study Center, at Minor Metals 2004, found at

www.tanb.org/publications/minor_metals_2004.ppt, retrieved Mar. 28, 2005; Mr. R. A.

Hildebrand, Chief Financial Officer and Chief Mining Engineer, Pinnacle Resources Inc.,

telephone interview by USITC staff, Mar. 28, 2005; and Pinnacle Resources Inc., “Pinnacle

Negotiates Tantalite Supply,” press release, found at www.pnrr.net/feb14.html, retrieved

3-53

the Lobito Corridor (Angola), an important channel for Zambia’s exports.234 High production

costs related to infrastructure also include costs for telecommunications and utilities.235 In

2002, for every 1,000 people, there were only 8.2 telephone mainlines, 13 mobile phones,

and 4.9 Internet users. 

Constraints to agricultural export growth include the country’s limited irrigation

infrastructure, deteriorating storage facilities,236 and lack of technical capacity to comply

with SPS and pest-risk assessment regulations in the United States.237 Constraints affecting

the floricultural market include issues related to air freight, including inadequate service and

high costs; high cost of capital; and the introduction of tighter phytosanitary standards in the

EU.238

Impediments to export development and diversification in the manufacturing sector include

insufficient development/investment capital, a lack of training in new technologies and

specialized skills, and inadequate equipment and personnel.239 The tax burden, particularly

on small firms, is reportedly significant.240 The textile and apparel industry in Zambia241 is

likely to face increased competition in the U.S. market from other world textile producers

as a result of the end of quotas in 2005.242 Constraints affecting manufacturing include high

transportation costs, high equipment and operating costs, and outdated equipment.243

Constraints related to potential expansion of the mining sector, particularly tantalite deposits,

include the ability of miners to market their product given the artisanal nature of much of the

mining and concerns by some transporters and importing countries about radioactivity in

exported tantalite.244
Mar. 25, 2005.

 245 The information presented regarding tariff and nontariff barriers was drawn from numerous

sources including U.S. Department of State telegram, “Zambia Information for USITC Study,”

attachments entitled “Investment Trends,” p. 6, and “Overview of Zambia’s Foreign Trade

Performance,” p. 19; Embassy of the Republic of Zambia official, interview by USITC staff,

Washington, DC, Feb. 14, 2005; Humphrey and de Senneville, “Constraints and Opportunities,”

p. 16; Krakoff, “Key Potential Export Markets,” p. 2; government official, interview by USITC

staff, Lusaka, Zambia, Mar. 18, 2005; and industry association official, interview by USITC staff,

Lusaka, Zambia, Mar. 14, 2005. The Krakoff report also cites bilateral agreements entered into by

the United States and the EU with various partner countries as a potential constraint to exports

from nonpartner countries such as Zambia.

3-54

Tariff barriers were also identified as impediments to Zambia’s exports. Such barriers

include duties assessed by regional markets and tariffs in potential markets. Nontariff trade

barriers include rules of origin, quotas and safeguards, production subsidies in developed

countries, product certification requirements, and standards related to packaging and

labeling.245
4-1

CHAPTER 4 

Moderately Mineral-Exporting Countries:

Mozambique, Niger, Rwanda, Sierra Leone,

and South Africa

The countries included in this chapter have exhibited a significant share of mineral

and metal products in their exports, but their exports are more diversified than the

countries described in chapter 3 (table 4-1). Characteristic mining products include

aluminum (Mozambique); uranium (Niger); tin and other nonferrous metals

(Rwanda); diamonds (Sierra Leone); and platinum-group metals, coal, diamonds,

gold, ferroalloys, and aluminum (South Africa). Mozambique and South Africa also

export electricity. A summary of findings for each of the five countries with respect

to potential export growth sectors and domestic and international barriers is provided

below.

Table 4-1

Mozambique, Niger, Rwanda, Sierra Leone, and South Africa, 1999-2003 average share of total exports, by sector

Sectors Mozambique Niger Rwanda

Sierra

Leone

South

Africa

–––––––––– Shares of total exports, 1999-2003 (percent) –––––––––––

Fish and related products . . . . . . . . . . . . . . . . . . . . . . . . 15.8 0.2 (1

) 1.9 1.6

Coffee, tea, and spices . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 0.2 31.4 1.8 0.3

Cocoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 0.2 (1) 2.5 0.1

Other agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7 5.8 3.0 10.3 31.2

Forest-based products . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 1.0 0.5 2.7 4.7

Minerals, metals, and metal products . . . . . . . . . . . . . . . 51.4 37.1 29.4 34.0 47.7

Fuels and electrical energy . . . . . . . . . . . . . . . . . . . . . . . 6.4 45.7 32.5 0.6 9.5

Textiles and fibers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 2.8 0.5 0.6 1.4

Apparel and related articles . . . . . . . . . . . . . . . . . . . . . . 0.6 0.3 0.2 2.7 1.3

Other manufactures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 6.6 2.4 47.4 23.2 1

 Average share of less than 0.05 percent during 1999-2003.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Mozambique

In the near term, Mozambique’s primary exports will likely continue to be concentrated in

the mining and minerals sectors, including aluminum and related downstream metal

products. Export potential exists for coal, natural gas, and other related energy and electricity

exports, and there is also potential for growth in Mozambique’s more traditional export

products, including prawns, cashew nuts, copra, sugar, a range of horticultural and

floricultural products, and wood products. Domestic barriers to increased exports include

complex regulatory and bureaucratic barriers; restrictive labor policies; lack of standards,

quality, accreditation, and metrology capacity; and supply-side factors such as inadequate

infrastructure and the need for extensive capital upgrades at existing facilities. International

barriers to increased exports mostly involve high quality and standards requirements in

developed countries. Mozambique’s agricultural sector exports will also be affected by

ongoing reforms in developed-country agricultural markets.
4-2

Niger

Although uranium accounts for two-thirds of Niger’s exports, more than 80 percent of the

workforce is employed in the agricultural sector. A number of products such as gold,

phosphate, and petroleum have export potential. However, Niger’s poor transportation and

communications infrastructure, its land-locked position, and its relatively unskilled

workforce severely restrict this potential. In addition, the inability to meet sanitary and

phytosanitary standards has been cited as an international impediment to export growth.

Rwanda

Rwanda has a comparative advantage in coffee, tin, and coltan, and export growth will likely

continue to center on these products. In addition, textiles and apparel, downstream chemical

products, dried fruit, frozen fish, and tourism may offer additional export potential. To

dramatically improve export performance by raising productivity and lowering costs,

Rwanda needs to overcome inefficiencies in transportation and utilities, particularly in

electricity and water. Overcoming these constraints is necessary before the agricultural and

mining export sectors can begin to adopt new technology and increase productivity. Access

to financial credit is a requisite to increasing large-scale agricultural production and

expanding into downstream products. Other barriers and impediments to export growth

include regional instability, lack of technical capacity to meet foreign market standards, and

a generally nonconducive business environment.

Sierra Leone

Products of Sierra Leone with the greatest export potential include diamonds, rutile, iron ore,

jewelry, and a variety of cash crops including cocoa beans and other crops not currently

grown. Goods that will be assembled in the future export processing zone, and tourism

services that will be offered at an associated hotel, also have potential to generate export

revenues. With much of the country destroyed by civil war, the leading barriers to export

development are inadequate infrastructure (roads, electricity, and communications),

inadequate schools and government institutions, and concerns regarding the rule of law.

Regional instability continues to be an international impediment to export growth.

South Africa

The economic sectors with the greatest potential for growth in export sales are agriculture

and agroprocessing, manufacturing (particularly motor vehicles, engines, and parts),

minerals and metals, and services (particularly information and communication technologies,

business process outsourcing, tourism, and feature and commercial film production).

Domestic impediments to increased exports in these sectors include the small scale of

production capacity; labor and immigration policies; inadequate transportation infrastructure;

exchange rate volatility; lack of standards, quality assurance, and metrology capacity; and

export control and licensing requirements. International impediments to increased exports

include standards, tariffs, customs procedures, agricultural support programs in developed

and middle-income countries, and bans on the importation of certain products in certain

markets.
 1

 Prepared by Renee Johnson, Office of Industries.

 2

 Mozal (Mozambique Aluminum Smelter) is financed by a four-country consortium (Australia,

Japan, Mozambique, and South Africa) and has made Mozambique one of the world’s top

aluminum producers, significantly altering its export profile. The smelter plant imports bauxite

from Australia, smelts it, and exports aluminum ingots. Economist Intelligence Unit (EIU),

Mozambique Country Profile, 2004, p. 45.

 3

 The Sasol pipeline is being developed ($600 million investment) by Sasol, a South African

energy company, and the Governments of Mozambique and South Africa, to transport natural gas

within the region. Construction was completed in early 2004, but production is not expected to

reach full capacity until 2008. Ibid., p. 35.

 4

 U.S. Department of State telegram, “July Monthly Economic Wrap-up: Mozambique,”

message reference No. 01091, prepared by U.S. Embassy, Maputo, Aug. 13, 2004.

 5

 World Resources Institute, “Food and Agriculture–Mozambique,” found at

http://earthtrends.wri.org, retrieved Feb. 8, 2005.

4-3

Mozambique1

Economic Overview

Mozambique’s GDP was $4.3 billion in 2003. It is one of the fastest-growing economies in

sub-Saharan Africa (SSA). In 2003, the annual GDP growth rate was 7.0 percent and GDP

per capita grew by 5.0 percent (table MZ-1). Mozambique’s government has initiated many

far-reaching structural reforms since the 1990s in an attempt to encourage private-sector

activity and investment. These reforms have contributed to relatively stable exchange rates

and low inflation rates, increased foreign direct investment (FDI) and exports, and GDP

growth. Mozambique has also initiated steps to create industrial free trade zones to

encourage private-sector investment in areas with development potential. 

In 2003, 42.8 percent of GDP was accounted for by services (figure MZ-1), composed of

retail, transportation and communications, construction, and tourism. Manufacturing and

other industry accounted for 31.1 percent of GDP, and agriculture, fishing, and forestry

accounted for the remaining 26.1 percent. Trade represents over 60 percent of Mozambique’s

annual GDP.

Mozambique has abundant mineral and energy resources, but these sectors are not well

developed. The country’s leading large-scale projects are in aluminum smelting, heavy sands

mining, and natural gas development. Mozal,2

 an aluminum smelter, and Sasol,3 a natural-gas

pipeline, are estimated to contribute 1 to 2 percent of Mozambique’s annual economic

growth and are credited with a reduction in Mozambique’s trade deficit.4

 Energy and

electricity production is another important sector, given Mozambique’s abundant reserves

of coal and natural gas.

Mozambique remains a mostly agriculture-based economy; more than 80 percent of

Mozambique’s population is employed primarily in subsistence agriculture.5

 Principal

agricultural products include cashew nuts (both processed kernels and unprocessed nuts),

coconut and copra, sugar, cotton, citrus fruits, teas, beans, rice, spices and seasonings
4-4

Table MZ-1

Mozambique: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 4,320.4

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 7.0

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 5.0

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... 13.4

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 4,609.3

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... .... 6.1

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... 23.5

Trade (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 61.7

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 23,782.3

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 18.8

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 1.9

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 9.8

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 52.3

Literacy rate, adult total (percent of people ages 15 and above, 2002) ....... ....... ....... ....... ....... . . 46.5

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... . 92.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ...... 12.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 5.1

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 45.1

Gross fixed capital formation (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... ....... . 44.7

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 11.3

 Most recent year for which data are available between 1999 and 2003. 1

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005; and

African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 

Figure MZ-1

Mozambique: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 6

 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005; Chemonics

International Inc., “Roadmap for Improved Horticulture Export Competitiveness in Malawi,

Mozambique, Tanzania, and Zambia,” prepared for U.S. Agency for International Development,

Apr. 2004, various pages; and South African Marketing Company, “Mozambique,” SADC Trade,

Industry, Finance and Investment Review, found at www.sadcreview.com/country_profiles,

retrieved Feb. 15, 2005. 

 7

 Gabriela Rebello da Silva and Lara da Silva Carrilho, “Bridging the Standards Divide: A Case

Study and Action Plan for Mozambique,” ch. 2 in the International Bank for Reconstruction and

Development/World Bank, Standards and Global Trade: A Voice for Africa (Washington, DC:

The World Bank, 2003), p. 116.

 8

 U.S. & Foreign Commercial Service (US&FCS), “Mozambique Country Commercial Guide,

FY 2004,” Sept. 2003, found at www.stat-usa.gov, retrieved Apr. 18, 2005; and EIU, Mozambique

Country Profile, p. 54.

 9

 United Nations Conference on Trade and Development (UNCTAD), World Investment

Report, 2004, annex B, p. 377.

 10 World Bank, “World Development Indicators,” found at

http://devdata.worldbank.org/dataonline, retrieved Feb. 1, 2005.

 11 EIU Viewswire, “Mozambique economy, region is a high FDI performer,” Jan. 10, 2005,

found at www.viewswire.com, retrieved Jan. 15, 2005.

 12 Mauritius industry official, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005;

and government official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

4-5

(safflower and paprika), peanuts, wheat, and edible oils (sunflower, sesame, and soybean).6

Its agricultural base also includes a wide range of horticulture products, including baby

vegetables (carrots and corn), melons, specialty and tropical fruits (banana, citrus, pineapple,

mango, other tropical fruits), and cut flowers. 

Mozambique also has significant marine resources, and seafood was its main export prior

to the development of its aluminum sector. Prawns account for between 20 and 40 percent

of the country’s total catch of fish and seafood.7

 Industrial fishing is conducted under direct

licensing schemes owned by joint ventures between Mozambican companies and foreign

fishing companies from Japan, Spain, Portugal, China, and South Africa.8

 Economic

performance in this sector has been negatively affected by declining world prices and a small

fishing fleet.

In 2003, Mozambique received $337 million in FDI and was one of the largest recipients of

foreign assistance in SSA.9

 During 1999-2002, FDI ranged from $140 million to more than

$400 million annually,10 accounting for 4 percent to 11 percent of GDP. Most FDI has

helped fund capital-intensive, large-scale projects in the mining, energy, and transportation

sectors.11 This investment is contributing to the rapid diversification of Mozambique’s

production and export base, and its transition from an agriculture-based economy. Industry

officials cited the low cost of production, particularly labor costs, as a primary impetus

behind investment interest in the country.12

Export Profile

Mozambique’s exports totaled $978.7 million in 2003, reflecting a more than threefold

increase compared with 1999 (tables MZ-2 and MZ-3). Exports of aluminum, which

primarily consisted of unwrought aluminum, registered one of the largest 9-year compound

annual growth rates (CAGRs) at 170.6 percent, and accounted for 65 percent of total exports

in 2003. Aluminum exports grew from less than 10 percent of all exports in 2000 to more
4-6

Table MZ-2

Mozambique: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––– 1,000 dollars –––––––– ––––– Percent ––––––

76 Aluminum and articles thereof. . . . . . . . . . . . . . . . . . . . . . . . 81.1 216.3 631,050.9 64.5 170.6

03 Fish and crustaceans, molluscs and other aquatic

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,003.1 85,452.6 95,655.1 9.8 2.7

24 Tobacco and manufactured tobacco substitutes . . . . . . . . . 11,260.1 5,457.1 66,550.4 6.8 21.8

44 Wood and articles of wood; wood charcoal . . . . . . . . . . . . . 3,364.8 14,679.3 36,737.4 3.8 30.4

52 Cotton, including yarns and woven fabrics thereof. . . . . . . . 27,660.3 38,569.9 29,443.6 3.0 0.7

08 Edible fruit and nuts; peel of citrus fruit or melons . . . . . . . . 13,032.9 38,941.7 21,560.9 2.2 5.8

17 Sugars and sugar confectionery. . . . . . . . . . . . . . . . . . . . . . 15,502.4 167.0 19,215.5 2.0 2.4

27 Mineral fuels, mineral oils and products of their

distillation; bituminous substances; mineral waxes . . . . . 1,761.4 7,797.9 10,682.4 1.1 22.2

25 Salt; sulfur; earths and stone; plastering materials, lime

and cement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,695.2 10,614.7 7,978.8 0.8 0.4

74 Copper and articles thereof. . . . . . . . . . . . . . . . . . . . . . . . . . 2,704.5 2,599.1 7,789.8 0.8 12.5

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,780.8 79,790.7 52,024.6 5.3 1.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204,846.6 284,286.3 978,689.5 100.0 19.0

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table MZ-3

Mozambique: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, and compound annual growth rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars ––––––––– –––– Percent –––––––

7601 Aluminum, unwrought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 629,870.0 64.4 (1

)

0306 Crustaceans, live, fresh, chilled, frozen etc.; crustaceans, 

in shell, cooked by steam or boilng water; flours, meals, 

& pellets of crustaceans, fit for human consumption . . . . 72,292.6 82,806.4 81,926.9 8.4 1.4

2401 Cigars, cheroots, cigarillos and cigarettes, of tobacco

or of tobacco substitutes . . . . . . . . . . . . . . . . . . . . . . . . . 11,131.8 5,457.1 66,548.9 6.8 22.0

4403 Wood in the rough, whether or not stripped of bark or

sapwood, or roughly squared . . . . . . . . . . . . . . . . . . . . . . 1,035.8 10,613.1 30,804.6 3.1 45.8

5201 Cotton, not carded or combed . . . . . . . . . . . . . . . . . . . . . . . 24,763.1 35,623.8 29,490.8 3.0 2.0

0801 Coconuts, brazil nuts and cashew nuts, fresh or dried . . . . . 11,075.9 36,737.1 21,338.6 2.2 7.6

1701 Cane or beet sugar and chemically pure sucrose, in solid 

form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,734.4 0.6 18,069.5 1.8 4.0

0307 Molluscs & other aquatic invertebrates nesoi, live, fresh, 

chilled, frozen, dried, salted or in brine; flours, meals &

pellets of aqua invertebrates fit for human consumption 307.1 913.5 11,811.0 1.2 50.0

2701 Coal; briquettes, ovoids and similar solid fuels

 manufactured from coal ........................... 326.1 5,426.8 8,950.0 0.9 44.5

2516 Granite, porphyry, basalt, sandstone and other building etc.

stone, whether or not roughly trimmed or merely cut by

sawing etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,365.5 6,764.0 7,732.7 0.8 4.1

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,814.3 99,943.9 72,146.5 7.4 1.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204,846.6 284,286.3 978,689.5 100.0 19.0 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 13 Commission estimate based on World Bank, World Integrated Trade Solution database. 

 14 UNCTAD, Commodity Yearbook (2000 data).

 15 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 16 UNCTAD, Commodity Yearbook (2000 data).

4-7

than one-half of exports in 2001.13 This growth is attributable to further expansion of

Mozambique’s aluminum industry resulting from the development of the Mozal smelter. The

European Union is the largest overall market for Mozambican exports, with six EU countries

accounting for 74 percent of total exports (table MZ-4). 

Table MZ-4

Mozambique: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

 CAGR

––––––––––––––––– 1,000 dollars –––––––––––––– –––––––– Percent ––––––––––

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 2,463.8 310,023.7 31.7 (2)

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,092.6 42,749.8 120,555.7 12.3 14.0

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,667.2 10,029.9 111,947.8 11.4 25.3

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . 7,868.0 11,197.8 96,358.0 9.8 32.1

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . 25,040.5 41,729.8 43,444.3 4.4 6.3

Netherlands . . . . . . . . . . . . . . . . . . . . . . . 2,232.6 7,381.7 41,304.3 4.2 38.3

Malawi . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,435.9 5,403.8 39,053.8 4.0 27.3

South Africa . . . . . . . . . . . . . . . . . . . . . . . 25,815.2 52,631.2 36,868.0 3.8 4.0

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,576.1 3,299.8 26,591.8 2.7 19.0

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,189.2 33,689.6 23,332.7 2.4 14.0

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,929.4 73,709.2 129,209.4 13.2 6.2

Total . . . . . . . . . . . . . . . . . . . . . . . . 204,846.6 284,286.3 978,689.5 100.0 19.0

1

 Not available.

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Other leading export products in 2003 were fresh and frozen prawns/crustaceans, primary

agriculture products (unmanufactured tobacco, cotton, cashew nuts, sugar cane), wood, and

coal. Prior to 2001, prawns were Mozambique’s main export, accounting for about

30 percent of the value of exports.14 Within the crustacean and mollusc category, prawns

account for 20 percent of exports. Such exports grew at a 9-year CAGR of 1.4 percent, but

accounted for only 8.4 percent of total exports in 2003. The European Union and Japan are

primary markets for prawns.15 CAGRs for other agricultural exports were sugar and sugar

products (2.4 percent), fruits and nuts (5.8 percent), and cotton (0.7 percent). Mozambique

is also a major exporter of fruits and nuts, accounting for about 10 percent of all fruit and nut

exports from SSA in 2003.16
 17 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 18 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 19 EIU, Mozambique Country Profile, p. 50; and World Trade Organization (WTO), Trade

Policy Review: Mozambique, Report 00-5619, Dec. 21, 2000, p. 46.

 20 U.S. Department of State telegram, “July Monthly Economic Wrap-up: Mozambique.” 

 21 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 22 South African Marketing Company, “Mozambique.”

 23 WTO, Trade Policy Review: Mozambique, p. 7.

 24 EIU, Mozambique Country Profile, various pages; and United Nations (UN)/International

Chamber of Commerce (ICC), “An Investment Guide to Mozambique,” June 2001, p. 21.

 25 Trade Law Center Centre for Southern Africa, “Sasol invests big in Moz,” May 7, 2002,

found at www.tralac.org , retrieved Jan. 31, 2005. 

4-8

Sectors with the Greatest Export Growth Potential

Mozambique’s exports will likely continue to be concentrated in the minerals and metals

sectors in the near term. Revealed comparative advantage17 (RCA) analysis supports this

qualitative assessment of merchandise export potential, as 4 of the top 10 products ranked

by RCA index are in the minerals and metals sector (appendix E, table E-23). Primary

unwrought aluminum will likely continue to dominate exports, as the sector is expected to

expand following the initiation of the second phase of the Mozal project (Mozal II) in 2003.

Construction of another aluminum smelter is also being considered. According to industry

representatives, the success of the Mozal and Sasol projects is attracting additional

investment in the mining and energy sectors.18 Mozambique has reserves including coal,

natural gas, titanium, bauxite, gold, marble, bentonite, granite, iron ore, cobalt, chromium,

nickel, copper, and precious and semiprecious stones.19 The development of two large

mineral processing plants is underway, including the Corridor Heavy Sands and the Moma

Heavy Sands projects. The Corridor Heavy Sands project will develop Mozambique’s

sizeable deposits of titanium dioxide minerals and will include a mine and a two-stage

mineral processing plant.20 Construction is expected to begin in 2006. There is also potential

for mining of semiprecious stones,21 and diamond exploration by the Portuguese firm

Tamega is underway.22 Export potential also exists for coal and natural gas, as

Mozambique’s energy and electricity industries continue to develop. RCA analysis also

identified coal gas as having a strong RCA index in recent years, suggesting the potential for

export growth. Given its long coastline, Mozambique also has the capacity to produce salt

for export. Potential salt markets include Malawi, Swaziland, South Africa, and Zimbabwe.

In addition, Mozambique is promoting additional development of its metallurgy sectors,

including downstream production of aluminum products at the Mozal project, and expansion

of its manufacturing sector in areas such as construction materials, heavy equipment,

furniture structures, and tools and parts.23

Mozambique has the potential to become an important energy and electricity producer and

exporter given its coal and natural gas reserves and significant hydroelectric capacity.24 The

Sasol pipeline will result in gasfield development in Mozambique and the construction of

a 865-kilometer pipeline for transporting natural gas from Mozambique to Sasol’s current

distribution network in South Africa, where the gas is converted into a synthetic fuel.25 New

coal mines are also being developed, including the Moatize coal deposit. The Moatize mine

project was awarded to the Brazilian mining company CVRD in late 2004, and includes
 26 U.S. Department of State telegram, “November Economic Wrap-up: Mozambique,” message

reference No. 894, prepared by the U.S. Embassy, Maputo, Dec. 2004.

 27 EIU, Mozambique Country Profile, p. 50. 

 28 U.S. Department of State telegram, “August Economic Wrap-up: Mozambique,” message

reference No. 1091, prepared by the U.S. Embassy, Maputo, Sept. 2004.

 29 Trade Law Center Centre for Southern Africa, “Sub-Saharan Africa to become a major

seafood producer,” Oct. 8, 2003, found at www.tralac.org,retrieved Jan. 31, 2005. 

 30 South African Marketing Company, “Mozambique.” 

 31 Technoserv, “TechnoServe in Mozambique,” found at www.technoserve.org, retrieved

Feb. 8, 2005.

 32 Ibid.

 33 Trade Law Center Centre for Southern Africa, “World Bank still mum on Moz cashews,”

July 24, 2003, found at www.tralac.org, retrieved Jan. 31, 2005; and Trade Law Center Centre for

Southern Africa, “Moz cashew industry in collapse,” Jan. 22, 2003, found at www.tralac.org,

retrieved Jan. 31, 2005. 

 34 Technoserv, “TechnoServe in Mozambique.”

4-9

plans to build a coal-fired power station close to the mine.26 Power lines are planned to

export electricity from Mozambique’s Cahora Bassa hydroelectric dam to South Africa and

Zimbabwe.27 Negotiations between Mozambique and Portugal have been re-opened

regarding ownership of Hidroelectrica Cahora Bassa, the firm operating the Cahora Bassa

dam.28

Other top 10 products ranked by RCA index are some of Mozambique’s more traditional

export commodities in the agriculture and fisheries sector, including prawns, nuts, copra, and

tobacco. Mozambique’s water resources give it the potential to expand production and

exports of seafood and fish,29 including prawns and shrimp, lobster, crab, shellfish, ocean

fish, and fresh-water fish. 

Mozambique’s main agricultural export crops are cashew nuts, cotton, copra, tea, and

sugar.30 There is potential to expand its exports of a wide range of horticulture products,

including baby vegetables (carrots and corn, for export to the European Union), melons,

passion fruit, bananas, and paprika, among other speciality fruits, vegetables, and spices.

Additional investment is needed to improve the quality and quantity of production in these

areas. Several high-value horticultural investments and joint ventures have been initiated

(Mozambican, Dutch, South African, and Zimbabwe investors), producing vegetables

(carrots and potatoes), melons, paprika, peppers, and tropical fruit (mangoes, passionfruit,

and bananas).31 Mozambique has also had success developing its cut flower industry and

began exporting cut flowers to the European Union in December 2002.32

Ongoing efforts to rehabilitate Mozambique’s cashew, citrus, sugar, tea and tobacco

industries are likely to increase exports from these sectors. Since being privatized in 1995,

the cashew nut sector has experienced major losses and production is limited because of

aging trees, few new plantings, disease, low yields, and ineffective use of pesticides and

pruning. The removal of the export duty on raw cashews resulted in increased exports of raw

cashews, rather than providing inputs to cashew processing,33 suggesting that either

Mozambique does not have a comparative advantage in processed cashews or impediments

exist in the processing industries. The government is promoting downstream processing,

rather than the export, of raw nuts. To address production constraints, investment in new

technologies and mechanized processes has reduced breakage rates and raised producer

prices. Some existing facilities have been upgraded and there are plans to build seven

medium-scale cashew processing plants.34 There are now eight small locally-owned
 35 Government official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 36 World Bank, “Southern African Agribusiness: Gaining through regional Collaboration,”

Technical Paper No. 424, Feb. 1999, p. 98.

 37 Ibid.

 38 Ibid., p. 124. Export sales were projected to increase 50 percent between 2000 and 2005.

 39 U.S. Department of State telegram, “U.S. Deputy Secretary of Agriculture Visits

Mozambique,” message reference No. 173, prepared by the U.S. Embassy, Maputo, Mar. 2005.

 40 WTO, Trade Policy Review: Mozambique, p. 42.

 41 UN/ICC, “An Investment Guide to Mozambique,” p. 33.

 42 EIU, Mozambique Country Profile, p. 49. 

 43 U.S. Department of State telegram, “Mozambique: Request for Tariff Rate Quota for

Tobacco,” action request letter for USTR, prepared by the U.S. Embassy, Maputo, Nov. 2004.

 44 Government official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 45 African Development Bank/Organization for Economic Cooperation and Development,

“Mozambique,” African Economic Outlook, 2004, p. 236. 

 46 EIU, Mozambique Country Profile, p. 47. 

 47 U.S. Department of State telegram, “Mozambique: Request for Tariff rate Quota for

Tobacco.”

 48 U.S. Department of State telegram, “July Economic Wrap-up: Mozambique.”

 49 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 50 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

4-10

processing facilities producing nuts mostly for export to the European Union, the United

States, and South Africa.35

Production from established citrus orchards has been decreasing because of outdated

cultivars, a breakdown in irrigation facilities, shortages in intermediate inputs, and

management problems.36 Recent efforts include rehabilitation of two large, abandoned, statecontrolled citrus plantations, new plantings of grapefruit and orange trees, private or jointventure investments, and development of the necessary port and other transport

infrastructure.37 These changes are expected to stimulate Mozambique’s citrus export sales.38

One citrus farm, Citrum, is exporting Ruby Red grapefruit to Europe with assistance from

U.S.-based Technoserve, which has rehabilitated 30,000 trees and refurbished its packing

houses. Export levels have increased to account for more than 70 percent of production.39

Sugar cane ranks as one of Mozambique’s leading agriculture commodities in terms of its

market potential,40 and there are ongoing efforts to upgrade the country’s sugar industry.41

South African and Mauritanian companies have invested heavily in sugar refineries.42 One

company also has plans to start production of alcohol.43 Investment is needed to develop

downstream sugar industries such as alcohol and food processing (beverages and condensed

milk).44 As a further incentive to the local industry, and to stop smuggling of sugar from

Zimbabwe, sugar was exempted from the value-added tax in 2002.45 Mozambique is also

actively trying to revive its exports of tobacco,46 and is interested in exporting processed

tobacco products to the United States.47 It recently constructed its first tobacco processing

plant, Mozambique Leaf Tobacco, which is expected to employ 2,000 workers.48

Wood products have also been identified as a potential export sector.49 Industry participants

estimated that there are 500,000 cubic meters of sustainable supply per year, including

African mahogany and panga-panga.50 Currently, Mozambique is exporting wood to China,

with little investment in the downstream manufacturing sectors. Trade groups in

Mozambique are trying to discourage the export of solid wood and bamboo timber in order

to develop downstream industries such as furniture manufacturing, picture frames, and other
 51 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 52 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 53 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 54 Government official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 55 Trade Law Center Centre for Southern Africa, “AGOA no help for Moz clothing industry,”

May 12, 2003, found at www.tralac.org; retrieved Jan. 31, 2005. 

 56 Trade Law Center Centre for Southern Africa, “Southern African businesses test U.S.

market,” Oct. 15, 2003, found at www.tralac.org; retrieved Jan. 31, 2005. 

 57 For additional information on the Multifiber Arrangement and the end of textile and apparel

quotas in 2005, see app. C.

 58 US&FCS, “Mozambique Country Commercial Guide, FY 2004.”

 59 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 15, 2005.

 60 WTO, Trade Policy Review: Mozambique, p. 43.

 61 U.S. Department of State telegram, “November Economic Wrap-up: Mozambique,” message

reference No. 894, prepared by the U.S. Embassy, Maputo, Dec. 2004.

 62 UN/ICC, “An Investment Guide to Mozambique,” p. 37.

 63 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 64 EIU, Mozambique Country Profile, p. 77; and US&FCS, “Mozambique Country Commercial

Guide, FY 2004.”

4-11

handicraft industries.51 Although timber availability could increase, export revenues would

be reduced at the expense of encouraging an industry in which the country may not have a

comparative advantage. Industry officials have cited the European Union as the best market

opportunity for Mozambican wood products,52 although there are hopes to manufacture

furniture for the U.S. market.53

Mozambique’s government has identified textiles and apparel as a priority sector,54 with

hopes for growth in exports, particularly to the United States under AGOA.55 It has also

identified potential for small businesses to export a wide range of handmade products,

including clothing and woven rugs, furniture, and jewelry.56 The export potential for this

sector is, however, dampened by the increasing international competition stemming from the

end of textile and apparel quotas in 2005.57 Many textile and garment plants remain idle, and

the remaining facilities and technologies are outdated and require extensive capital

investment.58 Current production capacity in the sector is low and further expansion is

limited by a lack of business initiatives and Mozambique’s strict labor laws. Only one

facility, Belita (a Mauritanian garment manufacturer) is currently exporting to the United

States under the AGOA program, but according to an industry official it has reportedly been

losing customers because of production delays.59 Cotton production is also being promoted

as having potential both as an input to the textile industry, as well as for import substitution

of edible oils.60 Raw cotton production has been increasing, but has been primarily exported

rather than processed in Mozambique.61

In services, tourism has the potential to become a significant source of foreign exchange for

Mozambique.62 An industry representative estimated that there are about 1 million arrivals

each year, up from about 400,000 arrivals in 2001.63 In 2004, the government developed a

new strategic plan for tourism. Among the identified opportunities are development of its

hunting and game reserves, safari operations, and ecotourism sectors, as well as

rehabilitation of the Gorgongosa National Park and development on the islands off the coast

of Pebane.64
 65 World Bank, Doing Business in 2004: Understanding Regulation (2004), p. 90.

 66 The Services Group, “Trade Policy Strategies for Mozambique,” Dec. 2002, p. 6, found at

www.satradehub.org, retrieved Mar. 6, 2005.

 67 Ibid.; and EIU, Mozambique Country Profile, various pages. 

 68 Nathan Associates, Mozambique: Diagnostic Trade Integration Study, Nov. 2004, found at

www.tcb-project.com, retrieved Mar. 11, 2005, p. 13.

 69 Ibid.

 70 EIU, Mozambique Country Profile, p. 37. 

 71 For additional information on regional organizations, see app. C.

 72 EIU, Mozambique Country Profile, p. 29. The telecommunication sector is controlled by the

state monopoly, Telecomunicações de Moçambique (TDM).

4-12

Domestic and International Barriers

In general, domestic impediments to increased exports include complex regulatory and

bureaucratic impediments; restrictive labor policies; lack of standards, quality, accreditation,

and metrology capacity; and supply factors including inadequate infrastructure and the need

for extensive capital upgrades at most existing facilities.

Mozambique is perceived as one of the world’s most difficult places to do business. The

World bank notes that Mozambique has “heavy regulation in all aspects of business

activity,” and is in need of “comprehensive” reforms.65 Costly and complex regulatory and

bureaucratic impediments are also blamed for Mozambique’s poor economic performance

across many of its industries. Regulatory burdens are also cited as contributing to

Mozambique’s underperformance in attracting foreign investors to its export processing

zones.66 Among the reported impediments are complex labor laws, restrictive land

procedures, ineffective law enforcement and judicial systems, burdensome corporate laws

and regulations, an inadequate financial sector, a burdensome tax system, an underskilled

labor market that is inadequate for diversification into more skill-intensive industries,

inadequate transport and telecommunications capacity, and a lack of government

transparency.67

These impediments are reflected in Mozambique’s ranking for many of the World Bank’s

business environment indicators, compared with the regional average. For example, the

average time to start a business is 153 days, more than twice the regional average

(table MZ-5). Continued effort is needed to streamline company registration processes and

to share information about regulations and procedures between the private sector and

government agencies.68 In general, larger businesses receive more support than small- and

medium-sized business investors. It also takes longer to close a business, compared to the

regional average, and the private-sector credit coverage is negligible. Labor law requirements

are also more restrictive compared with the regional average.69 The Heritage Foundation’s

Index of Economic Freedom reports that Mozambique ranks better than the regional average

overall, but worse than the regional average in terms of trade and monetary policy, wages

and prices, property rights, and regulation (table MZ-6).

Mozambique’s major challenge is its inadequate energy, water, transport, and

telecommunications infrastructure, which contributes to high capital, transportation, and

utilities costs. Its national electricity grid is small and poorly integrated. Many areas do not

have access to electricity, and many areas rely on diesel-powered generators.70 Less than

20 percent of all roads are paved (table MZ-7). The telecommunications sector in

Mozambique is underdeveloped, with only 4.6 telephone mainlines per 1,000 inhabitants,

one of the lowest of all the Southern African Development Community71 members.72
4-13

Table MZ-5

Mozambique: Business environment

Mozambique

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 12.3 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 5.0 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 5.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.0 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 580.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 11.9 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0 11.0 6.0

Starting a business: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . . . . 95.8 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 14.5 254.1 44.1

Starting a business: Time (days).......................................... 153.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.0 53.2 26.2

Employment: Firing costs (weeks)......................................... 141.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

Country data not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness/, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table MZ-6

Mozambique: Economic freedom

Mozambique

Regional

average1

OECD

 average

––––––––– Heritage Foundation indicators –––––––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . 2.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 
 73 Nathan Associates, Mozambique: Diagnostic Trade Integration Study, p. 10.

 74 UN/ICC, “An Investment Guide to Mozambique,” p. 55.

 75 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 76 Nathan Associates, Mozambique: Diagnostic Trade Integration Study, p. 13.

 77 EIU, Mozambique Country Profile, p. 42. 

 78 Government official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 79 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 15, 2005.

 80 Nathan Associates, Mozambique: Diagnostic Trade Integration Study, p. 32; and Chemonics,

“Roadmap for Improved Horticulture Export Competitiveness,” p. xiii.

4-14

Table MZ-7

Mozambique: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,400.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.7

Transport services (percent of service exports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.3

Transport services (percent of service imports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.5

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.6

Internet users (per 1,000 people, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . 3.0

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Mozambique also lacks a fair and transparent land policy.73 Land is officially state owned

and must be leased, but there are human and technical resource constraints in the land

registry service.74 As noted by an industry participant, the application process may take as

long as 2 years.75 The constraints on privately-held land limits the use of land as collateral

to obtain financing for investment. Other challenges include shortage of domestic capital and

an inadequate local financing system, resulting in high borrowing costs and conservative

banking practices.76

Mozambique’s customs and excise service was privatized in 1997, but problems with lack

of government transparency and bureaucratic procedures remain.77 Among cited problems

are administrative burdens, customs clearance problems, long delays in clearing imports, and

export procedures. Customs reform has been underway for the past 3-4 years, and includes

improvements to customs procedures, removal of export licensing requirements, and the

adoption of a single document system, allowing all requirements to be contained in one

document.78 Delays in value-added tax reimbursement and inefficiencies in Mozambique’s

duty drawback scheme also restrict funding for inputs and working capital. Industry

representatives assert that reimbursement of value-added tax can take up to 2 years.79

Identified impediments to Mozambique’s agricultural sector exports include low productivity

and production capacity, high input costs, high transport costs, limited access to cold storage

facilities, customs delays, ineffective producer organizations, limited agroprocessing

capabilities, limited market and export development services such as post-harvest

management, finance constraints, and difficulty obtaining import exemptions.80 Additional

investment is needed for fishing vessels, marine engines, vacuum packaging, and cold

storage/refrigeration.
 81 Industry official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 82 Rebello da Silva and da Silva Carrilho, “Bridging the Standards Divide,” p. 108.

 83 Nathan Associates, Mozambique: Diagnostic Trade Integration Study, p. 31.

 84 US&FCS, “Mozambique Country Commercial Guide, FY 2004.”

 85 Government official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 86 Government official, interview by USITC staff, Maputo, Mozambique, Mar. 14, 2005.

 87 Nathan Associates, Mozambique: Diagnostic Trade Integration Study, p. 35; WTO, Trade

Policy Review: Mozambique, p. 7; and EIU, Mozambique Country Profile, p. 52.

 88 EIU, Mozambique Country Profile, p. 55. 

 89 Trade Law Center Centre for Southern Africa, “The cost of European sugar,” Sept. 3, 2002,

found at www.tralac.org; retrieved Jan. 31, 2005. 

 90 Nathan Associates, Mozambique: Diagnostic Trade Integration Study, p. 23.

4-15

Other impediments to Mozambique’s agricultural exports include the inability to meet

foreign quality standards and labeling requirements.81 Currently, Mozambique has only a

rudimentary system of standardization, quality assurance, accreditation, and metrology. Also,

there are few laws relating to hygiene, sanitary and phytosanitary (SPS) standards,

importation, production, commercial exploitation, and export of foodstuffs and agricultural,

livestock, forestry, and fishery byproducts.82 SPS requirements in foreign markets involving

pest eradication are particularly difficult to satisfy.83 In the fisheries sector, Mozambique is

working to ensure that onshore processors meet U.S. Hazard Analysis and Critical Control

Point Standards, along with other types of SPS requirements that may require facility

upgrades and technical expertise.84 Mozambique is receiving assistance from the European

Union and Japan in meeting these fisheries-related requirements.85 Government

representatives also noted that labeling and certification requirements also limit

Mozambique’s timber processing potential, because requirements in some markets regarding

timber originating from sustainable forests limit the country’s ability to export processed

wood products.86

Impediments in the manufacturing sector include poor price competitiveness and the low

quality of local production; outdated technologies and need to upgrade facilities; poor

linkages to suppliers of inputs; and limited available industrial land.87 The manufacturing

sector has, nevertheless, benefitted from lower import tariffs on intermediate and capital

goods and more efficient customs procedures. Impediments in the mining sector include

inadequate geological information; an inadequate legal and regulatory framework issues,

including land tenure; lack of institutional capacity; and poor infrastructure and

transportation links.88

International barriers to increased exports mostly involve high quality and standards

requirements in developed countries. Mozambique’s agricultural sectors also have the

potential to be affected by ongoing reforms in developed country agriculture markets. For

example, Mozambique’s sugar export growth potential is said to be hampered by developedcountry agricultural sector support programs.89 Complex rules of origin requirements under

various regional and preferential trade agreements were also cited as limiting Mozambique’s

potential exports.90
4-16
 91 Prepared by Seamus O’Connor, Office of Industries.

 92 Central Intelligence Agency (CIA), “Niger,” World Factbook 2004, found at

www.cia.gov/cia/publications/

factbook/geos/ng.html, retrieved Mar. 22, 2005.

 93 Economist Intelligence Unit (EIU), Niger Country Profile, 2004, p. 22; and EIU, “Economic

Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.

4-17

Niger91

Economic Overview

Niger is land locked, has a semiarid climate, and is largely desert. Less than 4 percent of its

land base is arable (table NI-1). Its GDP totaled $2.7 billion and expanded by 4.0 percent in

2003. The economy is dominated by subsistence agriculture and animal husbandry, as well

as re-export trade and uranium exports.92 Economic activity, with the exception of mining,

is primarily located near the Niger River and the southern border with Nigeria and Benin.

Since the end of the uranium boom in the 1980s, Niger has faced macroeconomic imbalances

from weakening terms of trade, droughts, and poor money management. Trade represents

42.4 percent of GDP, and exports represent 16.1 percent of GDP.

In 2003, Niger’s services sector employed a little more than 10 percent of the population, but

accounted for 42.5 percent of Niger’s GDP in 2003 (figure NI-1).93 This sector consists

largely of retail and wholesale trading, re-exports, and basic public services.

Table NI-1

Niger: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,729.7

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.6

External debt, total (current US$, millions, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,797.1

Total debt service (percent of exports of goods and services)............................................ (2

)

Exports of goods and services (percent of GDP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.4

Official exchange rate (local currency unit per US$, period average, 2003) ................................. 581.2

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.9

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1

Primary school enrollment ratio, total (percent) ....................................................... (2

)

Secondary school enrollment ratio, total (percent, 2000)................................................ (2

)

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 
 EIU, Niger Country Profile, p. 21. 94

 Despite the general categorization noted in figure NI-1, Niger’s mining activity is included 95

within the secondary sector.

 Rigzone, “Petronas Strikes Oil in Niger,” found at 96

www.rigzone.com/news/article.asp?a_id=19345, retrieved Apr. 27, 2005; and EIU, Niger Country

Profile, p. 29.

4-18

In 2003, agriculture accounted for approximately 40 percent of Niger’s GDP and employed

more than 80 percent of the population. Agricultural output is affected by drought and 94

insect swarms that can devastate harvests and displace large numbers of people in search of

food for themselves and grazing land for cattle. The rearing of livestock is the main activity

in the less fertile regions of Niger, and the national herd is still recovering from a steep

decline in numbers resulting from droughts in the 1970s and 1980s. Most of the food

produced is consumed locally and sector development is hampered by a lack of modern

technology and reliance on rudimentary tools. 

The industrial (secondary) sector, which consists mainly of mining, small-scale local 95

manufacturing, and brewing, accounts for about 17 percent of GDP and employs less than

5 percent of the population. Mining accounts for approximately one-third of the sector’s

output and is dominated by uranium extraction, although the recent upturn in gold prices has

revived interest in gold mining. Similarly, higher petroleum prices spurred exploration that

led to the discovery of petroleum reserves in January 2005, although it has yet to be

established if quantities are sufficient to warrant additional investment. Within the 96

industrial sector, manufacturing accounts for 6.7 percent of GDP, and is concentrated in the

production of soap, detergents, and bottled drinks, as well as the processing of oilseeds, rice,

Note.—Primary is defined as agriculture, fisheries, mining, and quarrying, secondary is defined as manufacturing, construction, electricity,

water and other utilities; and tertiary is defined as primarily services activities such as retail, financial, and real estate, and government

services.

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.

Figure NI-1

Niger: Composition of GDP (2003)
 97 Official trade statistics, including those presented in tables NI-2 and NI-3, do not provide an

accurate reflection of exports that have been produced in Niger because of the large share of reexports and the number of informal trade channels. World Trade Organization (WTO), Trade

Policy Review: Niger, Reports by the Secretariat, WT/TPR/S/118, June 30, 2003, p. 8.

 98 U.S. Department of State, “Background Notes: Niger,” Apr. 2005, found at

www.state.gov/r/pa/ei/bgn/

5474.htm, retrieved Apr. 7, 2005.

 99 EIU, Niger Country Profile, p. 31.

 100 WTO, Trade Policy Review: Niger, p. 8.

 101 Ibid., p. 7.

 102 EIU, Niger Country Profile, p. 27.

 103 For additional information on regional organizations, see app. C.

4-19

industrial sector, manufacturing accounts for 6.7 percent of GDP, and is concentrated in the

production of soap, detergents, and bottled drinks, as well as the processing of oilseeds, rice,

cotton, and livestock products. Most factories are operating well below capacity. However,

because of an upturn in construction, Niger’s cement producing plant is experiencing an

increase in demand.

Export Profile

Uranium is Niger’s leading export, accounting for two-thirds of the $110.8 million total in

2003 (tables NI-2 and NI-3). Livestock is the country’s second-largest export, excluding reexports.97 Other agricultural exports include cowpeas and onions. Actual livestock exports

far exceed official statistics because large herds of animals informally cross the border into

Nigeria.98 Informal trade with Nigeria, particularly in cattle and agricultural products, likely

amounts to as much as 50 percent of formal trade.99 When considering informal trade,

Niger’s second-leading trading partner is Nigeria. Nigeria is Niger’s leading market for fresh

vegetable and livestock exports.100 With respect to re-exports to Nigeria, the value and

composition fluctuates greatly on an annual basis depending on price changes. For example,

the leading product for re-export in 1995 and 1998 was cigarettes, whereas in 2000 it was

textiles.101

As a whole, the structure of Niger’s exports has remained largely unchanged since 1995. The

European Union, more specifically France, is Niger’s largest trading partner, accounting for

more than two-thirds of the total value of exports in 2003 (table NI-4). Other markets for

Nigerien exports include Japan (5.7 percent of exports), the United Kingdom (4.2 percent),

and the United States (3.7 percent). Although Niger’s trade regime is considered one of the

most open within the region, it is still not well integrated in the global economy.102 As a

result of its membership in the Economic Community Of West African States and the West

African Economic and Monetary Union,103 most of Niger’s formal and informal exports, with

the exclusion of uranium, are to Niger’s neighbors. However, exports to Italy, Japan, and the

Netherlands are growing, with 9-year compound annual growth rates of 23.2 percent,

37.1 percent, and 53.8 percent, respectively.
4-20

Table NI-2

Niger: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars ––––––– –––– Percent ––––––

28 Inorganic chemicals; organic or inorganic compounds of 

precious metals, of rare-earth metals, of radioactive 

elements or of isotopes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,712.6 117,492.7 73,776.5 66.6 -1.7

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909.8 1,794.7 2,744.7 2.5 13.1

27 Mineral fuels, mineral oils and products of their distillation; 

bituminous substances; mineral waxes . . . . . . . . . . . . . . . . . 21.7 159,860.2 2,426.7 2.2 68.9

15 Animal or vegetable fats and oils and their cleavage 

products; prepared edible fats; animal or vegetable waxes . . 3.1 19.1 1,946.7 1.8 104.4

90 Optical, photographic, cinematographic, measuring, checking, 

precision, medical or surgical instruments and apparatus;

parts and accessories thereof ........................ 145.1 888.2 1,771.3 1.6 32.1

31 Fertilizers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5 43.2 1,708.4 1.5 76.2

52 Cotton, including yarns and woven fabrics thereof. . . . . . . . . . . 1,958.7 3,414.1 1,565.6 1.4 -2.5

85 Electrical machinery and equipment and parts thereof; sound 

recorders and reproducers, television recorders and 

reproducers, parts and accessories .................... 386.9 2,020.1 1,325.6 1.2 14.7

18 Cocoa and cocoa preparations. ......................... 296.5 441.2 1,307.9 1.2 17.9

44 Wood and articles of wood; wood charcoal ................ 284.8 158.3 1,284.9 1.2 18.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,991.9 17,128.2 20,943.6 18.9 1.7

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,721.5 303,260.0 110,801.8 100.0 0.3

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table NI-3

Niger: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars ––––––––– ––––– Percent ––––––

2844 Radioactive chemical elements and isotopes and their

compounds; mixtures and residues containing these

products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,669.2 117,167.7 73,763.6 66.6 -1.6

2710 Petroleum oils and oils from bituminous minerals (other

than crude) and products therefrom, nesoi, containing

70% (by weight) or more of these oils . . . . . . . . . . . . . . . . 17.7 7,966.7 2,332.5 2.1 72.0

1515 Fixed vegetable fats and oils (including jojoba oil) and

their fractions, whether or not refined, but not

chemically modified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 1,946.0 1.8 (1

)

3105 Mineral or chemical fertilizers with two of the three fertilizer 

elements; fertilizers nesoi; fertilizers in packs etc. not over 

10 kg gross weight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 1,667.3 1.5 (1

)

5201 Cotton, not carded or combed . . . . . . . . . . . . . . . . . . . . . . . . 1,501.3 3,229.6 1,444.1 1.3 -0.4

1801 Cocoa beans, whole or broken, raw or roasted ........... 130.6 441.2 1,301.7 1.2 29.1

4403 Wood in the rough, whether or not stripped of bark or

sapwood, or roughly squared . . . . . . . . . . . . . . . . . . . . . . . 0.0 91.5 1,198.5 1.1 (1

)

8474 Machinery for sorting, grinding etc. minerals; machinery for 

agglomerating etc. mineral products and for forming 

foundry molds of sand; parts thereof . . . . . . . . . . . . . . . . . 0.0 0.0 860.5 0.8 (1

)

0714 Cassava (manioc), arrowroot, salep, jerusalem artichokes, 

sweet potatoes and similar roots etc. (high starch etc. 

content), fresh or dried; sago . . . . . . . . . . . . . . . . . . . . . . . 0.2 264.6 759.9 0.7 144.2

7204 Ferrous waste and scrap; remelting scrap ingots of iron or 

steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110.2 0.0 676.1 0.6 22.3

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,292.3 174,098.9 24,851.6 22.4 2.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,721.5 303,260.0 110,801.8 100.0 0.3 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 104 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 105 UN Integrated Regional Information Networks, “Niger: First gold bar produced from new

mine,” found at www.irinnews.org, retrieved Mar. 17, 2005.

 106 U.S. Department of State telegram, “Niger: Request for Information for USITC Study on

Export Opportunities and Barriers in AGOA Eligible Countries,” message reference No. 08545,

prepared by U.S. Embassy, Niamey, Feb. 18, 2005.

 107 Ibid.

 108 Ibid.

4-21

Table NI-4

Niger: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––– 1,000 dollars ––––––– ––––––– Percent –––––––––

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,157.2 116,647.0 75,221.3 67.9 -1.1

Japan ........................................... 368.5 310.3 6,299.0 5.7 37.1

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,609.5 3,673.0 4,651.4 4.2 -3.8

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,543.7 12,797.8 4,090.3 3.7 5.4

Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.5 5,329.6 2,185.6 2.0 53.8

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 84.4 2,178.7 2.0 (1

)

Namibia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2

) (2) 1,549.1 1.4 (1)

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201.6 149.9 1,321.4 1.2 23.2

Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 903.6 1,309.7 1.2 (1

)

Togo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.1 66.6 1,194.6 1.1 35.4

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,717.4 163,297.9 10,800.7 9.7 -3.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,721.5 303,260.0 110,801.8 100.0 0.3

1

 Undefined.

 2 Not available.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

The revealed comparative advantage104 (RCA) analysis shows that Niger has a positive RCA

index in 9 of its top 10 exports (appendix E, table E-25). Most of these leading products have

exhibited relative stability in their RCA indices and therefore represent attractive export

potential. Of the leading 10 products in which Niger has a comparative advantage, the world

market is growing most significantly for certain ceramicwares; cyclic alcohols and

derivatives; and chlorites, hypochlorites, and hypobromites. 

The mining and energy sectors have been identified as having export growth potential. For

example, gold and crude petroleum have been cited as sources of export growth.105 In

addition, although not viable at the present time, considerable phosphate deposits could be

exploited as the regional demand for fertilizers increases.106 Likewise, an expansion of the

power grid and improved transportation would increase the potential for additional coal

mining and power generation station construction. Growth in the energy sector could result

in energy exports to the regional market.107

Improved farming and irrigation techniques could result in increased production of gum

arabic, meat, and sesame for export to the region.108 Should agricultural production increase,

downstream food processing or packaging industries could follow. 
 109 U.S. Department of State telegram, “Niger: Investment Climate Statement,” message

reference No. 250356, prepared by U.S. Embassy, Niamey, Jan. 14, 2005.

4-22

Domestic and International Barriers

Niger ranks below the regional average in many business environment indicators, most

notably with respect to labor market rigidities (table NI-5). However, Niger ranks better than

the regional average on contract enforcement and property registration. Niger also excels in

the amount of days needed to start a business, taking less than one-half the time of other

countries in the sub-Saharan region. Niger’s score for economic freedom is very close to the

regional average, but ranked worse than the regional average in 70 percent of the factors

contributing to the overall score (table NI-6). Impediments to investment and business

development in Niger include the small domestic economy, limited buying power, and lack

of capital accumulation; a slow and cumbersome bureaucracy; high transportation costs; and

the lack of a trained labor force and service providers resulting from low literacy and adult

education rates.109

Table NI-5

Niger: Business environment

Niger

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 2.6 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 74.6 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 1.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.0 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 330.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 12.5 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 396.4 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) .............. 744.7 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.0 50.6 26.8

Employment: Difficulty of hiring index ...................................... 100.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90.0 56.0 34.4

Employment: Rigidity of hours index ....................................... 100.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Niger, applied rate, 2002)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.9

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005. 
4-23

Table NI-6

Niger: Economic freedom

Niger

Regional

average1

OECD

 average

––––––– Heritage Foundation indicators ––––––––

1995 Overall score ................................................ (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . 3.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.

The biggest impediment that Niger faces is an underdeveloped infrastructure. There are

insufficient roadways in Niger, and those roads that exist are generally of poor quality. Of

the 10,100 kilometers of roads, only 7.9 percent are paved (table NI-7). Similarly, Niger’s

information infrastructure is undeveloped. Less than 2 percent of the population has access

to the Internet, mobile phones, and telephone land lines.

Table NI-7 

Niger: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,100.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9

Transport services (percent of service exports, BoP) ...................................... (2

)

Transport services (percent of service imports, BoP) ...................................... (2

)

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9

Electric power transmission and distribution losses (percent of output)......................... (2

)

Energy imports, net (percent of commercial energy use).................................... (2

)

 1

 Most recent year for which data are available between 1999 and 2003. 

 2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 
 110 EIU, Niger Country Profile, p. 27.

4-24

With regard to the agricultural sector, the export of downstream livestock products such as

milk, meat, hides, and skins is constrained by limited transportation infrastructure and

slaughterhouses.110 Niger is also at a disadvantage because it does not have direct access to

a major seaport. Although Niger’s products have benefitted from tariff preferences in its

major export markets, nontariff barriers represent a major impediment for Nigerien exports

in markets such as Canada, the United States, the European Union, and Japan. Requirements

set by those countries for sanitary and phytosanitary standards for many products are costly

to meet.
 111 Prepared by Christopher B. Mapes, Office of Industries.

 112 Integrated Framework (IF) “Rwanda Diagnostic Trade Integration Study Concept Note,”

Nov. 12, 2004, found at www.integratedframework.org/countries/rwanda.htm, retrieved

Feb. 18, 2005.

 113 Reportedly 1 million people were killed, 2 million people were driven into exile, over a

100,000 people were put in prison, and thousands of people were handicapped, both physically

and mentally. UK Embassy of Rwanda, found at www.ambarwanda.org.uk/genocide/index.htm,

retrieved Apr. 5, 2005.

 114 IF, “Rwanda Diagnostic Trade Integration Study Concept Note.” 

 115 Trade and GDP generally increased during the period; a drought in 2002-03 caused the 2003

GDP growth to stall, which increased the export-to-GDP ratio. East and Central Africa Trade Hub

(ECAHUB), “Development of National AGOA Export Strategies for Rwanda (2004 - 2008),”

Oct. 2004, found at www.ecatradehub.com/reports/rp.downloads/

2005.AGOA.Strategy.Rwanda.pdf, retrieved Mar. 21, 2005.

 116 U.S. Department of State, “Rwanda Country Commercial Guide - 2004,” prepared by U.S.

Embassy, Kigali, Oct. 2004.

 117 Banque Nationale du Rwanda, “Structure des exportations annuelles de 1995 à 2003," 2004,

p. 110; and International Monetary Fund (IMF), “The Global Demographic Transition,” World

Economic Outlook, Sept. 2004, p. 206.

4-25

Rwanda111

Economic Overview

Rwanda is a small, land-locked country in east-central Africa with a GDP of $1.6 billion and

a population of 8.3 million in 2003 (table RW-1). Ninety percent of the population lives in

rural areas with the majority of the population existing on subsistence farming.112 The

country has a sunny, tropical climate and two rainy seasons, giving it an agricultural

advantage. Protracted civil wars, culminating in the genocide of 1994, have resulted in the

death and displacement of many Rwandans. Prolonged turmoil has also destroyed much of

the nation’s limited infrastructure and production resources.113 The Rwandan government has

initiated several broad economic and financial reforms, including improving government

institutions and privatizing state-owned enterprises.114 Rwandan international trade is small,

representing approximately 36.2 percent of GDP in 2003, but higher than the 1992-2002

average of 17 percent.115

Agriculture accounted for 41.4 percent of Rwanda's GDP in 2002 (figure RW-1). Economic

activity is dominated by many large coffee and tea plantations; various fruit products and,

more recently, horticultural products are also traded. Almost all agricultural activity relies

exclusively on rainfall, as irrigation is limited. The Rwandan government owns all land.

Agricultural cooperatives and other private entities must obtain leasing rights and privileges

on a simple fee basis to hold the land rights for 50 to 99 years.116 Services accounted for

37.3 percent of GDP, and is composed primarily of wholesale and resale trade,

transportation, and public administration.

Industry accounted for 21.3 percent of GDP in 2002. Within the industry sector,

manufacturing, which accounted for 10 percent of GDP in 2002,117 is dominated by food,

beverages, and tobacco production, which together account for 80 percent of manufacturing

output. Manufacturing also includes small chemical and textile and apparel segments, a 
4-26

Table RW-1

Rwanda: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 1,637.3

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 3.2

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 2.1

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... 6.9

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 1,435.0

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... .... 14.9

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... 8.6

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 36.2

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 537.7

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 8.3

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 1.1

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 4.5

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 53.2

Literacy rate, adult total (percent of people ages 15 and above, 2002) ....... ....... ....... ....... ....... . . 69.2

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... .

2

119.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ...... 14.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 40.5

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 20.2

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 20.2

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 0.2

 Most recent year for which data are available between 1999 and 2003. 1

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school 2

age.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005; and

African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.

Figure RW-1

Rwanda: Composition of GDP (2002)
 118 Economist Intelligence Unit (EIU), Rwanda Country Profile, 2004, p. 32.

 119 Banque Nationale du Rwanda, “Structure des exportations annuelles,” p. 110; and IMF,

“The Global Demographic Transition,” p. 206.

 120 Banque Nationale du Rwanda, Annual Report 2002, pp. 19-21. Cement production, mostly

for domestic construction, increased by 66 percent during 1997-2002.

 121 Banque Nationale du Rwanda, “Structure des exportations annuelles,” p. 110; and IMF,

“The Global Demographic Transition,” p. 206.

 122 EIU, Rwanda Country Profile, p. 32.

 123 Coltan is a common term in sub-Saharan Africa for the mineral columbo-tantalite, from

which niobium (columbium) and tantalum can be obtained. Niobium and tantalum are critical

metals for electronic components of cell phones, computer chips, and numerous high-tech

electronics.

 124 EIU, Rwanda Country Profile, p. 27.

 125 Discounting the unsubstantiated export value to Indonesia for HS 2709.

 126 “Rwanda,” Infomine-Africa, found at www.infomine-africa.com/Rwanda.asp, retrieved

Mar. 29, 2005.

4-27

small amount of mineral and metal processing (metal products include gold and tin), and

multiple handicrafts.118 The construction sector share of GDP has increased from 5 percent

to 8 percent during 1995-2002,119 because of infrastructure rebuilding and refugee housing

projects.120 Despite accounting for less than 1 percent of GDP in 2002,121 Rwanda’s mining

products became the largest export value category in 2001.122 Domestically consumed

quarrying products include construction-related raw materials such as cement, sand, gravel,

and aggregate. Exported mineral products include concentrates of coltan,123 cassiterite (a tin

mineral), wolframite (a tungsten mineral), and sapphires.

FDI in Rwanda was estimated at $2.6 million in 2002, and has been negligible since the 1994

genocide, ranging between $1 million and $8 million per year. South African sources,

including mobile phone service and fuel distribution providers, are the largest foreign

investors. The government has expressed its intention to privatize all 74 parastatals, but only

30, almost all small, with a total value of $7 million, were privatized through 2003.124 The

large telecommunications, energy, banking, and tea plantation parastatals have not yet been

privatized.

Export Profile

Rwandan exports totaled $107.7 million in 2003 (table RW-2). Rwanda’s export

composition is heavily weighted toward minerals and metals, which accounted for 5 of the

top 10 export categories (table RW-3), and coffee and tea, which were the third- and fifthlargest export products in 2003. Rwanda’s largest export market is Indonesia, which

accounted for more than 61 percent of total exports in 2003 (table RW-4).125 Exports to Hong

Kong and Thailand also increased substantially during 1994-2003, accounting for less than

6 percent of the total. Many exports such as tea, leather products, and some mineral products

have yet to recover completely from the extensive disruption caused by the 1994 genocide

and civil unrest. Some mining facilities resumed operations only recently.126
4-28

Table RW-2

Rwanda: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars –––––– ))––)) Percent )––))))

27 Mineral fuels, mineral oils and products of their distillation;

bituminous substances; mineral waxes . . . . . . . . . . . . . . 32.9 71.0 65,786.1 61.1 132.7

26 Ores, slag and ash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,287.9 5,318.9 18,758.6 17.4 21.3

09 Coffee, tea, mate and spices. . . . . . . . . . . . . . . . . . . . . . . . . 30,198.7 31,372.1 16,223.3 15.1 -6.7

41 Raw hides and skins (other than furskins) and leather . . . . 3,067.0 660.7 909.3 0.8 -12.6

72 Iron and steel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.1 7.4 737.3 0.7 39.0

84 Nuclear reactors, boilers, machinery and mechanical

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . 413.8 77.7 623.3 0.6 4.7

80 Tin and articles thereof. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.0 0.0 622.5 0.6 40.1

85 Electrical machinery and equipment and parts thereof;

sound recorders and reproducers, television recorders

and reproducers, parts and accessories . . . . . . . . . . . . . 96.4 210.3 590.6 0.5 22.3

47 Pulp of wood/of other fibrous cellulosic material; recovered

(waste and scrap) paper and paperboard . . . . . . . . . . . . 0.0 0.0 446.7 0.4 (1

)

62 Articles of apparel and clothing accessories, not knitted or

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.8 5.1 314.7 0.3 22.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,676.1 7,554.0 2,700.0 2.5 5.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,892.7 45,277.3 107,712.5 100.0 12.0

1

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to petroleum-related

exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table RW-3

Rwanda: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, percent or 2003 total, and compound

annual growth rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

––––––––– 1,000 dollars –––––––– )––))) Percent ))––)))

2709 Petroleum oils and oils from bituminous minerals, crude . . 0.0 0.0 65,659.2 61.0 (1)

2615 Niobium, tantalum, vanadium or zirconium ores and

concentrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,410.1 3,910.5 15,890.5 14.8 30.9

0901 Coffee, whether or not roasted or decaffeinated; coffee

husks and skins; coffee substitutes containing coffee . . 27,446.2 30,463.8 15,106.1 14.0 -6.4

2609 Tin ores and concentrates . . . . . . . . . . . . . . . . . . . . . . . . . 1,877.8 1,222.9 1,839.2 1.7 -0.2

0902 Tea, whether or not flavoured . . . . . . . . . . . . . . . . . . . . . . . 2,751.3 908.2 1,117.2 1.0 -9.5

2611 Tungsten ores and concentrates . . . . . . . . . . . . . . . . . . . . 0.0 185.4 893.6 0.8 (1

)

7206 Iron and nonalloy steel in ingots or other primary forms

(excluding iron of heading 7203) . . . . . . . . . . . . . . . . . . 0.0 0.0 723.8 0.7 (1

)

8001 Tin, unwrought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.0 0.0 622.5 0.6 40.1

4702 Chemical wood pulp, dissolving grades . . . . . . . . . . . . . . . 0.0 0.0 446.7 0.4 (1

)

4103 Raw hides and skins nesoi (fresh or preserved, but not

tanned or further prepared), whether or not dehaired or

split . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,918.3 36.6 401.6 0.4 -15.9

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,459.0 8,549.8 5,012.1 4.7 4.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,892.7 45,277.3 107,712.5 100.0 12.0 1

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to petroleum-related

exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 127 ECAHUB, “Development of National AGOA Export Strategies.” 

 128 T. Yager, “The Mineral Industries of Burundi, Comoros, Malawi, Mauritius, Reunion,

Rwanda and Seychelles,” U.S. Geological Survey (USGS), 2003, found at

http://minerals.usgs.gov/minerals/pubs/country/2003/bycnmimpfrrwsemyb03.pdf, retrieved

Mar. 28, 2005; and USGS tin commodity specialist, interview by USITC staff, Washington, DC,

Apr. 18, 2005.

 129 J. Carlin, Tin Statistical Compendium, USGS, found at

http://minerals.usgs.gov/minerals/pubs/commodity/tin/stat, retrieved Apr. 12, 2005.

 130 EIU, Rwanda Country Profile, p. 32.

4-29

Table RW-4

Rwanda: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

 CAGR

-–––––––––– 1,000 dollars –––––––––– ))––)))))) Percent ))))))))

Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.2 66,105.9 61.4 (1)

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,443.0 11,243.0 8,079.0 7.5 -5.5

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 1,738.8 7,116.9 6.6 (1

)

Hong Kong, China . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 123.7 4,224.6 3.9 133.2

Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,214.6 2,988.0 3,290.8 3.1 -9.7

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,685.0 3,825.7 2,880.1 2.7 6.1

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2

) 4,311.9 2,326.4 2.2 (1)

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 157.1 1,919.5 1.8 92.6

Romania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 570.0 1,528.5 1.4 (1

)

Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 595.4 683.1 1,041.5 1.0 6.4

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,947.4 19,635.8 9,199.2 8.5 -5.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,892.7 45,277.3 107,712.5 100.0 12.0

1

 Undefined.

2

 Not available.

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to petroleum-related

exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

Rwanda’s leading exports–minerals and metals and coffee–are likely to be the engines of

export growth in the short to mid term. Rwanda’s hilly terrain, of which 41 percent is arable,

gives it a natural advantage in the growth of certain agricultural products such as coffee and,

more recently, tea. Rwanda also has a natural advantage in minerals and metals, notably in

gold, tin, gemstones, and other metals. However, opportunities for increasing Rwandan

exports may also be found in downstream processed products. Given their high input and

transport costs, most consultants are advising Rwandan producers to target high-end, niche

products that garner higher prices and take advantage of Rwanda’s low-cost labor.127

The outlook for Rwanda's mineral exports depends on the resolution of political instability

and favorable world market conditions for coltan, gold, tin, and tungsten. Historically, tin

exports had been the dominant mineral export. Rwanda was one of the major tin-producing

countries in the 1980s,128 approaching 1 percent of world production129 and peaking at 1,100

short tons in 1990.130 However, since 2000, coltan has become the largest mineral export.

REDEMI, the state-owned mining company, has more than doubled production of multiple

products during 2000-04, including cassiterite (up by 169 percent to 603 short tons), coltan
 131 “Rise in Redemi’s Production,” Africa Mining Intelligence: Rwanda, No. 79, Feb. 18, 2004,

p. 2, found at www.africaintelligence.com/recherche/navigation/p_navig_recherche.asp, retrieved

Apr. 11, 2005.

 132 Yager, "The Mineral Industries."

 133 “Rise in Redemi’s Production.”

 134 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 135 ECAHUB, “Development of National AGOA Export Strategies.”

 136 For additional information on the Multifiber Arrangement and the end of textile and apparel

quotas in 2005, see app. C.

 137 Jason Bauer, OTF Group, 7th Annual Africa Business Conference, The Africa Business

Club of Harvard Business School, Feb. 11-13, 2005.

 138 C. Spratling, “Premium beans, premium benefits,” Detroit Free Press, Mar. 18, 2005, found

at www.freep.com/features/living/rwanda18e_20050318.htm, retrieved Apr. 22, 2005.

 139 ECAHUB, “Development of National AGOA Export Strategies.” 

4-30

(up by 154 percent to 33 short tons), and wolframite (up by 110 percent to 258 short tons).131

In addition, Rwanda also has undeveloped beryllium, kaolin, and peat deposits,132 and

REDEMI’s announced intention to begin offering concessions for sale in 2007 should

increase production of multiple mineral resources destined largely for export.133

The revealed comparative advantage134 (RCA) analysis shows comparative advantage gains

for woven fabrics, indicating potential for increased sector exports (appendix E, table E-28).

Rwanda’s main producer, Première Usine Textile du Rwanda (UTEXRWA), was established

in 1985 and, despite continuing low production capacity, has rapidly expanded in the last

few years to become an integrated textile company with spinning, weaving, dyeing, printing,

and apparel-making capabilities. It produces industrial and school apparel and basic products

such as sheets and curtains. It operates a growing textile mill with an in-house garment

manufacturing facility. UTEXRWA has already established contact with U.S. customers

such as WalMart. Other small textile weaving companies are also expanding, such as Gahaya

Links, which specializes in hand-loomed textile products.135 The export potential of textile

and apparel products is, however, dampened by the end of quotas in 2005.136

Downstream chemical manufacturing opportunities include sodium hydroxides and

peroxides, which can be a product of peat processing; calcium carbides, which are generated

from carbon and limestone; and carbon black, a specialty product added to rubber tires,

which is derived almost exclusively from the burning of natural gas. 

The Rwandan government has identified coffee as an export growth product. Given

declining international coffee prices,137 the government plans to increase its sales of highgrade arabica coffee by developing specialty products that could potentially triple the income

to the farmers. This policy requires introducing improved harvesting techniques and coffeewashing technology,138 as well as introducing flavoring and packaging options to further

process the coffee for export.139

Other agricultural sector products also exhibit opportunities to diversify exports. For

example, RCA analysis indicates that dried fruit and frozen fish have gained in comparative

advantage, suggesting potential export growth for downstream products. In each case,

additional processing beyond raw materials (e.g., to dry the fruit and to freeze the fish) has

provided the opportunity to increase the margins on exported products and absorb the

additional transport costs associated with inadequate transportation infrastructure.
 140 Bauer, 7th Annual Africa Business Conference.

 141 Much of this section is derived from IF, “Rwanda Diagnostic Trade Integration Study

Concept Note.”

 142 US&FCS, “Rwanda Country Commercial Guide, FY 2004.”

 143 ECAHUB, “Development of National AGOA Export Strategies.”

 144 Ibid.

 145 For a detailed description of the transportation issue, see IF, “Rwanda Diagnostic Trade

Integration Study Concept Note.” 

 146 EIU, Rwanda Country Profile, p. 23.

4-31

Consultants have identified ecotourism as a services sector trade opportunity. Rwanda has

a highland forest with over 30 species of primates, including gorillas. To capitalize on these

assets, consultants suggest that Rwanda develop a research center that offers university

programs to attract additional visitors who would stay in the country longer than the typical

ecotourist.140

Domestic and International Barriers141

In general, increasing production levels and improving delivery capacities are the key to

increased exports of existing products. Rwanda’s typically low production capacity results

from a lack of technology and costly and inefficient transportation stemming from

underdeveloped infrastructure. These factors impede Rwanda's participation and integration

in the global economy, and negatively affect investment. The challenges confronting

potential investors in Rwanda include a shortage of reliable and affordable energy, regional

instability, inadequate transport links, lack of fiscal discipline, and the slow privatization

process.142 Additionally, several business environment issues such as the cost and time

required to register a property and start a business, negatively affect business development

(table RW-5). However, economic freedom measures are improving such that Rwanda’s

overall score is approaching the regional average in 2005 (table RW-6).

The East and Central African Trade Hub notes a number of impediments to increasing

Rwanda’s exports, including lack of technical/management skills necessary for

diversification into downstream products; nearly inaccessible roads from production sites to

distribution centers or ports; no native seaport; small domestic capital base for local

investment; lack of sufficient reasonable-term credit for working capital; lack of technology

transfer to increase downstream production; high utility costs, including transport fuel; few

cold storage (for perishables) and warehouse facilities; low electrical supply, at high cost;

low water supply, especially clean running water; expensive information technology

services; significant “red tape” paperwork delays; limited marketing knowledge; weak crosssectoral linkages, translating into little support for small and medium enterprises; and varied

tariff and nontariff barriers.143

Reportedly accounting for 40 to 60 percent of sales value, Rwanda’s high transport costs are

a major barrier to export diversification.144 Rwandan producers are thus unable to compete

in many overseas markets, especially commodity markets, and expand into new export

products.145 As Rwanda has no railways,146 all transport is road based, and only 8.3 percent

of roads are paved (table RW-7). Rwanda has two routes to access ports – a northern corridor

through Kampala to Mombasa and a central corridor to Dar-es-Salaam. Because of the lack

of security and dilapidated roads in the central corridor, 80 percent of traffic uses the

northern corridor. However, the greater security of the northern route comes at the expense
4-32

Table RW-5

Rwanda: Business environment

Rwanda

Regional

average

OECD

average

Closing a business: Cost (percent of estate)................................. (1

) 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 0.0 17.1 72.1

Closing a business: Time (years) ......................................... (1

) 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) ............ (2

) 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 1.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.5 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 395.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 9.5 13.2 4.9

Registering a property: Time (days) ....................................... 354.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 316.9 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 0.0 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Rwanda, applied rate, 2002)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.2

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.9

 1

 No practice.

 1

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table RW-6

Rwanda: Economic freedom

Rwanda

Regional

average1

OECD

average

–––––– Heritage Foundation indicators ––––––

1995 Overall score ............................................. (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.— Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 147 For multiple examples, see IF, “Rwanda Diagnostic Trade Integration Study Concept Note.”

 148 Regional organization official, interview by USITC staff, Lusaka, Zambia, Mar. 15, 2005.

 149 IF, “Rwanda Diagnostic Trade Integration Study Concept Note.”

 150 The principal airlines are Air France and Sabena, as well as some regional

airlines.“Rwanda,” Infomine-Africa, found at www.infomine-africa.com/Rwanda.asp, retrieved

Mar. 29, 2005.

 151 Regional organization representative, interview by USITC staff, Lusaka, Zambia,

Mar. 15, 2005. 

 152 IF, “Rwanda Diagnostic Trade Integration Study Concept Note.”

 153 Ibid.

 154 Energy product imports were 108,506 short tons, at a value of $40.2 million, in 2003; energy

imports accounted for nearly 16 percent of Rwanda's total imports. Banque Nationale du Rwanda,

“Structure des exportations annuelles.” 

 155 IF, “Rwanda Diagnostic Trade Integration Study Concept Note.”

 156 Ibid.

4-33

Table RW-7

Rwanda: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.7

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.2

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.4

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (

2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

of more checkpoints, resulting in delays and increased transit costs. The cost of moving

goods to or from the coast is reportedly often more than twice the cost of ocean-borne

shipping to and from Europe or Asia.147 

The length and variability of shipping times require producers to maintain large inventories,

which tie up capital and increase the cost of products. This constraint is particularly difficult

as interest rates average 20 percent.148 Rwandan producers also face a number of customs

barriers on both imports and exports that lead to delays and increased costs, including the

inefficient bonded warehouse system and the multiple customs frontiers that must be

crossed.149 Airline-based trade150 is being evaluated to assist in the development of servicesbased export activities.151 Air transport is also considered important to the development of

nontraditional exports such as horticulture. 

Insufficient water and power hinders development in all sectors. The national electric utility

monopoly, Electrogaz, is almost entirely dependent upon hydroelectric power. Thus, the

drought of the past 2 years has caused regular supply interruptions152 during a time when

demand is increasing by more than 10 percent per year.153 As a short-term remedy, many

companies have purchased their own electrical generators to improve supply reliability, but

this is more expensive than hydroelectricity.154 Other companies have significantly curtailed

output.155 Several businesses report that they have been unable to carry out plans to expand

production because of unreliable water and energy supplies.156 Water is also becoming
 157 ECAHUB, “Development of National AGOA Export Strategies.”

 158 IF, “Rwanda Diagnostic Trade Integration Study Concept Note.”

 159 Brenton and Ikezuki, “The Value of Trade Preferences for Africa,” mimeo, World Bank,

2004, found at www.ileapinitiative.com/pages/pdfs/WB,%20Trade%20Prefs_rcvd

%2011.07.04_FINAL%20FORMAT.pdf, retrieved Apr. 6, 2005.

4-34

increasingly scarce, and the urban water supply is dependent upon energy supply reliability.

This also affects tourism. 

Another barrier to accessing export markets is the lack of technical capacity to meet product

standards and requirements. To successfully market products internationally, especially

agricultural products, Rwanda must meet international standards in process and quality. With

the creation of the Rwandan Bureau of Standards in 2002, Rwanda is introducing a modern

system of standardization that did not exist.157

With regard to the agricultural sector, lack of access to credit constrains export growth; only

2 percent of bank credit went to the agricultural sector in 2002.158 High interest rates and

demands for 100-percent collateral make formal loans prohibitively expensive. Access to

credit to finance crop selection, fertilizer use, and marketing is necessary for large-scale

production and expansion into downstream products.

As noted above, Rwanda’s land-locked geographic position, requiring the need to access

neighboring country transportation infrastructure and the associated additional costs, limits

export diversification into low-margin, high-volume exports. In addition, rules of origin

requirements for certain exports such as textile and apparel products were identified as

limiting market access and export growth.159
 160 Prepared by Ralph Watkins, Office of Industries.

 161 Economist Intelligence Unit, (EIU), Sierra Leone Country Profile, 2004, p. 44; and World

Trade Organization (WTO), Trade Policy Review: Sierra Leone, Report by the Secretariat,

Jan. 7, 2005, p. 3.

 162 EIU, Sierra Leone Country Profile, p. 31.

 163 EIU, Sierra Leone Country Profile, p. 28.

 164 U.S. & Foreign Commercial Service (US&FCS), “Sierra Leone 2003 Country Commercial

Guide,” found at www.stat-usa.gov, retrieved Feb. 4, 2005.

 165 EIU, Sierra Leone Country Profile, p. 24.

 166 U.S. Department of State, “Background Notes: Sierra Leone (November 2004),” found at

www.stat-usa.gov, retrieved Feb. 4, 2005, p. 2.

 167 EIU, Sierra Leone Country Profile, pp. 19 and 29.

 168 US&FCS, “Sierra Leone 2003 Country Commercial Guide.”

 169 WTO, Trade Policy Review: Sierra Leone, p. x.

4-35

Sierra Leone160

Economic Overview

Sierra Leone, located on the west coast of Africa, had a GDP of $793.3 million in 2003

(table SL-1). With a population of 5.3 million, Sierra Leone’s GDP per capita of $150 places

it among the poorest countries in the world. The 1991-2002 civil war displaced about

2 million people, devastated the country’s infrastructure, disrupted economic activity, and

stifled the export sector.161 Sierra Leone’s economy is based on production of rice for the

domestic market, and diamond mining, which likely accounts for about 90 percent of total

official exports. In addition, a significant volume of diamonds are smuggled out of the

country.162

Sierra Leone’s real GDP grew by 6.5 percent in 2003, reflecting recovery in the agricultural

sector, strong growth in diamond mining, and modest growth in manufacturing for local

consumption.163 Agriculture accounted for just over one-half of Sierra Leone’s GDP in 2003

(figure SL-1). The sector employs about two-thirds of the labor force,164 mostly in the

production of rice by subsistence farmers.165 Cash crops include coffee, cocoa, ginger,

cassava, bananas, citrus, peanuts, sweet potatoes, and vegetables.166 Relatively infertile soil

limits the potential productivity of arable land. Sierra Leone’s timber production ceased

during the civil war because the insurgents occupied the forests that had the best prospects

for logging.167 The country’s fishing infrastructure also was damaged during the civil war.168

Industry accounted for almost one-third of Sierra Leone’s GDP in 2003, with mining the

main industrial activity. Sierra Leone’s mineral resources include diamonds, gold, iron ore,

rutile (a source of titanium), and bauxite (a source of aluminum); however, only diamonds

and gold currently are mined and exported. Diamond production in Sierra Leone reportedly

amounts to about $300 million annually. Roughly 90 percent of production is smuggled out

of the country without payment of taxes.169 Sierra Leone’s only iron ore mine was abandoned

prior to the civil war. A bauxite mine ceased operations in 1995 after it was attacked during

the civil war. A rutile mine also ceased operations in 1995 after it, too, came under attack.

Prior to its closure, the mine accounted for 25 percent of the world’s production of rutile.
4-36

Table SL-1

Sierre Leone: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 793.3

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 6.5

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 4.5

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... 7.6

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 1,447.7

Total debt service (percent of exports of goods and services) ....... ....... ....... ....... ....... ....... . . ( )2

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... 18.0

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 66.7

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 2,347.9

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 5.3

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 1.9

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 2.0

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 37.2

Literacy rate, adult total (percent of people ages 15 and above) ....... ....... ....... ....... ....... ....... ( )2

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... . 65.3

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ...... 26.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 7.0

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 18.5

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 18.5

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 0.6

 Most recent year for which data are available between 1999 and 2003. 1

 Not available. 2

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure SL-1

Sierra Leone: Composition of GDP (2002)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 170 From the 2004 Annual Statistical Digest by the Sierra Leone Central Statistics Office, as

reported in WTO, Trade Policy Review: Sierra Leone, p. 3.

 171 US&FCS, “Sierra Leone 2003 Country Commercial Guide.”

 172 Export data in tables SL-2, SL-3, SL-4, which are based on reports by partner countries of

imports from Sierra Leone, may be subject to reporting errors. Exports of articles classified in HS

chapters 22, 38, 61, 72, 74, 84, 85, and 94 (alcoholic beverages, chemicals, apparel, articles of

steel and copper, electronic components, electro-mechanical appliances, and furniture,

respectively) were likely exported from Slovenia, but inadvertently reported as U.S. and EU

imports from Sierra Leone. EIU, Sierra Leone Country Profile, p. 35.

 173 WTO, Trade Policy Review: Sierra Leone, p. 13. According to the Bank of Sierra Leone and

Sierra Leone’s Ministry of Finance, diamond exports totaled $76.7 million in 2003 and accounted

for 91 percent of the country’s total exports that year. Manufactured goods accounted for

5 percent, and cocoa, 3 percent.

 174 WTO, Trade Policy Review: Sierra Leone, p. x.

 175 The remaining eight categories listed in tables SL-2 and SL-3 are not produced in and/or

exported from Sierra Leone.

 176 World Bank, World Integrated Trade Solution database, reports of imports from Sierra

Leone by partner countries.

 177 Ibid.

4-37

Manufacturing accounted for an estimated 3 percent of GDP in 2003.170 Products currently

manufactured on a small scale for the domestic market include plastic footwear, apparel,

small furniture items, beer, soft drinks, matches, candles, and travel bags.171

Export Profile

World Bank data based on reports by partner countries of imports from Sierra Leone show

that Sierra Leone’s exports totaled $196.2 million in 2003 (table SL-2).172 However,

according to the Bank of Sierra Leone, the country’s exports totaled $84.0 million in 2003.

The World Bank reports that Sierra Leone’s diamond exports in 2003 amounted to

$96.3 million and accounted for nearly one-half of Sierra Leone’s total exports

(table SL-3).173 Actual diamond exports likely amounted to three times the value officially

reported as imported by Sierra Leone’s trading partners because most diamonds are

smuggled out of the country to avoid paying the export tax. Total diamond exports likely

accounted for over 90 percent of the value of Sierra Leone’s actual exports.174 Exports of

bauxite and rutile amounted to about $76 million in 1994, when they accounted for nearly

one-half of the country’s exports. However, as noted above, both mines closed in 1995

following attacks by forces of the Revolutionary United Front, and Sierra Leone’s exports

in 1999 were 42-percent smaller than in 1994. Exports of cocoa beans were valued at

$7.0 million, or 3.6 percent, of total exports.175

The European Union is the largest market for Sierra Leone exports, accounting for more than

87 percent of Sierra Leone’s shipments by value in 2003. Belgium, Sierra Leone’s largest

single export market, accounted for almost one-half of total exports in 2003 (table SL-4). In

2003, approximately 95 percent of Sierra Leone’s officially traded diamonds were exported

to Belgium for processing. Germany and Italy were the leading markets for Sierra Leone’s

exports of cocoa beans in 2003, and Morocco and the Czech Republic were the leading

markets for Sierra Leone’s coffee. All of Sierra Leone’s exports of crustaceans and molluscs

in 2003 were shipped to France.176 Sierra Leone’s exports of cocoa beans and crustaceans

more than doubled in 2003 compared with 2002; exports of coffee declined slightly.177
4-38

Table SL-2

Sierra Leone: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share 

of total

9-year

CAGR

–––––––– 1,000 dollars –––––––– ––––– Percent –––––

71 Natural or cultured pearls, precious or semiprecious

stones, precious metals; precious metal clad 

metals, articles thereof; imitation jewelry; coin . . . 23,685.7 34,755.8 96,482.8 49.2 16.9

94 Furniture; bedding, cushions etc.; lamps and lighting 

fittings nesoi; illuminated signs, nameplates and 

the like; prefabricated buildings . . . . . . . . . . . . . . 808.6 1,095.9 20,959.1 10.7 43.6

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . 5,821.4 4,084.1 14,127.9 7.2 10.4

85 Electrical machinery and equipment and parts 

thereof; sound recorders and reproducers, 

television recorders and reproducers, parts and 

accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,085.2 3,425.7 10,616.7 5.4 19.8

22 Beverages, spirits and vinegar . . . . . . . . . . . . . . . . . . 17.7 35.9 8,945.5 4.6 99.7

18 Cocoa and cocoa preparations. . . . . . . . . . . . . . . . . . 4,039.7 2,600.9 7,219.5 3.7 6.7

61 Articles of apparel and clothing accessories, knitted 

or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420.9 357.0 5,058.5 2.6 31.8

74 Copper and articles thereof. .................... 174.9 276.3 3,425.9 1.7 39.2

38 Miscellaneous chemical products. . . . . . . . . . . . . . . . 31.1 91.0 1,901.2 1.0 57.9

72 Iron and steel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,191.5 411.5 1,850.5 0.9 5.0

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,969.1 42,570.1 25,566.5 13.0 -15.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,245.9 89,704.3 196,154.1 100.0 2.6

Note.—Although these figures represent WITS data, they deviate from other sources, possibly resulting from the similarity of

country codes for Sierra Leone, Slovenia, and St. Lucia.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table SL-3

Sierra Leone: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars ––––––– –––– Percent ––––

7102 Diamonds, whether or not worked, but not mounted or set . . . 22,858.6 34,599.4 96,324.5 49.1 17.3

9401 Seats (other than barber, dental and similar chairs), whether

for not convertible into beds, and parts thereof .......... 212.5 901.7 20,389.4 10.4 66.1

8473 Parts and accessories nesoi for typewriters and other office

machines of headings 8469 to 8472 . . . . . . . . . . . . . . . . . . 23.5 438.6 9,214.1 4.7 94.1

2208 Ethyl alcohol, undenatured, of an alcoholic strength by

volume of under 80% vol.; spirits, liqueurs and other

spirituous beverages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9 0.0 8,735.4 4.5 112.4

1801 Cocoa beans, whole or broken, raw or roasted . . . . . . . . . . . . 4,002.1 2,600.9 7,027.8 3.6 6.5

8509 Electro-mechanical domestic appliances with self-contained

electric motor; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . 240.0 131.5 2,990.9 1.5 32.4

8511 Electrical ignition or starting equipment used for spark-ignition

for compression-ignition internal combustion engines;

generators etc. therefor; parts . . . . . . . . . . . . . . . . . . . . . . . 15.4 139.4 2,432.2 1.2 75.5

8533 Electrical resistors (including rheostats and potentiometers),

other than heating resistors; parts thereof . . . . . . . . . . . . . . 16.2 26.9 1,959.9 1.0 70.4

6105 Men's or boys' shirts, knitted or crocheted . . . . . . . . . . . . . . . . 0.7 1.5 1,859.5 0.9 141.3

7403 Refined copper and copper alloys (other than master alloys

of heading 7405), unwrought . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 1,827.1 0.9 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,867.0 50,864.4 43,393.3 22.1 -11.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,245.9 89,704.3 196,154.1 100.0 2.6

 1

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, possibly resulting from the similarity of

country codes for Sierra Leone, Slovenia, and St. Lucia.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 178 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 179 EIU, Sierra Leone Country Profile, p. 31; and US&FCS, “Sierra Leone 2003 Country

Commercial Guide.” 

 180 EIU, Sierra Leone Country Profile, p. 31.

4-39

Table SL-4

Sierra Leone: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

-–––––––– 1,000 dollars –––––––– –––––– Percent ––––––

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 29,184.8 94,065.6 48.0 (2)

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,717.7 645.8 43,383.5 22.1 23.0

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,172.0 2,451.8 20,311.0 10.4 1.9

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . 30,260.9 5,083.3 6,877.7 3.5 -15.2

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,694.8 10,873.6 6,726.7 3.4 -20.8

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 110.1 6,390.7 3.3 (2

)

Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,811.0 522.8 2,569.1 1.3 -11.6

Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,532.4 2,790.7 2,349.0 1.2 -9.1

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,584.0 83.6 2,048.7 1.0 -18.3

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576.5 78.2 1,593.7 0.8 12.0

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,896.7 37,879.6 9,838.5 5.0 -7.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,245.9 89,704.3 196,154.1 100.0 2.6

1

 Not available.

2

 Undefined.

Note.–Although these figures represent WITS data, they deviate from other sources, possibly resulting from the similarity of country

codes for Sierra Leone, Slovenia, and St. Lucia.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

Sierra Leone is, and is likely to remain, a globally competitive producer and exporter of

diamonds as a result of the country’s vast diamond reserves and expanding world demand,

as indicated by the strength and stability of the revealed comparative advantage178 (RCA)

indices (appendix E, table E-32). Foreign investors have been engaged in Sierra Leone’s

diamond mining sector and are expanding their operations.179 Resumption of production at

Sierra Leone’s rutile mine following the purchase of the mine by foreign investors could

boost exports of that commodity.180 Sierra Leone also has the potential to become an exporter

of bauxite and iron ore again if the country can find investors. With its diamond and gold

resources, Sierra Leone could become a producer and exporter of jewelry if investments

were made in manufacturing equipment.

The agriculture and fisheries sectors may have export growth potential. The RCA analysis

indicates that Sierra Leone has a strong revealed comparative advantage in the production

of cocoa beans as a result of land that is particularly conducive for cocoa production in the

eastern part of the country. Sierra Leone also eventually could develop downstream cocoabased products for export such as cocoa paste and cocoa butter. In addition, with only about

one-third of arable land under cultivation, Sierra Leone has the potential to expand

agricultural production and exports of products such as cassava, coffee, palm kernels, ginger,
 181 US&FCS, “Sierra Leone 2003 Country Commercial Guide.”

 182 Ibid.

 183 WTO, Trade Policy Review: Sierra Leone, p. 29.

 184 US&FCS, “Sierra Leone 2003 Country Commercial Guide.”

 185 EIU, Sierra Leone Country Profile, p. 31.

 186 Ibid., p. 35.

 187 See US&FCS, “Sierra Leone 2003 Country Commercial Guide,” p. 19, for a discussion of

attempts to fight corruption in Sierra Leone.

 188 The National Recovery Strategy recommends the provision of housing for medical workers

and teachers at clinics and schools to encourage the return of displaced professionals to their

communities. EIU, Sierra Leone Country Profile, p. 24.

4-40

rice, asparagus, avocados, cut flowers, green beans, mangoes, and mushrooms.181 Sierra

Leone also has substantial potential to become a seafood exporter. Most of the fish, lobster,

shrimp, and shark are caught by artisanal fishermen; investment in a fish processing facility

could permit the country to become an exporter of fish products.182

Sierra Leone is in the process of establishing an export processing zone for companies that

engage in manufacturing and assembly for export.183 It is anticipated that the first products

to be manufactured in the zone will be spare parts needed to service equipment in the

agricultural and mining sectors; such products also could be exported to regional subSaharan African markets.184

The petroleum and tourism sectors have elicited foreign investor interest. Several foreign

companies have acquired rights to explore for petroleum and gas off the coast of Sierra

Leone.185 Foreign investors have also expressed interest in developing a business/tourism

travel industry in Sierra Leone.186 If such investment materializes, Sierra Leone could

increase exports of petroleum and tourism.

Domestic and International Barriers

Sierra Leone scored worse than the regional average on most business environment indices

(table SL-5). The country registered its worst scores in costs for starting and closing

businesses, complexity of contract enforcement, and all labor-related indices. Sierra Leone

also ranked poorly with respect to economic freedom, particularly in its trade policy,

property rights, and regulation scores (table SL-6). Lack of government transparency is

reportedly widespread in Sierra Leone and is a significant obstacle to investment.

Enforcement of the rule of law is irregular and inefficient.187 Many professionals in civil

service, law, medicine, and education left the country during the civil war, weakening the

institutions that rely on such professionals.188 Although Sierra Leone has a surplus of labor

(the labor force participation ratio is less than 40 percent), the lack of education in the labor

force limits the availability of skilled labor required for diversification into more skillintensive industries.

Inadequate infrastructure is a significant impediment to investment, production, and the

expansion of exports. Much of the country’s transportation network was damaged or

destroyed during the civil war and has not been repaired. Only 7.9 percent of Sierra Leone’s

roads are paved (table SL-7). Significant investment is required to enable farmers to get their

products to urban areas for domestic sale, and the state of the nation’s transportation network

prevents farmers from getting their products to the port in Freetown for export. The lack of
4-41

Table SL-5

Sierra Leone: Business environment

Sierra Leone

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 12.1 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) ............ (1

) 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.0 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 305.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 16.5 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 11.0 6.0

Starting a business: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . . . . 1,268.4 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 0.0 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.0 53.2 26.2

Employment: Firing costs (weeks)......................................... 188.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

Country data not available.

Note.— Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table SL-6

Sierra Leone: Economic freedom

Sierra Leone

Regional

average1

OECD

 average

–––––– Heritage Foundation indicators ––––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . 2.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . 4.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 189 US&FCS, “Sierra Leone 2003 Country Commercial Guide.”

 190 Ibid.

 191 WTO, Trade Policy Review: Sierra Leone, p. x.

 192 U.S. Department of State telegram, “WTO Trade Policy Review Questions: Sierra Leone,”

message reference No. 5041, prepared by U.S. Embassy, Freetown, Feb. 2, 2005.

 193 EIU, Sierra Leone Country Profile, pp. 22 and 29.

 194 Ibid., pp. 19 and 29.

4-42

Table SL-7

Sierra Leone: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,330.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9

Transport services (percent of service exports, BoP) ...................................... (2

)

Transport services (percent of service imports, BoP) ...................................... (2

)

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8

Electric power transmission and distribution losses (percent of output)......................... (2

)

Energy imports, net (percent of commercial energy use).................................... (2

)

 1

 Most recent year for which data are available between 1999 and 2003.

 2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

widespread, reliable, and reasonably-priced public utilities also is an obstacle to economic

recovery and the resumption of industrial production.189

Government land policy also impedes foreign investment. Foreigners are prohibited from

owning land in Sierra Leone. However, there are many instances of de facto foreign

ownership. Technically, all land outside the region around Freetown belongs to the local

chiefs, and foreign investors who want to operate in such areas must negotiate leases with

the chiefs. Uncertainties with respect to the rights and obligations of leaseholders detract

from the business climate in Sierra Leone.190

With regard to the fisheries sector, Sierra Leone lacks both a well-organized fleet to harvest

deep-sea resources, and adequate fish processing facilities. All fish caught in the country’s

territorial waters not intended for fresh consumption must be processed in foreign plants.191

Sierra Leone lacks resources to enforce laws against illegal trawling, which impedes

investment in the local fishing sector and reduces revenue from licensing fees. Another

constraint to increased fish exports is the inability to satisfy international standards.

Although the European Union and the United States have banned the import of various fish

and fish products from Sierra Leone, the Sierra Leone Standards Bureau reportedly is in the

process of developing standards and codes of conduct in compliance with EU directives on

sanitary certification for fish and fish products.192

The primary international impediment to increased exports is regional instability. For

example, Sierra Leone’s leading cash crops, coffee, cocoa, and palm products, are grown in

the eastern part of the country, near the border with Liberia. Regional political instability,

evident in cross-border raids by insurgents from Liberia, have retarded the development of

these products for export.193 Regional instability has also destroyed resources that could be

used for the development of downstream production. For example, much of the country’s

livestock was killed during the civil war, limiting the potential for development of a leather

goods exporting industry.194
 195 Prepared by Laura Polly, Office of Industries.

 196 Economist Intelligence Unit (EIU), South Africa Country Profile, 2004, p. 42; and Economic

Commission for Africa, “Recent Economic Trends for Africa and Prospects for 2004,” Economic

Report on Africa 2004: Unlocking Africa’s Trade Potential, Sept. 2004, p. 21.

4-43

South Africa195

Economic Overview

South Africa has the largest GDP, at $159.9 billion, and is the most economically diverse

country in sub-Saharan Africa (SSA). GDP growth in 2003 was 1.9 percent (table SA-1),

down from 3.6 percent in 2002, owing to the strength of the rand, which negatively affected

exports; tight monetary policy; and weak agricultural sector performance resulting from

adverse climate conditions.196 Total trade represents slightly more than one-half of GDP.

Exports represent an increasing percentage of GDP, from 25.7 percent in 1999 to

33.3 percent in 2002, then declining in 2003 to 27.6 percent, largely because of the effect of

the appreciated rand on exports. 

Table SA-1

South Africa: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ................................................................. 159,885.9

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.0

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0

External debt, total (current US$, millions, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,040.5

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.6

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.3

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.3

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0.1

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.6

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.0

Primary school enrollment ratio, total (percent, 2000)

2 .................................................. 111.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.9

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 1

 Most recent year for which data are available between 1999 and 2003.

2

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school

age.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 

Manufacturing accounted for 20.2 percent of GDP in 2003, followed by financial services

(19.5 percent), mining and quarrying (5.4 percent), and agriculture, forestry, and fishing

(4.3 percent) (figure SA-1). However, as a whole, services is the single largest contributor

to GDP. Leading this sector is the financial services industry, which has been increasingly

liberalized and is considered one of the largest and most deregulated among developing 
 Business Day, Nov. 2, 2004, as reported in U.S. Department of State telegram, “South Africa 197

Economic Newsletter, Nov. 5, 2004,” message reference No. 04876, prepared by U.S. Embassy,

Pretoria, Nov. 2004.

 Anastasia Gekis, The Services Group for USAID, “Southern African Development 198

Community Economic Impact Assessment Study, Background Study: The Manufacturing Sector

in Southern Africa,” Feb. 18, 2004, p. 11.

 EIU, South Africa Country Profile, p. 51. 199

 “South Africa: Chemicals Industry,” Mbendi, found at 200

www.mbendi.co.za/indy/chem/af/sa/p0005.htm, retrieved Apr. 7, 2005.

 Industry official, interview by USITC staff, Pretoria, South Africa, Mar. 7, 2005. 201

 Central Intelligence Agency (CIA), “South Africa,” World Factbook 2004, found at 202

www.cia.gov/cia/publications/factbook, retrieved Feb. 1, 2005.

4-44

countries. Other important services include tourism, information and communication

technologies (ICT), and the feature and commercial film industry.

Manufacturing growth is currently constrained by high crude petroleum prices, slow global

demand, and the appreciation of the rand. The manufacturing sectors that contribute most 197

significantly to South Africa’s GDP are automotive, metalworking, chemicals, textiles,

apparel, and food processing. The automotive industry has grown significantly in the last 198

decade, and now reportedly accounts for almost 30 percent of manufacturing output. The 199

chemical industry is also significant, accounting for 5 percent of GDP and 25 percent of

manufacturing sales. South Africa also has a well-established aerospace and defense 200

manufacturing industry, with ties to both U.S. and European aerospace companies. South

Africa’s textile and apparel sector is contracting sharply; 30,000 jobs were lost during

2003-04.201

South Africa has a diverse natural resource base. It leads the world in production of

platinum-group metals (PGMs), gold, and chromium, is the fifth-largest producer of uncut 202

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.

Figure SA-1

South Africa: Composition of GDP (2003)
 203 EIU, South Africa Country Profile, pp. 33 and 48.

 204 Official statistics of the U.S. Department of Energy.

 205 U.S. & Foreign Commercial Service (US&FCS), “South Africa Country Commercial Guide,

Fiscal Year 2004,” Feb. 20, 2004, found at www.stat-usa.gov, retrieved Feb. 1, 2005. 

 206 Ibid.

 207 EIU, South Africa Country Profile, p. 51.

 208 Ibid.

 209 Official statistics of the U.S. Department of Energy.

 210 U.S. Department of Energy, Country Analysis Briefs, South Africa, Jan. 2005, p. 3.

 211 Michael L. Humphrey and Didier de Senneville, Cargill Technical Services for USAID,

“Constraints and Opportunities for Improved Trade and Investment between African and U.S.

Companies in Selected Countries (Ghana, Lesotho, Senegal, South Africa, Uganda, Zambia),”

African Trade and Investment Policy Project, Sept. 2002, p. 69.

 212 Trade and Investment South Africa and South Africa Business Guidebook 2002-2003, “Agro

exports plough ahead,” found at

www.southafrica.info/doing_business/economy/key_sectors/agricultural-sector.htm, retrieved

Jan. 5, 2005.

 213 Pan-African Productivity Association, “Supply side constraints that hamper African

enterprises from taking advantage of emerging export market opportunities,” Action Programme

on Productivity Improvement, Competitiveness and Quality Jobs in Developing Countries,

Working Paper PMD-5, Jan. 2000, p. 16,

found at www.ilo.org/public/english/employment/ent/papers/pmd-5.htm, retrieved Sept. 29, 2004.

 214 Business Report, Nov. 16, 2004, as reported in U.S. Department of State telegram, “South

Africa Economic Newsletter, Nov. 19, 2004,” message reference No. 05043, prepared by U.S.

Embassy, Pretoria, Nov. 2004.

 215 “Economic Sector: Agriculture,” Cape Business News, found at

www.cbn.co.za/ovreview/ecosect2.htm, retrieved Feb. 1, 2005.

4-45

diamonds,203 the sixth-largest producer of coal,204 and is also a leading global producer of

alumino-silicates, titanium, zirconium, antimony, and fluorspar. South Africa is the world’s

largest producer of ferroalloys and other alloying metals for the steel industry, and is a

significant producer of a wide variety of mineral-based products.205 South Africa does not

have any operating mines tapping into its limited bauxite reserves, but has developed an

expanding aluminum smelting and manufacturing industry based on alumina imports from

Australia,206 and is considered a major world aluminum producer.207 As one of the lowestcost steel producers in the world, South Africa has a well-developed steel industry that is

among the top 25 in the world.208 Although South Africa accounts for less than 0.001 percent

of the world’s crude petroleum reserves,209 it has become the second-largest petroleum

refining country in Africa. South Africa also has a long-established and highly-developed

synthetic fuels industry based on abundant reserves of coal and offshore natural gas and

condensate. South Africa’s natural gas reserves are also being developed to replace coal as

the feedstock for its synthetic fuels industry.210

Agriculture, forestry, and fishing accounted for 4.3 percent of South Africa’s GDP in 2003.

The agriculture industry primarily consists of large-scale farms with economies of scale that

enhance their international competitiveness.211 Corn is the largest crop in terms of land area

cultivated, followed by a variety of other field crops including sugarcane, wheat, sunflowers,

barley, soybeans, canola, groundnuts (peanuts), and cotton.212 South Africa is reportedly one

of the largest producers of cotton and raw wool in the world,213 and is the 6th largest wine

producer in the world.214 South Africa is a significant producer of ostrich products, as well

as tropical and temperate fruits and vegetables, flowers, and health foods.215 

The South African government has actively promoted an open investment climate, placing

virtually no restrictions on foreign investment. However, foreign direct investment (FDI) in

South Africa is low compared with other emerging peer economies, including Thailand,
 216 Business Day, Jan. 5, 2005, and IMF Country Report #04/379, as reported in U.S.

Department of State telegram, “South Africa Economic Newsletter, Jan. 7, 2005,” message

reference No. 00084, prepared by U.S. Embassy, Pretoria, Jan. 2005.

 217 As reported in the South African Reserve Bank’s quarterly bulletin, Sept. 2004. U.S.

Department of State telegram, “Investment Climate Statement 2005 - South Africa,” prepared by

U.S. Embassy, Pretoria, Jan. 19, 2005.

 218 Gekis, “Southern African Development Community Economic Impact Assessment Study,”

p. 45.

4-46

Malaysia, South Korea, Mexico, and Poland.216 The United Kingdom is by far the leading

foreign investor with $24.9 billion in year-end 2003 FDI stock; other FDI comes from the

United States ($3.9 billion in year-end 2003 FDI stock), Germany ($3.0 billion), the

Netherlands ($2.1 billion), and Malaysia ($1.3 billion).217 Major FDI recipient sectors

include plastic products; leather; television, radio, and communications equipment; motor

vehicles and parts; paper and paper products; and basic chemicals.218

Export Profile

South Africa’s exports totaled $36.2 billion in 2003. The leading product groupings included

precious gemstones, iron and steel, conventional energy and energy related products, and

motor vehicles (table SA-2). Within these broad product groupings, the leading products

exported by South Africa in 2003 were PGMs, diamonds, coal, motor vehicles, and gold

(table SA-3). The leading markets for South African exports in 2003 were the United

Kingdom, the United States, Japan, Germany, and China (table SA-4). China and the United

Kingdom have been the fastest growing markets for South Africa over the last decade, with

compound annual growth rates (CAGR) during 1994-2003 of 14.6 percent and 13.2 percent,

respectively. As a region, the European Union traditionally has been the largest market for

South African exports.

Table SA-2

South Africa: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars –––––––– ––––– Percent –––––

71 Natural or cultured pearls, precious or

semiprecious stones, precious metals; precious

metal clad metals, articles thereof; imitation jewelry;

coin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,078,715.2 8,259,006.7 9,360,006.1 25.9 7.0

72 Iron and steel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,867,013.0 2,385,892.9 3,263,607.8 9.0 6.4

27 Mineral fuels, mineral oils and products of their

distillation; bituminous substances; mineral

waxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,886,300.9 2,472,919.3 3,171,218.6 8.8 5.9

87 Vehicles, other than railway or tramway rolling

stock, and parts and accessories thereof ......... 226,755.0 1,266,318.8 3,047,903.9 8.4 33.5

84 Nuclear reactors, boilers, machinery and

mechanical appliances; parts thereof ............ 423,209.8 1,247,713.9 2,288,226.4 6.3 20.6

26 Ores, slag and ash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,230,814.9 1,604,911.6 1,743,252.6 4.8 3.9

08 Edible fruit and nuts; peel of citrus fruit or melons ..... 825,190.6 1,357,479.9 1,679,685.6 4.6 8.2

76 Aluminum and articles thereof. .................... 144,241.8 837,649.0 910,517.7 2.5 22.7

85 Electrical machinery and equipment and parts 

thereof; sound recorders and reproducers, television

recorders and reproducers, parts and accessories . . 157,981.1 463,844.2 683,738.1 1.9 17.7

22 Beverages, spirits and vinegar. ................... 199,028.9 310,825.3 623,432.8 1.7 13.5

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,314,945.1 9,087,377.6 9,425,094.0 26.0 4.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,354,196.2 29,293,939.2 36,196,683.5 100.0 7.8

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
4-47

Table SA-3

South Africa: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars –––––––– –––– Percent ––––

7110 Platinum, unwrought, in semimanufactured

forms, or in powder form . . . . . . . . . . . . . . . . . 1,648,275.6 2,661,099.5 3,903,985.8 10.8 10.1

7102 Diamonds, whether or not worked, but not

mounted or set ....................... 215,616.3 1,651,774.8 3,055,349.1 8.4 34.3

2701 Coal; briquettes, ovoids and similar solid fuels 

manufactured from coal . . . . . . . . . . . . . . . . . 1,665,072.0 2,037,526.0 2,617,267.2 7.2 5.2

8703 Motor cars and other motor vehicles designed

to transport people (other than publictransport type), including station wagons and

racing cars . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,558.0 760,585.9 2,323,468.5 6.4 49.2

7108 Gold (including gold plated with platinum),

unwrought or in semimanufactured forms, or

in powder form . . . . . . . . . . . . . . . . . . . . . . . . 2,964,853.6 3,783,305.9 2,190,476.9 6.1 -3.3

7202 Ferro-alloys ............................. 752,326.8 1,162,596.7 1,348,763.7 3.7 6.7

8421 Centrifuges, centrifugal dryers; filtering or

purifying machinery and apparatus, for 

liquids or gases; parts thereof . . . . . . . . . . . . 75,969.3 504,934.2 1,162,304.7 3.2 35.4

7601 Unwrought aluminum . . . . . . . . . . . . . . . . . . . . . 94,336.4 748,382.2 667,532.2 1.8 24.3

2601 Iron ores and concentrates, including roasted

iron pyrites . . . . . . . . . . . . . . . . . . . . . . . . . . . 462,425.4 466,002.7 638,717.6 1.8 3.7

0805 Citrus fruit, fresh or dried .................. 254,067.1 449,461.1 623,305.6 1.7 10.5

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,157,695.9 15,068,270.1 17,665,512.2 48.8 6.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,354,196.2 29,293,939.2 36,196,683.5 100.0 7.8

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table SA-4

South Africa: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

-–––––––––– 1,000 dollars ––––––––––– ––––– Percent ––––––

United Kingdom . . . . . . . . . . . . . . . . . . . . . 1,625,736.2 3,226,895.0 4,946,517.3 13.7 13.2

United States . . . . . . . . . . . . . . . . . . . . . . . 2,279,145.3 3,473,473.9 4,798,577.5 13.3 8.6

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,998,297.6 2,276,002.8 3,593,849.0 9.9 6.7

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,625,758.0 2,676,095.4 3,087,505.0 8.5 7.4

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537,814.1 864,390.7 1,839,993.2 5.1 14.6

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 1,025,962.7 1,263,382.2 3.5 (2)

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637,253.6 800,714.0 1,166,672.3 3.2 7.0

Namibia . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 1,148,960.7 3.2 (2)

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507,419.0 897,840.5 1,017,524.5 2.8 8.0

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588,687.7 745,698.5 971,859.6 2.7 5.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,554,084.8 13,306,865.8 12,361,842.2 34.2 4.2

Total . . . . . . . . . . . . . . . . . . . . . . . . 18,354,196.2 29,293,939.2 36,196,683.5 100.0 7.8

1

 Not available.

2

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 219 US&FCS, “The South African Mining Industry,” Sept. 30, 2004, found at www.stat-usa.gov,

retrieved Feb. 4, 2005.

 220 EIU, South Africa Country Profile, p. 48.

 221 Simon Roberts, “The Role for Competition Policy in the Economic Development: The South

African Experience,” Working Paper 8-2004, Trade and Industrial Policy Strategies, p. 13.

 222 CIA, “South Africa.”

 223 Trade and Investment South Africa and South Africa Business Guidebook 2002-2003, “Agro

exports plough ahead.”

 224 Ibid.

 225 “EU sugar subsidies hurting South Africa,” Moneyweb, Apr. 16, 2004, found at

www.tralac.org, retrieved Jan. 31, 2005.

 226 Andre Jooste, Erik Kruger, and Flip Kotze, “Standards and Trade in South Africa: Paving

Pathways for Increased Market Access and Competitiveness,” ch. 4 in the International Bank for

Reconstruction and Development/The World Bank, Standards and Global Trade: A Voice for

Africa (Washington, DC: The World Bank, 2003), p. 265.

 227 “South African automotive sector narrows trade deficit,” Business Report, Nov. 15, 2004,

found at www.tralac.org, retrieved Jan. 31, 2005.

 228 Industry official, interview by USITC staff, Pretoria, South Africa, Mar. 7, 2005.

 229 Industry official, interview by USITC staff, Pretoria, South Africa, Mar. 7, 2005.

 230 Industry official, interview by USITC staff, Pretoria, South Africa, Mar. 7, 2005.

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The South African mining sector is the leading foreign exchange earner.219 South Africa is

the world’s largest exporter of gold and PGMs, and the fifth-largest exporter of coal. South

Africa is the fifth-largest world producer of uncut diamonds. DeBeers, through its Diamond

Trading Company, controls approximately 60 percent of the global diamond market.220 The

iron and steel industries are export oriented, benefitting from some of the lowest production

costs in the world.221 South Africa is the largest exporter of ferroalloys for the steel

industry.222 Unwrought aluminum is also an important export for South Africa. 

South Africa is a net exporter of food, and exports a wide variety of products. South Africa

benefits from its counterseasonality with respect to export markets in the Northern

Hemisphere, and is the leading global exporter of avocados, tangerines, and ostrich products,

and the second-largest global exporter of grapefruit.223 South Africa is also the world’s thirdlargest exporter of plums and pears, and the fourth-largest exporter of table grapes.224 Other

important agricultural product exports include corn, sugar, wine, semiprocessed wool,

tobacco, and other fruits. Exports are critical to the South African sugar industry, accounting

for one-half of production.225 South Africa also exports mussels, oysters, abalone, and

shellfish to the Far East.226

South Africa produces an increasingly diversified array of manufactured goods for export.

The automotive industry has become a major source of export earnings. South Africa

currently exports automotive products to 117 markets,227 and is a net vehicle exporter. South

Africa also exports aerospace and defense products, railway equipment and rolling stock,

mining equipment, coal and chemical products including synthetic fuels, and furniture and

other wood products. South Africa exports some fabric, primarily to regional markets.228

South Africa is the world’s third-largest supplier of merino wool, and also exports synthetic

yarns.229 More recently, South Africa has began exporting flax yarn, the result of Irish

investment.230

Among South Africa’s leading exports, the products with the largest CAGRs over the past

decade include passenger motor vehicles (49.2 percent), catalytic converters (35.4 percent),

diamonds (34.3 percent), unwrought aluminum (24.3 percent), citrus fruit (10.5 percent), and

platinum (10.1 percent). Gold is the only leading export with a negative CAGR for 1994-

2003, at -3.3 percent.
 231 The sectors identified by the government’s Microeconomic Reform Strategy in 2001 include

agriculture and agroprocessing; tourism; ICT; cultural industries including film, music, crafts and

design; minerals and metals; clothing and textiles; automobiles and components; and chemicals. In

2002, BPO and tourism were added to the government’s list of targeted sectors in the Integrated

Manufacturing Strategy.

 232 Humphrey and de Senneville, “Constraints and Opportunities,” pp. 14-15.

 233 Department of Trade and Industry, “Pineapple plant to boost exports,” June 10, 2003, found

at www.southafrica.info/doing_business/sa_trade/exporting/processingplant.htm, retrieved

Feb. 1, 2005.

 234 Proudly South African, “SA berries make their mark,” May 19, 2003, found at

www.southafrica.info/doing_business/economy/success/berryfarming.htm, retrieved Feb. 1, 2005.

 235 Expansion of facilities and a 10-year contract to supply British American Tobacco were

announced in 2003. “Liquorice plant starts exporting,” BuaNews, Oct. 29, 2003, found at

www.southafrica.info/doing_business/sa_trade/exporting/liquoriceproject.htm, retrieved

Feb. 1, 2005.

 236 “N Cape’s R55m paprika factory,” BuaNews, Mar. 5, 2003, found at

www.southafrica.info/doing_business/sa_trade/exporting/factory_050303.htm, retrieved

Feb. 1, 2005.

 237 U.S. industry association officials, interview by USITC staff, Johannesburg, South Africa,

Mar. 7, 2005.

 238 Business Report, Nov. 16, 2004, as reported in U.S. Department of State telegram, “South

Africa Economic Newsletter, Nov. 19, 2004.”

 239 National Association of Automobile Manufacturers of South Africa, 2004 Annual Report,

p. 5.

 240 Government officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

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Sectors with the Greatest Export Growth Potential 

The major economic sectors with the greatest potential for growth in merchandise export

sales are agriculture and agroprocessing, manufacturing (particularly motor vehicles,

engines, and parts), minerals and metals; and services (particularly ICT, business process

outsourcing (BPO), tourism, and feature and commercial film production).231 The agriculture

products with the greatest potential for increased exports are processed and canned foods,

cut flowers, fresh fruits and vegetables, wine, and ostrich products.232 Many large, global

agroprocessing firms have a presence in South Africa. There is a broad range of agricultural

products in which South Africa is beginning or increasing export production, with recent

investments in pineapple processing,233 berries,234 licorice,235 and paprika.236 Fruits that have

the potential for increased exports include grapes, citrus, apples, mangoes, avocados,

pineapples, and peaches; and flowers with the greatest export potential include roses, protea,

tulips, shasta daisies, and bulbs.237 Most wine exports go to the United Kingdom,

Netherlands, Scandinavia, and Germany. The United States, India, China, and Japan have

been identified as growth markets for wine.238 

The CAGR for motor vehicle and component exports during 1994-2003 was approximately

33 percent,239 and strong growth is expected to continue. Motor vehicle exports are predicted

to double by 2007 compared with 2004 levels, and component exports are also expected to

expand, but this growth will be strongly influenced by the value of the rand.240 Although

local production is expected to remain predominantly right-hand drive (RHD) vehicles, the

recent start of left-hand drive vehicle production expands the number of potential markets

for South African-built vehicles. Investment and expansion plans by automakers such as

Ford and Toyota will create new opportunities for components producers in South Africa.

There are no serious impediments to the export of these products, as the industry is

dominated by multinational automakers that are familiar with and can meet global market
 241 Association officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

 242 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 243 Although the average SRCA for 2000-03 for these yarns is negative, the value for 2003, the

most recent year available, is positive (0.623 for HS 5110 and 0.502 for HS 5306).

 244 For additional information on the Multifiber Arrangement and the removal of textile and

apparel quotas in 2005, see app. C.

 245 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004.”

 246 Pan-African Productivity Association, “Supply side constraints,” p. 16.

 247 U.S. industry association officials, interview by USITC staff, Johannesburg, South Africa,

Mar. 7, 2005.

 248 “On the Air,” Creamer Media’s Engineering News, Dec. 3, 2004, found at

www.engineeringnews.co.za/eng/essentials/air/?show=60957, retrieved Apr. 8, 2005.

 249 “Global diamond industry needs to change image of African diamonds - Mbeki,” Business

Day, Nov. 17, 2004, found at www.tralac.org, retrieved Jan. 31, 2005.

 250 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005;

U.S. industry association officials, interview by USITC staff, Johannesburg, South Africa,

Mar. 7, 2005; and U.S. Embassy official, interview by USITC staff, Pretoria, South Africa,

Mar. 8, 2005.

 251 Precious Metals and Diamonds General Amendment Bill, Staatskoerant 16 April 2004, No.

26245, Republic of South Africa, found at

www.polity.org.za/pdf/DraftPrecMet&DiaGenAmenBill.pdf, retrieved May 26, 2005.

4-50

requirements.241 Major automakers with assembly plants in South Africa include BMW,

DaimlerChrysler, Ford, General Motors, Nissan, Toyota, and Volkswagen.

Revealed comparative advantage242 (RCA) analysis shows that South Africa has a strong and

growing RCA index in certain yarns.243 However, because of increased international

competition stemming from the removal of textile and apparel quotas in 2005,244 this sector

is not likely to offer considerable export growth, although opportunities reportedly may exist

for the South African textile and apparel industry in niche industries such as embroidery

services, overdyeing, high performance textiles, smart textiles, medical textiles and gowns,

and fire retardant clothing.245 Other potential export growth products include raw and

semiprocessed wool and cotton,246 and mohair.247 

RCA analysis supports the qualitative assessment of merchandise export potential

particularly with respect to the minerals and metals sector, as 5 of the top 10 highest indices

ranked by change in RCA are for products in this sector (appendix E, table E-33). Despite

the fact that South Africa’s mining sector is mature, new deposits continue to be discovered,

offering the potential for continued growth. In addition, minerals and metals processing is

expected to be a growth area in the next 5 to 15 years, as downstream processing is an

important government policy focus. An example of a new downstream metal product export

is superalloys made from locally procured nickel that are purchased by Rolls-Royce for use

in aircraft engines. Observers expect that there will be interest from other aerospace

companies as well.248

The South African government is targeting diamond processing, including diamond cutting,

polishing, tool making, and jewelry making. Government officials have called on the global

diamond industry to assist African countries in acquiring the technology and capability to

process their own diamonds.249 The jewelry industry is expanding and is a downstream

processing focus area for the South African government.250 Recently proposed legislation,

entitled the Precious Metals and Diamonds General Amendment Bill,251 would require

mining companies to engage in downstream processing on a percentage of the diamonds and
 252 US&FCS, “ICT Market,” Oct. 2, 2003, found at www.stat-usa.gov, retrieved Feb. 4, 2005.

 253 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004.”

 254 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

 255 Government officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

 256 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004.”

 257 U.S. Department of State telegram, “South Africa Economic Newsletter, Oct. 15, 2004,”

message reference No. 04621, prepared by U.S. Embassy, Pretoria, Oct. 2004.

 258 World Markets Research Centre, “Unlocking the Tourism Potential in Africa,” World

Markets in Focus 2002, found at

www.worldmarketsanalysis.com/InFocus2002/articles/africa_tourism.html, retrieved Apr. 7, 2005.

 259 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004.”

 260 US&FCS, “Film Industry in South Africa,” July 20, 2004, found at www.stat-usa.gov,

retrieved Feb. 4, 2005.

 261 US&FCS, “Film Industry in South Africa.” 

4-51

precious metals they extract. The remainder, if exported without processing, would be

subject to an export tax. 

ICT offers substantial growth potential in South Africa, and is considered a key driver of the

economy, accounting for over 6 percent of GDP.252 The sector is dominated by the parastatal

Telkom, but most multinational ICT firms have a presence in South Africa. South Africa’s

advantage lies in its skilled workforce and its development of niche products for the

financial, retail, and manufacturing sectors.253 BPO also has growth potential. South Africa

reportedly has enormous capacity for data processing, and call centers are a growth area as

well.254 Lufthansa is currently using South Africa as a call center, and a number of U.S.

companies are reportedly considering BPO opportunities in South Africa.255

Tourism is another important service sector for South Africa, contributing an estimated

7 percent of GDP.256 Tourism reportedly surpassed gold as the leading foreign exchange

earner in South Africa in 2003, and appears to be fairly resilient to the appreciation of the

rand.257 South Africa accounts for approximately one-quarter of international tourist arrivals

on the African continent, owing to its game reserves, comparatively good road system,

reliable power supply, and political stability.258 Recently, steps have been taken to develop

a cruise line industry in South Africa; a multipurpose docking terminal to accommodate

cruise ships is to be built, and the government is reportedly committed to developing this

part of the tourism industry in the mid to long term.259

South Africa is becoming increasingly competitive in the feature and commercial film

industry. Low cost labor is an advantage, and it is reported that overall film production costs

are half as much as in the United States, even given the recent appreciation of the rand.260

The industry received a boost in July 2004, when the government initiated a

rebate/investment scheme, similar to those offered in markets such as Australia and Canada,

with the aim of promoting South Africa as a high quality-production site for film making.261

Although the United States and the European Union will likely remain South Africa’s most

important markets, they are not likely to offer significant opportunities for export growth for

a number of reasons: (1) these are mature markets for South African exporters and not likely

to offer expanded opportunities in established export sectors; (2) these markets are signing

a large number of free trade agreements with other emerging economies that will enhance

those countries’ competitive position as compared with South Africa; (3) the addition of new

members to the European Union provides those countries with preferential access; (4) market

liberalization and reform in the United States and the European Union will lower their

domestic prices for certain items for which South African exporters currently have
 262 Charles Krakoff, The Services Group for USAID, “Key Potential Export Markets and the

Market Access Barriers Facing Southern African Exporters,” Nov. 2003, p. 1; and industry

officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

 263 Krakoff, “Key Potential Export Markets,” various pages.

 264 Ibid., p. 8.

 265 U.S. industry association officials, interview by USITC staff, Johannesburg, South Africa,

Mar. 7, 2005.

 266 U.S. industry association officials, interview by USITC staff, Johannesburg, South Africa,

Mar. 7, 2005.

 267 For additional information on regional organizations, see app. C.

 268 African Development Bank (AfDB)/Organization for Economic Cooperation and

Development (OECD), “South Africa,” African Economic Outlook, 2004, p. 286.

 269 Economic Commission for Africa, “Recent Economic Trends,” p. 28.

 270 Cyril Widdershoven, “Chinese Quest for Crude Increases Focus on Africa,” Energy

Security, Nov. 15, 2004, prepared by the Institute for the Analysis of Global Security, found at

www.iags.org/n1115044.htm, retrieved Mar. 23, 2005.

 271 EIU, South Africa Country Profile, p. 20.

 272 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

4-52

preferential access; and (5) transportation time and cost, and the size of orders, limits export

opportunities to the United States.262

In general, developing or emerging countries are increasingly important markets for South

African goods and services. Markets that offer increased export potential include Argentina,

Brazil, Costa Rica, Egypt, Indonesia, Iran, Korea, Malaysia, Mexico, Pakistan, Saudi Arabia,

Thailand, Turkey, and Venezuela.263 In addition, South Africa reportedly is one of the few

SSA countries that has the potential to increase its exports to other African countries in the

short to medium term.264 South African industry officials cite SSA,265 especially western

Africa,266 as a huge potential market for South African exports. The Southern African

Development Community (SADC),267 the rest of Africa, India, and China have recently

gained importance as export markets.268 

South African exports to China are concentrated in raw materials such as iron ore, diamonds,

crude petroleum, copper, aluminum, paper pulp, paper and paperboard, and coal.269 China’s

booming economy has led it to source energy and natural resources from African countries,

including South Africa. China’s importance as an export market is expected to be enhanced

by the New Asian-African Strategic Partnership, launching in 2005, which aims to improve

trade and investment opportunities between Southern Africa and Asia.270

Domestic and International Barriers

South Africa ranks above the regional average, but below the OECD average, for many of

the World Bank’s business environment indicators (table SA-5), and the Heritage

Foundation’s Index of Economic Freedom (table SA-6). In the latter index for 2005, South

Africa ranked better than the OECD average on trade policy, government intervention in the

economy, and wages and prices; and worse than the regional average on monetary policy.

South Africa ranked first in the category of organized crime and corruption in the World

Economic Forum’s Global Competitiveness Report.271

South African industry sources report that there is little incentive for South African firms to

export, as manufacturing costs are high, production capacity is not sufficient, and there is a

perceived lack of interest on the part of the South African government.272 These sources also

report that South African manufacturers do not have good information regarding consumer
4-53

Table SA-5

South Africa: Business environment

South

Africa

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 31.8 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 2.3 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita).............. 636.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 277.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 11.3 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 11.0 6.0

Starting a business: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . . . . 9.1 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 0.0 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(South Africa, applied rate, 2002)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005. 

Table SA-6

South Africa: Economic freedom

South

Africa

Regional

average1

OECD

average

–––––––– Heritage Foundation indicators ––––––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 
 273 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

 274 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

 275 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

 276 Government officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

 277 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005;

and government officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

 278 WTO, “Annex 9: South Africa,” SADC Member States and the Implementation of the WTO

Technical Barriers to Trade Agreement: A Benchmark Study, p. 4.

 279 Jooste, Kruger, and Kotze, “Standards and Trade in South Africa,” p. 259.

 280 The International Bank for Reconstruction and Development/The World Bank, Standards

and Global Trade: A Voice for Africa (Washington, DC: The World Bank, 2003), p. l.

 281 Jooste, Kruger, and Kotze, “Standards and Trade in South Africa,” p. 253.

 282 Department of Trade and Industry, “Accelerating Growth and Development: The

Contribution of an Integrated Manufacturing Strategy,” p. 16, found at

www.nedlac.org.za/research/fridge/investstrategy/appendix-d.pdf, retrieved Jan. 31, 2005.

 283 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004.”

 284 “Southern African railways not performing,” I-Net Bridge, Beira Daily, Business Day,

Feb. 13, 3004, found at www.tralac.org, retrieved Jan. 31, 2005.

4-54

tastes and standards in foreign markets.273 The U.S. market in particular is perceived by

many in the South African business community to be impenetrable; the orders are too large

for South African manufacturers, and the time and cost of transportation and distribution are

prohibitive.274 South African industry officials acknowledge that these constraints have led

to missed opportunities for increasing exports under AGOA.275 There is also reportedly a

lack of confidence, particularly on the part of small, medium, and microenterprises

(SMMEs), to invest in expanding output. The government is launching the National Small

Exporters Development Program at the end of 2005 to address this issue.276 A number of

South African officials stated that when domestic demand is strong, South African

manufacturers pull out of export markets and devote their existing capacity to domestic sales,

giving overseas customers the impression that South African suppliers are unreliable.

Likewise, when there is a downturn in business, South African manufacturers choose to

decrease production instead of look for new opportunities.277

As the composition of South African exports has moved away from primary exports to more

sophisticated, manufactured goods, the ability of firms to comply with international

standards, and the capacity of the South African government to educate firms, becomes

increasingly important.278 A 2001 government standards, quality assurance, and metrology

(SQAM) system review highlighted a lack of regulatory transparency in the South African

system that hinders the country’s ability to negotiate mutual recognition agreements with

foreign countries and meet its WTO Technical Barriers to Trade Agreement obligations.279

In addition, the relative cost of compliance is greater for SMMEs; reportedly, the South

African government does not provide sufficient support to SMMEs with respect to SQAM

issues.280 The government has, however, established a number of initiatives to help SMMEs

with the cost associated with standards compliance. This effort has reportedly assisted some

SMMEs in their efforts to export.281

Compared with other AGOA-eligible economies, the transportation infrastructure in South

Africa is of a much higher standard. However, the “efficiency, cost, and capacity for

intermodal transfers” is reportedly an impediment to increased South African exports.282 The

transportation infrastructure suffered from lack of investment because of budgetary

constraints in the late 1990s, leaving road networks stressed.283 Only 20.3 percent of the

roads are paved (table SA-7). In addition, several large companies in South Africa have

complained about poor rail infrastructure.284 South African ports, a critical link in terms of

exports, are in need of upgrading. The South African government has begun a program of
 285 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004.”

 286 “Southern African railways not performing.” 

 287 EIU, South Africa Country Profile, p. 29.

 288 “Upgrade of port in Maputo could provide relief for SA exporters,” Business Day,

Jan. 9, 2004, found at www.tralac.org, retrieved Jan. 31, 2005.

 289 Government officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

 290 Remarks by Jeff Radebe, MP, Minister of Transport, Airline Destination Workshop 2004,

Sept. 20, 2004, Cape Town, found at www.transport.gov.za/comm-centre/sp/2004/sp0920.html,

retrieved Apr. 7, 2005.

 291 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

 292 U.S. Agency for International Development, found at

www.usaid.gov/locations/sub-saharan_africa/countries/southafrica, retrieved Feb. 15, 2005.

 293 CIA, “South Africa.”

 294 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

 295 Jeffrey D. Lewis, “Reform and Opportunity: The Changing Role and Patterns of Trade in

South Africa and SADC,” Africa Region Working Paper Series No. 14, Mar. 2001, p. 14.

4-55

Table SA-7

South Africa: Infrastructure-related indicators

MRY1

Roads, total network (km, 2000)................................................................... 362,099.0

Roads, paved (percent of total roads, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3

Transport services (percent of service exports, BoP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.1

Transport services (percent of service imports, BoP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.8

Fixed line and mobile phone subscribers (per 1,000 people, 2002)........................................ 410.5

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.2

Mobile phones (per 1,000 people, 2002) ............................................................ 303.9

Telephone mainlines (per 1,000 people, 2002) ....................................................... 106.6

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34.9 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, ”World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

upgrading and restructuring the ports system, which includes ports at Durban, Cape Town,

and Elizabeth, but this process has been slow and difficulties have been compounded by the

increased demands for commercial traffic through the ports system.285 South African iron ore

producers have claimed that they are losing market opportunities in China because of the

poor state of the South African rail and port infrastructure.286 A new deep-water port at

Coega is being constructed, although at least one report indicates that it will have to be

expanded beyond original plans in order to accommodate ships fully laden with iron ore.287

Some South African exporters, for example Ford and BMW, have begun using Port Maputo

in Mozambique, which has recently been upgraded, to accommodate larger ships and

increase overall efficiency.288 The South African government is reportedly working to form

transportation cooperatives to lower shipping costs for smaller-scale exporters.289 With

respect to tourism, the passenger aviation industry suffers from a high cost structure, with

inefficient routings, schedules, and services.290 South African industry officials add that

requests for charter flights are often declined.291

As noted earlier, South Africa has an abundance of unskilled labor; the official

unemployment rate is 31 percent.292 The HIV/AIDS infection rate is also a factor in the labor

market, as an estimate for 2003 claims the adult prevalence rate to be 21.5 percent.293

However, there is a shortage of skilled workers, partly because of the emigration of skilled

labor,294 which is restraining the growth potential of skill-intensive sectors.295 In particular,

more extensive training of employees in the tourism industry is needed to improve the
 296 “SADC predicts boom in tourism,” The Reporter (Gaborone), Oct. 15, 2004, found at

www.tralac.org, retrieved Jan. 31, 2005.

 297 Office of the United States Trade Representative (USTR), 2004 National Trade Estimate

Report on Foreign Trade Barriers, p. 435.

 298 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004.”

 299 U.S. Department of State, “Investment Climate Statement 2005 - South Africa.”

 300 Marcel R.A.R. Kohler and Janet O. Bruce-Brand, “Comparative Cost Advantage and Trade

Performance in South African Manufactures: 1970-2000,” University of Natal, Durban, p. 12.

 301 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004.”

 302 Statement attributed to EIU, as reported in “SA companies understanding of free trade

abysmal,” Business Report, June 24, 2004, found at www.tralac.org, retrieved Jan. 31, 2005.

 303 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004.”

 304 EIU, South Africa Country Profile, p. 61.

 305 Just-auto.com editorial team, “South Africa: Car sales set record in 2004,” Jan. 6, 2005,

found at www.just-auto.com, retrieved Jan. 6, 2005. 

 306 Industry officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

 307 U.S. Department of State telegram, “South Africa Economic Newsletter, Dec. 17, 2004,”

message reference No. 05407, prepared by U.S. Embassy, Pretoria, Dec. 2004.

4-56

quality of services.296 U.S. and other foreign investor companies have noted that South

African immigration policies make it difficult to get work permits for their foreign

employees.297 Until recently, immigration policies reflected apartheid era policies. Parliament

approved the Immigration Act in May 2002, but implementation reportedly has been slow.298

Labor market rigidities are compounded by a strong labor movement presence in the

economy, representing 44 percent of those employed in the formal sector.299 As a result,

wage increases do not necessarily reflect increasing labor productivity, negatively affecting

international competitiveness.300 In an attempt to address this constraint, amendments to

labor laws agreed to by a business-labor group called the Millennium Labor Council were

passed by Parliament in March 2002. Subsequently, in January 2003, the IMF reported that

conditions in the labor market had improved.301 However, some observers note that “rigid

labor legislation and other regulations concerning employment are a major obstacle to more

rapid job creation in the private sector.”302

The volatility of the rand puts those South African exporters with rand-denominated inputs

at risk, and also makes it difficult for export-oriented firms to make long-term plans.303

Increased prices for gold and PGMs made the rand “one of the best performing currencies

in the world” in 2003 and 2004,304 with the rand appreciating against the dollar by

18.5 percent in 2004.305 A number of South African industries have indicated that their

export capabilities have suffered during this recent period of rand appreciation, including

textiles and apparel, sugar, and motor vehicles and parts. South African industry sources

report that the effect on automotive component producers is so great that some producers

may not renew some export contracts and may phase down their export business.306 Another

macroeconomic impediment to SMMEs and businesses owned by historically disadvantaged

individuals is access to financing. 

The Broad-Based Black Economic Empowerment (BEE) bill went into effect in early 2004.

The law aims to redistribute capital toward, and accelerate skill acquisition by, historically

disadvantaged groups. The government’s “BEE scorecard” recommends 25.1 percent BEE

equity levels, 40 percent black management, 50 percent procurement from black-owned

firms, and 50 percent equity in employment.307 A survey conducted by the American

Chamber of Commerce in South Africa reported that 74 percent of participants view selling
 308 Business Day, Dec. 14, 2004, as reported in U.S. Department of State telegram, “South

Africa Economic Newsletter, Dec. 17, 2004.”

 309 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004;” and “Market

Profiles - South Africa,” tdctrade.com, found at www.tdctrade.com/mktprof/other/mpsaf.htm,

retrieved Jan. 5, 2005.

 310 US&FCS, “South Africa Country Commercial Guide, Fiscal Year 2004.”

 311 Jooste, Kruger, and Kotze, “Standards and Trade in South Africa,” p. 268.

 312 Ibid.

 313 Ibid., p. 272.

 314 Ibid., p. 273.

 315 Government officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

4-57

equity under BEE as a negative factor in investment decisions. Nonetheless, 50 percent

planned to invest more in South Africa in 2005, and 62 percent said the business

environment is good or excellent, up from 50 percent in 2003.308

FDI in the mining sector is currently being delayed because of perceived significant

valuation and financial risk issues arising from several new pieces of legislation. The

Mineral and Petroleum Resources Development Act of 2002 (adopted in May 2004) requires

mining companies to transfer 26 percent of their ownership to black partners and transfers

ownership of the country’s mineral resources to the state. Further, the 2004 Mineral and

Petroleum Royalty Bill instituted royalties of 3 percent on gold, 4 percent on PGMs, and

8 percent on diamonds. In addition, the proposed new Mine Health and Safety Acts are

expected to increase production costs.

Export control and licensing requirements exist for a number of products, including

petrochemical products; waste and scrap of iron, steel, aluminum, copper, nickel, lead, zinc,

tin, magnesium, cadmium, antimony, manganese, and refined copper; motor vehicles;

diamonds (required to be registered with the South African Diamond Board); and live

ostriches and fertilized ostrich eggs.309 With respect to scrap metal, a new regulation was

issued in August 2003 with the goal of increasing the amount of downstream processing of

scrap metal, and ensuring that domestic demand is met before export sales are pursued.310

Such control and licensing requirements, however, limit exports by raising export costs and

encouraging industries for which South Africa may not have a comparative advantage.

The agriculture sector also faces a number of domestic regulatory constraints. The South

African fruit industry claims that domestic regulations pertaining to the industry are “out of

line with domestic norms, enormously time consuming and unrelated to the core production

issue – the quality of the fruit they produce.” The industry believes that this system is a

major impediment to exports.311 For example, pesticides must be registered in the exporting

country, a long and costly process that may not be undertaken if the crop’s economic

viability is questionable.312

South African participation in international standards setting bodies tends to be reactive

rather than proactive,313 and is “greatly challenged by the voting procedure within the

committees in which South Africa often disagrees with the EU.”314 Standards as an

impediment to South African exports have been most prevalent in the agricultural sector

(food, beverages, and tobacco), but also affect exports of pharmaceuticals and other

chemicals, machinery, and transportation equipment. Foreign country standards and

conformity assessment requirements, in general, can be costly for South African exporters

and in certain instances, nontransparent. They are particularly burdensome for SMMEs.315

Although South Africa enforces safety regulations for the manufacture and distribution of
 316 Jooste, Kruger, and Kotze, “Standards and Trade in South Africa,” p. 274.

 317 Industry officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

 318 Jooste, Kruger, and Kotze, “Standards and Trade in South Africa,” p. 267.

 319 Ibid., p. 270.

 320 CBS can only be controlled by costly spray chemicals.

 321 Jooste, Kruger, and Kotze, “Standards and Trade in South Africa,” p. 270.

 322 Humphrey and de Senneville, “Constraints and Opportunities,” p. 13.

 323 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

 324 Krakoff, “Key Potential Export Markets,” p. 19.

 325 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

 326 Government officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

 327 Krakoff, “Key Potential Export Markets,” p. 29.

 328 Ibid.

4-58

products, there is no mechanism for mutual recognition of the local conformity assessment

infrastructure by export markets. Therefore, South African exporters must undergo costly,

time-consuming testing and certification in overseas markets.316 South African automotive

industry officials, for example, assert that the U.S. testing process requirements are lengthy,

and that components producers have lost contracts in the interim.317

South African exporters of fruit reportedly must meet both internationally accepted standards

as well as distinct standards of the importing country. For example, the European Union is

increasingly applying the European Retailers Produce and Good Agricultural Practices

(EUREPGAP) protocol, which is invoked at the discretion of the importer. Meeting

EUREPGAP standards in addition to the internationally accepted standards adds cost and

uncertainty for South African exporters of fruit.318 Quality and packing requirements

reportedly disqualify up to 40 percent of the domestic fruit crop as not acceptable for

export.319 Citrus black spot (CBS), a disease afflicting citrus, is difficult to prevent in most

citrus-growing areas in South Africa. The European Union and the United States ban the

import of citrus fruit infected by CBS. This ban is perceived as a trade barrier by the South

African citrus growers aimed primarily at increasing export costs.320 Approximately

70 percent of South African citrus is exported to Europe.321 Complex U.S. sanitary and

phytosanitary (SPS) regulations reportedly discourage many potential exporters of

agricultural products, particularly the processing of pest-risk assessment approvals by

Animal Plant and Health Inspection Service of the U.S. Department of Agriculture.322

Additionally, agricultural support programs, particularly those in the United States, the

European Union, Japan, and India are cited as barriers to South African exports.323 Some

developing countries also provide agricultural subsidies, including Brazil, Thailand,

Venezuela, and, although less extensively, South Africa.324

With respect to the United States, South African industry officials cite the differences among

U.S. Customs procedures and rulings in various States and at various ports as an impediment

to exporting to the United States.325 Import-related administration in the European Union has

also been cited as an impediment.326

India reportedly has a very complex customs procedure that is considered burdensome by

exporters, and customs valuation procedures are reportedly arbitrary.327 India also requires

its own costly testing for over 100 products, and only permits standards certification to

countries with a local commercial presence or business representative. In addition, the

country applies its own SPS standards that are reportedly not scientifically relevant.328
 329 Ibid., pp. 28-29.

 330 Ibid.

 331 Ibid., p. 24.

 332 Industry officials, interview by USITC staff, Pretoria, South Africa, Mar. 8, 2005.

 333 Malaysia’s tariffs range from 70 percent to 200 percent, with excise taxes ranging from

60 percent to 100 percent; In Thailand the tariff is 80 percent, with an additional tax ranging from

35 percent to 48 percent. USTR, National Trade Estimate Report of Foreign Trade Barriers.

 334 “SADC predicts boom in tourism,” The Reporter (Gaborone), Oct. 15, 2004, found at

www.tralac.org, retrieved Jan. 31, 2005.

 335 Association officials, interview by USITC staff, Johannesburg, South Africa, Mar. 7, 2005.

4-59

China, another potentially large market for South African exports, has a variety of import

barriers. For example, China’s tariff-rate quota system, applied to key South African export

products such as wheat, corn, rice, soy oil, cotton, barley, vegetable oils, and fertilizers,

reportedly is nontransparent and disproportionately hinders new market entrants.329 In

addition, import licensing requirements vary among products, and China reportedly uses

technical standards and SPS measures to control import levels.330

High tariffs on nonagricultural products are found in potentially important markets such as

India, Mexico, Nigeria, and Brazil. These countries all apply tariffs of over 15 percent to

more than one-half their nonagricultural tariff line items. With respect to agricultural

products, India, Nigeria, Algeria, Egypt, Turkey, and China apply tariffs of over 15 percent

to more than one-half of their agricultural tariff line items.331 South African automotive

industry officials cite Brazilian tariffs in particular as a barrier. The Brazilian tariff structure

has three distinct rates for automotive parts; however, South African exporters report being

charged above these rates. The South African industry is addressing this issue through talks

with Mercosur.332 Also with respect to motor vehicles, Malaysia and Thailand are RHD

markets with prohibitively high tariffs.333 As South African motor vehicle assembly is

focused on RHD vehicles, these markets could offer opportunities if tariffs were reduced.

Transportation infrastructure is a major impediment to increased exports of cut flowers,

especially to the United States, as there is no direct air route between the United States and

South Africa, and associated logistics costs are high. Transportation is also an issue with

respect to certain fruits that require cold storage or careful handling. For tourism to expand,

improvements in interregional travel are needed.334 In addition, South African industry

officials note that road fees for regional transport of goods within SADC are problematic.

These officials claim that exporting to the United States and the European Union can be less

complicated than exporting within the region.335
4-60
5-1

CHAPTER 5

Cotton-Exporting Countries:

Benin, Burkina Faso, Chad, and Mali

These four countries share the semiarid grassland and woodland climate of the Sahel region

of West Africa in at least part of their territory. This territory lies between the Sahara Desert

and the mostly tropical plain of the West African coast. Cotton is the predominant export of

all four countries (“textiles and fibers,” table 5-1). A summary of findings for each of the

four countries with respect to potential export growth sector and domestic and

international barriers is provided below.

Table 5-1

Benin, Burkina Faso, Chad, and Mali, 1999-2003 average share of total exports, by sector

Sectors Benin Burkina Faso Chad Mali

–– Shares of total exports, 1999-2003 (percent) ––

Fish and related products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 1.0 0.1 0.4

Coffee, tea, and spices ................................. (1

) 0.2 (1) 0.1

Cocoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) (1) (1) 

Other agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.0 28.1 15.3 8.1

Forest-based products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 2.2 0.5 1.2

Minerals, metals, and metal products . . . . . . . . . . . . . . . . . . . . . . 2.0 4.4 0.4 2.9

Fuels and electrical energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 0.2 4.3 0.1

Textiles and fibers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.3 50.8 74.6 70.8

Apparel and related articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 0.4 0.2 0.5

Other manufactures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 12.7 4.7 16.0 1

 Average share of less than 0.05 percent during 1999-2003.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Benin

Exports exhibiting the greatest potential are processed products that use agricultural products

as an input, such as cotton thread and cloth. Given its unexploited natural resources, the

mineral sector also holds potential for export growth. However, expansion of exports

requires investment, which is inhibited by lack of government transparency, the high cost

of conducting business in Benin, and an inadequate infrastructure. Given the predominant

role of cotton in exports, tariffs and subsidies in developed markets have been identified as

barriers to export growth.

Burkina Faso

Potential export sectors include processed cotton, shea butter, light manufacturing,

traditional handicrafts, tourism, and gold. Major impediments to export expansion are an

inadequate and rigid regulatory structure, the high cost of utilities and other business inputs,

inadequate infrastructure, lack of skilled labor, costs associated with the country’s landlocked location, and agricultural support programs in developed markets. 
5-2

Chad

Although Chad had been predominantly a cotton exporter, recent development of the

petroleum sector has substantially altered the country’s macroeconomic and trade structure.

Gum arabic, a resinous secretion of certain acacia trees, is an important export for Chad.

Nevertheless, the agricultural sector and downstream processing of agricultural products

have export growth potential. The main barriers to export expansion include inadequate

infrastructure; high input costs, especially costs for utilities; lack of skilled labor; additional

transport costs associated with accessing neighboring country transport infrastructure; and

agricultural support programs in developed markets.

Mali

Mali’s economy is heavily dependent on cotton, livestock, and gold mining; these products

are both the main current and potential exports. Additional products and services with export

growth potential include rice, coarse grains, meat, fish, fruits and vegetables (especially

mangoes, green beans, tomatoes, and potatoes), shea butter, and tourism. Potential markets

include the European Union and the United States. However, increased exports face a

number of barriers. Mali’s infrastructure is inadequate; the delays and costs associated with

the infrastructure greatly reduce Mali’s competitiveness. The lack of financing affects

producers’ ability to buy equipment and supplies necessary to sustain or expand their

businesses. Electricity costs are considered the most expensive in the region. Finally,

producers lack the technical capacity to understand and meet sanitary and phytosanitary

requirements in developed-country markets. 
 1

 Prepared by Eric Forden, Office of Industries.

 2

 U.S. Department of State, “Country Background Note: Benin,” Mar. 2005, found at

www.stat-usa.gov, retrieved Mar. 16, 2005; World Bank, Country Brief: Benin, Sept. 2004, found

at http://web.worldbank.org, retrieved Mar. 16, 2005; and U.S. Central Intelligence Agency (CIA),

“Benin,” World Factbook 2004, found at www.odci.gov.cia/publications/factbook/print/bn.html,

retrieved Mar. 16, 2005.

 3

 Economist Intelligence Unit (EIU), Benin Country Profile, 2004, p. 32; MBendi, “Benin: 

Economy,” found at www.mbendi.co.za/land/af/be/p0005.htm, retrieved Mar. 9, 2005; World

Bank, “Snapshot Of Business Environment - Benin,” Doing Business, found at

http://rru.worldbank.org/DoingBusiness/ExploreEconomies/

BusinessClimateSnapshot.asp, retrieved Mar. 17, 2005; and World Trade Organization (WTO),

Trade Policy Review: Benin, May 24, 2004, found at www.wto.org, retrieved Mar. 23, 2005.

 4

 International Monetary Fund (IMF), “Table 1. Benin Gross Domestic Product By Sector or

Origin at Current Prices, 1996-2003,” and “Benin: Basic Data, 1996-2003,” Benin: Selected Issues

And Statistical Appendix, Nov. 2004, pp. 52-53.

 5

 U.S. Department of State, “Country Background Note: Benin;” and EIU, Benin Country

Profile, p. 23.

5-3

Benin1

Economic Overview

Benin’s GDP, totaling $3.5 billion in 2003, expanded by nearly 5.0 percent per year

since 1991 (table BN-1). Benin’s economic growth has resulted in large part from

sound macroeconomic policies, political stability, and the implementation of

structural reforms following the transition from a centrally-planned economy in 1990-

91. Despite Benin’s relatively high growth rates, however, the economy remains

underdeveloped, as rapid population growth has offset much of this growth on a per capita

basis.2

 Benin’s economy is primarily based on agriculture and services (figure BN-1). In

2003, the services sector, agricultural sector, and manufacturing sector accounted for 50

percent, 36 percent, and 14 percent of GDP, respectively. The Beninese economy also has

a large informal sector that is estimated to account for as much as 45 percent of gross

national income and accounts for a large share of unrecorded trade with Nigeria.3

The primary commercial crop, cotton, accounted for approximately 7 percent of GDP in

2003.4

 Other commercial crops include palm products and cashew nuts, and to a lesser

extent, cocoa, coffee, groundnuts (peanuts), and shea nuts. Subsistence crops include maize

(corn), sorghum, pineapples, cassava, tapioca, yams, beans, and rice. Small amounts of

poultry and livestock are also raised for local consumption. A small, localized fishing

industry also provides fish and shrimp for domestic consumption; the annual fish catch, most

of which is drawn from inland waters, meets approximately 50 percent of domestic demand.

Benin’s manufacturing base is small and underdeveloped. Manufacturing activities, which

accounted for just 9 percent of GDP in 2003, are largely confined to textiles; food,

beverages, and tobacco; chemicals; and cement. Manufacturing activities also include

processing activities such as cotton ginning and oilseed milling.5

 
5-4

Table BN-1

Benin: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 3,498.8

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 5.6

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 2.9

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... 1.5

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 1,843.3

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... .... 9.6

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... 14.5

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 40.7

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 581.2

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 6.7

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 2.5

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 3,057.6

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 45.5

Literacy rate, adult total (percent of people ages 15 and above, 2002) ....... ....... ....... ....... ....... . . 39.8

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... . 95.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ...... 22.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 18.1

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 18.9

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 18.9

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 1.5

 Most recent year for which data are available between 1999 and 2003. 1

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 

Figure BN-1

Benin: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005. 
 6

 IMF, “Table 1. Benin Gross Domestic Product By Sector or Origin at Current Prices,

1996-2003,” pp. 52-53.

 7

 EIU, Benin Country Profile, p. 26.

 8

 Ibid.; and U.S. and Foreign Commercial Service (US&FCS), “Country Commercial Guide FY

2004: Benin,” found at www.stat-usa.gov, retrieved Mar. 16, 2005.

 9

 WTO, Trade Policy Review: Benin.

 10 EIU, Benin: Economic Structure, Jan. 7, 2005, found at www.viewswire.com, retrieved

Apr. 8, 2005.

 11 US&FCS, “Country Commercial Guide FY 2004: Benin;” and U.S. Agency for International

Development (USAID), USAID’s Strategy in Benin, found at www.usaid.gov/locations/subsaharan_africa/countries/benin, retrieved Mar. 17, 2005.

 12 EIU, Benin Country Profile, p. 29; International Food Policy Research Institute (IFPRI),

“Country Note For Benin,” 1998, found at www.ifpri.org, retrieved Mar. 16, 2005; U.S.

Department of State, “Country Background Note: Benin;” CIA, “Benin;” World Bank, Country

Brief: Benin; and US&FCS, “Country Commercial Guide FY 2004: Benin.” 

5-5

Benin’s natural resources include timber and limestone, as well as unexploited deposits of

gold, phosphates, iron ore, marble, and clay. Benin produced small amounts of crude

petroleum until known reserves were exhausted in 1998. Mining activities, which account

for approximately 0.2 percent of GDP, play a relatively insignificant role in the economy.6

In 2002, foreign direct investment (FDI) equaled approximately 1.5 percent of GDP. Since

1990, much of Benin’s FDI has been associated with the government’s privatization

program. During 1991-96, Benin privatized or liquidated more than 100 state companies in

a wide variety of sectors.7

 Since the mid-1990s, however, the government’s privatization

program has largely stalled.8

Export Profile

Benin’s export sector is very small, and is composed almost entirely of cotton and re-exports

of goods destined to adjacent countries. Moreover, because of the dominant role played by

re-exports and the informal sector, the composition and geographic structure of Benin’s

exports is difficult to determine.9

 Although World Bank data indicate total exports of

$265.4 million in 2003 (tables BN-2 and BN-3), based on other estimates, Benin’s reported

exports totaled $672.1 million (f.o.b.) in 2003 and imports totaled $865.5 million (f.o.b),

yielding a trade deficit of approximately $193.4 million.10

Cotton, Benin’s principal export, accounted for approximately 60 percent of exports in 2003.

Although the cotton sector has experienced rapid growth over the past 30 years, making

Benin the second-largest producer of cotton in West Africa, its reliance on the cotton

industry, combined with fluctuating world cotton prices, have constrained Benin’s overall

economic growth.11 Other exports include wood and wood products, edible fruit and nuts,

oilseed and oleagi fruits, and, to a lesser extent, palm oil, cashew nuts, coffee, cocoa,

groundnuts, shea nuts, pineapple, and cassava. Benin also exports small amounts of fish and

shrimp to the European market.12

Re-exports of goods to neighboring countries, as well as unrecorded trade, account for a

substantial portion of economic activity in Benin, although such activities are difficult to

quantify. Nonetheless, one estimate shows that re-exports accounted for approximately

34 percent of exports in 2003, and another estimate indicates that informal exports could
5-6

Table BN-2

Benin: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars –––––––– ––––– Percent –––––

52 Cotton, including yarns and woven fabrics thereof ........ 107,062.5 159,667.6 158,731.5 59.8 4.5

08 Edible fruit and nuts; peel of citrus fruit or melons . . . . . . . . 6,980.5 23,420.5 32,313.9 12.2 18.6

27 Mineral fuels, mineral oils and products of their distillation; 

bituminous substances; mineral waxes . . . . . . . . . . . . . . 10,750.4 2,939.2 14,602.2 5.5 3.5

44 Wood and articles of wood; wood charcoal ............. 942.7 2,509.0 10,079.7 3.8 30.1

12 Oil seeds and oleaginous fruits; miscellaneous grains, 

seeds and fruits; industrial or medicinal plants; straw 

and fodder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,904.1 22,889.9 9,416.4 3.5 -6.9

24 Tobacco and manufactured tobacco substitutes ......... 438.7 4,109.9 8,085.2 3.0 38.2

25 Salt; sulfur; earths and stone; plastering materials, lime 

and cement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 174.2 8,036.5 3.0 119.8

23 Residues and waste from the food industries; prepared 

animal feed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,189.7 1,469.7 6,149.2 2.3 20.0

41 Raw hides and skins (other than furskins) and leather . . . . 3.1 1,384.4 3,179.0 1.2 116.3

03 Fish and crustaceans, molluscs and other aquatic

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,895.1 1,491.6 2,586.4 1.0 3.5

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,518.5 52,208.1 12,240.3 4.6 4.1

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,691.9 272,264.2 265,420.3 100.0 6.1

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table BN-3

Benin: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

––––––– 1,000 dollars –––––––– ––––– Percent –––––

5201 Cotton, not carded or combed ........................ 102,180.9 152,656.8 154,958.1 58.4 4.7

0801 Coconuts, brazil nuts and cashew nuts, fresh or dried . . . . . . 5,616.6 22,833.8 30,364.1 11.4 20.6

2710 Petroleum oils and oils from bituminous minerals

(other than crude) and products therefrom, nesoi,

containing 70% (by weight) or more of these oils . . . . . . . . 2,228.8 454.3 13,288.0 5.0 21.9

1207 Oil seeds and oleaginous fruits nesoi, whether or not 

broken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,084.4 22,714.3 9,393.5 3.5 -6.4

2402 Cigars, cheroots, cigarillos and cigarettes, of tobacco or 

of tobacco substitutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438.7 4,109.9 8,040.2 3.0 38.2

2523 Portland cement, aluminous cement, slag cement,

supersulfate cement and similar hydraulic cements . . . . . . 0.9 119.4 7,953.9 3.0 175.6

4403 Wood in the rough, whether or not stripped of bark or 

sapwood, or roughly squared . . . . . . . . . . . . . . . . . . . . . . . 4.1 506.7 6,563.2 2.5 127.1

2306 Oilcake and other solid residues (in pellets or not), 

resulting from the extraction of vegetable fats or oils 

(except from soybeans or peanuts), nesoi . . . . . . . . . . . . . 1,063.1 1,453.9 6,078.7 2.3 21.4

4106 Tanned or crust skins of animals nesoi, without wool or

hair on, whether or not split, but not further prepared . . . . 0.0 569.8 2,881.6 1.1 (1

) 

5208 Woven fabrics of cotton, containing 85% or more cotton 

by weight, weighing not more than 200 g/m2 . . . . . . . . . . . 3,223.4 5,370.1 2,667.5 1.0 -2.1

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,851.3 61,475.2 23,231.4 8.8 -0.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,691.9 272,264.2 265,420.3 100.0 6.1 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 13 EIU, Benin: Economic Structure, Apr. 13, 2005, found at www.viewswire.com, retrieved

Apr. 15, 2005; and IMF, Staff Report for the 2004 Article of Consultation, Sept. 3, 2004, found at

www.imf.org, retrieved Apr. 19, 2005.

 14 US&FCS, “Country Commercial Guide FY 2004: Benin.”

 15 World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

 16 US&FCS, “Country Commercial Guide FY 2004: Benin.” 

5-7

represent 6 percent of GDP.13 The largest share of re-exports go to Nigeria, due in large part

to Nigeria’s import duties and trade restrictions. The avoidance of these barriers provides a

profitable opportunity for Beninese and Nigerian smugglers who conduct informal trade

across the border on products ranging from agricultural commodities to used cars.14

Because of the predominance of raw cotton exports, Benin’s largest export markets in 2003

were China (25.8 percent) and India (19.8 percent), two of the leading textile and apparel

producing countries (table BN-4). Other important external markets include Thailand

(8.4 percent), Sri Lanka (5.7 percent), and Niger (5.6 percent).15 While Nigeria is one of

Benin’s largest export markets, most of Benin’s trade with Nigeria is not recorded because

of the informal nature of trade between the two countries.

Table BN-4

Benin: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

 of total

9-year

CAGR

––––––––––– 1,000 dollars ––––––––––– –––––– Percent ––––––

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474.2 2,422.8 68,398.3 25.8 73.7

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,616.5 42,722.2 52,551.3 19.8 28.2

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,611.7 12,482.5 22,173.1 8.4 16.5

Sri Lanka . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 15,008.5 5.7 (1

)

Niger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 6,826.0 14,743.8 5.6 (1

)

Indonesia .......................... 822.3 17,095.9 13,014.3 4.9 35.9

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,606.4 12,795.2 12,673.4 4.8 0.1

Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 3,430.2 12,627.1 4.8 (1

)

Togo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,251.1 40,090.6 9,652.6 3.6 12.9

Senegal . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1 382.8 8,866.3 3.3 96.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,289.5 134,015.9 35,711.7 13.5 -13.2

Total . . . . . . . . . . . . . . . . . . . . . . . . 155,691.9 272,264.2 265,420.3 100.0 6.1

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

Given the dominance of cotton in the export sector, processed cotton is a promising potential

export. Because of a lack of processing facilities, however, a large portion of the cotton crop

is shipped in raw form to China and India for processing into thread and cloth. Only about

5 percent of the country’s cotton crop is processed in Benin. With the help of foreign

investment, the government hopes to move the cotton export sector up the value chain from

raw material exports to the downstream processing of cotton thread, cloth, or garments.16
 17 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 18 The average growth in world trade during 1993-2003 was 9.87 percent.

 19 US&FCS, “Country Commercial Guide FY 2004: Benin.”

 20 University of Pennsylvania, Facts About the Republic of Benin: Official Document, found at

www.sas.upenn.edu/African_Studies/Country_Specific/benin_EDoc.html, retrieved Mar. 17, 2005;

U.S. Department of State, “Country Background Note: Benin;” and EIU, Benin Country Profile,

p. 23. 

 21 Commission research identified few secondary resources on this topic for Benin.

 22 US&FCS, “Country Commercial Guide FY 2004: Benin.”

5-8

Based on revealed comparative advantage17 (RCA) analysis, Benin’s strength lies in

agriculture- and animal-related products, with promising indicators for some processed

cotton products (appendix E, table E-2). Four of Benin’s top exports are in the agricultural

sector and two are animal-related products. Although all six exhibit high RCA indices, only

goat and kid skin leather displays above average growth in world trade.18 Nevertheless,

certain woven fabrics and processed cotton products have experienced strong growth in their

respective RCA indices in recent years.

Benin possesses unexploited reserves of gold, phosphates, iron ore, marble, clay, and,

potentially, petroleum. As with cotton and other agricultural products, lack of investment has

constrained development in the mineral sector. In order to attract foreign investment into

this sector, the government adopted a new Mineral Code in 1998 that provided tax breaks,

simplified licensing procedures, and delimited areas for mineral exploration and production.

The Government of Benin also uses such incentives to encourage investment in the

petroleum and gas sector.19 In 2003, Kerr-McGee Corporation announced an offshore

petroleum discovery, but the level of recoverable reserves has not yet been determined.20

Domestic and International Barriers21

The key to development of processed agricultural commodities and natural resources sectors

will likely be external investment, as the agricultural sector lacks processing facilities that

would enable Benin to move from primary products to processed products. For example,

Benin exports virtually its entire crop of raw cashews to India for processing, rather than

processing and packaging them domestically. Although the Government of Benin officially

encourages foreign investment and maintains an attractive investment code, many foreign

investors complain that, in practice, the code is difficult to implement, largely because of

inefficiencies and lack of transparency within the government bureaucracy.22

Business environment indicators show that, on average, Benin is comparable to the regional

average (table BN-5). Although Benin performs better than the regional average in certain

indicators such as cost to enforce contracts, number of procedures and time to register a

property, and time to start a business, it lags behind regional averages in other areas such as

cost to create collateral, time required to enforce a contract, and the business closing

recovery rate. With respect to the Heritage Foundation’s Index of Economic Freedom, Benin

lags behind most OECD averages, although it scored better than the region in 2000. Based

on its 2005 score, however, Benin was less economically free than the regional average and

performed worse than the regional average on 7 of 10 component indicators (table BN-6).
5-9

Table BN-5

Benin: Business environment

Business process Benin

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . . 80.7 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . . 2.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.6 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.0 35.0 19.0

Enforcing contracts: Time (days)........................................... 570.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . . 15.1 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ........................ 196.9 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) ............... 333.4 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Benin, applied rate, 2003)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table BN-6

Benin: Economic freedom

Benin

Regional

average1

OECD

 average

–––––– Heritage Foundation indicators ––––––

1995 Overall score ............................................... (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . 4.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 
 23 According to an official inquiry, governmental corruption costs Benin approximately

3 percent of GDP per year. EIU, Benin Country Guide, July 13, 2004, found at

www.viewswire.com, retrieved Apr. 7, 2005.

 24 US&FCS, “Country Commercial Guide FY 2004: Benin.”

 25 Ibid.

 26 Ibid.

 27 Ibid.

 28 EIU, Benin Country Guide.

 29 US&FCS, “Country Commercial Guide FY 2004.”

 30 Ibid.

5-10

The lack of transparency associated with Benin’s public administration acts as a major

disincentive to investment.23 For example, foreign investors complain that establishing a

business requires making numerous unofficial payments. Similarly, civil servants at the stateowned telecommunications monopoly reportedly require unofficial payments before granting

a phone line, while labor ministry inspectors reportedly demand payments to monitor union

elections.24 Benin’s labor laws, which severely constrict labor mobility, were also identified

as an impediment to foreign investment.25 Although Benin maintains laws and penalties

designed to combat corruption, enforcement measures, including prosecution and

punishment, are rare.26 In addition, the inefficiency of Benin’s state bureaucracy acts as a

deterrent to foreign investment.27 Inefficiency in the civil service is not expected to improve,

due to low salary levels28 and the existing government culture. 

The inadequacy of Benin’s physical infrastructure also represents an obstacle to foreign

direct investment (table BN-7). For example, water and electrical services are unreliable

nationwide. Similarly, while the main highways are generally paved and maintained,

secondary roads are often in poor condition. Outside the capital, fixed line telephone service

is also inadequate, although foreign investment in a wireless network has improved

connectivity in rural Benin.29 Although Benin’s deep-water port at Cotonou is among the

most efficient ports in West Africa, shippers continue to complain of inadequate port

security, pilferage, customs delays, and a lack of transparency. In an effort to improve the

efficiency of the customs clearing process, the government has initiated a one-stop-shop

service. The government has also attempted to decrease corruption and other crimes by

computerizing customs procedures, establishing a port police force, and offering customs

administration training. Despite such efforts, however, reform projects and privatization

efforts are strongly resisted by politicians, government and port officials, and union

representatives.30

Table BN-7

Benin: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,787.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0

Transport services (percent of service exports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3

Transport services (percent of service imports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.7

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.4

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.2

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.5

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.9 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 
 31 US&FCS, “Country Commercial Guide FY 2004: Benin.”

 32 IMF, Benin: Selected Issues And Statistical Appendix, pp. 16-19.

5-11

Although chronic mismanagement of the local cotton ginning industry represents a

significant impediment, foreign tariffs are the largest impediment to Benin’s cotton export

sector. For example, Benin’s exports of processed cotton face an average tariff of

approximately 8 percent in foreign markets. By contrast, the average tariff on foreign thread

is 25-30 percent, representing a major disincentive to downstream processing.31 Cotton

subsidies, including direct producer payments, price supports, and export subsidies have

been identified as international barriers to the export of cotton from Benin.32
5-12
 33 Prepared by Erick Oh, Office of Industries.

 34 Economist Intelligence Unit (EIU), Burkina Faso Country Profile, 2004, p. 11.

 35 World Trade Organization (WTO), Trade Policy Review: Burkina Faso, May 2004, p. 3.

 36 African Development Bank (AfDB)/Organization for Economic Cooperation and

Development (OECD), “Burkina Faso,” African Economic Outlook, 2004, p. 85.

 37 Ibid., p. 81.

 38 Ibid.

 39 Ibid., p. 85.

 40 EIU, Burkina Faso Country Profile, p. 19.

 41 WTO, Trade Policy Review: Burkina Faso, pp. 53 and 57.

 42 U.S. Department of State telegram, “Burkina’s Cotton Industry: Come So Far, So Far Left

To Go,” message reference No. 00596, prepared by U.S. Embassy, Ouagadougou, May 12, 2003.

 43 U.S. Department of State telegram, “Burkina’s Cotton Industry.” 

 44 WTO, Trade Policy Review: Burkina Faso, p. 53.

5-13

Burkina Faso33

Economic Overview

With a population of 12.1 million, Burkina Faso is a land-locked country located in the

middle of West Africa, bordered by Mali to the north and west, Niger to the east, Ghana to

the south, Côte d’Ivoire to the southwest, and Togo and Benin to the southeast. As a result

of its geographic location, Burkina Faso is vulnerable to recurring droughts, expanding

desertification, and frequent pest infestations.34 In 2003, GDP totaled approximately

$4.2 billion (table BF-1). From 1996 to 2002, Burkina Faso experienced an average annual

growth rate of approximately 4.7 percent, resulting from strong performances in the

agriculture sector.35 However, in mid-2002, when rising civil unrest in neighboring Côte

d’Ivoire resulted in border closings, Burkina Faso abruptly lost access to its primary trading

seaport in Abidjan. Additionally, approximately 350,000 migrant Burkinabe workers

returned to Burkina Faso from Côte d’Ivoire.36 Overall growth in 2002 nevertheless was

about 4.6 percent and expanded to approximately 6.3 percent in 2003.37 An economic

downturn in Burkina Faso was avoided primarily by the government’s ability to divert trade

flows through other ports in Ghana, Togo, and Benin, and from increased earnings from both

high cotton prices and abundant cotton harvests in 2002 and 2003.38 Furthermore,

remittances from Burkinabe workers abroad did not fall as much as expected.39

Agriculture (primary sector) accounts for 32.0 percent of GDP (figure BF-1). With few

permanent sources of water, only 15,000 hectares of the 3.27 million hectares of land under

cultivation are irrigated.40 Consequently, the agriculture sector as a whole, which employs

approximately 84 percent of the labor force, is greatly affected by adverse weather

conditions. The sector is dominated by cotton production and subsistence farming, typically

on small-scale plots of 3 to 5 hectares in size.41 Burkina Faso is second only to Mali in West

Africa in overall cotton production, with an output of approximately 450,000 metric tons

during the 2002-03 production year.42 The cotton parastatal, Sofitex, which is 35 percent

state owned, supervises producers; regulates and ensures the supply of funds, seeds,

fertilizer, and insecticides; and oversees harvesting, ginning, and export activities.43 Cotton

production accounts for approximately 57 percent of the agricultural sector’s total share of

GDP.44
5-14

Table BF-1

Burkina Faso: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ..... 4,181.9

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ..... 6.5

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ... 4.1

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... 2.0

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... . 1,579.9

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... 16.0

Exports of goods and services (percent of GDP, 1999) ....... ....... ....... ....... ....... ....... ... 8.5

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . 31.9

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... . 581.2

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ...... 12.1

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ...... 2.3

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ...... 5.9

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ...... 47.0

Literacy rate, adult total (percent of people ages 15 and above, 1999) ....... ....... ....... ....... ..... 74.3

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... .... 44.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... . . 10.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ... 14.4

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 18.7

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... .... 18.7

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... .... 0.3

 Most recent year for which data are available between 1999 and 2003. 1

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure BF-1

Burkina Faso: Composition of GDP (2003)

Note.—Primary is defined as agriculture, fisheries, mining, and quarrying; secondary is defined as manufacturing,

construction, electricity, water, and other utilities; and tertiary is defined as primarily services activities such as retail,

financial, real estate, and government services.

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 45 Ibid.

 46 EIU, Burkina Faso Country Profile, p. 19.

 47 Ibid.

 48 AfDB/OECD, “Burkina Faso,” p. 84.

 49 WTO, Trade Policy Review: Burkina Faso, p. 64.

 50 Ibid., p. 66.

 51 U.S. Department of State, Bureau of Economic Affairs, “Background Notes: Burkina Faso,”

Mar. 2005, found at www.state.gov/r/pa/ei/bgn/2834.htm, retrieved Mar. 20, 2005.

 52 World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/

dataonline, retrieved Feb. 1, 2005.

 53 EIU, Burkina Faso Country Profile, p. 24.

 54 WTO, Trade Policy Review: Burkina Faso, p. 54.

 55 EIU, Burkina Faso Country Profile, p. 20.

 56 U.S. Department of State telegram, “Burkina’s Cotton Industry.”

5-15

Livestock products (live animals, hides, and skins), the next largest agricultural commodity,

accounted for approximately 30 percent of the agricultural sector’s contribution to GDP in

2003.45 With a large total animal herd estimated at 21.4 million cattle, sheep, and goats in

2002, livestock products account for about one-fifth of total export earnings.46 Overall,

agriculture and livestock support approximately 90 percent of the population, but because

of a lack of modern technology, the agricultural sector only accounts for approximately onethird of total GDP.47 Other important agricultural commodities include groundnuts (peanuts),

shea nuts, sesame, and cereals such as millet, sorghum, maize (corn), and rice.

Within the industrial sector, the manufacturing subsector contributes 21 percent to GDP,

employs approximately 5 percent of the national labor force, and accounts for almost

11 percent of total exports.48 The industrial sector is primarily engaged in the manufacture

and processing of cotton derivatives, textiles, agrofoods, tobacco, consumer goods, and

small-scale gold mining.49 The services sector, which accounts for 47 percent of total GDP

and employs 11 percent of the labor force, consists primarily of road transport and tourism

activity.50 In addition, approximately 20 percent of the population works abroad as migrant

workers, providing foreign exchange earnings that are second only to cotton exports.51

Foreign direct investment (FDI) inflows fell from a high of $23.0 million in 2000 to

$8.2 million in 2002.52 FDI has focused primarily on the mining sector, and particularly mine

investments by Canadian firms. Overall FDI inflows have typically been modest resulting

from Burkina Faso’s high domestic production costs, high transportation costs, and general

lack of easily exploitable natural resources.53

Export Profile

Burkina Faso’s exports increased by a compound annual growth rate (CAGR) of 7.8 percent

during 1994-2003. This growth is principally attributed to Burkina Faso’s privatization of

all enterprises engaged in the production, processing, and marketing of agricultural

products,54 and cotton export growth, which increased at a CAGR of 8.7 percent during this

period. Cotton accounts for over 60 percent of Burkina Faso’s export earnings (tables BF-2

and BF-3), and supports about 2 million rural people.55 Given the lack of downstream

industries outside of ginning, the majority of cotton is exported unprocessed, primarily to

China and Thailand (table BF-4). Cotton is also exported to other Asian countries, South

America, and Europe.56
5-16

Table BF-2

Burkina Faso: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

–––––– 1,000 dollars –––––– ––––– Percent –––––

52 Cotton, including yarns and woven fabrics thereof . . . . . . . . . . . 57,299.3 116,971.9 121,694.6 62.4 8.7

12 Oil seeds and oleaginous fruits; miscellaneous grains,

seeds and fruits; industrial or medicinal plants; straw and

fodder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,426.8 12,144.5 14,643.0 7.5 17.5

24 Tobacco and manufactured tobacco substitutes . . . . . . . . . . . . 0.0 581.3 11,201.0 5.7 (1

)

41 Raw hides and skins (other than furskins) and leather . . . . . . . 7,950.8 8,904.5 8,764.4 4.5 1.1

17 Sugars and sugar confectionery . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 13,843.7 6,139.2 3.1 121.3

08 Edible fruit and nuts; peel of citrus fruit or melons . . . . . . . . . . . 1,352.2 1,010.3 6,035.5 3.1 18.1

07 Edible vegetables and certain roots and tubers . . . . . . . . . . . . . 6,590.9 5,615.9 3,845.6 2.0 -5.8

71 Natural or cultured pearls, precious or semiprecious stones, 

precious metals; precious metal clad metals, articles

thereof; imitation jewelry; coin . . . . . . . . . . . . . . . . . . . . . . . . 16,416.8 8,160.1 2,667.8 1.4 -18.3

85 Electrical machinery and equipment and parts thereof;

sound recorders and reproducers, television recorders

and reproducers, parts and accessories ................ 198.4 1,018.8 1,768.1 0.9 27.5

40 Rubber and articles thereof. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.8 255.1 1,287.8 0.7 34.9

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,119.2 10,203.5 16,972.1 8.7 12.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,445.9 178,709.7 195,019.1 100.0 7.8

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table BF-3

Burkina Faso: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars ––––––– ––––– Percent –––––

5201 Cotton, not carded or combed . . . . . . . . . . . . . . . . . . . . . . . . . 57,143.4 116,815.0 120,744.1 61.9 8.7

1207 Oil seeds and oleaginous fruits nesoi, whether or not

broken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,401.3 11,397.7 12,894.8 6.6 16.0

2402 Cigars, cheroots, cigarillos and cigarettes, of tobacco or of

tobacco substitutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 570.7 11,074.5 5.7 (1

)

1701 Cane or beet sugar and chemically produced . . . . . . . . . . . . . 0.0 13,824.2 5,741.2 2.9 (1

)

4105 Tanned or crust skins of sheep or lamb, without wool on,

whether or not split, but not further prepared ............ 642.7 4,220.7 4,495.8 2.3 24.1

4106 Tanned or crust skins of animals nesoi, without wool or hair

on, whether or not split, but not further prepared . . . . . . . . . 4,125.7 4,518.4 3,823.8 2.0 -0.8

0804 Dates, figs, pineapples, avocados, guavas, mangoes and

mangosteens, fresh or dried . . . . . . . . . . . . . . . . . . . . . . . . . 1,348.6 777.3 3,288.9 1.7 10.4

0708 Leguminous vegetables, shelled or unshelled, fresh or

chilled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,537.8 5,148.2 3,280.2 1.7 -7.4

7108 Gold (including gold plated with platinum), unwrought or in

semimanufactured forms, or in powder form . . . . . . . . . . . . 16,274.4 7,861.9 2,631.0 1.3 -18.3

0801 Coconuts, brazil nuts and cashew nuts, fresh or dried . . . . . . . 0.0 67.0 2,584.7 1.3 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,971.9 13,508.6 24,460.1 12.5 10.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,445.9 178,709.7 195,019.1 100.0 7.8 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 57 EIU, Burkina Faso Country Profile, p. 20.

 58 Ibid., p. 19.

 59 As the price of grain doubled, livestock prices fell by almost one-half as herdsmen who were

running out of fodder sold their animals to purchase grain. United Nations, Food and Agriculture

Organization, “Special Report: FAO Crop and Food Supply Assessment Mission to Burkina

Faso,” Jan. 10, 2005, found at www.fao.org/documents/show_cdr.asp?url_file=/docrep/

007/J3973e/J3973e00.htm, retrieved Feb. 20, 2005.

 60 WTO, Trade Policy Review: Burkina Faso, p. 61.

 61 AfDB/OECD, “Burkina Faso,” p. 87.

 62 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

5-17

Table BF-4

Burkina Faso: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

Market 1994 1999 2003

2003 share

 of total

9-year

 CAGR

––––––––––– 1,000 dollars ––––––––––– –––––––– Percent –––––––

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 1,997.2 32,340.4 16.6 (1

)

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,261.1 12,224.9 21,579.2 11.1 8.6

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,946.3 21,805.9 17,493.8 9.0 2.6

Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.5 13,089.8 14,619.1 7.5 89.9

Niger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2,156.0 11,132.7 5.7 (1

)

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 12,742.6 10,329.3 5.3 (1

)

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,119.6 9,343.0 9,531.4 4.9 0.5

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,272.2 8,040.5 9,211.2 4.7 24.6

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,522.2 8,795.0 6,425.3 3.3 4.0

Togo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624.4 451.0 5,405.7 2.8 27.1

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,654.7 88,064.0 56,951.0 29.2 -0.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,445.9 178,709.7 195,019.1 100.0 7.8

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Japan accounted for approximately 67 percent of Burkina Faso’s exports of oilseeds

(primarily groundnuts, shea nuts, and sesame), the country’s second-leading export product.

Excluding cotton, other agricultural products represented approximately 18 percent of total

exports.57 Principal export markets for these products are Côte d’Ivoire, Ghana, and Togo.58

However, livestock production has recently been declining primarily because of the Ivorian

border closure and various adverse environmental factors. For example, an infestation of

adult locusts and a drought devastated grazing land for livestock and crop land in early 2005,

and as a result, livestock prices fell sharply and cereal prices rose rapidly.59

Gold, Burkina Faso’s top mineral resource, is extracted at 200 sites using traditional low

technology panning and winnowing methods, which are conducive to small deposits.60 Gold

production was estimated at 390 kilograms in 2002 and accounted for approximately

3 percent of total exports.61

Sectors with the Greatest Export Growth Potential

Based on revealed comparative advantage62 (RCA) analysis, four of the leading exports are

in the agricultural sector (leguminous vegetables, oilseeds, cane or beet sugar, and cotton)
 63 “Shea nuts: Making trade work for poor women,” Africa Recovery, Dec. 2001, found at

www.un.org/ecosocdev/geninfo/afrec/vol15no4/154shea.htm, retrieved Feb. 20, 2005.

 64 Ibid.

 65 U.S. Agency for International Development, A Marketing Manual for West Africa: Buying

and Selling Shea Butter, Oct. 2002, p. 1.

 66 Ibid.

 67 Ibid., p. 2.

 68 “Shea nuts: Making trade work for poor women.” 

 69 Ibid.

 70 WTO, Trade Policy Review: Burkina Faso, p. 64.

 71 Embassy of Burkina Faso official, interview by USITC staff, Washington, DC, Feb. 11,

2005.

 72 For additional information on the Multifiber Arrangement and the removal of textile and

apparel quotas in 2005, see app. C.

 73 EIU, Burkina Faso Country Profile, p. 22.

 74 AfDB/OECD, “Burkina Faso,” p. 84.

5-18

and two are in the animal-related products sector (sheep and goat skin leather); all six

products show strong RCA indices indicating the strength of these two sectors in the

international market (appendix E, table E-4). Five of these products were ranked among the

top 10 products by RCA index, indicating that they are prime sectors for export growth. In

addition, with most of Burkina Faso’s current exports destined for markets in Europe or

Asia, RCA indicators show that the potential for growth in the largely untapped markets of

the United States, Canada, the Middle East, and South America remains very high.

With the largest concentration of shea nut trees in the West African region, the potential for

exporting processed, shea nut vegetable fat (shea butter) to markets in Europe and the United

States is promising.63 To illustrate, in 2000, Burkinabe exports of shea butter and the

unprocessed shea kernels brought in an estimated $7 million.64 Shea butter is used by the

food and cosmetics industries to produce high-end consumer products such as chocolates,

soaps, lotions, and shampoos.65 Europe is the largest market worldwide for shea butter, with

France and the Netherlands the largest single-country importers.66 The United States, which

imports much of its shea butter from European re-exporters, is a potential untapped export

market for Burkinabe suppliers.67 Additionally, international recognition of this product’s

potential has emerged. For example, the United Nations Development Fund for Women

brokered a deal in 2001 to produce 60 short tons of shea butter, and another 90 short tons for

2002.68 The deal offered advanced payment for the shea butter orders, thereby securing

capital during the production phase, and additionally, provided training in setting quality

controls.69

Export-oriented light manufacturing industries in Burkina Faso primarily consist of cotton

ginning, textiles, leather, agrofoods production (e.g., sugar, wheat, and beer), and tobacco

products (e.g., cigarettes).70 The Government of Burkina Faso contends that, with greater

foreign investments in processing facilities, lower level downstream processing activities

such as the production of cotton yarn for export still offer viable short-term growth

opportunities.71 However, such opportunities are dampened by increased international

competition from the removal of textile and apparel quotas in 2005.72 Increasing competition

from inexpensive cotton and synthetic products from Asia has deterred private investment

in the Burkinabe textiles sector, and the textiles parastatal, Faso Fani, was liquidated.

Further, worker unrest has grown, particularly at the largest manufacturing sugar processor,

SN-Sosuco,73 as a result of increasing low-cost sugar imports. In addition, the manufacturing

sector has been hindered by expensive electricity, restrictive labor laws, and a lack of skilled

labor required for diversification into more skill-intensive industries.74
 75 Embassy of Burkina Faso official, interview by USITC staff, Washington, DC, Feb. 11,

2005.

 76 Chambre de Commerce d'Industrie et d'Artisanat du Burkina Faso, “Handcrafts from Burkina

Faso,” found at www.artisanat-burkina.com, retrieved Mar. 1, 2005.

 77 WTO, Trade Policy Review: Burkina Faso, p. 67.

 78 Ibid.

 79 EIU, Burkina Faso Country Profile, p. 23.

 80 Ibid.

 81 AfDB/OECD, “Burkina Faso,” p. 83.

 82 WTO, Trade Policy Review: Burkina Faso, p. 16.

5-19

According to government representatives, traditional handicrafts such as leather handbags,

saddles, woven cotton fabrics, and decorative objects of bronze and wood are a growing

subsector within the Burkinabe economy.75 Since Burkina Faso hosts the biennial

Ouagadougou International Arts and Crafts Fair (SIAO), the largest of its kind in Africa,

local producers have the opportunity to network, display, and sell their products to tourists

and potential foreign investors and distributors. In addition, the Ministry of Trade, Business

Promotion, and Handicraft has initiated policies focused on creating the organizational,

technical, commercial, and legal support infrastructure to improve the production and export

capabilities of traditional handicraft producers in Burkina Faso.76

Tourism is the largest services sector export earner, generating about $20 million in 2001.77

One-half of all tourism in Burkina Faso is related to business trips involving short stays of

approximately 3 days.78 However, there is potential for leisure tourism growth because of

Burkina Faso’s numerous cultural and scenic attractions. Events such as the biennial

National Culture Week, which offers dance, music, masks, and theater; the Pan-African Film

Festival, the largest African film festival in the world; the SIAO international handicrafts

fair, the largest craft fair on the continent; and locations such as the country’s three national

parks offer a variety of activities and destinations for potential visitors.79 In addition, as more

international conferences are held in the capital, Ouagadougou, hotel construction activities

have grown; however, in general, communications and travel-related facilities still require

improvement to support increased tourism.80

Burkina Faso could potentially increase its exports of gold. Although gold production has

declined since 1994, recent investments could reverse this trend. Two Canadian firms,

Etruscan Resources and High River Gold Mines, have begun exploration activities in the

Youga and Taparko mines respectively, potentially increasing gold yields. Etruscan

estimates total reserves at Youga at 21 metric tons with an annual production level of 3

metric tons, and High River Gold estimates total reserves at Taparko at 20 metric tons with

similar annual production.81 Thus, total gold production in 2005 could reach 6 metric tons,

eclipsing the previous production high of approximately 1 metric ton in 1998. 

As noted, FDI has focused primarily on the mining sector. To promote further capital

inflows, the Government of Burkina Faso revised and actively promotes its Investment and

Mining Codes among potential investors. In addition to various tax exemptions, the

Investment and Mining Codes permit full repatriation of profits and 100-percent foreign

ownership. The Investment Code offers six incentive schedules, divided by industry or

sectoral focus, with increasing benefits depending on the size of the investment and the

number of permanent jobs created,82 and the Mining Code offers specific exploration and
 83 Ibid., p. 61.

 84 Ibid., p. 16.

5-20

exploitation licenses with various customs and fiscal preferences.83 According to Burkinabe

authorities, 23 projects were approved under the Investment Code in 2003.84

Domestic and International Barriers

The business environment poses substantial constraints to developing export-oriented

industries. Most of the business environment indicators for Burkina Faso were worse than

the regional average and far behind OECD averages (table BF-5). Notably, trade policy,

government intervention in the economy, wages and prices, property rights, and regulation

were areas where Burkina Faso fared worse than the regional average. Areas that exhibited

significant deviation from the regional averages were contract enforcement and employment

market rigidity and costs. In terms of overall economic freedom, however, Burkina Faso’s

overall score improved between 2000 and 2005 (table BF-6).

Table BF-5

Burkina Faso: Business environment

Business process Burkina Faso

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 6.4 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 22.2 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 2.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.5 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 458.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 16.2 13.2 4.9

Registering a property: Time (days) ....................................... 107.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 152.8 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) .............. 498.6 254.1 44.1

Starting a business: Time (days).......................................... 135.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.0 50.6 26.8

Employment: Difficulty of hiring index ...................................... 100.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90.0 56.0 34.4

Employment: Rigidity of hours index ....................................... 100.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Burkina Faso, applied rate, 2003)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 1

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.
 85 EIU, Burkina Faso Country Profile, p. 14.

 86 Ibid.

 87 Ibid., p. 15.

 88 U.S. Department of State telegram, “Burkina’s Cotton Industry.”

 89 WTO, Trade Policy Review: Burkina Faso, p. 63.

 90 EIU, Burkina Faso Country Profile, p. 12.

5-21

Table BF-6

Burkina Faso: Economic freedom

Burkina Faso 

Regional

average1

OECD 

average

–––––– Heritage Foundation indicators ––––––

1995 Overall score .............................................. (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . 3.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 

Deteriorating transportation networks, excessive regulations, and inadequate infrastructure

have inhibited investment and productive capacity growth across sectors. As a land-locked

country, high transportation costs hamper export-oriented business, especially in rural areas.

Approximately 60 percent of the 8,230 villages in Burkina Faso are more than 3 kilometers

away from a main road. Many of these villages are connected by an estimated 10,500

kilometers of unpaved paths, which become impassable during the rainy season

(table BF-7).85 In addition, the railway that runs from Kaya through the capital Ouagadougou

to Abidjan in Côte d’Ivoire has declining traffic volume because of growing operating

inefficiencies.86 Burkina Faso’s electricity grid serves only 4 percent of the population and

is significantly more expensive per kilowatt hour than in neighboring countries.87 For

example, electricity in Burkina Faso cost 75 CFA francs per kilowatt hour in 2000, which

is five to seven times more expensive than in Ghana and Nigeria.88 As a result, private

operations such as mines, the sugar plant, and the cotton parastatal generate their own

electricity.89 In addition, penetration of the telecommunications network remains relatively

low at 5.4 telephone mainlines per 1,000 people, which further impedes business operations.

The lack of skilled labor and low level of economic development hamper business growth,

diversification, and investment. The United Nations Development Programme human

development indicator placed Burkina Faso 173rd out of 175 countries in 2003. In particular,

approximately 75 percent of the adult population is illiterate, and life expectancy was

estimated at 46 years in 2001.90
 91 Ibid., p. 19.

 92 Ibid., p. 20.

 93 “Shea nuts: Making trade work for poor women.” 

 94 U.S. Department of State telegram, “Burkina’s Cotton Industry.”

5-22

Table BF-7

Burkina Faso: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,506.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.0

Transport services (percent of service exports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9

Transport services (percent of service imports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.2

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Within agriculture, insufficient irrigation, adverse environmental conditions, and limited

access to technology are key sectoral impediments. Only 15,000 hectares of the 3.27 million

hectares of land under cultivation is irrigated,91 and drought and locust infestations are

recurring problems. In addition, only 30 percent of households own a plough or traction

animals, and fertilizer is seldom used outside of cotton cultivation.92

Impediments to the export of shea butter remain high. The harvesting and processing of shea

is done primarily by rural women with limited access to credit, limited technical skills, few

direct linkages to potential markets, and no uniform quality controls. Using traditional means

of production, output levels have been very low. Whereas potential shea nut output is

estimated at 850,000 short tons per annum, only 40,000 to 80,000 short tons are harvested.93

Agriculture support programs in developed countries, particularly in the cotton sector, have

been cited by cotton producers and the government as an important international barrier.94

In addition, Burkina Faso’s land-locked locale increases transport costs and makes exports

vulnerable to the political environment and transport inefficiencies of neighboring re-export

countries. The delays and inefficiencies effectively constrain export industries’ ability to

expand into sectors that require timely delivery of perishable products.
 95 Prepared by Russell Duncan, Office of Investigations.

 96 World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/

dataonline/, retrieved May 5, 2005.

 97 Economist Intelligence Unit (EIU), Chad Country Profile, 2004, pp. 18-19; and International

Monetary Fund, Memorandum of Economic and Financial Policies of the Government of Chad

for 2005-07, Feb. 2005.

 98 Embassy of Chad official, interview by USITC staff, Washington, DC, Feb. 9, 2005.

 99 Integrated Framework (IF), Aide mémoire: Mission principale de l’Étude Diagnostic sur

l’Intégration du Commerce du Cadre intégré au Tchad, June 2004, paras. 35-36.

 100 Ministry of Planning, Development and Cooperation, National Poverty Reduction Strategy

Paper, June 2003, pp. 38-41.

 101 Agence Française de Developpement, Analyses et perspectives macroeconomique du Tchad,

Sept. 2002.

5-23

Chad95

Economic Overview

Chad is a land-locked country with a GDP of approximately $2.6 billion (table CH-1).

Chad’s economic performance has improved in recent years as a result of the influx of

petroleum export earnings based on the development of new petroleum fields. Chad’s GDP

growth rate in 2003 was 9.9 percent; GDP growth in 2004, the first full year of Doba

petroleum extraction, was estimated at 31.0 percent.96 With the country’s relatively low

population growth rate, Chad’s per capita GDP increased by 4.3 percent in 2003. The

majority of the Chadian labor force is unskilled. Chad’s large informal economy, not

reflected in official economic data, is estimated to account for as much as 72 percent of the

country’s total economic activity.97

 Petroleum production has transformed the structure of Chad’s economy. In 2003, services

accounted for 42.0 percent of Chad’s GDP; agriculture, 36.0 percent; and industry,

22.0 percent (figure CH-1). Foreign direct investment (FDI) peaked in 2002 at over

$1 billion as a result of investment in petroleum extraction in southern Chad. Subsequently,

levels of FDI have declined, with most new investment focused on infrastructure

development projects to reduce the time and cost of transportation within Chad.98

Chad’s main agricultural exports, cotton and gum arabic, grow well in the country’s droughtprone climate. Informal livestock trading is an important economic activity in southern

Chad.99 The growth of the industry sector in 2004 is due primarily to production and exports

of crude petroleum. Chad’s small downstream manufacturing sector includes the production

of cotton, sugar, beer and soft drinks, and cigarettes.100

Export Profile

Cotton, petroleum, and gum arabic are Chad’s leading exports (table CH-2). Cattle and

cattle-related product exports from Chad’s large informal sector also are significant.101 The

cultivation and ginning of cotton has been Chad’s primary economic and export activity for
5-24

Table CH-1

Chad: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 2,647.6

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 9.9

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 4.3

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... -1.9

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 1,280.6

Total debt service (percent of exports of goods and services) ....... ....... ....... ....... ....... ....... . . ( )2

Exports of goods and services (percent of GDP, 1999) ....... ....... ....... ....... ....... ....... ....... 21.2

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 75.0

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 581.2

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 8.6

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 2.8

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 4.2

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 45.6

Literacy rate, adult total (percent of people ages 15 and above, 2002) ....... ....... ....... ....... ....... . . 45.8

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... . 73.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ...... 10.7

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 2.9

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 44.7

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 44.7

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 45.0

 Most recent year for which data are available between 1999 and 2003. 1

 Not available. 2

Note.— Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure CH-1

Chad: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 102 World Bank, Chad Cotton Sector Reform: A Case Study on Poverty and Social Impact

Analysis, 2002, p. 2, found at http://poverty.worldbank.org/files/13138_chadcottonreform.pdf,

retrieved Mar. 26, 2005. In 1987, cotton accounted for 85 percent of exports; in 1997, it accounted

for 65 percent of exports. 

 103 Esso Exploration and Production Chad Inc., “Project Overview,” 2005, found at

www.essochad.com, retrieved Apr. 11, 2005.

 104 U.S. Department of State, Bureau of African Affairs, “Chad Country Profile: The

Economy,” Feb. 2005, found at www.state.gov/r/pa/ei/bgn/37992.htm, retrieved Mar. 27, 2005.

 105 Vétérinaires Sans Frontières, Rapport Final de Vétérinaires Sans Frontières au Tchad: 

Projet ASETO, Dec. 1998. 

5-25

Table CH-2

Chad: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars –––––– ––––– Percent ––––––

52 Cotton, including yarns and woven fabrics thereof . . . . . . . . 43,446.0 90,150.8 59,283.1 63.0 3.5

27 Mineral fuels, mineral oils and products of their distillation;

bituminous substances; mineral waxes . . . . . . . . . . . . . . 3.6 30.3 19,549.8 20.8 160.3

13 Lac; gums; resins and other vegetable saps and extracts . . 13,364.8 12,998.9 9,158.2 9.7 -4.1

84 Nuclear reactors, boilers, machinery and mechanical

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . 162.8 400.8 915.9 1.0 21.2

82 Tools, implements, cutlery, spoons and forks, of base 

metal; parts thereof of base metal . . . . . . . . . . . . . . . . . . 1.5 24.5 861.6 0.9 102.7

85 Electrical machinery and equipment and parts thereof;

sound recorders and reproducers, television recorders 

and reproducers, parts and accessories . . . . . . . . . . . . . 75.1 310.5 704.3 0.7 28.2

56 Wadding, felt and nonwovens; special yarns; twine, 

cordage, ropes and cables and articles thereof . . . . . . . . 0.0 0.0 529.0 0.6 (1

)

62 Articles of apparel and clothing accessories, not knitted or 

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7 15.4 426.8 0.5 50.6

41 Raw hides and skins (other than furskins) and leather .... 374.9 62.6 422.2 0.4 1.3

39 Plastics and articles thereof . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 2.6 348.4 0.4 85.3

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,712.3 11,172.0 1,833.3 1.9 -10.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,152.8 115,168.4 94,032.7 100.0 4.7

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

many years.102 Unprocessed cotton accounted for 63.0 percent of total exports in 2003, and

75.9 percent of total exports excluding petroleum (table CH-3). A government-owned cotton

monopoly controls the production and export of cotton in Chad. Chad exports gum arabic

primarily to developed countries for use in beverage, confectionery, food, and

pharmaceutical products. Despite a decline in Chad’s gum arabic exports since 1994, gum

arabic accounted for nearly 10 percent of Chad’s exports in 2003. Chad’s petroleum exports

have increased significantly in recent years as a result of the opening of several new

petroleum fields. In addition to this increased volume of petroleum exports, Chad also has

benefitted from increases in global petroleum prices. Chad’s exports of mineral fuel

increased by 160.3 percent in value during 1994-2003; moreover, the year 2004 was the first

full year of petroleum extraction and export from Chad’s Doba petroleum fields.103 The cattle

industry, which largely is based on traditional nomadic herding, is estimated to be the

second-largest employer in Chad.104 Most exports of cattle and cattle-related products are

traded informally to neighboring Nigeria and, to a lesser extent, Cameroon.105
5-26

Table CH-3

Chad: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars –––––– –––– Percent ––––

5201 Cotton, not carded or combed . . . . . . . . . . . . . . . . . . . . . . . . . 43,443.5 89,981.7 59,237.9 63.0 3.5

2709 Petroleum oils and oils from bituminous minerals, crude . . . . . 3.6 0.0 15,955.8 17.0 154.5

1301 Lac; natural gums, resins, gum-resins and balsams . . . . . . . . 13,364.8 12,998.9 9,115.0 9.7 -4.2

2710 Petroleum oils and oils from bituminous minerals (other than 

crude) and products therefrom, nesoi, containing 70% (by 

weight) or more of these oils . . . . . . . . . . . . . . . . . . . . . . . . 0.0 29.7 3,568.5 3.8 (1

)

8207 Interchangeable tools for handtools (power-operated or

not) or for machine-tools, including dies for extruding

metal, and base metal parts thereof . . . . . . . . . . . . . . . . . . . 0.0 0.0 870.1 0.9 (1

)

5601 Wadding of textile materials and articles thereof; textile

fibers, not over 5 mm (0.197 in.) in length, textile dust

and mill neps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 529.0 0.6 (1

)

8485 Machinery parts, not containing electrical connectors,

insulators, coils, contacts or other electrical features,

nesoi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.6 469.5 0.5 (1

)

8543 Printing machinery (including ink-jet printing machines,

except those of 8471); machines for uses ancillary to

printing; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 445.8 0.5 (1

)

4103 Raw hides and skins nesoi (fresh or preserved, but not 

tanned or further prepared), whether or not dehaired or

split . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271.7 20.8 408.6 0.4 4.6

8411 Turbojets, turbopropellers and other gas turbines, and

parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 381.6 0.4 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,069.3 12,136.7 3,050.9 3.2 -5.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,152.8 115,168.4 94,032.7 100.0 4.7 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Chad’s exports are concentrated in a few markets. In 2003, the leading 3 markets accounted

for 59.6 percent of Chadian exports, and the top 10 markets accounted for almost 87 percent

of Chad’s exports. Chad’s leading export market in 2003 was the United States, which

accounted for 26.2 percent of Chad’s total exports (mainly petroleum), followed by Germany

and Portugal (table CH-4). Exports to China increased by a compound annual growth rate

of 114.0 percent during 1994-2003; other relatively large increases during the same period

were exports to India (55.0 percent), Morocco (45.4 percent), Poland (37.7 percent), and the

United States (32.4 percent).
 106 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 107 Centre d'Étude et de Formation pour le Développement au Tchad, Sarh: La ville aux usines

mortes, 2004, found at www.cefod.org/Tchad%20et%20Culture/Tc219/

ville_rurale%20sarh%20usines.htm, retrieved May 5, 2005.

 108 Esso Exploration and Production Chad Inc., “Tapping Into a New Frontier Oil Province,”

press release, 1998, found at www.essochad.com/Chad/Library/News/

Chad_NW_mediabis_011098.asp, retrieved Mar. 27, 2005. Extraction was estimated to peak

(shortly after project initiation) along a left-skewed, log-normal curve over the life of the project.

5-27

Table CH-4

Chad: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

 CAGR

–––––––––– 1,000 dollars ––––––––– ––––– Percent –––––

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,970.5 7,403.9 24,664.2 26.2 32.4

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,693.0 16,812.2 16,313.0 17.3 1.2

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,365.7 30,491.8 15,166.7 16.1 -2.7

Morocco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178.6 4,150.7 5,193.3 5.5 45.4

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,193.9 5,371.9 4,065.7 4.3 -8.7

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,564.8 3,578.7 3,789.2 4.0 4.4

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.7 0.0 3,401.0 3.6 55.0

Poland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165.0 1,226.0 2,939.0 3.1 37.7

Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2,955.2 2,906.1 3.1 (1

)

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 0.0 2,837.8 3.0 114.0

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,952.6 43,178.0 12,756.6 13.6 -1.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,152.8 115,168.4 94,032.7 100.0 4.7

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

The revealed comparative advantage106 (RCA) analysis indicates that Chad has a strong

comparative advantage with respect to cotton, its leading export (appendix E, table E-7).

Chad’s cotton exports are primarily to the EU market; export potential exists in other global

markets, particularly North America, Japan, the Asia-Pacific region, and other developing

countries. Recent interest by the Government of Chad in reviving the defunct formerly

government-owned textile mill as a private enterprise with FDI from the Netherlands

demonstrates the government’s awareness of its downstream cotton sector potential.107 The

RCA analysis also shows Chad to have a strong comparative advantage with respect to gum

arabic, despite relatively low world demand. Although Chad’s gum arabic exports are

shipped primarily to the U.S. market, export potential appears to exist in other world

markets. The RCA analysis also shows Chad to have a comparative advantage in onions,

shallots, garlic, and leeks. There also appears to be potential for Chad to export cattle and

cattle-related products. As mentioned above, Chad exports cattle primarily through informal

trading; efforts to incorporate the informal cattle industry could result in greater exports in

the formal sector. Based on current exploration and investment, petroleum holds significant

export potential for Chad. Estimates are that Chad’s Doba petroleum field has a projected

life of approximately 30 years.108
 109 Embassy of Chad in the United States, “Business Info,” found at www.chadembassy.org,

retrieved Mar. 29, 2005.

5-28

Domestic and International Barriers

The business climate in Chad generally ranks below the average for SSA (table CH-5). For

example, Chad lags substantially behind regional averages for the minimum cost and capital

required to start a business indicators, the cost to close a business indicator, the difficulty in

hiring index, and all contract enforcement indicators. Although Chad’s 2005 economic

freedom indicators are, on average, on par with the region, the trade policy, fiscal burden,

property rights, regulation, and informal market scores are below regional averages (table

CH-6). Chad’s transportation infrastructure is limited; the country has no railroads and less

than 1 percent of the roads are paved (table CH-7). Cotton exports must be trucked to the

border of neighboring Cameroon, then loaded onto Cameroonian trains to be taken to the

port of Douala for shipping. The poor state of infrastructure leads to high transportation

costs, which limit the country’s export potential and its ability to attract potential investors.

Other key constraints include energy shortages and high energy costs. As a result of a weak

educational system and low adult literacy rates, Chad also faces a shortage of skilled labor

that inhibits the country’s ability to diversify into more skill-intensive industries.109

Table CH-5

Chad: Business environment

Chad

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 0.0 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 48.9 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.9 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 526.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 13.3 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 344.2 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) .............. 610.4 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 50.6 26.8

Employment: Difficulty of hiring index ...................................... 100.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

Country data not available.

Note.— Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.
 110 U.S. Department of State telegram, “U.S. Investment in New Chadian Cell Phone

Company,” message reference No. 02158, prepared by U.S. Embassy, Ndjamena, Dec. 2004. 

 111 U.S. industry official, email communication to USITC staff, May 3, 2005.

 112 Embassy of Chad in the United States, “Business Info.”

 113 Oxfam, The Impact of U.S. Cotton Subsidies on Africa, 2002, found at

www.oxfam.org.uk/what_we_do/issues/trade/downloads/bp30_cotton.pdf, retrieved Apr. 11, 2005.

5-29

Table CH-6

Chad: Economic freedom

Chad

Regional

average1

OECD

 average

––––– Heritage Foundation indicators –––––

1995 Overall score ................................................. (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.— Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.

Table CH-7

Chad: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,400.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8

Transport services (percent of service exports, BoP) .................................................. (2

)

Transport services (percent of service imports, BoP) .................................................. (2

)

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Lack of government transparency and inefficient regulatory systems also hinder the

development of a diversified formal economy. High-level political involvement in the

resolution of business contracts continues to be an issue in both the industry and services

sectors.110 Chad reportedly lacks a strong, well-functioning judicial system, which increases

the legal risk for businesses to operate in Chad.111 Political and security risks also create an

uncertain environment that is not conducive to investment or economic growth.112 In

addition, given the important role of cotton in Chad’s exports, agricultural support programs

in developed markets have been identified as a barrier to Chad’s cotton export growth.113
5-30
 114 Prepared by Angela Calarco, Office of Industries.

 115 Central Intelligence Agency (CIA), “Mali,” World Factbook 2004, found at

www.cia.gov/cia/publications/factbook/, retrieved Jan. 4, 2005.

 116 Economist Intelligence Unit (EIU), Mali Country Profile, 2004, p. 18.

 117 U.S. Department of State, “Background Notes: Mali,” Jan. 2005, found at www.stat-usa.gov,

retrieved Feb. 4, 2005.

 118 WTO, Trade Policy Review: Mali, Report by the Government Revision, June 2, 2004, p. 11.

 119 The Government of Mali, Poverty Reduction Strategy Paper, May 29, 2002, p. 30.

 120 Industry officials, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005. 

 121 U.S. Department of State, “Background Notes: Mali.” 

 122 EIU, Mali Country Profile, p. 31.

 123 Despite the general categorization note in figure ML-1, Mali’s mining activity is included

within the secondary sector.

 124 U.S. & Foreign Commercial Service (US&FCS), “Mali Aggregate Economic Outlook:

2000-2001,” July 2, 2001, found at www.stat-usa.gov, retrieved, Feb. 18, 2005.

5-31

Mali114

Economic Overview

Mali is a land-locked country located in West Africa. Mali’s economy is dominated by

cotton, livestock, and gold mining, and consequently, it is deeply affected by climatic

conditions and the variability of world prices for cotton and gold. The livelihood of a

majority of the population depends on agriculture and livestock.115 Reforms first instituted

in 1994 have been successful in improving macroeconomic performance and in meeting the

majority of fiscal objectives. In 2003, inflation was an estimated -1.3 percent and GDP

growth was 6.0 percent (table ML-1). Trade represents 65.2 percent of GDP, and exports of

goods and services represent 27.0 percent of GDP. 

The primary sector, predominantly agriculture, plays a vital role in Mali’s economy,

accounting for 41.4 percent of GDP (figure ML-1) and employing almost 80 percent of the

population.116 Crops include sorghum, millet, maize (corn), rice, dates, mangoes, beans, and

potatoes. Production is mostly by small-scale farming operations.117 The principal cash crop

is cotton, which accounts for approximately 14 percent of Mali’s GDP and almost 99 percent

of its agricultural export revenue.118 Livestock also plays an important role in Mali’s

agricultural sector. Mali’s national herd is approximately 5.7 million cattle, 13.2 million

goats, and 300,00 camels.119 Most livestock production is by small-scale farmers. Mali is the

biggest fresh-water fish producer in sub-Saharan Africa (SSA).120 The surplus is smoked,

salted, dried, and exported. Fish production has been declining since the early 1980s as a

result of drought and the use of river water for agriculture.121

The tertiary sector, primarily services, accounts for 35.5 percent of GDP. Tourism is the

country’s primary source of services export revenue. Another source of services revenue is

the financial sector; however, only three banks are 100 percent privately owned, resulting

in a limited range of financial products.122 The secondary sector, primarily industrial,

accounts for 23.1 percent of GDP. Manufacturing accounts for 2.8 percent of the value of

this sector, and mining makes up most of the remainder.123 Mali’s mineral sector is

dominated by gold mining. The decrease in international gold prices from 1997-99 adversely

affected Mali’s gold production.124 Since the latest changes to the 1999 investment code that

liberalized the sector, gold mining has increased significantly and is now the largest source
5-32

Table ML-1

Mali: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 4,326.0

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 6.0

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 3.5

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... -1.3

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 2,803.2

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... .... 7.0

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... 27.0

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 65.2

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 581.2

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 11.7

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 2.4

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 5.7

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 47.0

Literacy rate, adult total (percent of people ages 15 and above, 2000) ....... ....... ....... ....... ....... . . 19.0

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... . 61.0

Secondary school enrollment ratio, total (percent, 1999) ....... ....... ....... ....... ....... ....... ...... 15.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 3.8

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 22.0

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 22.0

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 3.1

 Most recent year for which data are available between 1999 and 2003. 1

Note.— Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure ML-1

Mali: Composition of GDP (2003)

Note.—Primary is defined as agriculture, fisheries, mining, and quarrying; secondary is defined as manufacturing, construction,

electricity, water and other utilities; and tertiary is defined as primarily services activities such as retail, financial, real estate, and

government services.

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 125 Philip A. Szczesniak, “The Mineral Industries of Burkina Faso, Mali, Mauritania, and

Niger,” U.S. Geological Survey Minerals Yearbook - 2001, 2001, p. 6.1. Mali’s trade data (see

below) should be viewed with caution because of problems that may exist such as misreporting,

errors, and omissions, especially with regard to gold exports.

 126 Szczesniak, “The Mineral Industries,” p. 6.1.

 127 EIU, Mali Country Profile, p. 26.

 128 Ibid., p. 36.

 129 Ibid.

 130 U.S. Department of State telegram, “2005 Investment Climate Statement,” message

reference No. 250356, prepared by U.S. Embassy, Bamako, Jan. 15, 2005.

 131 Ibid.

 132 Mali’s trade data should be viewed with caution because of problems that may exist such as

misreporting, errors, and omissions, especially with regard to gold exports. Integrated Framework

(IF), Mali Expanding and Diversifying Trade for Growth and Poverty Reduction: A Diagnostic

Trade Integration Study, Nov. 2004, p. 9.

 133 IF, Mali Expanding and Diversifying Trade, p. 2; and CARANA Corporation, Impact of

Transport and Logistics on Mali’s Trade Competitiveness, Aug. 2004. p. 14.

 134 African Development Bank (AfDB)/Organization for Economic Cooperation and

Development (OECD), “Mali,” African Economic Outlook, 2004, p. 195.

5-33

of export revenue.125 In 2001, Mali became the third-largest gold producer in Africa,126 and

has an estimated 600-800 metric tons of reserves.127

In 2001, foreign direct investment (FDI) reached a high of $125.8 million, up from

$3.6 million in 1999.128 Mali was the second-leading recipient of FDI in West Africa that

year, following Côte d’Ivoire.129 This increase was the result of investments in the gold

mining sector, which benefitted from mining code reforms in 1991 and 1999. The

government has identified the following priority sectors for economic development:

agribusiness, fishing and fish processing, livestock and forestry, mining and metallurgical

industries, water and energy production industries, tourism and hotel industries,

communications, housing development, transportation, human and animal health promotion

enterprises, vocational and technical training enterprises, and cultural promotion

enterprises.130 To encourage investment in these areas, the government is offering special

incentives, such as tax exemptions for job creation.131

Export Profile132

In 2003, Mali’s total exports were $213.6 million (tables ML-2 and ML-3), with cotton

accounting for almost 80 percent of exports. Based on sources other than WITS, the majority

of the value of the remaining exports is accounted for by gold.133 Mali is the top cotton

producer in SSA and the world’s eighth-largest cotton exporter.134 Approximately 50 percent

of Mali’s exports are sent to Asian countries, including Thailand, India, China, and Pakistan

(table ML-4). In general, Mali’s export markets have exhibited positive, modest to high

9-year compound annual growth rates (CAGRs), with exports to the United Kingdom and

India increasing by 38.7 percent and 148.4 percent, respectively. 
5-34

Table ML-2

Mali: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars ––––––––– –––– Percent –––––

52 Cotton, including yarns and woven fabrics thereof ........ 109,337.2 227,653.2 169,706.5 79.4 5.0

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . 9,858.5 2,789.0 13,319.9 6.2 3.4

85 Electrical machinery and equipment and parts thereof; 

sound recorders and reproducers, television recorders 

and reproducers, parts and accessories . . . . . . . . . . . . . 20,574.4 8,602.6 5,523.6 2.6 -13.6

41 Raw hides and skins (other than furskins) and leather . . . . 2,776.7 4,248.7 5,374.6 2.5 7.6

08 Edible fruit and nuts; peel of citrus fruit or melons . . . . . . . . 1,638.4 1,269.3 2,688.1 1.3 5.7

44 Wood and articles of wood; wood charcoal ............. 327.4 1,031.0 2,477.0 1.2 25.2

71 Natural or cultured pearls, precious or semiprecious 

stones, precious metals; precious metal clad metals, 

articles thereof; imitation jewelry; coin . . . . . . . . . . . . . . . 1,173.9 6,262.7 1,415.9 0.7 2.1

28 Inorganic chemicals; organic or inorganic compounds of 

precious metals, of rare-earth metals, of radioactive 

elements or of isotopes . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 36.3 1,151.4 0.5 182.6

07 Edible vegetables and certain roots and tubers . . . . . . . . . . 1,031.6 2,454.7 1,043.7 0.5 0.1

90 Optical, photographic, cinematographic, measuring, 

checking, precision, medical or surgical instruments 

and apparatus; parts and accessories thereof ......... 243.6 465.5 741.7 0.3 13.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,255.3 17,180.8 10,188.4 4.8 2.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,217.1 271,993.7 213,630.7 100.0 3.6

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to gold exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table ML-3

Mali: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars ––––––––– –––– Percent ––––

5201 Cotton, not carded or combed ................... 109,102.6 225,265.9 169,392.7 79.3 5.0

8471 Automatic data processing machines and units

thereof; magnetic or optical readers, machines

for transcribing and processing coded data, nesoi . . 246.8 456.4 12,099.1 5.7 54.1

8542 Electronic integrated circuits and microassemblies;

parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,944.6 6,356.9 3,124.8 1.5 -11.0

0804 Dates, figs, pineapples avocados, guavas,

mangoes and mangosteens, fresh or dried . . . . . . . 1,621.3 1,157.1 2,655.2 1.2 5.6

4105 Tanned or crust skins of sheep or lamb, without

wool on, whether or not split, but not further

prepared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84.6 1,601.0 2,534.6 1.2 45.9

4403 Wood in the rough, whether or not stripped of bark

or sapwood, or roughly squared . . . . . . . . . . . . . . . . 8.0 14.4 2,088.6 1.0 85.6

4106 Tanned or crust skins of animals nesoi, without

wool or hair on, whether or not split, but not

further prepared . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.3 1,822.4 1,410.9 0.7 47.6

4103 Raw hides and skins nesoi (fresh or preserved, but

not tanned or further prepared), whether or not

dehaired or split . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,463.9 388.0 1,328.3 0.6 -1.1

2814 Ammonia, anhydrous or in aqueous solution . . . . . . . . 0.0 0.0 1,146.4 0.5 0.0

8543 Electrical machines and apparatus, having

individual functions, nesoi; parts thereof . . . . . . . . . 7.0 105.3 771.4 0.4 68.6

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,696.1 34,826.2 17,078.8 8.0 -7.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,217.1 271,993.7 213,630.7 100.0 3.6

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to gold exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 135 EIU, Mali Country Profile, p. 33.

 136 AfDB/OECD, “Mali,” p. 201.

 137 U.S. Agency for International Development (USAID), Country Strategic Plan FY 2003-

2012, p. 6, found at www.usaid.gov, retrieved Jan. 15, 2005.

 138 CARANA Corporation, Impact of Transport and Logistics, p. 15.

5-35

Table ML-4

Mali: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––––– 1,000 dollars ––––––––––––– –––––– Percent ––––––

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . 32,926.3 33,847.0 33,282.9 15.6 0.1

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 8,687.1 30,860.0 14.4 148.4

China . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,094.4 1,358.1 28,390.0 13.3 13.5

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,941.1 30,901.8 17,536.9 8.2 9.2

Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 205.6 14,530.1 6.8 (1

)

United Kingdom ................... 730.8 4,480.6 13,865.6 6.5 38.7

France . . . . . . . . . . . . . . . . . . . . . . . . . . 7,950.2 5,021.5 8,690.0 4.1 1.0

Germany . . . . . . . . . . . . . . . . . . . . . . . . . 4,219.0 4,702.6 7,611.0 3.6 6.8

Tunisia . . . . . . . . . . . . . . . . . . . . . . . . . . 5,427.6 1,985.9 5,335.3 2.5 -0.2

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,929.5 4,722.3 5,180.7 2.4 0.6

Other . . . . . . . . . . . . . . . . . . . . . . . . . 81,989.5 176,081.1 48,348.0 22.6 -5.7

Total . . . . . . . . . . . . . . . . . . . . . . 155,217.1 271,993.7 213,630.7 100.0 3.6

1

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to gold exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Exports grew by 38 percent during 1994-2003, largely because of the devaluation of the

CFA franc in 1994. The devaluation increased Mali’s export competitiveness, especially for

cotton exports, which increased significantly during 1993-97.135 Since 1998, cotton exports

decreased because of a decline in world cotton prices. As a result of the new mining codes,

gold exports increased significantly during 1993-97. Policies, mostly in the mining sector,

that encourage FDI contributed to the improvement of Mali’s trade balance. In 2002, both

cotton and gold exports increased significantly as a result of record cotton harvests and the

opening of new mines.136

In 2003, the value of Mali’s exports declined as a result of mining ores with lower average

gold content; Air Afrique’s bankruptcy, which affected air cargo; the termination of flights

by Swissair and Sabena; and the crisis in Côte d’Ivoire. As 70 to 80 percent of Mali’s trade

passes through Côte d’Ivoire,137 the closure of the border between Mali and Côte d’Ivoire

and the railway between Ferke and Abidjan resulted in a serious disruption in trade and

affected Mali’s revenue and economic activity. In September 2003, regional transport

operations resumed.138

Sectors with the Greatest Export Growth Potential

The major economic sectors with the greatest potential for growth in export sales are

agriculture, including agroprocessing, gold, and tourism. Based on revealed comparative
 139 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 140 Industry officials, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 141 NewsEdge Corporation, “The Domestic Economy: Textile Plant to Open in 2005,"

Feb. 22, 2005. 

 142 U.S. Department of State telegram, “Mali AGOA Eligibility Review,” message reference

No. 168472, prepared by U.S. Embassy, Bamako, Sept. 2004.

 143 Government official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005. 

 144 Nathan Associates, Inc., Mali Diagnostic Trade and Integration Study, prepared for the U.S.

Agency for International Development, Dec. 7, 2004, p. 26.

 145 Ibid.

 146 IF, Mali Expanding and Diversifying Trade, p. 70.

 147 Government official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 148 Industry officials, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005. 

 149 Nathan Associates, Mali Diagnostic Trade and Integration Study, p. 54.

 150 Ibid.; and NGO official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 151 Nathan Associates, Mali Diagnostic Trade and Integration Study, p. 59.

5-36

advantage139 (RCA) analysis, Mali has a strong RCA index in the following leading export

products: cotton; rice; sheep or lamb skin leather; dates, figs, and pineapples; and goat or kid

skin leather (appendix E, table E-20). Most of these leading products have exhibited relative

stability in their RCA indices and, therefore, represent continued attractive export growth

potential. Rice, diamonds, and dates are particularly attractive given their above average

growth in world trade. Rice, in particular, had a substantial increase in the RCA index during

2000-03. 

Mali has a revealed comparative advantage in cotton; however, less than 1 percent of the

country’s cotton exports are processed.140 To take advantage of the preferential access to the

U.S. market under AGOA, plants are being improved and new factories are being built. A

new textile factory began production last year and has shipped cotton yarn to Mauritius,141

where it will be processed into apparel and shipped to the United States.142 Opportunities

may also exist to export cotton within the region.143

The livestock sector plays an important role in Mali’s economy and is the country’s secondlargest agricultural sector export.144 Mali has potential to export cattle,145 and in recent years,

a significant amount of hides and skins have been exported to neighboring countries.146

Current major export markets include Côte d’Ivoire and Ghana, and smaller markets include

Algeria, Benin, and Senegal. Guinea is considered an emerging market. Mali is currently

trying to penetrate the meat market in the United States.147 Opportunities may exist in

downstream production facilities such as slaughterhouses, or processed items such as corned

beef.148

Mali’s main export markets for mangoes are France, the Netherlands, Mauritania, Senegal,

Guinea, and Côte’d’Ivoire. Even though the United States imports approximately 40 percent

of the world’s mangoes,149 Mali does not export to the United States because of the inability

to satisfy sanitary and phytosanitary (SPS) requirements. Opportunities also exist in

downstream products such as mango juice and dried, frozen, or preserved mangoes, because

SPS requirements are less stringent for processed mango products.150 As one of West

Africa’s largest producers of potatoes, Mali has identified potatoes as a potential export

product.151 However, Mali is not currently cost competitive in the region compared with

European potato exporters. Another potential agriculture sector export is shea nuts. Potential
 152 Daniel Plunkett and J. Dirck Stryker, Regional Interventions to Improve Cross-Border Trade

and Food Security in West Africa, Agricultural Policy Development Program, Dec. 2002, p. 3; and

government official, interview with USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 153 Government official, interview with USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 154 Industry official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005. 

 155 Nathan Associates, Mali Diagnostic Trade and Integration Study, p. 17.

 156 Ibid.

 157 USAID, Country Strategic Plan FY 2003-2012, p. 61. 

 158 Nathan Associates, Mali Diagnostic Trade and Integration Study, p. 19.

 159 Ibid., p. 18.

 160 AfDB/OECD, “Mali,” p. 196.

 161 EIU, Mali Country Profile, p. 26.

 162 Ibid.

 163 Ibid., p. 27.

 164 WTO, Trade Policy Review: Mali, p. 14.

 165 U.S. Department of State, “Background Notes: Mali.”

5-37

markets for quality shea nuts include the European Union, Japan, and the United States.152

Processed shea butter may also be developed; currently, shea butter is sent to Burkina Faso

for refining.153

Mali has a comparative advantage in coarse grains and wheat for export to the region. Mali

has the only area in West Africa that is suitable for wheat production,154 and there is a

growing need for animal feed, particularly poultry feed.155 Markets exist for animal feed in

countries with large urban populations and insufficient domestic production such as

Senegal.156 With the use of improved seed variety along with fertilizer and water retention

techniques, yields of sorghum and millet could increase by 20 to 30 percent.157 Opportunities

exist in exporting millet and sorghum to Mauritania, Niger, and Senegal, as they are unable

to meet their basic consumption needs.158 A potential market for coarse grains is Europe,

where certain segments of the population prefer cereal-based dishes.159 Mali has a

comparative advantage in rice exports to the West African region. The sector has seen

significant growth since the 1990s. The high rice yields of the 2003-04 harvest enabled the

country to become a net exporter.160

There continues to be growth potential for exports of gold.161 Two more mines are expected

to open in mid-2005,162 and gold production is expected to peak in 2006, with production

leveling off at approximately 50 metric tons per year by 2014.163

Although tourism is a leading source of services export revenue,164 the sector is

underdeveloped and has great growth potential for recreational tourism. Mali has diverse

attractions such as national parks, ancient cities and archaeological sites, Niger River cruises,

cultural festivals, and desert landscapes.165

Domestic and International Barriers

Exporters are faced with several impediments to doing business in Mali. The minimum

capital required to start a business in Mali is much higher than the regional average (table

ML-5). The difficulty of hiring and firing indices, and firing costs are also much higher in

Mali than the regional and OECD averages. However, Mali ranks better than the regional

average on enforcing contracts. Mali’s overall economic freedom score is also better than

the regional average (table ML-6). However, Mali lags behind the region in property rights,

fiscal burden of government, banking and finance, and wages and prices scores.
5-38

Table ML-5

Mali: Business environment

Mali

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 6.3 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 58.5 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 1.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.6 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.0 35.0 19.0

Enforcing contracts: Time (days) .......................................... 340.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 20.6 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 187.4 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) .............. 482.3 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Mali, applied rate, 2003)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness/, retrieved Jan. 25, 2005; and

WTO, “Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile/, retrieved Apr. 5, 2005.

Table ML-6

Mali: Economic freedom

Mali

Regional

average1

OECD

average

–––––– Heritage Foundation indicators ––––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.4 2.2

 Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . 2.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 166 The Government of Mali, Poverty Reduction Strategy Paper, p. 29.

 167 IF, Mali Expanding and Diversifying Trade, p. 57.

 168 Ibid.

 169 Nathan Associates, Mali Diagnostic Trade and Integration Study, p. 7.

 170 CARANA Corporation, Impact of Transport and Logistics, p. 4.

 171 Industry official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005. 

 172 Nathan Associates, Mali Diagnostic Trade and Integration Study, p. 6.

 173 Government official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 174 Government official, interview by USTIC staff, Bamako, Mali, Mar. 17-18, 2005. 

 175 Government official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 176 The Government of Mali, Poverty Reduction Strategy Paper, p. 30.

5-39

Mali’s transportation infrastructure, considered one of the least developed in the world,166

greatly affects the cost and the efficient movement of products throughout the country. For

example, infrastructure indicators show that only 12.1 percent of roads are paved

(table ML-7). Mali’s transportation costs are the highest in the region and more than twice

those of Senegal.167 In addition, the poor condition of vehicles affects the ability to transport

products out of the country. In February 2003, nearly two-thirds of Mali’s 100,500 vehicles

were more than 15 years old, resulting in lower operating efficiencies and increased costs.168

Table ML-7

Mali: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,100.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1

Transport services (percent of service exports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7

Transport services (percent of service imports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.8

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Transportation costs are further increased because of high import duties charged for new

trucks and replacement parts.169 The railway system is inefficient, and the international

railway only provides access to about 25 percent of the country.170

Access to capital is a challenge in Mali. Commercial banks typically only offer 90- and

180-day loans.171 To finance their trading operations, many farmers rely on their own capital

or borrow from friends and family members.172 Banks reportedly seem more interested in

financing import and export activities than financing production;173 however, in order to

export, producers need financing to purchase equipment.174 Producers, especially in the

agricultural sector, lack financing for downstream production.175

The utilities infrastructure is generally considered to be inadequate and dilapidated.176 Mali’s

utilities, in particular electricity and telecommunications, are also impediments to export

growth. Approximately 91 percent of energy consumption is through traditional sources such
 177 The Government of Mali, Poverty Reduction Strategy Paper, p. 30.

 178 Industry official, interview with USITC staff, Bamako, Mali, Mar. 17-18, 2005; and U.S.

Embassy official, interview with USITC staff, Bamako, Mali, Mar. 17-18, 2005. 

 179 Nathan Associates, Mali Diagnostic Trade and Integration Study, p. 7.

 180 NGO official, interview by USITC staff, Bamako, Mali, Mar. 17-18.

 181 Industry official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 182 Industry official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 183 Industry official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 184 CARANA Corporation, Impact of Transport and Logistics, p. 4.

 185 Nathan Associates, Mali Diagnostic Trade and Integration Study, pp. 29-30.

 186 Industry official, interview by USITC staff, Bamako, Mali, Mar.17-18, 2005.

 187 NGO official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005. 

 188 Ibid., p. 4.

5-40

as firewood, coal, and agricultural waste.177 Electricity costs are considered the highest in the

region.178 Despite new investment in generation equipment, supply has not been able to keep

up with increases in demand. Poor telecommunications infrastructure is also an impediment

to trade growth. Telecommunication costs are high and there are long delays in obtaining

access.179 The country has only 5.3 telephone mainlines per 1,000 people. 

Exporters also face challenges in the labor market. There is a shortage of skilled labor and

a lack of management skills required for diversification into more skill-intensive

industries.180 Industry officials indicate that all labor contracts must be approved by the

government, and companies must formally request authority for overtime every 3 months.181

The officials note that labor market requirements can pose problems for factories that run 24

hours a day, 7 days a week, as they will always have overtime.182

Lack of access to technology to increase production capacity is a constraint to business and

export growth. Malian producers are consequently unable to meet volume levels often

required by developed country importers.183

The agriculture and tourism sectors face additional constraints in increasing export

production. The impediments that exist for expanding growth of the agriculture sector

include the lack of fertilizer supply, the high costs of inputs, the need to improve irrigation

infrastructure, highly variable rainfall, and lack of technical capacity to meet SPS

requirements. Mali’s inability to store products under refrigeration is a challenge and there

is a limited supply of reefer containers. As a result, a large amount of product spoils before

reaching its market,184 limiting Mali’s ability to export fruits, vegetables, and meat.

Producers of these agricultural products also face impediments such as limited access to

protein feed concentrates, seasonal feed shortages, and the lack of technical ability to comply

with SPS requirements.185 For example, Mali is not actively pursuing mango exports to the

United States because of SPS requirements.186 Malian producers are unaware of the U.S.

market’s quality expectations, and technical assistance is needed to satisfy certification

requirements.187 The tourism sector faces challenges such as poor communications,

insufficient accommodations, untrained people in human resources, and inefficient land,

river, and air transport systems.

As a land-locked country, exporters rely on access to neighboring country infrastructure to

export goods, especially high-volume, low-margin goods such as cotton. The nearest

effective deep-sea port is approximately 765 miles from Mali’s cities.188 Mali’s trade routes

were significantly affected by the crisis in Côte d’Ivoire, which closed access to this

important export route. Before the crisis, approximately 80 percent of exports went through
 189 US&FCS, “Mali Aggregate Economic Outlook: 2000-2001.” 

 190 CARANA Corporation, Impact of Transport and Logistics, p. 20.

 191 Ibid., p. 39.

 192 NGO official, interview by USITC staff, Bamako, Mali, Mar. 17-18, 2005.

 193 Nathan Associates, Mali Diagnostic Trade and Integration Study, p. 5.

 194 CARANA Corporation, Impact of Transport and Logistics, p. 42.

 195 WTO, Trade Policy Review: Mali, p. 12.

5-41

the Côte d’Ivoire port of Abidjan. Since the crisis, alternative routes have been used,

although Abidjan is still the most competitive route for trade in products such as cement,

hydrocarbons, wood, coal, bitumen, and butane gas.189 By 2003, exports through Abidjan

decreased by 75 percent, with most of the exports flowing through Dakar, Senegal. However,

Dakar became overcrowded and exports then were rerouted through Lomé, Togo.190

Regional impediments exist to the movement of trucks and people. As shipments move

throughout the region, drivers must pay informal fees to various operators, which may

include local police and people in charge of loading containers on ships.191 The lack of cargo

space available on air transportation has affected Mali’s trade with its international partners.

Airfreight is very expensive,192 and without sufficient bulk, airlines are unable to make a

profit.193

Mali’s exports are increasingly affected by the new EU regulations regarding traceability.

Small-scale exporters of horticultural products that rely on supplies from a variety of small

collectors and small producers face challenges in meeting these new regulations.194 With

regard to cotton and meat exports, sources identified support programs in developed and

middle-income countries as barriers to increased exports.195
5-42
6-1

CHAPTER 6

Fish-Exporting Countries: The Gambia,

Mauritania, Namibia, São Tomé and

Principe, Senegal, and Tanzania

Four of the fish-exporting countries–The Gambia, Mauritania, São Tomé and Principe, and

Senegal–are located on the north Atlantic coast. Namibia is located on the south Atlantic and

Tanzania, on the Indian Ocean. These six economies all have significant exports of fish and

seafood products, in some cases including fish meals and oils (table 6-1). These economies

tend to be more diversified than many of the petroleum- and mining-based economies. A

summary of findings for each of the six countries with respect to potential export growth

sectors and domestic and international barriers is provided below.

Table 6-1

The Gambia, Mauritania, Namibia, São Tomé and Principe, Senegal, and Tanzania, 1999-2003 average share of total

exports, by sector

Sector The Gambia Mauritania Namibia

São Tomé

and Principe Senegal Tanzania

–––––––––––––––– Shares of total exports, 1999-2003 (percent) –––––––––––––––

Fish and related products . . . . . . . . . . . . . . . 22.4 53.1 45.3 23.7 41.8 20.5

Coffee, tea, and spices . . . . . . . . . . . . . . . . . 0.1 (1

) (1) 0.5 (1) 13.6

Cocoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 (1

) (1) 33.1 0.1 0.8

Other agriculture . . . . . . . . . . . . . . . . . . . . . . 24.5 0.4 12.2 2.6 17.9 31.2

Forest-based products . . . . . . . . . . . . . . . . . 2.4 0.2 0.3 1.3 0.7 1.6

Minerals, metals, and metal products . . . . . . 34.2 44.0 36.0 1.4 25.2 16.4

Fuels and electrical energy .............. (1

) (1) 0.9 2.4 4.2 2.0

Textiles and fibers . . . . . . . . . . . . . . . . . . . . 1.8 (1

) 0.1 1.3 1.9 8.0

Apparel and related articles. . . . . . . . . . . . . . 0.8 0.7 2.0 1.5 0.2 1.0

Other manufactures . . . . . . . . . . . . . . . . . . . 13.1 1.6 3.3 32.2 8.0 4.9 1

 Average share of less than 0.05 percent during 1999-2003.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

The Gambia

The Gambian economy is dependent on its agricultural sector, especially groundnuts

(peanuts) and fisheries, and tourism. Expanding beyond raw groundnut cultivation and

fisheries, horticultural production and agroprocessing offer the greatest potential for

immediate growth. In addition, with most of The Gambia’s current exports destined for

Europe or Asia, there is potential to expand exports to the United States, Canada, the Middle

East, and South America. However, barriers such as inadequate infrastructure, high factor

costs, underdeveloped quality control standards, and limited human resources continue to

adversely affect The Gambia’s international competitiveness and export growth. Sanitary

and phytosanitary standards, particularly with respect to aflatoxin regulations for groundnuts,

were identified as international impediments to export growth.
6-2

Mauritania

Following the discovery of sizeable reserves off the coast of Mauritania in 2001, crude

petroleum offers the greatest export potential for Mauritania. Diamonds, fishery products,

and tourism also have significant potential. Impediments to diversification of the export base

include lack of skilled labor and an inadequate infrastructure. Sanitary and phytosanitary

standards and high tariffs in regional markets were identified as international impediments

to export growth.

Namibia

Namibia’s main exports will likely continue to be dominated by its traditional production

and export sectors: gem-quality diamonds, unprocessed minerals and metals (zinc, copper,

uranium, and lead), and fresh and processed fish and meat. Domestic barriers to increased

exports include lack of a comprehensive policy and regulatory framework that guides the

development and administration of standards and technical regulations; continued stateownership or -control of certain economic sectors; export control and licensing requirements;

and the need for transportation and infrastructure upgrades to address frequent bottlenecks.

International barriers to Namibian exports include quality and standards requirements,

customs requirements, and tariffs.

São Tomé and Principe

There is potential for export growth in both traditional and nontraditional sectors that could

contribute to diversification and growth of the economy. Examples of potential export

growth products are chocolate, coffee, sugar, other cocoa-derived products, and coffeederived products; fisheries products; petroleum; and services such as transport services and

tourism. São Tomé and Principe faces resource and infrastructure constraints, and export

growth may be hampered by the regulatory environment, the country’s judiciary system, and

external factors affecting competitiveness such as commodity prices. The islands’ high cost

of transportation was identified as the primary geographic trade-related impediment to export

growth.

Senegal

Senegal has substantial potential to expand its export base given its stable economy and

government, favorable geographical location, and infrastructure, which includes a port and

the basic infrastructure facilitating the transport of products throughout the region. Potential

for export growth in the fish and groundnuts (peanuts) sectors in the short run is promising.

There is also potential for growth in exports of downstream fish and groundnut products,

(peanuts), and in nontraditional exports such as fresh and semiprocessed fruits and

vegetables. The most significant barriers to increased exports are a lack of capital and a

domestic business environment that is not conducive to export development and expansion.

Lack of required certification to access directly the U.S. market was identified as an

important geographic trade-related impediment to export growth.
6-3

Tanzania

Tanzania could increase its export earnings through downstream agricultural processing such

as the processing and final packaging of coffee beans and tea. Tanzania also has the potential

to increase its exports of numerous fruits and vegetables to regional markets, the Middle

East, and Europe, and increase the export of spices to the European Union, the United States,

Japan, and the Middle East. Mining exports also have a high potential for growth. Export

growth in these areas would be enhanced if Tanzania’s poor transportation infrastructure was

improved, local government taxes on products in transit were eliminated, and if small-scale

producers had better access to financing in order to expand capacity. The inability to meet

sanitary and phytosanitary standards and the lack of required certification to access directly

the U.S. market were identified as important international impediments to export growth.
6-4
 1

 Prepared by Erick Oh, Office of Industries.

 2

 Economist Intelligence Unit (EIU), The Gambia Country Profile, 2004, p. 28.

 3

 World Trade Organization (WTO), Trade Policy Review: The Gambia, Feb. 2004, p. 8.

 4

 EIU, The Gambia Country Profile, p. 24.

6-5

The Gambia1

Economic Overview

The Gambia is located on the coast of West Africa and is bordered by the Atlantic Ocean to

the west and Senegal to the north, south, and east. GDP in 2003 totaled $386.3 million, with

agriculture accounting for 32.8 percent of GDP; services, 53.5 percent; and industry,

13.7 percent (table GM-1). The Gambia is vulnerable to recurring droughts and frequent

locust infestations. Real GDP declined by 3.2 percent in 2002 because of the adverse effects

of drought on agricultural production, but rebounded in 2003 to increase by an estimated

8.8 percent as a result of favorable weather conditions and greater agricultural production.2

Foreign direct investment (FDI) inflows were valued at $42.8 million in 2002, directed

primarily at financial services, tourism, manufacturing, and wholesale and retail services.3

Table GM-1

The Gambia: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ................................................................. 386.3

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3

Inflation, consumer prices (annual percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9

External debt, total (current US$, millions, 2002)...................................................... 572.6

Total debt service (percent of exports of goods and services)............................................ (2

)

Exports of goods and services (percent of GDP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.7

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.9

Official exchange rate (local currency unit per US$, period average, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.9

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.6

Literacy rate, adult total (percent of people ages 15 and above, 2000) ..................................... (2

)

Primary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.0

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.8

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.8

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

The services sector accounted for 53.5 percent of GDP and is composed mainly of re-export

trade and tourism. Tourism is The Gambia’s primary foreign exchange earner, accounting

for 12 percent of GDP. Trade (consisting primarily of re-exports to neighboring countries,

East Africa, and Europe), transport, and communications accounted for 55 percent of service

sector activities.4
 Ibid. 5

 Ibid., p. 29. 6

 WTO, Trade Policy Review: The Gambia, p. 59. 7

 EIU, The Gambia Country Profile, p. 30. 8

 WTO, Trade Policy Review: The Gambia, p. 66. 9

6-6

The Gambian agriculture sector is dominated by groundnut (peanut) production and

subsistence farming on small-scale plots. Although 80 percent of the work force is engaged

in agriculture, it only accounted for 32.8 percent of GDP in 2003 (figure GM-1) as a result

of low downstream processing capabilities and low productivity compared to world

production. Of the 200,000 hectares of arable land in The Gambia, around 55 percent is 5

devoted to groundnut cultivation. Groundnuts are the country’s primary cash crop, with 6

most production taking place on private plots no larger than 10 hectares. Groundnuts grow 7

well in The Gambia’s semiarid environment and are cultivated by almost all workers in the

agriculture sector; however, groundnut crops are very sensitive to fluctuations in rainfall and

pest and disease occurrence. Other crops such as rice, millet, sorghum, and maize (corn) are

increasingly important to the economy, but production is primarily for domestic

consumption. The fisheries sector, which accounted for about 2.5 percent of GDP, employs 8

an estimated 26,500 to 32,000 people.9

Within the industry sector, which accounted for 13.7 percent of GDP, manufacturing

accounts for less than 5 percent of GDP and employs fewer than 20,000 people. Its

downstream processing capacity, including groundnut processing, tanning, food baking, and

Figure GM-1

The Gambia: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 10 EIU, The Gambia Country Profile, p. 31.

 11 WTO, Trade Policy Review: The Gambia, p. x.

 12 Ibid.

 13 International Monetary Fund (IMF), The Gambia: Selected Issues and Statistical Appendix,

IMF Country Report No. 04/142, May 2004, p. 8.

 14 IMF, The Gambia, p. 9.

 15 Re-exports and large one-time shipments distort export data for The Gambia. For example, an

anomalous shipment of aircraft to Papua New Guinea was The Gambia’s leading export

commodity in 2003.

 16 International Trade Center (UNCTAD/WTO), “Mirror Exports of The Gambia, 2003,” found

at www.intracen.org/countries/toolpd03/gmb_4.pdf, retrieved Mar. 1, 2005.

 17 IMF, The Gambia, pp. 40 and 46; EIU, The Gambia Country Profile, p. 30; and WTO, Trade

Policy Review: The Gambia, pp. 67-68.

 18 EIU, The Gambia Country Profile, p. 33.

 19 WTO, Trade Policy Review: The Gambia, p. 5.

6-7

the production of fruit juices and soaps,10 is very limited because of low investment,

inadequate infrastructure, and the high cost of credit.11 There is also limited agroprocessing

activities involving products such as groundnuts, beer, soft drinks, plastic containers, and

leather.12 The Government of The Gambia is encouraging greater investments in agricultural

processing such as groundnut oil and cake production, fisheries, horticulture, and tourism

to diversify the country’s economic base. Industrial production grew by about 10 percent in

2002 with the establishment of a company whose main operation is the extraction and

filtration of groundnut oil for export to Europe.13 However, industrial production contracted

somewhat in 2003 because of a poor groundnut crop that limited the supply of groundnuts

available for processing.14

Export Profile

Excluding an anomalous export of aircraft to Papua New Guinea in 2003,15 The Gambia’s

leading exports consist primarily of agricultural and fisheries products (tables GM-2 and

GM-3). The United Kingdom, India, and China are leading export markets (table GM-4).

India imported 100 percent of The Gambia’s cashew nuts exports; the United Kingdom

imported 87 percent of all leguminous vegetables and 73 percent of all raw groundnuts.16

The Gambia’s overall exports declined at a compound annual growth rate (CAGR) of

10.3 percent during 1994-2003. In addition, many of The Gambia’s leading exports have

experienced negative CAGRs, with particularly large decreases in exports of fish, oilseeds,

groundnuts, and other vegetables. This negative trend has mainly been associated with the

decline in exports of fish and related products, and the volatility of groundnut exports related

to weather conditions and price incentives.17 Reasons for the decline in fisheries exports

include increased domestic regulatory barriers (due to licensing requirements), an end to the

fishing agreement between The Gambia and the European Union, and possible over fishing

by foreign commercial trawlers in Gambian waters.

Re-export trade accounted for 78 percent of total exports in 2003.18 Diamond imports from

Sierra Leone, Guinea, and Liberia account for the largest share of re-exported goods and, 

for the most part, are destined for Europe. Manufactured goods such as textiles, machinery,

and electric and electronic equipment account for the bulk of re-exports sent through The

Gambia to other countries in the region such as Guinea, Guinea-Bissau, Liberia, Mali,

Mauritania, and Senegal.19 The Gambia’s active re-export trade sector is a reflection of
6-8

Table GM-2

The Gambia: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––– 1,000 dollars –––––– ––––– Percent –––––

88 Aircraft, spacecraft, and parts ............................ 169.3 2.8 9,027.8 31.9 55.6

08 Edible fruit and nuts; peel of citrus fruit or melons . . . . . . . . . . . . . 2,628.5 1,153.3 4,707.5 16.6 6.7

03 Fish and crustaceans, molluscs and other aquatic

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,236.6 26,043.5 2,645.6 9.4 -28.4

07 Edible vegetables and certain roots and tubers . . . . . . . . . . . . . . . 3,204.9 3,187.8 2,329.9 8.2 -3.5

15 Animal or vegetable fats and oils and their cleavage products; 

prepared edible fats; animal or vegetable waxes . . . . . . . . . . . 2.7 92.6 1,656.4 5.9 103.9

26 Ores, slag and ash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 1,543.5 5.5 (1

)

12 Oil seeds and oleaginous fruits; miscellaneous grains, seeds 

and fruits; industrial or medicinal plants; straw and fodder . . . . 6,215.7 442.9 1,390.4 4.9 -15.3

84 Nuclear reactors, boilers, machinery and mechanical

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302.1 875.6 982.2 3.5 14.0

85 Electrical machinery and equipment and parts thereof; sound

recorders and reproducers, television recorders and 

reproducers, parts and accessories ..................... 624.7 604.3 531.6 1.9 -1.8

41 Raw hides and skins (other than furskins) and leather ......... 195.7 144.1 444.4 1.6 9.5

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,799.1 61,371.8 3,021.9 10.7 -11.2

Total 75,379.3 93,918.6 28,281.2 100.0 -10.3

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table GM-3

The Gambia: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––– 1,000 dollars ––––– –––– Percent ––––

8802 Aircraft, powered (for example, helicopters, airplanes);

spacecraft (including satellites) and spacecraft launch

vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 9,027.2 31.9 (1

) 

0801 Coconuts, brazil nuts and cashew nuts, fresh or dried ......... 933.4 313.5 3,696.0 13.1 16.5

0708 Leguminous vegetables, shelled or unshelled, fresh or

chilled ............................................ 670.2 2,474.1 1,807.3 6.4 11.7

1508 Peanut (ground-nut) oil and its fractions, whether or not

refined, but not chemically modified . . . . . . . . . . . . . . . . . . . . . 0.0 85.3 1,644.2 5.8 (1

) 

2615 Niobium, tantalum, vanadium or zirconium ores and

concentrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 1,543.5 5.5 (1

) 

0306 Crustaceans, live, fresh, chilled, frozen etc.; crustaceans, in

shell, cooked by steam or boilng water; flours, meals, &

pellets of crustaceans, fit for human consumption . . . . . . . . . . 1,757.9 3,183.7 1,141.6 4.0 -4.7

0804 Dates, figs, pineapples, avocados, guavas, mangoes and

 mangosteens, fresh or dried . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,403.1 803.6 991.0 3.5 -3.8

1202 Peanuts (ground-nuts), not roasted or otherwise cooked,

whether or not shelled or broken . . . . . . . . . . . . . . . . . . . . . . . 6,042.2 181.2 945.4 3.3 -18.6

0304 Fish fillets and other fish meat (whether or not minced),

fresh, chilled or frozen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186.1 1,332.8 789.5 2.8 17.4

0709 Vegetables nesoi, fresh or chilled . . . . . . . . . . . . . . . . . . . . . . . . 2,500.6 601.9 522.0 1.8 -16.0

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,885.9 84,942.5 6,173.6 21.8 -22.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,379.3 93,918.6 28,281.2 100.0 -10.3 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 20 Ibid., p. 8.

 21 IMF, The Gambia, p. 41.

 22 EIU, The Gambia Country Profile, p. 33.

 23 Ibid., p. 32.

 24 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

6-9

Table GM-4

The Gambia: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

 CAGR

––––––––––– 1,000 dollars ––––––––– ––––––– Percent ––––––––

Papua New Guinea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 9,244.6 32.7 (1

)

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,109.2 4,601.6 4,523.1 16.0 -4.9

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,552.8 632.3 3,723.8 13.2 10.2

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.6 0.0 1,548.8 5.5 54.6

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,256.0 776.8 1,429.0 5.1 1.4

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2

) 57,767.4 1,014.8 3.6 (1)

Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570.7 741.2 977.6 3.5 6.2

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69.5 428.8 856.7 3.0 32.2

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537.7 511.5 649.9 2.3 2.1

Netherlands ................................... 651.9 849.0 453.6 1.6 -3.9

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,600.8 27,610.1 3,859.3 13.6 -26.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,379.3 93,918.6 28,281.2 100.0 -10.3

1

 Undefined.

2

 Not available.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

several factors: the relatively lower import duties in The Gambia compared with duties in

neighboring countries; The Gambia’s relatively liberal exchange system, which does not

restrict capital flows;20 efficient cargo handling and customs clearance capabilities in The

Gambia’s port of Banjul; and trade spillover into The Gambia as a result of civil unrest and

port disruptions in other parts of West Africa.21

Tourism ranks as The Gambia’s largest source of foreign exchange earnings, accounting for

one-third of total earnings in 2003. The tourism sector is the second largest employer in The

Gambia after agriculture,22 with most of the sector’s revenue generated by European

tourists.23

Sectors with the Greatest Export Growth Potential

Based on revealed comparative advantage24 (RCA) analysis, The Gambia has a strong

comparative advantage with respect to its leading exports, which are primarily in the

agricultural and fisheries sectors. Examples include crustaceans, vegetables, various nuts,

and cocoa butter (appendix E, table E-12).
 25 United Nations (UN), Food and Agriculture Organization (FAO), “Representation in The

Gambia: Country Information,” found at http://www.fao.org/world/gambia/prof_en.htm, retrieved

Feb. 24, 2005. 

 26 UN, FAO, “Representation in The Gambia.” 

 27 EIU, The Gambia Country Profile, p. 30.

 28 IMF, The Gambia, p. 46.

 29 EIU, The Gambia Country Profile, p. 30.

 30 Ibid., p. 34.

 31 WTO, Trade Policy Review: The Gambia, p. 65.

 32 IMF, The Gambia, p. 45.

 33 Embassy of the Republic of The Gambia official, interview by USITC staff, Washington,

DC, Feb. 9, 2005.

 34 U.S. Department of State telegram, “The Gambia: USITC Study on Export Opportunities

and Barriers in AGOA eligible Countries,” message reference No. 00119, prepared by U.S.

Embassy, Banjul, Feb. 24, 2005.

 35 WTO, Trade Policy Review: The Gambia, p. 86.

6-10

The continental shelf area off The Gambia’s coast is one of the most abundant fishing zones

in the world, offering a wide variety of fish, crustaceans, and shellfish.25 In addition, the

Gambia River provides both salt-water and fresh-water fish such as tilapia, catfish, and sole,

as well as crustacean and shellfish varieties such as shrimps, crabs, and oysters.26 During the

last 10 years, extensive investments have been made in the fisheries sector, most notably by

the Japanese government for improvements in storage, processing, and distribution

facilities.27 The establishment of improved storage facilities in fishing villages has reduced

losses from 35 percent of the daily catch to 5 percent.28 However, exporting capabilities in

the sector remain greatly underdeveloped because of weak distribution and marketing links.29

Horticultural products, which mainly consist of cultivated flowers, fruits such as mangoes,

papayas, bananas, and tomatoes, and vegetables such as onions, cabbages, and legumes,

account for approximately 5 percent of total Gambian exports.30 Increased and more

diversified horticultural production would allow Gambian producers to take advantage of

seasonal fluctuations in foreign markets by shipping fresh fruits and vegetables to Europe

during the European offseason.31 Additionally, because most horticultural production takes

place during the Gambian dry season, these more drought-resistant crops tend to depend less

on irrigation and are less sensitive to adverse climatic conditions than groundnuts, making

them a potential hedge against downturns in groundnut production.32

The Government of The Gambia has recognized the unexploited export potential of the

manufacturing sector and identified fish, groundnut, and horticultural processing; textiles and

clothing; and ceramic tiles as key growth areas.33 In addition to competitive world market

growth and strong RCA indices, groundnut oil exports are heavily concentrated in EU

markets, leaving the largely unpenetrated U.S., Japanese, Australian, and Canadian markets

as areas for possible expansion.

In early 2004, the Government of The Gambia officially announced the presence of

significant offshore petroleum reserves and stated that negotiations began with a number of

oil companies for possible exploitation.34 If these prospects materialize, petroleum could

become a leading export.

Tourism sector activity is seasonal and volatile in response to regional political instability.

However, because of the opening of new charter connections with Switzerland and the Czech

Republic, as well as expanded services offered by United Kingdom-based tour operators,

total arrivals are projected to increase substantially.35
 36 Ibid., p. 33.

6-11

Domestic and International Barriers

Business environment indicators are not available for The Gambia (table GM-5). The

Gambia’s overall economic freedom indicator improved between 2000 and 2005, ranking

on par with the region’s overall average score. The Gambia’s economic freedom indicators

were worse than the regional average in 6 of 10 indicators, but better than the regional

average for the trade policy indicator (table GM-6). Nevertheless, high import duties,

particularly on agricultural goods, add to the cost of production and limit The Gambia’s

international competitiveness and export capability by increasing the cost of production for

imported inputs. The Gambia’s overall simple average tariff rate in 2003 was 12.7 percent,

while the average tariff rate for agricultural goods was 16.0 percent.36

Table GM-5

The Gambia: Business environment

Country data not available.

Import tariffs Simple average of ad valorem duties

Country data not available.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table GM-6

The Gambia: Economic freedom

The

Gambia

Regional

average1

OECD

 average

–––– Heritage Foundation indicators ––––

1995 Overall score .................................................... (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé &

Principe, Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.

The costs generated by inadequate infrastructure, including inadequate electricity,

transportation, and telecommunications networks, contribute to The Gambia’s inability to
 37 EIU, The Gambia Country Profile, p. 23.

 38 Ibid.

 39 IMF, The Gambia, p. 40.

 40 WTO, Trade Policy Review: The Gambia, p. 81.

 41 A project financed by the African Development Bank and the Arab Bank for Economic

Development in Africa is currently underway to establish a fisheries port to expand the sector’s

value-adding production capabilities. IMF, The Gambia, p. 46.

 42 Ibid., p. 45.

 43 EIU, The Gambia Country Profile, p. 31.

6-12

diversify its economy and make it less resilient to external shocks such as drought or locust

infestations. Wood and charcoal are the primary sources of fuel in rural areas and oil-fired

electricity generating plants supply most of the nation’s electricity to the Banjul area.37

However, electricity supply is unreliable and inefficient, and power outages are frequent.38

Transportation costs in The Gambia are high because of the overall poor condition of roads

across the country. Sporadic border closures between The Gambia and Senegal resulting

from increasing political tensions have the indirect effect of damaging The Gambia’s image

as a stable trade gateway to the region, thus decreasing its overall re-export trade

competitiveness.39 Furthermore, although the telecommunications sector has been growing,

connectivity remains limited, with only 28.0 telephone mainlines per 1,000 people in 2002

(table GM-7).40

Table GM-7

The Gambia: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.4

Transport services (percent of service exports, BoP) .................................................. (2

)

Transport services (percent of service imports, BoP) .................................................. (2

)

Fixed line and mobile phone subscribers (per 1,000 people, 2002)........................................ 100.8

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.9

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.0

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http:/devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

The industrial fishing sector, which primarily processes and exports fish to the European

Union, faces many constraints, including inadequate factory and fishing boat maintenance

facilities, poor marketing and distribution systems, excessive government regulation, lack

of trained personnel for management positions, high credit constraints, and the absence of

a dedicated fishing port.41 Expansion of horticultural production is limited by lack of access

to credit and insurance programs and the high cost of air cargo facilities to transport fresh

horticultural products to Europe.42 Within the manufacturing sector, fluctuations in input

availability, inadequate infrastructure (including electricity supply, telecommunications, and

roads), low managerial and technical expertise, excessive regulations, and lack of credit

available to local investors contribute to the sector’s underdevelopment. It is because of these

capacity constraints that The Gambia has been unable to develop downstream processing

opportunities.43
 44 WTO, Trade Policy Review: The Gambia, p. 59.

 45 International Trade Forum, “Controlling Aflatoxins, Healthy Groundnuts,” Jan. 2001, found

at www.tradeforum.org/news/fullstory.php/aid/138/Controlling_Aflatoxins.html, retrieved

Mar. 2, 2005.

 46 Ibid.

 47 Ibid., p. 41.

 48 Ibid., p. 47.

6-13

The prevalence of aflatoxins in Gambian groundnuts has been a leading export impediment.44

Aflatoxins, which are cancer-causing chemicals produced by molds that develop on

groundnuts, are usually caused by lack of crop rotation, poor irrigation, untimely planting

and harvesting, or inadequate use of pesticides. Proper crop management and good

harvesting techniques are some of the best methods for controlling aflatoxin levels and

avoiding the high costs associated with product downgrades or the complete banning of the

export by import inspectors.45 Although a lack of technical expertise and quality control

capacity in The Gambia have contributed to these problems, foreign administration of

sanitary and phytosanitary regulations related to aflatoxins has been cited as a barrier in

export markets.46 Lastly, because of the tourism sector’s sensitivity to internal and external

shocks such as the military coup d’état of 1994 and the 2001 terrorist attacks in the United

States, visitor numbers can fluctuate widely.47 Limited air access, a weak overall marketing

strategy, and poor infrastructure outside the Banjul area are some of the key constraints to

tourism sector growth.48
6-14
 49 Prepared by Seamus O’Connor, Office of Industries.

 50 Economist Intelligence Unit (EIU), Mauritania Country Profile, 2004, p. 25; and Integrated

Framework (IF), Diagnostic Trade Integration Study: A Poverty Focused Trade StrategyMauritania, Dec. 10, 2001 p. 2.

 51 EIU, Mauritania Country Profile, p. 25.

 52 Ibid,, p. 21; and Central Intelligence Agency (CIA), “Mauritania,” World Factbook 2004,

found at www.cia.gov/cia/publications/factbook/ geos/mr.html, retrieved Feb. 22, 2005. 

6-15

Mauritania49

Economic Overview

Mauritania, located on the northwest coast of Africa, is mostly desert with a small population

and limited economic activity. Mauritania’s economy has expanded significantly in the

nearly 45 years since it gained its independence, and GDP reached $1.1 billion in 2003

(table MT-1). GDP growth reached 5.4 percent in 2003,50 largely driven by government

reforms and growth in sectors such as construction, public works, and services. However,

structural weaknesses such as the lack of economic diversification, commodity dependence,

and widespread poverty affecting 46 percent of the population leave the economy vulnerable

to exogenous shocks.51 Consequently, there has been constant fluctuation in the performance

of the sectors that provide most of Mauritania’s foreign exchange–mining, fishing, and

agriculture. Desertification, the major constraint to Mauritania’s growth and development,

has claimed 80 percent of the country and has resulted in less than 1 percent of the land

being arable.52

Table MT-1

Mauritania: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,127.6

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2

External debt, total (current US$, millions, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,309.0

Total debt service (percent of exports of goods and services, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.7

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.5

Trade (percent of GDP, 2003) .................................................................... 108.0

Official exchange rate (local currency unit per US$, period average, 2003) ................................. 263.0

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.7

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.2

Primary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.2

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.2

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.
 EIU, Mauritania Country Profile, p. 26. 53

 Ibid., p. 36; and “Mauritania–Sector Analysis,” Arab Data Net, found at 54

www.arabdatanet.com/country/profiles/profile.asp?CtryName=Mauritania&CtryAbrv=ma&NavT

itle=Sector%20 Analysis, retrieved Mar. 10, 2005.

6-16

In 2002, the tertiary sector, comprised mainly of services, accounted for 49.7 percent of

GDP; the secondary sector, comprised mainly of manufacturing, 23.7 percent; and the

primary sector, comprised mainly of agriculture and fisheries, 18.3 percent (figure MT-1).

The fishing and agriculture sector employs about 60 percent of the workforce in Mauritania.

Livestock is the most important part of Mauritania’s agricultural sector and nomadic herders,

which represent 10 percent of the population, are found in the semiarid regions of the

country. Fishing has developed into a key sector for Mauritania, providing 10 percent of the

population with employment and accounting for 4 percent of GDP. The fishing industry is

dominated by fish processing located around Mauritania’s two largest cities, Nouakchott and

Nouadhibou, although the industry remains relatively undeveloped because Mauritania does

not have a developed manufacturing sector to provide downstream processing of fish.53

Mauritanians consume relatively little fish, so almost all output is exported, providing more

than one-half of total export revenue.54

Figure MT-1

Mauritania: Composition of GDP (2002)

Note.—Primary is defined as agriculture, fisheries, mining, and quarrying; secondary is defined as manufacturing, construction,

electricity, water, and other utilities; and tertiary is defined as primarily services activities such as retail, financial, real estate, and

government services.

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 55 EIU, Mauritania Country Profile, p. 41; and “Mauritania–Sector Analysis.” 

 56 EIU, Mauritania Country Profile, p. 42.

 57 United Nations (UN), “An Investment Guide to Mauritania,” Mar. 2004, p. 15.

 58 EIU, Mauritania Country Profile, p. 49; and “Mauritania–Sector Analysis.”

 59 World Bank, “World Development Indicators,” found at

http://devdata.worldbank.org/dataonline, retrieved Feb. 1, 2005.

 60 UN, “An Investment Guide to Mauritania,” p. 15.

6-17

Mining is an important component of Mauritania’s industrial base, accounting for an

estimated 12 percent of GDP and more than 40 percent of export earnings. Substantial

deposits of iron ore, diamonds, copper, cobalt, sulfur, phosphates, gypsum, and gold have

been found. Following a $120 million investment in 2002 by the country’s leading mining

company, iron ore output reached 12 million metric tons a year, making Mauritania the

primary African supplier to European steelmakers.55 Mining companies actively prospect for

gold and diamonds throughout Mauritania. In 1999, nine companies were awarded contracts

for gold exploration; seven companies received contracts for diamond exploration; and

another company contracted to extract copper, cobalt, and gold.56

Mauritania’s manufacturing sector is very small, consisting of only 84 establishments,

mostly in Nouakchott and Nouadhibou.57 Six companies account for 57 percent of all

investment and 40 percent of the 1,100 jobs in the formal nonfood sector.58 The

manufacturing sector is composed of food processing, especially fish freezing and processing

and sugar refining; petroleum refining; and production of chemicals, plastics, building

materials, and paper and packaging materials.

In recent years, foreign direct investment has fluctuated, reaching a high of $12 million in

2003.59 It is estimated that over $50 million was invested in mining and more than

$200 million was invested in petroleum exploration from 1998-2003.60 Twenty-four percent

of the investment in mining and 50 percent of the investment in petroleum exploration

occurred between 2002-03. Aside from the mining, agriculture, and fishing sectors,

investment in Mauritania has been modest.

Export Profile

Mauritania’s exports totaled $578.1 million in 2003 (table MT-2). Fisheries products and

iron ore accounted for 95.4 percent of total exports (table MT-3). Exports of these two

sectors have also exhibited steady growth over the 1994-2003 period, with compound annual

growth rates (CAGR) of 3.6 percent and 3.4 percent, respectively. Although the leading

fisheries sector product, molluscs, declined by a 1.4 percent CAGR, other components of the

sector experienced increases ranging from 11.7 percent CAGR to 23.1 percent CAGR.

Exports of prepared animal feed and certain apparel have increased substantially over the

same period, with CAGRs of 37.4 percent and 29.7 percent, respectively.
6-18

Table MT-2

Mauritania: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate

(CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––– 1,000 dollars ––––––––– –––– Percent ––––

03 Fish and crustaceans, molluscs and other aquatic

invertebrates sh & crustacean, mollusc & other .......... 223,181.6 359,155.9 307,388.2 53.2 3.6

26 Ores, slag and ash .................................. 179,660.7 256,076.5 243,754.7 42.2 3.4

23 Residues and waste from the food industries; prepared

animal feed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 951.9 5,663.6 16,595.4 2.9 37.4

62 Articles of apparel and clothing accessories, not knitted or 

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398.1 2,062.4 4,123.5 0.7 29.7

88 Aircraft, spacecraft, and parts thereof . . . . . . . . . . . . . . . . . . . 42.8 4.3 2,326.0 0.4 55.9

85 Electrical machinery and equipment and parts thereof;

sound recorders and reproducers, television recorders

and reproducers, parts and accessories ............... 717.5 1,999.7 1,093.8 0.2 4.8

84 Nuclear reactors, boilers, machinery and mechanical

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,717.0 10,066.1 1,076.5 0.2 -9.8

90 Optical, photographic, cinematographic, measuring,

checking, precision, medical or surgical instruments

and apparatus; parts and accessories thereof ........... 386.5 58.1 580.0 0.1 4.6

41 Raw hides and skins (other than furskins) and leather raw 

hides and skins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,964.4 729.7 547.5 0.1 -13.2

61 Articles of apparel and clothing accessories, knitted or

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184.5 757.2 543.0 0.1 12.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,006.6 7,483.6 55.6 0.0 -42.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418,211.7 644,057.2 578,084.2 100.0 3.7

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table MT-3

Mauritania: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate

(CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars ––––––– –––– Percent ––––

2601 Iron ores and concentrates, including roasted iron pyrites ..... 179,660.7 256,076.5 243,754.6 42.2 3.4

0307 Molluscs & other aquatic invertebrates nesoi, live, fresh,

chilled, frozen, dried, salted or in brine; flours, meals &

pellets of aqua invertebrates fit for human consumption .... 174,440.3 163,746.9 153,833.8 26.6 -1.4

0303 Fish, frozen, excluding fish fillets and other fish meat

without bones; fish livers and roes, frozen . . . . . . . . . . . . . . . 34,376.3 163,167.7 103,886.4 18.0 13.1

0302 Fish, fresh or chilled, excluding fish fillets and other fish

meat without bones; fish livers and roes, fresh or chilled . . . . 9,979.0 24,382.8 26,983.1 4.7 11.7

2301 Flours, meals and pellets, of meat or meat offal, of fish or

of crustaceans etc., unfit for human consumption;

greaves (cracklings) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592.1 5,663.6 16,376.4 2.8 44.6

0306 Crustaceans, fresh, chilled or frozen . . . . . . . . . . . . . . . . . . . . . 2,009.4 2,932.1 13,008.9 2.3 23.1

0304 Fish fillets and other fish meat (whether or not minced),

fresh, chilled or frozen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,216.2 2,873.7 5,388.8 0.9 18.0

0305 Fish, dried, salted or in brine; smoked fish; fish meal fit for

human consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,157.3 2,049.4 4,284.2 0.7 15.7

6203 Men's or boy's suits, ensembles, suit-type jackets, blazers, 

trousers, bib and brace overalls, breeches, etc. (No 

swimwear), not knitted or crocheted . . . . . . . . . . . . . . . . . . . . 21.6 1,242.0 3,348.7 0.6 75.1

8802 Aircraft, powered (for example, helicopters, airplanes); 

spacecraft (including satellites) and spacecraft launch

vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 2,315.7 0.4 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,758.6 21,922.5 4,903.7 0.8 -11.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418,211.7 644,057.2 578,084.2 100.0 3.7 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 61 U.S. Department of State telegram, “China-Mauritania Trade Surges Seven-Fold,” message

reference No. 071156, prepared by U.S. Embassy, Nouakchott, Feb. 2005.

 62 For additional information on regional organizations, see app. C.

 63 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

6-19

Mauritania’s leading export markets are in Europe and Asia. Exports to the European Union

increased from 68 percent to 76 percent of Mauritania’s total exports during 2000-01 while

Asia’s export share decreased from 14 percent to 12 percent. France is Mauritania’s largest

trading partner, accounting for 16.4 percent of exports in 2003. Spain, Italy, and Belgium

are also major EU export destinations (table MT-4). Japan is the leading Asian market for

Mauritanian exports, accounting for 13.7 percent of the total in 2003, although in the last few

years, demand from Japan has dropped while demand from China has increased rapidly.

Exports to China, consisting mostly of iron ore, increased more than sevenfold during the

first three quarters of 2004 compared with 2003.61 Mauritania exports very little regionally;

such exports mainly consist of fisheries products to Nigeria and hides to Senegal. Following

Mauritania’s withdrawal from the Economic Community of West African States at the end

of 1999,62 regional trade fell significantly.

Table MT-4

Mauritania: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year 

CAGR

–––––––––––––– 1,000 dollars ––––––––––– –––––– Percent ––––––

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,339.3 93,421.0 95,001.2 16.4 3.1

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,373.7 51,812.9 82,734.6 14.3 4.0

Japan ..................................... 140,745.5 114,683.8 79,249.9 13.7 -6.2

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,250.6 70,707.2 65,828.6 11.4 -1.6

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 40,044.8 52,229.6 9.0 (2)

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,929.0 23,102.8 47,656.0 8.2 15.6

Russian Federation . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 7,801.9 32,537.2 5.6 (2

)

Côte d'Ivoire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 27,261.2 26,725.1 4.6 (2

)

Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 8,372.8 18,908.9 3.3 (2

)

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,862.9 14,001.5 13,851.1 2.4 10.0

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,710.7 192,847.4 63,361.9 11.0 2.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418,211.7 644,057.2 578,084.2 100.0 3.7

1

 Not available.

2

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

Revealed comparative advantage (RCA)63 analysis suggests that Mauritania has a

comparative advantage in 9 of its top 10 exports (appendix E, table E-21). Notably, six of

these products are from the fisheries sector, and rank among the top 10 by RCA index. Other

sources suggest that export opportunities for Mauritania include petroleum production,

diamonds, iron ore, and to a very limited extent, tourism and certain agricultural items such

as bananas, potatoes, and citrus fruits.
 64 EIU, Mauritania Country Profile, p. 45.

 65 Embassy of the Islamic Republic of Mauritania official, interview with USITC staff,

Washington, DC, Feb. 23, 2005; and CIA, “Mauritania.” 

 66 “Mauritania,” Infomine Africa, found at www.infomine-africa.com/Mauritania.asp, retrieved

Feb. 10, 2005.

 67 EIU, Mauritania Country Profile, p. 43; and “Mauritania–Sector Analysis.” 

 68 UN, “An Investment Guide to Mauritania,” p. 32.

 69 EIU, Mauritania Country Profile, p. 51; and UN, “An Investment Guide to Mauritania,”

p. 39.

 70 U.S. Department of State telegram, “China-Mauritania Trade Surges Seven-Fold.” 

6-20

In 2001, petroleum was discovered off the coast of Mauritania. Since then, Woodside

Petroleum, an Australian company, has been conducting tests to estimate the size of its

reserves, which were most recently estimated at 110 million barrels.64 According to

government officials, Mauritania may be able to export 75,000 barrels per day starting in late

2005,65 substantially increasing Mauritania’s GDP and its export earnings. 

Currently, there are 34 active prospecting licenses for diamonds in Mauritania.66 Following

studies by the World Bank and the European Union, it is estimated that Mauritania’s

diamond export receipts could reach as high as $50 million by 2012.67

Mauritania may be able to diversify its agricultural production and exports with various

tropical fruits and vegetables. As the closest tropical country to Europe, there is some

potential for Mauritania to meet some of the European demand for these products during the

winter months. Products such as potatoes, bananas, and citrus fruit have been identified as

having export growth potential.68 Nevertheless, expansion of the agricultural sector is

difficult because of the lack of arable land and unfavorable environmental conditions such

as locusts and droughts.

Tourism also offers potential for growth in Mauritania. According to the state tourism office,

the number of people visiting Mauritania has increased at a steady rate from 270 in 1996 to

several thousand in 2001, doubling during 1999-2001. Other signs of development in the

tourism sector include an increase of charter flights from 3 to almost 90, and an increase in

hotel beds from approximately 1,400 to 7,000 over the same time period. In 2001-02,

tourism generated almost $4 million in revenue.69

Although the European Union and Japan will likely continue to be the predominant markets

for Mauritanian goods, rapidly expanding Chinese demand for raw materials such as iron ore

offers strong potential for export growth.70 Successful petroleum production is also likely to

increase exports to the Chinese market.

Domestic and International Barriers

Mauritania ranks below the regional average in a number of business environment indicators,

most notably with respect to employment indicators such as the difficulty of firing and

hiring, and rigidity of employment (table MT-5). Mauritania is approaching the OECD

average on economic freedom, ranking better than the regional average on 70 percent of the

factors, and as well or better than the OECD average on 30 percent of the factors that

contribute to the overall score (table MT-6).
6-21

Table MT-5

Mauritania: Business environment

Mauritania

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 6.1 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 5.6 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 2.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.3 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 410.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 8.5 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 140.8 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) .............. 858.1 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

Country data not available.

Note.— Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table MT-6

Mauritania: Economic freedom

Mauritania

Regional

average1

OECD

average

––––– Heritage Foundation indicators –––––

1995 Overall score .................................................. (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 71 U.S. Department of State telegram, “2005 Investment climate Statement,” message

reference No. 250356, prepared by U.S. Embassy, Nouakchott, Jan. 19, 2005; and IF, Diagnostic

Trade Integration Study: A Poverty Focused Trade Strategy-Mauritania, p. 21.

 72 WTO, “Mauritania: September 2002,” Trade Policy Review press release, found at

www.wto.org/english/tratop_e/tpr_e/tp200_e.htm, retrieved Feb. 2, 2005.

 73 EIU, Mauritania Country Profile, p. 21.

 74 IF, Diagnostic Trade Integration Study: A Poverty Focused Trade Strategy-Mauritania,

p. 27.

6-22

Mauritania’s lack of export diversification beyond minerals and fishing is largely because

of the absence of skilled workers, which prevents it from achieving economies of scale and

expanding into more skill-intensive industries. With the exception of the mining sector, there

is a shortage of skilled workers and well-trained personnel with technical and managerial

skills. However, professional training centers have been established in Mauritania’s two

largest cities, Nouakchott and Nouadhibou. These training centers are open to both privatesector and government employees interested in improving their skills.71 The combination of

a lack of skilled workers, a small domestic market, inadequate infrastructure, high utility

rates, and lack of available credit creates little incentive for investment in a manufacturing

sector. Likewise, the lack of human and institutional resources needed for effective

participation in both trade negotiations and the multilateral trading system act as obstacles

to opening potential new markets.72

Similar to many other countries in Africa, Mauritania suffers from poor infrastructure. Road

transportation accounts for roughly 90 percent of traffic and 80 percent of goods movement;

however, as of 1999, only 11.3 percent of all roads were paved (table MT-7).73

Transportation costs are high because of poor management in the sector and large distances

between centers of economic activity. New construction is sparse and annual spending on

roads targets limited maintenance. Existing factors of production constitute another

impediment to export growth. Although the cost of labor in Mauritania is low, credit, water,

transportation, and energy are expensive. A 1997 survey showed that Mauritania has the

second-highest electricity rates and highest water rates in the region–at least 20-percent

higher than Senegal and Côte d’Ivoire, and 60-percent higher than Ghana.74

Table MT-7

Mauritania: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,660.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3

Transport services (percent of service exports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9

Transport services (percent of service imports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.8

Fixed line and mobile phone subscribers (per 1,000 people, 2002)........................................ 103.9

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.2

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 
 75 Ibid., p. 16.

 76 UN, “An Investment Guide to Mauritania,” p. 14.

6-23

Mauritania benefits from tariff preferences in its major export markets. However, sanitary

standards and other requirements present an obstacle for exports from Mauritania to Canada,

the United States, the European Union, and Japan.75 In particular, sanitary and phytosanitary

requirements are costly to meet or, for Mauritania, technically impossible. Other

impediments include technical requirements, testing standards, and labeling requirements.

These standards often require Mauritanian companies to form partnerships with foreign firms

to provide the necessary infrastructure for quality control of its products. High tariffs in

regional markets also reduce Mauritania’s opportunities for increased exports to these

markets.76
6-24
 77 Prepared by Renee Johnson, Office of Industries.

 78 South African Marketing Company, “Namibia,” SADC Trade, Industry, Finance and

Investment Review, found at www.sadcreview.com/country_profiles, retrieved Feb. 15, 2005.

 79 WTO, Trade Policy Review: Namibia, Report 98-1319, Apr. 6, 1998, p. 67; and Economist

Intelligence Unit (EIU), Namibia Country Profile, 2004, p. 57.

6-25

Namibia77

Economic Overview

Namibia’s economy has shown stable and positive growth in recent years. Namibia’s GDP

grew by 3.7 percent during 2002-03, reaching $4.7 billion in 2003 (table NM-1). Continued

growth is expected to be driven by developments in the mining sector and expansion of

manufacturing activities, including base metal smelting and textile manufacturing.78 During

the 1990s, Namibia established a number of investment schemes for manufacturing and

export-oriented activities, including the national export processing zone (EPZ) program in

1995. The EPZ is credited with introducing new industrial activities to Namibia, including

textiles production, auto parts manufacturing, bathroomware production, and auto assembly,

and new export-oriented manufacturing capacity including the downstream processing of

metal ores, such as refined zinc, and gemstone cutting and polishing.79

Table NM-1

Namibia: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,658.4

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6.7

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2

External debt, total (current US$, millions)........................................................... (2

)

Total debt service (percent of exports of goods and services)............................................ (2

)

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.3

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.6

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.0

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.3

Primary school enrollment ratio, total (percent, 2000)

3 .................................................. 112.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.7

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.2

Foreign direct investment, net inflows (percent of GDP) ................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

3

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school

age.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 
 EIU, Namibia Country Profile, p. 57. 80

 WTO, Trade Policy Review: Namibia, p. 64. 81

 EIU, Namibia Country Profile, p. 66. 82

 African Development Bank (AfDB)/Organization for Economic Cooperation and 83

Development (OECD), “Namibia,” African Economic Outlook, 2002, p. 232.

6-26

Services (including government) accounted for over 50 percent of GDP in 2003

(figure NM-1). Manufacturing, including fish and mineral processing, accounted for

12.3 percent of GDP in 2003; agriculture, forestry, and fisheries accounted for 11.0 percent;

and mining and quarrying accounted for 7.6 percent. In 2003, the value of total trade was

almost equivalent to GDP. 

Mining and mineral processing is the largest source of foreign exchange earnings,

accounting for approximately 56 percent of total exports in 2003, and is the main source of

domestic revenue collected through taxes and royalties. Namibia has more than 40 active 80

mines that produce about 30 different commodities. Namibia is a leading producer of rough 81

diamonds and uranium oxide. Other precious and base metals produced in lesser quantities 82

include zinc, copper, gold, fluorspar, pyrite, salt, dimension stone (marble and granite), tin,

silver, tungsten, semiprecious stones, and coastal brine salt. 

Development of Namibia’s manufacturing sector is an economic priority for the country.83

Namibia’s manufacturing sector includes processed food, diamonds, metal and precast

concrete products, furniture, paint, soap and detergents, paper and plastic packages, and

leather products. Food-related industries account for about 80 percent of the sector’s valueadded, generally covering food processing, onshore fish and meat processing, beer brewing

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.

Figure NM-1

Namibia: Composition of GDP (2003)
 84 EIU, Namibia Country Profile, p. 60.

 85 Trade Law Centre for Southern Africa, “Namibian fishing industry growing despite

setbacks,” May 7, 2004, found at www.tralac.org, retrieved Jan. 31, 2005; U.S. Department of

State telegram, “Tough Times for Namibia’s Fishing Industry,” message reference No. 185,

prepared by U.S. Embassy, Windhoek, Mar. 2005; and United Nations (UN), Food and

Agriculture Organization (FAO), “Fishery Country Profile: Namibia,” Nov. 2002. 

 86 EIU, Namibia Country Profile, p. 52.

 87 U.S. Department of State telegram, “USITC Study on Export Opportunities and Barriers in

AGOA-eligible Countries,” message reference No. 8455, prepared by U.S. Embassy, Windhoek,

Mar. 2005.

 88 U.S. Department of State telegram, “USITC Study on Sub-Saharan Trade: Namibian

Update,” message reference No. 137500, prepared by U.S. Embassy, Windhoek, Aug. 2004.

 89 The Services Group for U.S. Agency for International Development (USAID), “Economic

Impact Assessment Study, Background Study, Manufacturing Sector in Southern Africa,” Feb.

2004, found at www.satradehub.org, retrieved Mar. 17, 2005, pp. 30 and 33.

 90 United Nations Conference on Trade and Development (UNCTAD) Commodity Yearbook,

1995-2000, volume II, p. 4 and pp. 2-34.

6-27

and soft drinks, dairy products, and other food products.84 Fisheries and fish processing make

up the majority of Namibia’s manufacturing sector, accounting for between 5 percent to

8 percent of GDP, and has become an important contributor to its foreign exchange

earnings.85

Namibia has a substantial livestock sector. It markets live cattle and sheep, beef and mutton,

and has commercial cattle and sheep slaughtering and processing facilities. It produces dairy

products, hides and skins, and sheep pelts, and is also expanding into ostrich farming.86 Main

cereal crops include pearl millet, and white and yellow maize (corn). Output of both

livestock and crops tends to be variable, depending on rainfall, and recently has been

adversely affected by drought conditions.

The Malaysian-owned Ramatex company began development of a large textiles and garment

manufacturing complex in 2001,87 followed by a large investment by the Taiwanese

company, Rhino Garments, in 2002.88 Currently, there are about eight textile operations and

eight clothing/cut-make-trim operations in Namibia, operating at about 40 percent capacity

utilization.89

Export Profile

Namibia’s exports totaled $829.2 million in 2003. The leading export product groupings

included fish and crustaceans, precious stones, inorganic chemicals, meat products, copper,

and apparel (table NM-2). Within these broad product groupings, the leading products

exported by Namibia in 2003 were fresh, frozen, and processed white fish and meat

products, which together accounted for approximately 45 percent of the total value of exports

in 2003 (table NM-3). Namibia accounts for about one-third of all fish and meat exports

from sub-Saharan Africa (SSA).90 Other leading exports in 2003 included diamonds

(15.4 percent of export value) and minerals and base metals, especially uranium, copper, and
 91 U.S. Department of State telegram, “USITC Study on Export Opportunities.”

 92 U.S. Department of State telegram, “A Conversation with Namibia’s Diamond Commission,”

message reference No. 172371, prepared by U.S. Embassy, Windhoek, Mar. 2005.

6-28

Table NM-2

Namibia: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––– 1,000 dollars –––––– –––– Percent ––––

03 Fish and crustaceans, molluscs and other aquatic 

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 336,090.8 40.5 (2)

71 Natural or cultured pearls, precious or semiprecious stones,

precious metals; precious metal clad metals, articles

thereof; imitation jewelry; coin . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 127,865.1 15.4 (2)

28 Inorganic chemicals; organic or inorganic compounds of 

precious metals, of rare-earth metals, of radioactive 

elements or of isotopes .............................. (1

) (1) 89,089.4 10.7 (2)

02 Meat and edible meat offal .............................. (1

) (1) 59,892.9 7.2 (2)

74 Copper and articles thereof. ............................. (1

) (1) 56,670.8 6.8 (2)

61 Articles of apparel and clothing accessories, knitted or 

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 44,664.9 5.4 (2)

79 Zinc and articles thereof. ............................... (1

) (1) 25,882.8 3.1 (2)

25 Salt; sulfur; earths and stone; plastering materials, lime and

cement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 14,132.6 1.7 (2)

08 Edible fruit and nuts; peel of citrus fruit or melons ............ (1

) (1) 10,885.7 1.3 (2)

23 Residues and waste from the food industries; prepared 

animal feed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 10,144.0 1.2 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 53,868.9 6.5 (2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 829,187.9 100.0 (2)

1

 Not available.

2

 Undefined.

Note.—Data for Namibia prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS.

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

zinc (combined, about 20 percent). Diamonds account for about 70 percent of Namibia’s

mineral exports91 and 15 percent of government revenues.92

The leading markets for Namibian exports in 2003 were Spain (29.7 percent), the United

Kingdom (20.5 percent), the United States (15.4 percent), France (8.6 percent), and Belize

(6.7 percent) (table NM-4). As a region, the European Union has traditionally been the

largest market for Namibia’s exports, particularly for its processed fish and meat products.
6-29

Table NM-3

Namibia: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total and compound annual growth rate

(CAGR)

HS 4 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

––––– 1,000 dollars ––––– –––– Percent ––––

0304 Fish fillets and other fish meat (whether or not minced), 

 fresh, chilled or frozen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 211,804.6 25.5 (2)

7102 Diamonds, whether or not worked, but not mounted or set ....... (1

) (1) 127,466.1 15.4 (2)

0303 Fish, frozen, excluding fish fillets and other fish meat

without bones; fish livers and roes, frozen .................. (1

) (1) 91,508.3 11.0 (2)

2844 Radioactive chemical elements and isotopes and their

compounds; mixtures and residues containing these 

products ............................................ (1

) (1) 88,960.2 10.7 (2)

7402 Unrefined copper; copper anodes for electrolytic refining ........ (1

) (1) 56,647.0 6.8 (2)

2710 Petroleum oils and oils from bituminous minerals (other than

crude) and products therefrom, nesoi, containing 70% (by

weight) or more of these oils . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 54,197.2 6.5 (2)

0201 Meat of bovine animals, fresh or chilled ...................... (1

) (1) 43,912.2 5.3 (2)

7901 Zinc, unwrought ........................................ (1

) (1) 25,882.8 3.1 (2)

6110 Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar

articles, knitted or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 25,477.7 3.1 (2)

0302 Fish, frozen, excluding fish fillets and other fish meat without

bones; fish livers and roes, frozen ........................ (1

) (1) 24,175.7 2.9 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 79,156.2 9.5 (2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 829,187.9 100.0 (2) 1

 Not available.

2

 Undefined.

Note.—Data for Namibia prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS.

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table NM-4

Namibia: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

 CAGR

––––––––– 1,000 dollars –––––––– ––––– Percent –––––

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 246,188.0 29.7 (2)

United Kingdom ....................................... (1

) (1) 169,990.4 20.5 (2)

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 127,829.9 15.4 (2)

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 71,003.0 8.6 (2)

Belize . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 55,691.1 6.7 (2)

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 38,800.2 4.7 (2)

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 36,951.1 4.5 (2)

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 35,325.0 4.3 (2)

Netherlands .......................................... (1

) (1) 19,182.6 2.3 (2)

Japan ............................................... (1

) (1) 15,255.8 1.8 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 12,970.8 1.6 (2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 829,187.9 100.0 (2)

1

 Not available.

2

 Undefined.

Note.—Data for Namibia prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS.

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 93 U.S. Department of State telegram, “USITC Study on Export Opportunities.”

 94 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 95 Charles Krakoff, The Services Group for USAID, “Key Potential Export Markets and the

Market Access Barriers Facing Southern African Exporters,” Nov. 2004, found at

www.satradehub.org, retrieved Mar. 13, 2005.

 96 South African Marketing Company, “Namibia.” 

 97 U.S. Department of State telegram, “A Conversation with Namibia’s Diamond Commission.” 

 98 EIU, Namibia Country Profile, p. 59.

 99 Ibid., various pages.

 100 U.S. Department of State telegram, “South Africa: Minerals and Energy Newsletter, The

Assay,” message reference No. 3049, prepared by U.S. Embassy, Pretoria, Aug. 2004.

 101 U.S. Department of State telegram, “USITC Study on Sub-Saharan Trade: Namibian

Update.”

 102 Institute for Public Policy Research, “Namibia’s Great White Hope,” Aug. 2001, various

pages.

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Sectors with the Greatest Export Growth Potential

The composition of Namibia’s exports will likely continue to be dominated by its traditional

export sectors: gem-quality diamonds, unprocessed minerals and metals (zinc, copper,

uranium, and lead), and fisheries products.93 These sectors likely also have the greatest

potential for growth in merchandise export sales. Revealed comparative advantage94 (RCA)

analysis supports this assessment of merchandise export potential, particularly with respect

to the minerals sector, as 5 of the top 10 products ranked by RCA index are in this sector

(appendix E, table E-24). Fresh and processed fish and also meat products are identified as

having strong RCA indices (4 of the top 10 ranked products). Other sources show that

Namibia has a competitive advantage in the export of minerals and fish and seafood

products.95 RCA analysis does not, however, support that apparel is likely to offer export

growth potential. 

In the mining sector, higher output is projected by the Skorpion zinc mine as well as the

Ongopolo copper mine and processing plant.96 Stronger world prices for uranium and gold

are also expected to boost Namibia’s mining sector. The expansion of the diamond sector

into downstream processing, such as gem cutting and polishing, and continued new

investment and joint ventures in this sector, should enhance export potential. Namibia also

instituted a certification regime on January 1, 2003, to enforce 1999 laws requiring the

monitoring of company systems and procedures to safeguard unpolished diamonds according

to international agreements on the Kimberley Process.97 In the near term, however, diamond

production is expected to decline because of mine closures and the provisional liquidation

of Namco, Namibia’s second-largest diamond producer.98 DeBeers and the Leviev Group,

however, are involved in the expansion of Namibia’s offshore diamond capacity and other

marine recovery investments and joint ventures.99 Other recent investments include

development of a tantalite mine and processing plant by the UK-based Central African

Mining and Exploration Company,100 and offshore petroleum exploration by Vanco, Shell,

Nampower, Eskom, and Texaco.101

In the fisheries sector, despite erratic catch rates, government-imposed total allowable catch

(TAC) levels, and declines in output for some fish species, output of fresh and processed

white fish such as hake, orange roughy, and monk fish is expected to grow.102 As part of its

efforts to expand and diversify its production and export base, Namibia has been actively

developing its onboard and onshore fish-processing capacity. Most of its hake catch is now
 103 Ibid.; and EIU, Namibia Country Profile, p. 55.

 104 U.S. Department of State telegram, “Tough Times for Namibia’s Fishing Industry,” message

reference No. 185, prepared by U.S. Embassy, Windhoek, Mar. 2005.

 105 EIU, Namibia Country Profile, p. 54.

 106 For additional information on the Multifiber Arrangement and the end of textile and apparel

quotas in 2005, see app. C.

 107 Trade Law Centre for Southern Africa, “Namibian official plays down impact on textile

quota,” Jan. 7, 2005, found at www.tralac.org, retrieved Jan. 31, 2005; and Online portal for the

Namibian community, “Namibia and the textile industry – Golden fleece or threadbare hope,”

Apr. 22, 2005, found at www.namibian.com.na, retrieved Apr. 28, 2005.

 108 U.S. Department of State telegram, “Namibia: Textiles and Apparel Employment Data,”

message reference No. 184238, prepared by U.S. Embassy, Windhoek, Oct. 2004.

 109 U.S. Department of State telegram, “USITC Study on Export Opportunities.”

 110 Ibid.

 111 Chemonics International Inc. for USAID, “Trip Report: Namibia Textile Export Visit,”

Dec. 2003, p. 3.

 112 Namibian Economic Policy Research Unit, “Namibia Economic Review and Prospects,”

Aug. 2001, p. 6.

 113 Online portal for the Namibian community, “Namibia and the textile industry.”

6-31

processed at onshore factories before export, rather than being exported directly by foreign

freezer trawlers; likewise, most midwater mackerel is processed onboard or at shore-based

processing facilities.103 However, in the near term, growth may be affected by recent market

pressures that have contributed to the closing of one fish processing facility (Blue Ocean

Products) and the liquidation of another (Namfish).104 Other companies are also at risk of

closing.

Namibia’s substantial commercial livestock sector and the ongoing effort to develop

processing facilities and to diversify further the sector should continue to have a positive

effect on production and export growth. A larger share of commercial cattle and sheep are

now slaughtered in EU-approved slaughtering facilities, rather than being exported live to

South Africa. Also, in an effort to target specific export markets such as the European Union,

the Meat Board of Namibia has implemented a program to ensure that meat supplied to

export markets has not received growth hormone injections.105 Efforts are also underway to

improve productivity and diversify the agricultural sector into products such as table grapes,

dates, and cotton. 

Despite elimination of textile and apparel quotas in 2005,106 the Namibian government

remains optimistic about expanding its textile and apparel industry, mostly because of dutyfree access to the U.S. market.107 Apparel exports to the United States increased from

$6.6 million to $42 million during 2002-03,108 increasing again to $75 million during

2003-04.109 Projected future exports to the United States are expected to reach more than

$100 million annually.110 Anticipated multiplier effects from recent investments in this sector

include opportunities for small, medium, and microenterprise development in areas such as

packaging, label printing, button and zipper manufacturing, and other apparel-related light

manufacturing.111 Namibia is also promoting cotton production as part of its diversification

scheme,112 and efforts are underway to establish cotton gins to stimulate cotton growing in

Namibia, in part to expand Namibia’s textile industry.113

The European Union and the United States will likely remain Namibia’s primary markets.

However, developing or emerging countries may become increasingly important markets for

Namibia’s goods and services. Markets in Asia offer the potential for increased exports,
 114 USAID, “Trans-Kalahari Corridor Exemplifies Collaboration,” found at

www.usaid.gov/stories/namibia/ss_namibia_transport.html, retrieved Mar. 13, 2005.

 115 Chemonics, “Trip Report: Namibia Textile Export Visit,” p. 3; and EIU, Namibia Country

Profile, p. 44.

 116 EIU, Namibia Country Profile, p. 44.

 117 EIU, Namibia Country Profile, various pages.

 118 EIU, Namibia Country Profile, p. 45.

6-32

particularly China and other southeast Asian nations that have been investing in Namibia.

Opportunities also exist for increased regional trade within SSA as regional infrastructure

improvements reduce the cost of transportation. For example, ongoing and planned

development of the Trans-Kalahari Corridor is expected to improve transborder issues such

as border management, customs control, traffic regulations, and road transport policies

among Namibia, Botswana, and South Africa.114 This project is also expected to improve

Namibia’s infrastructure, including extension of, and upgrades to, Namibia’s railway. 

Domestic and International Barriers

Compared with other SSA countries, Namibia ranks favorably in terms of many business

environment indicators. It has a relatively low number of startup procedures and low

business startup and closing costs, high coverage of creditors providing credit, and a high

recovery rate for closed businesses, roughly comparable to the OECD average (table NM-5).

However, the number of days to start a business is reported at more than 85 days, over 22

days longer than the regional average. With respect to the Heritage Foundation’s Index of

Economic Freedom, Namibia ranks better than the regional average on several indicators,

including regulation, banking and finance, and capital flows and foreign investment, but

below the regional average with respect to fiscal burden of government and government

intervention in the economy (table NM-6). Notably, Namibia’s relatively low import duties

are reflected in the trade policy score, which was better than regional and OECD averages.

Worker indices suggest that Namibia’s labor laws are relatively less restrictive than those

in other SSA countries. However, the need for extensive training of the local workforce and

low productivity continues to limit development in most sectors.115 Namibia’s Affirmative

Action Act (1999) requires private- and public-sector employers to establish programs that

advance the economic interests of Namibians. Similar to South Africa, new partnerships with

foreign private investors contain Black Economic Empowerment guidelines requiring

minimum local equity stakes, although specific targets are expected to be progressively set

for particular sectors.116 Government-owned or controlled enterprises continue to dominate

major sectors of the economy, including electricity (NamPower), telecommunications

(Telecom Namibia), water (NamWater), and air transportation (Air Namibia and

TransNamib).117 Although the number of state-owned enterprises (SOEs) has been

increasing, most SOEs operate along commercial lines and some government functions are

being outsourced, such as road maintenance.118
6-33

Table NM-5

Namibia: Business environment

Namibia

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 53.7 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 28.3 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 2.1 5.0

Getting credit: Legal rights index .......................................... (1

) 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita).............. 353.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.3 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 270.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 9.7 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0 11.0 6.0

Starting a business: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . . . . 19.3 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 0.0 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.5 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Namibia, applied rate, 2002)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3

 1

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness/, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile/, retrieved Apr. 5, 2005. 

Table NM-6

Namibia: Economic freedom

Namibia

Regional

average1

OECD

 average

–––– Heritage Foundation indicators ––––

1995 Overall score .................................................... (2

) 3.6 2.5

2000 Overall score .................................................... (2

) 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 4.1 1.9

2004 Corruption perception index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 2.9 7.1 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 119 U.S. Department of State telegram, “USITC Study on Export Opportunities.”

 120 Chemonics, “Trip Report: Namibia Textile Export Visit,” p. 10; and EIU, Namibia Country

Profile, p. 44.

 121 EIU, Namibia Country Profile, p. 44.

 122 The Services Group for USAID, “Annex 7: Namibia,” SADC Member States and the

Implementation of the WTO Technical Barriers to Trade Agreement: A Benchmark Study, Feb.

2003, found at www.satradehub.org, retrieved Jan. 12, 2005, p. 4 and p. 13.

 123 Ibid., p. 4.

 124 Trade Law Centre for Southern Africa, “Customs still hinders goods in Eastern and Southern

Africa,” June 17, 2004, found at www.tralac.org, retrieved Jan. 31, 2005. 

6-34

Despite Namibia’s relatively well-connected transport infrastructure, less than 13 percent of

roads are paved (table NM-7) and there are frequent transportation bottlenecks,119 adding to

reportedly high transportation costs. In addition, there is limited direct shipping container

Table NM-7

Namibia: Infrastructure-related indicators

MRY1

Roads, total network (km, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,237.0

Roads, paved (percent of total roads, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9

Transport services (percent of service exports, BoP) .................................... (2

)

Transport services (percent of service imports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8

Fixed line and mobile phone subscribers (per 1,000 people, 2002).......................... 144.8

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.7

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.8

Electric power transmission and distribution losses (percent of output)....................... (2

)

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.6 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline,

retrieved Jan. 25, 2005. 

service for exports.120 Spending on transportation and upgrading roads are the government’s

main infrastructure priorities.121

Namibia’s lack of standards, quality, accreditation, and metrology capacity is a major

domestic impediment to increased exports. There is no comprehensive policy and regulatory

framework that guides the development and administration of standards and technical

regulations; there is limited institutional and human resources capacity in this area; and there

is little understanding and technical capacity in order to address Namibia’s obligations in the

context of international and regional agreements.122 The government, however, is in the

process of establishing a National Standards Bureau to administer standards, quality

assurance, and certification requirements.123

Although customs procedures were cited as an impediment to trade in that they increase the

time and cost of trade, Namibia is taking steps to update its customs and excise system to

address reports of perceived overly burdensome customs procedures, counterfeit documents,

and illicit payments stemming from lack of administrative transparency that hinder the free

flow of goods across borders.124 As part of this process, the government has implemented a

data processing system that has the ability to process data and print out an assessment notice
 125 Trade Law Centre for Southern Africa, “Namibian customs and excise system updated,”

Mar. 2, 2004, found at www.tralac.org, retrieved Jan. 31, 2005.

 126 EIU, Namibia Country Profile, p. 57.

 127 Trade Law Centre for Southern Africa, “Namibian fishing industry needs to look outside of

EU,” Apr. 29, 2004, found at www.tralac.org, retrieved Jan. 31, 2005. 

 128 WTO, Trade Policy Review: Namibia, p. 42.

 129 Trade Law Centre for Southern Africa, “Nam to impose export levy on hides,” Sept. 3, 2003,

found at www.tralac.org, retrieved Jan. 31, 2005; and EIU, Namibia Country Profile, 2004, p. 56.

 130 WTO, Trade Policy Review: Namibia, p. 66.

 131 U.S. Department of State telegram, “A Conversation with Namibia’s Diamond

Commission.” 

 132 Trade Law Centre for Southern Africa, “Namibian meat making its way to the EU,” Feb. 2,

2004, found at www.tralac.org, retrieved Jan. 31, 2005. 

 133 Trade Law Centre for Southern Africa, “Namibian grape farmers not happy with EU import

duties,” Mar. 30, 2004, found at www.tralac.org, retrieved Jan. 31, 2005. 

6-35

immediately. This is expected to speed up clearing of customs in Namibia and allow customs

officials to more effectively combat illegal goods and collect revenue.125

With regard to the fisheries sector, Namibia’s fishing and marine resources are controlled

by a quota entitlement and TAC levies. The allocation of rights and quotas in Namibia’s

fisheries sector reportedly is not fully transparent.126 Further expansion of Namibia’s onboard

and onshore fish-processing capacity depends, in part, on new investment, improved

technologies and productivity, product innovation, market diversification, and training.127

Certain Namibian exports are subject to licensing agreements that may restrict exports,

including diamonds and other minerals, meat (to the European Union), canned meat, game,

forestry products, horticultural products, and fish products.128 In 2003, in an effort to raise

local processing and community-owned tanneries, Namibia applied a 15-percent levy on the

export of live cattle, sheep, and goats, and a 30-percent levy on the export of unprocessed

hides and animal skins.129 Namibia’s diamond export duty was abolished in 1994.130

In general, international impediments to Namibian exports include quality and standards

requirements, customs requirements, and tariffs. Namibia is particularly susceptible to strict

rules of origin on its diamond exports and on January 1, 2003, instituted a certification

regime in accordance with the Kimberley Process.131 In addition, beef exporters to European

markets were forced to adopt some of the highest global antipathogen standards after

Norway refused Namibian beef when salmonella was detected. Separately, Namibia’s meat

processing company, Meatco, suffered market losses over a 2-month period in 2003-04 when

a ban was initially imposed on Namibian meat exports after a team of EU experts found that

various procedures were not followed, despite renewed export certificates.132 Another case

involved canned fish exports; cracks detected in the cans resulted in the removal of

Namibian fish from some foreign markets. In 1999, Spain issued an alert throughout the EU

market alleging bacterial contamination of Namibian fish exported to Spain. Exports may

also be affected by high taxes on Namibian products to some markets. For example, in 2004,

Namibia’s grape farmers appealed to the European Union to remove excessive taxes on

imported grapes from Namibia.133
6-36
 134 Prepared by Russell Duncan, Office of Investigations.

 135 Ministry of the Economy, Division of Statistics, Agricultural production from 1998-2000,

part of Logistic Capacity Assessment Report in São Tomé and Príncipe.

 136 International Monetary Fund (IMF), São Tomé and Príncipe: Statistical Appendix, Apr.

2004, p. 3, found at www.imf.org, retrieved Mar. 19, 2005. 

 137 Economist Intelligence Unit, (EIU), São Tomé and Príncipe Country Profile, 2004, p. 15.

 138 Steven Kyle, We’re rich!! Or are we?? Oil and development in Sao Tome and Principe,

May 2003, table 2, p. 26, from Ministerio de Plano e Financas and the IMF. 

 139 In 2002, an armed insurgency negatively affected cocoa production in Côte d’Ivoire, the

world’s largest cocoa producer. Global Policy Forum, War Inflates Cocoa Prices but Leaves

Africans Poor, Oct. 2002, found at www.globalpolicy.org/socecon/develop/africa/2002/

1030cocoa.htm, retrieved Apr. 21, 2005; and International Cocoa Organization, Monthly and

Annual Averages of Daily Prices of Cocoa Beans, 1960–2004, Oct. 2004, found at

www.icco.org/prices/pricesave.htm, retrieved Apr. 21, 2005.

6-37

São Tomé and Principe134

Economic Overview

São Tomé and Principe consists of two main islands located off the west coast of Africa. The

country has a population of only 157,000 (table ST-1) and a land area of only 960 square

kilometers. The terrain is fairly mountainous, making cultivation impossible in most areas,

as indicated in the relatively small percentage of arable land. The country’s small size and

limited resources contribute to a general lack of economic diversification of the economy.

Services account for two-thirds of the country’s GDP, while agriculture and industry

together account for the remaining one-third (figure ST-1). Principal agricultural products

for local consumption include palm oil, banana, sugar cane, pineapple, bread fruit, maize

(corn), taro, cabbage, tomato, onion, bean, and manioc.135 As a former nonmarket economy,

the government continues to play a central role; the public sector is by far the largest

employer in the economy and accounts for more than 28 percent of GDP.136 São Tomé and

Principe relies heavily on international trade and foreign donor assistance. Domestic

consumption largely depends on imported goods and capital and in 2003, total trade

represented 153.2 percent of GDP. 

Export Profile

Cocoa has been the primary export product of the country for over a century137 and

accounted for 63.8 percent of total exports from São Tomé and Principe in 2003

(table ST-2). Nearly all of the country’s cocoa production is exported. Between 1990 and

2000, production of cocoa remained relatively constant at around 3,500 metric tons per

year,138 although increases in the quantity of cocoa exports in years after 2000 indicate recent

growth in production yields. In 2002, a disruption in global supply led to increased global

prices for cocoa139 and an increase in exports of cocoa from São Tomé and Principe.

In addition to cocoa, São Tomé and Principe has exported small volumes of other

agricultural commodities such as copra (a coconut derivative) and coffee. Data indicate,

however, that copra exports ceased in 2000 and coffee exports markedly decreased by
6-38

Table ST-1

São Tomé & Principe: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 53.7

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 4.5

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 2.5

Inflation, consumer prices (annual percent) ....... ....... ....... ....... ....... ....... ....... ....... . . ( )2

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 333.4

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... .... 31.8

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... 43.7

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 153.2

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 9,347.3

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 0.2

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 1.9

Labor force, total (millions) ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... . ( )2

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 45.9

Literacy rate, adult total (percent of people ages 15 and above) ....... ....... ....... ....... ....... ....... ( )2

Primary school enrollment ratio, total (percent) ....... ....... ....... ....... ....... ....... ....... ...... ( )2

Secondary school enrollment ratio, total (percent) ....... ....... ....... ....... ....... ....... ....... .... ( )2

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 6.3

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 31.2

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 31.2

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 6.0

 Most recent year for which data are available between 1999 and 2003. 1

 Not available. 2

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 

Figure ST-1

São Tome & Principe: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 140 IMF, São Tomé and Príncipe: Statistical Appendix, p. 30. 

 141 European Union (EU), The European Commission on Fisheries: Sao Tome and Principe,

Feb. 2004, found at http://europa.eu.int/comm/fisheries/doc_et_publ/factsheets/facts/en/

pcp4_2s15.htm, retrieved Apr. 9, 2005.

 142 According to the contract, the European Union paid 2.2 million euros for exclusive rights to

operate a fleet of 68 boats in the islands’ exclusive economic zone. EU, The European

Commission on Fisheries: Bilateral Agreements, 2004,

http://europa.eu.int/comm/fisheries/doc_et_publ/factsheets/facts/en/pcp4_2.htm, retrieved

Apr. 9, 2005. 

 143 Department of Agriculture and Agri-Food Canada, Canada’s Agri-food: Imports from all

countries, Jan. 2005, found at http://atn-riae.agr.ca/stats/AllCountries_country_m12.pdf, retrieved

Apr. 11, 2005.

6-39

Table ST-2

São Tomé & Principe: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual

growth rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars ––––––– –––– Percent ––––

18 Cocoa and cocoa preparations. . . . . . . . . . . . . . . . . . . . . . . . . . 2,927.7 4,808.8 7,644.3 63.8 11.3

85 Electrical machinery and equipment and parts thereof; 

sound recorders and reproducers, television recorders 

and reproducers, parts and accessories ................ 395.8 494.3 721.2 6.0 6.9

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.9 1,014.9 519.6 4.3 19.7

62 Articles of apparel and clothing accessories, not knitted or

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278.9 309.1 517.0 4.3 7.1

29 Organic chemicals. ................................... 197.9 107.8 391.1 3.3 7.9

34 Soap etc.; lubricating products; waxes, polishing or scouring

products; candles etc., modeling pastes; dental waxes 

and dental plaster preparations . . . . . . . . . . . . . . . . . . . . . . . 0.0 4.7 273.2 2.3 (1

)

87 Vehicles, other than railway or tramway rolling stock, and 

parts and accessories thereof . . . . . . . . . . . . . . . . . . . . . . . . 49.1 86.4 194.2 1.6 16.5

90 Optical, photographic, cinematographic, measuring,

checking, precision, medical or surgical instruments and

apparatus; parts and accessories thereof . . . . . . . . . . . . . . . 91.8 451.3 189.0 1.6 8.3

03 Fish and crustaceans, molluscs and other aquatic

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122.9 5,373.0 135.7 1.1 1.1

10 Cereals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 123.6 1.0 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,915.0 4,282.3 1,273.2 10.6 -8.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,082.1 16,932.5 11,982.2 100.0 6.0

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

2003.140 São Tomé and Principe also exports deep-sea fish caught by a European fleet

through a fisheries contract with the European Union. Frozen fish was the eighth-largest

export in 2003 (table ST-3). The fisheries contract, which provides for exclusive rights to

operate a fleet of 68 boats in the country’s exclusive economic zone,141 was signed in June

2002 and is set to expire at the end of May 2005.142

Because of arrangements such as the fisheries contract and the country’s colonial past, the

islands maintain strong commercial and trading links with the European Union. The EU

market accounted for more than 60 percent of the country’s exports in 2003 (table ST-4),

consisting primarily of cocoa and fish. The second-largest market for the islands in 2003 was

Canada.143
6-40

Table ST-3

São Tomé & Principe: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual

growth rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars ––––––– )))) Percent ––––

1801 Cocoa beans, whole or broken, raw or roasted . . . . . . . . . . . . . . 2,865.3 4,808.8 7,644.3 63.8 11.5

6204 Women's or girls' suits, ensembles, suit-type jackets, dresses,

skirts, divided skirts, trousers, etc. (No swimwear), not

knitted or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 25.7 510.0 4.3 59.8

2933 Heterocyclic compounds with nitrogen heteroatom(s) only . . . . . 0.0 0.0 245.5 2.0 (1

)

3402 Organic surface-active agents (other than soap); surface

 active, washing, and cleaning preparations, whether or not

containing soap, neso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 244.7 2.0 (1

)

8519 Turntables, record players, cassette players and other sound

reproducing apparatus, not incorporating a sound 

recording device . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 231.5 1.9 (1

)

8508 Electromechanical tools for working in hand with selfcontained electric motor; parts thereof . . . . . . . . . . . . . . . . . . . 26.3 13.8 152.7 1.3 21.6

8703 Motor cars and other motor vehicles . . . . . . . . . . . . . . . . . . . . . . 0.0 58.6 137.9 1.2 (1

)

0303 Fish, frozen, excluding fish fillets and other fish meat without

bones; fish livers and roes, frozen ...................... 122.9 4,081.2 132.7 1.1 0.9

1005 Maize (corn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 123.6 1.0 (1

)

2902 Cyclic hydrocarbons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 111.7 0.9 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,060.1 7,944.4 2,447.6 20.4 -5.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,082.1 16,932.5 11,982.2 100.0 6.0 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table ST-4

São Tome & Principe: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate

(CAGR)

Market 1994 1999 2003

2003 share

 of total

9-year

CAGR

–––––––––– 1,000 dollars –––––––––– )))) Percent ))))

Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,668.3 2,465.7 2,971.8 24.8 6.6

Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,701.8 159.1 1,957.1 16.3 -3.5

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.7 1,108.4 1,257.6 10.5 32.8

Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151.7 165.7 1,064.7 8.9 24.2

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 648.0 337.0 1,011.0 8.4 5.1

Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.6 114.8 909.9 7.6 31.3

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 307.2 655.7 5.5 (2)

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 18.8 513.4 4.3 66.7

Portugal .......................................... 179.4 4,450.8 339.1 2.8 7.3

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.4 34.4 255.6 2.1 29.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,526.0 7,770.7 1,046.3 8.7 -4.1

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,082.1 16,932.5 11,982.2 100.0 6.0

1

 Not available.

2

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 144 Production of the crop dates back to the colonial cocoa estates run by the Portuguese, which

were nationalized after independence and then broken into parcels for smallholder tenants with

support from the World Bank and the IMF in the late 1990s under a privatization initiative. Varela

da Silva, Afonso, Minister of Plan, Finance, and Cooperation, IMF Memorandum of Economic and

Financial Policy for 1999, Mar. 1999, found at www.imf.org/external/np/loi/1999/o32299.htm,

retrieved Apr. 28, 2005.

 145 Jedrez Frynas et al., Business and Politics in Sao Tome and Principe: From Cocoa

Monoculture to Petro-State, Jan. 2003, p. 3. 

 146 Ibid., p. 4.

 147 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 148 Kyle, We’re rich!! table 2, p. 26. Banana production increased from 10,000 metric tons in

1991 to 38,200 metric tons in 2000.

 149 Frynas et al., Business and Politics in Sao Tome and Principe, p. 3.

 150 Ibid., p. 4.

6-41

Sectors with the Greatest Export Growth Potential

There is potential for a variety of agricultural exports. Cocoa exports could increase because

the current smallholder system of production144 does not yield the volume of production once

achieved under colonial rule.145 In the 1920s and 1930s, São Tomé and Principe exported

nearly 9,500 metric tons of cocoa annually,146 which is approximately 3 times as much cocoa

as the islands produced in 2000. Additionally, potential exists for the diversification of

agricultural exports while maintaining and improving upon existing cocoa production. For

example, other exploitable trees could reasonably be grown among cocoa trees to serve as

both an alternative crop and as shade-providers for the low-growing cocoa trees. Such dualpurpose trees could include rubber trees and banana trees (currently present on the islands).

Both of these shade-providing trees could provide viable potential exports, resulting in

diversification in agricultural production, without negatively impacting the country’s current

revealed comparative advantage147 (RCA) in cocoa (appendix E, table E-29). Recent

increases in the production of bananas for domestic consumption indicate that some

diversification of agricultural production has already begun.148

Chocolate, coffee, sugar, other cocoa-derived products, and coffee-derived products are

potential exports considering the factor endowments of climate, soil, labor, and the existing

cocoa and coffee crops in São Tomé and Principe. In addition to cocoa, the islands can

produce sugar and milk as additional inputs. While the country’s annual rainfall may not

provide for high-quality, exportable sugar, the climate in São Tomé and Principe could

support sugar production of a quality suitable for further processing. In terms of pure

production capability, the viability of a sugar crop is manifest in the fact that the country

once supported a sugar industry in the 1500s and early 1600s.149 Milk could also be produced

locally, as the Dutch have reportedly re-introduced cattle herds to the islands.150 Donor

financial support and technical assistance, targeted reinvestment of state petroleum revenues,

and possible Brazilian investment and oversight could provide the impetus for the

development of such an industry.

São Tomé and Principe could develop fishing as a potential export. While the country does

not currently have the technical knowledge or fleet capacity to extract deep-sea fish for
 151 Integrated Framework (IF), Sao Tome and Principe: Diagnostic Trade Integration Study

Draft Concept Paper, June 2004, para. 44, found at www.integratedframework.org, retrieved

Mar. 7, 2005.

 152 U.S. Department of State, “Investment Climate Statement, Fiscal Year 2000,” found at

http://usembassy.state.gov/libreville/wwwhstpinvest.html, retrieved Apr. 27, 2005.

 153 Government of São Tomé Tourism Site, found at www.saotome.st, retrieved Apr. 11, 2005.

 154 Ministère du Commerce, de l’Industrie et du Tourisme, Table Ronde sur le developpement

du tourisme a Sao Tome et Principe: Dossier de presentation, May 2004.

 155 World Travel & Tourism Council, Sao Tome and Principe: Travel & Tourism Forging

Ahead, 2004, found at www.wttc.org, retrieved Apr. 27, 2005.

 156 ExxonMobil, Exxonmobil Signs PSC For Exploration Activities In Nigeria And Sao Tome

And Principe Joint Development Zone, press release, Feb. 1, 2005, found at www.exxonmobil.com,

retrieved Mar. 17, 2005.

 157 The Government of São Tomé has contracted out only one of its 19 zones and foreign direct

investment for that zone has not yet begun. 

6-42

export to Europe or other Northern markets, it does have a thriving artisanal fishing industry

that currently operates for the most part in the islands’ informal economy.151

Considering the inherent limitations of small island economies, São Tomé and Principe

recognizes the need to consider nontraditional sources of local productivity, mainly in the

services sector. The islands are ideally located in the Gulf of Guinea, some 200 to 300 km

from the coasts of larger African countries such as Nigeria, Cameroon, Equatorial Guinea,

Gabon, and Angola. The country could take advantage of its location by becoming an

entrepôt for the shipment of goods from Africa to the Americas (especially Brazil) or to

Europe by ocean freight. São Tomé and Principe has already created a free trade zone (FTZ)

on the island of Principe.152

Tourism is another service that could provide increased exports. The two islands have an

abundance of beautiful, mostly unexploited countryside, as well as over 269 km of tropical

coastline to offer potential visitors.153 Local plantations, churches, and colonial palaces add

to the country’s rich history as a former Portuguese colony. The government of São Tomé

and Principe is attempting to promote ecotourism as an export growth sector.154 Additionally,

the private sector has in recent years expressed an interest in developing the country’s

tourism potential.155

There is also potential for exports of crude petroleum. In 2005, Exxon Mobil signed the first

deep-sea exploration contract for one of nine blocks in the joint development zones between

São Tomé and Principe and Nigeria.156 If resources are discovered, the United States will

likely become a major trading partner for São Tomé and Principe. However, revenue from

the project is estimated to be at least 2 years from realization.157

Domestic and International Barriers

Business environment and economic freedom indicators are not available for São Tomé and

Principe (tables ST-5 and ST-6). However, a major issue facing São Tomé and Principe is

the lack of diversification of the country’s economy, which has left it vulnerable to price

volatility. Raw cocoa prices in world markets have been highly volatile within an overall
 158 Chocolate Manufacturers Association, The Cocoa Tree: Price Cycle, 2003, found at

www.cocoatree.org/thecocoatree/animportantcashcrop.asp, retrieved Apr. 11, 2005.

 159 Luba Freeport slide show, Deepwater Gateway to the West African Oil Industry, 2004.

 160 World Bank officials, interview with USITC staff, Washington, DC, Mar. 11, 2005. 

 161 Kyle, We’re rich!! p. 15.

 162 Taiwanese Council for Economic Planning and Development, Comprehensive Economic

Development Plan for the Democratic Republic of Sao Tome and Principle, Jan. 2004, pp. 10-11. 

6-43

Table ST-5

São Tomé & Principe: Business environment

Country data not available.

Import tariffs Simple average of ad valorem duties

Country data not available.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness/, retrieved Jan. 25, 2005; and

WTO, “Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table ST-6

São Tomé & Principe: Economic freedom

Country data not available.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.

downward trend since the early 1970s.158 The degree to which São Tomé and Principe as a

small island economy can diversify its export markets is constrained by the islands’ limited

production capacity and the commodity nature of its current major exports. The country’s

small size and capacity constraints also hinder its ability to compete against larger mainland

African economies. São Tomé and Principe competes with large regional economies along

the west coast of Africa in each of its potential export sectors. For example, the development

of a regional entrepôt on São Tomé and Principe would compete with Equatorial Guinea’s

newly constructed Luba Freeport on the island of Bioko.159 Additionally, it has been only

recently that the Government of São Tomé and Principe has actively canvassed regional

support for political and economic initiatives.

The current smallholder structure of cultivation acts as a domestic barrier to increasing the

country’s production and export of agricultural products, including cocoa. Currently, the

government owns all the former plantation land and either leases parcels out to smallholders

or runs its own mini-plantations.160 Under this system, the lack of ownership interest in the

land provides the lessees with little incentive to properly maintain the cocoa crops or employ

sustainable, ecofriendly production methods.

The small size of São Tomé and Principe’s labor pool and the scarcity of skilled labor also

limit or slow economic development and the growth and diversification of exports. In 2002,

the country’s labor force numbered fewer than 86,000 adults between the ages of 15 and

65.161 While education coverage and quality have improved because of national reform

efforts since independence, there is still a 20 percent national illiteracy rate that impedes

increased trade in skilled-labor intensive products.162 Additionally, the continued existence

of virulent strains of malaria and other tropical diseases reduces domestic labor productivity

and dissuades potential travelers. The government is aware of the importance of both health
 163 Taiwan Government Information Office, Taiwan helps Sao Tome eradicate malaria,

Feb. 2005, found at http://publish.gio.gov.tw/FCJ/past/05022581.html, retrieved Apr. 9, 2005. See

also Africa Taiwan Economic Forum, Sao Tome and Principe Economic Profile, 2003, found at

www.africa.org.tw/country_english_1_4.asp?C=6, retrieved Apr. 11, 2005.

 164 EIU, Sao Tome and Principe Country Profile, pp. 8-9, 13.

 165 Sao Tome President, BBC, Dec. 14, 2004, found at http://news.bbc.co.uk/1/hi/world/africa/

3107443.stm, retrieved Apr. 27, 2005. 

 166 World Bank officials, interview with USITC staff, Washington, DC, Mar. 11, 2005. 

 167 IF, Sao Tome and Principe: Diagnostic Trade Integration Study Draft Concept Paper,

para. 44.

 168 Capital Energy, Inc., Definitional Mission for Africa Regional Multi-Sector in Gabon/Sao

Tome & Principe: Contract No.: 2003-10050A, Final Report for USTDA, Dec. 2003. 

 169 IF, Sao Tome and Principe: Diagnostic Trade Integration Study Draft Concept Paper,

paras. 43-47.

6-44

and education services and is actively seeking engagement with donor partners such as

Taiwan to further develop its national health and education services.163

Political uncertainty also hampers export growth.164 In 2003, the extent of the political

instability became apparent as the democratically elected government was ousted by a

military coup that lasted for 1 week.165 Additionally, recent agitations related to high

unemployment in the country impede the domestic stability necessary for the development

of industries such as tourism.166

The lack of appropriate physical and regulatory infrastructure also inhibits the development

of export-oriented businesses. Although the country has a relatively well-developed road

network as compared with the region (table ST-7), transportation is a major barrier to exports

from São Tomé and Principe, as the country has no deep-sea port, and therefore cannot berth

most international shipping vessels167 or handle large-scale flow of goods in its FTZ.168

Table ST-7

São Tomé & Principe: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999)................................................................... 320.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.1

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.8

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.4

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.8

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.3

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

)

 1

 Most recent year for which data are available between 1999 and 2003.

 2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Other transportation infrastructure constraints limit export development growth. For

example, the country’s airport cannot currently handle the types of commercial flights that

would be necessary for growth of the tourism sector.169 Additionally, poor maintenance of

transportation infrastructure, frequent power shortages, and limited water sanitation coverage
 170 U.S. Trade and Development Agency official, interview by USITC staff, Apr. 27, 2005.

 171 U.S. State Department, International Narcotics Control Strategy Report: Country Report on

Sao Tome and Principe, 2005, found at www.state.gov/g/inl/rls/nrcrpt/2005/vol2/html/42395.htm,

retrieved Apr. 8, 2005.

 172 Ibid.

6-45

further inhibit the development of export-oriented businesses.170As São Tomé and Principe

is a small island country, international trade is inhibited by the lack of cost effective

transportation infrastructure into neighboring countries.

In addition to infrastructure constraints, São Tomé and Principe lacks a sufficiently

developed finance industry to provide financial and logistical services to those that might

take advantage of the country’s FTZ.171 While recent prudential reforms have allowed for

several commercial banks to begin operations in the country,172 the financial sector remains

weak and there is limited access to microfinance and other credit arrangements. 
6-46
 173 Prepared by Jackie Jones, Office of Industries.

 174 “Senegal’s Geography,” TravelBlog, found at www.travelbog.org/World/sg.econ.html,

retrieved Mar. 8, 2005, p. 2.

 175 Economist Intelligence Unit (EIU), Senegal Country Profile, 2004, p. 23.

 176 Ibid., p. 44.

 177 Ibid., p. 28.

 178 Ibid., p. 47.

 179 Integrated Framework (IF), Senegal: Diagnostic Trade Integration Study Report, vol. 1,

Mar. 12, 2003, p. 79.

 180 IF, Senegal: Diagnostic Trade Integration Study Report, vol. 1, Mar. 12, 2003, pp. 79-80.

 181 IDDRA (UK) Ltd., commissioned by CTA and the Commonwealth Secretariat, “Executive

Summary,” Analysis of the Impact on ACP Countries of Opening Up the EU Import Market for

Canned Tuna, Feb. 2004, p. 8.

 182 Ibid.; and EIU, Senegal Country Profile, p. 43. 

6-47

Senegal173

Economic Overview

Senegal lies on the western coast of Africa and has a tropical climate. Its land area is

approximately 196,190 square kilometers, with 1,327 kilometers of coastline and a maritime

claim to 12 contiguous nautical miles of territorial sea.174 These resources are important to

Senegal’s fishing industry. Dakar, the westernmost port in Africa, is an important regional

and international transit hub.175 Senegal is considered to be one of the most stable and

industrialized countries in West Africa.176 Senegal’s economy has been relatively stable over

the past 5 to 6 years, with GDP growth at approximately 6.5 percent in 2003 (table SN-1).

Senegal’s exports of goods and services accounted for about 30 percent of GDP during

1999-2003, and total trade represented between 69 percent and 72 percent of Senegal’s GDP

during 1999-2003. 

Senegal’s service sector, which accounted for 62.0 percent of Senegal’s GDP in 2003

(figure SN-1), consists largely of tourism. Compared with other French-speaking West

African countries, Senegal’s tourism industry is relatively large.177 Senegal’s beach resorts

are its main attraction; other tourist interests include scuba diving, big-game fishing, a

wildlife reserve, bird watching along the Senegal River delta, and a rich traditional culture

in a relatively stable and crime-free environment.178

Senegal’s agricultural sector, the largest employer of the country’s labor force, accounted

for approximately 70 percent of the workforce179 and almost 17 percent of GDP in 2003.

Agriculture is the main activity and source of income for most of Senegal’s rural population.

A relatively new trend towards agroprocessing for export has also emerged. Senegal’s

agricultural sector continues to be based mostly on its production of groundnuts (peanuts)

and groundnut oil (peanut oil). Senegal is one of the world’s largest producers and exporters

of peanut oil. The government is encouraging the cultivation and exports of other

agricultural products, including fresh fruits and vegetables, to ship to markets such as the

European Union.180 The fishing industry accounted for slightly over 2 percent of Senegal’s

total GDP in 2002,181 and is also an important employer in Senegal, employing about

15 percent of the country’s employable population in 2003-04.182
6-48

Table SN-1

Senegal: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 6,496.4

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 6.5

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 6.0

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... 0.0

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 3,918.2

Total debt service (percent of exports of goods and services, 1999) ....... ....... ....... ....... ....... .... 14.3

Exports of goods and services (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... 30.2

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 69.9

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 581.2

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 10.0

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 2.2

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 4.5

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 44.8

Literacy rate, adult total (percent of people ages 15 and above, 2002) ....... ....... ....... ....... ....... . . 39.3

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... . 75.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ...... 18.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 12.8

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 20.1

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 19.8

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 1.9

 Most recent year for which data are available between 1999 and 2003. 1

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 

Figure SN-1

Senegal: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 183 EIU, Senegal Country Profile, p. 43.

 184 Ibid.

 185 U.S. Department of State telegram, “Senegal: USITC Study on Export Opportunities and

Barriers in AGOA-Eligible Countries,” message reference No. 008545, prepared by U.S. Embassy,

Dakar, Feb. 16, 2005.

 186 U.S. Department of State telegram, “Senegal: USITC Study on Export Opportunities.”

 187 IF, Senegal: Diagnostic Trade Integration Study Report, p. 79.

6-49

Senegal’s mining and industry sector accounted for approximately 21 percent of GDP in

2003, with industrial activity accounting for the majority of this sector. Mining alone

accounted for less than 2 percent of GDP in 2002, but accounted for approximately

17 percent of merchandise exports that year.183 Senegal has reserves of phosphates and other

derived minerals, and there appears to be increasing foreign interest in potentially large

deposits of gold, copper, and other minerals in Senegal’s eastern regions.184

Senegal’s economy suffers from a lack of capital. Gross fixed capital formation as a share

of GDP was almost 20 percent in 2003, and averaged approximately 19 percent during

1999-2003. France traditionally has been and remains the largest foreign investor. French

companies account for 25 percent of all Senegal’s formal enterprises and are invested in the

import-export, shipping, banking, food production, mechanical engineering, tobacco,

agribusiness, petroleum distribution, industrial equipment, vehicles, chemicals and

pharmaceuticals, tourism, insurance, telecommunications, and water sectors.185

Export Profile

Senegal’s major foreign exchange earners continue to be fishing, phosphates, tourism, and

groundnuts and groundnut oil.186 Total merchandise exports from Senegal were almost

$659.0 million in 2003 (tables SN-2 and SN-3). Although the fishing sector accounted for

only about 2 percent of Senegal’s GDP in 2003, it is the country’s largest export earner,

representing 39 percent of the total value of Senegal’s exports in 2003. Exports of

phosphates and other derived minerals were the next-largest group of exports, accounting

for almost 19 percent of total export value in 2003. Traditionally one of Senegal’s largest

exports, peanut oil and its derivatives, was the third-largest product group exported in 2003,

accounting for 8.2 percent of total export value that year. These three groups of products

together accounted for almost two-thirds of the value of products exported in 2003. 

Overall export growth during the 1994-2003 period was fueled primarily by Senegal’s

traditional exports of fish and phosphates, which together accounted for 61.6 percent of

Senegal’s total value of commodity exports in 2003. Exports of fresh and frozen fish and

crustaceans fluctuated, but rose overall by 67 percent during 1994-2003. With a compound

annual growth rate (CAGR) of 65.9 percent, exports of phosphates and phosphoric acids also

increased overall during the period.

Senegal’s overall agricultural exports peaked in 1990 before falling to a low of $146 million

in 2000. Reportedly, more than one-half of this decline was attributed to a sharp decline in

the quantity of relatively high value-added exports of confectionery groundnuts and

declining volumes and values of exports of groundnut oil.187 Fluctuating downward,
6-50

Table SN-2

Senegal: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

 –––––––– 1,000 dollars –––––––– –––– Percent ––––

03 Fish & crustaceans, mollusc & other aquatic

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,969.7 275,709.7 253,814.2 38.5 5.9

28 Inorganic chemicals; organic or inorganic compounds of

precious metals, of rare-earth metals, of radioactive

elements or of isotopes . . . . . . . . . . . . . . . . . . . . . . . . . 1,402.6 51,831.7 124,698.3 18.9 64.6

15 Animal or vegetable fats and oils and their cleavage

products; prepared edible fats; animal or vegetable

waxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,995.7 64,216.9 55,079.4 8.4 -3.5

25 Salt; sulfur; earths and stone; plastering materials, lime

and cement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,659.3 50,809.4 52,017.8 7.9 5.3

16 Preparation of meat, fish, crustaceans, molluscs, or

other aquatic invertebrates . . . . . . . . . . . . . . . . . . . . . . 54,520.5 33,144.1 31,818.9 4.8 -5.8

24 Tobacco and manufactured tobacco substitutes ........ 133.1 665.7 18,606.5 2.8 73.1

07 Edible vegetables and certain roots and tubers . . . . . . . . . 7,629.5 13,416.8 16,389.8 2.5 8.9

52 Cotton, including yarns and woven fabrics thereof. . . . . . . 21,010.4 10,136.3 16,303.5 2.5 -2.8

41 Raw hides and skins (other than furskins) and leather . . . 3,957.8 5,412.7 12,597.9 1.9 13.7

29 Organic chemicals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.3 804.2 11,776.1 1.8 97.0

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,645.8 170,561.7 65,854.6 10.0 -0.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416,950.7 676,709.0 658,957.0 100.0 5.2

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table SN-3

Senegal: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

 CAGR

 ––––––––– 1,000 dollars ––––––––– ––––– Percent –––––

2809 Diphosphorus pentaoxide; phosphoric acid and

polyphosphoric acids . . . . . . . . . . . . . . . . . . . . . . . . . 1,310.5 49,556.9 124,653.1 18.9 65.9

0307 Molluscs & oth aquatic invertebrates nesoi, live, frsh,

chilld, frzn, dried, saltd or in brine; flours, meals &

pellets of aqua inverteb hum consumptn . . . . . . . . . . 45,086.1 100,765.6 98,620.1 15.0 9.1

1508 Peanut (ground-nut) oil and its fractions, whether or

not refined, but not chemically modified 73,804.2 62,997.7 53,884.6 8.2 -3.4

0302 Fish, fresh or chilled, excluding fish fillets and other

fish meat without bones; fish livers and roes, fresh

or chilled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,976.1 56,592.7 48,187.9 7.3 2.7

2501 Salt (incl table & denaturd salt) & pure sodium

chloride, wheth/not in aqueous solution or contain

added anticaking/free flowing agents; sea water .... 961.4 10,862.3 37,745.4 5.7 50.4

0306 Crustaceans, live, frsh, chilled, frzn etc.;

crustaceans, in shell, cookd by stm or boilng watr;

flours, meals, & pellets of crustaceans, human

consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,887.4 44,345.1 36,391.7 5.5 5.3

0304 Fish fillets and other fish meat (whether or not

minced), fresh, chilled or frozen . . . . . . . . . . . . . . . . . 24,488.0 37,273.6 36,063.7 5.5 4.4

0303 Fish, frozen, excluding fish fillets and other fish meat

without bones; fish livers and roes, frozen . . . . . . . . . 13,262.5 32,019.9 32,302.1 4.9 10.4

1604 Prepared or preserved fish; caviar and caviar

substitutes prepared from fish eggs . . . . . . . . . . . . . 54,436.6 30,596.8 29,448.2 4.5 -6.6

2402 Cigars, cheroots, cigarillos and cigarettes, of tobacco

or of tobacco substitutes . . . . . . . . . . . . . . . . . . . . . . 133.1 310.0 18,606.5 2.8 73.1

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,604.8 251,388.4 143,053.8 21.7 0.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416,950.7 676,709.0 658,957.0 100.0 5.2

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 188 Ibid., p. 29.

 189 Ibid., p. 28.

 190 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

6-51

Senegal’s exports of groundnut oil and its derivatives had a CAGR of -3.4 percent during

1994-2003. Nonetheless, exports of groundnut oil and groundnut cake used in animal feed

continued to dominate Senegal’s agricultural exports in 2003. Senegal’s exports of fresh fruit

and vegetables grew by 41 percent in quantity terms during 1998-2001. The growth in

exports of these products may largely be due to intervention by the World Bank’s

Agricultural Export Promotion Project and investment by several international companies

in the domestic supply chain.

Leading EU markets accounted for 55.9 percent of the total value of exports in 2003

(table SN-4). The European Union is a major market for Senegalese exports of fresh and

frozen fish and crustaceans and, more recently, nontraditional exports of fresh and

semiprocessed fruits and vegetables. In addition, most of Senegal’s exports of groundnut oil

go to the European Union, with 50 percent of that amount going to France.188 Much of

Senegal’s exports of phosphates and other phosphoric acids and almost one-half of Senegal’s

exports of salt and cement go to India. Neighboring Côte d’Ivoire and Nigeria were the fifthand sixth-largest markets in 2003, accounting for 6.5 and 4.8 percent, respectively, of total

exports. These countries are important markets for some of Senegal’s nontraditional exports

such as cosmetics, perfumes, and soaps.189

Table SN-4

Senegal: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

 ––––––––––– 1,000 dollars ––––––––––– ––––– Percent –––––

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,782.3 87,271.5 143,218.9 21.7 30.8

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181,903.1 128,275.1 127,812.8 19.4 -3.8

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,493.4 128,249.7 114,576.4 17.4 7.6

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,682.9 41,031.6 52,601.0 8.0 8.3

Côte d'Ivoire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 20,759.9 42,954.8 6.5 (1

) 

Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 1,301.2 31,364.0 4.8 (1

) 

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2

) 13,198.7 24,148.0 3.7 (1) 

Greece . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,224.2 22,749.5 22,750.8 3.5 29.5

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,686.6 16,621.5 12,928.5 2.0 1.1

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,043.7 13,758.8 12,416.0 1.9 10.5

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,134.6 203,491.6 74,185.9 11.3 -5.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416,950.7 676,709.0 658,957.0 100.0 5.2

1

 Undefined.

2

 Not available.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

Two of Senegal’s leading exports products, phosphates and groundnut oil, ranked fourth and

second in terms of the revealed comparative advantage (RCA) index.190 Other exports with

strong RCA indices include certain fresh, chilled, frozen, and semiprocessed fish;
 191 IF, Senegal: Diagnostic Trade Integration Study Report, pp. 26-30.

 192 U.S. Embassy official, interview by USITC staff, Dakar, Senegal, Mar. 15, 2005.

 193 IF, Senegal: Diagnostic Trade Integration Study Report, p. 80.

 194 Association official, interview with USITC staff, Dakar, Senegal, Mar. 14, 2005.

 195 Association official, interveiw with USITC staff, Dakar, Senegal, Mar. 14, 2005.

 196 IF, Senegal: Diagnostic Trade Integration Study Report, p. 82.

6-52

crustaceans; molluscs; and leguminous vegetables (peas and beans) (appendix E, table E30). In general, major potential exports in the short to medium term are in the agricultural

and fish products, services, and energy sectors.

The potential for export growth in the agricultural sector lies primarily with further

processed traditional agricultural products such as confectionery groundnuts and completely

processed groundnut oil, and nontraditional agricultural exports such as fresh and further

processed fruits and vegetables. Although small as compared with traditional exports, growth

in Senegal’s nontraditional exports, including edible fruits and vegetables, outpaced

Senegal’s traditional exports (except for fresh, frozen, or preserved fish or crustaceans)

during 2000-03. For example, exports of edible vegetables and certain roots increased

substantially to $16 million in 2003. With sufficient FDI, diversifying Senegal’s exports into

new areas such as fresh fruits and vegetables and further processed agricultural products

could boost agricultural exports.191

Without FDI to further the processing of the groundnut oil or to diversify into other

processed groundnut products, this sector is likely to expand only in the short term.

Reportedly, about 80 percent of Senegal’s exports of groundnut oil consists of semirefined

groundnut oil, with the remainder of the refining process performed in the European Union,

indicating potential for further processing in Senegal.192 In addition, Senegal could increase

its processing of groundnuts into groundnuts for confectionery use or groundnut candy. As

these products had a strong RCA index during 2000-03, it appears that Senegal’s exports of

groundnut oil have the comparative advantage to continue supplying almost one-third of the

world market for these products as it did in 2003, and to potentially increase its share of the

global market. In addition, these products have the opportunity for export growth, as the data

indicate that the world markets for groundnut oil are expanding. Because Senegal’s exports

of these products went primarily to the EU and U.S. markets, there is potential for Senegal

to diversify into other markets such as Australia and Canada, and some of the developing

countries such as India, that may have some demand for these products.

There appears to be potential for growth of nontraditional exports of fresh and processed

fruits and vegetables,193 as there is a market for these products in the European Union (where

they would be largely counterseasonal). Senegal has shown the potential to increase its

production of certain fresh fruits and vegetables, primarily green beans, cherry tomatoes,

melons, mangoes, papaya, and asparagus.194 Although production of these products has been

small, it grew to 10,000 tons in 2004 from approximately 6,000 tons 10 years ago, and is

projected to rise to 13,000 tons in 2005.195 The successful export of these products requires

exporters to meet quality and sanitary and phytosanitary standards (SPS) in export markets,

reduce shipping times, and develop a local port with the necessary infrastructure for packing

and cold storage.196

Exports of fresh, frozen, or preserved fish and crustaceans from Senegal have been

increasing since 2001 and are believed to have the potential to increase further in the short

run based on RCA analysis. The extent of this potential largely depends on the available
 197 Industry official, interview by USITC staff, Dakar, Senegal, Mar. 14, 2005.

 198 Industry official, interview by USITC staff, Dakar, Senegal, Mar. 14, 2005.

 199 Industry official, interview by USITC staff, Dakar, Senegal, Mar. 14, 2005.

 200 Industry official, interview by USITC staff, Dakar, Senegal, Mar. 14, 2005.

 201 IF, Senegal: Diagnostic Trade Integration Study Report, “Executive Summary,” p. vi.

 202 U.S. Embassy official, interview by USITC staff, Dakar, Senegal, Mar. 15, 2005.

 203 Government official, interview by USITC staff, Dakar, Senegal, Mar. 16, 2005.

6-53

supply of fish and the availability of FDI needed to provide the infrastructure for further

processing, such as refrigeration and freezing facilities at Senegal’s port. Senegal’s fishing

sector might then be able to diversify its export markets to the United States, Canada, Japan,

and Australia. Two of the fish products, molluscs and aquatic invertebrates, and fresh or

chilled fish, were in the top 10 products when ranked by average RCA index, indicating that

Senegal has some comparative advantage in these products. Senegal accounts for only a

small portion of the EU and the U.S. import markets for these products, indicating the

potential for Senegal’s fish sector to expand in these markets, especially if Senegal improves

its infrastructure at Dakar and focuses on niche products such as “dolphin-safe” tuna or

“line-caught” fish.197 There are currently two companies in Senegal that produce canned

tuna.198 These companies have the competitive advantage of proximity to the European

market;199 shipments by sea to Europe may take from 5 to 12 days, while shipments by sea

from Thailand take as much as 45 days. One of the canned tuna producers also processes

frozen fish. Shipping advantages also exist for frozen fish; fish caught on Sunday may be

shipped frozen to Paris on Monday night by Air France and be available to French grocery

stores or restaurants by Tuesday morning.200 There is concern, however, that the lack of

regulations over fishing rights is causing a crisis in the fishing sector, leading to depletion

of fishing resources and declining industrial fishing.201

Two potential service sector exports are tourism and information technology services. The

tourism sector has potential for growth, as Senegal’s beach resorts, natural African habitats,

and stable economy and government make Senegal a relatively attractive tourist destination.

Efforts have also been made to diversify into information technology outsourcing services

exports. With its several universities, Senegal could be a location for call centers, especially

for French-speaking EU countries. Reportedly, Senegal has good infrastructure in place to

support the information technology services sector.202

Another identified potential export is energy-related products, specifically petroleum. There

has been active exploration for gas and petroleum off the shores of Senegal. Several

companies have showed considerable interest in exploring for petroleum off the coast of

Senegal and there are studies currently underway to determine the potential supply.203

Domestic and International Barriers

A major constraint for Senegal’s economy is the lack of technically skilled labor necessary

for diversification into more skill-intensive industries, especially services such as

information technology outsourcing. The country’s relatively high illiteracy rate of

approximately 60 percent (2002), with secondary school enrollment of only 18 percent

(2003), contributes to the country’s high unemployment rate. Lack of trained labor,

especially relating to international business, hampers export growth. For example, exporters
 204 Nongovernmental organization official, interview by USITC staff, Dakar, Senegal,

Mar. 14, 2005. 

 205 U.S. Embassy official, interview by USITC staff, Dakar, Senegal, Mar. 15, 2005.

 206 U.S. Department of State telegram, “Senegal: USITC Study on Export Opportunities.”

 207 U.S. Embassy official, interview by USITC staff, Dakar, Senegal, Mar. 15, 2005.

 208 Industry official and association official, interviews by USITC staff, Dakar, Senegal,

Mar. 14, 2005.

 209 Researcher, interview by USITC staff, Dakar, Senegal, Mar. 15, 2005; and association

official, interview by USITC staff, Dakar, Senegal, Mar. 14, 2005.

 210 U.S. Embassy official, interview by USITC staff, Dakar, Senegal, Mar. 15, 2005.

 211 EIU, Senegal Country Profile, p. 23.

 212 U.S. Embassy official, industry official, and government official, interviews by USITC staff,

Dakar, Senegal, Mar. 15-16, 2005. 

 213 U.S. Embassy official, interview by USITC staff, Dakar, Senegal, Mar. 15, 2005.

6-54

suffer from a lack of knowledge of U.S. markets and business practices and the lack of

production capacity to meet large orders.204

Senegal has trouble attracting FDI despite the government’s recent efforts. Factors deterring

FDI include increased congestion in and around Dakar and the port’s outdated infrastructure,

indirect costs associated with government regulations such as “cumbersome labor laws,”205

a nontransparent judiciary,206 general banking sector problems, and over-reliance on taxing

large corporations.207 The current lack of FDI also may result from the civil unrest in Côte

d’Ivoire. Government bureaucracy and inadequate government support for exporters have

been noted as major barriers to investing in Senegal.208

The business environment indicators for Senegal are, on average, similar to those of the

region though below OECD averages (table SN-5). For example, it reportedly takes 485 days

to enforce a business contract in Senegal, compared with 434 days for the region and 229

days for OECD countries. Several of the indicators where Senegal fared worse than the

regional average relate to labor market rigidity, including difficulty in hiring and firing.

Although Senegal ranked as economically more free than the regional average in 2005, it

ranked below the region in fiscal burden of government, regulations, wages and prices, and

regulation (table SN-6). Businesses in Senegal are hampered by a lack of easily-accessible

credit; credit access is not a problem for large companies, but is generally unavailable to

small and medium enterprises (SMEs) to expand production into downstream products.209

In addition, the cost of electricity in Senegal is high–reportedly double the cost of electricity

in Côte d’Ivoire–because Senegal relies on thermal or diesel power generators.210

Inadequate infrastructure also hampers export growth. As the country’s major port, Dakar

does not have the capacity or infrastructure to accommodate additional container traffic and

to process the shipping of fresh, frozen, and processed fish and crustaceans. Some of the

trade that formerly went through Côte d’Ivoire’s port of Abidjan now passes through Dakar

because of the civil unrest and political instability in Côte d’Ivoire.211 Although there are

efforts to expand facilities, Dakar’s port has been considered less competitive than Abidjan,

which is considered to be faster, easier, and less expensive to use than neighboring ports. In

addition, traffic congestion212 causes delays in transporting products to and from ships. A

solution has been proposed to build an industrial zone outside of Dakar for SMEs.213
6-55

Table SN-5

Senegal: Business environment

Senegal

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 18.8 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 16.5 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 3.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.8 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 485.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 34.0 13.2 4.9

Registering a property: Time (days) ....................................... 114.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 112.9 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) .............. 270.4 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Senegal, applied rate, 2002)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005. 

Table SN-6

Senegal: Economic freedom

Senegal

Regional

average1

OECD

 average

–––– Heritage Foundation indicators ––––

1995 Overall score .................................................... (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 
 214 EIU, Senegal Country Profile, p. 23.

 215 Ibid.

 216 U.S. Department of State telegram, “Senegal: USITC Study on Export Opportunities.”

 217 EIU, Senegal Country Profile, p. 31.

 218 African Development Bank/Organization for Economic Cooperation and

Development,“Senegal,” African Economic Outlook, 2004, p. 268.

 219 Industry officials, interviews by USITC staff, Dakar, Senegal, Mar. 14, 2005.

 220 IF, Senegal: Diagnostic Trade Integration Study Report, p. 75.

 221 IF, Senegal: Diagnostic Trade Integration Study Report, Executive Summary, p. vi.

6-56

Although Senegal has a relatively advanced road network for the region with about

29 percent of Senegal’s roads paved (table SN-7), 214 the roads are in need of repair, consist

of three primary routes that are not interconnected, and do not connect with roads in

neighboring countries.215 For example, the transport of groundnuts from Senegal’s rural areas

to Dakar is hindered by the country’s infrastructure, which, although relatively advanced for

that region, is still problematic. Senegal’s railways are also inefficient and slow because of

aging infrastructure. Senegal’s national airline, Air Senegal International, however, has

domestic, regional, and international service to Paris, providing easy access to EU markets.216

The government is seeking private investors to finance a new international airport and

expansion of Senegal’s roads and the port at Dakar.217

Table SN-7

Senegal: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,575.0

Roads, paved (percent of total roads, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.3

Transport services (percent of service exports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6

Transport services (percent of service imports, BoP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.8

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.2

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.9

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.3

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.1

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.5 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Resource depletion limits the long-term viability of Senegal’s fishing sector. The

government has developed a restructuring plan to revive the fishing sector.218 Despite these

plans, however, industry sources in Senegal emphasized that the fishing sector is declining

in the long term and there is very little activity in place to prevent the decline.219 The basic

problem is that “the capacity to fish exceeds the availability of resources.”220 Only allocating

future catches of fish and enforcing these allocations, along with “regenerating the fish

stocks,” can help this sector.221

Senegal’s nontraditional exports of fresh fruits and vegetables also face barriers such as the

lack of technical capacity to meet export markets’ quality standards and requirements.

Senegal’s agricultural and fish exports, namely exports of fresh, chilled, and frozen fish and

fish products, and fresh fruits and vegetables, must meet EU and U.S. SPS requirements.

Exporters of these products need to be familiar with these requirements and have the

capability to meet them in order to increase sales in these markets. This sector also needs to
 222 IF, Senegal: Diagnostic Trade Integration Study Report, p. 82.

 223 U.S. Embassy official, Interview by USITC staff, Dakar, Senegal, Mar. 15, 2005.

 224 U.S. Embassy official, Interview by USITC staff, Dakar, Senegal, Mar. 15, 2005.

 225 IF, Senegal: Diagnostic Trade Integration Study Report, Executive Summary, p. viii.

 226 Ibid.

 227 U.S. Agency for International Development official, interview by USITC staff, Dakar,

Senegal, Mar. 16, 2005. Category one certification is required by the FAA for direct flight access

to the United States (app. C). 

6-57

reduce shipping times to its markets and suffers from a lack of packing and cooling centers

in Dakar.222

A factor constraining expansion of Senegal’s tourist sector is the inability to maintain the

infrastructure of the resorts and beach areas.223 Consequently, the sector relies on lower-end

vacations.224 The sector is in need of considerable and consistent FDI to enable it to compete

with other African tourist sites. The overall business environment constraints that hamper

FDI also inhibit expansion of the tourism sector. Other problems with Senegal’s tourist

sector include an “excessive dependence on beach tourism,”225 and poor communication

between the government and the private sector.226

Given Senegal’s access to various preferential market access initiatives, the reviewed

literature has not identified international barriers as major barriers to export growth. Lack

of required certification to access the U.S. market was, however, cited as hampering exports.

One potential impediment is that Senegal needs U.S. Federal Aviation Administration

Category One status to allow direct flights from Senegal to the United States, which it has

not obtained.227
6-58
 228 Prepared by Angela Calarco, Office of Industries.

 229 “SADC Trade, Industry and Investment Review 2004,” found at www.sadcreview.com,

retrieved Jan. 14, 2005.

 230 Central Intelligence Agency (CIA), “Tanzania,” World Factbook 2004, found at

www.cia.gov/cia/publications/factbook/, retrieved Jan. 4, 2005

6-59

Tanzania228

Economic Overview

Tanzania is located in East Africa and includes the islands of Pemba, Mafia, and Zanzibar

in the Indian Ocean. Tanzania’s GDP increased steadily from $8.6 billion in 1999 to

$9.9 billion in 2003 (table TZ-1). However, GDP growth slowed to 5.6 percent in 2003

compared with 6.3 percent in 2002. The growth in GDP can be attributed to the

government’s focus on improving the agricultural sector and the achievement of

macroeconomic stability. Trade represents 45.0 percent of GDP, and exports of goods and

services represent 17.6 percent of GDP. 

Table TZ-1

Tanzania: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,871.8

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4

External debt, total (current US$, millions, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,243.7

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.6

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.0

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,038.4

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.9

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.5

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.1

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.1

Primary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.7

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 

Tanzania’s economy is highly dependent on agriculture, which accounts for approximately

50 percent of GDP, 75 percent of exports, and 80 percent of employment.229 However, only

4 percent of the land area is used to cultivate crops because of topography and climatic

conditions.230 Tanzania has abundant natural resources and extensive water resources that 
 “Supply Survey on Tanzania’s Fish and Fish Products,” Subregional Trade Expansion in 231

Southern Africa, sponsored by the UNCTAD/WTO International Trade Centre, July-Aug. 1999,

found at www.intracen.org/sstp/Survey/fish/fishtan.html, retrieved Feb. 3, 2005.

 Economist Intelligence Unit (EIU), Tanzania Country Profile, 2004, p. 27. 232

 Ibid. 233

 “SADC Trade, Industry and Investment Review 2004.” 234

 Embassy of United Republic of Tanzania, “Basic Facts of Tanzania,” found at 235

www.tanzaniaembassy-us.org/government/facts.html, retrieved, Jan. 12, 2005.

 “SADC Trade, Industry and Investment Review 2004.” 236

 EIU, Tanzania Country Profile, p. 29. 237

6-60

include parts of three of the largest inland lakes in Africa, a diverse river system, and a

coastline stretching approximately 800 km.231

Tanzania’s agricultural sector is the largest contributor to GDP, accounting for 47.5 percent

(figure TZ-1). Cash crops account for a slightly larger percentage of GDP than subsistence

crops. Tanzania’s main cash crops are coffee, tea, cotton, tobacco, cashew nuts, and sisal.

Most cash crops, excluding tea and sisal, are primarily grown by small-scale farmers. Major

subsistence crops include maize (corn), sorghum, millet, cassava, rice, plantains, wheat, and

pulses. Yields for subsistence crops are generally low because they are produced by small 232

independent farmers who do not have access to modern technology or fertilizers.233

Livestock accounts for approximately 30 percent of Tanzania’s agricultural GDP.234

Tanzania has the fourth-largest cattle population in Africa, consisting of 13 million head of

cattle. More than 80 percent of fish are caught in fresh-water fisheries. The main fish 235 236

species include sardines, Nile perch, haplochromis, catfish, and tilapia. However, production

is not close to its potential because of a shortage of modern fishing equipment.237

Figure TZ-1

Tanzania: Composition of GDP (2002)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 238 Ibid., p. 32.

 239 African Development Bank (AfDB)/Organization for Economic Cooperation and

Development (OECD), “Tanzania,” African Economic Outlook, 2004, p. 300.

 240 U.S. & Foreign Commercial Service, (US&FCS), “Tanzania Country Commercial Guide FY

2004,” July 25, 2003, found at www.stat-usa.gov, retrieved Feb. 18, 2005.

 241 AfDB/OECD, “Tanzania,” p. 300.

 242 US&FCS, “Tanzania Country Commercial Guide, FY 2004.”

 243 Ibid.

 244 Ibid.

 245 Ibid.

 246 U.S. Department of State, “Background Notes: Tanzania,” Jan. 2005, found at www.statusa.gov, retrieved Jan. 5, 2005.

 247 EIU, Tanzania Country Profile, p. 30.

6-61

The services sector is improving its growth performance. In 2002, the sector accounted for

33.9 percent of GDP. Financial services are growing steadily; 20 licensed banks were

operating in Tanzania in 2003.238 Another major contributor to this sector is tourism, with

activity in hotels and associated retail activities growing by 7 percent in 2002.239 The dozen

national parks, including one of the world’s most famous, the Serengeti, and Africa’s highest

mountain, Kilimanjaro, make tourism one of the fastest-growing foreign exchange earning

sectors in Tanzania.240 Tourism continues to grow, both in number of tourists and revenue,

despite recent travel advisories for East Africa and the events of September 11, 2001.241

Manufacturing, construction, and mining contribute 16.1 percent to GDP. Although mining

only contributes 2.7 percent of GDP, it is the fastest-growing sector of the economy.242

Tanzania’s minerals and energy resources include gold, diamonds, salt, gypsum, gemstones,

tanzanite (found only in Tanzania), iron ore, natural gas, phophates, coal, nickel, and cobalt.

In 1997, the Parliament approved the New Mining Policy and a new special fiscal package

that eliminated import duties and value-added tax on equipment related to mineral

exploration, development, and production.243 However, only gold has reaped notable benefits

from this amendment. Tanzania may become the third-largest gold producer in Africa as

more gold mines open.244 The government estimates that mining will account for 10 percent

of GDP by 2025.245

Tanzania’s manufacturing sector accounts for 8.4 percent of the GDP. The dominant

industrial activities include raw materials processing and agroprocessing.246 The

manufacturing sector is expanding as a result of the privatization of many state-owned

factories, increased foreign direct investment in the sector, improved water and electricity

supplies, and overall economic growth.247

Export Profile

In 2003, Tanzania’s total exports were $799.6 million. The leading export products were fish

and crustaceans; coffee, tea, mate, and spices; ores, slag and ash; edible fruit and nuts; and

tobacco (table TZ-2). Within these categories, the leading export products were fish fillets

and other fish meat, coffee, copper ores and concentrates, cashew nuts, and tobacco

(table TZ-3). Tanzania’s exports of goods and services have been an important source of

economic growth since 1990. Between 1990 and 2003, almost 60 percent of the country’s
6-62

Table TZ-2

Tanzania: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars ––––––– –––– Percent ––––

03 Fish & crustaceans, molluscs & other aquatic invertebrates . . . 25,453.3 66,717.8 153,844.8 19.2 22.1

09 Coffee, tea, mate and spices. ........................... 107,783.6 118,162.2 83,591.8 10.5 -2.8

26 Ores, slag and ash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,148.6 4,438.1 64,979.5 8.1 56.6

08 Edible fruit and nuts; peel of citrus fruit or melons . . . . . . . . . . . 43,325.5 98,877.4 59,903.6 7.5 3.7

24 Tobacco and manufactured tobacco substitutes . . . . . . . . . . . . 23,815.8 74,182.2 59,674.5 7.5 10.7

71 Natural or cultured pearls, precious or semiprecious stones, 

precious metals; precious metal clad metals, articles 

thereof; imitation jewelry; coin . . . . . . . . . . . . . . . . . . . . . . . . 12,471.1 38,749.3 59,299.0 7.4 18.9

52 Cotton, including yarns and woven fabrics thereof . . . . . . . . . . . 90,237.9 33,661.0 49,635.7 6.2 -6.4

07 Edible vegetables and certain roots and tubers . . . . . . . . . . . . . 8,290.4 8,326.9 28,835.3 3.6 14.9

12 Oil seeds and oleaginous fruits; miscellaneous grains, seeds 

and fruits; industrial or medicinal plants; straw and fodder . . . 7,165.9 16,404.5 23,439.7 2.9 14.1

44 Wood and articles of wood; wood charcoal . . . . . . . . . . . . . . . . 7,069.2 5,287.3 22,204.6 2.8 13.6

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,900.0 153,644.4 194,192.2 24.3 5.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447,661.2 618,451.1 799,600.9 100.0 6.7

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to gold exports.

 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table TZ-3

Tanzania: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––– 1,000 dollars –––––– –––– Percent ––––

0304 Fish fillets and other fish meat (whether or not minced), 

fresh, chilled or frozen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,864.3 48,230.8 121,537.6 15.2 110.6

0901 Coffee, whether or not roasted or decaffeinated; coffee 

husks and skins; coffee substitutes containing coffee . . . . . . 99,665.5 94,801.7 61,781.9 7.7 -5.2

0801 Coconuts, brazil nuts and cashew nuts, fresh or dried . . . . . . . . 43,275.7 98,723.0 59,830.1 7.5 3.7

2401 Tobacco, unmanufactured (whether or not threshed or 

 similarly processed); tobacco refuse . . . . . . . . . . . . . . . . . . . 23,815.8 74,082.8 59,635.4 7.5 10.7

5201 Cotton, not carded or combed . . . . . . . . . . . . . . . . . . . . . . . . . . 79,182.1 31,605.2 43,580.9 5.5 -6.4

2603 Copper ores and concentrates . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 4,246.3 38,552.8 4.8 (1

)

7103 Precious and semiprecious stones (not diamonds), not

strung, mounted etc.; ungraded precious and semiprecious stones (not diamonds) strung for transport . . . . . . . 8,842.1 28,298.6 29,781.5 3.7 14.4

7102 Diamonds, whether or not worked, but not mounted or set .... 335.5 8,243.8 27,398.8 3.4 63.1

0713 Leguminous vegetables, dried shelled . . . . . . . . . . . . . . . . . . . . 6,395.1 7,898.6 26,032.6 3.3 16.9

2616 Precious metal ores and concentrates . . . . . . . . . . . . . . . . . . . . 0.0 0.0 25,983.3 3.2 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176,285.1 222,320.1 305,486.0 38.2 21.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447,661.2 618,451.1 799,600.9 100.0 6.7 1

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to gold exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 248 Integrated Framework (IF), “Concept Paper, Tanzania Diagnostic Integration Study,” p. 6,

found at www.integratedframework.org, retrieved Mar. 1, 2005.

 249 US&FCS, “Tanzania Country Commercial Guide, FY 2004.”

 250 World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/

dataonline, retrieved Jan. 25, 2005.

 251 Trade Law Centre for Southern Africa, “Tanzania Ban on Fish Exports to be Lifted,”

Oct. 3, 2004, found at www.tralac.org, retrieved Jan. 31, 2005. 

 252 World Bank, “Tanzania’s Coffee Sector,” Constraints and Challenges in a Global

Environment, Apr. 2004.

 253 Trade Point, found at www.tptanzania.co.tz, retrieved Feb. 3, 2005.

 254 EIU, Tanzania Country Profile, p. 35.

 255 Trade Law Centre for Southern Africa, “Trade Relations Between Tanzania and the EU,”

Feb. 21, 2003, found at www.tralac.org, retrieved Jan. 14, 2005.

 256 Charles Krakoff, The Services Group for USAID, “Key Potential Export Markets and the

Market Access Barriers Facing Southern African Exporters,” Nov. 2003, p. 5.

6-63

GDP growth can be attributed to exports.248 Agricultural products are predominately

traditional exports such as coffee, cotton, sisal, cashew nuts, cloves, tea, and tobacco.249

Tanzania’s largest export product is fish. Exports of fish have grown significantly, from

$48.2 million in 1999 to $121.5 million in 2003, largely because the European Union lifted

its ban on imports of Tanzanian fish in June 2000.250 Tanzania’s government plans to lift a

ban imposed in 2002 on exporting certain fish by foreign trawlers in an attempt to reduce

illegal fishing in Tanzanian waters; currently licensed foreign trawlers are only permitted to

export prawns, crabs, and lobsters.251

Tanzania’s second-largest export product is coffee. The value of coffee exports declined each

year during 1995-2002 because of the decrease in world market prices. Exports increased in

2003, reaching $61.8 million. This growth is attributed to government reform of the sector,

which began in 1990 and included allowing the private sector to participate in marketing and

processing coffee, and allowing private buyers to purchase and process coffee in their own

factories.252 In recent years, tea and tobacco have been more stable exports.

Although gold, diamonds, gemstones, and industrial minerals are currently being mined for

export, a new mining policy liberalizing the sector could increase the potential for minerals

and metals export growth.253 Gold exports have already responded to changes in sector

regulations, and have driven the overall increase in minerals exports from $26.4 million in

1998 to an estimated $540.2 million in 2003.254

India and Japan accounted for approximately 26 percent of Tanzania’s exports in 2003

(table TZ-4). Another 32 percent were sent to the European Union. Markets with the highest

9-year compound annual growth rates (CAGRs) are China and the Netherlands, with CAGRs

of 12.9 percent and 11.5 percent, respectively. Most of Tanzania’s exports to the European

Union consist of raw agricultural and mineral products.255 Tanzania’s biggest export market

in Africa is Kenya.256
 257 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 258 World Bank, “Tanzania’s Coffee Sector.” 

 259 TechnoServe, “TechnoServe and the Coffee Industry,” found at http://technoserve.org/

africa/tanzan-coffee.html, retrieved Feb. 18, 2005.

 260 “SADC Trade, Industry and Investment Review 2004.” 

 261 Government officials, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

6-64

Table TZ-4

Tanzania: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––––––– 1,000 dollars ––––––––––––––– –––––––– Percent –––––––

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,340.0 124,447.6 108,004.4 13.5 7.9

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,959.5 67,322.8 100,872.6 12.6 8.4

Netherlands . . . . . . . . . . . . . . . . . . . . . . . 23,212.8 42,445.8 62,007.3 7.8 11.5

United Kingdom . . . . . . . . . . . . . . . . . . . . 34,412.8 29,768.8 55,743.4 7.0 5.5

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . 51,153.0 57,470.3 55,482.0 6.9 0.9

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 18,562.6 43,154.4 5.4 (2)

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,225.3 5,743.9 27,567.1 3.4 12.9

United States . . . . . . . . . . . . . . . . . . . . . . 16,432.8 37,361.7 26,169.2 3.3 5.3

France . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,790.0 10,938.3 23,699.7 3.0 5.4

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,090.9 13,824.4 21,410.0 2.7 8.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . 185,044.3 210,564.8 275,490.9 34.5 4.5

Total . . . . . . . . . . . . . . . . . . . . . . . 447,661.2 618,451.1 799,600.9 100.0 6.7

1

 Not available.

2

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to gold exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

The major economic sectors with the greatest potential for growth in export sales are

agriculture and agroprocessing, apparel, mining and energy, and tourism. Tanzania’s leading

exports are agricultural, fisheries, or mining products, and most have high revealed

comparative advantage257 (RCA) indices (appendix E, table E-35). Several mining products

are also among the top products in terms of an increase in the RCA index.

The potential for growth in the coffee sector is considerable. Coffee factories are operating

at approximately one-quarter of installed capacity.258 Recent changes in regulations allow

coffee growers to bypass the country’s state-run national coffee auction and export directly

to buyers.259 This change could help increase coffee exports. Tanzania has a potential to

increase its exports of a wide range of fruit, vegetables, and flowers. The climate and

growing conditions are ideal for fruits such as pineapples, passion fruit, citrus, mangoes,

peaches, pears, and bananas; and vegetables such as green beans, tomatoes, spinach,

cabbage, and okra. Potential export markets include regional countries, the Middle East, and

Europe.260 Unprocessed cashew nuts are considered a nontraditional export. The government

is promoting this product for export and is trying to acquire updated technology from China

and India for its 12 processing plants.261 Tanzania’s Board of External Trade has identified

pepper, chili, paprika, cardamom, cinnamon, vanilla, turmeric, and ginger as potential export
 262 United Republic of Tanzania, International Trade Center and Board of External Trade,

“Spices Export Development Strategy,” Nov. 2002, p. 7. 

 263 Ibid.

 264 Government officials, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 265 “Supply Survey on Tanzania’s Fish and Fish Products,” Subregional Trade Expansion in

Southern Africa, sponsored by the UNCTAD/WTO International Trade Centre, July-Aug. 1999,

found at www.intracen.org/sstp/Survey/fish/fishtan.html, retrieved Feb. 3, 2005.

 266 Government officials, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005;

and Board of External Trade, “The Fish Sector Export Development Strategy,” Nov. 2003, p. 8.

 267 U.S. Department of State telegram, “Tanzania: 2005 Investment Climate Statement,”

message reference No. 250356, prepared by U.S. Embassy, Dar Es Salaam, Jan. 14, 2005.

 268 Government official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 269 Multilateral Investment Guarantee Agency (MIGA), World Bank, Shedding New Light on

Africa’s Investment Opportunities, June 2003, p. 10.

 270 US&FCS, “Tanzania Country Commercial Guide, FY 2004.”

 271 EIU, Tanzania Country Profile, p. 17

 272 Trade Law Centre for Southern Africa, “Oil and Gas Prospects in Africa,” Mar. 8, 2005,

found at www.tralac.org, retrieved Mar. 11, 2005.

 273 US&FCS, “Tanzania Country Commercial Guide, FY 2004.”

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growth products.262 Potential markets for expanded spice production are the European Union,

the United States, Japan, and the Middle East;263 however, government representatives note

that quality and packaging standards would have to improve to meet market requirements.264

Tanzania’s abundant water resources present potential for fisheries industries.

Approximately 6 percent of Tanzania’s total mainland area is covered by fresh-water lakes

with significant fish resources. Captured fish and aquaculture have potential yields of

730,000 metric tons; however, very little of this potential is being exploited.265 Currently, the

only fresh-water fish allowed to be exported are Dagaa, Nile perch, and aquarium fish;

rescinding the above-mentioned export ban on foreign trawlers could increase fish exports.266

Opportunities also exist to increase offshore fisheries that could result in additional export

capacity. 

The majority of Tanzania’s agricultural exports are not processed. However, the government

is starting to focus on the downstream processing of agricultural products and great potential

reportedly exists for growth in agroprocessing.267 For example, most coffee exports are

beans. Processing coffee beans and the final packaging of tea would result in downstream

exports, which garner higher prices.268 Opportunities also exist in processing and packaging

fruit and vegetables, dairy products, and meats, as well as manufacturing spirits from

molasses produced by sugar processing factories.269

Various mineral and energy products have potential for export growth. Tanzania’s mining

sector is expanding; as previously noted, Tanzania is expected to become the third-largest

gold producer in Africa.270 The government has eliminated many impediments that restricted

foreign ownership of mineral production enterprises. The government anticipates that

petroleum will be discovered off the coast of Tanzania, although it is unclear if the deposits

will be commercially viable.271 The government is seeking investors for 7 of 12 exploration

blocks with potential gas and petroleum deposits.272

Tourism, one of the fastest-growing sectors in Tanzania and the largest foreign currency

earner, has potential for increased growth.273 An increasing number of travelers from East

Asia, India, the United States, and Europe are drawn to Tanzania’s wildlife safaris, deep-sea
 274 The East and Central Africa Global Competitiveness Trade Hub (ECAHUB), “National

AGOA Strategy Report,” submitted to the ECA Hub by Kathleen Charles, USAID, Aug. 24, 2004. 

 275 Ibid.

 276 Tanzania Chamber of Commerce official, interview by USITC staff, Dar Es Salaam,

Tanzania, Mar. 11, 2005.

 277 For additional information on the Multifiber Arrangement and the end of textile and apparel

quotas in 2005, see app. C.

 278 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 279 Tanzania Chamber of Commerce representatives, interview by USITC staff, Dar Es Salaam,

Tanzania, Mar. 11, 2005; and government official, interview by USITC staff, Dar Es Salaam,

Tanzania, Mar. 10, 2005.

 280 For additional information on regional organizations, see app. C.

 281 MIGA, Shedding New Light on Africa’s Investment Opportunities, p. 10.

 282 Ibid.

 283 Ibid.

 284 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

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fishing, mountain climbing, and nature treks.274 The growth in this sector has stimulated

significant investment in hotels, restaurants, and ground service facilities.275

Textiles and apparel, processed wood products, and leather products are manufactured items

that have been identified as export growth sectors. The government has supported the export

of textiles and apparel as one of the major sectors for growth, and Tanzania has begun to

export apparel to the United States under AGOA.276 The identification of textiles and apparel

as a potential export sector is, however, dampened by the increasing international

competition stemming from the removal of quotas in 2005.277 Wood exports increased

significantly, from $2.4 million in 2001 to $18.9 million 2003; the government is

encouraging the sale of processed wood products such as handicrafts, instead of timber or

logs.278 Tanzania’s livestock numbers have been growing consistently in recent decades, and

opportunities reportedly exist for the export of leather and leather products.279

Regarding potential export growth markets, Southern African Development Community

(SADC)280 countries offer potential for growth in Tanzanian exports.281 Growth in exports

is likely to be in downstream processing and expanding the volume of products that Tanzania

currently exports, including beans, tobacco, cotton, cottonseed residue, raw hides and

skins.282 As a member of SADC, Tanzania benefits from a 5-15 percent tariff preference.

Tanzania can further process its exports by washing, sorting, and grading beans, and by

using technical innovation in its cotton production.283

Domestic and International Barriers

Although Tanzania has many potential exports, the country lacks policies, incentives,

supporting information, and infrastructure to encourage exports.284 These challenges affect

numerous products across sectors. Investors wanting to start and maintain a business in

Tanzania are faced with several obstacles. When registering property, investors face twice

as many procedures as other countries in the region and three times as many procedures as

OECD countries (table TZ-5). Most of Tanzania’s employment indicators are also worse

than the regional average. However, Tanzania scores better than the regional average on

enforcing contracts. Although Tanzania’s economic freedom score is on par with the regional

average, the trade policy score is notably worse than the regional or OECD averages

(table TZ-6).
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Table TZ-5

Tanzania: Business environment

Tanzania

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . . . 21.3 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.3 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.0 35.0 19.0

Enforcing contracts: Time (days)............................................ 242.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . . . 12.6 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ......................... 186.9 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . . . 6.8 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Tanzania, applied rate, 2003)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.5

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005. 

Table TZ-6

Tanzania: Economic freedom

Tanzania

Regional

average1

OECD

average

––––– Heritage Foundation indicators ––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.4 2.2

 Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 
 285 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 286 Government official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 287 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 288 Government official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 289 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 290 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 291 US&FCS, “Tanzania Country Commercial Guide, FY 2004.”

 292 Embassy of the United Republic of Tanzania official, interview by USITC staff,

Washington, DC, Mar. 2, 2005; African Development Bank (AfDB), “United Republic of

Tanzania: Country Strategy Paper 2002-2004,” May 2003, p. 6; and government officials,

interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 293 US&FCS, “Tanzania Country Commercial Guide, FY 2004;” and association official,

interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 294 U.S. Department of State telegram, “Tanzania: 2005 Investment Climate Statement.” 

 295 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 296 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005

 297 Government officials, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 298 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005. 

 299 For additional information on regional organizations, see app. C.

 300 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

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The government’s policymaking and implementation process can be slow. For example, an

industry representative that potentially could have benefitted from access to AGOA tariff

preferences noted that as a result of government delays, Tanzania did not become eligible

for AGOA until 1 year after the AGOA legislation passed.285 There is also an inconsistency

in government decisions, especially in the handicrafts sector. For example, at the same time

the government is trying to promote an increase in downstream production, the taxes on

handicrafts have increased.286 According to an industry representative, the government also

does not effectively promote investment in the export processing zone (EPZ).287 The EPZ

faces many challenges, including poor infrastructure and lack of space.288 Industry

representatives also noted that the process of exporting through Tanzanian Customs is

tedious and discourages formal export.289 Other industry participants raised concerns about

local governments’ imposition of (unofficial) taxes as products transit between regions and

districts, which raise the cost of production and cause shipping bottlenecks.290

The financial services sector is not well developed. Even though the financial sector has been

liberalized, only 5 percent of farmers have access to bank credit.291 There are few banks and

interest rates are 20-25 percent.292 Because the government owns all of the land in Tanzania,

small-scale farmers and other borrowers are unable to use land as collateral.293 Instead, land

can be leased for 33, 66, or 99 years, depending on its use,294 and the president can revoke

leases, increasing investment risk.295

Tanzania’s packaging industry is of poor quality. Investments are needed to develop and

improve packaging to meet quality, strength, and environmental-friendly requirements.296

Government officials commented that although some packaging companies are emerging,

they are unable to fill the demand or to provide adequate quantities for export to certain

markets, including the United States, or for certain sectors, such as horticulture and spices.297

Consequently, packaging is typically imported from South Africa.298

Production costs in Tanzania are high. Raw materials are expensive, and the average import

tariff in 2003 was 13.6 percent (table TZ-5). Among East African Community members,299

electricity costs are the highest in Tanzania300 and service is sporadic. The high cost of
 301 AfDB, “United Republic of Tanzania,” p. 6.

 302 U.S. Department of State telegram, “Tanzania: 2005 Investment Climate Statement.”

 303 U.S. Trade Representative, “Tanzania,” National Trade Estimate of Foreign Trade Barriers

2004, p. 408, found at www.ustr.gov, retrieved Feb. 16, 2005.

 304 US&FCS, “Tanzania Country Commercial Guide, FY 2004.”

 305 WTO, “Trade Policy Features,” Trade Policy Review, Report by the Secretariat, found at

www.wto.org, retrieved Feb. 2, 2005; and industry officials, interview by USITC staff, Dar Es

Salaam, Tanzania, Mar. 11, 2005.

 306 AfDB, “United Republic of Tanzania,” p. 10.

 307 Government official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005. 

 308 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 309 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 310 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 311 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005. 

 312 Various industry officials, interview by USITC staff, Dar Es Salaam, Tanzania,

Mar. 10, 2005.

 313 Various industry officials, interview by USITC staff, Dar Es Salaam, Tanzania,

Mar. 11, 2005.

 314 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 315 Industry officials, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 316 ECAHUB, “National AGOA Strategy Report;” and government official, interview by

USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 317 U.S. Department of State telegram, “Tanzania: 2005 Investment Climate Statement.”

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electricity is a serious impediment to attracting new businesses. Other deterrents to business

development include a weak legal system, obsolete labor laws, and the tax regime.301

Another significant impediment is the inability of foreign investors to own land,302 which

may be alleviated by the new land law that would allow the government to sell government

land to the private sector, including foreign investors.303 Foreign investors also face

difficulties in obtaining documentation such as town planning certificates and building

permits.304

Export production capacity is limited.305 Productivity in the rural sectors is low because of

the limited access to modern technology, manufacturing equipment, and inputs,306 and a

government official noted that producers are generally slow to change their operational

practices to increase efficiency.307 Industry representatives have lamented that producers

cannot satisfy large quantities demanded by certain export markets,308 and transportation

costs increase when producers are unable to fill containers for shipments.309 For example,

handicrafts producers are fragmented and not centrally located, making it difficult to fill

orders and educate producers about management.310 Individual carvers produce minimum

volumes and use traditional materials that are not conducive to mass production.311 A number

of industry representatives commented that exporters face many regulations in procuring

wood and are required to have a certificate to export, and cutting fees associated with forests

increase costs.312 Tanzanian producers also lack a clear understanding of overseas quality

requirements313 and consumer preferences;314 the cost of traveling to foreign market trade

shows and sending samples overseas is expensive for Tanzanian producers.315 There is also

a lack of skilled labor and managerial skills, which hampers expansion into more skillintensive industries.316 For example, an impediment to trading with the United States is that

Tanzania’s exporters do not have information about the U.S. market or how to make U.S.

business contacts.317

An important factor hampering export growth is inadequate infrastructure, both

transportation (air and road) and communications. For example, to develop horticulture in
 318 Government officials, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 319 US&FCS, “Tanzania Country Commercial Guide, FY 2004.”

 320 AfDB, “United Republic of Tanzania,” p. 10.

 321 ECAHUB, “National AGOA Strategy Report.”

 322 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 323 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 324 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 325 US&FCS, “Tanzania Country Commercial Guide, FY 2004.”

 326 ECAHUB, “National AGOA Strategy Report.”

 327 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

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Arusha, the airport needs to be improved as it does not have the necessary storage and

refrigeration facilities to support such exports.318 The road network suffers from 25 years of

neglect and decay.319 Only 4.2 percent of the total road network is paved (table TZ-7), and

only 8 percent and 20 percent of district and regional roads, respectively, were in good

condition in 2000.320 Feeder roads are inaccessible from production sites to distribution

centers and ports,321 making it difficult for businesses to operate outside of Dar es Salaam.

For example, an industry representative noted that the Mwanza area has mineral production

potential (e.g., uranium); however, the city cannot be reached by air or rail transportation,

and bus transportation requires 2 days.322 Because of poor road conditions, the cost of

transportation is high. A local industry participant noted that the cost to ship a 20-foot

container from Arusha to Dar es Salaam is an estimated $900-$950, the same amount as

shipping from Dar es Salaam to the European Union.323 Although communication with

producers in rural areas has improved with the increased use of mobile phones, the

inadequate transport infrastructure hampers the retrieval of products from remote areas.324

Postal and fixed line phone services are weak; fixed line telephone services are unreliable

and international service is expensive and inconsistent.325

Table TZ-7

Tanzania: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,200.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.8

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.1

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.0

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

The agriculture and agroprocessing sectors face sector-specific challenges such as the lack

of cold storage facilities and warehouses for perishable goods. Limited technology transfer

hinders the growth in downstream production.326 Despite its lakes and rivers, Tanzania has

a very low level of irrigation.327 Even though Tanzania has comparative advantages in

agricultural products, the country faces challenges exporting to the U.S. market. Industry

representatives commented that export impediments include the lack of technical capacity

to meet strict customs procedures; sanitary, phytosanitary, and U.S. Food and Drug
 328 Embassy of the United Republic of Tanzania official, interview by USITC staff,

Washington, DC, Mar. 2, 2005; and various industry officials, interview by USITC staff, Dar Es

Salaam, Tanzania, Mar. 10-11, 2005.

 329 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 330 Industry official, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 331 World Bank, “Tanzania’s Coffee Sector.” 

 332 Government officials, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005;

and industry officials, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 10, 2005.

 333 Government officials, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

 334 Industry officials, interview by USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005.

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Administration standards;328 and requirements similar to those in the European Union such

as the traceability of products.329 Tanzania competes with Kenya and South Africa, which

have more capacity to meet U.S. standards requirements.330 One of the most significant

impediments to growth in the coffee sector is taxation. Taxes are high, 50 to 70 percent, and

the tax code is complicated.331 In addition, the Coffee Board limits the number of export

licenses applicants can obtain. 

Mineral sector export growth is hindered by pervasive smuggling of tanzanite into Kenya;

for example, Kenya is the leading exporter despite the fact that tanzanite can only be found

in Tanzania.332 Government officials conceded that smuggling is induced by the porous

borders and burdensome licensing and regulations applied to the export of tanzanite.333

International impediments to trade were rarely cited as major factors inhibiting export

growth. One factor that was identified is the lack of direct transport to the United States. One

industry representative asserted that all freight is directed through the European Union,

causing delays of at least 7 weeks to reach the U.S. market.334
6-72
7-1

CHAPTER 7

Coffee, Tea, and Spice-Exporting Countries: 

Ethiopia, Kenya, and Uganda

The East African countries in this group all contain similar elevated semiarid regions along

the Great Rift Valley that are suitable for coffee production. The arabica coffee tree is native

to the semiarid highland forests of southwestern Ethiopia and has been diffused around the

world. Table 7-1 summarizes the pattern of exports for these countries. The region also

includes ecological niches that support significant cultivation and exports of tea (Kenya), cut

flowers (Kenya and Uganda), and vanilla (Uganda). A summary of findings for each of the

three countries with respect to potential export growth sectors and domestic and international

barriers is provided below.

Table 7-1

Ethiopia, Kenya, and Uganda, 1999-2003 average share of total exports, by sector

Sector Ethiopia Kenya Uganda

–––– Shares of total exports, 1999-2003 (percent) ––––

Fish and related products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 4.8 17.8

Coffee, tea, and spices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.8 24.6 47.8

Cocoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 0.1 0.8

Other agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.3 31.9 21.0

Forest-based products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 2.5 0.5

Minerals, metals, and metal products . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 8.0 2.9

Fuels and electrical energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 11.9 0.9

Textiles and fibers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 1.2 4.7

Apparel and related articles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 5.8 0.3

Other manufactures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 9.3 3.2 1

 Average share of less than 0.05 percent during 1999-2003.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Ethiopia

Ethiopia has an agrarian economy that is dependent on coffee, oilseeds, animal skins, and

cotton exports. Continuous armed conflicts, diseases, and chronic food shortages have

hampered Ethiopian economic progress. Coffee has long dominated Ethiopian exports to the

EU market. There are a variety of potential export sectors in Ethiopia, with agricultural

products, light manufacturing, energy, and services having the most potential. The main

barriers to trade for Ethiopia are lack of technology, market information, adequate

transportation infrastructure, social stability, and security. Difficulty in complying with

sanitary and phytosanitary standards was identified as an international impediment to export

growth.
7-2

Kenya

Kenya has significant potential for export development in the horticultural, tourism, and

manufacturing sectors. The potential for increasing exports of horticultural products,

especially cut flowers, is high both in traditional export markets such as the European Union

and in relatively unexploited markets such as the United States, South Africa, and Japan. The

principal barriers to export development are poor infrastructure, a lack of regulatory

transparency, and lack of security. Difficulty in complying with sanitary and phytosanitary

standards and the lack of certification required for direct flight access to the U.S. market

were identified as international impediments to export growth.

Uganda

Uganda has been touted as one of Africa’s success stories. Following the social disruption

and economic mismanagement of the 1970s and early 1980s, almost 20 years of reform have

culminated in relative political stability and dynamic and stable economic growth. There is

a variety of potential export sectors in Uganda, with agribusiness and nontraditional exports

such as fish, vanilla, gold, cut flowers, and livestock products having the most potential. A

main barrier to trade for Uganda is poor infrastructure, both within the country and across

the continent, particularly its inefficient and expensive regional transportation network,

which constrains the land-locked country’s competitiveness and comparative advantage.

Difficulty in complying with sanitary and phytosanitary standards and agricultural support

programs in developed countries were identified as international impediments to export

growth. Regional instability and high transport costs associated with being land locked were

also cited as geographic trade-related barriers.
 1

 Prepared by Selamawit Legesse, Office of Economics.

 2

 World Bank, “A Strategy to Stimulate and Balance Growth in Ethiopia,” found at 

www.worldbank.org, retrieved Feb. 3, 2005. 

 3

 International Organization for Migration, “Reversed Brain Drain and Remittances,” found at

www.ethiopiandiaspora.info/articles.asp?id=44, retrieved Mar. 2005.

7-3

Ethiopia1

Economic Overview

Ethiopia, the second-most populous country in sub-Saharan Africa (SSA), is a land-locked

country located in the northeast horn of Africa. Ethiopia’s GDP increased steadily during

1999-2001, reaching a growth rate of 8.8 percent in 2001, before slowing to 1.9 percent in

2002 and contracting by 3.9 percent in 2003 (table ET-1). In 2003, trade represented more

than 50 percent of GDP. Over the last 40 years, regional instability and natural disasters have

hindered Ethiopia’s economic progress.2

 Famine, HIV/AIDS, and other diseases are also

limiting factors. In recent years, the frequency of droughts and the number of people affected

by them have increased. Remittances have become an increasingly important source of

foreign currency for Ethiopia.3

Table ET-1

Ethiopia: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,637.8

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.9

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5.7

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8

External debt, total (current US$, millions, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,522.5

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.2

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.8

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.6

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.5

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.7

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.5

Primary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.
 U.S. Department of State telegram, “Ethiopia: 2005 Investment Climate Statement,” message 4

reference No. 221111, prepared by U.S. Embassy, Addis Ababa, Feb. 2005. 

 World Bank, “Ethiopia: Country Brief,” found at www.worldbank.org, retrieved 5

Mar. 13, 2005.

 U.S. Department of State telegram, “USITC AGOA Study on Export Opportunities and 6

Barriers Information Request: Ethiopia” message reference No. 000545, prepared by U.S.

Embassy, Addis Ababa, Feb. 2005.

 World Bank, “Ethiopia’s Recent Growth Performance: A Survey of the Literature,” found at 7

www.worldbank.org, retrieved Mar. 13, 2005.

7-4

In 1991, after 17 years of a centrally planned economy, the government began pursuing a

market-oriented economic development strategy, including privatization of state enterprises

and rationalization of government regulation. These reforms have stimulated economic 4

activity and increased investment in the country. The momentum of the reforms and

economic progress, however, was interrupted by war with Eritrea in May 1998, which lasted

until the end of 2000.5

The services sector accounted for 48.7 percent of GDP in 2002/03, and is dominated by

wholesale, retail, and other general services (figure ET-1). Agricultural and related activities 6

represented 39.4 percent of GDP in 2002/03, and accounted for 85 percent of total

employment. A large part of this sector remains state owned, and the government remains 7

the sole owner of land. Limited access to investment, technology, and water has resulted in

limited productivity in the agricultural sector. Recurring famines, dependency on food aid,

and armed conflicts have also reduce productivity. 

Figure ET-1

Ethiopia: Composition of GDP (2002/03)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 8

 Government official, interview with USITC staff, Dar Es Salaam, Tanzania, Mar. 11, 2005. 

 9

 U.S. & Foreign Commercial Service (US&FCS), “Ethiopia Country Commercial Guide, FY

2004,” found at www.stat-usa.gov, retrieved Mar. 13, 2005.

 10 EIU, Ethiopia Country Profile, p. 19.

 11 Following liberalization, the private sector has also become the dominant player in the vital

leather industry, owning some of the county’s 20 tanneries. U.S. Department of State telegram,

“USITC AGOA Study.” 

 12 Ethiopian Economic Association official, e-mail communication to USITC staff,

Mar. 23, 2005.

 13 Lega Dembi started production in August 1998, and in 2001, output reached 3.4 metric tons.

Midroc initiated a new $51.6 million gold mining venture in 2003, probably to fund the purchase

of the 300-kilogram-per-year Adola gold project that is scheduled for privatization. EIU, Ethiopia

Country Profile, p. 46.

 14 U.S. Department of State telegram, “USITC AGOA Study.”

 15 Ibid.

 16 Ibid.

 17 Ibid.

7-5

Among the largest livestock producers in Africa,8 Ethiopia has an estimated 75 million head

of livestock: 35 million cattle, 23 million sheep, and 17 million goats.9

 Ethiopian livestock

and animal-related production accounts for about 20 percent of the GDP and employs over

30 percent of the agricultural labor force.10 State-owned and some private companies process

most of the agricultural products.11

Industrial production accounted for 11.9 percent of GDP in 2002/03. The main industrial

products are food and beverages, textiles, chemicals, processed metals, and cement, mostly

for the domestic market. More than 40 percent of manufacturing output is in food and

beverage processing, particularly vegetable oil, flour products, and soft drinks and beer.12

State ownership is prevalent in the manufacturing sector as well. Ethiopia’s mineral and

petroleum deposits remain unexplored and underdeveloped. Lack of investment, inadequate

technology use, and lack of a comprehensive geological survey limit expansion of the mining

sector. In 1997, the government awarded the Saudi Arabian-owned conglomerate Midroc a

license to operate the country’s largest existing gold deposit, at Lega Dembi, for

$175 million. A government study asserts that Ethiopia’s gold output could reach 30 short

tons per year.13

Foreign direct investment (FDI) into Ethiopia has fluctuated substantially since 1997.

Among FDI-funded projects licensed as of 2003, 46.6 percent are in manufacturing and

agroprocessing; 40.7 percent are in trade, hotels, and tourism; and 12.7 percent are in

agriculture and mining.14 A history of government appropriation of private property has

inhibited increased investment. Since 1994, however, Ethiopia has privatized approximately

220 businesses worth $405 million, mostly small enterprises in trade and other service

sectors.15 The government also plans to privatize 115 state enterprises in fiscal year

2004-05.16 The 1996 investment code was implemented in an attempt to increase investment

by providing fiscal incentives such as tax exemptions to prospective investors.17 Ethiopia's

primary investment sources include Saudi Arabia, South Korea, Kuwait, and Italy.

Export Profile

In 2003, Ethiopia’s exports totaled $422.8 million (table ET-2). The leading export product

was coffee (45.5 percent of total exports), followed by oilseeds (15.5 percent), and raw skins
 18 U.S. Department of State telegram, “USITC AGOA Study.”

 19 Ethiopian Export Agency, “Fruits, Vegetables, and Flowers,” found at www.ethioexport.org,

retrieved Jan. 21, 2005.

 20 U.S. Department of State telegram, “USITC AGOA Study.” 

7-6

Table ET-2

Ethiopia: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

––––––––– 1,000 dollars –––––––– –––– Percent ––––

09 Coffee, tea, mate and spices ......................... 201,695.8 253,568.6 194,337.9 46.0 -0.4

12 Oil seeds and oleaginous fruits; miscellaneous grains, 

seeds and fruits; industrial or medicinal plants; straw 

and fodder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,464.4 43,297.1 65,738.2 15.5 25.6

41 Raw hides and skins (other than furskins) and leather . . . . . 52,739.3 30,962.8 59,480.1 14.1 1.3

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . 15,713.5 13,293.0 18,028.8 4.3 1.5

52 Cotton, including yarns and woven fabrics thereof ......... 440.9 2,921.5 17,561.8 4.2 50.6

07 Edible vegetables and certain roots and tubers . . . . . . . . . . . 10,518.8 20,479.2 16,588.1 3.9 5.2

17 Sugars and sugar confectionery . . . . . . . . . . . . . . . . . . . . . . . 1,654.6 737.3 9,768.8 2.3 21.8

06 Live trees and other plants; bulbs, roots and the like; cut 

flowers and ornamental foliage . . . . . . . . . . . . . . . . . . . . . 1,261.4 379.5 4,944.0 1.2 16.4

02 Meat and edible meat offal ........................... 882.2 5,261.5 3,819.3 0.9 17.7

23 Residues and waste from the food industries; prepared 

animal feed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.2 1,522.6 2,380.6 0.6 59.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,385.3 29,885.0 30,108.5 7.1 4.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313,791.2 402,308.0 422,756.3 100.0 3.4

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

of sheep or lambs (7.2 percent) (table ET-3). Agricultural and animal-related products

represented approximately 90 percent of Ethiopia’s exports in 2003. Coffee production

contributes 5 percent to Ethiopia’s GDP and provides nearly 10 percent of government

revenue.18 Although cotton represents less than 5 percent of exports, Ethiopian cotton is

well-known for its high quality. The major vegetable export products are potatoes, green

beans, okra, white and red onions, shallots, cabbage, leeks, beetroot, carrots, green chilies,

tomatoes, and lettuce.19 The main exportable fruits are oranges, mandarins, grapefruit,

melons, mangoes, guavas, lemons, and limes. Cut flower exports include statice, allium,

roses, and carnations. Although unreported by UN trade data because it is classified as an

illicit drug, kat has become an important export product.20

Ethiopia’s leading export markets are Germany (18.1 percent of total 2003 exports), Japan

(10.7 percent), Italy (10.3 percent), Saudi Arabia (8.0 percent), and the United States

(8.0 percent) (table ET-4). Overall, one-half of Ethiopia’s exports go to the European Union,

consisting primarily of coffee. Since the 1998 Ethiopian-Eritrean war, Ethiopia’s increased

exports to Djibouti are believed to reflect kat exports and the rerouting of shipments from

the Eritrean port to Djibouti’s port.

Between 1994 and 2003, Ethiopia’s exports increased at a compound annual growth rate

(CAGR) of 3.4 percent. At the 4-digit HS-classification level, woven fabrics of cotton

experienced the greatest growth, registering a 9-year CAGR of 122.6 percent. At the

HS 2-digit level, residues and waste from the food industries registered the largest CAGR

of 59.7 percent. Other HS 2-digit exports with large 9-year CAGRs include cotton
7-7

Table ET-3

Ethiopia: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars –––––– –––– Percent ––––

0901 Coffee, whether or not roasted or decaffeinated; coffee 

husks and skins; coffee substitutes containing coffee ..... 201,529.8 252,459.0 192,309.5 45.5 -0.5

1207 Oil seeds and oleaginous fruits nesoi, whether or not 

broken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,439.9 40,865.4 65,510.9 15.5 25.6

4102 Raw skins of sheep or lambs, other than astrakhan, 

broadtail, caracul or similar skins (fresh or preserved,

but not tanned or further prepared) . . . . . . . . . . . . . . . . . . . 25,251.3 19,781.9 30,408.2 7.2 2.1

8411 Turbojets, turbopropellers and other gas turbines, and 

parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,521.1 12,394.8 17,100.7 4.0 2.6

4106 Tanned or crust skins of animals nesoi, without wool or

hair on, whether or not split, but not further prepared . . . . . 13,454.5 5,046.4 15,127.8 3.6 1.3

5201 Cotton, not carded or combed ......................... 435.5 1,292.6 9,427.2 2.2 40.7

1701 Cane or beet sugar and chemically pure sucrose, in solid 

form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 8,726.5 2.1 (1

)

0713 Leguminous vegetables, dried shelled . . . . . . . . . . . . . . . . . . . 5,532.4 14,937.6 8,456.7 2.0 4.8

4105 Tanned or crust skins of sheep or lamb, without wool on, 

whether or not split, but not further prepared . . . . . . . . . . . . 5,747.6 3,886.8 7,389.6 1.7 2.8

5208 Woven fabrics of cotton, containing 85% or more cotton by 

weight, weighing not more than 200 g/m2 . . . . . . . . . . . . . . . 5.4 1,009.0 7,232.6 1.7 122.6

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,873.9 50,634.4 61,066.5 14.4 4.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313,791.2 402,308.0 422,756.3 100.0 3.4 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table ET-4

Ethiopia: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

 CAGR

––––––––––– 1,000 dollars –––––––––– ––––––– Percent –––––––

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,244.0 82,463.0 76,329.0 18.1 -1.6

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,692.4 64,399.3 45,178.1 10.7 -3.9

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,121.4 34,303.7 43,459.4 10.3 2.1

Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,904.6 34,567.7 33,972.2 8.0 27.2

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,278.3 32,039.6 33,638.0 8.0 -0.8

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,120.9 16,163.8 25,145.6 5.9 2.5

Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,254.2 291.2 20,130.8 4.8 36.1

Israel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282.6 12,785.0 16,023.0 3.8 56.6

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,690.2 21,925.9 14,589.0 3.5 -1.5

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 15,675.2 13,635.1 3.2 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,202.7 87,693.6 100,656.0 23.8 9.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313,791.2 402,308.0 422,756.3 100.0 3.4

1

 Not available.

2

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

(50.6 percent), oilseeds (25.6 percent), and sugar and related products (21.8 percent).

Ethiopia’s primary export product, coffee, experienced a small decline over the same period.

Total exports to Israel, Turkey, and Saudi Arabia increased the most during 1994-2003, with

CAGRs of 56.6 percent, 36.1 percent, and 27.2 percent, respectively. During the same

period, leading export markets for Ethiopia, Germany and Japan, declined slightly, with

CAGRs of -1.6 percent and -3.9 percent, respectively.
 21 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has a comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 22 Some of the fruits that could be commercially produced and exported include mangoes,

papayas, bananas, citrus fruits, guava, tangerines and grapes. Recently, the Ethiopian highlands

were found suitable for growing apples, which also could be exported. Ethiopian Economic

Association official, e-mail communication to USITC staff, Mar. 23, 2005. 

 23 Jason Bauer, OTF Group, “Find pathways out of Africa’s commodity trap,” 7th Annual Africa

Business Conference, The Africa Business Club of Harvard Business School, Feb. 12, 2005. 

 24 Ethiopian research organization official, e-mail communication to USITC staff,

Mar. 30, 2005.

 25 FAO Prevention of Food Losses Programme, “Milk and Dairy Products, Post-harvest Losses

and Food Safety in Sub-Saharan Africa and the Near East,” found at http://fao.org/ag/againfo/

projects/en/pfl/docs/P1assessmentuganda.pdf, retrieved Mar. 2, 2005.

7-8

Sectors with the Greatest Export Growth Potential

Exports with the greatest potential for growth in the short to medium term are primarily in

the agricultural (including livestock), light manufactures, energy, and services sectors. Based

on revealed comparative advantage21 (RCA) analysis, Ethiopia’s leading export products are

relatively internationally competitive, especially in the agricultural and animal-related

sectors (appendix E, table E-10). Of the top 10 exports, 4 are animal-related products and 4

are agricultural products. Of the top 10 products ranked on RCA index, 7 are agricultural

products and 3 are animal-related products. In addition, the animal-related products have

experienced moderate to above average growth in international trade. The majority of

products registering a substantial recent increase in RCA index are in the light manufacturing

sector. Although, in general, these products have not exhibited a strong RCA index, export

growth potential exists.

Ethiopia’s diverse ecology supports the potential for a number of agricultural product

exports.22 Although coffee’s share of total trade has been declining, coffee products continue

to have strong export potential. Ethiopian coffee enjoys a good reputation in the international

market.23 Moreover, because Ethiopia only processes a small portion of the coffee that is

exported, there is potential for the country to increase export earnings by developing the

resources to process and package coffee for export. 

Another potential export is herbal plant products. Ethiopia’s herbal product exports are

limited mainly to tea. Similar to coffee, there is potential for increased processing,

packaging, and branding of tea. Many plants in Ethiopia are traditionally used for medicine

and cosmology such as thyme (tosign).24 These herbal cosmetic and pharmaceutical products

may offer export potential. Tropical fruits, nuts, beans and other pulses (legumes), and

medicinal plants are found throughout the country but have not been extensively developed

for international markets. Ethiopia has a natural comparative advantage in oilseeds, honey,

and flowers, but exports have not developed to their potential because of limited technology,

low capacity utilization, and high input costs for domestic processing plants. The livestock

and animal-related products industry is also underexploited and has export growth

potential.25 In an attempt to increase investment and production, the government is currently

establishing a 20-year livestock development plan in conjunction with the African

Development Bank.
 26 Ethiopian government representative, interview by USITC staff, Washington, DC,

Feb. 23, 2005. 

 27 For additional information on the Multifiber Arrangement and the removal of textile and

apparel quotas in 2005, see app. C.

 28 US&FCS, “Ethiopia Country Commercial Guide, FY 2004.”

 29 World Energy Council, “Extract from the Survey of Energy Resources 2001,” found at

www.worldenergy.org/wec-geis/publications/reports/ser/geo/geo.asp, retrieved Mar. 2004.

 30 Digest Newspaper official, telephone interview by USITC staff, Mar. 25, 2005.

7-9

According to government officials, Ethiopia has the potential to produce light manufactured

goods for export, including textiles, apparel, and leather products such as wallets, handbags,

coats, and shoes.26 The potential for textile and apparel products is dampened, however, by

increasing international competition stemming from removal of quotas in 2005.27 In addition,

with ample gold reserves estimated between 60 to 200 short tons, and prospects for increased

output, downstream jewelry products exhibit export potential if manufacturing constraints

are overcome. 

In the energy sector, Ethiopia has promising hydropower and geothermal energy resources.

According to World Energy Council, Ethiopia’s potential for hydropower generation is the

second largest in Africa. Although Ethiopia currently has only 450 megawatts of installed

hydroelectric capacity, it has a potential to develop over 30,000 megawatts of hydroelectric

power.28 In 1999, hydropower output was only 1.6 million megawatt hours, which provided

97 percent of Ethiopia’s electricity. Ethiopia’s geothermal energy capacity is estimated to

have 24 prospects with a potential output level of 700 megawatt equivalent.29

The major services sectors with greatest potential for growth are tourism, air transportation,

and publishing. Ethiopia is an area of great interest for archeologists, and close proximity

to other tourist destinations such as Djibouti, Egypt, Eritrea, and Kenya provides a

springboard from which the tourism sector could develop. In addition, the diverse ecological

resources and vast archeological sites provide a strong base for expansion of tourism as well

as plant, animal, and medical research services. Increased trade in tourism services will in

turn drive demand for air transport services. Indeed, while some African airlines have been

decreasing flight frequency and shutting down services, Ethiopian Airlines recently

purchased several Boeing aircraft to expand services. With respect to publishing, the

outsourcing of printing and publishing services exhibit potential for increased export

earnings.30 Ethiopians living abroad are increasingly outsourcing magazine and book printing

services to Ethiopia to take advantage of lower cost structures.

Domestic and International Barriers

In general, Ethiopia’s business environment indicators are better than the regional average

though far below OECD averages (table ET-5). Business environment indicators for which

Ethiopia scored worse than the regional average include the number of procedures to register

a property and the minimum capital required to start a business. According to most indicators

of economic freedom, however, Ethiopia, on average, lags other countries in the region

(table ET-6). This discrepancy between assessments of Ethiopia’s business environment may

reflect better-than-average regulation at the individual business level, but an overall more

difficult macroeconomic environment for business.
7-10

Table ET-5

Ethiopia: Business environment

Ethiopia

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 40.0 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 10.6 41.8 5.2

Getting credit: Credit information index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 420.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 11.0 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0 11.0 6.0

Starting a business: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . . . . 77.4 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) .............. 1821.9 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

Country data not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table ET-6

Ethiopia: Economic freedom

Ethiopia

Regional

average1

OECD

average

–––– Heritage Foundation indicators ––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé &

Principe, Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 31 Ambassador Kassahun Yele, Embassy of Ethiopia, Washington, DC, written submission in

connection with USITC inv. No. 332-464, Export Opportunities and Barriers in African Growth

and Opportunity Act-Eligible Countries, Feb. 14, 2005.

 32 Industry official, telephone interview by USITC staff, Mar. 22, 2005.

 33 US&FCS, “Ethiopia Country Commercial Guide, FY 2004.”

 34 Ibid.

 35 Ethiopian industry official, e-mail communication to USITC staff, Mar. 24, 2005.

 36 Ethiopian association official, e-mail communication to USITC staff, Mar. 23, 2005.

7-11

Ethiopian government officials and private business owners identify the main domestic

impediments as a lack of access to international buyer information, limited technology, lack

of skilled labor to facilitate diversification into more skill-intensive industries, and

inadequate physical infrastructure.31 For example, a leather and shoe company representative

mentioned that his company would expand production capacity, and even invest in air cargo,

if he could find a reliable buyer for his leather products.32 In addition, diversification is

hampered because Ethiopian farmers are unable to access information on high-yield

varieties, cost-effective inputs, better agronomic practices, and management skills.

Inadequate transportation impedes both domestic and international trade (see discussion of

infrastructure impediments below). Structural problems in the banking and finance sector

also contribute to limited access to credit and foreign exchange, inhibiting investment and

development of export industries.

In addition, while Ethiopia has a large labor force estimated at 30 million,33 social instability,

civil unrest, recurring famines, HIV/AIDS, and population displacement have continuously

depleted human resources and reduced productivity. These factors have contributed to the

migration of much of the educated population, exacerbating the lack of skilled labor.34

Most of the agricultural product processing facilities utilize outdated technology and most

products do not meet U.S. and EU quality standards. Consequently, products are shipped to

third-party countries for processing and packaging and subsequent export to the United

States or the European Union.35 Furthermore, the horticultural sectors in Ethiopia are

constrained by monopolies that reduce efficiency and industry expansion. The major

constraints to agroprocessing are the lack of packaging technology, inadequate facilities, lack

of investment, and limited access to production inputs.36 In the manufacturing sectors, the

high cost of imports is also a barrier to increased exports. For example, a printer in Ethiopia

reported that if he did not have to pay the 40-percent tariff on paper, his company could be

more internationally competitive in exporting printing products. Delays in customs

clearances also remain an impediment to trade. Insufficient textile and accessories suppliers

in Ethiopia limit apparel sector expansion. Lack of government transparency as well as

security issues deter potential foreign investors and may also encourage local entrepreneurs

to leave the country.

The infrastructure necessary to foster an export-oriented environment is lacking. Only

12.0 percent of roads are paved (table ET-7). The communications infrastructure is poor,

with less than 1 in 1,000 people having mobile phones or access to the Internet.

The Ethiopian government and exporters report that sanitary and phytosanitary measures and

other requirements in potential markets represent impediments for Ethiopian exporters.

These markets include the European Union, the United States, Canada, Japan, and

increasingly, the middle-income countries. These requirements reportedly affect important
 37 U.S. Department of State telegram, “USITC AGOA Study.”

 38 Ambassador Kassahun Yele, written submission.

 39 “Ethiopia’s export bundle is generally subject to higher import tariffs. On average, across the

whole spectrum of countries, tariffs imposed on products exported by Ethiopia are 25 percent

higher.” U.S. Department of State telegram, “USITC AGOA Study.” 

7-12

Table ET-7

Ethiopia: Infrastructure-related indicators

MRY1

Roads, total network (km, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,663.0

Roads, paved (percent of total roads, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.8

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.8

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1

 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Ethiopian agriculture and livestock-related exports.37 These sources also report that these

requirements are too complex and difficult to implement for the average exporter.38

According to the U.S. Department of State, Ethiopia’s exports are generally subject to

relatively higher tariffs in foreign markets.39
 40 Prepared by John Davitt, Office of Industries.

 41 World Bank, “World Development Indicators 2004,” found at

http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005.

 42 International Monetary Fund, Kenya: Poverty Reduction Strategy Paper, Jan. 2005, p. 8.

 43 U.S. & Foreign Commercial Service (US&FCS), “Doing Business in Kenya: A Country

Commercial Guide for U.S. Companies,” Mar. 7, 2005, found at www.stat-usa.gov, retrieved

Feb. 28, 2005.

 44 U.S. Department of State, “Background Notes: Kenya,” Feb. 2005, found at www.statusa.gov, retrieved Feb. 28, 2005; and US&FCS, “Doing Business in Kenya.” 

 45 Economist Intelligence Unit (EIU), Kenya Country Profile, 2004, p. 39.

 46 World Bank, “World Development Indicators 2004.”

 47 EIU, Kenya Country Profile, p. 21.

7-13

Kenya40

Economic Overview

Kenya’s GDP totaled $13.8 billion in 2003 (table KN-1), making it the third-largest of the

AGOA-eligible countries. GDP increased by 1.3 percent during 2003, the highest rate since

1999 but well below population growth, causing GDP per capita to decrease each year

during 1999-2004.41 Economic growth in recent years has been sluggish, hampered by poor

governance, the slow pace of economic reforms, low savings and investment, intermittent

shortages and high cost of electricity, and poor physical and telecommunications

infrastructure.42 HIV/AIDS has also had a damaging effect on the economy, reducing

savings, labor productivity, and the number of experienced workers.43

The economy remains largely agrarian, although the manufacturing and services sectors

represent a steadily increasing share of total output. Although Kenya has an abundant supply

of well-educated and skilled labor in most sectors,44 about 75 percent of the workforce is

engaged in agriculture, mainly as subsistence farmers. Kenya is endowed with rich

agricultural land that yields a wide variety of crops; access to Lake Victoria and the Indian

Ocean that provides for a productive fishing industry; and a scenic coastline and game parks

that provide major tourist attractions. The agriculture, forestry, and fishing sector is the

largest component of GDP, accounting for more than 25 percent (figure KN-1). Kenya’s

principal crops are sugarcane, corn, wheat, coffee, and tea, although horticultural production,

especially fresh fruit, vegetables, and cut flowers, has increased steadily in recent years.45

Food production varies widely as a result of climatic conditions, and Kenya is regularly

subject to floods and droughts. About one-half of all agricultural output is for subsistence.

Kenya is the most industrially developed country in East Africa, although manufacturing

accounts for a relatively modest share of Kenya’s economy. Manufacturing’s share of GDP

was 14.0 percent in 2003,46 and consisted largely of food-processing activities such as grain

milling, beer production, and sugarcane crushing. There is a substantial, informal, smallscale manufacturing sector making products such as household goods, auto parts, and

farming implements; this activity may account for as much as 18 percent of GDP.47 AGOA

has spurred the growth of the apparel industry, providing the greatest boost to Kenya’s
7-14

Table KN-1

Kenya: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 13,841.6

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 1.3

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... -0.7

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... 9.8

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 6,031.2

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... .... 14.1

Exports of goods and services (percent of GDP, 1999) ....... ....... ....... ....... ....... ....... ....... 26.5

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 57.6

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 75.9

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 31.9

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 1.8

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 16.7

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 52.1

Literacy rate, adult total (percent of people ages 15 and above, 2002) ....... ....... ....... ....... ....... . . 84.3

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... . 94.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ...... 38.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 8.1

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 15.6

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 13.9

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 0.4

 Most recent year for which data are available between 1999 and 2003. 1

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure KN-1

Kenya: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 48 Ibid., p. 43.

 49 World Bank, “World Development Indicators 2004.”

 50 EIU, Kenya Country Profile, p. 41.

 51 U.S. Department of State telegram, “Kenya: USITC Study on Export Opportunities and

Barriers for AGOA,” message reference No. 666, prepared by U.S. Embassy, Nairobi, and

supplemental email correspondence to USITC staff, Feb. 14, 2004; and World Bank, “Snapshot Of

Business Environment – Kenya,” p. 1, found at http://rru.worldbank.org/InvestmentClimate/

ExploreEconomies/Snapshot, retrieved Mar. 26, 2005.

 52 World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/

dataonline, retrieved Feb. 1, 2005.

 53 U.S. Department of State telegram, “Kenya: USITC Study,” and supplemental email

correspondence.

 54 Ibid.

 55 US&FCS, “Doing Business in Kenya.” 

7-15

manufacturing sector in recent years. The apparel industry consists of 40-50 firms that are

mostly foreign owned and operate in export processing zones (EPZs).48

The services sector increased from 58.7 percent to 64.2 percent of Kenya’s GDP during

1999-2003.49 Tourism, a major component of this share, is Kenya’s third-largest foreign

exchange earner after tea and horticulture. Kenya’s minerals sector accounts for a relatively

small share of GDP and consists primarily of soda ash and fluorspar production. Kenya is

in the process of expanding its soda ash production.50 The sluggish economy has failed to

provide enough jobs in the formal economy, causing an expansion in the informal sector,

which currently employs an estimated 34 to 40 percent of the labor force, and continues to

grow.51

Kenya attracted relatively little foreign direct investment (FDI) during recent years prior to

the introduction of the latest set of government reforms in 2004. Although FDI tripled from

$42 million to $127 million during 1999-2000,52 this increase largely reflected the

construction of a cellular telephone network. FDI decreased to $50 million in 2001 and 2002.

In contrast, East African neighbors Tanzania and Uganda received annual FDI inflows

averaging $387 million and $149 million, respectively, during 1999-2002, despite having

economies less than one-half the size of Kenya’s.

Most foreign investment in Kenya has gone into EPZs, while investment in the rest of the

economy has stagnated because of the high cost of doing business associated with uncertain

energy supplies, cumbersome government regulations, and a deteriorating infrastructure.53

Foreign investors are attracted to EPZs by tax incentives and more reliable support services

such as power and water. The number of firms operating in EPZs increased from 54 to 69

during 2002-03.54 Much of the increased investment is attributable to access to the AGOA

textile and apparel provisions. An increasing number of firms in EPZs are engaged in

agroprocessing, especially in cotton, horticulture, and tea processing.55 Other sectors

represented in EPZs include chemicals, pharmaceuticals, and computers and electrical

components.
 56 World Bank, “World Development Indicators 2004.”

 57 U.S. Department of State telegram, “Kenya: USITC Study,” and supplemental email

correspondence.

 58 Ibid.

7-16

Export Profile

Although Kenya has tried to follow an export-led growth strategy since the early 1990s,56

exports of goods and services as a share of GDP remained relatively stable during

1999-2003, representing between 25.4 percent and 26.6 percent. Total exports were

$2.3 billion in 2003 (table KN-2). Tea, refined petroleum products, cut flowers, coffee, and

vegetables accounted for 48.0 percent of total exports in 2003 (table KN-3). The value of

Kenya’s exports of tea and petroleum oils each increased by slightly over 30 percent during

2000-03, and exports of cut flowers increased by 63 percent during the same period. Kenya’s

coffee exports decreased sharply following the decline in world coffee prices during the

2000/01 season. Kenya’s exports of horticultural products (primarily cut flowers, fresh fruit,

and vegetables) increased by 23 percent in 2004 to 149,000 tons.57 Kenya’s rapidly growing

floriculture sector alone generated $120 million in 2004. 

Apparel exports, which account for a large and growing share of Kenya’s exports, have

benefitted substantially from the AGOA program and the incentives provided in EPZs.

Kenya’s apparel exports to the United States nearly tripled during 2001-03 and accounted

for over 75 percent of the total value of Kenya’s EPZ production and more than 95 percent

of EPZ employment.58 

Table KN-2

Kenya: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars –––––––––– ––––– Percent –––––

09 Coffee, tea, mate and spices ....................... 492,623.2 482,247.5 524,469.4 23.1 0.7

06 Live trees and other plants; bulbs, roots and the like; cut 

flowers and ornamental foliage . . . . . . . . . . . . . . . . . . . . 91,860.0 162,429.3 282,124.8 12.4 13.3

27 Mineral fuels, mineral oils and products of their

distillation; bituminous substances; mineral waxes . . . . 21,833.5 168,553.0 263,324.5 11.6 31.9

07 Edible vegetables and certain roots and tubers . . . . . . . . . 58,573.9 120,172.9 167,542.8 7.4 12.4

62 Articles of apparel and clothing accessories, not knitted 

or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,865.7 45,003.3 151,845.1 6.7 15.1

03 Fish and crustaceans, molluscs and other aquatic 

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,317.7 63,330.7 83,584.6 3.7 6.0

20 Preparations of vegetables, fruit, nuts, or other parts of 

plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,565.0 94,577.7 82,528.6 3.6 2.8

25 Salt; sulfur; earths and stone; plastering materials, lime 

and cement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,470.3 48,962.5 61,257.5 2.7 -0.6

08 Edible fruit and nuts; peel of citrus fruit or melons . . . . . . . 26,173.1 38,178.3 57,559.1 2.5 9.2

61 Articles of apparel and clothing accessories, knitted or 

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,967.5 1,710.1 56,526.3 2.5 28.4

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,061.0 488,323.2 537,872.1 23.7 3.7

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,306,310.9 1,713,488.4 2,268,634.8 100.0 6.3

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 59 For additional information on regional organizations, see app. C.

7-17

Table KN-3

Kenya: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars –––––––––– ––––– Percent –––––

0902 Tea, whether or not flavored ...................... 232,486.6 282,248.2 378,655.5 16.7 5.6

2710 Petroleum oils and oils from bituminous minerals

(other than crude) and products therefrom, nesoi, 

containing 70% (by weight) or more of these oils . . . . 18,567.8 163,054.6 257,775.2 11.4 34.0

0603 Cut flowers and buds suitable for bouquets or 

ornamental purposes, fresh, dried, dyed, bleached,

impregnated or otherwise prepared . . . . . . . . . . . . . . 85,216.3 145,490.6 241,389.3 10.6 12.3

0901 Coffee, whether or not roasted or decaffeinated; 

coffee husks and skins; coffee substitutes

containing coffee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259,863.1 198,120.6 111,567.6 4.9 -9.0

0708 Leguminous vegetables, shelled or unshelled, fresh

or chilled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,340.6 88,320.9 98,923.0 4.4 11.8

6204 Women's or girls' suits, ensembles, suit-type jackets, 

dresses, skirts, divided skirts, trousers, etc. (no

swimwear), not knitted or crocheted . . . . . . . . . . . . . . 1,438.8 19,290.8 92,609.7 4.1 58.8

0304 Fish fillets and other fish meat (whether or not

minced), fresh, chilled or frozen . . . . . . . . . . . . . . . . . 33,177.0 46,916.1 64,849.6 2.9 7.7

0709 Vegetables nesoi, fresh or chilled . . . . . . . . . . . . . . . . . 19,449.3 26,415.3 57,925.7 2.6 12.9

2008 Fruit, nuts and other edible parts of plants, otherwise 

prepared or preserved, whether or not containing 

added sweetening or spirit, nesoi . . . . . . . . . . . . . . . . 38,623.1 52,919.1 51,065.2 2.3 3.2

6203 Men's or boy's suits, ensembles, suit-type jackets, 

blazers, trousers, bib and brace overalls, breeches, 

etc. (no swimwear), not knitted or crocheted . . . . . . . 14,629.8 12,246.2 45,649.1 2.0 13.5

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566,518.7 678,465.9 868,224.9 38.3 4.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,306,310.9 1,713,488.4 2,268,634.8 100.0 6.3

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

The principal markets for Kenya’s exports are in Africa and the European Union

(table KN-4). African countries, principally Rwanda, Tanzania, and Uganda, accounted for

24.2 percent of Kenya’s exports in 2003, while exports to the European Union accounted for

more than 30 percent of total exports. The United States was the third-largest single-country

market for Kenya’s exports, accounting for 11.7 percent of the total. The vast majority of

exports from EPZs are destined for the United States, with the remainder going to Europe

and other Common Market for Eastern and Southern Africa (COMESA) countries.59

Kenya’s exports to Uganda, its largest single-country market, increased at a compound

annual growth rate (CAGR) of 7.5 percent during 1994-2003, although most of this growth

occurred during the second half of this period. The entry into force of the COMESA in 2000

contributed significantly to the growth of trade between Kenya and Uganda. Kenya’s exports

to the United Kingdom increased at a CAGR of 3.7 percent during 1994-2003, reflecting

increased exports of tea and horticultural products, which offset decreasing coffee exports.

The value of Kenya’s products shipped to the U.S. market decreased by $4 million between

1994 and 1999, before rising at a CAGR of 24.2 percent during 1999-2003. AGOA

preferences, combined with the incentives provided by EPZs, boosted apparel exports during

that period. The steady growth of Kenya’s cut flower industry explains the rapid growth of

the Netherlands as one of Kenya’s major export markets during 1994-2003. Kenya is the

European Union’s leading supplier of flowers, and although Kenya ships directly to France,
 60 U.S. Department of State telegram, “Kenya: USITC Study,” and supplemental email

correspondence; and Kenyan government officials, interview by USITC staff, Washington, DC,

Mar. 10, 2005.

 61 Kenyan government officials, interview by USITC staff, Washington, DC, Mar. 10, 2005.

7-18

Table KN-4

Kenya: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

 CAGR

–––––––––––– 1,000 dollars –––––––––––– ––––––– Percent ––––––––

Uganda .................................. 186,958.6 241,878.5 357,326.6 15.8 7.5

United Kingdom ........................... 256,194.8 318,338.6 354,960.9 15.6 3.7

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,264.0 111,915.7 266,247.8 11.7 9.6

Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,482.4 146,101.7 227,115.8 10.0 10.2

Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,657.9 153,199.6 145,449.8 6.4 4.6

Tanzania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 106,285.3 116,322.0 5.1 (1

)

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,011.0 122,208.2 92,697.0 4.1 -5.6

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,254.0 76,750.8 80,872.6 3.6 2.6

Rwanda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 54,598.1 74,112.8 3.3 (1

)

Egypt, Arab Rep. . . . . . . . . . . . . . . . . . . . . . . . . . . 52,664.8 78,992.2 60,419.7 2.7 1.5

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,823.3 303,219.7 493,109.8 21.7 6.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,306,310.9 1,713,488.4 2,268,634.8 100.0 6.3

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Germany, and other European countries, the Netherlands is home to one of the world’s

largest international flower markets.

Sectors with the Greatest Export Growth Potential

The export growth potential for Kenya’s horticultural products in nontraditional markets

such as Canada, United States, South Africa, and Japan has been noted by Kenyan

government officials and other sources,60 and analysis of export statistics provides evidence

of such potential. The vast majority of Kenya’s horticultural exports are presently shipped

to markets in the European Union and, although Kenya’s share of the global market for cut

flowers is 4.3 percent, it holds less than 1 percent of the U.S. and Canadian markets

(appendix E, table E-16). Kenya’s world market share of leguminous vegetables (e.g., peas,

beans, and lentils) is 15.1 percent, whereas it supplies 22.3 percent of the EU market and has

virtually no exports to the United States or Japan. Much of this market concentration can be

explained by transportation costs that allow Kenya to be more competitive in proximate

markets. However, these costs are less likely to create a significant competitive disadvantage

for products with a relatively low weight-to-value ratio such as cut flowers, especially if the

products have an advantage over the competing product. In this case, Kenya’s cut flowers

are reported by Kenyan government officials as having a longer shelf life than the

comparable South American flowers that supply much of the North American market.61

Kenya is already a leading supplier of horticultural products to the European Union and is

likely to continue increasing these exports as the European Union expands. According to

government officials, Kenya is also pursuing a diversification strategy with the intention of

entering new markets such as the United States, Japan, and South Africa. These officials also

report that Kenya has begun exporting a small number of flowers to Japan and the United
 62 Ibid.

 63 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has a comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 64 African Development Bank/Organization for Economic Cooperation and Development,

“Kenya,” African Economic Outlook, 2004, p. 183.

 65 Category 1 certification is required by the Federal Aviation Administration for direct flight

access to the United States. For additional information, see app. C.

7-19

States, and is actively working to develop these and other markets in North America, the

Middle East, and South Africa.62

Kenya also exhibits strong revealed comparative advantage63 (RCA) indices in its top

exports, most of which have remained stable during 2000-03. In addition, the top 10 export

products reflect relative diversity, including products in the agriculture, apparel, energy, and

fish sectors. Eight of the top 10 products ranked by change in RCA index are in the metals

sector. International trade growth in most of these metal-related products has been above

average. Although the metals sector represents an attractive potential export sector based on

world market growth and increasing RCA indices, the attractiveness is dampened by the

negative RCA index exhibited by some of the products in this sector.

Pyrethrum, a natural herbicide, used to be one of Kenya’s major exports and has strong

export potential given the demand for effective low toxicity pesticides. Flooding associated

with the El Niño weather patterns in 1997-98 destroyed a large number of plants that have

yet to be replaced. The government is currently trying to attract investment by liberalizing

the pyrethrum sector and restricting the pyrethrum board to regulatory functions. 

Although coffee prices decreased by 70 percent during 1997-2003,64 coffee remains a major

export for Kenya. Reforms that would increase efficiency and provide greater returns to

coffee growers may provide potential for expansion of the sector. The government is

considering reforms that would include legislative amendments to the Coffee Act that

eliminate the requirement that growers sell only to the Coffee Board, and establish an agency

to operate processing, marketing, and inputs distribution.

The potential for tourism sector growth has increased with government efforts to revitalize

the sector following the smooth political transition in December 2002, which alleviated

concerns about Kenya’s ability to control political violence. If the government can maintain

a secure environment for tourists and the United States removes its travel advisory, the

number of tourists visiting Kenya’s beaches and parks could increase.

As stated above, the European Union and other African countries are the principal

destinations for Kenya’s exports. There is potential to further develop these markets,

especially with the recent expansion of the European Union, and to develop new markets

such as the United States, Japan, and Canada. If Kenya can obtain “Category 1”

certification,65 which is required to establish direct flights with the United States, Kenya will

likely be able to reduce its shipping costs and increase its competitiveness with South and

Central American suppliers.
 66 For additional information on regional organizations, see app. C.

 67 Transparency International, “Corruption Perceptions Index,” found at www.transparency.org,

retrieved Feb. 11, 2005. 

 68 U.S. Department of State telegram, “Kenya: USITC Study,” and supplemental email

correspondence.

 69 World Bank, “Snapshot Of Business Environment – Kenya,” found at

http://rru.worldbank.org/InvestmentClimate/ExploreEconomies/Snapshot, retrieved Mar. 26, 2005,

pp. 1-3.

 70 Ibid.

 71 Ibid.

7-20

The East African Community (EAC) customs union,66 which entered into force on

January 1, 2005, is likely to boost Kenya’s exports to Uganda and Tanzania and could

provide new opportunities for light manufacturing and agroprocessing because Kenya is the

most technologically developed of the three countries. EAC members accounted for

25 percent of Kenya’s exports in 2003, and this share is likely to increase as a result of the

EAC customs union agreement, which is designed to eliminate all tariffs and nontariff

barriers among the members by January 1, 2010. 

Domestic and International Barriers

The principal domestic impediments to exports in Kenya are largely the same factors that

have restricted the growth of the economy as a whole, including lack of government

transparency, incomplete implementation of reforms and projects, crime, and poor

transportation infrastructure. Lack of transparency, particularly in government procurement

and dispute settlement, has been cited by U.S. and other foreign firms as a major obstacle

to FDI.67 Kenyan firms pay more unofficial fees, provide more of their own infrastructure,

and face more regulation than competitors in countries such as China and India.68

Although Kenya’s business environment indicators are, in general, better than regional

averages, they continue to lag those of the OECD (table KN-5). Kenya faired worse than the

regional averages in six business environment indicators: recovery rate when closing a

business, time required to close a business, private bureau credit coverage, public credit

registry coverage, number of procedures to register a property, and number of procedures

to start a business. Employment market indicators were similar to or surpassed OECD

averages. 

Another, more recent World Bank survey presents a mixed picture, indicating a more

favorable climate in Kenya relative to others in the region but far less favorable compared

to the OECD countries. That survey found that the time required to start a business in Kenya

averaged 47 days at a cost equal to 53 percent of per capita income. The comparable

indicators for the sub-Saharan region as a whole were 63 days and 225 percent, but only

25 days and 8 percent for the OECD average.69 Similarly, the average number of procedures

and days required to enforce a commercial contract in Kenya was substantially less than the

regional average and substantially greater than the OECD average.70 The survey also

reported that corruption was cited most frequently as a major or severe obstacle to the

operation and growth of their businesses. Other major obstacles include high finance costs

and tax rates, anticompetitive or informal practices, and economic and regulatory policy

uncertainty.71
 72 The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at

www.heritage.org, retrieved May 26, 2005. 

 73 World Bank, the International Finance Corporation, and Oxford University Press, “Doing

Business in 2005: Removing Obstacles to Growth,” found at http://rru.worldbank.org/Documents/

DB-2005-overview.pdf, retrieved Mar. 28, 2005, p. 7.

7-21

Table KN-5

Kenya: Business environment

Kenya

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 14.7 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 3.3 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 1.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.3 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 360.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 4.0 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0 11.0 6.0

Starting a business: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . . . . 53.4 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 0.0 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Kenya, applied rate, 2001)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness/, retrieved Jan. 25, 2005; and

WTO, “Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile/, retrieved Apr. 5, 2005. 

Kenya’s economic freedom score improved between 1995 and 2000, but deteriorated

between 2000 and 2005 (table KN-6). Notably, the trade policy component fared worse than

all other indicators of economic freedom. The Index of Economic Freedom score was 3.3 in

2005 on scale of 1 to 5, which means that Kenya’s economic environment was characterized

as “mostly unfree.” This characterization was primarily because of shortcomings in a few

areas, most notably Kenya’s protectionist trade policies and its large informal sector, rather

than a general lack of economic freedom.72 Kenya scored in the moderate or better range for

indicators such as level of government consumption, monetary policy, foreign investment,

and property rights. The large informal sector has been blamed for distortions, reduced tax

revenues, and the exclusion of many people from basic protections.73

Crumbling transport infrastructure (table KN-7), inadequate marketing, and increased

competition from Mauritius, South Africa, and Tanzania have hurt the tourist industry in

recent years. Terrorist acts, such as the U.S. Embassy bombing in 1998, the Paradise Hotel

suicide bombing in November 2002, and another terrorist threat in 2003 caused several

Western countries to issue negative travel advisories that have had a significant adverse
 74 U.S. Department of State telegram, “Kenya: USITC Study,” and supplemental email

correspondence; and EIU, Kenya Country Profile, 2004, p. 41.

 75 “Wages in Kenya Are Among the Highest in Africa,” AllAfrica.com, found at

http://allafrica.com/stories/200502220120.html, retrieved Feb. 23, 2005.

7-22

Table KN-6

Kenya: Economic freedom

Kenya

Regional

average1

OECD

 average

–– Heritage Foundation indicators ––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé &

Principe, Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 

Table KN-7

Kenya: Infrastructure-related indicators

MRY1

Roads, total network (km, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,942.0

Roads, paved (percent of total roads, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.0

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.2

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.8

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.5

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3

Electric power transmission and distribution losses (percent of output, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3

Energy imports, net (percent of commercial energy use, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

impact on tourism.74 Most countries have rescinded these warnings, although the U.S.

advisories were still in place as of May 2005. 

High wage rates for unskilled workers relative to other African and Asian countries such as

China, India, Nigeria, Thailand, Zambia, and Uganda put Kenya at a competitive

disadvantage, particularly because the higher wages do not reflect greater productivity.

According to a World Bank study, Kenya’s high wages reflect: 1) an increase in publicsector wages, which causes a comparable rise in the private sector that competes for the same

workers; 2) pressure for higher wages from donors, tourists, and large foreign commercial

banks that pay high salaries to their expatriate staff; and 3) labor market rigidity that does

not allow a reduction in employment commensurate with reduced productivity.75
 76 US&FCS, “Doing Business in Kenya.” 

 77 U.S. Department of State telegram, “Kenya: USITC Study,” and supplemental email

correspondence.

 78 Ibid.

 79 Zambian government officials, interview by USITC staff, Lusaka, Zambia, Mar. 15, 2005;

and development organization representative, interview by USITC staff, Kampala, Uganda,

Mar. 7, 2005.

 80 EIU, Kenya Country Profile, p. 40.

7-23

Other factors raising the cost of doing business in Kenya include relatively high import

duties, high interest rates, and high-priced, unreliable utilities. Moreover, the Business

Software Alliance lists Kenya among the top 25 worst piracy offenders.76 Kenya’s average

applied ad valorem tariff in 2001 was 20 percent for agricultural goods and nearly 17 percent

for nonagricultural goods (table KN-5). Both imports and exports are further hampered by

customs procedures that are detailed and rigidly implemented, and inefficient procedures at

Kenya’s principal port, Mombasa.77

Kenya’s export taxes on certain products such as hides, skins, and scrap metal discourage

raw material exports. The government is considering a further ban on raw cashew exports

to encourage roasting and other processing in Kenya.78 According to government officials

and representatives of development organizations, export taxes and bans have been justified

in many African countries as necessary for the development of local or infant industries and

downstream processing sectors.79 These export taxes and bans, however, limit the export of

these products by raising export costs and encourage industries for which Kenya may not

have a comparative advantage.

The U.S. Federal Aviation Administration does not allow direct flights between the United

States and any country that does not meet the safety and security standards required for a

Category 1 certification. Kenya does not qualify for this type of certification and,

consequently, air-freighted exports destined for U.S. markets must first be shipped to thirdparty countries that qualify. The current arrangement requires additional time and expense

and reduces the competitiveness of Kenyan exports of flowers, fresh fruit, and vegetables

in the U.S. market. Lack of certification also prevents Kenya Airways from transporting

tourists directly to and from the United States. Attaining Category 1 status would require

significant refurbishing of airport facilities, investment in security equipment and safety

facilities, and training, but would ultimately enhance export potential. In addition, the

horticultural sector faces increased environmental and safety standards in the EU and U.S.

markets, and producers have limited capacity to meet these standards.80
7-24
 81 Prepared by Kelly Clark, Office of Economics.

 82 World Trade Organization (WTO), Trade Policy Review: Uganda, Report by the Secretariat,

WT/TPR/S/93, Nov. 2001, “Part III, Trade Policies and Practices by Measure,” p. 31.

7-25

Uganda81

Economic Overview

Uganda is a land-locked country in East Africa that faces continuing regional and internal

security problems, primarily in the north and west of the country. These problems hamper

economic growth and have caused economic activity to be concentrated in the south. In

2003, trade represented 39.9 percent of GDP, with exports representing 7.1 percent

(table UG-1). The country faces a large trade deficit (financed by donor assistance) and

foreign debt of about 60 percent of GDP. The economy suffers annual fluctuations linked

to weather conditions, changes in international petroleum and coffee prices, and variations

in donor funding that affect consumer demand. Except for a few sectors such as rail transport

and postal services, no state-owned companies maintain monopoly positions that affect

trade.82

Table UG-1

Uganda: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,197.7

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8

External debt, total (current US$, millions, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,100.4

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.9

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,963.7

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.3

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.0

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.9

Primary school enrollment ratio, total (percent, 2000)

2 .................................................. 140.9

Secondary school enrollment ratio, total (percent, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.9

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.7

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.4

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 1

 Most recent year for which data are available between 1999 and 2003.

2

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school

age.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 
 U.S. & Foreign Commercial Service (US&FCS), “Uganda Country Commercial Guide, 83

Fiscal Year 2004,” July 30, 2004, found at www.stat-usa.gov, retrieved Mar. 13, 2005. 

7-26

Almost 40 percent of GDP is represented by the agriculture, forestry, and fishing sector, and

the sector employs 80 percent of the labor force (figure UG-1). The agricultural sector’s

importance has declined as the economy has diversified. Given the country’s large public

sector, government and community services account for almost 20 percent of GDP, and these

services are growing in importance. Commerce, manufacturing, and construction activities

make up an additional 35.3 percent of GDP. Overall, additional processing of manufactured

goods appears limited and usually involves only repackaging. 

Agriculture is dominated by subsistence farming, with food crops accounting for 65 percent

of agricultural output, and cash crops, consisting mostly of coffee, cotton, tea, tobacco,

vanilla, cut flowers, and cocoa, accounting for 10 percent of agricultural output. Crop

cultivation is dominated by smaller holdings with low input technology. There is grazing in

drier areas, and livestock products are major nontraditional outputs. Although a land-locked

country, nearly 20 percent of the total area of Uganda is open water or swampland, providing

substantial fish resources.

Mining contributes a negligible amount to Uganda's total exports. Despite the fact that 83

many minerals and metals can be found in Uganda, including copper, cobalt, gold, tin,

tungsten, beryllium, columbite, iron ore, limestone, phosphates, salt, clay, kaolin, feldspar,

glass sand, diatomite, gypsum, marble, and chromite, the country lacks significant largescale mining activity. 

Figure UG-1

Uganda: Composition of GDP (2002)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 84 World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/

dataonline, retrieved Feb. 1, 2005.

 85 US&FCS, “Uganda Country Commercial Guide, Fiscal Year 2004.”

 86 “Uganda to become fourth largest exporter of tobacco by 2005,” Xinhua, Nov. 22, 2003,

found at www.amex.com/?href=/newsDetails/CmnNewsDet.jsp?id=XpressFeed_NewsDetails_

1069480832622.html, retrieved Mar. 18, 2005.

 87 Center for Regional Agricultural Trade Expansion Support, “Cotton-Textile-Apparel Value

Chain Report for Uganda,” Apr. 2003, found at www.cottonafrica.com/downloads/

Uganda_Cotton_VCA.pdf#search='uganda%20cotton', retrieved Mar. 10, 2005.

7-27

Foreign direct investment (FDI) in Uganda increased steadily, from approximately

$55 million in 1993 to $210 million in 1998, after which FDI levels fluctuated around

$150 million during 1999-2002.84 Uganda's policy and attitude toward FDI are positive, and

industrial zones for the production of exports are planned as a special measure to stimulate

investment and promote exports.85 There has been significant foreign investment in the past

few years in the beverage industry, and most investors are from countries with historical and

regional ties to the country, including British and Indian firms, as well as large numbers of

Kenyan and South African firms. A substantial part of the FDI has been in the rehabilitation

of old industries and not in the creation of new production capacity. In addition to the

beverage industry, other industries such as sugar, textiles, cement, footwear, packaging,

plastics, and food processing have attracted some FDI. 

Export Profile

Exports of agricultural products are a major source of foreign exchange. Uganda’s exports

have diversified in recent years. Coffee’s dominance has decreased as other agricultural

goods and processed goods have become more important. The government’s focus on

increasing the production and export of nontraditional goods such as fish, vanilla, gold,

flowers, maize (corn), and cattle hides has played a role in this diversification. Coffee, tea,

and spices (42.0 percent), fish and crustaceans (19.7 percent), and tobacco (11.1 percent) are

among Uganda’s leading export products (table UG-2). Coffee was the largest export at the

HS 4-digit level in 2003, accounting for 35.0 percent of total exports (table UG-3). Coffee

or fish are Uganda’s largest exports, with changes in ranking driven by coffee prices. 

Uganda’s 44,000 square kilometers of inland water provides for substantial fish resources.

Nile perch is found in sufficient abundance to form a commercial fishery. Tilapia also is

found in relative abundance. Fish is marketed as both fresh and processed (usually by

traditional methods such as smoking). 

Like all other traditional cash crops, tobacco production suffered from Uganda's political

insecurity and economic mismanagement. Rehabilitation of this industry has been slow;

however, exports are expected to increase significantly when a new joint venture between

British American Tobacco Uganda and Universal Leaf Tobacco Company of the United

States begins production in 2005.86

Uganda has adequate land resources, labor, and conducive weather for the production of

high-quality cotton. Cotton output is expanding as farmers switch to cotton in the face of

declining coffee prices. There are over 35 ginneries in Uganda, although some are dormant,

and some are in need of repair or upgrading.87 Cotton, yarn, fabric, and apparel are sold
7-28

Table UG-2

Uganda: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––– 1,000 dollars –––––––– –––– Percent ––––

09 Coffee, tea, mate and spices. ......................... 357,261.3 313,226.8 184,079.2 42.0 -7.1

03 Fish and crustaceans, molluscs and other aquatic 

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,013.8 37,395.1 86,181.8 19.7 22.4

24 Tobacco and manufactured tobacco substitutes . . . . . . . . . . 4,677.4 21,688.6 48,567.5 11.1 29.7

06 Live trees and other plants; bulbs, roots and the like; cut 

flowers and ornamental foliage . . . . . . . . . . . . . . . . . . . . . . 1,239.2 12,456.1 27,380.8 6.3 41.0

52 Cotton, including yarns and woven fabrics thereof. . . . . . . . . 8,222.6 16,942.9 16,023.8 3.7 7.7

41 Raw hides and skins (other than furskins) and leather . . . . . 9,664.1 4,401.6 14,739.7 3.4 4.8

27 Mineral fuels, mineral oils and products of their distillation;

bituminous substances; mineral waxes . . . . . . . . . . . . . . . 0.0 871.9 7,850.0 1.8 (1

)

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . 331.5 2,389.5 5,840.4 1.3 37.5

07 Edible vegetables and certain roots and tubers . . . . . . . . . . . 1,251.3 4,058.6 5,239.2 1.2 17.2

87 Vehicles, other than railway or tramway rolling stock, and 

parts and accessories thereof . . . . . . . . . . . . . . . . . . . . . . . 11.6 2,399.8 5,018.0 1.1 96.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,942.8 31,272.0 36,977.0 8.4 14.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407,615.7 447,102.8 437,897.4 100.0 0.8

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table UG-3

Uganda: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars ––––––– –––– Percent ––––

0901 Coffee, whether or not roasted or decaffeinated; coffee 

husks and skins; coffee substitutes containing coffee . . . 355,518.1 310,531.6 153,360.9 35.0 -8.9

0304 Fish fillets and other fish meat (whether or not minced), 

fresh, chilled or frozen . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,020.3 33,726.4 76,378.9 17.4 24.0

2401 Tobacco, unmanufactured (whether or not threshed or 

similarly processed); tobacco refuse . . . . . . . . . . . . . . . . . 4,677.4 21,643.8 48,564.0 11.1 29.7

0905 Vanilla beans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 1,154.7 30,014.2 6.9 (1

)

0603 Cut flowers and buds suitable for bouquets or ornamental 

purposes, fresh, dried, dyed, bleached, impregnated or

otherwise prepared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,239.0 9,505.6 19,588.4 4.5 35.9

5201 Cotton, not carded or combed . . . . . . . . . . . . . . . . . . . . . . . . 8,135.5 16,921.7 15,990.7 3.7 7.8

4101 Raw hides and skins of bovine or equine animals (fresh or 

preserved, but not tanned or further prepared), whether

or not dehaired or split . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,333.0 3,508.4 10,424.7 2.4 4.0

0602 Live plants nesoi (including their roots), cuttings and slips; 

mushroom spawn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2,938.1 7,792.4 1.8 (1

)

2710 Petroleum oils and oils from bituminous minerals (other

than crude) and products therefrom, nesoi, containing 

70% (by weight) or more of these oils . . . . . . . . . . . . . . . . 0.0 805.9 6,019.0 1.4 (1

)

1801 Cocoa beans, whole or broken, raw or roasted . . . . . . . . . . . 1,017.3 2,558.8 4,775.0 1.1 18.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,675.2 43,807.7 64,989.2 14.8 14.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407,615.7 447,102.8 437,897.4 100.0 0.8 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 88 Industry official, interview by USITC staff, Kampala, Uganda, Mar. 7, 2005.

 89 For additional information on regional organizations, see app. C.

 90 U.S. Agency for International Development (USAID), “Integrated Strategic Plan for

USAID’s Program in Uganda, 2002-2007,” June 2001, pp. 87-89, found at www.usaid.gov/

locations/sub-saharan_africa/countries/uganda/index.html, retrieved Apr. 14, 2005; and Dannie E.

Harrison, James P. McCoy, and Gerry Muuka, “Impediments to Economic Integration in Africa: 

The Case of COMESA,” The Journal of Business in Developing Nations, vol. 2, art. 3, 1998,

found at www.rh.edu/jbdn/jbdnv203.htm, retrieved Apr. 14, 2005.

7-29

domestically and exported to Kenya, Tanzania, Democratic Republic of the Congo, and

Sudan.88

Although tea is a marginal export, favorable climate and soil conditions have enabled

Uganda to develop some of the world's highest quality tea. It is typically grown on large

estates, and some modern production techniques have been incorporated to improve

productivity. 

Manufactured items represent a small portion of Uganda’s exports, and most manufacturing

in Uganda is based on processing agricultural commodities almost entirely for domestic

consumption. These include refined sugar, plastics, cork, soap, textiles, processed foods,

beer, and soft drinks. Large-scale industries include tobacco, beverages, wood and paper

products, construction materials, and chemicals, while small-scale manufacturing is

dominated by apparel assembly, sugar and maize mills, furniture making, and general

workshops. 

Most of Uganda’s exports have traditionally gone to the European Union. Uganda’s leading

single-country export markets in 2003 were the Netherlands (13.8 percent), Belgium

(10.4 percent), the United States (8.8 percent), Germany (7.8 percent), and Spain

(6.3 percent) (table UG-4). Exports to the Common Market for Eastern and Southern Africa

(COMESA)89 and other African countries have grown in recent years, but not as strongly as

expected because of similar production and consumption patterns, as well as the poor

infrastructure common to these countries.90 In addition, many of the COMESA member

countries share the same export markets, whether through historic colonial ties or recent

trade preference regimes. However, as exports diversify and infrastructure improves,

Uganda’s trade with other African countries is expected to increase.
 91 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 92 Ministry of Finance, Planning and Economic Development of the Government of Uganda,

found at www.finance.go.ug, retrieved, May 4, 2005.

 93 Uganda Coffee Development Authority, found at www.ugandacoffee.org, retrieved

Apr. 8, 2005.

7-30

Table UG-4

Uganda: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––––––––– 1,000 dollars ––––––––––––––– ––––––– Percent –––––––

Netherlands . . . . . . . . . . . . . . . . . . . . . . 15,869.1 33,660.9 60,467.7 13.8 16.0

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 27,955.6 45,383.9 10.4 (2)

United States . . . . . . . . . . . . . . . . . . . . . 36,161.9 22,108.3 38,360.7 8.8 0.7

Germany . . . . . . . . . . . . . . . . . . . . . . . . . 55,404.0 37,507.9 34,035.0 7.8 -5.3

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,972.6 58,276.9 27,678.8 6.3 -9.2

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,728.4 26,732.4 22,246.1 5.1 -4.2

Rwanda . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 9,444.5 19,990.0 4.6 (2

)

France . . . . . . . . . . . . . . . . . . . . . . . . . . 67,570.0 31,858.2 18,229.4 4.2 -13.5

United Kingdom . . . . . . . . . . . . . . . . . . . 23,743.3 17,323.8 15,451.4 3.5 -4.7

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . 13,144.9 14,241.2 14,515.7 3.3 1.1

Other . . . . . . . . . . . . . . . . . . . . . . . . . 97,021.5 167,993.1 141,538.7 32.3 4.3

Total . . . . . . . . . . . . . . . . . . . . . . 407,615.7 447,102.8 437,897.4 100.0 0.8

1

 Not available.

2

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

All of Uganda’s 10 leading exports have strong revealed comparative advantage91 (RCA)

indices, and 8 of the top 10 leading products by RCA index rank are leading exports

(appendix E, table E-36). Nine of Uganda’s top 10 leading exports are classified as either

agricultural goods or nontraditional products, and the one that does not fall into either of

these two categories is mineral related. These three categories represent Uganda’s top

potential export sectors, and although Uganda remains a net importer of services, tourism

is a primary source of export earnings and represents another of Uganda’s potential export

sectors. The strategic export proposals program of the Ministry of Finance identified coffee,

cotton, fish, horticulture, Irish potatoes, and livestock/livestock products (including meat,

milk, hides, skins, and leather products) as potential growth sectors.92

Coffee has been Uganda’s top export, and even though its share of the total has been

declining, specialty coffee products have strong export potential. As a group, East African

countries produce about 15 percent of the specialty coffees in the world and could potentially

produce more. Uganda is currently the leading exporter of organic coffee in Africa. Various

attempts also are being made to add value to coffee, sell washed arabica and robusta to the

specialty market, popularize local consumption of roasted and ground coffee, and attract an

investor to begin soluble coffee production.93
 94 For additional information on regional organizations, see app. C.

 95 Multilateral Investment Guarantee Agency (MIGA), World Bank, Shedding New Light on

Africa’s Investment Opportunities, June 2003, p. 10, found at www.miga.org/screens/pubs/

otherpubs/otherpubs/africa_newlight.pdf, retrieved May 24, 2005.

 96 For additional information, see app. C.

 97 “Uganda to become fourth largest exporter of tobacco by 2005.” 

 98 Uganda National Banana Research Programme, found at www.banana.go.ug, retrieved

Apr. 8, 2005.

 99 Federal Research Division, Library of Congress, Country Studies, 2003, found at

http://countrystudies.us, retrieved Apr. 15, 2005.

 100 Industry official, interview by USITC staff, Kampala, Uganda, Mar. 7, 2005.

 101 “Uganda courts Norwegians to invest in fish sector,” The Monitor, Feb. 17, 2005, found at

http://allafrica.com/stories/200502160919.html, retrieved Mar. 2, 2005.

7-31

Conditions are favorable for investment in the production of other agricultural goods for

export to the East African Community (EAC) region,94 including soybean oil and currentlyexported peas and sugar, provided that the inadequate transportation network is improved.95

New opportunities also exist to export to the European Union through the Everything But

Arms initiative96 for traditional agricultural products such as tobacco, maize, and sugar.

Uganda is expected to become the second-largest exporter of tobacco in Africa and fourth

in the world when Uganda Tobacco Processors (UTP) starts production in 2005. UTP is

establishing a $35-million project as a joint venture between British American Tobacco

Uganda and Universal Leaf Tobacco Company of the United States.97 Bananas have been

a staple food crop in Uganda, and the National Banana Research program was established

in 1989 to enhance banana productivity and utilization, thus improving food security and

increasing household income.98 With continued growth and development in this area,

bananas represent a potential export.

Currently, downstream processing of agricultural and manufactured goods is almost entirely

for domestic consumption, but the activity represents an export opportunity. Uganda already

has an export-oriented agribusiness sector, but there is potential for further development. For

example, current textile production is limited, but with modernization of existing plants,

continued availability of locally-grown, high-quality cotton, and ample access to water,

production for export could substantially increase. Uganda is beginning to develop a cottonspinning industry, and as with most other sectors, developing related transport logistics is

critical. The U.S. Agency for International Development is working with the Government

of Uganda, the Cotton Development Organization, ginners, and producers to help Uganda

take advantage of AGOA rules of origin and to become a significant supplier of cotton lint,

and perhaps cloth, to textile manufacturers in Africa.99 In addition, organic cotton is already

being grown in Uganda and can garner a premium price over regular cotton.100 Organic yarn

has been exported to Mauritius, Kenya, and Tanzania. The European Union, United States,

and Japan are potential export markets for high-quality organic yarn and apparel.

Nontraditional exports have strong RCA indices for Uganda. Fish and fish products are

exported to all markets, but most heavily to Australia, and there is potential to increase

exports to markets such as the United States and Europe. Uganda is courting Norwegian

investors to establish a fish feed-producing plant.101 There is potential in processing fish into

finished products such as canned fish, fish sausages, fish soups, and breaded fish. Low-cost

species such as tilapia could be processed for the local and regional markets, while premium

fish such as Nile perch could be processed for premium markets such as the United States
 102 The ADF is a U.S. government corporation that provides support directly to African small,

medium, and microenterprises and nongovernmental organizations that work at the grassroots

level. United States Trade Representative (USTR), 2004 Comprehensive Report on U.S. Trade and

Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and

Opportunity Act, May 2004, p. 57, found at www.agoa.gov/resources/2004-05-agoa.pdf, retrieved

May 24, 2005.

 103 “Investing in Uganda’s fish and fish-farming industry,” found at www.ugandainvest.com/

fishing.pdf#search='uganda%20fish', retrieved Mar. 10, 2005.

 104 “Sweet hopes for Uganda’s vanilla industry,” BBC News, June 25, 2003, found at

http://news.bbc.co.uk/2/hi/business/3017876.stm, retrieved Mar. 8, 2005.

 105 Patrick K. Asea and Darlison Kaija, “Impact of the Flower Industry in Uganda,”

International Labor Organization, Jan. 2000, found at www.ilo.org/public/english/dialogue/

sector/papers/uganflow, retrieved Mar. 29, 2005.

 106 Dubai Flower Centre, found at www.dubaiflowercentre.com/press1.htm, retrieved

Apr. 20, 2005.

 107 Michael L. Humphrey and Didier de Senneville, Cargill Technical Services for USAID,

“Constraints and Opportunities for Improved Trade and Investment between African and U.S.

Companies in Selected Countries (Ghana, Lesotho, Senegal, South Africa, Uganda, Zambia),”

African Trade and Investment Policy Project, Sept. 2002, p. 3.

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and the European Union. The sector has benefitted from African Development Fund (ADF)

project financing.102

Additionally, there is potential for development and marketing of high-value materials from

fish by-products, such as skins and carcasses. The skins could be tanned and marketed as

high-value leather, while both the skins and carcasses may be used as raw materials for

gelatin and glue. Fish gelatin is suitable for use in kosher and halal foods. Currently, only

one firm converts fish skins into leather for export. Other markets identified for fish leather

include South Africa and Asia. There also are opportunities in fish oil and fishmeal

production for export to the European Union.103

Uganda has a strong RCA index for vanilla. Vanilla has been growing at a rapid pace in

world trade,104 and the two largest producers of vanilla, Indonesia and Madagascar, have

decreased their production levels recently. Consequently, Uganda is in a position to increase

market share, especially to the United States, the world’s largest importer of vanilla. In

FY2003, four ADF projects were undertaken in Uganda to develop vanilla exports.

Uganda’s varied climate with cooler temperatures at higher elevations, and access to water

from Lake Victoria, suggest the possibility of growing a variety of flowers.105 Floriculture

is still a new industry; cut flowers, cut foliage, and, to a lesser degree, pot plant cuttings are

the main outputs. Cut flowers include a variety of roses, chrysanthemum cuttings, carnations,

and summer flowers. Cut flowers currently are exported to Europe, primarily to the

Netherlands where they are sold through auctions and brokers for distribution throughout

Europe. They represent a potential export to the United States, as they are duty-free under

AGOA, and to other export markets, such as South Africa, Australia, and the United Arab

Emirates. Dubai is another potential export market, as it is a new flower center with an

auction system and there are direct flights from Uganda to Dubai.106

Uganda is a substantial exporter of raw hides, but the sector is dominated by one familyowned firm that has expressed no interest in downstream processing such as transforming

the hides into leather and leather products.107 However, given the government’s export
 108 Embassy of Uganda official, telephone interview by USITC staff, Washington, DC,

Feb. 8, 2005.

 109 John S. Wilson and Victor O. Abiola, editors, The International Bank for Reconstruction and

Development/The World Bank, “Enhancing Uganda’s Access to International Markets: A Focus

on Quality,” ch. 5 in Standards and Global Trade: A Voice for Africa (Washington, DC: The

World Bank, 2003), p. 372. 

 110 US&FCS, “Uganda Country Commercial Guide, Fiscal Year 2004.”

 111 East African Petroleum Conference, found at www.eac.int/eapc, retrieved Apr. 12, 2005.

 112 US&FCS, “Uganda Country Commercial Guide, Fiscal Year 2004.”

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strategy and emphasis on nontraditional and agroprocessing exports, leather and leather

products remain a viable potential export for Uganda.

Milk and other dairy products are another potential export. Uganda boasts a growing

livestock industry, centered on Ankole cattle, and a growing dairy sector with excess

production capacity. With improved transport infrastructure and better storage capability,

Uganda could serve the West African market, which has traditionally imported milk from

the United States.108 There is a demand for better breeding techniques, feed, and veterinary

care because endemic diseases and the lack of quality standards necessary for export have

limited the sector’s potential. Other nontraditional potential exports include honey, chilies,

ginger, pineapples, silk, oilseeds, and vegetables.109

The mining and quarrying sector is underdeveloped but constitutes a promising sector for

Uganda, as it is endowed with a great diversity of geological formations and structures

favorable to mineralization and petroleum entrapment. European mining firms are involved

in a $100-million cobalt reprocessing project at Kilembe, and local gold dealers report some

high-quality gold deposits within Uganda as well.110 Exploration activities in the Semliki

Basin in western Uganda have reaffirmed the existence of petroleum deposits, and further

drilling is planned to assess their size. There have been two conferences (2003 in Kenya and

2005 in Uganda) on the petroleum potential and investment opportunities in the three EAC

member countries.111 In 2002, mineral surveys were conducted throughout the country,

specifically for gold, zinc, copper, and lead in southeastern Uganda; and carbonatite, gold,

nickel, diamonds, tantalum, and niobium in other areas. The government also reduced fees

for exploration licences.

Since the late 1980s, tourism has been one of the fastest-growing industries and an important

source of foreign exchange, but prospects have suffered in recent years because of lack of

security, mainly in the north and west of the country. However, security is improving, and

Uganda is one of only three countries with rare mountain gorillas, in Bwindi and Mgahinga

national parks.112 In addition, Uganda boasts two significant game parks, Queen Elizabeth

and Murchison Falls, and a few smaller parks.

Domestic and International Barriers

Uganda's supply constraints include poor physical infrastructure (e.g., roads and railways),

unreliable public utilities (e.g., power, water, and telecommunications), weaknesses and lack

of transparency in tax administration and commercial justice, low levels of education and

skills and low labor productivity, a poor technological research base, a weak export

institutional framework, market access problems, limited access to trade finance and market

information, and cumbersome customs procedures. These obstacles have hindered Uganda’s
 113 EIU, Uganda Country Profile, p. 21.

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efforts to expand trade and attract FDI. Despite these constraints, many of Uganda’s business

environment indicators are, on average, better than the regional averages (table UG-5). 

Table UG-5

Uganda: Business environment

Uganda

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 35.5 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 11.9 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.3 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 209.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 5.5 13.2 4.9

Registering a property: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 131.3 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 0.0 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Uganda, applied rate, 2003)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005. 

Like most African countries, Uganda is fairly small, both in terms of population and percapita income. As a consequence, investment is limited and production and exports are slow

to diversify. Many countries in the region produce similar products, and thus compete for

the limited investment capital. In addition, many agricultural exports (except tea) are grown

by smallholders, so there is a need for organization and consolidation to foster export

capability. Small-scale production also limits investment in essential infrastructure that

depends on economies of scale for viability.

Governance also reportedly presents a significant impediment, and Uganda ranks as the

seventh-most corrupt country in Africa.113 The 2005 Index of Economic Freedom score for

Uganda classifies the country as mostly unfree, with better scores for government

intervention and monetary policy than for fiscal burden, property rights, or regulation

(table UG-6).

Less than 7 percent of the country’s road network paved (table UG-7), and the rail service

is mostly unreliable. Most businesses opt to use trucks, but efforts are underway to increase
 114 USTR, 2004 Comprehensive Report on U.S. Trade and Investment Policy Toward

Sub-Saharan Africa, p. 44.

 115 “Turning on the lights where electricity is rare,” The New York Times, Feb. 15, 2005.

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Table UG-6

Uganda: Economic freedom

Uganda

Regional

average1

OECD

average

–––– Heritage Foundation indicators ––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.6 2.5

2000 Overall score .................................................... (2

) 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.4 2.2

 Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé &

Principe, Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 

Table UG-7

Uganda: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,000.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.6

Transport services (percent of service imports, BoP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.5

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.9

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

the usability and efficiency of the railway system. Privatization of the national rail company

is nearly complete, and there are proposals for eastern, central, and southern rail links, but

these projects have yet to be funded. In addition, the U.S. Trade and Development Agency

is partially funding a feasibility study on the upgrade and expansion of Entebbe International

Airport on behalf of the Civil Aviation Authority of Uganda.114

Electricity is both intermittent and expensive. Currently, more than 90 percent of energy

requirements are met by sources other than petroleum and electricity, with more than

$100 million spent each year on small dry-cell batteries for radios and lighting.115 The
 116 U.S. Energy Information Administration, “Country Analysis Briefs, Great Lakes Region,”

found at www.eia.doe.gov/emeu/cabs/eafrica.html, retrieved Apr. 1, 2005.

 117 Embassy of Uganda official, telephone interview by USITC staff, Washington, DC,

Feb. 8, 2005.

 118 Humphrey and de Senneville, “Constraints and Opportunities,” pp. 3, 5, and 71.

 119 Uganda country information, found at www.infomine-africa.com/Uganda.asp, retrieved

Mar. 25, 2005.

 120 United Nations Conference on Trade and Development, “Investment Policy Review of

Uganda,” 2000, found at www.unctad.org/en/docs/iteiipmisc17_en.pdf, retrieved May 24, 2005.

 121 Association official, interview by USITC staff, Kampala, Uganda, Mar. 8, 2005.

 122 Asea and Kaija, “Impact of the Flower Industry in Uganda.” 

7-36

Electricity Board was privatized in 2002, and the government has undertaken a 10-year

program of rural electrification. Uganda also has huge hydroelectric power potential, with

the various lakes and rivers in the country, but little progress has been made in this sector.116

Environmental groups have deterred investors from developing the country’s hydroelectric

power potential, citing concerns about the environmental effects of dams and power plants

on Uganda’s forests and waterways.117

Universities suffer from lack of funds and poor staff recruitment. As a result of the decline

in the education system and the emigration of skilled labor during the decades of political

turmoil, there is a shortage of middle managers and technicians and a lack of entrepreneurs

exposed to advanced industrial culture, both of which are necessary for developing export

industries, especially those in the industrial sector. In addition, with experience limited to

regional and EU markets, Ugandan business managers have little knowledge of the U.S.

market, including trends, required standards, methods of doing business, and how to develop

contacts, which serves as an impediment to exporting to the United States.118

Major constraints in the mining industry include the lack of local capital sources and basic

equipment, outmoded plant and equipment, inadequate repair and maintenance facilities, lack

of in-country research and development, incomplete geological and mineral information, low

investment levels in feeder industries that consume industrial minerals, and underdeveloped

infrastructure.119 Depending on the nature of activities, operations in the sector are subject

to exploration, mineral dealer, and mining licences. However, the revised mining statute is

expected to reduce the number of licences required to operate in the sector.

There is a high level of loss in the agricultural sector because of the lack of appropriate

storage facilities and weak marketing and distribution systems. Partly for this reason,

agribusinesses depend on imports. For example, in the edible oil processing sector, the

domestic supply of inputs (i.e., sunflower, simsim, cotton seed, soybeans, groundnuts

(peanuts), and some oil palm) meets only 20 to 25 percent of the demand of the processing

mills. Large oil millers bridge the gap between domestic supply and capacity demand by

importing inputs and crude or semifinished edible oil products. Improvement in the domestic

supply of agricultural inputs could improve productivity in downstream industries.120

In Uganda, flower production, which is increasing worldwide, has become a high-volume,

low-margin activity. The Government of Uganda offered tax incentives in the 1990s, when

the flower industry was emerging, but these incentives were withdrawn in 2000 because the

government thought they were being abused, and there have been no new incentives since

then.121 Price trends have been unfavorable for the Ugandan growers as margins have been

narrowing and projected price increases have not materialized.122 In addition, flowers are

perishable commodities and need proper preservation to maintain quality. The requisite
 123 Humphrey and de Senneville, “Constraints and Opportunities,” p. 80.

 124 For additional information on the Multifiber Arrangement and the removal of textile and

apparel quotas in 2005, see app. C.

 125 Government official, interview with USITC staff, Kampala, Uganda, Mar. 7, 2005.

 126 EIU, Uganda Country Profile, p. 32.

 127 Embassy of Uganda official, telephone interview by USITC staff, Washington, DC,

Feb. 8, 2005.

 128 The United States maintains sanitary and phytosanitary (SPS) regulations to protect the U.S.

food supply. This is done through the Animal Plant and Health Inspection Service (APHIS) and

the Food Safety Inspection Service (FSIS) of the U.S. Department of Agriculture. APHIS is

responsible for inspecting animal and plant product imports that could harbor pests or disease

7-37

infrastructure such as refrigerated storage is lacking throughout most of Uganda, especially

at the Entebbe airport.

There are concerns over the long-term health of the fish and fish-products industry because

of the uncertainty of fish reserves, especially in Lake Victoria. The government is already

concerned about overfishing and dwindling fish stocks, but has been unable to establish an

effective fishing program to preserve the resource.123

With the removal of textile and apparel quotas in 2005,124 the cotton-processing (textile and

clothing) industries in Uganda face increased international competition. In this sector in

particular, Uganda’s production is constrained by higher production costs, fewer economies

of scale, and lower capacity utilization as compared with other global suppliers. Capacity

utilization has been very low throughout the manufacturing sector, at less than 20 percent

for most industries. This is partly because many industries, such as plastics and paper, are

dependent on imported inputs, which experience high mark-ups from tariffs and

transportation costs. In addition, purchasers in markets such as the United States want large

volumes, but the local environment is not conducive to increasing volumes. According to

government officials, technical expertise for evaluating export opportunities for

manufactured goods is lacking, as is the level of support for these goods, as compared with

agricultural goods.125

Lack of security is a problem, not only for attracting tourism and the associated services, but

also for attracting FDI. Lack of security is especially a problem in the north and west of

Uganda. The killings of eight tourists in the Bwindi National Park in Uganda in March 1999

raised security concerns.126 The Rwenzori Mountains National Park was closed for a period

in the late 1990s because of security concerns. Along similar lines, as noted by a Ugandan

government official, the country’s history of economic mismanagement and the negative

connotation that is associated with it has been a deterrent to doing business in the country.127

In addition, the country needs upgraded tourist facilities and an improved transportation

network to take full advantage of the tourism sector's potential. Uganda is trying to market

Entebbe and Kampala as convention centers, but inadequate facilities limit increased usage.

Registration, documentation, customs procedures, and valuations, along with standards,

testing, labeling, and certification requirements for exporting some products to other

countries can exceed the capability of Ugandan businesses. These regulations can be

especially burdensome for new businesses, small companies, and producers of high-value

and small-quantity products. Complying with certain sanitary and phytosanitary

requirements for agricultural produce, live animals, and meat products also remains a

significant challenge for exporters to the United States and Europe because of the lack of

technological resources and the added cost.128 In the United States, the pest-risk assessment
organisms. FSIS is responsible for assuring that U.S. imported meat, poultry and egg products are

unadulterated and properly labeled and packaged. U.S. SPS standards are consistent with the

provisions of the WTO SPS Agreement.

 129 Humphrey and de Senneville, “Constraints and Opportunities,” p. 13.

 130 The ban was lifted in 2000 after shipments were monitored and found not to contain high

levels of pesticides and heavy metals. 

 131 Embassy of Uganda official, telephone interview by USITC staff, Washington, DC,

Feb. 8, 2005; and “Africans’ Burden: West’s Farm Subsidies,” The New York Times,

Sept. 10, 2003, found at www.nytimes.com/2003/09/10/international/africa/

10COTT.html?ei=5007&en=5f72a9bf7b7adf64&ex=1378526400&partner, retrieved

Apr. 18, 2005.

 132 US&FCS, “Uganda Country Commercial Guide, Fiscal Year 2004.”

7-38

from the U.S. Department of Agriculture Animal and Plant Health Inspection Service,

required before exporting fresh produce to the U.S. market, has been described as a

complicated and lengthy process.129 However, the cost of noncompliance can also be high.

For example, the European Union instituted a ban on fish and fish products from Uganda in

1999 because of low standards of hygiene.130 Also, since April 2003, all exports of fruit and

flowers to the European Union have been subject to regular checks to ensure that standards

are observed, with failure resulting in fines and blacklisting.

Ugandan officials maintain that government support programs in developed markets such

as the United States and the European Union are an impediment to increased exports.131 As

Uganda’s primary exports are agricultural goods, domestic supports and tariffs in primary

export markets, they maintain, limit the competitiveness of Uganda’s agricultural products

in those markets. 

As the European Union and other African countries have been heavily engaged in trade with

Uganda, air transport routes, supply chains, and trade agreements have been in place for

some time. However, trade with other regions, including the United States, is in the early

stages of development. There is no direct route from Uganda to the United States, and routes

via other African countries do not have sufficient capacity. All trade using airfreight is

concentrated on Europe. There are both freight capacity and freight cost problems for

accessing the U.S. market.

Within Africa, opportunities have been hampered by inefficient or nonexistent transportation

networks. The lack of paved roads, rail links, and agreements for transnational flights

discourage regional trade. Because of its land-locked status, most goods entering or exiting

Uganda pass through Kenya, which has inadequate infrastructure, including the inefficient

port of Mombasa, decrepit rail service, and deteriorating roads. Generally, transporting a

container of goods between Mombasa and Kampala will take twice the time and expense as

transporting that same container between London and Mombasa.132 In addition, Uganda’s

trade with some of its neighbors, specifically Sudan and Democratic Republic of the Congo,

is hampered because of the chronic instability in the region.
8-1

CHAPTER 8

Other Agriculture-Exporting Countries: 

Ghana, Guinea-Bissau, Malawi, and

Swaziland

The agriculture sectors in Ghana, Guinea-Bissau, Malawi, and Swaziland are somewhat

diversified. The trademark exports of these countries are cocoa (Ghana), cashews

(Guinea-Bissau), tobacco (Malawi), and sugar (Swaziland) (table 8-1). A summary of

findings for each of the four countries with respect to potential export growth sectors and

domestic and international barriers is provided below.

Table 8-1

Ghana, Guinea-Bissau, Malawi, and Swaziland, 1999-2003 average share of total exports, by sector

Sector Ghana Guinea-Bissau Malawi Swaziland

––––– Shares of total exports, 1999-2003 (percent) –––––

Fish and related products . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 7.3 0.1 0.7

Coffee, tea, and spices . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 0.2 9.4 (1

)

Cocoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.9 0.2 (1

) 0.1

Other agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 50.8 78.3 42.3

Forest-based products . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5 1.1 0.6 7.4

Minerals, metals, and metal products . . . . . . . . . . . . . . . . 20.5 1.1 0.8 3.1

Fuels and electrical energy . . . . . . . . . . . . . . . . . . . . . . . . 5.7 35.2 0.2 0.3

Textiles and fibers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 2.6 1.1 2.4

Apparel and related articles. . . . . . . . . . . . . . . . . . . . . . . . 0.2 (1

) 8.3 20.8

Other manufactures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 1.4 1.1 22.8 1

 Average share of less than 0.05 percent during 1999-2003.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Ghana

Ghana’s economy has traditionally been focused on exports of cocoa, gold, and timber.

Potential Ghanaian exports include raw and processed agricultural products such as fresh cut

flowers; fresh and processed fruits and vegetables; fresh and processed seafood; processed

cocoa products; processed wood products; apparel and textiles; and light industrial

manufactures such as ceramics, cosmetics, fine and costume jewelry, electrical and electronic

goods, and handtools, all for the U.S., EU, and sub-Saharan African markets. Services,

including offshore data processing and tourism services, are oriented primarily for the U.S.

and EU markets. The main barriers to Ghana’s potential exports include lack of access to

credit; shortages of certain skilled labor; port congestion; often unreliable energy supply; and

high energy prices. Sector-specific barriers include smallholder-based agricultural

production, poor feeder roads in rural areas, and limited available tourism options because

of sector undercapitalization. Poor roads and differing currencies inhibit the expansion of

regional trade. Difficulties meeting U.S. and EU sanitary and phytosanitary standards also

impede the expansion of Ghanaian agricultural exports to those markets.
8-2

Guinea-Bissau

Guinea-Bissau’s economy and trade are dependent on the agriculture and fisheries sectors,

with the recent emerging influence of the petroleum sector. Products with the best prospects

for export growth include cashews, frozen fish, molluscs, cotton, mangoes, lumber, and

processed wood products. The country faces many hurdles in developing its exports,

including lack of government transparency, social instability, costly and unreliable utilities,

inadequate transport and communications infrastructure, and lack of skilled labor and

management capacity. High tariffs on fish products were also identified as an international

barrier to export growth.

Malawi

Malawi’s economy and trade are highly dependent on the agricultural sector, particularly

tobacco, sugar, and tea. The sectors with the greatest potential for export development and

expansion are the processing of products such as paprika, macadamia nuts, and groundnuts

(peanuts); horticultural products such as cut flowers; and textiles and apparel. Despite

government efforts, export growth is constrained by inadequate transportation and

communication infrastructures, unreliable and costly utilities, excessive government

regulation, and a poor business environment. Difficulties meeting sanitary and phytosanitary

standards, agricultural support programs in developed countries, and tariff rate quotas on key

exports also impede export growth.

Swaziland

Swaziland’s economy is dependent on the apparel industry and the agricultural sector.

Potential Swazi exports include cane sugar, food preparations, chemical wood pulp, citrus

fruit, certain light manufactured products, textiles and apparel, and tourism. Key barriers

include high transportation costs, labor scarcity, ambiguous land tenure regulations, and

difficulties meeting sanitary and phytosanitary standards.
 1

 Prepared by James Stamps, Office of Economics.

 2

 Central Intelligence Agency (CIA), “Ghana,” The World Factbook, found at www.odci.gov/

cia/publications/factbook/print/gh.html, retrieved Mar. 29, 2005; and Economist Intelligence Unit

(EIU), Ghana Country Profile, 2004, p. 17.

 3

 World Bank, Ghana: International Competitiveness—Opportunities and Challenges Facing

Non-Traditional Exports, Report No. 22421-GH, June 21, 2001, p. iv.

 4

 EIU, Ghana Country Profile, p. 25.

 5

 Ibid., p. 33.

 6

 U.S. Department of Agriculture (USDA), Foreign Agricultural Service (FAS), “Ghana Cocoa

Situation Report, 2000,” GAIN Report No. GH0002, Oct. 6, 2000, p. 3. 

 7

 EIU, Ghana Country Profile, p. 36; and Ghana Investment Promotion Centre (GIPC),

“Country Overview: Economic Overview,” p. 1, found at www.gipc.org.gh, retrieved

Mar. 29, 2004. 

8-3

Ghana1

Economic Overview

Ghana is located in West Africa and is bordered by Côte d’Ivoire, Burkina Faso, Togo, and

the Atlantic Ocean. GDP in 2003 totaled $7.7 billion (table GH-1). Ghana’s economy grew

by 5.2 percent in 2003, driven primarily by exports of cocoa, gold, and timber. Ghana is

endowed with a number of natural resources, including sizeable deposits of gold, diamonds,

manganese, and bauxite; offshore deposits of crude petroleum and natural gas; and both

coastal and inland fishing. Agricultural production is adversely affected by periodic

droughts, deforestation, overgrazing, and soil erosion.2

 Compared to sub-Saharan Africa

(SSA) as a whole, Ghana has a relatively well-developed infrastructure of transportation

services, public utilities, and financial services.3

Ghana has a diverse economic base. Services accounted for almost 42 percent of GDP;

agriculture, 34 percent; and industry (manufacturing and other industry, including mining),

24 percent (figure GH-1). Within the services sector, tourism ranks as one of the country’s

most important industries. Tourism is Ghana’s third-largest source of foreign exchange

earnings after exports of cocoa and gold.4

The agriculture, forestry, and fishing sector employs about 60 percent of the Ghanaian

workforce.5

 Cocoa is by far Ghana’s most important cash crop and ranked as Ghana’s largest

source of foreign exchange in 2004, the second largest after gold in 2003. Ghana ranks as

the world’s second-largest cocoa bean producer after neighboring Côte d’Ivoire. Ghana’s

cocoa is grown by an estimated 1.6 million peasant farmers.6

 Other food and industrial crops

cultivated in Ghana include bananas, cashew nuts, cassavas, cereals (corn, rice, millet, and

sorghum), pineapples, and tobacco. Wood products rank as its third-leading export. Marine

and inland fishing is primarily for the domestic market, although small quantities of tuna and

shrimp are exported.7
8-4

Table GH-1

Ghana: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... . . 7,658.8

GDP growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... ....... . . 5.2

GDP per capita growth (annual percent, based on local currency, 2003) ....... ....... ....... ....... ....... 2.5

Inflation, consumer prices (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... .... 26.7

External debt, total (current US$, millions, 2002) ....... ....... ....... ....... ....... ....... ....... ..... 7,338.2

Total debt service (percent of exports of goods and services, 2002) ....... ....... ....... ....... ....... .... 8.0

Exports of goods and services (percent of GDP, 1999) ....... ....... ....... ....... ....... ....... ....... 37.2

Trade (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ..... 88.1

Official exchange rate (local currency unit per US$, period average, 2003) ....... ....... ....... ....... ..... 8,677.4

Population, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 20.4

Population growth (annual percent, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ... 1.7

Labor force, total (millions, 2003) ....... ....... ....... ....... ....... ....... ....... ....... ....... ... 9.9

Labor force participation rate, total (percent, 2002) ....... ....... ....... ....... ....... ....... ....... ... 49.7

Literacy rate, adult total (percent of people ages 15 and above, 2002) ....... ....... ....... ....... ....... . . 73.8

Primary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ....... . 80.0

Secondary school enrollment ratio, total (percent, 2000) ....... ....... ....... ....... ....... ....... ...... 36.0

Land use, arable land (percent of total, 2001) ....... ....... ....... ....... ....... ....... ....... ....... 16.3

Gross capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... ..... 19.4

Gross fixed capital formation (percent of GDP, 2003) ....... ....... ....... ....... ....... ....... ....... . 21.8

Foreign direct investment, net inflows (percent of GDP, 2002) ....... ....... ....... ....... ....... ....... . 0.8

 Most recent year for which data are available between 1999 and 2003. 1

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Figure GH-1

Ghana: Composition of GDP (2002)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 8

 George J. Coakley, “The Mineral Industry of Ghana,” U.S. Geological Survey Minerals

Yearbook, 2002, found at http://minerals.usgs.gov/minerals/pubs/country/2002/ghmyb02.pdf,

retrieved Mar. 30, 2005.

 9

 EIU, Ghana Country Profile, p. 39.

 10 Literacy refers to either English or a known Ghanaian language. Since much of literature and

mass communication in Ghana is in English, the reported effective literacy level was 46.9 percent.

GIPC, “Industry Information: Infrastructure,” p. 12, found at www.gipc.org.gh, retrieved

Mar. 29, 2004. 

 11 World Bank, Ghana: International Competitiveness, p. 4.

 12 World Bank, Ghana: International Competitiveness, p. 6.

 13 The minimum capital required for foreign investors is $10,000 for joint ventures with

Ghanaians or $50,000 for enterprises wholly owned by non-Ghanaians. U.S. Department of State

telegram, “Ghana 2005 Investment Climate Statement,” message reference No. 02536, prepared by

U.S. Embassy, Accra, Dec. 22, 2004.

 14 In 2000, Ghana ranked as the 21st largest FDI destination in Africa. World Bank, Ghana: 

International Competitiveness, p. 6.

 15 Ibid., p. 42.

 16 Ghana’s official definition of “nontraditional exports,” adopted in 1995, includes all

merchandise exports except for cocoa beans, logs and lumber, and mining products; other exports

are considered “traditional.” World Bank, Ghana: International Competitiveness, p. i.

8-5

Ghana’s diverse industrial base includes mining, aluminum smelting, agricultural processing,

and light industry. Mining ranks as one of Ghana’s top sources of foreign exchange, with

gold exports accounting for about 95 percent of Ghana’s total mining export earnings.8

Ghana’s manufacturing subsector is geared towards light industry, and has not changed

significantly since the 1980s. Key industries include cement, ceramics, electronics assembly,

food and beverages, fine and costume jewelry, petroleum refining, pharmaceuticals, seafood,

and textiles and apparel.9

Ghana has a population of 20.4 million people and an available labor force of 9.9 million

workers. The literacy rate for Ghana’s population ranks close to the SSA average,10 and

wages for Ghanaian labor generally are considered internationally price competitive.11

Ghana generally is perceived as an attractive location for foreign direct investment (FDI).12

The only precondition for FDI in Ghana is that investors meet a minimum capital

requirement.13 Foreign direct investment trends in Ghana are highly variable, and show a

significant decline since 1999, reflecting highly variable levels of investment in Ghana’s

capital-intensive mining sector, and sharply lower inflows associated with reduced activity

in Ghana’s privatization efforts after 1999.14

Export Profile

Ghana has few controls on exports. Ghana’s export regime provides for duty drawback and

value-added tax refunds for exporters. Companies that export more than 70 percent of their

products qualify as foreign trade zone (FTZ) companies. This qualification allows for zero

duty on imports used as production inputs and a 10-year income tax exemption.15 Despite

efforts by the Government of Ghana to expand nontraditional exports, Ghana’s main foreign

exchange earners continue to be its traditional exports16—cocoa beans, gold, and wood

products. Receipts from tourism have emerged as an increasingly important source of foreign

exchange since 1999. Cocoa accounts for more than one-half of Ghana’s earnings from

merchandise exports (table GH-2). Other key Ghanaian exports include aluminum (Ghana’s

main processed mineral export), pineapples, fish products, processed wood products,

petroleum products, cocoa paste and cocoa butter, and manganese (table GH-3).
8-6

Table GH-2

Ghana: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––– 1,000 dollars ––––––––– ––––– Percent –––––

18 Cocoa and cocoa preparations ..................... 387,353.4 569,991.3 883,658.4 51.3 9.6

44 Wood and articles of wood; wood charcoal ............ 246,006.7 212,632.5 221,914.0 12.9 -1.1

08 Edible fruit and nuts; peel of citrus fruit or melons . . . . . . . 17,416.6 31,864.0 97,069.6 5.6 21.0

76 Aluminum and articles thereof ...................... 228,507.8 140,322.0 86,304.4 5.0 -10.3

16 Edible preparations of meat, fish, crustaceans,

molluscs or other aquatic invertebrates . . . . . . . . . . . . 9,935.5 75,251.5 82,624.6 4.8 26.5

27 Mineral fuels, mineral oils and products of their 

distillation; bituminous substances; mineral waxes . . . . 28,227.9 79,573.2 61,990.9 3.6 9.1

26 Ores, slag and ash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,395.9 33,752.1 54,297.4 3.2 6.7

03 Fish and crustaceans, molluscs and other aquatic

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,828.1 35,608.5 47,247.1 2.7 1.1

71 Natural or cultured pearls, precious or semiprecious 

stones, precious metals; precious metal clad

metals, articles thereof; imitation jewelry; coin . . . . . . . 226,928.8 219,855.6 37,121.8 2.2 -18.2

07 Edible vegetables and certain roots and tubers . . . . . . . . . 7,126.3 15,797.5 22,668.8 1.3 13.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,115.6 272,061.7 128,682.8 7.5 2.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,329,842.6 1,686,709.9 1,723,579.8 100.0 2.9

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to gold exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table GH-3

Ghana: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––– 1,000 dollars ––––––––– ––––– Percent –––––

1801 Cocoa beans, whole or broken, raw or roasted ......... 324,582.1 495,305.7 799,385.5 46.4 10.5

4407 Wood sawn or chipped lengthwise, sliced or peeled, 

more than 6 mm (.236 in.) thick .................. 131,240.8 127,113.3 107,604.5 6.2 -2.2

7601 Aluminum, unwrought ............................. 225,998.9 133,427.7 85,132.1 4.9 -10.3

1604 Prepared or preserved fish; caviar and caviar

substitutes prepared from fish eggs . . . . . . . . . . . . . . . 9,930.9 75,216.7 82,609.9 4.8 26.5

4408 Veneer sheets and sheets for plywood and other wood 

sawn lengthwise, sliced or peeled, not more than 

6 mm (.236 in.) thick . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,646.2 59,166.6 73,614.2 4.3 12.4

0804 Dates, figs, pineapples, avocados, guavas, mangoes 

and mangosteens, fresh or dried . . . . . . . . . . . . . . . . . 15,924.9 23,701.8 70,548.3 4.1 18.0

2710 Petroleum oils and oils from bituminous minerals (other 

than crude) and products therefrom, nesoi, 

containing 70% (by weight) or more of these oils . . . . . 26,162.8 57,165.0 58,367.2 3.4 9.3

1803 Cocoa paste, whether or not defatted . . . . . . . . . . . . . . . . 12,252.3 17,365.3 39,030.8 2.3 13.7

1804 Cocoa butter, fat and oil . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,199.2 54,395.4 35,625.5 2.1 -3.3

2602 Manganese ores and concentrates, including 

ferruginous manganese ores and concentrates

with a manganese content of 20% or more, based

on dry weight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,272.2 29,811.9 34,772.8 2.0 8.8

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493,632.3 614,040.4 336,889.0 19.5 -4.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,329,842.6 1,686,709.9 1,723,579.8 100.0 2.9

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to gold exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 17 Production totaled 497,000 mt in 2002-03, and 340,000 mt in 2001-02. Ghana’s

second-highest production, 580,869 mt, was recorded during the 1964-65 cocoa season. Ghana

Cocoa Board, “Performance of the Cocoa Sector in the 2003-04 Cocoa Year,” news release,

Apr. 2, 2005, found at www.cocobod,gh/News_Details.cfm?EmpID=869, retrieved Apr. 7, 2005.

 18 Ibid.

 19 In recent years, Ghana has imported 15,000-50,000 mt of cocoa beans. USDA, FAS, “Ghana

Cocoa Situation Report, 2000,” GAIN Report No. GH0002, Oct. 6, 2000, p. 2.

 20 Ibid.

 21 U.S. Department of State telegram, “Ghana: Response to Request for Information for USITC

Study on Export Opportunities and Barriers in AGOA-Eligible Countries,” message reference

No. 08545, prepared by U.S. Embassy, Accra, Feb. 17, 2005.

 22 EIU, Ghana Country Profile, p. 34.

 23 Ibid., p. 46; and GIPC, “Ghana Investment Profile: Cash Crops and Food Production and

Processing,” found at www.gipc.org.gh, retrieved Mar. 31, 2005.

 24 EIU, Ghana Country Profile, p. 46.

 25 Ghana Forestry Commission, Timber Industry Development Commission, “Structure of the

Ghana Timber Industry,” found at www.ghanatimber.org/industry/structure.asp, retrieved

Apr. 7, 2005.

8-7

Ghana’s total cocoa bean production for the 2003-04 season ending in September 2004 was

a record high of nearly 735,000 metric tons.17 As a result, cocoa exports based on the

2003-04 crop season were valued at $1.2 billion, also a record high.18 Beans make up more

than 80 percent of Ghana’s cocoa exports,19 with the remainder consisting of processed

products–primarily cocoa butter and smaller amounts of cocoa liquor and paste, as well as

cocoa powder, cocoa cake, and chocolate.20 Cocoa bean production has increased in part

because of Ghanaian government support to farmers for pest and disease control, planting

of improved hybrids, and higher cocoa prices.21 In addition, as much as 100,000 metric tons

of cocoa beans reportedly were routed through and shipped from Ghana during the 2003-04

season by farmers from Côte d’Ivoire because of that country’s civil unrest and difficulties

in exporting from Ivorian ports.22

Ghana’s export earnings from gold were second only to cocoa earnings in 2004, primarily

because of the surge in the volume of cocoa shipments; gold was Ghana’s top export earner

in 2003, when total cocoa shipment volume was at a more typical level. Ghana’s gold export

earnings in recent years have benefitted from higher world gold prices.

Exports of nontraditional crops also have increased in recent years, although export values

remain low relative to Ghana’s traditional exports. For example, production and exports of

pineapple (prepared or preserved) and fish products have increased, aided by available air

and sea shipments to major European markets.23 Exports of unwrought aluminum and

aluminum ores and concentrates have declined significantly during the past 10 years, while

exports of aluminum plates and sheets have increased during the period. Similarly, exports

of processed wood products have increased, while exports of upstream wood products have

declined.24 Nearly 200 companies in Ghana export sawn timber, with a smaller number of

companies exporting profiled and machined timber, veneers, plywood, doors, furniture parts,

flooring, and other wood products.25

Continued growth and development of tourism is an important component of Ghana’s

economic development strategy. Ghana’s annual tourism receipts nearly doubled between

1998 and 2002 to $520 million, with the number of annual tourist arrivals increasing steadily
 26 EIU, Ghana Country Profile, p. 45. One source estimated that 27 percent of tourist arrivals

were overseas Ghanaians. African Development Bank/Organization for Economic Cooperation

and Development, “Ghana,” African Economic Outlook, 2003, p. 166.

 27 EIU, Ghana Country Profile, p. 45.

 28 GIPC, “Ghana Investment Profile: Travel and Tourism,” found at www.gipc.org.gh,

retrieved Mar. 31, 2005.

 29 EIU, Ghana Country Profile, p. 47.

 30 Ghana Cocoa Board, “Cocoa Bean Exports by Destination,” found at www.cocobod.gh/

cocoa_beans_export.cfm, retrieved Apr. 8, 2005.

 31 Ghana Forestry Commission, Timber Industry Development Division, “Ghanaian Timber

Statistics,” found at www.ghanatimber.org, retrieved Apr. 8, 2005.

8-8

to more than 482,000 by 2002.26 The main sources of tourism in Ghana are the United

Kingdom, the United States, Germany, and France.27 The Government of Ghana is

encouraging investment in historic and cultural areas as well as in beach and lakefront areas

to enhance the country’s status as an internationally competitive tourist destination.28

The European Union is by far Ghana’s leading export market, with the United Kingdom,

France, the Netherlands, and Germany the largest EU partners, followed by Japan; the

United States ranked 7th behind Italy (table GH-4). The Netherlands is the largest market for

Ghana’s cocoa beans, processing much of Ghana’s cocoa,29 and accounting for 22 percent

of Ghanaian 2002-03 exports of cocoa beans, by value. Other leading cocoa bean markets

include the United Kingdom (14 percent), Japan (13 percent), and Turkey (11 percent); the

United States accounts for less than 1 percent.30 Italy, the United States, and France are the

largest export markets for Ghana’s timber.31 Germany and the United States are the only

major export markets for which Ghana’s exports declined during 1994-2003.

Table GH-4

Ghana: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––––––– 1,000 dollars ––––––––––––– ––––––– Percent –––––––

United Kingdom ..................... 212,760.9 248,477.0 234,382.9 13.6 1.1

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,677.5 100,717.9 176,762.7 10.3 7.2

Netherlands . . . . . . . . . . . . . . . . . . . . . . . . 71,834.2 196,786.9 172,324.7 10.0 10.2

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,613.0 108,565.7 131,895.0 7.7 -6.5

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,238.0 66,165.9 117,273.3 6.8 7.1

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,195.6 189,985.4 101,462.4 5.9 2.2

United States . . . . . . . . . . . . . . . . . . . . . . . 205,219.9 219,436.5 93,228.2 5.4 -8.4

Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,299.3 18,157.2 91,131.5 5.3 40.4

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,001.7 47,737.1 86,339.3 5.0 8.9

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 77,667.3 81,886.5 4.8 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313,002.6 413,013.0 436,893.3 25.3 3.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . 1,329,842.6 1,686,709.9 1,723,579.8 100.0 2.9

1

 Not available.

2

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to gold exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 32 GIPC, “Ghana Investment Profile: Floriculture,” found at www.gipc.org.gh, retrieved

Mar. 31, 2005; and Multilateral Investment Guarantee Agency (MIGA) and World Bank, Shedding

New Light on Africa’s Investment Opportunities (Johannesburg: June 2003), p. 11.

 33 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 34 GIPC, “Ghana Investment Profile: Cash Crops and Food Production and Processing,” found

at www.gipc.org.gh, retrieved Mar. 31, 2005; and MIGA and World Bank, Shedding New Light, 

table 1.

 35 GIPC, “Ghana Investment Profile: Seafood Processing,” found at www.gipc.org.gh, retrieved

Mar. 31, 2005; MIGA and World Bank, Shedding New Light, table 1; and World Bank, Ghana: 

International Competitiveness, p. 24.

8-9

Sectors with the Greatest Export Growth Potential

Ghana has excellent growing conditions to support an export-oriented floriculture industry,

particularly to supply fresh cut flowers to European markets. Direct flights from Ghana to

Europe are significantly shorter than flights from other major African flower-producing

countries. Although current production is very small, potential Ghanaian exports include

hibiscus, gladioli, roses, ornamental palms, ferns, chrysanthemums, and sunflowers. Ghana’s

floriculture industry is at an early stage of development relative to other major flower

producers in Africa; only one Ghanaian company currently exports fresh cut flowers to

Europe.32

Ghana is, and is likely to remain, a globally competitive producer and exporter of cocoa

beans as a result of the country’s natural resource endowments, favorable conditions for

cocoa production, and the expanding world market for cocoa beans, as shown in the revealed

comparative advantage33 (RCA) analysis (appendix E, table E-13). Based on Ghana’s

significant agricultural resources, generally favorable growing conditions, and available

arable land, potential exports include food and cash crops (corn, rice, plantains, cassava, and

yams) for SSA and world markets; fresh and processed fruits (pineapples, papayas, mangoes,

and other offseason fruits) for EU and U.S. markets; fresh and processed vegetables (fresh

and canned tomatoes, tomato paste, chilies and hot sauces, squash, and frozen vegetables);

processed food products (cottonseed, corn, and palm oil; flour; cassava starch; tapioca; and

pasta); cigarettes; beer and other alcoholic beverages; confectionery goods, chewing gum,

and sweet biscuits; and food sector technology and services (including fertilizers,

insecticides, pesticides, and fungicides) for SSA markets.34 In addition, the RCA analysis

shows Ghana to be a competitive supplier in the growing world market for cocoa butter, fat,

and oil, in line with other assessments of potential Ghanaian exports of processed cocoa

products (cocoa butter and paste, chocolate, and cocoa preparation).

Ghana has significant coastal and inland fishing resources; however, farmed fishing is at a

minimal level. Potential exports for European and SSA markets include fresh and processed

(salted, smoked, canned, and block and individually quick-frozen) seafood. Marine species

include grouper, red snapper, croaker, barracuda, cuttlefish, shrimp, anchovy, chub mackerel,

sardines, and tuna; inland (fresh-water) fish from Lake Volta include tilapia and African

perch.35 Based on the RCA analysis, Ghana ranks as highly competitive in the export of

certain categories of processed seafood.
 36 GIPC, “Ghana Investment Profile: Cotton Textiles,” found at www.gipc.org.gh, retrieved

Mar. 31, 2005.

 37 MIGA and World Bank, Shedding New Light, table 1.

 38 GIPC, “Ghana Investment Profile: Apparel,” found at www.gipc.org.gh, retrieved

Mar. 31, 2005.

 39 GIPC, “Ghana Investment Profile: Ceramics,” found at www.gipc.org.gh, retrieved

Mar. 31, 2005.

 40 GIPC, “Ghana Investment Profile: Electrical and Electronic Goods,” found at

www.gipc.org.gh, retrieved Mar. 31, 2005.

 41 GIPC, “Ghana Investment Profile: Fine and Custom Jewelry,” found at www.gipc.org.gh,

retrieved Mar. 31, 2005.

 42 GIPC, “Ghana Investment Profile: Hand Tools,” found at www.gipc.org.gh, retrieved

Mar. 31, 2005.

 43 GIPC, “Ghana Investment Profile: Furniture and Wood Processing,” found at

www.gipc.org.gh, retrieved Mar. 31, 2005; MIGA and World Bank, Shedding New Light, p. 12;

and World Bank, Ghana: International Competitiveness, p. 18.

8-10

There is small-scale local production of apparel produced from local wax, batik, tie-dye, and

screen-printed fabrics, as well as imported fabric. Small quantities of Afrocentric apparel

currently are exported. There is product- and market-specific export potential for Afrocentric

clothing, large-scale apparel manufacturing, hand-woven indigenous textiles, and high-end

designer wear. There is the potential to export Afrocentric articles made from traditional

woven fabrics such as Kente cloth to SSA markets as well as niche products to markets in

Europe and the United States.36 Ghana also could potentially export clothing made of

synthetic fabrics and footwear to SSA markets;37 Ghana currently exports small quantities

of such products to neighboring countries.38

With significant clay deposits and a tradition of producing a wide range of ceramic articles,

Ghana’s potential exports to EU and U.S. markets include traditional and contemporary

pottery; structural ceramics such as bricks and tiles; dishware; electrical products such as

insulators, plugs, and capacitors; sanitary items such as sinks and wash basins; and clinical

items such as dental fixtures and bone joints.39 Potential exports of electrical equipment,

based on Ghana’s current low-volume electrical appliance assembly and fabrication, include

equipment such as transformers, traffic signals, generators, air conditioners, and household

appliances, as well as consumer electronics such as televisions for SSA markets.40 Given the

relatively large number of small-scale artisans producing jewelry and using the country’s

abundant supply of raw materials, potential jewelry exports to SSA and international markets

include handcrafted and machine-made fine jewelry, costume jewelry, and jewelry

accessories and tools.41 Ghana also has the potential to expand production and exports to

SSA markets of handtools, including agricultural tools (e.g., machetes, spades, and shears)

and construction tools (e.g., saws, wrenches, hammers, and chisels). The range of production

is limited by the lack of access to materials such as shock resisting and high carbon steel.42

The Government of Ghana is promoting greater production of processed wood products for

markets in Europe, the United States, and South Africa. Based on the RCA analysis, Ghana

ranks as a competitive supplier to the growing world market of veneer sheets and plywood.

Potential downstream wood exports include handicrafts; finished and semifinished furniture,

moldings and machined wood; flooring; door, window, and cabinet frames and panels; and

paper and paperboard.43

In addition to the above-mentioned products, Ghana also has the potential to produce and

export a wide variety of products currently imported. One such key product is aluminum.

While the RCA analysis shows Ghana’s high competitiveness as a supplier of primary
 44 EIU, Ghana Country Profile, p. 37.

 45 World Bank, Ghana: International Competitiveness, p. 13.

 46 MIGA and World Bank, Shedding New Light, table 1.

 47 GIPC, “Country Overview: Economic Overview–President’s Special Initiatives,” found at

www.gipc.org.gh, retrieved Mar. 29, 2005; and U.S. Department of State telegram, “Ghana: 

Response to Request.”

 48 GIPC, “Ghana Investment Profile: Travel and Tourism.”

 49 World Bank, Ghana: International Competitiveness, p. 13.

 50 Ibid., p. 25; and EIU, Ghana Country Profile, p. 39.

 51 U.S. Department of State telegram, “Ghana: Response to Request.”

8-11

unwrought aluminum, that competitiveness has declined in recent years, in part perhaps

because of the country’s electricity supply problems in this energy-intensive industry.

Ghana’s future competitiveness is likely to be in the production of downstream aluminum

products such as sheets and plates. The RCA analysis also shows Ghana to be a globally

competitive supplier of manganese ores and concentrates. Although the RCA analysis does

not show Ghana to be a competitive diamond supplier despite the country’s diamond mining

potential, this may be because of reported poor management in the sector and diamond

smuggling, resulting in current diamond production of about one-fourth of capacity.44

Additional products with export potential for Ghana identified by other sources include foam

mattresses, cosmetics and hair products,45 soaps, and pharmaceuticals for SSA markets.46 In

addition, the Government of Ghana is actively seeking to expand the production and export

of nontraditional products (i.e., products other than cocoa beans and gold). To this end,

several small-scale pilot projects are underway in five export-oriented areas: accelerated

textile and apparel production to take advantage of AGOA, salt mining, cotton production,

cassava production for industrial starch, and palm oil production.47

Tourism is Ghana’s third-leading source of foreign exchange revenue, and the continued

expansion of tourism services is an important component of Ghana’s economic development

strategy. Potential opportunities also exist for the expansion of tourism-related services for

both foreign visitors and returning visits from Ghanaians living abroad.48 The provision of

offshore data processing for English-speaking countries also is a potential source of foreign

exchange revenue for Ghana.49

Domestic and International Barriers

The business climate in Ghana generally is as good as, or better than, the average for SSA

(table GH-5). A notable exception is the time required to register a property, which is more

than three times the regional average. In addition, for four of the five employment market

indicators, Ghana scored better than the OECD average. Despite reports of a lack of

transparency in government operations,50 Ghana generally ranks better than average for SSA

with respect to economic freedom (table GH-6). Despite a better-than-average property

rights score, several investors have longstanding and expensive investment and trade

disputes with the Government of Ghana.51 In addition, its relatively high average import

tariffs are reflected in the trade policy score, which was worse than the regional average.
8-12

Table GH-5

Ghana: Business environment

Ghana

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 28.2 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) . . . . . . . . . . . . 37.9 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.1 5.0

Getting credit: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 1.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.4 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 200.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 4.1 13.2 4.9

Registering a property: Time (days) ....................................... 382.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0 11.0 6.0

Starting a business: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . . . . 87.5 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 31.4 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Ghana, applied rate, 2000)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8

Note.— Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table GH-6

Ghana: Economic freedom

Ghana

Regional

average1

OECD

 average

–––– Heritage Foundation indicators ––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé &

Principe, Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 52 World Bank, Ghana: International Competitiveness, pp. 44-45.

 53 Ibid.

 54 Ibid., p. 45; and World Bank, “Trade and Investment Gateway Project,” found at 

http://web.worldbank.org/external/default/main?pagePK=64027221&piPK=64027220&theSiteP

K=351952&menuPK=351984&Projectid=P000970, retrieved Apr. 6, 2005.

 55 World Bank, Ghana: International Competitiveness, p. 58.

 56 EIU, Ghana Country Profile, pp. 41-42.

 57 World Bank, Ghana: International Competitiveness, pp. 55-56.

 58 U.S. Department of State telegram, “Ghana: Response to Request.”

 59 World Bank, Ghana: International Competitiveness, p. 56.

 60 EIU, Ghana County Profile, pp. 18, and 22-23.

 61 U.S. Department of State telegram, “Ghana: Response to Request.”

 62 Ibid.

 63 World Bank, Ghana: International Competitiveness, p. 28.

 64 EIU, Ghana Country Profile, p. 18.

 65 Ibid., p. 5.

 66 Ibid., p. 22.

8-13

Reported customs impediments include inefficiencies and delays because of paperwork

requirements and inefficient document handling.52 Exporters reported delays in receiving

duty drawback and value-added tax refunds on imported inputs.53 Ghana’s Gateway

Program, sponsored by the World Bank to enhance the country’s global competitiveness by

promoting private-sector investment in infrastructure improvement, includes measures to

improve customs efficiencies and speed inspection and valuation procedures.54 As with other

SSA countries, the absence of market research and poor marketing also were reported as

impediments to Ghanaian exports.55

Impediments reported in Ghana’s financial sector include the focus of commercial banks on

high-income customers and large businesses, high transactions costs, high interest rates, and

preference for short-term finance such as trade finance, rather than long-term investment

finance.56 The high cost of local financing is a significant constraint,57 inhibiting the

expansion of most Ghanaian businesses beyond their current micro-scale operations,

rendering most Ghanaian manufacturers incapable of meeting the demand of large U.S.

wholesalers and retailers.58 Larger firms reportedly resort to using retained earnings to

finance working capital rather than seeking loans because of the slow delivery of banking

services in Ghana.59

Other reported impediments include high electricity prices;60 poor road quality, which

impedes the timely delivery of goods, especially during the rainy season;61 congestion at

Ghana’s ports and airport; high freight rates, particularly with respect to shipments to the

United States versus shipments to Europe;62 and the limited network of cold storage facilities

in Ghana, which increases the likelihood of spoilage of fresh fruits and vegetables between

harvest and export.63 In general, Ghana’s transportation and public utilities infrastructure is

extensive (table GH-7), but needs much more investment.64

Ghana has an abundant supply of unskilled labor, but skilled labor generally is considered

to be in short supply and a factor limiting the country’s future competitiveness across all

sectors.65 The shortage of highly skilled workers also limits the ability of Ghanaian producers

to improve their product quality and focus on more sophisticated processed and downstream

products.66
 67 GIPC, “Cash Crops and Food Production and Processing.”

 68 EIU, Ghana Country Profile, p. 39; and World Bank, Ghana: International Competitiveness,

p. 25.

 69 World Bank, Ghana: International Competitiveness, p. 23.

 70 Ibid., p. 39.

 71 Ibid., p. 18.

 72 Ibid., pp. 25-26

 73 EIU, Ghana Country Profile, p. 45.

 74 World Bank, Ghana: International Competitiveness, p. 30.

8-14

Table GH-7

Ghana: Infrastructure-related indicators

MRY1

Roads, total network (km, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,179.0

Roads, paved (percent of total roads, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.4

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.0

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.4

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.7

Electric power transmission and distribution losses (percent of output, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7

Energy imports, net (percent of commercial energy use, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.7 1

 Most recent year for which data are available between 1999 and 2003.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005.

In addition to the economywide constraints identified above, various sector-specific

obstacles impede export growth. Ghana’s agricultural sector predominantly consists of

smallholder plots characterized by traditional (nonmechanized) land-use methods, with few

large-scale farms and plantations.67 Agricultural productivity is further restricted by Ghana’s

complex land tenure system, which makes it difficult to establish clear title. In addition, poor

feeder roads in rural areas limit the movement of agricultural and forestry products to

processing centers and ports.68 In the wood processing sector, Ghana is in danger of

depleting its forest resources and being unable to supply important export markets because

of the country’s poor forest management policies.69 The lack of design skills also was

reported as a constraint in the development of wood products for EU and U.S. markets.70

Productivity in this sector is low by international standards because of the use of outdated

equipment and inadequate access to the financing needed to upgrade production.71 In the

seafood sector, stable and reliable supplies of electricity and water remain problematic.

Despite being registered FTZ companies, tuna exporters reported problems with respect to

customs clearance delays and noted that, although shipping time has improved since 2000,

document clearance time has increased, with the result that vessels arrive in European ports

ahead of the documents.72 Ghana’s tourism sector is undercapitalized and much of the

country’s tourism potential is underdeveloped. This sector faces a shortage of hotels,

particularly those with four-star rating or above, which constrains Ghana’s available tourism

resources.73

As is the case for other SSA countries, producers and exporters in Ghana expressed the

concern that Ghanaian agricultural exports might face difficulties meeting sanitary and

phytosanitary standards in EU and U.S. markets.74 Poor roads linking Ghana to its neighbors

are a significant impediment to Ghanaian exports to regional SSA countries, as most of

Ghana’s exports to neighboring countries are exported by road. Ghanaian exporters also
 75 For additional information on regional organizations, see app. C.

 76 Ibid., p. 32.

8-15

report that some members of the Economic Community of West African States (ECOWAS)75

assess duties and quotas on Ghanaian exports that should be duty and quota free, creating

a barrier to regional trade. Ghanaian exporters also report that currency conversion

complications between the Ghanaian currency and the CFA franc used by francophone

members of ECOWAS add costs to cross-border transactions and impede regional trade.76
8-16
 77 Prepared by Ralph Watkins, Office of Industries.

 78 Central Intelligence Agency (CIA), “Guinea-Bissau,” The World Factbook, found at

www.stat-usa.gov, retrieved Feb. 4, 2005.

 79 Economist Intelligence Unit (EIU), Guinea-Bissau Country Profile, 2004, p. 12.

 80 Ibid., p. 25.

 81 Ibid., p. 12.

 82 Mario de Queiroz, “[Guinea-Bissau]: The Military is Mortgaging the Country’s Future,” The

Norwegian Council for Africa, found at www.afrika.no/noop/page.php?p=Detailed/

6568&print=1, retrieved Mar. 29, 2005.

8-17

Guinea-Bissau77

Economic Overview 

Guinea-Bissau has a population of 1.5 million, with a per capita GDP of $157, one of the

lowest rates in the world. Its external debt ($699.2 million) is nearly three times as large as

its annual GDP ($235.7 million) (table GB-1). Exports as a percent of GDP were more than

50 percent. After declining by 1.2 percent in 2003, GDP was estimated to have decreased by

7 percent in 2004.78 A civil war that erupted in June 1998 displaced several hundred

thousand people and disrupted the economy;79 real GDP fell by 28.1 percent in 1998, and the

industrial and services sectors declined by 40 percent.80 Although the civil war ended in

mid-1999, followed by a peace agreement in February 2000,81 the country has continued to

experience civil unrest and abrupt changes in government.82 Output had yet to reach pre-war

levels by the end of 2003.

Table GB-1

Guinea-Bissau: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ................................................................. 235.7

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.2

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16.9

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.6

External debt, total (current US$, millions, 2002)...................................................... 699.2

Total debt service (percent of exports of goods and services)............................................ (2

)

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.2

Trade (percent of GDP, 2003) .................................................................... 139.2

Official exchange rate (local currency unit per US$, period average, 2003) ................................. 581.2

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.1

Literacy rate, adult total (percent of people ages 15 and above) .......................................... (2

)

Primary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.7

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.
 EIU, Guinea-Bissau Country Profile, p. 22. 83

 CIA, “Guinea-Bissau.” 84

 Ibid. 85

 U.S. Department of State, Bureau of African Affairs, “Background Notes: Guinea-Bissau 86

(Nov. 2004),” found at www.stat-usa.gov, retrieved Feb. 4, 2005.

 “Procaju: Cashews from Guinea-Bissau,” found at www.steele.com/cashew/gb.html,

87

retrieved Mar. 29, 2005.

 EIU, Guinea-Bissau Country Profile, p. 26. 88

 Ibid. 89

8-18

Agriculture, forestry, and fisheries accounted for nearly two-thirds of GDP in 2003

(figure GB-1). Agriculture accounts for over 60 percent of GDP, and employs 85 percent of

the labor force, with much of the workforce dedicated to growing rice for domestic 83

consumption. Only 10.7 percent of the land is arable, limiting the capacity for the 84

expansion of agriculture. The leading commercial crops are cashews, tropical fruits, rice,

peanuts, cotton, and palm oil, with cashews dominating exports. Guinea-Bissau is the

world’s sixth-leading producer of cashews. The civil war led to a 30-percent decline in 85

cashew production in 1998. Although the quantity exported recovered after the war, a

50-percent reduction in world cashew prices in 2000 reduced farmers’ incomes and

dampened economic performance as a whole. There are over 37,000 small farmers that 86

grow and harvest cashews, accounting for over 90 percent of the country’s cashew

production. The country has few processing facilities. Instead, most of the nuts are sold to 87

traders from Mauritania and Senegal, who in turn export much of the production to India for

processing. In the decade prior to the civil war (1987-97), cashew production grew by an

annual average of 17 percent. After the sharp decline in 1998 because of the civil war, 88

expansion of production resumed in 1999, but at a much slower pace.89

Figure GB-1

Guinea-Bissau: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 90 U.S. Department of State, Bureau of African Affairs, “Background Notes: Guinea-Bissau

(Nov. 2004).”

 91 EIU, Guinea-Bissau Country Profile, p. 23.

 92 World Bank statistics indicating exports of crude petroleum from Guinea-Bissau totaling

$166 million during 1998-2001 were based on inaccurate reporting by Thailand regarding the

source of its petroleum imports. Multinational consortia drilling for petroleum were not

commercially successful until 2003. 

 93 U.S. Department of State, Bureau of African Affairs, “Background Notes: Guinea-Bissau

(Nov. 2004).” 

 94 Ibid.

 95 EIU, Guinea-Bissau Country Profile, p. 27.

8-19

Natural resources include fish, timber, natural gas, and petroleum. Most fishing, however,

is done by foreign trawlers with foreign crews, and little of the catch is processed in GuineaBissau. The government receives revenue from license fees charged to the foreign trawlers,90

which accounted for 10 percent of the country’s GDP in 2001.91 Guinea-Bissau began

exporting natural gas in 2003 and crude petroleum in 2004.92 Although bauxite and

phosphate deposits are reported to exist, they have not been exploited.93

Industry accounts for 12 percent of GDP. Manufacturing, primarily for the domestic market,

is the largest share of the industry category, accounting for 10 percent of total GDP. Services

account for 24 percent of GDP and consist largely of government services and activities

related to the administration of international assistance.

Export Profile

Cashews dominate Guinea-Bissau’s exports, accounting for over two-thirds of the country’s

total exports in 2003 (tables GB-2 and GB-3). Electrical machinery, equipment, and parts

is second-leading export category, accounting for 8.5 percent of total exports in 2003.

Products from the fisheries industries (oysters, scallops, mussels, and frozen fish) accounted

for 7.8 percent; natural gas, 2.6 percent; and cotton, 2.1 percent. A United Nations program

pays civilians cash for weapons and unexploded mines and ordnance remaining from the

civil war.94 Disabled weapons and munitions (HS 9304) may be reported as exports when

they are removed from the country. There reportedly also is active trade in diamonds

smuggled out of Guinea and Sierra Leone and shipped to Europe through Guinea-Bissau, but

these exports are not recorded in official statistics.95

Although Guinea-Bissau’s exports declined by a compound annual growth rate (CAGR) of

0.2 percent during 1994-2003, Guinea-Bissau’s cashew exports increased by a CAGR of

7.2 percent during the same period. Fisheries exports, by contrast, decreased by a

19.7 percent CAGR, with nearly all of the decline occurring early in the period. Cotton

exports also declined during 1994-99 (by 66 percent), before increasing slightly during

1999-2003. 

Chief growth markets for Guinea-Bissau’s exports over the past decade were Nigeria and the

United States. The United States stopped importing natural gas from Guinea-Bissau in 2004,

and started importing crude petroleum, with crude petroleum accounting for 98 percent of

U.S. imports from Guinea-Bissau in 2004. All of Guinea-Bissau’s cashews are exported to

India for processing, and that country accounted for 67.8 percent of Guinea-Bissau’s exports

in 2003 (table GB-4). Nigeria was the second-leading market, accounting for 16.9 percent,
8-20

Table GB-2

Guinea-Bissau: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars –––––– ––––– Percent –––––

08 Edible fruit and nuts; peel of citrus fruit or melons . . . . . . . . . . . . . . 27,927.3 36,080.4 51,778.4 67.7 7.1

85 Electrical machinery and equipment and parts thereof; sound 

recorders and reproducers, television recorders and 

reproducers, parts and accessories . . . . . . . . . . . . . . . . . . . . . . 59.3 381.8 6,468.2 8.5 68.4

03 Fish and crustaceans, molluscs and other aquatic invertebrates . . . 42,918.2 7,450.8 5,990.6 7.8 -19.7

27 Mineral fuels, mineral oils and products of their distillation; 

bituminous substances; mineral waxes . . . . . . . . . . . . . . . . . . . 0.0 18,455.6 2,008.3 2.6 (1

)

52 Cotton, including yarns and woven fabrics thereof . . . . . . . . . . . . . . 3,847.9 1,314.7 1,589.6 2.1 -9.4

44 Wood and articles of wood; wood charcoal . . . . . . . . . . . . . . . . . . . 2,156.5 547.0 402.3 0.5 -17.0

72 Iron and steel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2.0 272.5 0.4 (1

)

84 Nuclear reactors, boilers, machinery and mechanical appliances;

parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271.1 83.1 253.8 0.3 -0.7

09 Coffee, tea, mate and spices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.4 408.9 247.0 0.3 15.7

87 Vehicles, other than railway or tramway rolling stock, and parts 

and accessories thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.3 218.1 133.1 0.2 11.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 657.5 2,820.6 7,326.9 9.6 30.7

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,955.4 67,762.8 76,470.7 100.0 -0.2

1

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to petroleum-related

exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table GB-3

Guinea-Bissau: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars –––––––– ––––– Percent –––––

0801 Coconuts, brazil nuts and cashew nuts, fresh or dried . . . . . . 27,744.9 36,075.0 51,718.8 67.6 7.2

8532 Electrical capacitors, fixed, variable or adjustable (pre-set);

parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 29.9 3,656.2 4.8 (1

) 

0307 Molluscs & other aquatic invertebrates nesoi, live, fresh,

chilled, frozen, dried, salted or in brine; flours, meals &

pellets of aqua invertebrates fit for human consumption . . 19,788.7 2,186.0 3,021.3 4.0 -18.8

0303 Fish, frozen, excluding fish fillets and other fish meat

without bones; fish livers and roes, frozen . . . . . . . . . . . . . 9,316.0 2,915.9 2,382.4 3.1 -14.1

2711 Petroleum gases and other gaseous hydrocarbons . . . . . . . . 0.0 0.0 2,008.3 2.6 (1

) 

8502 Electric generating sets and rotary . . . . . . . . . . . . . . . . . . . . . 1.6 0.0 1,781.8 2.3 118.3

5201 Cotton, not carded or combed . . . . . . . . . . . . . . . . . . . . . . . . 3,815.3 1,314.7 1,589.6 2.1 -9.3

7308 Structures (excluding prefab buildings of heading 9406)

and parts thereof (bridges, towers etc.), including

prepared shapes etc., of iron or steel . . . . . . . . . . . . . . . . . 9.6 0.0 1,249.2 1.6 71.8

9304 Arms nesoi (including spring, air or gas guns and pistols,

but excluding swords, bayonets and similar arms) . . . . . . . 0.0 0.0 1,082.5 1.4 (1

) 

2402 Cigars, cheroots, cigarillos and cigarettes, of tobacco or of 

tobacco substitutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 23.6 917.4 1.2 (1

) 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,279.4 25,217.8 7,063.3 9.2 -9.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,955.4 67,762.8 76,470.7 100.0 -0.2 1

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to petroleum-related

exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 96 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 97 U.S. Department of State, Bureau of African Affairs, “Background Notes: Guinea-Bissau

(Nov. 2004).” 

8-21

Table GB-4

Guinea-Bissau: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

 CAGR

––––––––––––– 1,000 dollars –––––––––––– –––––– Percent ––––––

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,744.9 36,075.3 51,827.3 67.8 7.2

Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 12,910.2 16.9 (1

)

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,330.7 4,848.2 5,853.9 7.7 6.5

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,920.5 396.6 2,142.9 2.8 -8.8

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 77.2 2,114.4 2.8 (1

)

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 0.0 351.7 0.5 57.0

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.4 1,584.6 244.3 0.3 12.8

Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458.8 46.9 171.0 0.2 -10.4

Côte d'Ivoire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 433.3 137.1 0.2 (1

)

Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.2 45.4 126.7 0.2 4.9

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,329.8 24,255.3 591.2 0.8 -37.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,955.4 67,762.8 76,470.7 100.0 -0.2

1

 Undefined.

Note.—Although these figures represent WITS data, they deviate from other sources, especially with respect to petroleum-related

exports.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

followed by Italy (7.7 percent), Portugal (2.8 percent), and the United States (2.8 percent).

Italy purchased nearly all of Guinea-Bissau’s fisheries exports in 2003. All of the cotton

exports went to France, all of the natural gas exports went to the United States, and all of the

scrap iron and steel exports went to India, while most of the coffee was exported to the

Netherlands and Ireland. According to U.S. statistics, U.S. imports from Guinea-Bissau

increased to $26.6 million in 2004, reflecting new imports of crude petroleum.

Sectors with the Greatest Export Growth Potential

Seven of Guinea-Bissau’s top 10 exported products rank highly in terms of their revealed

comparative advantage96 (RCA) indices, indicating relative international efficiency and

suggesting export growth potential (appendix E, table E-15). Of these seven products, two

are agricultural products, two are fish products, and one is a petroleum product.

Consequently, based on RCA analysis, these three sectors represent areas for short- to

medium-term export growth potential. The sectors for which Guinea-Bissau exhibits the

highest RCA indices have, however, experienced only modest growth in world markets.

Currently exported products with additional potential include cashews, frozen fish, molluscs,

and cotton. Mangoes are not currently exported, but have been identified as a potential

export product.97 Although identified as potential exports, the high start-up costs make the

development of bauxite and potash resources very difficult. In addition to being among
 98 “Procaju: Cashews from Guinea-Bissau.” 

 99 EIU, Guinea-Bissau Country Profile, p. 27.

 100 Ibid.

 101 Commission research identified few secondary resources on this topic for Guinea-Bissau.

 102 EIU, Guinea-Bissau Country Profile, p. 21.

 103 Ibid.

 104 International Monetary Fund, Guinea-Bissau: Selected Issues and Statistical Appendix, IMF

Country Report No. 05/93, Mar. 2005, pp. 5-18.

8-22

Guinea-Bissau’s leading exports, the fish and cotton sectors have high and stable RCA

indices, indicating that both sectors may have potential for export development. 

There is also potential to develop downstream products from existing exports. For example,

with assistance from the U.S. Agency for International Development, cashew growers have

formed an association, Procaju, to assist growers in establishing processing plants for the

roasting, drying, shelling, and packaging of cashews for export. Procaju is also engaged in

marketing organically-grown cashews.98 Guinea-Bissau reportedly has significant

underdeveloped timber resources (forests occupy 38 percent of the land), with the potential

to support the emergence of wood furniture and lumber exporting industries. To induce

investment in this industry, the state timber company, Socotram, has been split into four

separate enterprises in preparation for privatization.99 Similar to the timber sector, abundant

offshore fish resources offer an opportunity to develop a locally-based fishing industry.

Licenses are granted to trawlers based in Algeria, Japan, Korea, Portugal, and Russia. The

fees associated with the licenses accounted for 28 percent of total government revenues in

1999.100 The country has yet to attract the necessary investment for downstream development

of this sector.

Domestic and International Barriers101

Although business environment indicators are not available for Guinea-Bissau (table GB-5),

its relatively poor scores in measures of economic freedom reflect conditions that discourage

foreign investment. Guinea-Bissau scored worse than the regional average in 6 of

10 measures (table GB-6). Notably, the areas that received the worst possible score were

trade policy, banking and finance, property rights, regulation, and informal market activity.

The only measures in which Guinea-Bissau scored significantly better than the regional

average were fiscal burden of government and monetary policy. Insufficient development

of transportation and communications infrastructure also inhibits the pace of investment in

Guinea-Bissau. For example, only 10 percent of the country’s roads are paved, making

transportation very difficult during the rainy season (table GB-7). There are only 9 telephone

mainlines per 1,000 people and just 4 Internet users per 1,000. Lack of a deep-water port

inhibits the expansion and increases the costs of trade.102 Because of lack of development of

hydroelectric potential, the country relies on petroleum and diesel-powered generators for

electricity, making electricity supply inadequate and expensive.103

A March 2005 report by the International Monetary Fund attributed the poor prospects for

investment and development of the export sector to a number of factors.104 Several were

related to the aftermath of the civil war, which destroyed much of the country’s

infrastructure. The country’s two banks closed and remained closed after the war, until one

re-opened in 2000. Most of the country’s electricity generating capacity was destroyed.
8-23

Table GB-5

Guinea-Bissau: Business environment

Country data not available.

Import tariffs Simple average of ad valorem duties

Country data not available.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table GB-6

Guinea-Bissau: Economic freedom

Guinea-Bissau

Regional

average1

OECD

 average

–––––– Heritage Foundation indicators ––––––

1995 Overall score ................................................. (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . 2.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé &

Principe, Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.

Table GB-7

Guinea-Bissau: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,400.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3

Transport services (percent of service exports, BoP) .................................................. (2

)

Transport services (percent of service imports, BoP) .................................................. (2

)

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0

Mobile phones (per 1,000 people) ................................................................. (2

)

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 
 105 EIU, Guinea-Bissau Country Profile, p. 12.

 106 T. Ademola Oyejide and William Lyakurwa, Africa and the World Trading System,

Volume 1: Selected Issues of the Doha Agenda, Africa World Press, 2005, p. 4.

8-24

The small manufacturing sector was dismantled during the civil unrest. Decreased economic

activity during the civil war led to reduced government revenue from taxes, limiting

investment in infrastructure necessary for export growth. The remaining infrastructure fell

into further disrepair because of lack of maintenance and repair. Political instability

following the civil war continued to discourage foreign investment, which is especially

important given low levels of savings and credit provided by the domestic financial

institutions. 

Another constraint is the lack of skilled labor required for increased exports of more skillintensive products. Although Guinea-Bissau has a surplus of labor (the labor force

participation rate is less than 50 percent), the lack of educated workers discourages

investment in the country. Although 82.7 percent of eligible children are enrolled in primary

school, only 20.0 percent of eligible children are enrolled in secondary school. The education

system was set back during the 1998 civil war because classes were disrupted and many

school buildings destroyed.105 Many technically-competent administrators emigrated during

the civil war and the post-war transition, further contributing to a lack of skilled labor. In

addition, the environment created by the civil unrest reduced services provided to the

business community and exacerbated situations in which government officials supplemented

their incomes through unofficial transactions.

So far, the country has few export products that encounter foreign barriers. The one

exception is fish products. The leading export markets tend to have relatively high tariffs on

fisheries products, which inhibit export growth in that sector.106 Some sanitary standards

related to fisheries products also have become a significant hurdle to export growth because

of the costs required for testing and documentation.
 107 Prepared by Alan Treat, Office of Industries.

 108 Economist Intelligence Unit (EIU), Malawi Country Profile, 2004, p. 31.

 109 United Nations Conference on Trade and Development (UNCTAD), FDI in Landlocked

Developing Countries at a Glance (New York and Geneva, 2003), p. 8.

8-25

Malawi107

Economic Overview

Malawi is a small, land-locked country located in southern Central Africa and bordered by

Zambia, Tanzania, and Mozambique. With a population of about 11 million people, Malawi

is one of the poorest countries in the world (table MW-1). Malawi’s real GDP growth has

been highly variable because the economy’s performance is largely dependent on

agricultural output, which varies depending on weather conditions.108 GDP was $1.7 billion

in 2003, with trade as a percent of GDP amounting to almost 70 percent.

Table MW-1

Malawi: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,731.2

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6

External debt, total (current US$, millions, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,912.2

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.9

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69.1

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.4

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.1

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.8

Primary school enrollment ratio, total (percent, 2000)

2 .................................................. 158.1

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.4

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 1

 Most recent year for which data are available between 1999 and 2003.

2

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school

age.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

Services compose the largest share of Malawi’s GDP. The telecommunications and financial

services subsectors are the fastest-growing areas within the services sector. Deregulation of

the telecommunications industry resulted in greater foreign direct investment (FDI) flows

in the late 1990s. FDI in the telecommunications industry increased from 40 percent of total

inflows in the late 1990s to roughly 60 percent in 2000.109 Reform of the financial services
 World Trade Organization (WTO), Trade Policy Review: Malawi, Report by the Secretariat, 110

2002, p. 82.

 “Malawi Country Profile,” SADC Trade, Industry, and Investment Review 2004, found at 111

www.sadcreview.com/country_profiles/malawi/mal_introduction.htm, retrieved Mar. 7, 2005.

 WTO, Trade Policy Review: Malawi, Report by the Government, 2002, p. 7. 112

 “Malawi Country Profile,” SADC Trade, Industry, and Investment Review 2004. 113

 Ibid.; and International Food Policy Research Institute, “Impact of Agricultural Market 114

Reforms on Smallholder Farmers in Benin and Malawi,” Feb. 2001, found at

www.ifpri.org/divs/mtid/dr/dr200102.htm#dl, retrieved Mar. 21, 2005, p. 23.

 “Malawi Country Profile,” SADC Trade, Industry, and Investment Review 2004.

115

 Illova Sugar Group, Annual Financial Statements, 2004, p. 2. 116

8-26

sector–notably banking and insurance–has been a government priority. Distribution and

transportation are two other notable components of the services sector.110

Malawi is heavily dependent on natural resources. Agriculture is an important sector of the

economy, accounting for approximately 38 percent of GDP (figure MW-1) and 90 percent

of export earnings. Agriculture supplies more than 65 percent of raw materials to the 111

manufacturing sector and directly or indirectly supports 85 percent of the population. 112 113

Historically, a dual structure consisting of estate and smallholder farmers has characterized

the sector. Smallholder farms produce subsistence crops (maize (corn), millet, fruit,

sorghum, rice, beans, cassava, and root crops), and cash crops primarily for export 114

(tobacco, cotton, rice, and groundnuts (peanuts)). The estate sector mainly produces 115

burley and flue-cured tobacco, tea, sugar, and coffee destined for export. Downstream

operations associated with sugar production include such products as furfuryl alcohol,

ethyl alcohol, diacetyl, acetoin, lactulose, and other specialty sugars and syrup. Malawi 116

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.

Figure MW-1

Malawi: Composition of GDP (2003)
 117 “Malawi Country Profile,” SADC Trade, Industry, and Investment Review 2004.

 118 Ibid.; and EIU, Malawi Country Profile, p. 39.

 119 “Malawi Country Profile,” SADC Trade, Industry, and Investment Review 2004. 

 120 WTO, Trade Policy Review: Malawi, Report by the Government, p. 15.

 121 WTO, Trade Policy Review: Malawi, Report by the Secretariat, p. 33.

 122 Ibid., p. x.

8-27

is also one of the world’s largest producers of burley tobacco, and the largest producer of

fire-cured tobacco, which together account for more than 60 percent of agricultural

exports.117

The industrial sector accounts for approximately 14 percent of GDP; the manufacturing

subsector accounts for roughly 11 percent of GDP and is composed of approximately

100 manufacturing and industrial companies. The manufacturing sector is concentrated

mainly in light industries such as agroprocessing; the production of footwear, textiles, and

clothing; and construction and building materials.118 The mining sector contributes less

than 1 percent to GDP; however, the sector’s contribution has been growing in recent

years.119

FDI in Malawi has fluctuated during 1993-2002. Overall, flows into the country have been

relatively low, with a peak of nearly $60 million in 1999. Malawi ranked 109 out of

140 countries according to the United Nations Conference on Trade and Development’s

Inward FDI Performance Index. Net FDI inflows account for 0.3 percent of GDP.

Malawi’s investment policy aims to facilitate private-sector investment growth and

increase FDI. Malawi passed the Capital Market Development Act (1990) in order to

further develop capital and financial markets,120 and the Investment Promotion Act (1991),

which ensures protection and freedom of investment and ownership rights.121 Malawi

offers incentives to attract FDI, including export promotion schemes such as export

processing zones and special taxation policies for export-oriented manufacturers. For

example, exporters that ship nontraditional export goods (i.e., any export good other than

tobacco, tea, and sugar) receive a 12-percent deduction of gross receipts from their income

tax and a 25-percent deduction of international transport costs.122 In 2002, the government

introduced incentives for selected manufacturing activities, including textiles and apparel

production, and agroprocessing.

Export Profile

Malawi’s total exports reached $510.0 million in 2003. Despite a liberalization program

in the mid-1990s, exports are highly concentrated in the agricultural sector. Burley, and

to a lesser extent flue-cured tobacco, are Malawi’s major export earners, accounting for

approximately 62.3 percent of the country’s exports in 2003 (table MW-2). Cane sugar and

flavored and unflavored teas were the second- and third-largest export earners, accounting

for 12.9 percent and 8.7 percent, respectively, in 2003. Apparel accounted for more than

8 percent of exports. Other top exports include fruits, nuts, vegetables, oilseeds, cotton,

and cereals (table MW-3).

The United States, Germany, and South Africa are the largest single-country markets for

Malawi exports (table MW-4). Other important trading partners include the United

Kingdom, Japan, and the Netherlands. 
8-28

Table MW-2

Malawi: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars 

–––––––– –––– Percent ––––

24 Tobacco and manufactured tobacco

substitutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264,903.2 351,889.1 317,668.8 62.3 2.0

17 Sugars and sugar confectionery. . . . . . . . . . . . . . . . . . 17,220.1 23,138.7 65,972.4 12.9 16.1

9 Coffee, tea, mate and spices. . . . . . . . . . . . . . . . . . . . . 49,652.4 47,045.6 49,673.8 9.7 0.0

62 Articles of apparel and clothing accessories, not 

knitted or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . 8,871.0 27,100.4 29,581.3 5.8 14.3

61 Articles of apparel and clothing accessories, knitted

or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,606.4 16,411.7 12,596.1 2.5 3.1

08 Edible fruit and nuts; peel of citrus fruit or melons . . . . 1,200.2 4,516.3 8,945.1 1.8 25.0

7 Edible vegetables and certain roots and tubers . . . . . . 1,505.9 3,572.2 6,209.2 1.2 17.0

12 Oil seeds and oleaginous fruits; miscellaneous

grains, seeds and fruits; industrial or medicinal 

plants; straw and fodder ...................... 832.4 1,469.1 3,834.4 0.8 18.5

52 Cotton, including yarns and woven fabrics thereof . . . . 11,363.2 5,117.0 2,700.5 0.5 -14.8

10 Cereals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 190.9 2,670.0 0.5 116.1

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,093.1 32,741.5 10,160.9 2.3 -7.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386,250.5 513,192.6 510,012.5 100.0 3.1

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table MW-3

Malawi: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate

(CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––– 1,000 dollars ––––––––– –––– Percent ––––

2401 Tobacco, unmanufactured (whether or not

threshed or similarly processed); tobacco

refuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264,901.9 351,737.7 317,439.7 62.2 2.0

1701 Cane or beet sugar and chemically pure sucrose,

in solid form . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,169.5 23,127.7 65,956.9 12.9 16.1

0902 Tea, whether or not flavored . . . . . . . . . . . . . . . . . . 34,543.8 35,559.0 44,231.3 8.7 2.8

6203 Men's or boys' suits, ensembles . . . . . . . . . . . . . . . 2,097.7 10,112.8 12,114.4 2.4 21.5

0802 Other nuts, fresh or dried, nesoi . . . . . . . . . . . . . . . 1,194.7 4,484.3 8,941.3 1.8 25.1

6204 Women's or girls' suits, ensembles, suit-type

jackets, blazers, trousers, bib and brace

overalls, breeches, etc. (no swimwear), not 

knitted or crocheted . . . . . . . . . . . . . . . . . . . . . 473.8 1,579.2 6,906.8 1.4 34.7

0713 Leguminous vegetables, dried shelled . . . . . . . . . . 1,421.2 3,523.1 6,208.0 1.2 17.8

6205 Men's or boys' shirts, not knitted or crocheted . . . . 3,980.9 10,778.1 5,588.1 1.1 3.8

0901 Coffee, whether or not roasted or decaffeinated;

coffee husks and skins; coffee substitutes

containing coffee . . . . . . . . . . . . . . . . . . . . . . . 14,186.5 9,832.8 3,781.9 0.7 -13.7

6105 Men's or boys' shirts, knitted or crocheted . . . . . . . 1,850.0 1,800.5 2,799.4 0.5 4.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,430.5 60,657.5 36,044.8 7.1 -2.3

Total . . . . . . . . . . . . 386,250.5 513,192.6 510,012.5 100.0 3.1

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 123 Illova Sugar Group, Annual Financial Statements, 2004, p. 2. For additional information on

regional organizations, see app. C.

 124 WTO, Trade Policy Review: Malawi, Report by the Secretariat, p. 73.

8-29

Table MW-4

Malawi: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––––––– 1,000 dollars 

––––––––––––––

––––––– Percent

–––––––

United States . . . . . . . . . . . . . . . . . . . . . 62,674.3 75,731.3 82,862.2 16.2 3.2

Germany . . . . . . . . . . . . . . . . . . . . . . . . . 55,155.0 80,171.3 69,322.0 13.6 2.6

South Africa . . . . . . . . . . . . . . . . . . . . . . 52,031.3 75,152.0 50,516.2 9.9 -0.3

Egypt, Arab Rep. . . . . . . . . . . . . . . . . . . 11,679.0 6,598.1 31,122.0 6.1 11.5

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . 3,152.4 12,998.8 29,459.0 5.8 28.2

United Kingdom . . . . . . . . . . . . . . . . . . . 39,568.8 17,564.1 26,796.1 5.3 -4.2

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,910.1 22,300.0 26,778.9 5.3 -6.9

Netherlands . . . . . . . . . . . . . . . . . . . . . . 24,735.4 47,513.0 26,118.3 5.1 0.6

Russian Federation . . . . . . . . . . . . . . . . 0.0 7,582.3 22,314.1 4.4 (1

)

Kenya . . . . . . . . . . . . . . . . . . . . . . . . . . . 300.5 298.8 12,316.0 2.4 51.1

Other . . . . . . . . . . . . . . . . . . . . . . . . . 86,043.6 167,282.9 132,407.6 26.0 4.9

Total . . . . . . . . . . . . . . . . . . . . . . . 386,250.5 513,192.6 510,012.5 100.0 3.1

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Malawi maintains approximately 4.5 percent of the world share of tobacco production. The

United States is Malawi’s largest tobacco export market. However, import concentrations

of tobacco are relatively dispersed among countries; for example unmanufactured tobacco

from Malawi makes up a little more than 6 percent of U.S. tobacco imports, 4 percent in

the European Union, 7.5 percent in Australia, and 6.3 percent in Japan.

Sugar is Malawi’s second-largest export, with 50 percent of sugar production exported.

Twenty percent of exports are to the United States and the European Union under

preferential access programs; the remaining 30 percent is sold to regional markets where

sugar sales have been supported by commitments under the Southern Africa Development

Community and the Common Market for Eastern and Southern Africa.123

Malawi’s exports grew by 33 percent during 1994-1999, but remained relatively flat

during 1999-2003. The 9-year compound annual growth rate (CAGR) revealed minimal

growth in Malawi’s two largest export markets–the United States and Germany–and a

slight decline in Malawi’s third-largest export market, South Africa, during 1994-2003.

Exports to Kenya grew substantially, with a 9-year CAGR of 51.1 percent. Exports to

Portugal and Egypt also increased considerably, exhibiting 9-year CAGRs of 28.2 percent

and 11.5 percent, respectively, during 1994-2003.

Although tobacco has remained the leading export product, it has experienced limited

growth, with a 2.0-percent CAGR during 1994-2003. During the same period, cotton

exports declined by a 14.8-percent CAGR. The decline in cotton production has been

attributed to declining international prices and inadequate access to inputs such as

pesticides and fertilizer.124
 125 Association official, interview by USITC staff, Blantyre, Malawi, Mar. 8, 2005.

 126 Embassy of the Republic of Malawi officials, interview by USITC staff, Washington, DC,

Feb. 17, 2005.

 127 Industry official, interview by USITC staff, Lolongwe, Malawi, Feb. 16, 2005.

 128 Embassy of the Republic of Malawi officials, interview by USITC staff, Washington, DC,

Feb. 17, 2005.

 129 Ibid.

 130 Ibid.

 131 Ibid.

 132 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 133 Association official, interview by USITC staff, Blantyre, Malawi, Mar. 17, 2005.

 134 For additional information on the Multifiber Arrangement and the end of textile and apparel

quotas in 2005, see app. C.

 135 Association official, interview by USITC staff, Blantyre, Malawi, Mar. 17, 2005.

 136 Association official, interview by USITC staff, Blantyre, Malawi, Mar. 17, 2005; and

industry council official, email correspondence to USITC staff, Mar. 21, 2005. 

8-30

Sectors with the Greatest Export Growth Potential

Export sectors with the greatest potential for growth include agroprocessing, textiles and

apparel, and horticultural products. Professional services also have been identified as a

potential export sector.

The strategy of Support for Agriculturally-Linked Enterprises (SALES) is focused on the

production and export of cotton, tea, coffee, and macadamia nuts.125 Processed paprika,

macadamia nuts, and groundnuts are also seen as potential export goods.126 Fresh and dried

nuts have experienced a 9-year CAGR of 25 percent during 1994-2003, with most exports

destined for the U.S. and EU markets, notably the United Kingdom, with which Malawi

has recently signed a free trade certification. Additionally, the processing of groundnuts

and other nuts into oils also represents a potential downstream export if crushing capacity

can be increased.127

Fruit juice represents a potential export, because approximately 50 percent of mangoes,

tangerines, and other tropical fruits go to waste every year.128 Development of the sector

requires capital investment, because there are currently no domestic juice producers after

the closure of the only production facility.129 Horticulture products have also been

identified as having export growth potential. The government has identified cut flowers

as a potential export, especially given increased market access into the European Union.130

Government and industry officials have identified increased production of cotton and the

vertical integration of the cotton industry into apparel as export growth sectors.131 Cotton

exhibits a strong revealed comparative advantage132 (RCA) index, and currently is Malawi’s

eighth-largest export (appendix E, table E-19). Some apparel and textile sector exports also

have strong RCA indices. However, infrastructure improvements and trade capacity building

are needed in order to compete in the cotton-textile-garment supply chain.133 With the end

of textile and apparel quotas in 2005,134 however, there likely is a need for further market

research in order to create niche markets given increased international competition in the

sector.135 Vertical integration also depends on adequate investment in the textile sector.136
 137 Export promotion official, interview by USITC staff, Blantyre, Malawi, Mar. 17, 2005.

 138 EIU, Malawi Country Profile, p. 31.

 139 Other supporters of the initiative are the Tobacco Exporters Association of Malawi, the

Chamber of Mines, the Garment and Textile Association of Malawi, the Tea Association of

Malawi, the Cotton Development Association, the Trade Policy National Working Group, and the

Malawi Tourism Association.

 140 “Ten Priority Actions for Improving the Business Climate in Malawi,” revised Dec. 2004,

document received by USITC staff, Blantyre, Malawi, Mar. 17, 2005.

8-31

Other sectors with export potential include services and mining. According to industy

officials, services, including medical services, accounting, and architecture, have been

identified as potential exports.137 The identification of these services stems from the

increased need for professional services in regional markets. The government is also

interested in developing bauxite deposits located on Mount Mulanje in the south, as well as

titanium deposits in Nsanje in the south and Salima in the central region.138

Domestic and International Barriers

Indices to assess the business environment in Malawi are generally in line with regional

averages and in several areas–including the number of procedures and time to enforce

contracts, the cost and time of starting a business, and most employment indicators–are

superior to sub-Saharan African (SSA) averages (table MW-5). Principal exceptions were

the cost of contract enforcement and the time to register property. Indices measuring

economic freedom indicate that Malawi generally scored lower than the regional average,

and much lower than the OECD average (table MW-6), suggesting a larger degree of

economic repression in the country compared with most SSA countries.

A private-sector initiative, led by the Malawi Confederation of Chambers of Commerce and

Industry, the Society of Accountants in Malawi, and the Economic Association of Malawi,

as well as other leading Malawi business associations,139 provided the Government of

Malawi with a list entitled “Ten Priority Actions for Improving the Business Climate in

Malawi,” which recognizes that economic growth and poverty reduction must come through

the development of the private sector. Improving the investment climate for both domestic

and international investors is considered a top priority.140 The top 10 priority actions listed

by the private sector deal with regulatory reforms designed to facilitate greater financial

investment. Six of the 10 priority actions deal with transparency and governance, of which

4 deal with tax reform, including ensuring that the government honors its own deadlines for

tax refunds, as well as extending the deadline for businesses to calculate and pay provisional

tax. The remaining four priority actions deal with utilities (improving services in electricity,

telecommunications, and water), investment promotion (revitalizing the Malawi Investment

Promotion Agency), foreign exchange regulation (removing foreign exchange conversion

requirements for exporters), and duties on production inputs (duty free and zero-rated for

surtax on capital goods and spare parts, excluding motor vehicles). 

Malawi faces formidable challenges in the movement of goods for export because of

inadequate transportation infrastructure in Malawi and neighboring Mozambique, where

Malawi exports are transported to port. The high transport costs associated with inadequate

road and rail transportation significantly impede the efficient movement of goods for export
8-32

Table MW-5

Malawi: Business environment

Malawi

Regional

average

OECD

average

Closing a business: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 20.5 6.8

Closing a business: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . . . . 17.6 17.1 72.1

Closing a business: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 3.6 1.7

Getting credit: Cost to create collateral (percent of income per capita) ............ (1

) 41.8 5.2

Getting credit: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2.1 5.0

Getting credit: Legal rights index .......................................... (1

) 4.6 6.3

Getting credit: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . . . . . . . 0.0 39.4 577.2

Getting credit: Public credit registry coverage (borrowers per 1000 capita) . . . . . . . . . 0.0 1.1 76.2

Enforcing contracts: Cost (percent of debt).................................. 136.5 43.0 10.8

Enforcing contracts: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.0 35.0 19.0

Enforcing contracts: Time (days).......................................... 277.0 434.0 229.0

Registering a property: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 6.0 4.0

Registering a property: Cost (percent of property value per capita) . . . . . . . . . . . . . . . 3.5 13.2 4.9

Registering a property: Time (days) ....................................... 118.0 114.0 34.0

Starting a business: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0 11.0 6.0

Starting a business: Cost (percent of income per capita) ....................... 140.0 225.2 8.0

Starting a business: Minimum capital (percent of income per capita) . . . . . . . . . . . . . . 0.0 254.1 44.1

Starting a business: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Malawi, applied rate, 2000)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2

 1

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile/, retrieved Apr. 5, 2005. 

Table MW-6

Malawi: Economic freedom

Malawi

Regional

average1

OECD 

average

–––– Heritage Foundation indicators ––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 3.4 2.2

 Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé &

Principe, Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom. 

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.
 141 Export promotion official, interview by USITC staff, Blantyre, Malawi, Mar. 17, 2005.

 142 “The transport sector in Malawi: an overall picture,” Trade and Investors Magazine

Malawi, Second Ed., Oct. 2004, p. 24.

 143 Ibid.

 144 Ibid.

 145 Embassy of the Republic of Malawi officials, interview by USITC staff, Washington, DC,

Feb. 17, 2005.

 146 Export promotion official, interview by USITC staff, Blantyre, Malawi, Mar. 17, 2005.

8-33

and the type of goods that can be profitably exported. For example, only 18.5 percent of

roads in Malawi are paved (table MW-7). The Malawi Export Promotion Council (MEPC)

has cited infrastructure impediments as one of the leading impediments to taking advantage

of preferential market access under AGOA. MEPC estimates that 55 percent of production

costs are associated with transportation costs.141

Table MW-7

Malawi: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,400.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.5

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.7

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.1

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0

Electric power transmission and distribution losses (percent of output)...................................... (2

)

Energy imports, net (percent of commercial energy use)................................................. (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

In 1999, the Ministry of Transport and Public Works approved the National Transport Policy

Framework, which deregulates the transport of goods in order to improve the transport sector

in Malawi.142 Several rehabilitation and construction projects have been undertaken to

improve existing road and rail infrastructure, including the rehabilitation of the Beira

corridor and the creation of transport links such as the Nacala Development Corridor.143 The

Central East African Railways expects that the Nacala corridor will make it possible to

freight goods from Nacala to Malawi in 48 hours.144 Regulations restrict international

truckers from operating outside of main roads, creating inefficiencies and contributing to

higher transport costs.145

Other cross-sector impediments include the small size of the domestic market, inappropriate

production technologies, and inefficient and costly financing for small and medium

enterprises. Technology and communication obstacles also impede export growth. More

computers and Internet access are needed in order to access market information for smalland medium-sized exporters.146 Erratic electricity supply and inefficiencies in electricity

distribution are common problems that affect several industries, particularly the apparel

manufacturing industry.
 147 Association official, interview by USITC staff, Lilongwe, Malawi, Mar. 17, 2005.

 148 Export promotion official, interview by USITC staff, Blantyre, Malawi, Mar. 17, 2005.

 149 Association official, interview by USITC staff, Blantyre, Malawi, Mar. 17, 2005

 150 Association official, interview by USITC staff, Blantyre, Malawi, Mar. 17, 2005

 151 WTO, Trade Policy Review: Malawi, Report by the Government, p. 9.

 152 Export promotion official, interview by USITC staff, Blantyre, Malawi, Mar. 17, 2005.

 153 Malawi association official, email correspondence to USITC staff, Mar. 21, 2005.

 154 Association official, interview by USITC staff, Lilongwe, Malawi, Mar. 17, 2005.

 155 Embassy of the Republic of Malawi officials, interview by USITC staff, Washington, DC,

Feb. 17, 2005.

 156 Association official, interview by USITC staff, Lilongwe, Malawi, Mar. 17, 2005; and EIU,

Malawi Country Profile, p. 40.

8-34

The lack of a cold supply chain and local transport air hub impedes the development of

horticultural products such as cut flowers.147 A limited supply capacity resulting from high

input costs and high production costs generally constrain agricultural exports.148 Low levels

of irrigation also lead to low agricultural production levels.

High capital and transport costs, and lack of adequate infrastructure constrain the apparel

industry. There is limited electric capacity for major investments in spinning and textile

mills. These impediments, as well as slow customs clearance procedures, reduce

competitiveness with respect to lead times.149 A lack of capacity and a dearth of investment

in cotton ginneries constrain the cotton industry from expanding into downstream

production.150

Other impediments to manufacturing sector growth include a weak industrial base, lack of

diversification, few upstream and downstream linkages, insufficient standards and quality

assurance, and limited capabilities to market products internationally.151 The agroprocessing

industry is highly dependent on the domestic agricultural sector, and is thus adversely

affected during times of drought.

The main international barriers include sanitary and phytosanitary (SPS) measures, support

programs in developed markets, and tariff-rate quotas (TRQs). Malawi lacks the capability

to conduct tests in line with quality control regulations required by industrial markets.152

There is a widespread lack of knowledge and understanding among the Malawi business

community of the results of the Uruguay Round trade negotiations and of the role of the

WTO. Moreover, the Malawi Bureau of Standards does not have adequate information on

existing standards, technical regulations, conformity procedures, and SPS regulations.153

Given the leading, though declining role of cotton in Malawi’s exports, government officials

have identified support programs in developed markets such as the United States as an

international barrier to exports.154 TRQs on tobacco and sugar have been also cited as

international barriers to trade.155 Malawi has been unsuccessful in its efforts to increase quota

levels on tobacco and sugar. However, TRQs may not be significant international barriers

to trade, because Malawi does not currently fill these international quotas.156
 157 Prepared by Kim Olsen, Office of Industries.

 158 Cotton Board, “Cotton News from Sub-Saharan Africa,” A Special Issue of the Cotton

Importer Update from the Cotton Board, Dec. 2001; U.S. Department of State telegram, “A

Strategy for Swaziland After the End of the WTO,” message reference No. 600, prepared by U.S.

Embassy, Mbabane, Dec. 2004; and “Swaziland King Visits Key Taiwan investor,” Taiwan News,

May 20, 2004, found at www.taiwanheadlines.gov.tw, retrieved Apr. 25, 2005.

8-35

Swaziland157

Economic Overview

Swaziland is a land-locked country bordered by South Africa and Mozambique. Swaziland’s

GDP was $1.8 billion in 2003, with annual GDP growth of 2.2 percent in 2003 (table SW-1).

Swaziland is highly dependent on foreign trade, particularly with South Africa; the value of

trade was equivalent to 177.2 percent of Swaziland’s GDP in 2003–double the average share

in other AGOA-eligible countries. Foreign direct investment (FDI) in Swaziland totaled

$45 million in 2002, accounting for 3.8 percent of GDP.

Table SW-1

Swaziland: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,845.2

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3

External debt, total (current US$, millions, 2002)...................................................... 341.8

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.5

Trade (percent of GDP, 2003) .................................................................... 177.2

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.4

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.9

Primary school enrollment ratio, total (percent, 2000)

2 .................................................. 125.0

Secondary school enrollment ratio, total (percent, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.4

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.4

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 1

 Most recent year for which data are available between 1999 and 2003.

2

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school

age.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 

Manufacturing and services each accounted for approximately one-third of Swaziland’s GDP

in 2003 (figure SW-1). Apparel manufacturing is a top export earner. Swaziland has a

spinning mill that produces core-spun yarns and sewing thread, and a knitting and dyeing

facility was constructed in 2004.158 Swaziland’s main service industries are tourism and
 Swaziland Sugar Association, “Fact Sheet,” found at www.swazibusiness.com, retrieved 159

Mar. 23, 2005.

 Swaziland Review, “Economic Overview,” 2005, p. 27; “Manufacturing & Processing,” 160

Swaziland Business Yearbook 2002, found at www.swazibusiness.com, retrieved Feb. 2, 2005;

Sappi, “Sappi’s Usuthu Business Faces Tough Challenges,” Aug. 31, 2001; and Sappi, “Sappi

Usuthu Mill Restructuring to Restore Profitability,” Nov. 15, 2001.

 Sharma Group of Companies, “Swazi Paper Mills Limited,” found at 161

www.thesharmagroup.com, retrieved Mar. 1, 2005; Lockwood-Post, Directory of Pulp and Paper

Mills, International Ed., 2004, p. 736; and World Trade Organization (WTO), Trade Policy

Review: Southern African Customs Union, “Annex 5: Kingdom of Swaziland,”

WT/TPR/S/114/SWZ, Apr. 2003, p. A5-339. 

8-36

supplying fresh water to its neighbors. Swaziland’s industrial sector, at 14.8 percent of GDP,

includes the manufacture of plastics, metals, and chemicals. Mining contributed less than

1 percent of GDP, and is based on Swaziland’s limited mineral resource base of coal,

asbestos, and anthracite.

Agriculture and forestry represented 15.7 percent of Swaziland’s 2003 GDP. Leading

products are sugar, citrus, and wood pulp. Sugar production is Swaziland’s leading

agricultural activity, employing an estimated 16,000 individuals. Swaziland was 159

sub-Saharan Africa’s (SSA) second-largest sugar producer behind South Africa in 2003.

Swaziland has seven major citrus estates producing oranges, grapefruit, pineapples, and

limes. Swaziland is the third-largest producer of wood pulp in SSA behind South Africa and

Kenya. Swaziland has one pulp and one paper mill; all unbleached kraft pulp is exported.

Six percent of Swaziland has been converted to non-native forest plantations and tree farms

where pine and eucalyptus trees are grown. Downstream wood exports include coated 160

paper and paperboard, and fiberboard; other products include tissue papers and industrial

towels, which use recycled paper imported from South Africa.161

Figure SW-1

Sw aziland: Composition of GDP (2002)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 162 World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

8-37

Export Profile

Swaziland’s leading exports, textiles and apparel, were valued at $153.1 million in 2003.

Apparel items accounted for 27.5 percent of total Swazi exports in 2003 (table SW-2), up

from 12.2 percent in 2000.162 Cane sugar ranked as Swaziland’s single-largest export earner,

at $95.2 million in 2003 (table SW-3). 

Table SW-2

Swaziland: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––– 1,000 dollars –––––– –––– Percent ––––

61 Articles of apparel and clothing accessories, knitted or 

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 113,281.8 20.4 (2)

17 Sugars and sugar confectionery ........................... (1

) (1) 96,629.2 17.4 (2)

21 Miscellaneous edible preparations ......................... (1

) (1) 70,181.7 12.6 (2)

33 Essential oils and resinoids; perfumery, cosmetic or toilet

 preparations ....................................... (1

) (1) 40,324.7 7.2 (2)

62 Articles of apparel and clothing accessories, not knitted or

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 39,774.5 7.1 (2)

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 36,544.6 6.6 (2)

47 Pulp of wood or other fibrous cellulosic material; recovered

(waste and scrap) paper and paperboard ................. (1

) (1) 36,349.4 6.5 (2)

08 Edible fruit and nuts; peel of citrus fruit or melons ............. (1

) (1) 18,966.3 3.4 (2)

20 Preparations of vegetables, fruit, nuts, or other parts of plants . . . (1

) (1) 15,062.3 2.7 (2)

85 Electrical machinery and equipment and parts thereof; sound

recorders and reproducers, television recorders and 

reproducers, parts and accessories ...................... (1

) (1) 9,256.5 1.7 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 80,036.2 14.4 (2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 556,407.3 100.0 (2)

1

 Not available.

2

 Undefined.

Note.—Data for Swaziland prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS.

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 163 WTO, Trade Policy Review: Southern African Customs Union, p. A5-309.

 164 “Manufacturing & Processing,” Swaziland Business Yearbook 2002.

 165 Data from U.S. Department of Commerce.

 166 WTO, Trade Policy Review: Southern African Customs Union, p. A5-337.

 167 “Swaziland Agriculture,” SADC Review, found at www.sadcreview.com, retrieved

Mar. 16, 2005.

8-38

Table SW-3

Swaziland: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––– 1,000 dollars –––––– ––––– Percent ––––

1701 Cane or beet sugar and chemically pure sucrose, in solid

form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 95,186.6 17.1 (2)

2106 Food preparations nesoi ............................. (1

) (1) 69,784.3 12.5 (2)

6110 Sweaters, pullovers, sweatshirts, waistcoats (vests) and 

similar articles, knitted or crocheted . . . . . . . . . . . . . . . . . . (1

) (1) 55,489.0 10.0 (2)

3302 Mixtures of odoriferous substances and mixtures based

on one or more odoriferous substances, of a kind used

as raw materials in industry or bev mfg ............... (1

) (1) 39,195.8 7.0 (2)

4703 Chemical wood pulp, soda or sulphate, other than

dissolving grades ................................ (1

) (1) 36,349.4 6.5 (2)

6204 Women's or girls' suits, ensembles, suit-type jackets, 

dresses, skirts, divided skirts, trousers, etc. (no

swimwear), not knitted or crocheted . . . . . . . . . . . . . . . . . (1

) (1) 19,894.6 3.6 (2)

0805 Citrus fruit, fresh or dried ............................ (1

) (1) 18,362.0 3.3 (2)

6203 Men's or boy's suits, ensembles, suit-type jackets, blazers,

trousers, bib and brace overalls, breeches, etc. (no

swimwear), not knitted or crocheted . . . . . . . . . . . . . . . . . (1

) (1) 15,361.4 2.8 (2)

2008 Fruit, nuts and other edible parts of plants, otherwise

prepared or preserved, whether or not containing added

sweetening or spirit, nesoi . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 13,293.8 2.4 (2)

6104 Women's or girls' suits, ensembles, suit-type jackets,

blazers, dresses, skirts, divided skirts, trousers, etc. (no

swimwear), knitted or crocheted . . . . . . . . . . . . . . . . . . . . (1

) (1) 12,320.5 2.2 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 181,388.8 32.6 (2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 556,407.3 100.0 (2) 1

 Not available.

2

 Undefined.

Note.—Data for Swaziland prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS.

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Swaziland’s second-largest export in 2003 was sugar, used primarily for soft drink

production163 and for confectionery goods exported to SSA markets.164 Chemical wood pulp

ranked as Swaziland’s fifth-largest export in 2003, valued at $36.3 million. Citrus was

Swaziland’s seventh-largest export in 2003, valued at $18.4 million; preserved and prepared

grapefruit accounted for 95 percent of Swaziland’s citrus exports by value to the United

States in 2003.165 Meat ranks as another important Swazi export. The Swazi meat industry

benefits from a 92-percent reduction in the EU tariff on beef;166 Swaziland is also subject to

an EU quota on its beef exports, but has not filled its quota because of difficulties in meeting

EU sanitary and phytosanitary (SPS) standards.167
 168 Economist Intelligence Unit (EIU), Swaziland Country Profile, 2004, p. 19; and “Swazi

Trails,” found at www.swazitrails.co.sz, retrieved Mar. 3, 2005.

 169 Neil Ford, “Lesotho & Swaziland,” African Business, Oct. 2003.

 170 Southern African Global Competitiveness Hub, “Swazican,” found at www.satrade.org,

retrieved Feb. 2, 2005; and “Manufacturing & Processing,” Swaziland Business Yearbook 2002. 

 171 “Swaziland Agriculture,” SADC Review.

 172 Ibid.

8-39

Swaziland’s tourism industry is highly reliant on that of South Africa. South African tour

companies offer side trips destined for Swaziland’s game reserves, golf courses, and other

tourist sites as part of a packaged regional trip.168 Swaziland also exports fresh water from

the Magugua Dam to South Africa and Mozambique.169

The United States ranked as the largest market for Swazi exports in 2003, accounting for

31.2 percent of the total (table SW-4). Korea was the second-largest market for Swazi goods,

accounting for $54.6 million in export sales. One-half of Swaziland’s top 10 export markets

in 2003 were in the Asia-Pacific region. The European Union as a whole accounted for

22.8 percent of Swazi exports in 2003. The United Kingdom was the largest EU market for

Swazi exports in 2003, accounting for $52.9 million of the total. In 2003, Swazi exports to

the European Union were 17.9 percent below their 2000 levels, whereas Swazi exports to the

United States and Australia increased by 12.1 percent and 4.9 percent, respectively.

Table SW-4

Swaziland: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––– 1,000 dollars ––––––––––– ––––––– Percent –––––––

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 173,451.0 31.2 (2)

Korea, Rep. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 54,631.2 9.8 (2)

United Kingdom ............................ (1

) (1) 52,853.8 9.5 (2)

Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 29,812.1 5.4 (2)

New Zealand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 28,331.2 5.1 (2)

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 22,212.5 4.0 (2)

Kenya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 20,748.2 3.7 (2)

Netherlands ............................... (1

) (1) 16,568.3 3.0 (2)

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 14,755.6 2.7 (2)

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 14,533.1 2.6 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 128,510.3 23.1 (2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 556,407.3 100.0 (2)

1

 Not available.

2

 Undefined.

Note.—Data for Swaziland prior to 2000 are included within the Southern African Customs Union data and are unavailable in

WITS. Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s

membership in SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

The value of Swaziland’s citrus exports to the world increased by 14 percent between 2000

and 2003. Swaziland’s citrus is canned locally and exported to South Africa, the European

Union, the United States, and Japan. The local canning factory reportedly supplies

25 percent of the United Kingdom’s canned grapefruit.170 The Swazi citrus industry also

produces jams and jellies for the southern Africa region.171 The primary markets for Swazi

wood-based products are South Africa, China, the European Union, and parts of East Asia.172
 173 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 174 For additional information on the Multifiber Arrangement and the removal of textile and

apparel quotas in 2005, see app. C.

 175 “Lower Sugar Prices to Challenge Swaziland,” Business Day (South Africa), Aug. 2, 2004.

 176 Government of the Kingdom of Swaziland, “Export Products,” found at www.gov.sz,

retrieved Mar. 21, 2005; and Phiwokwakhe Ngidi, “We Can Do Well Without Strike,” Times of

Swaziland, Jan. 10, 2005.

 177 United Nations, Food and Agriculture Organization, “Fishery Country Profile,”

FID/CP/SWA, Dec. 2000.

 178 “SwaziTrails;” and “Raw Africa,” found at www.rawafrica.com, retrieved Mar. 3, 2005.

8-40

Sectors with the Greatest Export Growth Potential

Eight of Swaziland’s top 10 export products have relatively strong revealed comparative

advantage173 (RCA) indices, including cane sugar; food preparations; jerseys, pullovers, and

cardigans; odoriferous substances (from raw materials used in beverage manufacturing);

chemical wood pulp; citrus; fruits and nuts; and synthetic filament yarn (appendix E,

table E-34). International trade in three of these exports (food preparations, odoriferous

substances, and chemical wood pulp) experienced above average growth in world trade

during 1993-2003. Among products for which Swaziland has a comparative advantage,

textile and apparel products include woven cotton fabrics and gauze. The potential for export

growth in the textile and apparel sector is limited, however, by increased international

competition as a result of removal of the quotas in 2005.174 Other potential export sectors that

exhibit gains in comparative advantage include artificial waxes, live animals, watch straps,

and book-binding machinery.

The Swazi government is encouraging farmers to diversify away from sugar into other

agricultural products,175 including fresh flowers (such as roses), goats, aquaculture, peanuts

for processing into peanut butter, and other articles such as pottery, natural health products,

kaolin mining, candles, glassware, and mohair.176 In particular, several hatcheries for trout

and warm water species exist in Swaziland; however various technical problems hamper

growth.177 Tourism continues to be a potential growth sector through increased emphasis on

Swaziland’s cultural heritage and its adventure-focused day trips.178

Domestic and International Barriers

In general, Swaziland has a conducive domestic trade policy. For example, the simple

average of Swaziland’s ad valorem duties was 5.8 percent in 2002 for all imports

(table SW-5). This favorable trade policy is also reflected in the Heritage Foundation data,

which report that in 2005, Swaziland’s trade policy ranked more favorably than the SSA and

comparable to OECD averages (table SW-6). In its overall 2005 assessment, the Heritage

Foundation ranked Swaziland as having greater economic freedom than the average of its

SSA counterparts and, in the government intervention in the economy subcategory,

Swaziland scored better than the OECD average.
 179 Amanda Hilligas, The Elimination of Quotas under the World Trade Organization

Agreement on Textiles and Clothing: The Impact on Swaziland, Southern African Global

Competitiveness Hub, USAID/Regional Center for Southern Africa, Dec. 7, 2004, pp. 11-12.

8-41

Table SW-5

Swaziland: Business environment

Country data not available.

Import tariffs Simple average of ad valorem duties

(Swaziland, applied rate, 2002)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table SW-6

Swaziland: Economic freedom

Swaziland

Regional

average1

OECD

 average

––––– Heritage Foundation indicators –––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.6 2.5

2000 Overall score ................................................... (2

) 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé &

Principe, Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 

Key domestic impediments are related to Swaziland’s land-locked geographical position,

making it reliant on South African and Mozambican ports and transportation networks.

Consequently, Swaziland faces high shipping costs. According to the U.S. Agency for

International Development, the cost of shipping a container from the Swazi capital of

Mbabane to Durban, South Africa, is approximately three times the cost of shipping the same

container from Durban to Hong Kong.179

Another impediment to business, and especially export, development is Swaziland’s

communication infrastructure. For example, there are only 95.0 fixed or mobile phone lines

per 1,000 people and less than 20 Internet users per 1,000 people (table SW-7). This

impediment constrains potential exporters from efficiently obtaining information about

potential export products and markets.
 180 Report on the Mission of Stephen Lewis, UN Secretary-General’s Special Envoy on

HIV/AIDS in Africa, to Swaziland, Mar. 17-19, 2004.

 181 U.S. Agency for International Development (USAID), “Country Profile HIV/AIDS,” Bureau

for Global Health, Jan. 2004; and EIU, Swaziland Country Profile, p. 10.

 182 International Monetary Fund, African Department, Fourth Review Under the Poverty

Reduction and Growth Facility Arrangement and Request for Waiver of Performance Criteria,

May 22, 2003, p. 9; Scott Drimie, “HIV/Aids and Land: Case Studies from Kenya, Lesotho and

South Africa,” Development Southern Africa, vol. 20, No. 5, Dec. 2003, pp. 648-650; and USAID,

Bureau for Global Health, Lesotho: Country Profile HIV/AIDS, Jan. 2004.

 183 U.S. Department of State telegram, “Swaziland’s 2005 National Trade Estimate Report.” 

 184 WTO, Trade Policy Review: Southern African Customs Union, p. A5-332; Swaziland

Review, “Economic Overview,” 2005, pp. 27-28; and EIU, Swaziland Country Profile, pp. 16-17.

 185 Government of the Kingdom of Swaziland, “Export Products.” 

8-42

Table SW-7

Swaziland: Infrastructure-related indicators

MRY1

Roads, total network (km, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,107.0

Roads, paved (percent of total roads) .............................................................. (2

)

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.0

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.4

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.0

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.0

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

)

 1

 Most recent year for which data are available between 1999 and 2003.

 2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Impediments with respect to labor include shortages of skilled labor, resulting from high

levels of emigration of educated Swazis to South Africa,180 as well as shortages of unskilled

labor, resulting from Swaziland’s declining population growth rate stemming from what is

reportedly the world’s highest rate of HIV/AIDS.181 These impediments potentially adversely

affect Swaziland’s labor productivity and constrain future economic growth.182 In addition,

foreign workers in Swaziland report difficulties and delays in obtaining work permits.183

Swaziland has two forms of land tenure–title deed land and Swazi nation land. Title deed

land is leased to commercial farmers, and Swazi nation land, which makes up 60 percent of

the total area, is devoted to small-scale and communally-managed subsistence farming.

Swazi nation land is held in trust for the nation and parceled out by community chiefs and

leaders. The Swazi nation land system contributes to Swaziland’s ambiguous land tenure

regulations and lack of land ownership security. This discourages farmers from making

investments in their property, reducing overall agricultural productivity and consequently

hampering potential export growth, particularly in the agricultural sector.184

Another constraint to exports is the lack of domestic capacity to meet international standards.

Swazi producers also report difficulties in producing output that meets EU SPS or other

regulatory standards. Swaziland Meat Industries processes beef for export and is an

EU-approved abattoir;185 however, a 2005 shipment of Swazi beef to the European Union

was halted because of improper paperwork and veterinary records.
9-1

CHAPTER 9

Apparel-Exporting Countries: Lesotho,

Madagascar, and Mauritius

Lesotho, Madagascar, and Mauritius have the largest concentration of apparel exports among

AGOA-eligible countries (table 9-1). All have been significant beneficiaries of AGOA.

Exports from Madagascar and Mauritius are fairly diversified, whereas Lesotho's exports are

heavily concentrated in apparel. A summary of findings for each of the three countries with

respect to potential export growth sectors and domestic and international barriers is provided

below.

Table 9-1

Lesotho, Madagascar, and Mauritius, 1999-2003 average share of total exports, by sector

Sectors Lesotho Madagascar Mauritius

––– Shares of total exports, 1999-2003 (percent) –––

Fish and related products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 19.0 6.6

Coffee, tea, and spices ............................... (1

) 23.8 0.1

Cocoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 0.7 (1) 

Other agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 9.0 19.8

Forest-based products ............................... (1

) 2.0 0.6

Minerals, metals, and metal products . . . . . . . . . . . . . . . . . . . . 2.9 1.8 7.0

Fuels and electrical energy ............................ (1

) 2.0 (1) 

Textiles and fibers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 2.3 2.0

Apparel and related articles . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.7 35.9 57.6

Other manufactures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 3.5 6.1

 1

 Average share of less than 0.05 percent during 1999-2003.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Lesotho

Potential exports include high-value agricultural products, diamonds, tourism, business

process outsourcing, and to a certain extent, textiles and apparel. Major constraints to export

growth include the effect of HIV/AIDS on the economy, an internationally less-competitive

business environment, inadequate infrastructure, and government regulations regarding land

and mineral deposit development. In addition, restrictive rules of origin were identified as

international impediments to export growth.

Madagascar

The main components of Madagascar’s economy and trade are services (tourism), agriculture

(spices), fisheries (crustaceans), and industry (apparel). A variety of sectors have growth

potential owing to the country’s varied natural resource base. The sectors with the greatest

potential for export growth are agriculture, mining, tourism, and business process

outsourcing. Textiles and apparel have been identified as growth sectors by several sources.

Growth in exports is impeded by a number of barriers, particularly those related to the
9-2

business environment, infrastructure, and access to finance. In addition, difficulty meeting

sanitary and phytosanitary standards and increased international transport security

requirements were identified as international impediments to export growth.

Mauritius

With the removal of global textile and apparel quotas and the impending reform of the EU

sugar market, Mauritius’ future growth potential hinges on diversifying its economy away

from these traditional sectors. In particular, Mauritius has the necessary infrastructure and

is striving to expand development of its service sectors, particularly tourism, information and

communication technologies, and international financial services. However, the country’s

shortage of skilled labor will limit its ability to expand these sectors, particularly as it

attempts to move up the value chain into higher-skilled areas. Mauritius has also laid the

foundation for growth in distribution services, repackaging, and minor processing of goods

for export, particularly in the tuna and seafood sector. Its location, port facilities, and

participation in regional trade agreements makes it well suited to expand its trade within the

region. However, the lack of purchasing power for much of the region will mean that

Mauritius will need to look elsewhere in the near term for significant export growth

opportunities. Mauritius’ small size and location inhibit its ability to make new inroads into

the U.S. market. However, it may be able to further grow its business with the European

Union, particularly the United Kingdom and France, with which it already has strong ties.

Difficulty meeting sanitary and phytosanitary standards was also identified as international

impediments to export growth.
 1

 Prepared by Kim Olsen, Office of Industries.

 2

 For additional information on regional organizations, see app. C.

9-3

Lesotho1

Economic Overview

Lesotho is a low-income, mountainous country surrounded entirely by South Africa. Lesotho

is highly dependent upon the South African economy for its economic and financial health.

Trade amounted to 148.5 percent of GDP in 2003 (table LS-1). In 2003, Lesotho’s GDP was

$1.1 billion, with GDP growth averaging 2.5 percent annually during 1999-2003. With a

population of 1.8 million in 2003, Lesotho’s population growth rate is declining because of

HIV/AIDS and emigration. Its population growth rate averaged less than 1 percent annually

during 1999-2003. As a result of the 2002 Southern African Customs Union (SACU)

agreement,2

 customs revenues for Lesotho were reduced from 75 percent of total Lesotho

government revenues in the mid-1980s to approximately 33 percent in 2004.

Table LS-1

Lesotho: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,135.3

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7

External debt, total (current US$, millions, 2002)...................................................... 637.1

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.1

Trade (percent of GDP, 2003) .................................................................... 148.5

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.9

Literacy rate, adult total (percent of people ages 15 and above, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81.4

Primary school enrollment ratio, total (percent, 2000)

2 .................................................. 115.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.9

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.4

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.6

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3 1

 Most recent year for which data are available between 1999 and 2003.

2

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school

age.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

The services sector, consisting primarily of financial services, tourism, and wholesale and

retail trade, was the largest contributor to GDP, accounting for 39.6 percent of GDP in 2002.

Manufacturing contributed 19.9 percent; construction, 17.9 percent; and agriculture,

17.3 percent (figure LS-1). The majority of manufacturing continues to be in the apparel

industry, in particular, low-end, cut-make-trim apparel for export. The largest manufacturing

companies in Lesotho are a brewer that produces mainly for domestic consumption and a
 “Lesotho Review 2005,” Countrywatch.com, found at www.countrywatch.com, retrieved 3

Feb. 18, 2005.

 World Trade Organization (WTO), Trade Policy Review: Southern African Customs Union,

4

“Annex 2: Kingdom of Lesotho,” Apr. 25, 2003, p. A2-143.

 FitchRatings, “Kingdom of Lesotho,” International Credit Analysis, Sovereigns, Dec. 1, 2004. 5

 Economist Intelligence Unit (EIU), Lesotho Country Profile, 2004, p. 36; and Embassy of the 6

Kingdom of Lesotho official, interview by USITC staff, Washington, DC, Feb. 28, 2005.

 EIU, Lesotho Country Profile, p. 36; and Central Bank of Lesotho, Annual Report 2003,

7

Mar. 2004.

 EIU, Lesotho Country Profile, p. 34. 8

 WTO, Trade Policy Review: Southern African Customs Union, p. A2-136. 9

9-4

soft drink bottler primarily engaged in trade with South Africa. Other industries include 3

leather, television assembly, and edible oils, which all have little or no current exports. A4

circuit breaker factory was established in 2004. Lesotho’s clay deposits are being used to 5

manufacture bricks, ceramicware, and tiles.6

Agricultural output remains primarily subsistence based, with maize (corn), wheat, and

sorghum production dominating the sector. Domestic production does not meet domestic 7

demand. Given its primarily mountainous terrain, only 10.9 percent of Lesotho is arable. The

country is particularly prone to soil erosion and livestock overgrazing, which affects

agricultural productivity and livestock growth. The government assists the sector by 8

supplying potatoes, maize, sorghum, beans, and pea seeds, as well as fertilizers and

agricultural machinery.9

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.

Figure LS-1

Lesotho: Composition of GDP (2002)
 10 United Nations Conference on Trade and Development (UNCTAD), Investment Policy

Review – Lesotho, UNCTAD/ITE/IPC/2003/4, July 2003, p. 52.

 11 Ibid., p. 8.

 12 U.S. Department of State telegram, “Scenesetter for Visit of MCC Chief Executive Paul

Applegarth to Lesotho,” message reference No. 579, prepared by U.S. Embassy, Maseru,

Oct. 2004; and UNCTAD, Investment Policy Review – Lesotho, pp. 8-12.

 13 World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

 14 Ibid.

 15 U.S. Department of State telegram, “World Textile Trade Without Quotas,” message

reference No. 282, prepared by U.S. Embassy, Maseru, Apr. 2002.

 16 While the WITS data do not indicate South Africa and SACU as major export markets for

Lesotho, other sources report that South Africa receives one-quarter of Lesotho’s exports. Possible

reasons for the data discrepancies include Lesotho’s membership in SACU (app. C), which may

make it difficult to identify intra-SACU trade, or underreporting of re-exported and transshipped

goods. See EIU, Lesotho Country Profile.

 17 Peter Gibbon, “AGOA, Lesotho’s Clothing Miracle’ & the Politics of Sweatshops,” Review

of African Political Economy, vol. 30, No. 96, p. 317.

9-5

Diamonds and water are Lesotho’s only market-viable natural resource industries. Mineral

exploration has occurred in Lesotho; however, two-thirds of the country is overlain with a

1,300 meter-thick basalt layer, which complicates extraction.10

Among AGOA-eligible countries, Lesotho attracted the seventh-largest share of foreign

direct investment (FDI) during 1993-2002, at $1.6 billion. In the last few years, the majority

of FDI was in the cut-make-trim garment manufacturing industry, which benefits from

AGOA’s third-country provisions.11 The majority of foreign investment originates in South

Africa and East Asia, in particular Taiwan. Taiwanese investments dominate the textile and

apparel industry, and South African investments are more diversified and include footwear

factories, electronics manufacturing, food processing, insurance, telecommunications,

financial services, and tourism.12

Export Profile

Once dominated by diamonds, wool, and mohair, Lesotho’s export profile has changed

significantly. After becoming eligible for apparel benefits under AGOA, total exports

increased by 140 percent, from $180 million in 2000 to more than $432 million in 2003

(table LS-2).13 In 2003, 98.9 percent of Lesotho’s total exports were apparel, compared with

84.9 percent in 2000.14 During that period, HS chapter 61 items gained as a percentage of

total exports, while HS chapter 62 items declined as a percentage of total exports.15 Within

the apparel industry, there is high dependence on a few products; the leading five products

represent over 80 percent of total exports (table LS-3). The vast majority of Lesotho’s

apparel exports is destined for the U.S. market (table LS-4).16

Lesotho factories are cut-make-trim operations, with all other aspects of design and

production handled overseas. Lesotho’s four industrial estates provide services similar to

those found in export processing zones, and are home to textile and apparel firms

manufacturing for export. By 2003, there were 54 plants and approximately

50,000 employees, resulting in private employment exceeding public employment for the

first time in Lesotho’s history.17 Approximately three-quarters of the factories are owned by

Taiwanese investors, with Hong Kong, Singapore, and South African investors representing

the remainder. However, eight factories have closed since June 2004 at a cost of 12,500 jobs.
9-6

Table LS-2

Lesotho: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––– 1,000 dollars –––––– ––––– Percent –––––

61 Articles of apparel and clothing accessories, knitted or

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 270,759.3 62.7 (2)

62 Articles of apparel and clothing accessories, not knitted or

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 156,295.1 36.2 (2)

72 Iron and steel ........................................ (1

) (1) 894.1 0.2 (2)

85 Electrical machinery and equipment and parts thereof; sound 

recorders and reproducers, television recorders and 

 reproducers, parts and accessories ..................... (1

) (1) 735.0 0.2 (2)

60 Knitted or crocheted fabrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 523.8 0.1 (2)

90 Optical, photographic, cinematographic, measuring, checking, 

precision, medical or surgical instruments and apparatus;

parts and accessories thereof ......................... (1

) (1) 451.4 0.1 (2)

39 Plastics and articles thereof ............................. (1

) (1) 382.3 0.1 (2)

51 Wool and fine or coarse animal hair, including yarns and

woven fabrics thereof; horsehair yarn and woven fabric ..... (1

) (1) 315.5 0.1 (2)

84 Nuclear reactors, boilers, machinery and mechanical

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 215.3 0.0 (2)

68 Articles of stone, plaster, cement, asbestos, mica or similar

materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 179.1 0.0 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 1,403.6 0.3 (2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 432,154.6 100.0 (2)

1

 Not available.

2

 Undefined.

Note.—Data for Lesotho prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS.

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
9-7

Table LS-3

Lesotho: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate

(CAGR)

HS 4 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

–––––– 1,000 dollars –––––– ––––– Percent –––––

6110 Sweaters, pullovers, sweatshirts, waistcoats (vests) and 

similar articles, knitted or crocheted . . . . . . . . . . . . . . . . . . . . (1

) (1) 143,536.9 33.2 (2)

6203 Men's or boy's suits, ensembles, suit-type jackets, 

blazers, trousers, bib and brace overalls, breeches, etc. (no

swimwear), not knitted or crocheted . . . . . . . . . . . . . . . . . . . . (1

) (1) 79,433.9 18.4 (2)

6204 Women's or girls' suits, ensembles, suit-type jackets, dresses,

skirts, divided skirts, trousers, etc. (no swimwear), not

knitted or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 71,120.9 16.5 (2)

6104 Women's or girls' suits, ensembles, suit-type ............... (1

) (1) 39,307.4 9.1 (2)

6103 Men's or boys' suits, ensembles, suit-type jackets, blazers,

trousers, bib and brace overalls, breeches and 

shorts (no swimwear), knitted or crocheted . . . . . . . . . . . . . . (1

) (1) 28,618.4 6.6 (2)

6106 Women's or girls' blouses and shirts, knitted or crocheted ..... (1

) (1) 16,902.8 3.9 (2)

6109 Sweaters, pullovers, sweatshirts, waistcoats (vests) and 

similar articles, knitted or crocheted . . . . . . . . . . . . . . . . . . . . (1

) (1) 15,999.4 3.7 (2)

6105 Men's or boys' shirts, knitted or crocheted .................. (1

) (1) 12,880.5 3.0 (2)

6114 Garments nesoi, knitted or crocheted ..................... (1

) (1) 3,542.0 0.8 (2)

6208 Women's or girls' singlets and other undershirts, slips, panties,

nightdresses, pajamas, negligees and similar articles, not

knitted or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 2,941.8 0.7 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 17,870.8 4.1 (2)

 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 432,154.6 100.0 (2) 1

 Not available.

2

 Undefined.

Note.—Data for Lesotho prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS.

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table LS-4

Lesotho: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––– 1,000 dollars –––––––– ––––– Percent –––––

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 419,667.2 97.1 (2)

Canada ............................................ (1

) (1) 6,388.8 1.5 (2)

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 2,308.2 0.5 (2)

United Kingdom ..................................... (1

) (1) 844.2 0.2 (2)

Japan ............................................. (1

) (1) 742.8 0.2 (2)

Malawi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 426.6 0.1 (2)

Hong Kong, China ................................... (1

) (1) 405.8 0.1 (2)

Saudi Arabia ........................................ (1

) (1) 384.7 0.1 (2)

Netherlands ........................................ (1

) (1) 172.0 0.0 (2)

Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 171.0 0.0 (2)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 643.3 0.1 (2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) 432,154.6 100.0 (2)

1

 Not available.

2

 Undefined.

Note.—Data for Lesotho prior to 2000 are included within the Southern African Customs Union data and are unavailable in WITS. 

Although these figures represent WITS data, they deviate from other sources, possibly resulting from the country’s membership in

SACU and the associated difficulty in extricating intra-regional trade.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 18 UN Integrated Regional Information Networks, “Lesotho: New Trade Regime Threatens

Economy,” Jan. 13, 2005, found at www.irinnews.org, retrieved Jan. 17, 2005; U.S. Department of

State telegram, “USITC Study on Export Opportunities and Barriers in African Growth and

Opportunity Act Eligible Countries,” message reference No. 90, prepared by U.S. Embassy,

Maseru, Feb. 2005; and Just-style.com, “LESOTHO: Six Apparel Factories Close, 6,650 Jobs

Axed,” Jan. 13, 2005. For additional information on the Multifiber Arrangement and the end of

textile and apparel quotas in 2005, see app. C.

 19 WTO, Trade Policy Review: Southern African Customs Union, p. A2-139.

 20 U.S. Department of State telegram, “Scenesetter for Visit of MCC Chief Executive Paul

Applegarth to Lesotho.”

 21 Neil Ford, “Lesotho & Swaziland,” African Business, Issue 291, Oct. 2003.

 22 George J. Coakley, “The Mineral Industries of Lesotho and Swailand,” U.S. Geological

Surveys Mineral Yearbook, 2003, p. 19.1.

 23 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 24 U.S. Department of State telegram, “Trade Minister Upbeat over Recent Trade Mission to the

United States,” message reference No. 78 Maseru, prepared by U.S. Embassy, Maseru, Feb. 2005;

and U.S. Department of State telegram, “Prime Minister Officiates at AGOA-Driven USD 106

Million Textile Investment,” message reference No. 335, prepared by U.S. Embassy, Maseru,

June 2001.

9-8

Reasons for closures include volatility of the rand and anticipated increased competition due

to the end of textile and apparel quotas in 2005.18

Water is Lesotho’s most important natural resource. The infrastructure for this export is the

Lesotho Highlands Water Project, a joint venture with South Africa. This project also

includes the production of electricity, with a planned capacity of 200 megawatts after

completion of all five phases. It currently has an 80-megawatt capacity after completion of

phases 1A and 1B.19 In 1998, Lesotho began exporting water to South Africa’s Gauteng

Province, which amounted to about R6 million (approximately $1 million) per month.20

Shortly after completion, water receipts accounted for 13 percent of Lesotho’s GDP.21

In 2004, the Letseng-la-Terae diamond mine was reopened, 22 years after closure. South

Africa’s DeBeers Company had previously operated the mine from 1976 to 1982 when it

closed the mine because of low diamond prices and tax disputes. Prior to 2004, diamonds

contributed less than 1 percent of GDP.22

Sectors with the Greatest Export Growth Potential

Eight of Lesotho’s top 10 export products have high revealed comparative advantage23

(RCA) indices (appendix E, table E-17), all of which are apparel products. Four of Lesotho’s

top 10 exports are growing at trends faster than the world market, including diamonds and

apparel items. Three of the 10 products with the largest RCA index increase are also in the

textile and apparel sector. Although RCA analysis has identified numerous products in the

apparel industry, the removal of textile and apparel quotas in 2005 and subsequent increase

in international competition is expected to dampen this sector’s potential for export growth.

However, a recent investment in a denim mill and a quadrupling of orders for 2005 from a

U.S.-based denim buyer are positive trends and are viewed as means for sector

diversification.24

Five of the 10 products with the largest increase in RCA indices are in the agricultural sector,

suggesting that this sector may have export potential. These products include cereals, animal
 25 U.S. Department of State telegram, “USITC Study on Export Opportunities.” 

 26 Embassy of the Kingdom of Lesotho official, interview by USITC staff, Washington, DC,

Feb. 28, 2005; and Zero Emissions Research Initiative, “ZERI Activities in Lesotho,” part of a

UNDP/UNOPS Regional Project, found at www.zeri.unam.na, retrieved Mar. 16, 2005.

 27 JCI Limited, “Lesotho Celebrates Resurgence of its Diamond Industry,” company

announcements, Nov. 26, 2004; and “Lesotho Celebrates Resurgence of its Diamond Industry,”

Marulelo Times (South Africa), Nov. 26, 2004. 

 28 Sean Cowan, “Alan Bond lies low in African diamond float,” The West Australian,

Apr. 12, 2005; and Emma Muller, “Lesotho Diamond Mine Sparkles,” Business Day (South

Africa), Apr. 6, 2005.

 29 George J. Coakley, “The Mineral Industry of Lesotho,” U.S. Geological Surveys Mineral

Yearbook, 2001, p. 17.1; and UNCTAD, Investment Policy Review – Lesotho, p. 10.

 30 EIU, Lesotho Country Profile, p. 40.

 31 UNCTAD, Investment Policy Review – Lesotho, p. 58. 

 32 Francis Ng and Alexander Yeats, “Export Profiles of Small Land-Locked Countries: A Case

Study Focusing on their Implications for Lesotho,” The World Bank, Development Research

Group, Policy Research Working Paper 3085, June 2003, p. 31.

9-9

hair, and fruit juices. Lesotho is currently seeking to diversify into high-value agricultural

exports. Products such as asparagus, peaches, and mushrooms have been identified as

potential exports. In 2004, an asparagus canning factory was re-opened with plans to can

asparagus and peaches for export.25 In addition, the United Nations has encouraged high-end

mushroom production in coordination with the University of Lesotho.26

The Letseng-la-Terae diamond mine is expected to generate revenues of R230 million a year

(approximately $40 million), and have a life expectancy of 25 years.27 In January 2005, four

diamonds weighing a total of 366 carats were found with an estimated value of $6 million.

Letseng’s investors are considering doubling current capacity and building a new plant by

2007.28 Lesotho has other diamond prospects, albeit small, including a Lesotho-Canadian

venture that may yield 290,000 carats per year at full capacity. The Canadian company plans

to invest $7.1 million in the mine, which has an expected life of 5 years.29

The small but expanding tourism sector is also viewed as a potential source of foreign

exchange. In cooperation with external investors from Austria and South Africa, the

construction of a $12-million ski resort, AfriSki, has been underway since 2001, and once

opened, will provide 4 months of skiing per year.30 Other potential industries include

consumer electronics, leather goods, toys, plastics, call centers, business process

outsourcing/data entry, travel/sporting goods, and simple machining activities.31

Domestic and International Barriers

According to a 2003 World Bank study of competitiveness among land-locked countries,

“almost 70 percent of developing countries appear to pursue commercial policies that make

them as, or more, attractive to foreign investment than Lesotho.”32 Despite this assessment,

with the exception of the number of procedures to enforce contracts, the time to start a

business, and serveral credit indicators, Lesotho’s business environment indicators were

comparable to, or better than, regional averages, though generally worse than OECD

averages (table LS-5). According to the Heritage Foundation’s economic freedom index,

Lesotho’s overall 2005 score is comparable to other sub-Saharan African (SSA) countries

(table LS-6). Notably, Lesotho’s trade policy, which is primarily export-led, is the only

policy that scores better than both the SSA and OECD averages. 
9-10

Table LS-5

Lesotho: Business environment

Lesotho

Regional

average

OECD

average

Closing a Employment: Cost (percent of estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 20.5 6.8

Closing a Employment: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . 33.0 17.1 72.1

Closing a Employment: Time (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 3.6 1.7

Getting Employment: Cost to create collateral (percent of income per capita) ....... (1

) 41.8 5.2

Getting Employment: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2.1 5.0

Getting Employment: Legal rights index .................................... (1

) 4.6 6.3

Getting Employment: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . 0.0 39.4 577.2

Getting Employment: Public credit registry coverage (borrowers per 1000 capita) . . . . 0.0 1.1 76.2

Enforcing Employment: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.9 43.0 10.8

Enforcing Employment: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.0 35.0 19.0

Enforcing Employment: Time (days) ....................................... 285.0 434.0 229.0

Registering a Employment: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 6.0 4.0

Registering a Employment: Cost (percent of property value per capita) . . . . . . . . . . . . 9.1 13.2 4.9

Registering a Employment: Time (days) .................................... 101.0 114.0 34.0

Starting a Employment: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 11.0 6.0

Starting a Employment: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . 58.4 225.2 8.0

Starting a Employment: Minimum capital (percent of income per capita) . . . . . . . . . . . 17.4 254.1 44.1

Starting a Employment: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

Country data not available.

 1

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table LS-6

Lesotho: Economic freedom

Lesotho

Regional

average1

OECD

average

––––– Heritage Foundation indicators –––––

1995 Overall score .................................................... (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 
 33 U.S. Department of State telegram, “USITC Study on Export Opportunities.” 

 34 Ibid.

 35 Embassy of the Kingdom of Lesotho official, interview by USITC staff, Washington, DC,

Feb. 28, 2005.

 36 EIU, Lesotho Country Profile, p. 27; and WTO, Trade Policy Review: Southern African

Customs Union, 

p. A2-112.

 37 WTO, Trade Policy Review: Southern African Customs Union, p. A2-112.

 38 International Monetary Fund (IMF), “Lesotho Letter of Intent,” Feb. 3, 2000, found at

www.imf.org, retrieved Mar. 2, 2005.

9-11

Because Lesotho is land locked and is surrounded by South Africa, it is reliant on South

African transport networks, which are relatively well developed as compared with other

AGOA-eligible countries. Of Lesotho’s total road network, less than 20 percent is paved

(table LS-7). The Maseru Container Terminal is inadequate given the level of traffic

transported via the terminal and has outdated container handling capabilities. One effect of

this situation is that “...containers destined for Lesotho are forced to pay rentals in

Bloemfontein, South Africa until space can be made for them in Maseru.”33 There is one

international airport. The Lesotho government plans to upgrade its cargo-holding capabilities

at the international airport to export fresh vegetables and fruit.34

Table LS-7

Lesotho: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,940.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.3

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.1

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.7

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.5

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

)

 1

 Most recent year for which data are available between 1999 and 2003.

 2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Despite Lesotho’s exports of water and the Lesotho Highlands Water Project, drought,

distribution inefficiencies, and the apparel sector’s increasing water demand have created

continuing shortages in residential areas and an inability to irrigate land, constraining

commercial development and export-oriented activity. The Lesotho Electricity Corporation

is in the process of being privatized.35 Backlogs in consumer electricity connections and high

prices, estimated to be 40-percent higher than in South Africa,36 limit expansion

opportunities across economic sectors. Lesotho’s mobile phone service is not fully

compatible with that of South Africa.37 The Lesotho Minister of Finance and Development

Planning commented that, “Lesotho-based enterprises would be at a competitive

disadvantage if structural impediments to investment and exports, particularly those in the

utilities sector, are not removed.”38
 39 U.S. Agency for International Development, Lesotho: Country Profile HIV/AIDS, Bureau for

Global Health, Jan. 2004.

 40 IMF, Fourth Review Under the Poverty Reduction and Growth Facility Arrangement and

Request for Waiver of Performance Criteria, African Department, May 22, 2003, found at

www.imf.org, retrieved Dec. 21, 2004.

 41 UNCTAD, Investment Policy Review – Lesotho, pp. 62 and 65.

 42 Ibid., p. 67.

 43 Ibid., pp. 62 and 65.

 44 WTO, Trade Policy Review: Southern African Customs Union, p. A2-121; and UNCTAD,

Investment Policy Review – Lesotho, pp. 38 and 70.

 45 UNCTAD, Investment Policy Review - Lesotho, p. 38.

 46 USITC, Textiles and Apparel: Assessment of the Competitiveness of Certain Foreign

Suppliers to the U.S. Market, volume II, inv. No. 332-448, USITC pub. 3671, Jan. 2004, p. K-15.

 47 UNCTAD, Investment Policy Review – Lesotho, p. 44.

 48 WTO, Trade Policy Review: Southern African Customs Union, p. A2-131.

 49 Ng and Yeats, “Export Profiles of Small Land-Locked Countries,” p. 48.

9-12

At approximately 31 percent, Lesotho has the fourth-highest rate of HIV/AIDS infection in

the world.39 The IMF predicts that over the medium term, economic growth will be reduced

by one-half of 1 percentage point solely because of HIV/AIDS.40

In the apparel sector, Lesotho’s labor productivity levels remain lower than East Asian

productivity levels.41 A major factor limiting productivity is the inability of manufacturers

to pay on a piece-rate scale, which is specified in the Lesotho Labour Code, despite the

prevalence of such pay rates in other countries. Piece-rate payments are viewed as an

effective way to increase productivity.42 In addition, with increasing capital intensity in the

textile industry, advanced skills will be required and Lesotho has a limited supply of skilled

labor necessary for the diversification of industries into more skill-intensive exports.43

Another impediment to increased exports is the limits placed on land ownership. Foreigners

cannot own land nor can a commercial entity if that entity has only minority Lesotho

ownership. The Lesotho National Development Corporation (LNDC) provides investors with

30-year subleases that the LNDC negotiates with the government. All land transactions

require ministerial approval.44 This land system presents several problems for foreign

investors including: 1) added risk for long-term development; 2) lengthy government

approval even if the LNDC mediates; and 3) difficult land transfer procedures.45 However,

recently, and with many industrial estates near capacity, an investor was given permission

to construct an estate “in order to avoid possible funding delays because of the LNDC

backlog.”46

Cumbersome regulations in the mining sector hamper its development. For example,

according to Lesotho’s mining legislation, the authority to grant title rests with the king and

chiefs, rather than with a minister. The legislation does not distinguish between large-scale

and artesian mining.47 Additionally, diamonds are the only exports subject to an export tax.48

The export tax limits the export of these products by raising export costs and may encourage

industries for which Lesotho does not have a comparative advantage.

Under the European Union’s GSP program, Lesotho exports to the European Union face zero

tariffs. However, restrictive rules of origin hamper Lesotho’s export potential across most

industries. Because Lesotho has a limited natural resource base, it must import the raw

materials used in manufacturing and as a result, Lesotho exports often cannot comply with

the EU GSP requirements.49
 50 Prepared by Cindy Cohen, Office of Economics.

9-13

Madagascar50

Economic Overview

Madagascar is an island nation located in the Indian Ocean about 400 kilometers from the

southeastern coast of Africa. The country is geographically diverse, rich in natural resources,

and has an abundant, low-cost, and generally unskilled labor force. The island is vulnerable

to natural hazards, including cyclones and drought; two cyclones in early 2004 destroyed

large sections of agricultural infrastructure affecting vanilla, rice, and aquaculture

production. GDP in 2003 was $5.5 billion, with trade representing 48.8 percent of GDP;

exports represented 20.5 percent of GDP that same year (table MD-1). 

Table MD-1

Madagascar: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ................................................................. 5458.8

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.2

External debt, total (current US$, millions, 2002)...................................................... 4517.7

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.8

Official exchange rate (local currency unit per US$, period average, 2003) ................................. 6191.6

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.9

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.9

Literacy rate, adult total (percent of people ages 15 and above) .......................................... (2

)

Primary school enrollment ratio, total (percent, 2000)

3 .................................................. 103.0

Secondary school enrollment ratio, total (percent, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.0

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.0

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

3

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school

age.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.

The country experienced GDP growth of 4 to 6 percent during 1999 to 2001; however, a

political crisis in 2002 after a contested presidential election contributed to the loss of

approximately 80,000 jobs, the transfer of apparel production to other countries, and a

decline in tourism. The economy experienced a strong recovery in 2003, growing by

9.6 percent, and continued to grow in 2004. However, the inflation rate increased sharply,

from -1.2 percent in 2003 to 17 percent in the first half of 2004, because of the economic
 International Monetary Fund, (IMF), PRSP-Annual Progress Report, Joint Staff Assessment, 51

Sept. 15, 2004.

 World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness,

52

retrieved Jan. 25, 2005. 

 Europa, “Country Overview,” found at http://europa.eu.int/comm/development/body/ 53

country/mg, retrieved Feb. 8, 2005.

 World Travel and Tourism Council, Madagascar, The 2004 Travel and Tourism Economic 54

Research, found at www.wttc.org/2004tsa/tsapdf/Madagascar.pdf, retrieved Mar. 22, 2005.

 Economist Intelligence Unit (EIU), Madagascar Country Profile, 2004, p. 19. 55

9-14

effect of the cyclones in early 2004, higher import prices for rice and petroleum, and a

40-percent depreciation in the currency.51

In 2002, services accounted for 54.6 percent of GDP, agriculture accounted for 32.1 percent,

and industry accounted for 13.3 percent (figure MD-1). Activity in the informal sector is

estimated at about 40 percent of gross national income.52

The main activities within the services sector are transportation, construction, public works,

telecommunications, and tourism. Tourism directly contributed about 3.0 percent of GDP

53

and 78,000 jobs in 2001; when related goods and services are included, tourism contributed

7.4 percent of GDP and 195,000 jobs.54

Although agriculture accounts for about one-third of GDP, it employs four-fifths of the

population. The major staple crops are rice, maize (corn), and tubers. Cash crops include 55

spices, coffee, sugar, and cotton. Rice accounts for about 70 percent of farm output. Most

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.

Figure MD-1

Madagascar: Composition of GDP (2002)
 56 Ibid., p. 31.

 57 Integrated Framework (IF), Madagascar: Diagnostic Trade Integration Study, Aug. 2003,

p. 100.

 58 Ibid., p. 111.

 59 U.S. Department of State telegram, “Madagascar Agoa Country Report,” message reference

No. 00189, prepared by U.S. Embassy, Antananarivo, Mar. 2005.

 60 EIU, Madagascar Country Profile, p. 34.

 61 IF, Madagascar: Diagnostic Trade Integration Study, p. 103.

 62 Madagascar Consulate General in Johannesburg, “10 Good Reasons to Invest in the Mining

Industry,” found at www.madagascarconsulate.org.za/10mining.htm, retrieved Feb. 9, 2005.

 63 World Bank, “World Development Indicators,” found at

http://devdata.worldbank.org/dataonline, retrieved Feb. 1, 2005.

 64 IF, Madagascar: Diagnostic Trade Integration Study, p. 111.

 65 Ibid., p. 125.

 66 Ibid., p. 150.

9-15

rice is produced by small landholders in highland areas using traditional production

techniques. Crop yields are low and are subject to locust infestations, drought, and cyclones.

Vanilla, the major agricultural export crop, is grown by 60,000 smallholder farms. Other

agricultural production for export includes cloves, pepper, essential oils, and litchis. Locally

grown mangoes, papayas, and bananas are consumed domestically. Vegetables are also

grown primarily for local consumption, although some are exported regionally. Most coffee

is also consumed locally.56

The fishing industry is dominated by mostly foreign-owned industrial trawlers, which

account for 45.5 percent of production; and aquaculture, which accounts for 31.5 percent.

The aquaculture industry is owned by French and Japanese investors. All of the catch from

trawlers and production from aquaculture is exported.57

The majority of firms in the export processing zone (EPZ) produce textiles and apparel, but

there are also firms engaged in food processing, production of footwear and jewelry, and

data processing.58 While the cotton industry is being revitalized, the current textile industry

in Madagascar is small, with only three mills producing fabric for local and regional markets.

At least 3,000 workers in the apparel industry have lost jobs because of the closure of

Chinese-owned factories since January 2005.59 Non-EPZ industries include plastics,

pharmaceuticals, leather, footwear, fish and meat canning, soap, furniture, palm oil, biscuits,

tobacco, car assembly, and farm machinery.60

Informal activities dominate the mining industry, and there is a high rate of unrecorded trade

in semiprecious stones.61 Despite production of chromium, mica, and graphite, mineral

exports have been limited.62 

Foreign direct investment (FDI) increased from $6.6 million in 1998 to $93.1 million in

2001, and then declined precipitously to $8.3 million in 200263 following the political crisis.

FDI growth prior to 2002 was attributable to increased investment in the EPZ by China,

France, Hong Kong, India, Malaysia, and Mauritius;64 privatization of government assets;

and a substantial increase in hotel investments.65 Mauritius investment is largely made by

apparel investors that have sought cheaper labor for garment production. In addition, about

20 Mauritian firms operate digital data entry companies in Madagascar.66
9-16

Export Profile

Madagascar’s main exports are apparel, spices, and crustaceans. Apparel accounted for

31.2 percent of the value of 2003 exports (table MD-2), vanilla accounted for 24.3 percent,

and crustaceans accounted for 14.5 percent (table MD-3). Other exports include prepared or

preserved fish (4.6 percent), fresh fruit (3.7 percent), cloves (3.4 percent), and petroleum oils

(3.1 percent). 

Table MD-2

Madagascar: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––––– 1,000 dollars ––––––––––– ––––– Percent –––––

09 Coffee, tea, mate and spices ................ 182,470.1 135,706.6 330,787.5 28.6 6.8

61

Articles of apparel and clothing accessories,

knitted or crocheted . . . . . . . . . . . . . . . . . . . . . 39,942.4 146,093.8 195,226.5 16.9 19.3

03

Fish & crustaceans, molluscs & other aquatic

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,985.2 107,801.8 177,373.2 15.3 7.4

62

Articles of apparel and clothing accessories,

not knitted or crocheted . . . . . . . . . . . . . . . . . . 59,039.4 147,858.4 165,714.4 14.3 12.2

16

Edible preparations of meat, fish, crustaceans,

molluscs or other aquatic invertebrates . . . . . . 30,192.6 33,339.1 52,907.0 4.6 6.4

08 Edible fruit and nuts; peel of citrus fruit or

melons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,122.2 44,758.7 44,044.5 3.8 4.3

27 Mineral fuels, mineral oils and products of their

distillation; bituminous substances; mineral

waxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,158.7 15,817.7 35,698.8 3.1 30.9

18 Cocoa and cocoa preparations . . . . . . . . . . . . . . 3,416.9 6,386.3 12,940.5 1.1 15.9

52 Cotton, including yarns and woven fabrics

thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,162.6 19,740.5 10,769.1 0.9 -1.3

25 Salt; sulfur; earths and stone; plastering

materials, lime and cement . . . . . . . . . . . . . . . 12,919.2 10,079.3 10,194.1 0.9 -2.6

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,182.0 129,480.3 122,802.1 10.6 3.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557,591.4 797,062.6 1,158,457.8 100.0 8.5

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 67 “Top Vanilla Region Feel the Pain of Boom and Bust,” Reuters, Feb. 5, 2005; “World Market

Prices for Vanilla is Facing a Crack,” Finance CustomWire, Aug. 22, 2004; and “Country Report: 

Madagascar,” Feb. 2005, found at www.creditguarantee.co.za, retrieved Feb. 10, 2005.

9-17

Table MD-3

Madagascar: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars ––––––––– ––––– Percent –––––

0905 Vanilla beans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,445.8 40,423.1 282,074.9 24.3 15.8

0306 Crustaceans, live, frsh, chilled, frzn etc.; 

crustaceans, in shell, cookd by stm or boilng 

water; flours, meals, & pellets of crustaceans, 

human consumption . . . . . . . . . . . . . . . . . . . . . . . 75,485.0 97,834.9 168,490.1 14.5 9.3

6110 Sweaters, pullovers, sweatshirts, waistcoats (vests)

 and similar articles, knitted or crocheted . . . . . . . . 26,526.7 102,700.5 131,693.6 11.4 19.5

6204 Women's or girls' suits, ensembles, suit-type

jackets, dresses, skirts, divided skirts, trousers,

etc. (no swimwear), not knitted or crocheted . . . . . 10,691.4 33,585.8 76,547.4 6.6 24.4

1604 Prepared or preserved fish; caviar and caviar

substitutes prepared from fish eggs . . . . . . . . . . . 30,110.4 33,094.5 52,743.2 4.6 6.4

0810 Fruit nesoi, fresh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,569.4 42,175.0 42,559.8 3.7 4.9

0907 Cloves (whole fruit, cloves and stems) . . . . . . . . . . . . 14,259.5 29,134.8 39,744.0 3.4 12.1

6203 Men's or boy's suits, ensembles, suit-type jackets,

blazers, trousers, bib and brace overalls,

breeches, etc. (no swimwear), not knitted or

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,268.2 48,917.7 38,195.7 3.3 17.0

2710 Petroleum oils and oils from bituminous minerals

(other than crude) and products therefrom,

nesoi, containing 70% (by weight) or more of 

these oils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,019.6 15,652.0 35,696.7 3.1 31.6

6104 Women's or girls' suits, ensembles, suit-type

jackets, blazers, dresses, skirts, divided skirts,

trousers, etc. (no swimwear), knitted or 

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,435.7 2,217.2 14,007.6 1.2 28.3

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,779.8 351,327.0 276,704.8 23.9 -0.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557,591.4 797,062.6 1,158,457.8 100.0 8.5

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Madagascar is the world’s largest producer of vanilla, accounting for nearly 60 percent of

world exports of the product in 2003. The value of Madagascar’s exports of vanilla declined

from $75 million in 1993 to $40 million in 1999, but then increased substantially over the

next 4 years to reach $282 million in 2003. Cyclone damage to the vanilla crop in 2003

decreased Madagascar’s vanilla production, causing world vanilla prices to increase

significantly. High prices encouraged increased production in Madagascar and in other

vanilla growing countries, but also caused buyers to switch to less expensive artificial

vanilla. In 2004, record harvests, coupled with decreased demand as purchasers switched to

artificial vanilla, caused world vanilla prices to decrease.67

Madagascar is also a major supplier of cloves, accounting for 44 percent of world exports

in 2003. Exports of cloves, which accounted for 3.4 percent of total exports in 2003,

increased somewhat from 2002, but remained less than one-half of the levels in 2002 and

2003. Exports of fresh fruits also fluctuated. Coffee exports have declined dramatically,

from $86.8 million in 1994 to $5.3 million in 2003. Cotton, sugar, and cereal exports also

declined, while exports of crustaceans have grown over the past decade. 
 68 IF, Madagascar: Diagnostic Trade Integration Study, p. 103.

 69 World Travel and Tourism Council, Madagascar, The 2004 Travel and Tourism Economic

Research.

 70 IF, Madagascar: Diagnostic Trade Integration Study, p. 84.

 71 For additional information on regional organizations, see app. C.

9-18

Unofficially recorded mining exports were estimated at $200 million, compared with

$37 million in reported mining exports in 2000.68 Tourism is expected to account for

10.8 percent of 2004 exports, with total receipts of $367 million.69

Madagascar’s main export markets are the European Union and United States. In 2003, the

United States was the destination for 34.6 percent of exports; France, 34.4 percent; Germany,

6.2 percent; and Mauritius, 4.4 percent (table MD-4). Other export markets include Italy,

Japan, Singapore, and the United Kingdom. The European Union, United States, and Japan

account for 80 percent of Madagascar’s agricultural exports, although there has been a shift

away from the United States to France, the Middle East, and North Africa.70 France is

traditionally the leading trading partner and remains important because of historical ties and

common language. The share of Madagascar’s exports to the United States increased from

10.7 percent in 1994 to 34.6 percent in 2003 because of growth in apparel and vanilla

exports. Exports to Mauritius, the fourth-largest trading partner, have grown considerably

because of common language, the relationship between the apparel industries of the two

countries, and preferential access under the Indian Ocean Commission (IOC).71 Exports to

Singapore, Hong Kong, and China have also increased during the past 10 years.

Table MD-4

Madagascar: Leading exports markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate

(CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––––––– 1,000 dollars –––––––––––––– ––––––– Percent –––––––

United States . . . . . . . . . . . . . . . . . . . . . . 59,673.4 85,326.9 401,188.9 34.6 23.6

France . . . . . . . . . . . . . . . . . . . . . . . . . . . 205,524.3 326,829.8 398,729.7 34.4 7.6

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . 54,626.0 56,195.4 71,453.0 6.2 3.0

Mauritius . . . . . . . . . . . . . . . . . . . . . . . . . . 11,676.7 23,633.6 50,431.2 4.4 17.7

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,979.1 43,326.9 36,739.9 3.2 3.1

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,471.5 27,481.9 32,311.0 2.8 -1.6

Singapore . . . . . . . . . . . . . . . . . . . . . . . . . 10,696.1 16,944.3 29,949.5 2.6 12.1

United Kingdom . . . . . . . . . . . . . . . . . . . . 28,792.4 35,073.5 27,127.9 2.3 -0.7

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 28,366.2 15,794.7 1.4 (2)

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,926.1 23,985.2 14,759.1 1.3 -0.8

Other . . . . . . . . . . . . . . . . . . . . . . . . . . 105,225.7 129,898.8 79,972.9 6.9 -3.0

Total . . . . . . . . . . . . . . . . . . . . . . . 557,591.4 797,062.6 1,158,457.8 100.0 8.5

1

 Not available.

2

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 72 For additional information on the Multifiber Arrangement and the end of textile and apparel

quotas in 2005, see app. C.

 73 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 74 Embassy of Madagascar official, interview by USITC staff, Washington, DC, Feb. 28, 2005.

 75 “Madagascar Support Fund to the Private Sector,” found at www.madagascarcontacts.com/fasp/US, retrieved Feb. 10, 2005. 

 76 EIU, Madagascar Country Profile, pp. 30-31.

 77 IF, Madagascar: Diagnostic Trade Integration Study, p. 96.

 78 U.S. Department of State telegram, “Non-use of Tariff Rate Quota for Raw Sugar, 2004-

Madagascar,” message reference No. 00805, prepared by U.S. Embassy, Antananarivo, Aug. 2004.

 79 Dagris, “Dagris controle 90% de Hasyma, producteur de coton-fibre malgache,”

Sept. 17, 2004, found at www.dagris.fr, retrieved Apr. 7, 2005.

 80 IF, Madagascar: Diagnostic Trade Integration Study, p. 99.

 81 EIU, Madagascar Country Profile, p. 39.

9-19

Sectors with the Greatest Export Growth Potential

Export sectors with potential for growth include agriculture, minerals, tourism, and business

process outsourcing. Textiles and apparel may have some opportunity for short-term growth,

but the sector faces increased international competition since the end of quotas in 2005.72 The

top 10 export products with the highest revealed comparative advantage73 (RCA) indices, in

order from highest to lowest, are vanilla; cloves; fresh fruit; crustaceans; prepared or

preserved fish; and jerseys, pullovers, cardigans, and sweaters (appendix E, table E-18).

Only 1 product in the top 10, petroleum oils, showed a negative RCA index. Madagascar

government officials have identified agribusiness, ecotourism, mining, textiles and apparel,

and handicrafts as having the greatest export potential.74 Other products with export potential

include spices (chilies and ginger), fruit (litchis, rambutan, pineapple, and mangoes),

vegetables (french beans, gherkins, onions, garlic, asparagus, and potatoes), essential oils,

and organic products.75

Although coffee exports have declined in recent years, there may be potential to increase

exports in the future. There is an EU-funded project to help farmers increase the bean size

of robusta coffee through pruning techniques, and the European Union is also financing a

project to revive traditional production of arabica coffee in highland areas.76 Sugar may have

potential for increased exports despite low capacity utilization and yields, as the transfer of

production units of the national sugar refinery Sirama to private firms may increase

incentives for production. Madagascar fulfilled only 10 percent of its sugar quota to the

European Union in 2001-02.77 Although it fulfilled its quota to the United States during

2001-02, it did not export any sugar to the United States in FY2004 because of cyclone

damage to the sugar refinery.78 Cotton production also should increase with the privatization

of the HASYMA ginnery. The French company Dagris plans to invest $6 million over

3 years to increase the production of cottonseed to 22,000 short tons in 2005 and to

50,000 short tons in future years.79 

Another sector with growth potential is fisheries. New aquaculture projects in Madagascar

should increase shrimp production by 8,000 short tons over 5 years,80 and Madagascar has

reportedly been recognized by developed-country markets as an environment-conscious

aquaculture producer.81 Other fish and seafood products such as crab, octopus, and mussels

are also potential exports.
 82 Madagascar Consulate General in Johannesburg, “10 Good Reasons to Invest in the Mining

Industry.”

 83 UK Trade and Investment, “British Geological Survey Charts Success in Madagascar,”

Dec. 13, 2004.

 84 IF, Madagascar: Diagnostic Trade Integration Study, p. 103; and Madagascar Consulate

General in Johannesburg, “10 Good Reasons to Invest in the Mining Industry.” 

 85 EIU, Madagascar Country Profile, p. 16.

 86 “Mining: Madagascar,” Business Africa, Mar. 24, 2005.

 87 EIU, Madagascar Country Profile, p. 33.

 88 “Nickel Exploration – Dynatec to acquire all of Ambatovy,” Canadian Mining Journal,

Feb. 2, 2005.

 89 EIU, Madagascar Country Profile, p. 31.

 90 Ibid., p. 32.

 91 Ibid., p. 18.

 92 “China plans Madagascar oil venture,” China Economic Net, Jan. 19, 2005, found at 

http://en.ce.cn/Industries/Energy&Mining/200501/19/t20050119_2889582.shtml, retrieved

Feb. 15, 2005.

9-20

Madagascar has extensive mineral resources that have not been exploited, including

chromium, nickel, cobalt, iron, ilmenite (iron-titanium oxides), copper, gold, tin, quartz,

marble, and semiprecious stones.82 As part of a World Bank $30-million mining reform

program, a British firm was awarded a 3-year contract (2005-08) to prepare a geological map

of northern and central Madagascar that may help identify potential mineral deposits.83 In

addition to mineral extraction, the potential exists for mineral processing and downstream

manufacture of products such as jewelry.84 Improved freight services on the recently

privatized northern railroad may encourage investment by foreign mining companies,85 and

new regulations in 2005 allow foreigners to export gemstones. The previous policy reserving

gemstone export rights for Malagasy companies only encouraged the smuggling of millions

of dollars worth of gemstones. In addition, China has announced plans to increase imports

of chrome from Madagascar.86

There are a number of other mining projects that can increase output or are being evaluated

for new investment. The $350-million Rio Tinto project has the potential to increase

production of mineral sands, although there have been international concerns about the

environmental impact of the project.87 The Ambatovy nickel project also has the potential

to expand nickel ore and cobalt ore output.88 Other minerals that could be developed are

quartz, gemstones, bauxite, and iron ore (the rehabilitation of the northern railway may

encourage investment in iron predevelopment), but further reforms to regulations and

concession terms may be needed to attract international investors.89 Gold output could be

more than doubled from its current production level.90

A private firm, Galana, has acquired the national oil refinery, which has a nominal capacity

of more than double domestic consumption; the remaining production could be exported to

nearby countries.91 In addition, in 2005, a Chinese firm, Sino Union Petroleum and Chemical

International, announced that it had signed a letter of intent with the Government of

Madagascar for exclusive rights under a joint venture to explore for petroleum, and to

operate a refinery, oil storage facilities, oil ports, and oil transportation facilities for

50 years.92 

With unique flora and fauna, 16 national parks, a World Heritage Site, and 5,000 kilometers

of coastline, Madagascar has the potential to become “one of the prime ecotourism
 93 IF, Madagascar: Diagnostic Trade Integration Study, p. 124.

 94 Ibid., p. 130.

 95 Iain T. Christie and D. Elizabeth Crompton, “Republic of Madagascar: Tourism Sector

Study,” World Bank, Africa Region Working Paper Series No. 63, Nov. 2003, p. 32.

 96 Ibid.

 97 “Morocco fears Madagascar as competitor in call center market,” Business CustomWire,

Nov. 8, 2004

 98 Pro€Invest, Sector Orientation Report: East Africa and Indian Ocean, Feb. 2004, found at

www.proinvest-eu.org/files/files/Sectorial%20reports/EAOI-Website.pdf, retrieved May 2, 2005.

 99 East and Central Africa Global Competitiveness Trade Hub (ECAHUB), “Impact of the end

of the MFA quotas on COMESA’s Textile and Apparel Exports under AGOA,” 2005, p. 46.

 100 For additional information on regional organizations, see app. C.

 101 IF, Madagascar: Diagnostic Trade Integration Study, p. 75.

 102 IF, Madagascar: Diagnostic Trade Integration Study, addendum to vol. 1 - Analysis of

Regional and Preferential Trade Agreements, Aug. 2003, p. 7.

9-21

destinations in the world.”93 Besides ecotourism, expansion into niche markets for sport

tourism (fishing, windsurfing, surfing, and diving) is a possibility, as well as expanding

opportunities for cultural tourism and beach vacation tourism.94 Madagascar also has

potential to increase the number of cruise ship visitors because it is located between welltraveled cruise ship destinations Mombasa, Kenya, and Cape Town/Durban, South Africa.95

The potential also exists to attract tourists from countries other than France, which accounts

for the majority of tourists because of historical reasons, cultural ties, and air routes. A major

potential market, South Africa, only accounted for about 3 percent of visitors in 2002.96

Outsourcing services are another potential growth area as international demand for

information technology (IT) and related services are increasing. Outsourcing services

currently in existence include data processing centers and French language call centers.97

There has been significant growth in the IT industry in Madagascar. Currently, there are

50 companies, 20 of which are in the EPZ, employing 4,000 people in software development,

web design, and data entry. Wages are much lower than in France and similar to those in

India.98

Apparel has been one of the fastest-growing export sectors over the past 10 years, despite

the loss of 3,000 jobs inthe last year. While Madagascar’s textile and apparel industry is

facing increased international competition, there may be some opportunity to increase

exports in the short term and into niche products. Some factors favoring increased exports

in the textile and apparel industry are the current presence of a vibrant apparel sector, the

existence of a well-established EPZ, good artisanal skills, low wages, and access to regional

sources for raw material and textiles.99 In addition, new investment in the cotton industry in

Madagascar will provide access to raw materials. Possible export opportunities include handloomed textiles utilizing Madagascar’s artisan heritage and skills; apparel from manmade

fiber; and apparel manufactured from locally or regionally produced materials. 

Markets with potential for growth in exports include the Common Market for Eastern and

Southern Africa (COMESA),100 South Africa, the European Union, and the IOC. With its

entry into the Southern African Development Community, Madagascar has the potential to

access the South African market, particularly for agriculture products, spices, and shrimp.101

The cotton sector may also benefit as Dagris, the major investor in the cotton industry, has

a number of suppliers and customers in South Africa. COMESA is a potential destination

for exports of tea, tobacco, sugar, live animals, cotton and textile products, and rice.102 The
 103 “Madagascar Support Fund to the Private Sector,” found at www.madagascarcontacts.com/fasp/US, retrieved Feb. 10, 2005.

 104 Christie and Crompton, “Republic of Madagascar: Tourism Sector Study,” p. 7.

 105 Ibid., p. 28. 

 106 IF, Madagascar: Diagnostic Trade Integration Study, p. 119.

 107 Ibid.

 108 Ibid.

 109 EIU, Madagascar Country Profile, p. 16.

 110 Ibid.

9-22

European Union is a potential market for organic agricultural products, exotic fruits, and

vegetables, and the IOC is a potential market for fruits and vegetables.103

Domestic and International Barriers

Madagascar faces a number of constraints to increasing exports, particularly the business

environment, inadequate infrastructure and transportation, limited access to capital, high

utility costs, and a lack of trained workers to facilitate diversification into higher skillintensive industries. 

In terms of the business environment, Madagascar scored better than the regional average

except for recovery rate when closing a business, legal rights with respect to credit, private

bureau coverage, and difficulty of firing, but scored significantly worse than the OECD

average (table MD-5). Madagascar’s rating in terms of economic freedom has improved

from 1995, when it was rated as less free than the regional average, to 2005, when it was

rated significantly more free than the regional average (table MD-6). Madagascar’s poorest

scores were in informal market activity and fiscal burden of government.

Impediments related to the business environment include lack of transparency in the judicial,

tax, and customs systems, high taxes, labor market rigidity, and customs inefficiency. Other

impediments include excessive bureaucracy and unpredictable and arbitrary government

decision making.104 For example, incentive schemes for investors in tourism are offered on

a case-by-case basis.105 Investors in the EPZ noted that they invested because incentives in

the EPZ legislation allowed them to reduce the costs of government bureaucracy.106 Also,

the length of time to get expatriate work permits is a constraint.

Taxes are another obstacle. The tax rate is 30 percent and there are reportedly delays in

value-added tax refunds. While EPZ firms and small firms avoid taxes, larger manufacturers

are targeted by tax authorities and reportedly are subject to many tax audits, inspections, and

the like.107 Although the government has taken steps to improve customs administration by

contracting with a private firm to provide customs support services, customs administration

continues to exact unofficial payments.108 

Inadequate and costly transportation infrastructure is a major impediment to increased

exports. Only 11.6 percent of roads are paved (table MD-7), although 1,850 km of roads

have been repaired since 2001.109 Inadequate road maintenance and cyclone damage are

problems. The rail network is also in disrepair, although the northern rail network was

privatized in 2003 and there has been new investment.110 High port fees are another

constraint to exporters, and lack of adequate port facilities, poor road infrastructure from the
9-23

Table MD-5

Madagascar: Business environment

Madagascar

Regional

average

OECD

average

Closing a Employment: Cost (percent of estate).............................. (1

) 20.5 6.8

Closing a Employment: Recovery rate (cents on the dollar) . . . . . . . . . . . . . . . . . . . . . 0 17.1 72.1

Closing a Employment: Time (years) ...................................... (1

) 3.6 1.7

Getting Employment: Cost to create collateral (percent of income per capita) . . . . . . . 39.0 41.8 5.2

Getting Employment: Credit information Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.1 5.0

Getting Employment: Legal rights index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.6 6.3

Getting Employment: Private bureau coverage (borrowers per 1000 capita) . . . . . . . . 0.0 39.4 577.2

Getting Employment: Public credit registry coverage (borrowers per 1000 capita) . . . . 3.0 1.1 76.2

Enforcing Employment: Cost (percent of debt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.8 43.0 10.8

Enforcing Employment: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.0 35.0 19.0

Enforcing Employment: Time (days) ....................................... 280.0 434.0 229.0

Registering a Employment: Number of procedures ............................ (2

) 6.0 4.0

Registering a Employment: Cost (percent of property value per capita)............ (2

) 13.2 4.9

Registering a Employment: Time (days) .................................... (2

) 114.0 34.0

Starting a Employment: Number of procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 11.0 6.0

Starting a Employment: Cost (percent of income per capita) . . . . . . . . . . . . . . . . . . . . 65.3 225.2 8.0

Starting a Employment: Minimum capital (percent of income per capita) . . . . . . . . . . . 50.7 254.1 44.1

Starting a Employment: Time (days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.0 63.0 25.0

Employment: Difficulty of firing index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 50.6 26.8

Employment: Difficulty of hiring index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.0 53.2 26.2

Employment: Firing costs (weeks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.0 59.5 40.4

Employment: Rigidity of employment index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.0 56.0 34.4

Employment: Rigidity of hours index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0 64.2 50.0

Import tariffs Simple average of ad valorem duties

(Madagascar, applied rate, 2000)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 1

 No practice.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table MD-6

Madagascar: Economic freedom

Madagascar

Regional

average1

OECD

average

––––– Heritage Foundation indicators ––––––

1995 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 3.4 2.2

 Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . 1.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé &

Principe, Seychelles, and Somalia.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 
 111 IF, Madagascar: Diagnostic Trade Integration Study, p. 148; and Christie and Crompton,

“Republic of Madagascar: Tourism Sector Study.” 

 112 EIU, Madagascar Country Profile, p. 16.

 113 Christie and Crompton, “Republic of Madagascar: Tourism Sector Study,” p. 6.

 114 EIU, Madagascar Country Profile, p. 17.

 115 Pro€Invest, Sector Orientation Report: East Africa and Indian Ocean.

 116 IF, Madagascar: Diagnostic Trade Integration Study, p. 113.

 117 Ibid., pp. 115-116.

 118 Short-term interest rates were 18 percent in Madagascar compared to 5.5 percent in China,

11 percent in India and Mauritius, 13 percent in Kenya, 15 percent in Ethiopia, and 19 percent in

Uganda. ECAHUB, “Impact of the end of the MFA quotas,” p. 46.

 119 IF, Madagascar: Diagnostic Trade Integration Study, p. 115.

9-24

Table MD-7

Madagascar: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,827.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.8

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.2

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

port, and the lack of transportation from the port inhibit cruise ship tourism.111 High airfares

and a lack of flight routes also constrain exports. Prices have been lowered on flights to

Europe, although they remain high because of the high cost of fuel.112 Internal air flights are

reportedly costly and unreliable, with frequent cancellations.113

Lack of access to, and high costs of, telecommunications is another impediment. Only 14 out

of 1,000 people had telephones in 2002, including cell phones (up from 4.2 in 1998). The

fixed line system is in poor condition although the mobile phone system is liberalized and

highly competitive.114 Limited data connections (lack of bandwidth) are a constraint to data

entry services as companies have to transfer data via courier services.115 In addition,

unreliable and costly electricity is a problem, particularly outside of the capital.116

Financial constraints were cited as the most important problem faced by firms other than

multinationals that are funded by parent companies.117 Specific problems are the high lending

rate (the real short-term interest rate was 20.9 percent in 2003); the lack of operating banks,

an equity market, and microfinance; and crowding out of private investment. Banks are

reportedly more interested in foreign exchange and treasury trading. Short-term interest rates

are higher than in many other countries.118 Banks reportedly demand personal guarantees and

high levels of collateral, and will not lend to small firms.119 Short-term credit is difficult to

obtain and long-term loans are reportedly rare. Excessive discretionary government powers

reportedly prevent firms from entering the banking industry. Banks have difficulty obtaining

information to assess the creditworthiness of borrowers, and a weak and ineffective legal

system makes it difficult and costly to obtain recourse if a borrower defaults on a loan. Only
 120 EIU, Madagascar Country Profile, p. 29; and Christie and Crompton, “Republic of

Madagascar: Tourism Sector Study,” p. 6.

 121 IF, Madagascar: Diagnostic Trade Integration Study, p. 117.

 122 ECAHUB, “Impact of the end of the MFA quotas,” p. 46.

 123 Christie and Crompton, “Republic of Madagascar: Tourism Sector Study,” p. 60.

 124 IF, Madagascar: Diagnostic Trade Integration Study, pp. 89, 105-106; and EIU,

Madagascar Country Profile, p. 29.

 125 Pro€Invest, Sector Orientation Report: East Africa and Indian Ocean.

 126 Common Market for Eastern and Southern Africa (COMESA), “Market Access Constraints– 

Prepared by the COMESA Secretariat,” May 2003, found at

www.comesa.int/trade/multilateral/epa, retrieved Feb. 8, 2005. 

 127 IF, Madagascar: Diagnostic Trade Integration Study, p. 102.

 128 COMESA, “Market Access Constraints.” 

 129 IF, Madagascar: Diagnostic Trade Integration Study, pp. 126-129 and xix.

 130 Christie and Crompton, “Republic of Madagascar: Tourism Sector Study,” p. 113.

9-25

5 percent of total lending is to agriculture. Difficulty in acquiring the title to land is most

frequently mentioned as the main impediment to hotel investors.120

There is a lack of trained workers, especially skilled mid-level managers and technicians,

which are necessary for diversification into more skill-intensive industries and services. For

example, apparel firms have to bring in managers, supervisors, and quality control experts.121

Madagascar lacks a training school for apparel workers.122 Lack of computer software

developers and training institutes are also constraints. Another obstacle is lack of language

training. Lack of English speakers has inhibited the ability to attract tourists from Englishspeaking countries and other countries such as Japan.123

Many constraints hinder agricultural exports.124 Impediments to agricultural exports include

limited technology, deteriorated irrigation infrastructure, inadequate research and extension,

lack of access to credit, vulnerability to weather, and lack of education. Other factors are low

use of nontraditional inputs such as fertilizer, pesticides, and improved seed varieties because

of lack of availability and high prices; the absence of rural markets and programs to promote

associations; and the lack of investment because of the risk of droughts, floods, and crop

diseases. A major issue is ill-defined property rights, in particular the absence of land titles

and the lack of administrative capacity to survey and register land titles. Also, degradation

of natural resources and loss of forest cover has resulted in high rates of erosion, lower

productivity in lowland areas, and the spread of farming to marginal lands. Marketing,

processing, and quality control are particular problems for rice, cotton, sugar, and wheat

growers. Currently, only 300 farms (0.005 percent of total agricultural area) are producing

organic products (fruit juices and pulp), which require extensive traceability documentation.

Lack of agricultural extension services and the expense of certification are also constraints.125

Lack of domestic capacity to satisfy sanitary and phytosanitary (SPS) requirements in the

European Union is an impediment for some agricultural products. Most small and medium

enterprises are unable to export shrimp to the European Union, although 42 companies in

Madagascar are approved by the European Union for export of prawns and other seafood.126

Crabs and lobsters that are caught by traditional methods do not meet EU SPS standards, but

have been sold to Mauritius and South Africa.127 Exports of essential oils directly to

consumers in the European Union face technical barriers and a lack of transparency of

regulations and procedures.128 A number of impediments have also been identified in the

tourism sector.129 Domestic and international transport were cited as the main constraint to

tourism development.130 Air transport constraints include high international and domestic air
 131 Ibid., p. 6-7.

 132 ECAHUB, “Impact of the end of the MFA quotas,” p. 67.

 133 Embassy of Madagascar official, interview by USITC staff, Washington, DC, Feb. 28, 2005.

 134 IF, Madagascar: Diagnostic Trade Integration Study, p. 72.

 135 Ibid., p. 75.

9-26

transportation costs, late and canceled flights, and few gateway cities in tourist markets.

Other impediments include impassable roads in the wet season, absence of medical facilities,

inadequate telecommunications, and the inability of hotels to accommodate tour groups.

Investment in tourism is hampered by difficulty in acquiring land, lack of financing,

bureaucracy, lack of transparency in investment incentives, and the tax structure.131

One of the major impediments is related to Madagascar’s location. The long distance from

markets, including mainland Africa, and the fact that Madagascar is not on major shipping

routes, increases costs and shipping times. For example, shipping time from Madagascar to

the East Coast of the United States is 35 days compared to 20 days for China and India, and

30 days for Kenya and Mauritius.132 Another impediment is difficulty complying with

international standards on port security, thereby lengthening the stay of vessels at foreign

ports and the possibility that vessels may be refused (particularly at U.S. ports).133 Other

international impediments include insufficient knowledge of international markets, trading

practices, and international standards. 

Impediments to increasing exports to COMESA include transportation costs, language

differences, and lack of market knowledge.134 Barriers and impediments to increasing exports

to South Africa include transportation costs, rules of origin, language barriers, production

volumes, lack of market knowledge, and standards and quality issues.135
 136 Prepared by Kimberlie Freund, Office of Industries.

 137 Mauritius also has several dependencies, islands located east and north of the main island of

Mauritius. Among these are the islands of Rodrigues and Agalega Cargados Carajos.

 138 Government of Mauritius, Mauritius in Figures, p. 1, found at www.mauritius.gov.mu/mif03/

mif.pdf, retrieved Jan. 19, 2005.

 139 World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/

dataonline, retrieved Feb. 5, 2005.

 140 Based on annual percentage growth rate of GDP at market prices based on constant local

currency. World Bank, “World Development Indicators.” 

 141 Inflation as measured by the consumer price index. World Bank, “World Development

Indicators.”

9-27

Mauritius136

Economic Overview

A small tropical island137 in the Indian Ocean between India and East Africa, Mauritius has

a land mass of 1,969 square kilometers138 and a population of 1.2 million people

(table MR-1). Mauritius is a middle-income, diversified economy, and at $4,354, its annual

gross national income per capita ranks second amongst the AGOA countries after

Seychelles.139 During 1999-2003, real GDP growth averaged 4.6 percent140 and annual

inflation averaged 5.5 percent.141 Despite a strong domestic economy, Mauritius’ relatively

small population and finite resources reinforce the importance of trade and integration in the

global economy. Trade as a share of GDP represented 116.1 percent in 2003. 

Table MR-1

Mauritius: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,224.8

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2

External debt, total (current US$, millions, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,803.1

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.4

Trade (percent of GDP, 2003) .................................................................... 116.1

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.9

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.0

Literacy rate, adult total (percent of people ages 15 and above, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84.3

Primary school enrollment ratio, total (percent, 2000)

2 .................................................. 109.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.3

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.4

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.5

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 1

 Most recent year for which data are available between 1999 and 2003.

2

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school

age.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.
 Economist Intelligence Unit (EIU), Mauritius Country Profile, 2004, p. 24. 

142

 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005. 143

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In 2003, manufacturing accounted for 21.5 percent of GDP, followed by financial and

business services at 19.4 percent (figure MR-1). All services accounted for approximately

two-thirds of GDP. The Government of Mauritius has been working to shift the economy

away from one based on production and exports of goods to one based more heavily on

services. Mauritius has several growing services sectors, including tourism, information and

communication technologies (ICT), and international financial services. In the past year,

Mauritius has also started to position itself as a seafood hub by providing the intermediate

and final processing services to the large Asian fishing boats that operate off the coast of

Mauritius.

The apparel sector dominates the manufacturing industry in terms of employment, exports,

and foreign direct investment (FDI). This sector was established in Mauritius largely by

Asian investors that were looking for additional access to the U.S. and EU markets.

In 2001, nearly one-half of the land mass of Mauritius was being used for agriculture, most

of which was sugar cane production. The share of land under cultivation reportedly has 142

decreased, as some of the arable land has been designated for high-income housing

communities and business parks. The agricultural sector was built almost entirely on sugar, 143

sugar cane being one of the few commodities that can survive the 2-3 cyclones the island

receives each year. In addition, Mauritius receives preferential treatment for sugar exports

Figure MR-1

Mauritius: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 144 European Commission, Agricultural Directorate-General, A Description of the Common

Organisation of the Market in Sugar, Sept. 2004, AGRI/63362/2004, p. 16. For additional

information on the Cotonou Agreement, see app. C.

 145 Mauritius has the largest European Union sugar commitment of the ACP countries at 491

million metric tons in 2003/04. This amount was more than double the next largest commitment

for an ACP supplier (app. C). European Commission, A Description of the Common Organisation

of the Market in Sugar, pp. 16 and 27. 

 146 “Mauritius Country Profile,” SADC Trade, Industry, and Investment Review 2004, found at

www.sadcreview.com/country_profiles/mauritius, retrieved Mar. 11, 2005.

 147 Foreign workers totaled about 18,000 in 2004, employed largely the textile and apparel

sector, as well as tuna canning, construction, and hotel and catering services. U.S. Department of

State telegram, “Mauritius: 2005 Investment Climate Statement,” message reference No. 00030,

prepared by U.S. Embassy, Port Louis, Jan. 2005.

 148 Literacy rate is the share of people ages 15 and above who are literate. World Bank, “World

Development Indicators.” According to another source, the literacy rate for those aged 30 and

under in Mauritius was 95 percent in 2003. EIU, Mauritius Country Profile, p. 14.

 149 EIU, Mauritius Country Profile, p. 15.

 150 U.S. Department of State telegram, “Mauritius: 2005 Investment Climate Statement.” 

 151 World Bank, “World Bank Development Indicators.” 

 152 Ibid.

 153 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005.

 154 World Trade Organization (WTO), Trade Policy Review: Mauritius, Report by the

Government, Oct. 5, 2001, p. 10; and data on foreign direct investment by sector from Bank of

Mauritius, Monthly Statistical Bulletin, Dec. 2004, found at http://bom.intnet.mu, retrieved

9-29

to the European Union under the Cotonou Agreement.144 Under the Agreement, the European

Union committed to buy a certain quantity of sugar from each African, Caribbean, and

Pacific, or ACP, sugar-supplying country, including Mauritius, at guaranteed prices.145 With

the impending reform of the EU sugar market, the Government of Mauritius estimates that

it will need to reduce its cost of sugar production by at least 22 percent in the short term, and

by 45 percent in the longer term, to remain competitive.146 

Mauritius has a total labor force of 531,000 workers, including both domestic and foreign

workers.147 Compared with much of sub-Saharan Africa (SSA), Mauritius has a relatively

literate population, with a literacy rate of about 84 percent in 2000.148 English is the official

language in Mauritius, though most of the population speaks a French-based Creole.149

The Government of Mauritius encourages FDI, particularly for export-oriented industries.

The government is encouraging diversification both in its industrial and agricultural sectors,

and has extended other tax incentives once put in place for its export processing zones

(EPZs) to the services sectors. The government grants tax concessions and other investment

incentives for numerous sectors, including ICT, manufacturing, tourism, agriculture and

agroprocessing, fishing and marine resources, global business services, and foreign trade

zone (FTZ) activities.150

Net inflows of FDI totaled $27.6 million in 2002,151 accounting for 0.6 percent of GDP.

During 1993-2002, net FDI fluctuated, reaching a high of $265.6 million in 2000, before

dipping to a negative $27.7 million in 2001.152 The apparel sector in the EPZs has

experienced an outflow of FDI in recent years, in part because of disinvestment in the sector,

but also because local investors have replaced many of the original Asian investors that

helped to develop the sector in the 1980s. The apparel sector is now over 80-percent locally

owned.153 During 1999-2003, more than one-half of the FDI was accounted for by the sale

of shares of Mauritius Telecom to France Telecom in 2000.154
Mar. 13, 2005. The telecommunications sector accounted for 58 percent of total FDI during

1999-03. 

 155 Government of Mauritius, Central Statistics Office, National Accounts, Table 7, Dec. 2004,

found at http://statsmauritius.gov.mu/indicate.htm, retrieved Mar. 9, 2005; and EIU, Mauritius

Country Profile, p. 45.

 156 Association official, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 157 EIU, Mauritius Country Profile, p. 29. 

9-30

Export Profile

Total exports of services and merchandise totaled about $3.0 billion in 2003, of which

services accounted for about 43 percent, or $1.3 billion.155 Tourism, financial services, and

ICT are among the top foreign exchange earners in the services sector. Total merchandise

exports from Mauritius were $1.7 billion in 2003, accounting for 57 percent of total exports

(table MR-2). The European Union is the major market for foreign exchange income from

services. France and the United Kingdom are the primary markets for ICT services, primarily

business processing and call centers.156 The European Union is also the major market for

tourism in Mauritius, along with South Africa.157

Table MR-2

Mauritius: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars –––––––––– –––– Percent ––––

61 Articles of apparel and clothing accessories, knitted or 

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412,586.6 543,527.6 593,672.5 34.3 4.1

62 Articles of apparel and clothing accessories, not knitted or 

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335,731.8 423,680.5 374,367.5 21.6 1.2

17 Sugars and sugar confectionery. ...................... 338,198.7 310,826.9 308,374.8 17.8 -1.0

71 Natural or cultured pearls, precious or semiprecious stones, 

precious metals; precious metal clad metals, articles 

thereof; imitation jewelry; coin . . . . . . . . . . . . . . . . . . . . . . 25,006.0 83,796.2 101,396.5 5.9 16.8

16 Edible preparations of meat, fish, crustaceans, molluscs 

or other aquatic invertebrates . . . . . . . . . . . . . . . . . . . . . . . 36,310.0 45,084.4 69,317.3 4.0 7.4

03 Fish & crustacean, mollusc & other aquatic invertebrates . . . 5,160.1 41,670.4 26,554.6 1.5 20.0

90 Optical, photographic, cinematographic, measuring, 

checking, precision, medical or surgical instruments and 

apparatus; parts and accessories thereof . . . . . . . . . . . . . 16,709.9 19,359.2 24,711.3 1.4 4.4

85 Electrical machinery and equipment and parts thereof; 

sound recorders and reproducers, television recorders 

and reproducers, parts and accessories . . . . . . . . . . . . . . 7,586.1 6,316.9 24,559.6 1.4 13.9

91 Clocks and watches and parts thereof . . . . . . . . . . . . . . . . . . 28,236.3 27,262.6 19,677.5 1.1 -3.9

52 Cotton, including yarns and woven fabrics thereof. . . . . . . . . 11,065.3 15,138.1 19,034.0 1.1 6.2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,572.4 99,837.4 168,809.3 9.8 7.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,305,163.2 1,616,500.3 1,730,474.9 100.0 3.2

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Total merchandise exports from Mauritius grew by 33 percent, or at a compound annual

growth rate (CAGR) of 3.2 percent in the last 9 years, to $1.7 billion in 2003. Export growth

was fueled in large part by the apparel sector. Apparel exports from Mauritius grew by

29 percent during 1994-2003, though most of this growth occurred prior to the

implementation of AGOA in 2000. Apparel exports fell for the first couple of years of

AGOA, in part reportedly because Mauritius, along with South Africa, was excluded from
 158 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005.

 159 Based on official data of the United Nations.

9-31

the special AGOA lesser-developed beneficiary-country provision allowing the use of thirdcountry fabrics.158 At the same time, labor costs in Mauritius increased relative to other SSA

clothing suppliers.

Mauritius’ merchandise exports are concentrated in apparel, which accounted for

55.9 percent of total exports in 2003. Six of the leading export products were apparel

(table MR-3). Most of Mauritius’ apparel exports went to the European Union in 2003

(approximately 68 percent of the total), followed by the United States (30.7 percent).159

Sugar is the second-largest export sector, accounting for 17.8 percent of total exports. Over

98 percent of the value of Mauritius’ sugar exports go the European Union. The next largest

group of exports included diamonds and jewelry of precious metals, which accounted for

5.9 percent of total exports, and canned tuna and frozen fish, which together accounted for

another 5.5 percent of exports.

Table MR-3

Mauritius: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––––– 1,000 dollars –––––––––– –––– Percent ––––

1701 Cane or beet sugar and chemically pure sucrose, in solid

form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327,236.9 306,207.4 300,292.3 17.4 -1.0

6109 T-shirts, singlets, tank tops and similar garments, knitted

or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,321.4 202,870.0 277,212.7 16.0 11.0

6110 Sweaters, pullovers, sweatshirts, waist-coats (vests) and 

similar articles, knitted or crocheted . . . . . . . . . . . . . . . . 192,351.5 199,068.5 192,832.6 11.1 0.0

6204 Women's or girls' suits, ensembles, suit-type jackets, 

dresses, skirts, divided skirts, trousers, etc. (no 

swimwear), not knitted or crocheted . . . . . . . . . . . . . . . . 43,215.2 93,436.9 118,819.3 6.9 11.9

6203 Men's or boy's suits, ensembles, suit-type jackets, 

blazers, trousers, bib and brace overalls, breeches,

etc. (no swimwear), not knitted or crocheted . . . . . . . . . 89,631.5 159,470.6 113,230.6 6.5 2.6

6205 Men's or boys' shirts, not knitted or crocheted ........... 132,519.4 120,678.4 100,432.3 5.8 -3.0

1604 Prepared or preserved fish; caviar and caviar substitutes 

prepared from fish eggs . . . . . . . . . . . . . . . . . . . . . . . . . 24,116.5 43,018.8 69,181.2 4.0 12.4

7113 Articles of jewelry and parts thereof, of precious metal or 

of metal clad with precious metal . . . . . . . . . . . . . . . . . . 11,617.6 31,004.3 49,967.2 2.9 17.6

6105 Men's or boys' shirts, knitted or crocheted . . . . . . . . . . . . . . 44,290.5 75,663.4 49,650.9 2.9 1.3

7102 Diamonds, whether or not worked, but not mounted or

set . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,443.6 34,025.8 38,742.5 2.2 30.9

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328,419.2 351,056.3 420,113.4 24.3 2.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,305,163.2 1,616,500.3 1,730,474.9 100.0 3.2

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

The European Union as a whole is Mauritius’ largest market, accounting for 71.7 percent

($1.2 billion) of its exports in 2003. The United Kingdom and France are the largest

individual country markets, followed by the United States (table MR-4). These countries

accounted for 30.7 percent, 23.6 percent, and 18.3 percent, respectively, of Mauritian

exports. In 2003, the United Kingdom was the principal market for Mauritius’ exports of

sugar and canned fish, France was the leading market for jewelry of precious metals and

clothing, and apparel accounted for over 90 percent of the value of Mauritius’ exports to the

United States. Mauritius’ investment in apparel production in neighboring Madagascar

resulted in increased exports of apparel inputs from Mauritius to Madagascar. 
 160 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 161 For additional information on the Multifiber Arrangement and the end of textile and apparel

quotas in 2005, see app. C.

 162 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005;

and association official, interview by USITC staff, Washington, DC, Feb. 15, 2005. 

 163 Industry official, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005. For the

textile industry, hourly labor costs (direct and indirect costs) in Mauritius were $1.57, compared

with $0.67 in India, and $0.48 to $0.76 in China. Werner International Management Consultants,

“Primary Textiles Labor Cost Comparisons,” Winter 2004/2005.

 164 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005;

and association official, interview by USITC staff, Washington, DC, Feb. 15, 2005.

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Table MR-4

Mauritius: Leading export markets, 1994, 1999, 2003, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

 CAGR

––––––––––––– 1,000 dollars ––––––––––––– –––––––– Percent ––––––––

United Kingdom .................... 448,322.8 497,797.1 531,498.2 30.7 1.9

France . . . . . . . . . . . . . . . . . . . . . . . . . . . 296,486.8 358,195.4 408,220.4 23.6 3.6

United States . . . . . . . . . . . . . . . . . . . . . . 233,853.8 274,787.5 316,047.5 18.3 3.4

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) 71,862.9 66,247.7 3.8 (2)

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,275.4 52,433.8 64,977.1 3.8 1.6

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . 91,117.0 78,727.7 57,391.0 3.3 -5.0

Madagascar . . . . . . . . . . . . . . . . . . . . . . . 2,263.4 6,377.6 37,942.9 2.0 36.8

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,149.1 42,954.9 33,731.0 1.9 3.3

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . 13,389.5 21,847.9 27,728.4 1.6 8.4

Netherlands . . . . . . . . . . . . . . . . . . . . . . . 25,519.5 37,257.8 24,790.3 1.4 -0.3

Other . . . . . . . . . . . . . . . . . . . . . . . . . . 112,785.9 174,257.6 161,900.4 9.4 4.1

Total . . . . . . . . . . . . . . . . . . . . . . . 1,305,163.2 1,616,500.3 1,730,474.9 100.0 3.2

1

 Not available.

2

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

The revealed comparative advantage160 (RCA) analysis shows a high RCA for 9 of

Mauritius’ top 10 export items (appendix E, table E-22). However, with the exception of

frozen and prepared fish, the other items listed are either clothing products, exports of which

are not likely to increase given removal of quotas in 2005,161 or sugar products, which are

subject to existing sugar quotas.

Because of the elimination of textile quotas in 2005, the apparel industry faces substantially

more competition in its major markets from other large apparel suppliers that are no longer

constrained by quotas. Many of the major U.S. retailers have closed or are closing their

regional SSA buying offices that are located in Mauritius.162 Mauritius’ apparel

manufacturers are not cost competitive compared with major Asian suppliers. According to

an industry official in Mauritius, wage rates (income per head per day) in Mauritius are 3-4

times those in China.163 Mauritius is also less competitive with Asia in terms of lead times.

Not only does Mauritius take about twice as long as East Asia to ship to the United States,164

it also takes considerable time to acquire the needed inputs, as the quantity, quality, and
 165 Ibid.

 166 Industry official, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005; and

Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005.

 167 Industry official, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005. 

 168 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005;

and association official, interview by USITC staff, Washington, DC, Feb. 15, 2005.

 169 Association official, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005.

 170 Even though this subheading covers articles of pearls and precious or semiprecious stones,

all of Mauritius’ exports in 2003 consisted of articles of precious or semiprecious stones, based on

UN data. 

 171 Government officials, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 172 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005;

and association official, interview by USITC staff, Washington, DC, Feb. 15, 2005.

 173 Mauritius Ministry of Tourism, “International Travel and Tourism Overview – Year 2003,”

found at http://tourism.gov/mu/yr2003.htm, retrieved Feb. 4, 2005.

 174 U.S. government official, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 175 EIU, Mauritius Country Profile, p. 17.

9-33

variety of yarns available regionally are not sufficient. For the U.S. market, Mauritius

apparel exporters are also at a disadvantage in terms of the economies of scale required by

large U.S. retailers.165 Mauritius does not have large companies able to fill large orders, nor

a supply of subcontractors to tap for large rush orders.166 Mauritius may be able to compete

better in the EU market, which is less price conscious and allows for greater lead times than

its U.S. customers. In addition, EU customers often require smaller lot sizes that may not be

attractive to the large Asian suppliers.167 

With the reform of the EU sugar market, Mauritius will need to bring its cost of production

down within the next 3 years in order to be competitive in the EU market.168 Nevertheless,

even if Mauritius is able to bring down its cost of production and continue to export the same

volume of sugar to the European Union, the lower per-pound price will result in a significant

decline in the value of sugar exports. The one exception for potential growth in the sugar

sector is speciality sugars, which can be sold at a premium over raw sugar exports.

According to a Mauritius association official, speciality sugars account for about 10 percent

of Mauritius’ total sugar production.169 However, as a niche product, it is unlikely to totally

offset expected losses in the larger aggregate sugar sector.

The products that ranked highest in terms of RCA index, other than sugar and clothing,

include parachutes, items of precious or semiprecious stones,170 watch straps, and prepared

fish. Parachutes are an offshoot from the apparel sector, in an attempt to diversify

production. However, according to Mauritius government officials, they are not seen as a

growth industry.171 With the exception of the fish sector, all of these sectors are considered

niche areas that are unlikely to grow substantially in the future.172

The largest growth opportunities will likely come from Mauritius’ established and growing

services industries, including tourism, ICT, and international financial services, as well as

distribution services, repackaging, and minor processing of goods for export. Tourism is

likely to continue to expand and be one the growth sectors for the economy in the

foreseeable future. The number of new arrivals increased by 21 percent during 2001-03 to

reach 702,000 in 2003.173 For 2005, tourism is expected to grow by 8 percent.174 Mauritius

is served by 15 international airlines, including the national airline, Air Mauritius.175

Mauritius has 97 hotels in operation, 38 of which are “large” hotels (large beach hotels with

more than 80 rooms). The occupancy rate of hotels in operation was 66 percent of total
 176 Mauritius Ministry of Tourism, “International Travel and Tourism Overview.” 

 177 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005.

 178 U.S. government official, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 179 Association officials, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005.

 180 Information from Ebène CyberCity Internet site, found at http://e-cybercity.mu, retrieved

Feb. 28, 2005.

 181 Industry officials, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005.

 182 Industry officials, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005.

 183 Association official, interview by USITC staff, Washington, DC, Feb. 15, 2005.

 184 In September 2004, Mauritius passed a new law that that ended the distinction between

offshore and domestic banks. U.S. Department of State telegram, “Mauritius: 2005 Investment

Climate Statement.” 

9-34

capacity in 2003, so the hotel business has room for growth, even without opening new

hotels.176 Mauritius is promoting upscale tourism; it has five 6-star resorts. To further grow

its tourism business, Mauritius is also reportedly working with some of the big tour operators

and other African countries to offer joint safari/deep-sea fishing or beach vacations.177

Mauritius is also trying to increase the revenues it receives from tourist arrivals by expanding

the range of activities available for tourists, such as deep-sea fishing, ecotourism, nightclubs,

and opportunities to buy handicrafts. A related area that Mauritius is trying to develop is

conference facilities. A new conference center was recently built with Indian government

financing.178 Mauritius is also looking at other opportunities for attracting people to

Mauritius, including the provision of medical services in combination with tourism.179

The ICT sector, which is also referred to as business processing, is a growing sector area

encompassing a number of different services, including call centers and “backroom

processing” for customer care, finance, human resources, payment services, and

administration business processing. Mauritius has developed the infrastructure to grow the

ICT business. The sector has been buoyed by the opening of a fiber optic cable at the end of

2002 and the recent establishment of Ebène CyberCity, a business park that reportedly

contains a world-class telecommunications network.180 Ebène CyberCity was established by

Business Parks of Mauritius, Ltd. with a $100-million line of credit from the Government

of India, of which $20 million has been used to date.181 In 2004, it completed construction

of a large “Cyber Tower” that provides fully functional office space for this sector at $1 per

foot. Roughly 80 percent of the tower is now occupied, and construction has started on a

second tower. Mauritius is active in call centers, which can serve a large variety of functions,

from offshore gambling to bill payment and human resources. The multilingual population,

fluent in French and English, gives the call centers an advantage in servicing both the

European and U.S. markets, and Mauritius reportedly has a particular advantage in Frenchspeaking markets over other regional and global providers.182 In addition to call centers, the

CyberCity is encouraging businesses to consider its facilities for use in business processing

and more skilled services, such as information technology infrastructure management. The

time zone difference between Mauritius and the United States allows U.S.-based companies

to send data processing or other backroom processing to Mauritius during nonbusiness hours

in the United States and have the completed results by start of business the next day without

having to pay any overtime and at less expensive labor rates overall.183

The business services sector can also build on its success in international financial services,

most notably offshore banking, by providing additional support services to companies that

are already in Mauritius. At the end of 2004, Mauritius had 12 offshore banks operating in

the global business sector.184 Mauritius’ offshore banking business benefits from double-
 185 EIU, Mauritius Country Profile, p. 12.

 186 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005.

 187 U.S. Department of State telegram, “Mauritius: 2005 Investment Climate Statement;” and

Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005.

 188 African Development Bank/Organization for Economic Cooperation and Development,

“Mauritius,” African Economic Outlook, 2004, p. 216. 

 189 Association official, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005.

 190 U.S. Department of State telegram, “Mauritius: 2005 Investment Climate Statement.” 

 191 For additional information on regional organizations, see app. C.

 192 Industry official, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 193 Mauritius Freeport Authority, “Mauritius Freeport...A World Class Sea Food Hub in the

Indian Ocean,” brochure given to USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 194 Industry official, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

9-35

taxation treaties with 29 countries, particularly those with India and South Africa.185

Companies incorporated in Mauritius reportedly are the largest foreign investors in India.186

The double-taxation treaty allows companies to incorporate in Mauritius and pay the lower

Mauritius tax rates for their investments in India. Mauritius is learning to capitalize on the

offshore business to offer more financial services to investors, including investment advisory

services, fund management, trusteeship of offshore accounts, and private banking.187

Nevertheless, the potential for growth through spin-off business is reportedly relatively

limited, and the offshore business itself could be threatened by legal challenges to the

bilateral investment treaty with India and easing of foreign exchange controls in South

Africa.188

While Mauritius does not appear to have a large number of product sectors from which it can

grow its exports, it does have the capability to grow its business as a regional distributor and

a minor processor or repackager of goods for export. For example, Mauritius is looking at

increasing its business in food processing, using raw materials from the region such as

potatoes.189 Mauritius is promoting itself as a “regional warehousing, distribution, marketing

and logistics center for Eastern and Southern Africa and the Indian Ocean Rim.”190

Mauritius’ location lends itself to its goal of becoming a provider of all types of business and

logistics services. Mauritius’ membership in the Common Market for Eastern and Southern

Africa (COMESA) and the Southern African Development Community191 have helped to

strengthen its role as a regional trading hub for Southern African countries. Boxmore, a U.S.

company, recently set up operations to produce polyethylene terephthalate (PET) bottles for

soda and water in the FTZ for export to COMESA countries.192 Production costs are

reportedly 5 percent less in Mauritius than in South Africa; this is an example of the type of

business that Mauritius could expand. The production process is highly mechanized, and

benefits from its location in the Freeport, which is geared towards technical, high-volume

industries. 

As part of the minor processing and repackaging business, Mauritius will also likely be able

to further grow its tuna exports, and not only to regional markets. Mauritius has developed

a world-class port infrastructure, including cold storage, to provide the impetus needed for

investment in this sector. The Mauritius Freeport describes its services as “an integrated

logistics platform for the transshipment, warehousing, handling, processing and re-export

of frozen sea foods.”193 Taiwanese fishing companies mostly use the Mauritius Freeport as

a transit zone, storing fish in the Freeport cold room and exporting the product directly to

buyers.194 In addition, many fishing boats, which are largely Asian-owned, do the

intermediate processing offshore on their boats and ship the fish back to Asia for final
 195 Association official, interview by USITC staff, Washington, DC, Feb. 15, 2005.

 196 Industry officials, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 197 IDDRA Ltd., Analysis of the Impact on ACP Countries of the Opening up the EU Import

Market for Canned Tuna, Feb. 2004, p. 17. 

 198 U.S. Department of State telegram, “Business Facilitation Incentive Fund FY 05 Project

Proposals,” message reference No. 00043, prepared by U.S. Embassy, Port Louis, Jan. 2005.

 199 Ibid.

 200 The information in this paragraph is based on the following, unless otherwise noted. U.S.

Department of State telegram,“Mauritius Input for 2005 President’s Report on AGOA,” message

reference No. 00104, prepared by U.S. Embassy, Port Louis, Feb. 2005; and U.S. Department of

State telegram, “Mauritius: 2005 Investment Climate Statement.” 

9-36

processing before being sent to the EU and or U.S. markets.195 Energy and labor costs for

tuna processing in Mauritius reportedly are on par with many of the Asian factories.196

Processing in Mauritius could save Asian firms shipping time and costs. Mauritius currently

has one tuna canning factory, jointly owned by Princes Tuna Ltd. (United Kingdom) and

Ireland Blyth Ltd. (Mauritius).197 A U.S. company, Casamar Holdings, also recently

established itself in Mauritius for tuna processing.198 In an effort to attract more tuna

processing to the country, Mauritius is hosting a conference with international invitees in

July 2005.199

Domestic and International Barriers

While specific data are not reported on the business environment for Mauritius (table MR-5),

compared to the region, it is generally seen as a safe, supportive environment for business.200

Mauritius has the legal and regulatory framework to fight against corruption, money

laundering, and terrorism. The Independent Commission Against Corruption was set up in

2002, and is seen as a model for Africa. A joint public- and private-sector committee issued

a new Code of Corporate Governance in July 2004 and a financial intelligence unit was

established by the government under the Financial Intelligence and Anti-Money Laundering

Act. 

Table MR-5

Mauritius: Business environment

Country data not available.

Import tariffs Simple average of ad valorem duties

(Mauritius, applied rate, 2001)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.0

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.7

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

In terms of economic freedom, Mauritius scored 2.9 out of a scale of 1 to 5, indicating that

Mauritius was “mostly free” (table MR-6). Mauritius’ score of 5.0 for trade policy reflects

its relatively high average import tariff rate of 19.0 percent ad valorem. Mauritius also scored

higher than the OECD average and the regional average on the wages and prices score,
 201 U.S. Department of State telegram, “Mauritius FY 2004-2005 Budget: A Budget With A

Strong Social Bias,” message reference No. 00452, prepared by U.S. Embassy, Port Louis,

July 2004; and EIU, Mauritius Country Profile, pp. 21-22.

 202 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005.

9-37

Table MR-6

Mauritius: Economic freedom

Mauritius

Regional

average1

OECD

 average

–––– Heritage Foundation indicators ––––

1995 Overall score ..................................................... (2

) 3.6 2.5

2000 Overall score ..................................................... (2

) 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé &

Principe, Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.

which indicates that the government has a high level of involvement in setting wage rates

and the prices of goods and services. For the capital flows and foreign investment score,

Mauritius rated a 3.0, which is considered a “moderate” impediment to foreign investment,

largely reflecting the bureaucratic approval process for new investments. However, the

2004/05 budget seeks to facilitate private investment by streamlining the approval process

for new investments.201 

As a small island economy, it is difficult for Mauritian industries to achieve the economies

of scale required to satisfy single-order requirements. In addition, Mauritius must import

virtually all of its inputs, which puts it at a cost and time disadvantage as compared with

countries that have abundant raw materials. Its 19.0 percent average tariff rate adds to the

cost of doing business. In addition, construction costs for new buildings in every sector are

boosted by the need to import building materials, even cement. China’s increased demand

for international transport services has lead to an increase in the already high shipping rates,

which has doubled the cost of cement in Mauritius.202

Mauritius has laid the foundation for growth in distribution services, repackaging, and minor

processing of goods for export, and its location, port facilities, and participation in regional

trade agreements makes it well suited to expand its trade within the region. However, the

lack of purchasing power for much of the region will mean that Mauritius will need to look

elsewhere in the near term for significant export growth opportunities. 

One of the largest impediments to growth in Mauritius is its shortage of resources,

particularly skilled labor required for diversification of exports into more skill-intensive

industries, especially services. Despite an unemployment rate of about 10.6 percent
 203 EIU, Mauritius Country Profile, p. 23.

 204 Association official, interview with USITC staff, Port Louis, Mauritius, Mar. 17, 2005; and

association official, interview by USITC staff, Washington, DC, Feb. 15, 2005.

 205 Secondary school enrollment was 66 percent in 2003. Government of Mauritius, Mauritius

in Figures, found at www.mauritius.gov.mu/mif03/mif.pdf, retrieved Jan. 19, 2005 

 206 Government of Mauritius, Mauritius in Figures, found at www.mauritius.gov.mu/mif03/

mif.pdf, retrieved Jan. 19, 2005.

 207 U.S. Department of State telegram, “Mauritius FY 2004-2005 Budget: A Budget With A

Strong Social Bias,” message reference No. 00452, prepared by U.S. Embassy, Port Louis,

July 2004; and EIU, Mauritius Country Profile, pp. 21-22.

 208 Industry officials, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005.

 209 Board of Investment, Business Processing Secretariat, “Survey on the ITES BPO Sector in

Mauritius,” Feb. 2005 and Joint Economic Council (Mauritius), “A Road Map for Achieving

Meaningful Competitiveness," Feb. 3, 2005. 

 210 Association official, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 211 Association official, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005.

 212 Association official, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005.

 213 Industry official, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 214 Board of Investment, Business Processing Secretariat, “Survey on the ITES BPO Sector in

Mauritius;” and Joint Economic Council, “A Road Map for Achieving Meaningful

Competitiveness." 

 215 Joint Economic Council, “A Road Map for Achieving Meaningful Competitiveness." 

 216 Ibid.

 217 Industry officials, interview by USITC staff, Port Louis, Mauritius, Mar. 18, 2005; and

association official, interview with USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

9-38

(mid-2004),203 the skills of workers leaving the clothing and sugar sectors are not

interchangeable with those required for the ICT or tourism sectors.204 In an effort to increase

its skill base, the government made secondary education mandatory to age 16.205 Mauritius

has also increased the number of its pre-vocational or technical schools from 25 in 2000 to

114 schools in 2003.206 Despite these efforts, the Government of Mauritius and the private

sector recognize the need to increase further the education levels of its population to meet

the growing needs of the service sector. The 2004/05 budget contained reforms to the

education sector and funding for training programs to boost employment.207 For the ICT

sector in particular, Mauritius is paying up to 70 percent of the training cost for workers in

such areas as software development.208 It has also been recommended that Mauritius

establish special training institutes for the ICT sector.209

Labor seems to be in short supply for the EPZ, which employs 67,000 people.210 The EPZ

reportedly has 5,000 to 6,000 available jobs that it is unable to fill with locals.211 Hence,

labor is imported from India and other countries.212 In addition, there reportedly is a high rate

of absenteeism.213

Mauritius has a good telecommunications network, with 560 fixed line and mobile phone

subscribers per 1,000 people in 2002 (table MR-7), compared with 103 subscribers per 1,000

people for the region as a whole. However, for the ICT sector, the high cost of

telecommunications is frequently cited as a major impediment to growth in this sector.214

Mauritius Telecom owns the landing station for the fiber optic cable system, giving it

monopolistic pricing power.215 The cost of using the fiber optic cable between Mauritius and

Paris is over five times as costly as the cost between Réunion and Paris.216 As a result,

Mauritius reportedly is a higher-cost provider for ICT services than its main competitors,

India and the Philippines, though costs in India reportedly are increasing.217
 218 Joint Economic Council, “A Road Map for Achieving Meaningful Competitiveness;" and 

Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005. 

 219 Joint Economic Council, “A Road Map for Achieving Meaningful Competitiveness." 

 220 Industry official, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 221 For additional information, see app. C.

 222 To receive duty-free treatment in the European Union, tuna must be caught within national

waters and must be landed from nationally-owned vessels or vessels operating under a joint

venture. IDDRA Ltd., Analysis of the Impact on ACP Countries, p. 2; and industry officials,

interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005. 

 223 IDDRA Ltd., Analysis of the Impact on ACP Countries, p. 16. 

 224 Industry officials, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 225 Government officials, interview by USITC staff, Port Louis, Mauritius, Mar. 17, 2005.

 226 For example, a planned agribusiness conference was recently cancelled because of lack of

interest on the part of U.S. companies. Association official, interview by USITC staff,

Washington, DC, Feb. 15, 2005.

9-39

Table MR-7

Mauritius: Infrastructure-related indicators

MRY1

Roads, total network (km, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000.0

Roads, paved (percent of total roads, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.0

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.0

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.2

Fixed line and mobile phone subscribers (per 1,000 people, 2002)........................................ 559.5

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.1

Mobile phones (per 1,000 people, 2002) ............................................................ 289.1

Telephone mainlines (per 1,000 people, 2002) ....................................................... 270.3

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

)

 1

 Most recent year for which data are available between 1999 and 2003.

 2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

For tourism, the strict rules on passenger visits and a lack of a competitive air policy are

considered impediments to growth.218 To help encourage more tourism, it has been

recommended that Mauritius allow for greater competition in its code sharing with other

airlines, allow selective charters, and increase the capacity and frequency of its flights.219

Mauritius does not own large boats needed for tuna fishing.220 For the tuna sector, the lack

of large fishing vessels is an impediment to growth, because it makes it more difficult for

Mauritius to meet the rules of origin requirements for preferential treatment under the

Cotonou Agreement221 and AGOA.222 Mauritius is also at a disadvantage in terms of the tuna

migration routes, which only just enter the national waters of Mauritius.223 Finally, the type

of tuna caught in the waters off Mauritius is of a darker flesh color and cannot be sold to

international premium brands.224 

The largest international impediment cited by business and government people in Mauritius

is the lack of recognition of Mauritius. In an effort to overcome this lack of recognition,

Mauritius’ businesses participate in international trade fairs.225 Mauritius also hosts its own

conferences to develop interest and recognition by foreign investors and importers, but does

not always get full international participation.226
 227 Embassy of Mauritius official, interview by USITC staff, Washington, DC, Feb. 22, 2005.

9-40

Sanitary and phytosanitary standards (SPS) are considered a major barrier for entry into the

U.S. market for food processing and agricultural products. The small scale of Mauritius’

companies compounds the difficulties of conforming and compliance with SPS

requirements.227
 1

 The share of re-exports for The Gambia and Senegal is also relatively large. See ch. 6.

10-1

CHAPTER 10

Transportation Services-Exporting

Countries: Cape Verde, Djibouti, and

Seychelles

Cape Verde, Djibouti, and Seychelles are all located along strategic transportation routes.

The archipelagos of Cape Verde and Seychelles are located along major shipping lanes in

the Atlantic and Indian Oceans, respectively. Djibouti is located along the B~b al Mandab

straits, which link the Red Sea and Gulf of Aden and thus the Mediterranean and Arabian

Seas. Therefore, all three countries are important ports of transshipment, providing port and

logistics services that do not appear in the merchandise trade data. Available United Nations

Comtrade data indicate that 77 percent of Cape Verde's total exports in 1999-2000 consisted

of re-exports, and 23 percent of the total exports of Seychelles in 2003 consisted of reexports. The share of re-exports in Djibouti's total trade is also high, though not reported in

the Comtrade data.1

 Seychelles is also a provider of offshore business services.

Table 10-1 summarizes the merchandise exports of these countries. Cape Verde’s exports

include apparel, electronic components, and parts of footwear. Djibouti's exports include salt,

miscellaneous fuels, live animals, wheat, and gold. Seychelles' exports consist largely of

fisheries products. A summary of findings for each of the three countries with respect to

potential export growth sectors and domestic and international barriers is provided below.

Table 10-1

Cape Verdi, Djibouti, and Seychelles, 1999-2003 average share of total exports, by sector

Sector Cape Verde Djibouti Seychelles

–––––– Shares of total exports, 1999-2003 (percent) ––––––

Fish and related products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 1.0 88.8

Coffee, tea, and spices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 1.3 0.1

Cocoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1

) (1) (1) 

Other agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 24.6 0.3

Forest-based products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 3.7 0.1

Minerals, metals, and metal products . . . . . . . . . . . . . . . . . . . . . . 4.3 23.2 0.7

Fuels and electrical energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 12.7 2.6

Textiles and fibers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 1.6 (1

) 

Apparel and related articles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.4 0.7 0.1

Other manufactures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.2 31.2 7.2

 1

 Average share of less than 0.05 percent during 1999-2003.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
10-2

Cape Verde

Because export-led growth is one of Cape Verde’s key development objectives, the

government has identified export sectors that it believes will deliver strong growth in the

medium to long term. Such sectors include apparel, footwear, light manufacturing, tourism

services, and transport support services. Although these industries currently account for a

large share of Cape Verde’s exports of goods and services, capacity constraints in each sector

severely hamper further growth. Limited domestic access to capital further hinders domestic

investment in these industries. The inability to meet sanitary and phytosanitary requirements

is also an international impediment to export growth.

Djibouti

Djibouti’s market is dominated by port-related services, which have increased significantly

in recent years after Ethiopia diverted its port-related business to Djibouti following the loss

of its ports in a 1998 regional conflict. Potential exports include services involving

transshipments, international money transfer, and telecommunications, as well as goods such

as livestock and related-products, salt, and fisheries products. Barriers to increased exports

include insufficient infrastructure and regional instability.

Seychelles

Given its extensive fisheries resources, lack of arable land, and small, educated population,

the main components of Seychelles’ economy–services and fisheries–have the most potential

for export growth. Specifically, the export sectors with the strongest potential for growth are

fisheries, tourism, and business and shipping services. There is potential for export growth

to its main trading partner, the European Union; however, other markets also offer potential,

in particular South Africa and the Middle East. The major barriers to export growth are the

fixed exchange rate policy, lack of government transparency, and price controls, as well as

factors related to the country’s small size, location, and human and natural resource

limitations. The inability to meet rules-of-origin requirements was also identified as an

international impediment to export growth.
 2

 Prepared by Eric Forden, Office of Industries.

 3

 Economist Intelligence Unit (EIU), Cape Verde Country Profile, 2005, p. 18.

 4

 In 2003, important sources of remittances included Portugal ($21 million; 26 percent), France

($19.6 million; 24 percent), and the United States ($19.6 million; 24 percent). EIU, Cape Verde

Country Profile, pp. 14 and 23-24.

 5

 U.S. & Foreign Commercial Service (US&FCS), “Cape Verde Country Commercial Guide

2004,” July 2003, found at www.buyusainfo.net, retrieved Feb. 14, 2005.

10-3

Cape Verde2

Economic Overview

Cape Verde, a small archipelago of 10 islands, is located approximately 400 miles off the

coast of West Africa. GDP totaled $831 million in 2003 (table CV-1). Since 1993, Cape

Verde’s GDP grew at an average annual rate of 7.0 percent, falling to 5.0 percent in 2003.

Cape Verde’s per capita GDP of approximately $1,662 in 2003 ranks among the highest in

sub-Saharan Africa (SSA).3

 Remittances from Cape Verdeans abroad approximated

$82 million in 2003, or about 10 percent of GDP.4

 Foreign direct investment (FDI) in Cape

Verde totaled $14.8 million in 2003. Portugal is the leading source of FDI in Cape Verde as

a result of historic and linguistic ties, with most of that investment focused on hotel

construction.5

Table CV-1

Cape Verde: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ................................................................. 831.1

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4

Inflation, consumer prices (annual percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9

External debt, total (current US$, millions, 2002)...................................................... 413.5

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6

Exports of goods and services (percent of GDP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.7

Trade (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.1

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.7

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6

Labor force, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.5

Literacy rate, adult total (percent of people ages 15 and above, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.7

Primary school enrollment ratio, total (percent, 2000)

2 .................................................. 139.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.4

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.4

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 1

 Most recent year for which data are available between 1999 and 2003.

2

 Where figures are more than 100 percent, total enrollment includes repeaters and pupils above and below the primary school

age.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.
 US&FCS, “Cape Verde Country Commercial Guide 2004;”and EIU, Cape Verde Country 6

Profile, p. 20.

 US&FCS, “Cape Verde Country Commercial Guide 2004.” 7

 EIU, Cape Verde Country Profile, pp. 19-20. 8

10-4

The services sector, which accounted for 74.5 percent of GDP in 2003, dominates Cape

Verde’s economy (figure CV-1). Principal services include tourism, transportation support

services, and public services. Manufacturing and construction industries represented

approximately 19 percent of GDP in 2003. Cape Verde’s manufacturing sector consists of

approximately 120 small- and medium-sized industrial enterprises, and accounted for

7.6 percent GDP in 2003. Leading manufacturing industries, most of which are export 6

oriented, include apparel and shoe production and, to a lesser extent, fish canning, rum

distilling, and beverage bottling.

The fishing and agriculture sectors accounted for 6.6 percent of Cape Verde’s GDP in 2003.

Fish production is estimated to be less than one-third of the country’s annual production

potential of 50,000 short tons of fish because of the informal nature of Cape Verde’s fishing

industry, a lack of access to deep-water fishing technology, and an obsolete fishing fleet.7

Frequent droughts and limited available arable land severely limit Cape Verde’s agricultural

production. Leading crops are sugar cane, maize (corn), and beans, although bananas,

pineapples, and coffee are increasingly produced. Bananas are Cape Verde’s primary

agricultural export.8

Figure CV-1

Cape Verde: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 9

 World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/

dataonline, retrieved Mar. 25, 2005.

 10 Embassy of Republic of Cape Verde official, interview by USITC staff, Washington, DC,

Mar. 10, 2005.

 11 EIU, Cape Verde Country Profile, p. 22.

10-5

Export Profile

In 2003, Cape Verde’s services exports totaled approximately $224.1 million, making it the

primary source of foreign exchange earnings.9

 Overall tourist arrivals increased from

approximately 60,000 in 1998 to 162,000 in 2001. In contrast, Cape Verde’s merchandise

exports totaled approximately $23.6 million in 2003 (tables CV-2 and CV-3). The

Government of Cape Verde views tourism as an important component of its overall

economic development strategy.10 The main tourist markets include Germany, Italy, and

Portugal.11 Goods exports have increased almost threefold since 1994, growing at an average

annual rate of 12.3 percent. Export growth is the result of the Government of Cape Verde’s

export-oriented growth policy and FDI that has targeted export production. Cape Verde’s

leading goods exports in 2003 included apparel, footwear, and electronic components,

representing 31.7 percent, 16.6 percent, and 4.6 percent of total exports, respectively. Other

leading exports in 2003 included live trees and plants; fish, crustaceans, and molluscs; and

hides and skins. While categories of turbojets and turbopropellers and ships, boats, and

floating structures technically rank among Cape Verde’s leading exports, almost all such

goods are re-exports and are attributed to Cape Verde’s growing importance as a servicing

and refueling hub for aircraft traveling between Africa and the Americas. Cape Verde

shipped 41.9 percent of its merchandise exports to Portugal, its largest export market;

exports to the United States and the United Kingdom accounted for 25.2 percent and

23.2 percent of total exports, respectively (table CV-4).

Table CV-2

Cape Verde: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate

(CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars ––––––– ––––– Percent –––––

84 Nuclear reactors, boilers, machinery and mechanical

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157.1 8,472.5 5,925.7 25.1 49.7

62 Articles of apparel and clothing accessories, not knitted

or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 2,146.9 4,706.9 19.9 153.4

64 Footwear, gaiters and the like; parts of such articles . . . . . . . . 2,123.2 6,510.1 3,923.8 16.6 7.1

61 Articles of apparel and clothing accessories, knitted or

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 4.0 2,777.6 11.8 (1

)

85 Electrical machinery and equipment and parts thereof;

sound recorders and reproducers, television recorders 

and reproducers, parts and accessories ................ 299.3 805.4 1,079.3 4.6 15.3

06 Live trees and other plants; bulbs, roots and the like; cut 

flowers and ornamental foliage . . . . . . . . . . . . . . . . . . . . . . . 0.0 1.7 763.4 3.2 (1

)

89 Ships, boats and floating structure . . . . . . . . . . . . . . . . . . . . . . . 10.8 0.0 406.5 1.7 49.6

90 Optical, photographic, cinematographic, measuring, 

checking, precision, medical or surgical instruments

and apparatus; parts and accessories thereof ............ 262.0 152.0 342.3 1.4 3.0

03 Fish and crustaceans, molluscs and other aquatic 

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,386.7 1,838.9 323.4 1.4 -19.9

41 Raw hides and skins (other than furskins) and leather . . . . . . . 60.6 106.0 271.7 1.2 18.1

 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,978.8 1,879.7 3,091.5 13.1 0.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,279.7 21,917.3 23,612.0 100.0 12.3

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
10-6

Table CV-3

Cape Verde: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate

(CAGR)

HS 4 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

––––– 1,000 dollars ––––– ––––– Percent –––––

8411 Turbojets, turbo propellers and other gas turbines, and

parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 8,170.8 5,472.7 23.2 114.7

6406 Parts of footwear; removable insoles, heel cushions and 

similar articles; gaiters, leggings and similar articles, and 

parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 951.6 5,121.3 3,744.9 15.9 16.4

6107 Men's or boys' underpants, briefs, nightshirts, pajamas,

bathrobes, dressing gowns and similar articles, knitted or 

crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 1,967.4 8.3 (1

)

6204 Women's or girls' suits, ensembles, suit-type jackets, 

dresses, skirts, divided skirts, trousers, etc. (no 

swimwear), not knitted or crocheted . . . . . . . . . . . . . . . . . . . . 0.7 61.4 1,863.4 7.9 140.2

6203 Men's or boy's suits, ensembles, suit-type jackets, blazers, 

 trousers, bib and brace overalls, breeches, etc. (no 

 swimwear), not knitted or crocheted . . . . . . . . . . . . . . . . . . . . 0.0 0.0 1,226.8 5.2 (1

)

6205 Men's or boys' shirts, not knitted or crocheted . . . . . . . . . . . . . . . 0.0 2,084.1 1,124.8 4.8 (1

)

0602 Live plants nesoi (including their roots), cuttings and slips;

 mushroom spawn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 1.7 737.5 3.1 (1

)

8532 Electrical capacitors, fixed, variable or adjustable (pre-set); 

parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 34.8 671.5 2.8 207.9

6109 T-shirts, singlets, tank tops and similar garments, knitted

or crocheted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 616.1 2.6 (1

)

8901 Vessels for the transport of persons or goods, including 

cruise ships, excursion boats, ferry boats, cargo ships and 

barges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 406.5 1.7 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,321.8 6,443.1 5,780.4 24.5 -2.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,279.7 21,917.3 23,612.0 100.0 12.3 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table CV-4

Cape Verde: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

 of total

 9-year

CAGR

––––––––– 1,000 dollars ––––––––– ––––––– Percent –––––––

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,209.7 10,337.3 9,892.1 41.9 13.3

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127.0 117.5 5,958.6 25.2 53.4

United Kingdom ............................. 741.3 3,922.5 5,488.8 23.2 24.9

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143.0 4,636.2 543.0 2.3 16.0

Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 0.0 415.6 1.8 65.0

Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 47.4 295.0 1.2 (1

)

Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.4 135.8 175.3 0.7 10.7

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236.7 107.1 174.2 0.7 -3.4

Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 701.2 112.5 0.5 3.9

Japan ..................................... 107.1 53.4 88.4 0.4 -2.1

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,560.0 1,858.9 468.5 2.0 -20.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,279.7 21,917.3 23,612.0 100.0 12.3

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 12 Embassy of Republic of Cape Verde official, interview by USITC staff, Washington, DC,

Mar. 10, 2005; US&FCS, “Cape Verde Country Commercial Guide 2004;” and EIU, Cape Verde

Country Profile, p. 20.

 13 Ministry of Finance and Planning, Republic of Cape Verde, “Interim Poverty Reduction

Strategy Paper,” Jan. 2002, pp. 15-16, found at www.worldbank.org, retrieved Apr. 18, 2005; and

Embassy of Republic of Cape Verde official, interview by USITC staff, Washington, DC,

Mar. 10, 2005.

 14 Embassy of Republic of Cape Verde official, interview by USITC staff, Washington, DC,

Mar. 10, 2005.

 15 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 16 For additional information on the Multifiber Arrangement and the end of textile and apparel

quotas in 2005, see app. C.

 17 US&FCS, “Cape Verde Country Commercial Guide 2004.”

10-7

Sectors with the Greatest Export Growth Potential

Cape Verde’s main comparative advantage is its geographic location 400 miles off the coast

of West Africa, making it a convenient regional hub for passengers and cargo crossing the

Atlantic by both sea and air. Cape Verde’s beaches and mountainous terrain make it an

attractive tourist destination. Cape Verde also is located in one of the world’s few remaining

underdeveloped fishing grounds.12 The country’s official development strategy emphasizes

the promotion of tourism and transport support services, as well as increasing capacity in the

manufacturing and fish processing industries.13 According to official country representatives,

the Government of Cape Verde also is attempting to expand its export-oriented

manufacturing base, focusing mainly on light manufacturing and assembly operations in the

textiles, footwear, and electronics industries.14

Given the large percentage of services exports and the potential data discrepancies stemming

from transshipments, the revealed comparative advantage15 (RCA) analysis provides limited

insight into Cape Verde’s potential exports. Nevertheless, several apparel products have

strong RCA indices, indicating the possibility of certain apparel as a competitive potential

export for Cape Verde (appendix E, table E-6). This potential, however, is dampened by the

increasing international competition stemming from the end of textile and apparel quotas in

2005.16 Similarly, footwear emerges as a leading export with a strong and stable RCA index.

Domestic and International Barriers

In addition to sound macroeconomic management and a best-practice investment code, Cape

Verde offers a comprehensive set of foreign investment incentives including tax holidays,

interest rate subsidies, and import duty waivers, as well as sector-specific incentives for

export-oriented investment in light industry, fishing, and tourism.17 Although business

environment indicators are not available for Cape Verde (table CV-5), in terms of economic

freedom, it ranked better than the regional average in 9 of 10 indicators, and was better than

the OECD average in 5 to 10 indicators. However, Cape Verde’s high trade policy score of

5.0 indicates a low degree of trade policy freedom (table CV-6). The trade policy score is

likely a result of its high import tariffs, which equaled a weighted average of approximately

20 percent in 2004. Such tariffs may increase costs for Cape Verde’s export-oriented

manufacturers. 
 18 Embassy of Republic of Cape Verde official, interview by USITC staff, Washington, DC,

Mar. 10, 2005; and World Bank, Development Policy Review: Cape Verde, Report

No. 29340-CV, Nov. 1, 2004, pp. 18 and 22.

 19 Embassy of Republic of Cape Verde official, interview by USITC staff, Washington, DC,

Mar. 10, 2005; and World Bank, Development Policy Review: Cape Verde, p. 28.

 20 World Bank, Development Policy Review: Cape Verde, p. 9.

 21 EIU, Cape Verde Country Profile, pp. 20-21; US&FCS, “Cape Verde Country Commercial

Guide 2004;” and U.S. Department of State, Post Reports: Cape Verde, June 29, 2004, found at

www.foia.state.gov, retrieved Mar. 10, 2005.

10-8

Table CV-5

Cape Verde: Business environment

Country data not available.

Import tariffs Simple average of ad valorem duties

Country data not available.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness/, retrieved Jan. 25, 2005; and

WTO, “Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile/, retrieved Apr. 5, 2005.

Table CV-6

Cape Verde: Economic freedom

Cape

Verde

Regional

average1

OECD

average

–– Heritage Foundation indicators ––

1995 Overall score ....................................................... (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005. 

As with many SSA countries, high cost of, and limited domestic access to, capital is a

significant constraint to the expansion of production capacity.18 Other economywide

impediments to exports include inadequate infrastructure and the lack of technological

capacity.19 Cape Verde’s transportation infrastructure is better than that of most SSA

countries (table CV-7); however, the high cost of transportation associated with Cape

Verde’s relatively remote geographic location likely inhibits the growth of domestic

exports.20 Cape Verde’s role as a regional hub for transportation and cargo is constrained by

limited port and airport facilities. A lack of fish processing and refrigeration facilities limits

Cape Verde’s fishing and fish processing potential.21
 22 Embassy of Republic of Cape Verde official, interview by USITC staff, Washington, DC,

Mar. 10, 2005; and World Bank, Development Policy Review: Cape Verde, p. 18.

 23 World Bank, Development Policy Review: Cape Verde, p. 26.

 24 Ibid., p. 19.

 25 Embassy of Republic of Cape Verde official, interview by USITC staff, Washington, DC,

Mar. 10, 2005.

10-9

Table CV-7

Cape Verde: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.0

Transport services (percent of service exports, BoP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.3

Transport services (percent of service imports, BoP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.5

Fixed line and mobile phone subscribers (per 1,000 people, 2002)........................................ 257.7

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.4

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.8

Telephone mainlines (per 1,000 people, 2002) ....................................................... 159.9

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

)

 1

 Most recent year for which data are available between 1999 and 2003.

 2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Trade is also inhibited by the high cost of telecommunications, water, and energy,22 and a

shortage of skilled workers necessary for diversification into more skill-intensive industries

and services.23 Administrative and regulatory constraints include burdensome and ambiguous

administrative procedures that increase the cost and time of doing business in Cape Verde.24

Lack of awareness among foreign investors, particularly U.S. investors, and lack of access

to new technology and technical assistance across a broad range of areas, including fishing

and fish processing, light manufacturing, and sanitary and phytosanitary compliance, limit

the country’s ability to capitalize on its comparative advantages.25
10-10
 26 Prepared by Selamawit Legesse, Office of Economics.

 27 There were an estimated 100,000 Ethiopian and Somali refugees in Djibouti in 1991. An

additional 50,000 people entered Djibouti to escape famine in 2000. U.S. Department of State,

“Background Note: Djibouti,” found at www.state.gov, retrieved Mar. 2005. 

 28 U.S. Department of State telegram, “USITC AGOA Study on Export Opportunities and

Barriers Information Request: Ethiopia,” message reference No. 000545, prepared by U.S.

Embassy, Addis Ababa, Feb. 2005.

10-11

Djibouti26

Economic Overview

Djibouti is a relatively small, arid country in East Africa, notable for its strategic position at

the confluence of the Red Sea and the Gulf of Aden. Its common borders with Ethiopia,

Somalia, and Eritrea and its deep-water port allow it to serve as a port for transshipments and

refueling. Since 1999, Djibouti’s GDP increased by 4 percent annually, reaching

$625.0 million in 2003 (table DJ-1). Approximately 65 percent of Djibouti’s population of

700,000 live in the capital city and are mainly employed by the government or port-related

businesses, while the remaining population is mostly nomadic. Immigrants and refugees

from conflict-stricken neighboring countries27 have exacerbated the existing stress on

Djibouti’s economy and increased unemployment to 45 percent of the workforce.28

Table DJ-1

Djibouti: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ................................................................. 625.0

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8

Inflation, consumer prices (annual percent) .......................................................... (2

)

External debt, total (current US$, millions, 2002)...................................................... 335.3

Total debt service (percent of exports of goods and services)............................................ (2

)

Exports of goods and services (percent of GDP, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.6

Trade (percent of GDP, 2000) .................................................................... 107.4

Official exchange rate (local currency unit per US$, period average, 2003) ................................. 177.7

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7

Labor force, total (millions) ....................................................................... (2

)

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.05

Literacy rate, adult total (percent of people ages 15 and above) .......................................... (2

)

Primary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.0

Secondary school enrollment ratio, total (percent, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.0

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0

Gross capital formation (percent of GDP, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9

Gross fixed capital formation (percent of GDP, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005.
 Economist Intelligence Unit (EIU), Djibouti Country Profile, 2004, p. 21. 29

 EIU, Djibouti Country Profile, p. 21. 30

 Embassy of Djibouti official, interview by USITC staff, Washington, DC, Feb. 9, 2005. 

31

10-12

Djibouti’s strategic location, one of its greatest assets, provides an enabling environment for

port-related businesses such as transshipment, storage, air cargo, and refueling to thrive. The

relatively well-developed seaport, railway, and airport in the country and its positive

reputation for safety and security make Djibouti the preferred transportation hub for its

neighboring countries. The rerouting of trade because of the conflict between Ethiopia and

Eritrea has increased seaport-related business in Djibouti since 1998. 

Djibouti’s strategic position has attracted a foreign military presence that also makes a

significant contribution to the economy. For example, the United States and its allies have

chosen Djibouti as a base from which to pursue the international war against terrorism;29

France has had a long standing military presence in the country and Germany maintains a

base to monitor sea traffic between Somalia and the Arabian Peninsula.30

The tertiary sector–primarily port-related services, public administration, banking, and

insurance–accounted for 80.2 percent of GDP in 2002 (figure DJ-1). Port-related activities,

a major source of foreign currency, significantly increased after 1998 when Ethiopia lost

access to its ports in Eritrea and had to rely exclusively on Djibouti’s port for ocean-going

freight. Investment in port facilities by Dubai Ports International, the manager of the port of

Djibouti since 2000, significantly improved cargo-handling capacity and has made the port

one of the fastest-growing container terminals on the Red Sea.31

Figure DJ-1

Djibouti: Composition of GDP (2002)

Note.—Primary is defined as agriculture, fisheries, mining, and quarrying; secondary is defined as manufacturing,

construction, electricity, water, and other utilities; and tertiary is defined as primarily services activities such as retail,

financial, real estate, and government services.

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 32 Ibid.

 33 U.S. Department of State, “Background Note: Djibouti.”

 34 EIU, Djibouti Country Profile, p. 26.

 35 World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/

dataonline, retrieved Feb. 1, 2005.

 36 The first phase of the project, the oil terminal, is already near completion. Embassy of

Djibouti official, interview with USITC staff, Washington, DC, Feb. 9, 2005.

 37 EIU, Djibouti Country Profile, p. 28.

 38 Ibid.

 39 United Nations (UN), Food and Agriculture Organization (FAO), “Structure and

Characteristics of the Industry,” found at www.fao.org, retrieved Feb. 10, 2005.

 40 EIU, Djibouti Country Profile, pp. 28-29.

10-13

The manufacturing sector accounted for 15.4 percent of GDP in 200232 and is limited to a

few industries such as food processing and shipbuilding and repair. 

In 2002, agriculture, fisheries, mining, and quarrying accounted for 4.4 percent of GDP, and

consisted mainly of livestock, fishing, salt production, and limited production of fruits and

vegetables.33 Demand for Djibouti's salt increased when Ethiopia lost its source of salt in

Eritrea because of the war. Djibouti’s commercial fishing industry is limited, consisting of

a fleet of approximately 140 small boats that catch less than 1,000 short tons annually.34

The level of foreign direct investment (FDI) in Djibouti has been among the lowest in subSaharan Africa (SSA), ranging between $1 million and $5 million during 1993-2002.35 Most

FDI is from the Middle East, mainly from the United Arab Emirates, and is targeted at portrelated infrastructure. Recent projects include a new port with a deep-water container

terminal, an oil terminal, and an international logistics and industry center for the industrial

and commercial free zone in Djibouti.36

Export Profile

Re-exports, primarily from Ethiopia and Somalia, account for approximately 81 percent of

Djibouti’s total exports.37 Djibouti’s exports started to increase in 1998 as a result of the

Ethiopian-Eritrean war during 1998-2000, which forced Ethiopia to abandon its ports in

Eritrea and rely exclusively on the port in Djibouti for all ocean-going shipments. The

leading domestically produced exports are live animals, skins, and salt (tables DJ-2 and

DJ-3).38 Exports of live animals increased at a compound annual growth rate (CAGR) of

18.5 percent during 1994-2003, although it is not clear how much of this increase reflects

transshipments. The 83.2-percent CAGR for salt exports largely reflects Djibouti’s increased

production in response to greater demand from Ethiopia, which lost its salt-producing

regions during its war with Eritrea. Djibouti also exports limited amounts of dried anchovies

and sardines to neighboring countries.39 In general, earnings from services, including the

provision of port services, exceed receipts from merchandise exports and are the singlelargest earner of foreign exchange.40

In 2003, Djibouti’s main export destination by far was Ethiopia, followed by Egypt, Hong

Kong, France, and the United Kingdom (table DJ-4). During 1994-2003, the largest CAGRs

for Djibouti’s exports were registered by Hong Kong, the United States, and Egypt, at

41.4 percent, 27.7 percent, and 18.2 percent, respectively.
10-14

Table DJ-2

Djibouti: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––– 1,000 dollars ––––– –––– Percent ––––

25 Salt; sulfur; earths and stone; plastering materials, lime and 

cement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.5 2,890.8 13,812.4 32.1 83.2

27 Mineral fuels, mineral oils and products of their distillation;

bituminous substances; mineral waxes . . . . . . . . . . . . . . . . . . . . 2,790.0 590.4 8,016.3 18.6 12.4

10 Cereals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 122.7 4,516.9 10.5 (1

)

01 Live animals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 846.1 223.1 3,911.0 9.1 18.5

41 Raw hides and skins (other than furskins) and leather . . . . . . . . . . 1,765.6 2,151.6 2,835.0 6.6 5.4

88 Aircraft, spacecraft, and parts thereof . . . . . . . . . . . . . . . . . . . . . . . 0.0 7.4 1,168.1 2.7 (1

)

09 Coffee, tea, mate and spices .............................. 625.9 840.5 944.5 2.2 4.7

03 Fish and crustaceans, molluscs and other aquatic 

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131.5 374.3 884.9 2.1 23.6

33 Essential oils and resinoids; perfumery, cosmetic or toilet 

preparations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.9 1,701.0 810.2 1.9 55.9

34 Soap etc.; lubricating products; waxes, polishing or scouring 

products; candles etc., modeling pastes; dental waxes and 

dental plaster preparations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 71.5 695.4 1.6 (1

)

 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,402.7 9,973.6 5,416.2 12.6 5.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,636.2 18,947.0 43,010.9 100.0 18.1

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table DJ-3

Djibouti: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––– 1,000 dollars –––––– ––––– Percent –––––

2501 Salt (incl table & denaturd salt) & pure sodium chloride,

whether/not in aqueous solution or contain added 

anticaking/free flowing agents; sea water . . . . . . . . . . . . . . . 0.0 2,730.2 13,727.3 31.9 (1

)

1001 Wheat and meslin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 2.8 4,500.3 10.5 (1

)

2713 Petroleum coke, petroleum bitumen and residues of 

petroleum oils or of oils obtained from bituminous 

minerals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 3,990.0 9.3 (1

)

0106 Animals, live, nesoi ................................... 807.7 32.9 3,911.0 9.1 19.2

2714 Bitumen and asphalt, natural; bituminous or oil shale and 

tar sands; asphaltites and asphaltic rocks . . . . . . . . . . . . . . . 14.3 468.3 3,577.7 8.3 84.7

8804 Parachutes (including dirigible parachutes) and rotochutes; 

parts and accessories thereto . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 1,045.0 2.4 (1

)

4102 Raw skins of sheep or lambs, other than astrakhan, 

 broadtail, caracul or similar skins (fresh or preserved, but 

not tanned or further prepared) . . . . . . . . . . . . . . . . . . . . . . . 1,022.7 1,275.6 907.9 2.1 -1.3

4101 Raw hides and skins of bovine or equine animals (fresh or 

preserved, but not tanned or further prepared), whether or

not dehaired or split ................................ 225.7 178.1 876.5 2.0 16.3

2106 Food preparations nesoi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 7.0 763.3 1.8 (1

)

4104 Leather of bovine or equine animals . . . . . . . . . . . . . . . . . . . . . 0.0 159.8 700.3 1.6 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,565.8 14,092.2 9,011.7 21.0 2.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,636.2 18,947.0 43,010.9 100.0 18.1 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 41 EIU, Djibouti Country Profile, p. 16.

 42 Ibid., p. 28.

 43 Embassy of Djibouti official, interview with USITC staff, Washington, DC, Feb. 9, 2005. 

10-15

Table DJ-4

Djibouti: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––– 1,000 dollars –––––––––– ––––––– Percent –––––––

Ethiopia (excludes Eritrea) . . . . . . . . . . . . . . . . . . . . . . . 0.0 4,524.3 26,838.6 62.4 (1

)

Egypt, Arab Rep. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 872.7 1.7 3,933.6 9.1 18.2

Hong Kong, China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.6 1,820.1 2,199.2 5.1 41.4

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 708.6 897.2 1,682.8 3.9 10.1

United Kingdom ............................... 571.2 623.9 1,303.9 3.0 9.6

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332.9 222.9 1,178.2 2.7 15.1

Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580.0 152.1 954.8 2.2 5.7

Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 731.8 1.7 (1

)

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747.1 1,671.0 648.2 1.5 -1.6

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.1 119.2 633.3 1.5 27.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,656.1 8,914.5 2,906.5 6.8 -7.1

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,636.2 18,947.0 43,010.9 100.0 18.1

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Sectors with the Greatest Export Growth Potential

Djibouti’s services sector has great export potential. Djibouti’s strategic location provides

an environment for service-related industries such as transportation, money transfer,

telecommunications, and energy services to thrive. Djibouti also has the potential to increase

its exports of livestock, leather products, salt, and fisheries products. 

Djibouti’s relative social and political stability; the new port of Doralhe, which is currently

under construction; and Djibouti’s open and friendly business environment create potential

for Djibouti to further expand the port services it provides. The new port is being developed

to accommodate a petroleum terminal, a container and bulk terminal, a petroleum refinery,

and Djibouti’s first free trade zone.41 Djibouti currently provides transshipment services

mainly to Ethiopia and Somalia; however, it has the potential to provide port services to

other land-locked countries in the region such as Burundi, Central African Republic,

Rwanda, and Uganda.

The military bases in Djibouti have helped it to develop one of the best telecommunications

networks in the region.42 Unlike in other countries in the region, the telecommunications

network in Djibouti, although expensive, is very reliable. Therefore, Djibouti has potentialto

be a network center that further integrates customers in Africa, the Middle East, Europe, and

Asia. Current plans to improve Djibouti’s transportation infrastructure by repairing the

100-year old railway shared by Djibouti and Ethiopia, developing a new port, and increasing

efficiency in airport management are likely to lower transport costs for many goods

throughout the region, thereby increasing Djibouti’s potential as a transshipment center.43

Djibouti has already begun to develop its export market potential for hides and skins. There

are approximately one million head of livestock in Djibouti consisting of sheep, goats, and

camels. The Regional Food Security Program, sponsored by the United States, plans to
 44 EIU, Djibouti Country Profile, pp. 28-29.

 45 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 46 EIU, Djibouti Country Profile, p. 25.

 47 UN, FAO, “Structure and Characteristics of the Industry.”

 48 EIU, Djibouti Country Profile, p. 25.

10-16

provide $4 million to support the export of livestock from Djibouti, Ethiopia, and Somalia.44

In addition to the potential export of livestock, Djibouti has the potential to export

downstream products such as leather goods. This potential is also supported by revealed

comparative advantage45 (RCA) analysis, where sheep, goats, and other live animal exports

exhibit strong and stable RCA indices (appendix E, table E-9).

Given Djibouti’s salt lakes, there is potential for increasing salt production and exports. This

potential for salt exports is further supported by RCA analysis, where salt exports exhibit

very high and stable RCA indices. Currently, the export of salt is concentrated in low- and

middle-income countries, indicating a potential for increased salt exports by penetrating

alternative markets. 

Another identified potential export sector is fisheries. The fisheries sector in Djibouti is

generally considered to be significantly underutilized and is limited to only a few species

such as tuna. For the most part, production is limited to the Gulf of Tadjourah and a few

other areas. The reef and demersal fisheries are probably more intensively exploited and

therefore have lesser potential for development. The World Bank estimated that only

3 percent of national fisheries resources are being tapped.46 The potential catch for fish,

shellfish, and lobsters is estimated at 48,000 short tons per year; however, current catch rates

are only approximately 1,000 short tons per year.47

Domestic and International Barriers

Business environment indicators are not available for Djibouti (table DJ-5). Despite an

overall score that was better than the regional average in terms of economic freedom,

Djibouti scored significantly worse than the regional average with respect to trade policy and

government intervention in the economy (table DJ-6). Although Djibouti’s port-related

infrastructure is good compared with most other SSA countries, inadequate domestic

infrastructure hampers the expansion of production and exports beyond its major cities. For

example, less than 13 percent of the road network is paved (table DJ-7). Despite the

development of telecommunication services to facilitate military base activities, the general

state of the country’s telecommunication services is an impediment to expanded commercial

activity. There are less than 40 phone subscribers per 1,000 people and Internet penetration

is low. With respect to the fishing industry, lack of managerial staff, refrigeration facilities,

and newer fish-catching techniques prevent Djibouti’s fishing industry from flourishing.

A major international impediment is social and political instability and terrorist attacks in

neighboring countries. The protracted conflicts have increased the perception of risk in the

region, reducing FDI, restraining tourism activities, and creating volatility in Djibouti’s

major markets. In addition, U.S. security restrictions that require inspection of all products

prior to shipment to the United States are expected to be very expensive and may disrupt

Djibouti’s transshipment services.48
10-17

Table DJ-5

Djibouti: Business environment

Country data not available.

Import tariffs Simple average of ad valorem duties

Country data not available.

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness/, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile/, retrieved Apr. 5, 2005.

Table DJ-6

Djibouti: Economic freedom

Djibouti

Regional

average1

OECD

 average

–––– Heritage Foundation indicators ––––

1995 Overall score .............................................. (2

) 3.6 2.5

2000 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.7 2.2

2005 Overall score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.4 2.2

Trade policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 3.9 2.2

Fiscal burden of government score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 3.9 3.6

Government intervention in the economy score . . . . . . . . . . . . . . . . . . . . 3.5 2.6 2.5

Monetary policy score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 2.4 1.5

Capital flows and foreign investment score . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 2.0

Banking and finance score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.2 1.9

Wages and prices score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.8 2.1

Property rights score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 1.6

Regulation score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7 2.7

Informal market activity score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.1 1.9 1

 Heritage Foundation data cover 42 of the 48 SSA countries; it does not include Comoros, Eritrea, Liberia, São Tomé & Principe,

Seychelles, and Somalia. 2

 Not available.

Note.—Indicator definitions are provided in app. F. A lower score indicates a higher degree of freedom.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.

Table DJ-7

Djibouti: Infrastructure-related indicators

MRY1

Roads, total network (km, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,890.0

Roads, paved (percent of total roads, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6

Transport services (percent of service exports, BoP) .................................................. (2

)

Transport services (percent of service imports, BoP) .................................................. (2

)

Fixed line and mobile phone subscribers (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.3

Internet users (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9

Mobile phones (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.9

Telephone mainlines (per 1,000 people, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.4

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F.

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 
10-18
 49 Prepared by Cindy Cohen, Office of Economics.

 50 United Nations Development Program (UNDP), UNDP Human Development Report 2004,

p. 139.

 51 Economist Intelligence Unit (EIU), Seychelles Country Profile, 2004, p. 19.

10-19

Seychelles49

Economic Overview

Seychelles consists of 115 islands covering an Exclusive Economic Zone (EEZ) of

1.4 million square kilometers, with a land area of 455 square kilometers. About 90 percent

of the population lives on the main island of Mahe, and most of the remaining population

live on the islands of Praslin or La Digue. Seychelles has a small population of around

83,000 and a total GDP of $720.1 million (table SY-1). With one of the highest per capita

GDPs in Africa, Seychelles is considered an upper-middle income country.50 The labor force

is generally highly educated, with a literacy rate of 91.9 percent, and is nearly universally

trilingual in Seychelles Creole (Seselwa), English, and French. 

Table SY-1

Seychelles: Basic economic indicators

MRY1

GDP (current US$, millions, 2003) ................................................................. 720.1

GDP growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5.1

GDP per capita growth (annual percent, based on local currency, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6.5

Inflation, consumer prices (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3

External debt, total (current US$, millions, 2002)...................................................... 252.7

Total debt service (percent of exports of goods and services, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6

Exports of goods and services (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.4

Trade (percent of GDP, 2003) .................................................................... 154.4

Official exchange rate (local currency unit per US$, period average, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4

Population, total (millions, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1

Population growth (annual percent, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2

Labor force, total (millions) ....................................................................... (2

)

Labor force participation rate, total (percent, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.5

Literacy rate, adult total (percent of people ages 15 and above, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.9

Primary school enrollment ratio, total (percent) ....................................................... (2

)

Secondary school enrollment ratio, total (percent)..................................................... (2

)

Land use, arable land (percent of total, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2

Gross capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.0

Gross fixed capital formation (percent of GDP, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3

Foreign direct investment, net inflows (percent of GDP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005;

and African Development Bank, “Country Tables,” found at www.afdb.org, retrieved Feb. 1, 2005. 

GDP growth rates were low during 1999-2003, and were negative in 2001 and 2003. GDP

declined by 5.1 percent in 2003 because of a cut in government spending and a decline in

tourist arrivals.51 An overvalued and tightly controlled exchange rate has caused a lack of

foreign exchange and impaired economic growth. To reduce inflation, in June 2001, the

government introduced new strict foreign exchange laws and a new price control unit to
 EIU, Seychelles Country Profile, p. 19. 52

 Ibid., p. 17. 53

 “Seychelles Marketing Board,” found at www.seychelles.net/smb, retrieved Mar. 30, 2005; 54

and EIU, Seychelles Country Profile, p. 37.

 Stanbic Bank, “Seychelles Economics Blueprint,” Jan. 2005. 55

 International Trade Centre, found at www.intracen.org/countries, retrieved Apr. 11, 2005. 56

 EIU, Seychelles Country Profile, p. 12. 

57

10-20

monitor the price of imported goods. The government plays a major role in the economy. 52

In 2002, 33 percent of all workers were employed by the public sector and 15 percent were

employed by parastatals. These parastatals include the Seychelles Marketing Board (SMB), 53

which is involved in the production, import, export, and distribution of numerous goods. It

is the single largest business in Seychelles and has preferential access to foreign exchange.54

As a small island nation, Seychelles is heavily dependent upon trade. Trade represented

about one and one-half times total GDP in 2003, while exports of goods and services

represented 77.4 percent of GDP. The country imports more than 90 percent of its total

primary and secondary production inputs. 

55

The largest contributor to GDP is transport, communications, and distribution services

(39.7 percent of GDP), followed by manufacturing (16.4 percent), government services

(12.9 percent), hotels and restaurants (9.2 percent), construction (9.0 percent), finance

(5.4 percent), and agriculture and fishing (2.6 percent) (figure SY-1). In 2002, exports of

transport services were $115 million and tourism exports were $161 million. Seychelles’ 56

Port Victoria serves as a tuna transshipment point, and offers repairs, refueling, and shipping

services for cruise ships, fishing vessels, and freight carriers. Income from transportation 57

services includes passenger tickets on Air Seychelles. 

Figure SY-1

Seychelles: Composition of GDP (2003)

Source: EIU, “Economic Structure,” found at www.viewswire.com, retrieved Feb. 1, 2005.
 58 “Seychelles’ Ministry of Foreign Affairs,” found at www.mfa.govt.sc/seychelles_economy_

fish.html, retrieved Mar. 30, 2005.

 59 “Republic of Seychelles,” found at www.virtualseychelles.sc/pages/vs_ie.htm, retrieved 

Mar. 30, 2005.

 60 Seychelles Fishing Authority, Annual Report, 2003.

 61 EIU, Seychelles Country Profile, p. 20.

 62 Heinz is one of two brands that supplies most of the UK market. IDDRA (UK) Ltd., Analysis

of the Impact on ACP Countries of Opening up the EU Import Market for Canned Tuna,

Feb. 2004, pp. 19-21, found at http://agritrade.cta.int/Tuna_study_30pager_EN.pdf, retrieved Mar.

30, 2005. 

10-21

The fishing sector consists of artisanal fisheries (small vessels mostly supplying local

consumption), semi-industrial (longline fishing, mostly of tuna for export), and industrial

(mostly EU-owned purse seiners). Most tuna vessels are foreign-flagged and -owned. In

2002, there were 36 EU purse seiners (Spain, France, and Italy), 7 from Seychelles, and

17 from other countries, and 190 longliners from Taiwan and Japan. The tuna cannery,

Indian Ocean Tuna (IOT), uses only one-third of the 300,000 short tons of the tuna landed

each year; about 40,000 short tons are purchased by Princes Tuna (Mauritius) and the rest

is transshipped, mostly to the European Union. Fish processing, in particular tuna canning,

represents most of the manufacturing base. In 2002, canned tuna accounted for about

90 percent of the value of fish production.58 Since Heinz acquired a 60-percent share in IOT,

production of canned tuna has risen from 7,500 short tons in 1995 to 36,436 short tons in

2003.59 Because of high labor costs, the IOT has invested heavily in capital equipment, and

has a high labor efficiency rate. The IOT is also competitive in terms of output and

production processes compared with other regional producers such as Mauritius and Ghana.

With the exception of the tuna cannery, manufacturing is small scale, focusing on

agroprocessing and import substitution industries. The SMB runs a black tiger prawn

processing plant. In 2003, it completed a $10-million investment in new ponds and other

improvements for prawns. Production of prawns increased from 234 metric tons in 2002 to

1,084 metric tons in 2003.60

Agriculture contributes only a small percentage to GDP because Seychelles has little arable

land. Furthermore, production of copra, the main export in the 1960s, has declined greatly

because of rising land prices, high costs of production, and nationalization of the copra

plantations. SMB closed its two copra crushers in 2002 and production has fluctuated

between 1999 and 2003.61 Other agroprocessing includes tea production (which has

fluctuated) and cinnamon bark production (which declined during 1999-2003).

Export Profile

By far, the two largest export sectors are fish products and services. Exports of fish,

molluscs, and crustaceans accounted for 85.5 percent of all merchandise exports in 2003

(tables SY-2 and SY-3). Almost all canned tuna exports go to the European Union

(97.3 percent in 2003), which was Seychelles’ largest overall export market, accounting for

approximately 70 percent of total exports in 2003 (table SY-4). Forty percent of Seychelles’

canned tuna is exported to the United Kingdom, accounting for 21 percent of the UK market

in 2002.62 The largest markets for frozen fish are Thailand and Spain. Exports of fish benefit
 63 For additional information, see app. C.

10-22

Table SY-2

Seychelles: Leading 2003 exports by HS 2-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 2 Description 1994 1999 2003

2003 share

 of total

9-year

CAGR

–––––––– 1,000 dollars–––––––– ––––– Percent –––––

16 Edible preparations of meat, fish, crustaceans, molluscs or 

other aquatic invertebrates . . . . . . . . . . . . . . . . . . . . . . . . 17,331.5 103,116.5 208,698.3 53.2 31.8

03 Fish and crustaceans, molluscs and other aquatic 

invertebrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,882.7 31,979.9 126,647.3 32.3 11.9

27 Mineral fuels, mineral oils and products of their distillation; 

bituminous substances; mineral waxes . . . . . . . . . . . . . . 0.1 316.6 18,741.8 4.8 274.9

90 Optical, photographic, cinematographic, measuring, 

checking, precision, medical or surgical instruments 

and apparatus; parts and accessories thereof . . . . . . . . . 64.3 5,192.0 17,971.5 4.6 87.0

84 Nuclear reactors, boilers, machinery and mechanical 

appliances; parts thereof . . . . . . . . . . . . . . . . . . . . . . . . . 1,358.9 1,436.4 5,456.0 1.4 16.7

23 Residues and waste from the food industries; prepared 

animal feed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153.9 1,111.7 3,395.1 0.9 41.0

85 Electrical machinery and equipment and parts thereof; 

sound recorders and reproducers, television recorders

and reproducers, parts and accessories ............. 300.4 1,545.7 1,214.0 0.3 16.8

93 Arms and ammunition; parts and accessories thereof . . . . . . 0.0 0.0 1,183.4 0.3 (1

)

31 Fertilizers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 811.8 0.2 (1

)

95 Toys, games & sports equipment; parts and accessories

thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1 757.8 359.0 0.1 35.7

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,306.5 8,397.1 7,777.3 2.0 2.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,421.4 153,853.8 392,255.5 100.0 20.8

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

from duty-free access to the EU tuna market under the Cotonou Agreement;63 the fisheries

agreement with the European Union; and the fact that Heinz, one of the largest investors in

Seychelles, is a multinational company with a major presence in the EU tuna market. Nearly

one-quarter of Seychelles’ total exports in 2003 were re-exports; some re-exported products

include petroleum oils, medical and veterinary equipment, and automatic data processing

machines.
10-23

Table SY-3

Seychelles: Leading 2003 exports by HS 4-digit, 1994, 1999, 2003, percent of 2003 total, and compound annual growth

rate (CAGR)

HS 4 Description 1994 1999 2003

2003 share

of total

9-year

CAGR

–––––––– 1,000 dollars–––––––– –––– Percent ––––

1604 Prepared or preserved fish; caviar and caviar substitutes

prepared from fish eggs . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,331.3 103,116.5 208,704.5 53.2 31.8

0303 Fish, frozen, excluding fish fillets and other fish meat

without bones; fish livers and roes, frozen . . . . . . . . . . . . . 43,224.6 18,710.0 106,628.1 27.2 10.6

2710 Petroleum oils and oils from bituminous minerals (other

than crude) and products therefrom, nesoi, containing

70% (by weight) or more of these oils . . . . . . . . . . . . . . . . 0.0 316.6 17,070.3 4.4 (1

)

9018 Instruments and appliances used in medical, surgical,

dental or veterinary sciences (including electro-medical

and sight-testing); parts etc. thereof . . . . . . . . . . . . . . . . . . 7.7 791.6 16,311.8 4.2 134.2

0306 Crustaceans, live, frsh, chilled, frzn etc.; crustaceans, in

shell, cookd by stm or boilng watr; flours, meals, &

pellets of crustaceans, human consumption ........... 421.4 1,891.9 10,290.9 2.6 42.6

0302 Fish, fresh or chilled, excluding fish fillets and other fish

meat without bones; fish livers and roes, fresh or

chilled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,347.2 2,928.2 4,633.6 1.2 14.7

2301 Flours, meals and pellets, of meat or meat offal, of fish or

of crustaceans etc., unfit for human consumption;

greaves (cracklings) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151.5 1,111.7 2,842.8 0.7 38.5

0307 Molluscs & oth aquatic invertebrates nesoi, live, fresh,

chilld, frzn, dried, salted or in brine; flours, meals &

pellets of aqua invertebrae human consumption . . . . . . . . 8.1 50.8 2,683.2 0.7 90.6

8471 Automatic data processing machines and units thereof; 

magnetic or optical readers, machines for transcribing

and processing coded data, nesoi ................... 230.9 317.2 2,651.0 0.7 31.2

0304 Fish fillets and other fish meat (whether or not minced), 

fresh, chilled or frozen . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241.3 8,254.7 2,199.6 0.6 27.8

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,457.4 16,364.7 18,239.9 4.7 8.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,421.4 153,853.8 392,255.5 100.0 20.8 1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.

Table SY-4

Seychelles: Leading export markets, 1994, 1999, 2003, percent of 2003 total, and compound annual growth rate (CAGR)

Market 1994 1999 2003

2003 share

of total

9-year

CAGR

––––––––––– 1,000 dollars ––––––––––– –––– Percent ––––

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,037.5 56,629.8 87,984.8 22.4 22.6

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 980.3 27,500.9 74,334.7 19.0 61.8

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,274.5 24,247.4 47,323.6 12.1 34.5

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,978.1 8,129.6 41,456.6 10.6 -0.1

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,454.0 3,592.2 38,068.0 9.7 35.6

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133.2 959.8 19,907.6 5.1 74.4

Japan .......................................... 523.6 5,590.0 17,635.4 4.5 47.8

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,869.7 5,241.9 13,878.6 3.5 19.1

Maldives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 11,802.2 3.0 (1

)

Iran, Islamic Rep. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 9,702.8 2.5 (1

)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,170.6 21,962.3 30,161.3 7.7 21.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,421.4 153,853.8 392,255.5 100.0 20.8

1

 Undefined.

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005.
 64 “Seychelles’ Ministry of Foreign Affairs.”

 65 “Seychelles’ Ministry of Information Technology and Communication,” found at

www.seychelles.net/misdstat/tourism.htm, retrieved Mar. 30, 2005.

 66 Ibid.

 67 EIU, Seychelles Country Profile, p. 32.

 68 Ibid., p. 18.

 69 IDDRA (UK) Ltd., Analysis of the Impact on ACP Countries, pp. 19-21. 

 70 Ibid.

 71 RCA indices measure a country’s export specialization in certain products, and they indicate

whether a country has or lacks comparative advantage in those products. See ch. 1 and app. D for a

discussion of RCA indices.

 72 EIU Viewswire, “Seychelles: Country Outlook,” Mar. 17, 2005.

10-24

The other major export category is services, in particular services related to tourism,

shipping, and business services. Tourism accounts for the majority of foreign exchange

earnings–61.5 percent in 2003.64 The European Union is the major source of tourism;

80 percent of tourists in 2002 were from Europe, primarily France (21.4 percent of all

tourists), Italy (15.1 percent), Germany (11.5 percent), and the United Kingdom

(14.6 percent).65 Other sources of tourists are Africa, accounting for 10.5 percent of 2002

tourists; Asia, 5 percent; and North America, 2.8 percent.66 Seychelles provides shipping

services (such as repairs and refueling) for international cruise liners, fishing vessels, and

freight carriers.67 In 2001, there were 10,632 international business companies in the business

services outsourcing sector; these companies generated $3.8 million for local agents,

lawyers, and accountants.68 

Exports of goods and services increased during 1999-2002, but declined by 3.0 percent in

2003. Exports of goods from Seychelles grew by a compound annual rate of 20.8 percent

during 1994-2003, driven by growth in the canned tuna segment. However, a recent change

in EU tariff rates for some Asian suppliers of canned tuna may affect Seychelles’ tuna

exports. In an agreement with Asian suppliers through the WTO, in July 2003, the European

Union decreased the in-quota tariff rate on canned tuna from Thailand, Philippines, and

Indonesia from 24 percent to 12 percent for shipments up to 25,000 short tons.69 Heinz

reported that its exports from Seychelles were negatively affected, although it was unable

to quantify the extent of the impact.70

Sectors with the Greatest Export Growth Potential

Seychelles has a shortage of arable land, but has significant fisheries resources in its

1.4 million square kilometer EEZ. There is potential for growth in prepared fish and frozen

fish, which account for nearly 80 percent of merchandise exports and have high revealed

comparative advantage71 (RCA) indices (appendix E, table E-31). Canned tuna exports are

concentrated in the EU market; other markets may offer potential. Other fisheries products

besides canned and frozen tuna are potential exports. One possible growth sector is

crustaceans, which has a relatively strong RCA index. The shrimp parastatal has recently

invested in new shrimp ponds and the government plans to privatize the parastatal.

Tuna exports are expected to increase because of investment in new storage facilities and

increased tuna transshipments under the new fisheries agreement with the European Union,

which covers January 2005 to January 2011.72 In addition, with the opening of new airline

routes to the Middle East, Seychelles may be able to export fresh and frozen seafood to these
 73 “Emirates Chairman officially inaugurates Seychelles Office,” AME Info., Feb. 22, 2005,

found at www.ameinfo.com, retrieved Mar. 28, 2005.

 74 IDDRA (UK) Ltd., Analysis of the Impact on ACP Countries, pp. 19-21. 

 75 “Albert Rene’s Legacy,” African Business, Apr. 2004, Issue 297, p. 44.

 76 “Franki Africa has Embarked on Construction Contract in Seychelles,” Engineering News,

July 30, 2004, found at www.engineeringnews.co.za, retrieved May 5, 2005.

 77 “Fishing Funding Flows In,” Seychelles Nation, Feb. 10, 2005, found at www.nation.sc,

retrieved Apr. 1, 2005.

 78 “Airport Revamp Takes Off,” Seychelles Nation, Feb. 25, 2005, found at www.nation.sc,

retrieved Apr. 1, 2005.

 79 EIU, Seychelles Country Profile, p. 32. 

 80 “Seychelles’ Ministry of Foreign Affairs.”

 81 EIU, Seychelles Country Profile, p. 23.

 82 Seychelles International Business Authority, Seychelles International Business Focus, 2nd

quarter 2004.

 83 “2005 Budget Speech of President Michel,” found at www.siba.net/pdf/Budget_

speech_2005.pdf, retrieved Mar. 28, 2005.

 84 “Seychelles’ Ministry of Foreign Affairs.”

10-25

markets.73 Some strengths of the Seychelles tuna industry are an EEZ rich in tuna, an

experienced fisheries workforce, and the fact that the product is well established in EU

markets.74 In addition, Seychelles has a comparatively advanced infrastructure system. The

efficiency and geographic convenience of Port Victoria reportedly influenced Heinz’s

investment in the Seychelles tuna industry.75 There has also been recent investment in

infrastructure. In 2004, work began to extend the tuna quay at Port Victoria to increase

handling and processing capabilities and upgrade facilities.76 A World Bank grant of

$2 million and assistance from the Japanese International Cooperation Agency will

rehabilitate the artisanal fishing quay.77 Renovations on the international airport terminal

started in early 2005, financed by the Arab Bank for Economic Development in Africa

(nearly $2 million) and the Government of Seychelles.78

Privatization of the tourism parastatals in the 1990s and a new open skies policy could

increase tourism sector exports. Tourism benefits from a favorable climate, beaches, and a

generally stable political environment. It also benefits from “sound environmental policies”

that protect over 50 percent of the land.79 The tourist base could be diversified to attract

tourists from a broader range of countries and tourists for different types of vacations such

as nature and adventure vacations.80 Recent government initiatives to increase tourism

include concessions to businesses under the Tourism Incentives Act; a reduction in taxes on

food items, wine, and bottled water; and a 200-percent tax rebate on promotion and

advertising expenses for trade operators. Also, in 2004, the government adopted an open

skies policy, a change from its previous policy of regulating carriers to protect the national

airline. The government has also encouraged investment in luxury hotels through incentives

including exemptions from taxes and labor regulations.81 In 2004, a Dubai-based group

invested $50 million in Mahe’s third 5-star resort.82 New hotel projects are expected to

increase capacity by 1,356 beds.83

Most tourism has been from the European Union; however, there is the potential to attract

tourists from other regions of the world. Emerging markets for tourism include South Africa

and Southeast Asia; in 2003, Seychelles opened tourist offices in Johannesburg and

Singapore to attract additional visitors.84 In addition, the Middle East has become an

emerging source of tourists since Qatar Airways began flights to the country in December

2004 and Emirates Airlines began flights in January 2005. Also, Emirates Holidays and
 85 “Emirates Chairman officially inaugurates Seychelles Office.”

 86 EIU, Seychelles Country Profile, p. 23. 

 87 World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/

dataonline, retrieved Jan. 25, 2005.

 88 EIU, Seychelles Country Profile, p. 13. 

 89 EIU,“Financial Services: Seychelles,” Business Africa, Mar. 16, 2005.

 90 Indian Ocean Rim Network, Republic of Seychelles: Compendium on Investment and Trade,

found at www.iornet.com/new-iornet/iorarc/wgti/wgti2003index.htm, retrieved Mar. 30, 2005.

 91 Seychelles National Party, found at www.seychelles.net/snp/partb.html, retrieved

Apr. 25, 2005.

 92 Seychelles International Business Authority, Seychelles International Business Focus, 1st

quarter 2005.

 93 “Forex shortage main investment barrier–study,” Seychelles Nation, Mar. 28, 2005, found at

www.nation.sc, retrieved Apr. 1, 2005.

 94 EIU, Seychelles Country Profile, p. 16.

 95 Central Intelligence Agency, “Seychelles,” World Factbook 2004, found at www.cia.gov/

cia/publications/factbook, retrieved Mar. 28, 2005.

 96 Republic of Seychelles National Assessment, Barbados Programme of Action +10 Review,

Jan. 2004.

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Seychelles Tourist Marketing Authority have recently begun promoting the island to tourists

from the Middle East.85

With its high literacy rate, trilingual culture, and telecommunications infrastructure, online

business services is another potential export.86 The number of fixed and mobile phone

subscribers is high (823 of 1,000 people in 2002), Internet access in 2002 was 145 per 1,000

people,87 and PC use was 16.1 per 100 people.88 Offshore business services is another sector

that may increase with recent changes in legislation and new double taxation treaties. The

government introduced legislation in July 2003 to promote the offshore business industry.

The first offshore bank, Barclays Bank, opened in 2005, as a result of changes in offshore

legislation and new double taxation agreements with other countries. It will serve firms

primarily in the offshore sector and may encourage other international businesses.89 Other

services with growth potential include consulting and translation services;90 dry docking,

technical support, and other shore services;91 and shipping services, which may benefit from

the recently created Port Authority and a proposed transshipment hub.92

Domestic and International Barriers

A recent study by the Foreign Investment Advisory Board identified the lack of foreign

exchange and discretionary government decision making as the two main impediments to

investment in Seychelles.93 The Seychelles Chamber of Commerce and Industry has lobbied

the government for the following reforms: devaluation of the currency, review of foreign

exchange allocation procedures, a new investment code, and an end to SMB’s monopoly

powers.94 The controlled exchange rate reportedly is a major impediment; the official

exchange rate is double the black market value of the Seychelles rupee. The high value of

the Seychelles’ rupee has increased prices for tourists, and vacationers have sought less

expensive destinations such as Comoros, Mauritius, and Madagascar.95

Limited access to capital from international commercial markets and from multilateral

financial institutions is also a constraint, and the limited size of the economy discourages

investment.96 In addition, the cost of labor is high, as are the costs of most other inputs, since
 97 EIU, Seychelles Country Profile, p. 32. Data are for 2002. 

 98 Ibid., p. 39. 

 99 For additional information on regional organizations, see app. C.

 100 “Franki Africa has Embarked on Construction Contract in Seychelles.”

10-27

nearly all inputs have to be imported. The average ad valorem duty on all imports was

28.3 percent in 2001 (table SY-5). Labor is a major constraint to growth in exports because

of the small population, high wages, and shortages of certain skills needed to diversify into

more skill-intensive industries, especially services. Also, a shortage of flat land, poor soil,

water shortages, and a fragile environment are other impediments. The government has

invested in desalination plants and land reclamation to address some of these issues.

Economic freedom indicators are not available for Seychelles (table SY-6).

Table SY-5

Seychelles: Business environment

Country data not available.

Import tariffs Simple average of ad valorem duties

(Seychelles, applied rate, 2001)

All goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.3

Agricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.0

Nonagricultural goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.5

Source: World Bank, “Doing Business in 2005,” found at http://rru.worldbank.org/DoingBusiness, retrieved Jan. 25, 2005; and WTO,

“Country Profile,” Nov. 2004, found at http://stat.wto.org/CountryProfile, retrieved Apr. 5, 2005.

Table SY-6

Seychelles: Economic freedom

Country data not available.

Source: The Heritage Foundation, “2005 Index of Economic Freedom Database,” found at www.heritage.org, retrieved

Feb. 11, 2005.

Seychelles has a relatively well-developed infrastructure, especially telecommunications,

where over 80 percent of the population has access to fixed or mobile phones (table SY-7).

In addition, of the 456 kilometers of road network, 437 kilometers are surfaced.97 However,

high transportation costs to export markets and limited air and sea connections to suppliers

and markets are impediments.98 Furthermore, the islands are over 1,500 kilometers from the

continental Common Market for Eastern and Southern Africa countries, limiting the benefit

of regional trade agreements.99 Capacity at the airport and shipping ports has been a concern,

but these facilities are currently being upgraded. The airport is small, but renovations should

be complete in 2006. The port has also experienced some problems with capacity.

Reportedly, “during peak season, ships berth up to six abreast and delays through double

handling have resulted in threats from fleet operators to take their business to

Madagascar.”100 However, facilities are currently being upgraded. Challenges to the

improvement project include the remoteness of the island and lack of availability of labor,

materials, plant, and equipment.
 101 IDDRA (UK) Ltd., Analysis of the Impact on ACP Countries, pp. 19-21. 

 102 Ibid.

 103 “Albert Rene’s Legacy,” p. 44.

 104 Republic of Seychelles National Assessment, Barbados Programme of Action +10 Review.

10-28

Table SY-7

Seychelles: Infrastructure-related indicators

MRY1

Roads, total network (km)........................................................................ (2)

Roads, paved (percent of total roads) .............................................................. (2

)

Transport services (percent of service exports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.3

Transport services (percent of service imports, BoP, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.6

Fixed line and mobile phone subscribers (per 1,000 people, 2002)........................................ 822.5

Internet users (per 1,000 people, 2002) ............................................................. 145.2

Mobile phones (per 1,000 people, 2002) ............................................................ 553.5

Telephone mainlines (per 1,000 people, 2002) ....................................................... 269.1

Electric power transmission and distribution losses (percent of output)..................................... (2

)

Energy imports, net (percent of commercial energy use)................................................ (2

) 1

 Most recent year for which data are available between 1999 and 2003.

2

 Not available.

Note.—Indicator definitions are provided in app. F. 

Source: World Bank, “World Development Indicators,” found at http://devdata.worldbank.org/dataonline, retrieved Jan. 25, 2005. 

Seychelles faces a number of obstacles to the export of canned tuna.101 It has much higher

labor costs than other countries; per-worker labor costs are $19.20 per day compared to

$4.15 in Thailand, $6.01 in Philippines, and $4.00 in Ghana. Moreover, because there are

not enough Seychellois to fill jobs at the prevailing wage, foreign workers must be brought

in. Other constraints are high utilities costs and seasonal water problems. The need to import

raw material and manufactured inputs also increases production costs. For tuna exports, a

constraint is the rules of origin requirements for canned tuna exports to the European Union

that require the tuna cannery to purchase tuna caught by EU vessels, which is more costly

than other tuna.102

Some services face sector-specific impediments to increased exports. With regard to tourism,

the main impediments are distance from markets and cost and availability of flights. Other

constraints are the lack of available foreign exchange, service standards, and human resource

availability.103 An impediment to increased development of offshore centers is international

monitoring bodies that require complex and substantial legislation and reporting

mechanisms.104
APPENDIX A

REQUEST LETTER

A-3

APPENDIX B

FEDERAL REGISTER NOTICE

B-3

Federal Register / Vol. 69, No. 238 / Monday, December 13, 2004 / Notices 72217

INTERNATIONAL TRADE

COMMISSION

[Investigation No. 332–464]

Export Opportunities and Barriers in

African Growth and Opportunity Act—

Eligible Countries

AGENCY: United States International

Trade Commission.

ACTION: Institution of investigation and

scheduling of hearing.

SUMMARY: Following receipt on

November 15, 2004, of a request from

the United States Trade Representative

(USTR) under section 332(g) of the

Tariff Act of 1930 (19 U.S.C. 1332 (g)),

the Commission instituted investigation

No. 332–464, Export Opportunities and

Barriers in African Growth and

Opportunity Act—Eligible Countries

Background

As requested by the USTR, in its

report the Commission will identify,

with respect to each of the 37 subSaharan African countries that are

eligible for African Growth and

Opportunity Act (AGOA) trade

preferences, (1) the major economic

sectors with the greatest potential for

growth in export sales, and (2) domestic

and international barriers that impede

trade growth in such sectors. The

Commission will also include in its

report any information it identifies, in

the course of its research efforts,

concerning private sector initiatives and

technical assistance programs that

attempt to address such barriers.

As requested by the USTR, the

Commission will seek to provide its

report by June 30, 2005.

DATES: Effective Date: December 6,

2004.

FOR FURTHER INFORMATION

CONTACT:

Information may be obtained from the

project leader, Nannette Christ (202–

205–3263 or nannette.christ@usitc.gov) or

the deputy project leader, Laura Polly

(202–205–3408 or laura.polly@usitc.gov).

For information on the legal aspects of this

investigation, contact William Gearhart of

the Office of the General Counsel (202–

205–3091, william.gearhart@usitc.gov).

The media should contact Margaret

O’Laughlin, Office of Public Affairs

(202–205–1819,

margaret.olaughlin@usitc.gov). 

Public Hearing: A public hearing in

connection with this investigation is

scheduled to begin at 9:30 a.m. on

March 1, 2005, at the U.S. International

Trade Commission Building, 500 E

Street, SW., Washington, DC. All

persons have the right to appear by

counsel or in person, to present

information, and to be heard. Persons

wishing to appear at the public hearing

should file a letter with the Secretary,

United States International Trade

Commission, 500 E St., SW.,

Washington, DC 20436, no later than the

close of business (5:15 p.m.) on

February 14, 2005. In addition, persons

appearing should file prehearing briefs

(original and 14 copies) with the

Secretary by the close of business on

February 16, 2005. Posthearing briefs

should be filed with the Secretary by the

close of business on March 11, 2005. In

the event that no requests to appear at

the hearing are received by the close of

business on February 14, 2005, the

hearing will be canceled. Any person

interested in attending the hearing as an

observer or nonparticipant may call the

Secretary to the Commission (202–205–

1806) after February 14, 2005 to

determine whether the hearing will be

held.

Written Submissions: In lieu of or in

addition to appearing at the public

hearing, interested persons are invited to

submit written statements concerning the

investigation. Submissions should be

addressed to the Secretary, United States

International Trade Commission, 500 E

Street, SW., Washington, DC 20436. To

be assured of consideration by the

Commission, written statements related

to the Commission’s report should be

submitted to the Commission at the

earliest practical date, and should be

received by the close of business on

March 11, 2005. All written

submissions, including briefs , must

conform with the provisions of signed

original (or copy designated as an

original) and fourteen (14) copies of

each document be filed. In the event that

confidential treatment of the document

is requested, at least four (4) additional

copies must be filed, in which the

confidential business information (CBI)

must be deleted (see the following

paragraph for further information

regarding CBI). The Commission’s rules

do not authorize filing submissions

with the Secretary by facsimile or

electronic means, except to the extent

permitted in section 201.8 of the rules

(see Handbook for Electronic Filing

Procedures,

ftp://ftp.usitc.gov/pub/reports/electron

ic_filing_handbook.pdf). Persons with

questions regarding electronic filing

should contact the Secretary

(202–205–2000 or edis@usitc.gov).

Any submissions, including briefs,

that contain CBI must also conform

with the requirements of section 201.6

of the Commission’s rules (19 CFR

201.6). Section 201.6 of the rules

requires that the cover of the

document and the individual pages

clearly be marked as to whether they

are the ‘‘confidential’’ or ‘‘nonconfidential’’ versions, and that the

CBI be clearly identified by means of

brackets. All written submissions,

except for CBI, will be made

available for inspection by interested

parties.

The Commission may include some or

all of the CBI it receives in the report

it sends to the USTR. However, the

Commission will not publish CBI in

the public version of the report in a

manner that would reveal the

operations of the firm supplying the

information. The public version of the

report will be made available to the

public on the Commission’s Web site.

The public record for this report may

be viewed on the Commission’s

electronic docket (EDIS) at matter can

be obtained by contacting our TDD

terminal on 202–205–1810. Persons

with mobility impairments who will

need special assistance in gaining

access to the Commission should

contact the Office of the Secretary at

202–205–2000.

List of Subjects

AGOA, Sub-Sahran Africa.

Issued: December 8, 2004.

By order of the Commission.

Marilyn R. Abbott,

Secretary to the Commission.

[FR Doc. 04–27265 Filed 12–10–04;

8:45 am]

APPENDIX C

TRADE- AND ECONOMICS-RELATED TERMS,

UNILATERAL TRADE PREFERENCE

PROGRAMS, AND REGIONAL TRADE

AGREEMENTS

C-3

Trade- and Economics-related Terms

Absolute Advantage.—The ability of a country to supply a particular product or class of

goods at lower costs than competing nations.

African, Caribbean, and Pacific (ACP) Countries.—Refers to 77 countries–most of them

former colonies of member states of the European Union–receiving preferential tariff

treatment as well as EU financial and technical assistance under the Cotonou Agreement, the

successor to the Lomé Convention.

African Growth and Opportunity Act (AGOA).—AGOA is a U.S. government initiative

aimed at assisting the 48 sub-Saharan countries that are potentially eligible to achieve

sustained long-term economic growth and development through its provisions on preferential

trade and investment policy as contained in the Act.

Agreement on Textiles and Clothing (ATC).—A WTO agreement concluded during the

Uruguay Round to phase out the Multifiber Arrangement (MFA). Under the ATC, which

entered into force in 1995, the textiles and apparel sector was to be brought into full

compliance with the GATT/WTO rules by 2005. Under the ATC, mulitilateral textiles and

apparel quotas ended and importing countries may no longer discriminate between exporters

on the basis of multilateral, MFA-like rules.

Appreciation.—An increase in the purchasing power of a currency, relative to one or more

other currencies, as a result of market forces rather than government action.

Bilateral Investment Treaty (BIT).—An agreement between two countries providing for

nondiscriminatory treatment of direct investments. A BIT usually contains provisions for

prompt and adequate compensation in the event of expropriation; guarantees on free transfers

of investment earnings; freedom from performance requirements; and mechanisms for

resolving disputes such as third-party arbitration.

Biotechnology.—A term used in agriculture to refer to techniques that can be used to

increase a plant’s ability to control pests and disease, to tolerate environmental stress, and

to enhance food qualities, such as flavor, texture, shelf-life, and nutritional content. Other

uses include increasing food processing efficiency and developing more effective diagnostic

techniques for testing food safety and environmental quality.

Capacity-building.—In trade context, activities supported by the donor community aimed

at strengthening the ability of stakeholders in developing countries to develop national trade

policy, to undertake analysis, to identify their interests in international trade negotiations,

and to integrate increasingly into the international trading environment. See also trade

capacity.

Category 1 Certification.—A country's civil aviation authority has been assessed by U.S.

Federal Aviation Administration inspectors and has been found to license and oversee air

carriers in accordance with International Civil Aviation Organization aviation safety

standards.
C-4

Common Agricultural Policy (CAP).—The system of production targets, subsidies, price

supports, and other marketing mechanisms maintained by the European Union to manage

farm trade within the European Union and with the rest of the world.

Common External Tariff.—A uniform tariff schedule applied by members of a customs

union or common market to imports from nonmember countries.

Common Market.—A group of countries formally committed to the unrestricted movement

of goods, services, and factors of production traded among themselves. Features of a

common market include elimination of tariffs and other barriers to internal trade, and

common external tariffs.

Comparative Advantage.—Relative efficiency in production of one particular product or

class of goods over another class of goods. Differences in comparative advantage among

countries are the basis for mutually beneficial specialization and trade. (Not to be confused

with absolute advantage, in which comparison is made with other countries; for even if a

country were absolutely more efficient than others in producing every product, it could still

benefit by specializing in—and exporting—products in which its comparative advantage is

greatest, and importing the other products.)

Competitive Advantage.—Different than comparative advantage, a market position

established either by providing comparable buyer value more efficiently than competitors

or by performing activities at comparable cost but in unique ways that create more buyer

value through differentiation.

Cotonou Agreement.—Partnership agreement between the European Union and the ACP

countries signed in June 2000 in Cotonou, Benin that replaces the Lomé Convention. Its

main objective is poverty reduction, "to be achieved through political dialogue, development

aid and closer economic and trade cooperation."

Customs Union.—A group of countries that have agreed to eliminate barriers to trade

among themselves while harmonizing their tariffs on imports from nonmember countries into

a common external tariff. A customs union represents a level of economic cooperation

intermediate between a free trade area and a more closely integrated common market. Unlike

a common market, it does not provide for free movement of capital and labor among

members.

Depreciation.—A decline in the purchasing power of a currency, relative to one or more

other currencies, as a result of market forces rather than government action.

Devaluation.—The lowering of the value of a currency, relative to one or more other

currencies, as a result of deliberate government action.

Developing Countries or Less-Developed Countries.—A broad range of approximately

130 countries that are distinguished from industrial countries by their lack of a high degree

of industrialization, infrastructure and other capital investment, or of advanced living

standards among their populations as a whole.
C-5

Drawback.—Also known as duty drawback. The partial or total reimbursement of import

duties by a government when the imported goods are re-exported or used in the manufacture

of exported goods.

Economies of Scale.—(Also known as increasing returns to scale.) Cost savings that occur

in production processes where higher output levels allow a firm to employ more productive

technology so that doubling inputs, for example, will result in more than a doubling of

output.

Economic Union.—The highest level of economic integration between sovereign countries,

in which members proceed beyond the requirements of a common market to unify their

fiscal, monetary, and socioeconomic policies.

Effective Rate of Protection.—The overall effect of a nation's tariff system on a specific

domestic product, after taking into account the impact of trade restrictions on the industry's

inputs. The effective rate of protection is the proportionate increase in value-added in an

industry that is possible as a result of the whole structure of protection, on both the output

and the inputs of the industry.

Enhanced Structural Adjustment Facility (ESAF).—Facility established in 1987, by the

World Bank to provide assistance on concessional terms to low-income member countries

facing protracted balance of payments problems. Replaced in 2000 by the Poverty Reduction

and Growth Facility (PRGF). 

Everything But Arms (EBA).—A 2001 EU initiative to grant least-developed countries

duty- and quota-free access for their exports.

Export Processing Zone (EPZ).—A special form of free trade zone in which certain

exemptions from duties and regulations are granted as an inducement to export-oriented

manufacturing. Usually a manufacturer within the zone may import equipment and raw

materials free of duty for goods that are ultimately exported as finished products.

Foreign Direct Investment (FDI).—The acquisition of productive resources such as

factories, mines, or transport facilities in a foreign country. For an investment to be

considered "direct," it must be large enough to give the investor control or significant

influence over the foreign operation. Investments falling below the threshold of active

participation in management of the foreign entity are regarded as "portfolio" investments.

Free Trade Agreement (FTA).—An agreement between two or more countries establishing

a free trade area.

Free Trade Area (FTA).—A group of two or more countries that agree to remove barriers

affecting substantially all trade with each other, while each maintains its own schedule of

tariffs and other regulations on imports from nonmember countries.

Free Trade Zone (FTZ).—A designated area within a country in which goods can be

imported, stored, or processed without being subject to customs duties and taxes. Also

known as a "foreign trade zone," a "free port," or a "bonded warehouse."
C-6

Generalized System of Preferences (GSP).—A system of tariff preferences applied by

industrial countries to selected manufactured and semimanufactured goods from developing

countries, in order to facilitate LDC exports and economic development.

Genetically Modified Organism (GMO).—A new organism created by combining, through

genetic engineering, DNA from different species.

Harmonized System (HS).—A system of tariff nomenclature for customs classification

negotiated within the World Customs Organization. Participating countries classify goods

for customs purposes on the HS basis up to a level of product specificity denoted by six-digit

codes.

Highly Indebted Poor Countries Initiative (HIPC).—An agreement among official

creditors to help the most heavily indebted countries to obtain debt relief.

Import Licensing.—Procedures requiring the submission of an application or other

documentation (other than those normally required for customs purposes) to an

administrative body for approval as a prior condition for importation into the customs

territory of a country.

Import Substitution Industrialization (ISI).—A policy of promoting domestic production

of goods that otherwise would be imported. Such programs may involve a combination of

domestic subsidies and import restrictions, and are often justified on grounds of conserving

foreign exchange. Also known as infant industry protection.

Informal Economy/Sector.—Whereas the formal sector refers to activities linked to official

administrative entities (such as through tax collection), the informal sector refers to activities

primarily unmonitored by administrative entities (such as cash payments to employees). It

is also referred to as the system of exchange used outside state-controlled economic

activities. 

Integrated Framework for Trade-related Technical Assistance (IF).—Joint activity and

donor-financed trust fund managed by six agencies (IMF, UNCTAD, UNDP, World Bank,

WTO, and International Trade Centre (Geneva)) to work with LDCs to undertake diagnostic

studies, to assist countries in identifying key constraints to better integration into the world

economy, and to provide followup trade-related technical and financial assistance.

Interim Poverty Reduction Strategy Paper (IPRSP).—Document which outlines actions

the government intends to take to develop a full Poverty Reduction Strategy Paper (PRSP).

It also contains details of intended macroeconomic policy reforms and may also include

information on the country's poverty situation.

Kimberley Process.—The Kimberley Process Certification Scheme (KPCS) is a scheme

designed to prevent conflict diamonds (also known as blood diamonds) from entering the

mainstream rough diamond market. In December 2000, the General Assembly of the United

Nations passed a resolution calling for the creation of a scheme that would allow certification

of diamonds that had not been sold in order to finance civil war. The KPCS was finally

agreed upon by nations involved in the trade of diamonds and having diamond-mining and

production companies in November 2002. In order for a country to be able to participate in

the scheme, it must ensure that (1) any diamond originating from the country does not

finance a rebel group or other entity seeking to overthrow a UN-recognized government, (2)
C-7

every diamond export be accompanied by a Kimberley Process certificate proving that any

diamond originating from the country does not finance a rebel group or other entity seeking

to overthrow a UN-recognized government, and (3) no diamond is imported from, or

exported to, a nonmember of the scheme. 

Least Developed Countries (LDCs – or sometimes LLDCs, to distinguish from lessdeveloped countries).—Refers to those developing countries experiencing no significant

economic growth, very low per capita incomes, and low literacy rates.

Lomé Convention.—A series of preferential trade and economic assistance agreements–the

first of which was signed in 1975 in Lomé, Togo–between the European Community and 69

former colonies of the EC member states (the ACP countries). Superceded the Yaoundé

Conventions of 1963 and 1969.

Multifiber Arrangement (MFA).—Full name is the Multifiber Arrangement Regarding

International Trade in Textiles. A multilateral arrangement under which GATT members

could apply quantitative restrictions on imports of textiles and clothing. On January 1, 2005,

the Uruguay Round Agreement on Textiles and Clothing (ATC) expired, marking the end

of import quotas that had shaped world trade in textiles and apparel. The ATC came into

effect with the WTO Uruguay Round Agreements in 1995 and superseded the MFA, an

arrangement that permitted importing countries to establish quotas on textiles and apparel

outside normal GATT rules during 1974-1994. As such, WTO countries now have quota-free

access to the textile and apparel markets of major importing countries, including the United

States and the European Union.

Multiple Exchange Rates (also known as Differential Exchange Rates).—A system of

officially prescribed rates of exchange for a country's currency that varies depending on the

type of transaction involved.

New Partnership for Africa's Development (NEPAD).—Organization adopted by African

heads of state and government in Nigeria in October 2001, NEPAD is an agenda set by

African leaders to eradicate poverty through sustainable growth and development and

through active participation in multilateral fora. NEPAD has seven main initiatives

concerning (1) peace, security, democracy, and political governance; (2) economic and

corporate governance; (3) infrastructure; (4) human resource development; (5) capital flows;

(6) market access; and (7) the environment.

Nontariff Barriers (NTBs).—Measures other than tariffs that burden or restrict international

trade.

Nontariff Measures (NTMs).—A broader term than NTBs, including not only importrestricting barriers but also measures that distort trade by stimulating exports.

Parastatal.—An entity with some degree of state ownership.

Poverty Reduction Strategy Paper (PRSP).—Document describing a country's

macroeconomic, structural, and social policies and programs to promote growth and reduce

poverty, as well as associated external financing needs. PRSPs are prepared by governments

through a participatory process involving civil society and development partners, including

the World Bank and IMF, and provide the basis for concessional lending and debt relief

under the enhanced HIPC initiative.
C-8

Poverty Reduction and Growth Facility (PRGF).—The IMF's concessional lending

facility, which provides finance for Poverty Reduction Strategy Papers (PRSPs). Previously,

this facility was called the Enhanced Structural Adjustment Facility (ESAF).

Poverty Reduction Support Credit (PRSC).—World Bank program loan availability to

countries in support of a Poverty Reduction Strategy Paper (PRSP). 

Preferential Trade Arrangement (PTA).—A group of countries that grant each other

special trade advantages, such as preferential tariff rates, in order to promote member

countries' export growth.

Primary Commodity or Primary Product.—An agricultural, forest, mineral, or fisheries

product sold in its original form, including such processing as may be necessary to make the

product suitable for sale in international trade.

Real Exchange Rate.—The nominal exchange rate adjusted for inflation.

Re-Export Trade.—The export of previously imported products without value added.

Regional Trade Arrangement.—See trade bloc.

Revaluation.—The increasing of the value of a currency, relative to one or more other

currencies, as a result of deliberate government action.

Revealed Comparative Advantage (RCA).—A measure of relative competitive

performance of a country's exporters of a particular product or class of goods. Calculated by

dividing the country's share of world exports of the product in question by the country's

share of total world trade. Products having a ratio greater than one may be considered

indicative of the country's underlying comparative advantage, relative to products with ratios

less than one.

Rules of Origin.—The laws, regulations, and administrative practices that are applied to

ascribe a country of origin to goods in international trade.

Sanitary and Phytosanitary (SPS) Measures.—Health and safety standards affecting

imports. "Sanitary" regulations are those applying to human and animal products;

"phytosanitary" regulations apply to plants and plant products.

Short Term.— One business cycle, or approximately 4 to 5 years.

Special and Differential Treatment.—WTO agreements contain special provisions that

give developing countries special rights and developed countries the possibility to treat

developing countries more favorably than other WTO members. These provisions are

referred to as “special and differential treatment” provisions, and can include longer time

periods for implementing agreements and commitments, measures to increase trading

opportunities for these countries, provisions requiring all WTO members to consider

favorably the trade interests of developing countries, support to help developing countries

build the infrastructure for trade purposes, help in handling WTO legal aspects of trade

disputes, help in implementing technical standards, and provisions related to LDC members.
C-9

Standards.—Rules, regulations, or procedures specifying characteristics that must be met

by a product (such as dimensions, quality, performance, or safety).

Structural Adjustment Lending.—A program of lending by the World Bank designed to

help developing countries deal with balance-of-payments problems resulting from internal

economic patterns that are susceptible to correction. The program provides hard-currency

loans conditional upon agreement by the beneficiary country to undertake specified

corrective measures.

Structural Adjustment Policies.—Measures–such as worker re-training and placement,

capital formation, and R&D support–intended to facilitate the adjustment of factors of

production to "structural" economic forces such as increased international competition.

Subsidy.—A payment or economic benefit conferred by a government on a specific industry

or enterprise in order to advance an economic objective deemed to be in the public interest.

Symmetric Revealed Comparative Advantage (SRCA).—A revealed comparative

advantage index developed by Laursen and Engedal, which ranges between -1 adn +1 and

is symmetric around zero.

Tariff.—A tax or duty levied upon goods imported into a country or customs area.

Tariff Binding.—In GATT context, commitment by countries not to raise particular tariffs

above a specific or “bound” level. Also referred to as ceiling bindings.

Tariff Equivalent.—Measure of the protective effect of a nontariff barrier (NTB); the tariff

that would have the exact same effect on imports as the NTB.

Technical Barriers to Trade (also referred to as technical standards).—Governmentestablished specifications of product characteristics–such as levels of quality or purity,

performance, safety, environmental impact, or physical dimensions–that must be met in

order to receive permission to import the product. The specifications may cover testing and

test methods, terminology, symbols, packaging, marking, or labeling requirements.

Terms of Trade.—The volume of exports that can be traded for a given volume of imports;

changes in the terms of trade are measured by changes in the ratio of export prices to import

prices.

Trade Barrier.—Any governmentally-imposed constraint upon the international exchange

of goods or services. Such constraints can take the form of tariffs, quotas, or nontariff

barriers.

Trade Bloc.—A general term referring to regional arrangements among countries that have

established formal mechanisms for cooperation on trade issues. The term does not

necessarily imply a protectionist stance with respect to nonmember countries, although it is

sometimes used in this way. No widely accepted definition of "trade bloc" exists, but it is

commonly understood to include six types of arrangements. In descending order of politicaleconomic integration, these categories are: economic union, common market, customs union,

free trade area, preferential arrangement, and regional cooperation.
C-10

Trade Capacity.—The supply-side ability (capacity) of a country to benefit from the

opportunities offered by the world market and MFN or preferential access to markets.

Value Added.—The value of output minus the value of all inputs used in production. By

definition, equal to the contribution of, and payments to, primary factors of production

(labor, capital, and land).

Value-Added Tax (VAT).—An indirect tax, assessed on increments in the value of a

product from the raw-material stage through the production process to final sale. At each

stage, the tax is levied on the amount by which inputs purchased from the preceding stage

have been augmented in value. The final sale price will incorporate all of the VAT payments

made along the production chain.

Vertical Integration.—The combination within one firm of two or more different stages in

the production process of a particular good or service.

World Integrated Trade Solution (WITS).—A database and software package developed

by UNCTAD and the World Bank to allow analysis of trade flows, market access conditions,

and the impact of own- and partner-country liberalization.

World Trade Organization (WTO).—The WTO is the multilateral organization that

oversees implementation of the multilateral trade rules under the General Agreement on

Tariffs and Trade 1994 (GATT 1994) negotiated during the 1986-93 Uruguay Round of

trade negotiations and today observed by nearly 150 WTO members. 

Source: Nathan Associates, “Terms Related to Trade Policy and Economics,” Compiled for

USAID/Support for Trade Capacity, June 2002; World Trade Organization, “Glossary,”

found at www.wto.org/english/thewto_e/glossary_e/glossary_e.htm, retrieved Apr. 27, 2005;

and U.S. Department of State, “The Language of Trade,” found at http://usinfo.state.gov,

retrieved Apr. 8, 2005. Edited and supplemented by USITC staff.
C-11

Table C-1Unilateral trade preference programs and regional trade agreementsAgreement Date Established SSA Membership Description/PurposeAfrican EconomicCommunity (AEC)(Also known as theAbuja Treaty)

June 3, 1991.Entered into force in1994.

All African states. It envisions a 34-year and six-stage process toward the est

the coordination of existing regional communities. Its five pCOMESA, SADC, ECOWAS, and the Arab Maghreb Union members are in the first stage, strengthening the five regiocreating new ones, as needed. While this first stage was to continues today as the regional organizations are at varying economic development and integration.

African Union (AU) 1999-2002 All African states. In 1999, the Heads of State and Government of the Organi

issued a Declaration (the Sirte Declaration) calling for the eAfrican Union. The Durban Summit (2002) launched the AU Assembly of the Heads of States of the African Union. The 

are to achieve greater unity and solidarity between the Africpeoples of Africa; to defend the sovereignty, territorial integits Member States; to accelerate the political and socio-ecocontinent; to promote and defend African common positionthe continent and its peoples; to encourage international coaccount of the Charter of the United Nations and the UniveRights; to promote peace, security, and stability on the condemocratic principles and institutions, popular participation promote and protect human and peoples' rights in accordaCharter on Human and Peoples' Rights and other relevant to establish the necessary conditions that enable the continin the global economy and in international negotiations; to pdevelopment at the economic, social, and cultural levels as 

African economies; to promote cooperation in all fields of hliving standards of African peoples; to coordinate and harmbetween the existing and future Regional Economic Commattainment of the objectives of the Union; to advance the decontinent by promoting research in all fields, in particular in to work with relevant international partners in the eradicatioand the promotion of good health on the continent.
C-12

Table C-1—ContinuedUnilateral trade preference programs and regional trade agreementsAgreement Date Established SSA Membership Description/PurposeCommon Market forEastern andSouthern Africa(COMESA)

Founded in 1981 asthe Preferential TradeAgreement (PTA) andin 1994 was renamedthe Common Marketfor Eastern andSouthern Africa(COMESA). 

Angola, Burundi, Comoros,Democratic Republic of theCongo, Djibouti, Egypt,Eritrea, Ethiopia, Kenya,Madagascar, Malawi,Mauritius, Rwanda,Seychelles, Sudan,Swaziland, Uganda, Zambia,and Zimbabwe.

COMESA plans to achieve an economic community with a unified monetary policy. Stage one of the integration plan is with lower tariffs in intra-regional than in extra-regional tradtrade area (FTA). Stages three and four are a customs unioCOMESA is currently in between the first and second stageon October 31, 2000, not all COMESA members haven choFTA. FTA participants maintain a 100-percent rate of tariff members promise reductions between 0 percent and 80 pemembers also benefit from several operational and active isuch as the PTA-Reinsurer Bank, the Eastern and SoutherDevelopment Bank, and the World Bank-supported African The United States maintains a Trade and Investment Framwith COMESA, which allows both parties to have regular, fodiscussions.

Cotonou Agreement.Also called theAfrican, Caribbean,Pacific(ACP)–EuropeanCommunity (EC)Agreement or theACP–EC Agreement

Ratified by ACP andEU partners between2000 and 2003;expires January 1,2008. The CotonouAgreement replacedthe 1975 LoméAgreement.

Angola, Benin, Burkina Faso,Burundi, Cape Verde, CentralAfrican Republic, Chad,Comoros, DemocraticRepublic of the Congo,Djibouti, Equatorial Guinea,Ethiopia, Eritrea, The Gambia,Guinea, Guinea-Bissau,Lesotho, Liberia, Malawi, Mali,Mauritania, Madagascar,Mozambique, Niger, Rwanda,São Tomé and Principe,Sierra Leone, Somalia, Sudan,Tanzania, Togo, and Zambia.

The Cotonou Agreement has five pillars including a politicaapproaches, poverty reduction focus, economic and trade ccooperation. It maintains protocols on sugar, beef, and veasought to begin negotiations of Economic Partnership Agrehowever to date, there has been little interest. The EPAs wagreements to the Cotonou Agreement. Only Kenya and Zinterest in an EPA given that benefits gained through the "Einitiative are far greater for many countries even if the EBA withdrawn at any time. The European Union wants all EPAJanuary 1, 2008, at which time a transitional 12-year period liberalization will begin.
C-13

Table C-1—ContinuedUnilateral trade preference programs and regional trade agreementsAgreement Date Established SSA Membership Description/PurposeEast AfricanCommunity (EAC)

Existed in variousforms off-and-onsince 1917 beforedissolving completelyin 1977. Agreementfor the Establishmentof the PermanentTripartite Commissionfor East African Cooperation was signedon November 30,1993.

Kenya, Uganda, andTanzania.

Its Customs Union began operation on January 1, 2005. Thcommon external tariff. The intention is that by 2011 there quota-free movement of tradeable goods among EAC mema common set of customs rules and procedures, and a comgoods. The union may enter into FTAs with other trading bnegotiations with other countries, EAC members are requirtrade policy.

EconomicCommunity ofCentral AfricanStates (ECCAE)/CommunautéÉconomique etMonétaire del'Afrique Centrale(CEMAC)

December 1981.Became inactive in1992 and wasreactivated inFebruary 1998.

Angola, Burundi, Cameroon,Central African Republic,Chad, Democratic Republic ofthe Congo, Equatorial Guinea,Gabon, Republic of theCongo, Rwanda, and SãoTomé and Principe.

Seeks regional economic cooperation and a common mark

EconomicCommunity of WestAfrican States(ECOWAS) /CommunautéÉconomique desEtats de l'Afrique del'Ouest (CEEAO)

May 28, 1975. Anupdated ECOWASTreaty was signed in1993.

Benin, Burkina Faso, CapeVerde, Côte d'Ivoire, TheGambia, Ghana, Guinea,Guinea-Bissau, Liberia, Mali,Niger, Nigeria, Senegal, SierraLeone, and Togo.

The 1993 treaty seeks increased political cooperation, a cosingle currency, a common parliament, a Court of Justice aresponsibility in solving regional conflicts. While the Court oECOWAS Parliament are operational, it is uncertain as to wheard cases or whether the Parliament has the jurisdiction decisions. ECOWAS maintains a Defense Protocol, signed members to resolve conflicts in other member states. The EForce has been utilized in regional conflicts. Little movemea common market.
C-14

Table C-1—ContinuedUnilateral trade preference programs and regional trade agreementsAgreement Date Established SSA Membership Description/PurposeIndian OceanCommission (IOC)/Commission del'Océan Indien (COI)

January 1984. Comoros, France (for

Réunion), Madagascar,Mauritius, and Seychelles.

Promote cooperation among island states of the southwest encourages diplomatic cooperation, economic and commecooperation in the fields of agriculture, maritime fishing, anresources and the ecosystems. The IOC receives financial European Union on a variety of trade and environmental prsummit was held in 1999 and chaired by the French PresidWhile the 1999 meeting suggested a quadrenniel summit pwas held in 2003 or 2004.

Indian Ocean RimAssociation forRegionalCooperation(IOR-ARC)

March 1997. African Members: Kenya,

Madagascar, Mauritius,Mozambique, South Africa,and Tanzania. Asian and Middle EasternMembers: Australia,Bangladesh, India, Indonesia,Iran, Malaysia, Oman,Singapore, Sri Lanka,Thailand, United ArabEmirates, and Yemen.

Facilitate economic cooperation; seek sustained growth anof the region; and promote trade liberalization and the remogoods, services, and technology.

Inter-GovernmentalAuthority ofDevelopment inEastern Africa(IGAD)

Founded in 1986 andrevised in 1996.

Djibouti, Eritrea, Ethiopia,Kenya, Somalia, Sudan, andUganda.

Enhance cooperation and coordination of macro-economic development and food security, environmental policies, and conflict prevention, management and resolution; encourage persons to benefit from humanitarian assistance; and promharmonization of trade, transport, and communication polic

Southern AfricanCustoms Union(SACU)

Began in 1910.Updated agreementswere made in 1969and 2002.

Botswana, Lesotho, Namibia,South Africa, and Swaziland.

SACU has a common external tariff and a common excise duties among members. All members except Botswana shaArea (CMA) and within the CMA, the currencies of Lesotho (lilangeni) and Namibia (dollar) are tied to the South African Agreement created a more democratic institutional structur

wide dispute settlement mechanism; encouraged movemenpolicies on industrial development, agriculture, competitionpractices; and created a tariff board disallowing unilateral cantidumping measures, countervailing and safeguard dutie

duty drawbacks.
C-15

Table C-1—ContinuedUnilateral trade preference programs and regional trade agreementsAgreement Date Established SSA Membership Description/PurposeSouthern AfricanDevelopmentCommunity (SADC)

April 1980. Angola, Botswana,

Democratic Republic of the Congo, Lesotho, Malawi,Mauritius, Mozambique,Namibia, South Africa,Swaziland, Tanzania, Zambia,Zimbabwe. Madagascar’smembership is to enter intoeffect in August 2005.

Seeks economic cooperation, regional economic integratiochoices, and regional solidarity. On the trade front, the SADoperation in 2000. By 2008, 85 percent of all intra-SADC trby 2012, 98 percent of SADC merchandise trade is to have making SADC a free trade area. Affected goods are split inliberalization occurs in stages. There are two side agreemesugar and textiles. The Sugar Protocol intends full liberaliza2013. With textiles, Malawi, Mozambique, Tanzania, and Zstage produced textiles and clothing to SACU countries untexports above the quota are subject to “double stage transEach of these agreements has been published.

West AfricanEconomic andMonetary Union(WAEMU) / UnionÉconomique etMonétaire OuestAfricaine (UEMOA)

January 10, 1994. Benin, Burkina Faso, Côte

d’Ivoire, Guinea-Bissau, Mali,Niger, Senegal, and Togo.

Tariff elimination and common monetary and commercial pmonetary zone was launched in 2000, and the WAEMU IntCommittee has held discussions about creating a regional States maintains a Trade and Investment Framework AgreWAEMU, which allows both parties to have regular, formal, discussions.

Africa Growth andOpportunity Act(AGOA)

The African Growthand Opportunity Act(AGOA) was signedinto law on May 18,2000 as Title I of TheTrade andDevelopment Act of2000.

Angola, Benin, Botswana,Burkina Faso, Cameroon,Cape Verde, Chad,Democratic Republic of theCongo, Djibouti, Ethiopia,Gabon, The Gambia, Ghana,Guinea, Guinea-Bissau,Kenya, Lesotho, Madagascar,Malawi, Mali, Mauritania,Mauritius, Mozambique,Namibia, Niger, Nigeria,Republic of the Congo, Rwanda, São Tomé andPrincipe, Senegal, Seychelles,Sierra Leone, South Africa,Swaziland, Tanzania, Uganda,and Zambia.

Provides duty-free entry into the United States of over 6,40United States' Generalized System of Preferences (GSP). opportunities to export to the United States with zero imporAGOA were signed into law on August 6, 2002. These ameAGOA II, expand preferential access. The AGOA Accelerainto law on July 12, 2004, extends preferential access for imcountries until September 30, 2015 and extends the third-cuntil September 2007.
C-16

Table C-1—ContinuedUnilateral trade preference programs and regional trade agreementsAgreement Date Established SSA Membership Description/Purpose"Everything butArms" Initiative of theEuropean Union(EBA)

February 2001. Countries classified as lessdeveloped: Angola, Benin,

Burkina Faso, Burundi, CapeVerde, Central AfricanRepublic, Chad, Comoros,Democratic Republic of theCongo, Djibouti, EquatorialGuinea, Eritrea, Ethiopia, The Gambia, Guinea,Guinea-Bissau, Lesotho,Liberia, Madagascar, Malawi,Mali, Mauritania, Mozambique,Niger, Rwanda, São Toméand Principe, Senegal, SierraLeone, Somalia, Sudan,Tanzania, Togo, Uganda, andZambia.

Grants duty-free access to imports of nearly all products, wrestriction, from LDCs, except arms and munitions. Bananaliberalized immediately and their duties will be gradually redto be granted for bananas in January 2006, for sugar in JulSeptember 2009. Certain products are subjected to rules ocumulative rules of origin. The EBA initiative has no periodEuropean Union’s GSP and thus, EBA-granted preferences countries remain in place for an unlimited period. However, can be withdrawn from any country at any time. In additionquantitative restrictions on imports into the European Union

temporary withdrawal measures may be considered.

Sources: Government of the Republic of South Africa, "African Economic Community," Department of Foreign Affairs, found at www.dfa

2005; African Union (The), "Treaty Establishing the African Economic Community," found at www.africa-union.org, retrieved Apr. 4, 200Eastern and Southern Africa,” found at www.comesa.int, retrieved Apr. 4, 2005; USTR, “Agreement Between the Government of the Un

the Common Market for Eastern and Southern Africa Concerning the Development of Trade and Investment Relations,” found at www.u

2005; Institute for Security Studies (South Africa), "Common Market for Eastern and Southern Africa," found at www.iss.org.za, retrieved 

Commission (The), "ACP-EU Agreement," found at http://europa.eu.int, retrieved Apr. 4, 2005; “ACP-EU-trade,” found at www.acp-eu-tr

2005; “East African Community,” found at www.eac.int, retrieved Apr. 4, 2005; “Economic Community of Central African States,” found a

retrieved Apr. 4, 2005; Institute for Security Studies, “Economic Community of Central African States,” found at www.iss.org.za, retrieve

Government of the Republic of South Africa, “Economic Community of Central African States,” Department of Foreign Affairs, found at w

Apr. 4, 2005; “Economic Community of West African States,” found at www.ecowas.int, retrieved Apr. 4, 2005; Institute for Security StudCommunity of West African States,” found at www.iss.org.za, retrieved Apr. 4, 2005; “Indian Ocean Commission,” found at www.coi-info

2005; Delegation of the European Commission to the Republic of Mauritius, Comoros and the Republic of Seychelles, “Cooperation – Infound at www.delmus.cec.eu.int, retrieved Apr. 4, 2005; “Indian Ocean Rim Network,” found at www.iornet.org, retrieved Apr. 4, 2005; G

“The Indian Ocean Rim Association for Regional Cooperation,” Department of Foreign Affairs and Trade, found at www.dfat.gov.au, retrGovernment of the Republic of South Africa, “Intergovernmental Authority on Development,” Department of Foreign Affairs, found at ww

Apr. 4, 2005; “Intergovernmental Authority on Development,” found at www.igad.org, retrieved Apr. 4, 2005; WTO, Trade Policy Review

Customs Union, Report by the Secretariat, T/TPR/S/114, Mar. 24, 2003; Institute for Security Studies, “Southern African Development Cwww.iss.org.za, retrieved Apr. 4, 2005; Government of the Republic of South Africa, “West African Economic and Monetary Union,” Dep

found at www.dfa.gov.za, retrieved Apr. 4, 2005; U.S. Department of State, “West African Economic and Monetary Union,” Bureau of Af

2002; “Union Economique et Monétaire Ouest Africaine,” found at www.uemoa.int, retrieved Apr. 4, 2005; “AGOA,” found at www.agoa.2005; European Commission (The), “EBA” - Everything But Arms Initiative,” found at http://europa.eu.int, retrieved Apr. 4, 2005; and Eu(The), "EBA" - Everything But Arms Initiative: User's guide to the EU GSP's - Special Arrangements for Least Developed Countries,” fou

retrieved Apr. 4, 2005.
APPENDIX D

DESCRIPTION OF QUANTITATIVE ANALYSIS

 105 David Ricardo, On the Principles of Political Economy and Taxation (London: John Murray,

Third ed., 1821) (First published in 1817).

 106 See R. W. Jones, “Comparative Advantage and the Theory of Tariffs: A Multi-Country,

Multi-Commodity Model,” Review of Economic Studies 28:161-175, June, 1961; J.R. Melvin,

“Production and Trade with Two Factors and Three Goods,” American Economic Review 58:1249-

1268, Dec. 1968; W.P. Travis, “Production, Trade, and Protection When There Are Many

Commodities and Two Factors,” American Economic Review 62:87-106, 1972; and J.Z. Drabicki

and A. Takayama, “An Antimony in the Theory of Comparative Advantage,” Journal of

International Economics 9:211-223, May 1979.

 107 A.V. Deardorff, “The General Validity of the Law of Comparative Advantage,” Journal of

Political Economy 88(5):941-957, Oct. 1980.

D-3

Description of Quantitative Analysis

This appendix discusses the quantitative analysis used to (1) identify potential export

growth sectors and (2) determine the categorization of countries for each chapter.

Analysis of Export Growth Potential

In order to identify sectors with potential in export growth, the Commission conducted

qualitative and quantitative analyses. This section discusses the methodology applied in

the analysis of export statistics, which is based on three considerations:

(1) comparative advantage and how it has been changing over time; 

(2) degree of export market concentration; and 

(3) strength of global markets.

The rest of this section discusses these considerations along with the data that were

utilized and the calculations that were performed. 

Comparative Advantage

In the early 1800s, David Ricardo proposed the law of comparative advantage.

105 Ricardo

defined that country A has comparative advantage over other countries in a good or

service Y when in the absence of trade, that is autarky, country A has a lower opportunity

cost in the production of Y than other countries. The implication of the law of

comparative advantage is that each country exports the good in which it has a

comparative advantage and it imports the good in which it has a comparative

disadvantage and that under trade, the relative prices of goods and services are more

equal across countries than under autarky.

Extensions of the simple model of comparative advantage showed that the law of

comparative advantage breaks down, and it is not possible to explain trade patterns by

comparing relative-autarky-prices.106 In 1980, however, Alan Deardorff showed that a

version of the law of comparative advantage holds in a general model.107 Deardorff

summarized his propositions in the statement that there must exist a negative correlation
 108 Other reasons include government interventions that result in trade flows, that do not reflect

comparative advantage, and data aggregation.

 109 B.A. Balassa, “Trade Liberalization and “Revealed” Comparative Advantage,” The

Manchester School of Economics and Social Studies 33:99-123, May 1965.

 110 R.H. Ballance, H. Forstner, and T. Murray, “Consistency Tests of Alternative Measures of

Comparative Advantage,” Review of Economics and Statistics 69(1):157-161, Feb. 1987.

 111 K. Laursen and C. Engedal, "The Role of the Technology Factor in Economic Growth: A

Theoretical and Empirical Inquiry into new Approaches to Economic Growth," University of

Aalborg, Denmark, 1995. Soete and Verspagen proposed a logarithmic transformation of RCA

D-4

between any country’s net exports, under trade, and relative-autarky-prices. Thus, on

average, high relative-autarky-prices are associated with imports under trade, and low

relative-autarky-prices are associated with exports.

For several reasons, it is difficult to quantify international differences in comparative

advantage. The most important reason is that comparative advantage is defined in terms

of relative product prices in the absence of trade, which are not observable.108 Instead,

real world data must be used in measurements of comparative advantage. In 1965,

Balassa proposed an index of revealed comparative advantage.109 Balassa’s index uses

observed export statistics to reveal the underlying pattern of comparative advantage. The

Balassa revealed comparative advantage (RCAir) index measures a good i’s share in a

country r’s total exports relative to that good's share in world trade: 

where i is a commodity index and r is a country index,

Xir is exports of commodity i from country r,

Xr is total exports from country r,

Xi

 is global trade in commodity i, and 

X is total global trade.

If the share of good i in country r's exports is larger than its share in world trade

(RCAir>1), the country has a revealed comparative advantage in good i. If the share of

good i in country r's exports is smaller than its share in world trade (RCAir<1), the

country does not have a revealed comparative advantage in industry i. 

Since Balassa proposed his RCA index, several other indices have been proposed as

alternatives which are based on other statistics, e.g., net exports. In 1987, Ballance et al.

tested the consistency of alternative RCA indices, and they found that the Balassa index

is consistent with other plausible indices when it is used as an ordinal or dichotomous

measure.110

The RCA index ranges from zero to infinity and thus is difficult to interpret. Laursen and

Engedal developed the symmetric RCA (SRCA) index, which ranges between -1 and +1

and is symmetric around zero:111

X X

X X RCA

i

ir r

ir /

/ =
index, which is not defined when RCA is zero, see L. Soete and B. Verspagen, “Competing for

Growth: The Dynamics of Technology Gaps," in L. Pasinetti and R. Solow (eds.), Economic

Growth and the Structure of Long-Term Development (London: Macmillan, 1994).

D-5

Degree of Export Market Concentration

In addition to identifying sectors for which an AGOA-eligible country either has

comparative advantage or is gaining in comparative advantage, the Commission also

identified sectors that may have a potential for export growth because of opportunities to

expand exports to new markets. The next section discusses the analysis of export

markets.

A high degree of export market concentration in one or two markets could suggest

difficulties in exporting to other markets. If those difficulties were eased, exports could

potentially expand to the other markets. 

For each export market s and product i, we compute the market share, MSirs, that is

satified by exports from AGOA-eligible country r:

where Xirs is exports of good i from AGOA country r to importing country s, and

Xis is total imports of good i by country s.

We then compute the standard deviation, Fir, of market share MSirs from the global market

share MSir:

where MSir = Xir/Xi

, and 

n is the number of markets under consideration in this report.

1

1

+

− =

ir

ir

ir RCA

RCA SRCA

is

irs

irs X

X MS =

n

MSirs MSir

ir

∑ − =

2

( )

σ
 112 More information about WITS is at http://wits.worldbank.org/witsnet/StartUp/

Wits_Information.aspx.

 113 More information about Comtrade can be found at http://unstats.un.org/unsd/comtrade. 

D-6

Large values for standard deviation Fir would suggest that exports of good i from AGOA

country r are relatively concentrated in a few markets. To standardize the comparison

across commodities, we scale Fir by MSir to obtain the normalized standard deviation,

FN

ir:

For each AGOA-eligible country, the analyses of revealed comparative advantage and

export market concentration identify sectors that may have a potential for export growth.

Some of these sectors, however, may not be as promising as the analyses might suggest,

and one of the factors that should be considered is the state of the global market for those

products.

Strength of Global Markets

In addition to exploring the degree of comparative advantage for different product

groups, it is important to consider whether world markets for these products grow or

decline relative to general world trade. As a point of reference, world trade growth

averaged 9.87 percent during 1993-2003. In addition to expanding markets, commodities

that are characterized by relatively expanding global trade are more likely to be

characterized by stable or increasing prices than commodities that are characterized by

relatively declining global trade. For some sectors, however, more research may be

required to understand price behavior (e.g., new electronic products are characterized by

both expanding trade and declining prices).

Trade Statistics and Calculations

The trade statistics used in the analysis of export potential were obtained from World

Integrated Trade Solution (WITS). The World Bank, in collaboration with the United

Nations Conference on Trade and Development (UNCTAD), has developed WITS for

access and retrieval of information on trade compiled by various international

organizations.112 The trade statistics in WITS are those provided by the United Nations

Statistical Division in the Comtrade (Commodity Trade) database.113

ir MS ir

N

ir σ = σ /
 114 The Comtrade database has two values for each bilateral trade flow. One value is reported

by the exporting country; the other value is reported by the importing country. Even though trade

statistics that are reported by importers typically are on a CIF basis, they are more up to date and

they are considered more reliable. Thus, commodity trade reported by all importing countries in

the world was obtained from WITS.

 115 Special HS chapters 98 and 99 were not considered in this report because Comtrade does not

provide data for these chapters.

 116 That is 505,087 (=37×1241×11) trade values were calculated from WITS data.

D-7

The trade statistics that were calculated from WITS data are total exports for each

commodity by each one of the 37 AGOA-eligible countries.114 The statistics obtained

cover trade in 1,241 product aggregates as defined by the Harmonized System (HS)

(1988/92) at the 4-digit level, and from Chapters 1-97.115 The time period is 1993-2003.116

SRCA and Trends in SRCA

SRCAirt for all 1,241 products and all 37 countries were calculated for each year. The

SRCAir that are reported in this report are arithmetic means over 2000-03:

SRCAir = (SRCAir, 2000 + SRCAir, 2001 + SRCAir, 2002 + SRCAir, 2003)/4

Annual changes in the SRCAir were calculated for each year:

)SRCAirt = SRCAir, t – SRCAir, t-1

The reported average trend in SRCAir over 2000-03 was computed as:

SRCAtrendir = ()SRCAir, 2000 +)SRCAir, 2001 + )SRCAir, 2002 + )SRCAir, 2003)/4

Market Shares

The analysis of market shares considered seven markets: Australia, Canada, the United

States, European Union (15 members), Japan, lower- and middle-income economies

(LMI), and the rest of the world (ROW). Appendix table D-1 lists the countries that make

up LMI and ROW.

Market shares, MSirst, were computed for the period 2000-03 and the statistics that are

reported here are arithmetic means:

MSirs = (MSirs, 2000 + MSirs, 2001 + MSirs, 2002 + MSirs, 2003)/4

Standard deviations, Fir, in market shares were computed using the arithmetic means of

market shares. Products were ranked by normalized standard deviation in market shares.
D-8

. 10

2003

1994

∑

= = t it gr

i gr

Growth of Global Trade on a Commodity-by-Commodity Basis

Annual growth rates in global trade were computed for each one of the 1,241 products:

grit = (Xi, t+1 – Xi, t)/ Xi, t , t=1994, ..., 2003.

Average growth rates for each product, gri

 , were computed as arithmetic means:
D-9

Table D-1

Makeup of lower- and middle-income economies (LMI) and rest of the world (ROW)

LMI — Lower- and Middle-Income Countries:

Afghanistan Djibouti Lesotho Rwanda

Albania Dominica Liberia Samoa

Algeria Dominican Republic Libya São Tomé and Principe

Angola Ecuador Lithuania Saudi Arabia

Antigua and Barbuda Egypt, Arab Rep. Macedonia, FYR Senegal

Argentina El Salvador Madagascar Seychelles

Armenia Equatorial Guinea Malawi Sierra Leone

Azerbaijan Eritrea Malaysia Slovak Republic

Bangladesh Estonia Maldives Solomon Islands

Barbados Ethiopia (excludes Eritrea) Mali Somalia

Belarus Fiji Malta South Africa

Belize Gabon Marshall Islands Sri Lanka

Benin Gambia, The Mauritania St. Kitts and Nevis

Bhutan Georgia Mauritius St. Lucia

Bolivia Ghana Mexico St. Vincent and the Grenadines

Bosnia and Herzegovina Grenada Micronesia, Fed. Sts. Sudan

Botswana Guatemala Moldova Suriname

Brazil Guinea Mongolia Swaziland

Bulgaria Guinea-Bissau Morocco Syrian Arab Republic

Burkina Faso Guyana Mozambique Tajikistan

Burundi Haiti Myanmar Tanzania

Cambodia Honduras Namibia Thailand

Cameroon Hungary Nepal Togo

Cape Verde India Nicaragua Tonga

Central African Republic Indonesia Niger Trinidad and Tobago

Chad Iran, Islamic Rep. Nigeria Tunisia

Chile Iraq Oman Turkey

China Jamaica Pakistan Turkmenistan

Colombia Jordan Palau Uganda

Comoros Kazakhstan Panama Ukraine

Congo, Dem. Rep. Kenya Papua New Guinea Uruguay

Congo, Rep. Kiribati Paraguay Uzbekistan

Costa Rica Korea, Dem. Rep. Peru Vanuatu

Côte d'Ivoire Kyrgyz Republic Philippines Venezuela

Croatia Lao PDR Poland Vietnam

Cuba Latvia Romania Yemen

Czech Republic Lebanon Russian Federation Zambia

Zimbabwe
D-10

Table D-1—Continued

Makeup of lower- and middle-income economies (LMI) and rest of the world (ROW)

ROW — Rest of the World 

Andorra East Timor Monaco Saint Helena

Anguila Faeroe Islands Montserrat Singapore

Aruba Falkland Island Nauru Slovenia

Bahamas, The Fr. So. Ant. Tr Netherlands Antilles Special Categories

Bahrain Free Zones Neutral Zone Switzerland

Bermuda French Polynesia New Caledonia Taiwan, China

Br. Antr. Terr Gibraltar New Zealand Tokelau

British Indian Ocean Ter. Greenland Niue Turks and Caicos Isl.

British Virgin Islands Hong Kong, China Norfolk Island Tuvalu

Brunei Iceland Northern Mariana Islands United Arab Emirates

Bunkers Israel Norway Unspecified

Cayman Islands Korea, Rep. Occ.Pal.Terr Us Msc.Pac.I

Christmas Island Kuwait Pitcairn Wallis and Futura Isl.

Cocos (Keeling) Islands Macao Qatar Western Sahara

Cook Islands Mayotte Saint Pierre and Miquelon Yugoslavia

Cyprus

Source: WITS

Country Categorization

As current exports generally represent products for which the AGOA-eligible countries

have a comparative advantage, grouping countries together based on similar export

patterns essentially develops resource- or endowment-based categories to facilitate the

reader’s ability to compare similarly endowed countries. The country groupings were

developed in part by explorations using cluster analysis. 

Cluster analysis is a statistical technique that groups observations in statistical data

together based on a measure of their similarity. There are a number of different similarity

measures which are employed in practice. In this case, the cluster analysis was applied to

the average export market shares of the countries in question for the period 1999-2003.

The groupings reflect both forward and backward linkages among products as well as the

types of exports observed in the countries included in this study. The tables introducing

each chapter reflect 10 aggregates of trade data originally collected at the chapter

(2-digit) level of the Harmonized System, chosen so as to reflect the particular features of

the commodities exported by AGOA-eligible sub-Saharan African countries. For

example, HS chapters 16 and 23 are grouped with “fish and fish products” even though

they contain a number of nonfish products because, in the case of AGOA-countries’

exports, they consist primarily of processed fish products; and HS 40, in the context of

AGOA, refers primarily to natural rather than synthetic rubber and is thus grouped with

forest-based products. The categories are designed to illustrate similarities and

differences in patterns of exports specific to the 37 countries.
D-11

Table D-2 lists the concordance between the HS2 trade data and nine trade categories. A

tenth trade category, “transport services,” is not shown in table D-2 because information

on services trade is not reflected in the merchandise trade data shown. The cluster

analysis did not suggest the existence of a grouping of countries based on “cocoa”

exports. Thus, there is no such country grouping in this report. The three country

groupings “predominantly mineral,” “moderately mineral,” and “cotton” were identified

after indepth analysis of the exports of the countries in the groupings resulting from

cluster analysis. Thus, the corresponding three trade categories are not listed in table D-2.

The data shown in each chapter introduction are averages of market shares for the 5-year

period 1999-2003. This procedure was chosen so as to smooth out fluctuations in

commodity prices or other factors affecting markets in a single year. Thus, the data

shown may not fully capture the most recent trends that may be reflected in the country

profiles. Cluster analysis was used to develop a first approximation of the groupings

presented, supplemented by the judgment of Commission staff. The country groups are

based on similarity of the overall pattern of trade across all trade categories. Thus, the

sector with the largest share of trade may be different for countries in the same country

group.
D-12

Table D-2

Concordance for summary trade categories 

HS Chapter Description

Fish and Related Products

Chapter 3 Fish and crustaceans, molluscs and other aquatic invertebrates 

Chapter 16 Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates 

Chapter 23 Residues and waste from the food industries; prepared animal feed

Coffee, Tea, and Spices

Chapter 9 Coffee, tea, maté and spices

Cocoa

Chapter 18 Cocoa and cocoa preparations

Other Agriculture

Chapter 1 Live animals 

Chapter 2 Meat and edible meat offal 

Chapter 4 Dairy produce; birds eggs; natural honey; edible products of animal origin, not elsewhere

 specified or included

Chapter 5 Products of animal origin, not elsewhere specified or included 

Chapter 6 Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage 

Chapter 7 Edible vegetables and certain roots and tubers 

Chapter 8 Edible fruit and nuts; peel of citrus fruit or melons

Chapter 10 Cereals

Chapter 11 Products of the milling industry; malt; starches; inulin; wheat gluten

Chapter 12 Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruits; industrial or medicinal

 plants; straw and fodder

Chapter 13 Lac; gums, resins and other vegetable saps and extracts

Chapter 14 Vegetable plaiting materials; vegetable products not elsewhere specified or included

Chapter 15 Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or

 vegetable waxes

Chapter 17 Sugars and sugar confectionery 

Chapter 19 Preparations of cereals, flour, starch or milk; bakers' wares 

Chapter 20 Preparations of vegetables, fruit, nuts or other parts of plants

Chapter 21 Miscellaneous edible preparations 

Chapter 22 Beverages, spirits and vinegar 

Chapter 24 Tobacco and manufactured tobacco substitutes

Chapter 41 Raw hides and skins (other than furskins) and leather

Chapter 42 Articles of leather; saddlery and harness; travel goods, handbags and similar containers;

 articles of animal gut (other than silkworm gut)

Chapter 43 Furskins and artificial fur; manufactures thereof 

Forest-based products

Chapter 40 Rubber and articles thereof 

Chapter 44 Wood and articles of wood; wood charcoal 

Chapter 45 Cork and articles of cork 

Chapter 46 Manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork 

Chapter 47 Pulp of wood or of other fibrous cellulosic material; waste and scrap of paper or paperboard

Chapter 48 Paper and paperboard; articles of paper pulp, of paper or of paperboard 

Chapter 49 Printed books, newspapers, pictures and other products of the printing industry; manuscripts,

 typescripts and plans 

Minerals, metals, and metal products

Chapter 25 Salt; sulfur; earths and stone; plastering materials, lime and cement

Chapter 26 Ores, slag and ash 

Chapter 28 Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals,

 of radioactive elements or of isotopes

Chapter 31 Fertilizers

Chapter 71 Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with

 precious metal and articles thereof; imitation jewelry; coin 

Chapter 72 Iron and steel 

Chapter 73 Articles of iron or steel 

Chapter 74 Copper and articles thereof 

Chapter 75 Nickel and articles thereof 

Chapter 76 Aluminum and articles thereof

Chapter 78 Lead and articles thereof 

Chapter 79 Zinc and articles thereof 

Chapter 80 Tin and articles thereof 

Chapter 81 Other base metals; cermets; articles thereof

Chapter 82 Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal 

Chapter 83 Miscellaneous articles of base metal
D-13

Table D-2—Continued

Concordance for summary trade categories

HS Chapter Description

Fuels

Chapter 27 Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes 

Textiles and Fibers

Chapter 50 Silk

Chapter 51 Wool, fine or coarse animal hair; horsehair yarn and woven fabric

Chapter 52 Cotton

Chapter 53 Other vegetable textile fibers; paper yarn and woven fabric of paper yarn 

Chapter 54 Man-made filaments

Chapter 55 Man-made staple fibers

Chapter 56 Wadding, felt and nonwovens; special yarns, twine, cordage, ropes and cables and articles

 thereof 

Chapter 57 Carpets and other textile floor coverings 

Chapter 58 Special woven fabrics; tufted textile fabrics; lace, tapestries; trimmings; embroidery

Chapter 59 Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for

 industrial use 

Chapter 60 Knitted or crocheted fabrics

Apparel and related articles

Chapter 61 Knitted or crocheted fabrics

Chapter 62 Articles of apparel and clothing accessories, knitted or crocheted 

Chapter 63 Articles of apparel and clothing accessories, not knitted or crocheted 

Other Manufactures

Chapter 29 Organic chemicals

Chapter 30 Pharmaceutical products

Chapter 32 Tanning or dyeing extracts; dyes, pigments, paints, varnishes, putty and mastics 

Chapter 33 Essential oils and resinoids; perfumery, cosmetic or toilet preparations

Chapter 34 Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial

 waxes, prepared waxes, polishing or scouring preparations, candles and similar articles,

 modeling pastes, "dental waxes" and dental preparations with a basis of plaster 

Chapter 35 Albuminoidal substances; modified starches; glues; enzymes

Chapter 36 Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations 

Chapter 37 Photographic or cinematographic goods

Chapter 38 Miscellaneous chemical products 

Chapter 39 Plastics and articles thereof 

Chapter 64 Footwear, gaiters and the like; parts of such articles

Chapter 65 Headgear and parts thereof 

Chapter 66 Umbrellas, sun umbrellas, walking sticks, seatsticks, whips, riding-crops and parts thereof 

Chapter 67 Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of

 human hair

Chapter 68 Articles of stone, plaster, cement, asbestos, mica or similar materials 

Chapter 69 Ceramic products

Chapter 70 Glass and glassware

Chapter 84 Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof 

Chapter 85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers,

 television image and sound recorders and reproducers, and parts and accessories of such

 articles

Chapter 86 Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures

 and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling

 equipment of all kinds 

Chapter 87 Vehicles other than railway or tramway rolling stock, and parts and accessories thereof

Chapter 88 Aircraft, spacecraft, and parts thereof

Chapter 89 Ships, boats and floating structures 

Chapter 90 Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical

 instruments and apparatus; parts and accessories thereof 

Chapter 91 Clocks and watches and parts thereof 

Chapter 92 Musical instruments; parts and accessories of such articles

Chapter 93 Arms and ammunition; parts and accessories thereof 

Chapter 94 Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings;

 lamps and lighting fittings, not elsewhere specified or included; illuminated sign illuminated

 nameplates nd the like; prefabricated buildings

Chapter 95 Toys, games and sports requisites; parts and accessories thereof 

Chapter 96 Miscellaneous manufactured articles

Chapter 97 Works of art, collectors' pieces and antiques

Source: Compiled by the Commission.

APPENDIX E

REVEALED COMPARATIVE ADVANTAGE

ANALYSIS BY COUNTRY

E-3

This appendix shows the results of the analysis of export statistics for the 37 AGOAeligible countries. The methodology and the data are discussed in detail in appendix D.

The results of the analysis are presented in 37 tables, one table for each AGOA-eligible

country (tables E-1 to E-37). Each table shows information for potentially up to 40

products, which are grouped in 4 sets of 10 products each, according to the following

indicators:

(1) top 10 by export share,

(2) top 10 by SRCA (symmetric revealed comparative advantage)

index,

(3) top 10 by SRCA index trend, i.e., average annual change in

SRCA index, and 

(4) top 10 by normalized standard deviation (of share of imports in

destination market).

Most country tables, however, do not have 40 products because some

products may belong to more than 1 of the 4 above-mentioned groups. 

Each country table has the following information, for each product, in the

following columns:

(1) - (2) HS 4-digit product number and truncated description,

respectively,

(3) - (6) 1 to 10 product rank for each of the 4 above-mentioned

groups; product ranks higher than 10 are not given in

the table,

(7) average (2000-03) percent share of product exports in

country’s total exports,

(8) SRCA index, 2000-03 average,

(9) annual change in SRCA index, average 2000-03,

(10) growth rate in global trade for product, average

1993-2003, in percent,

(11) - (18) export market shares, average 2000-03, in percent, and 

(19) normalized standard deviation in export market shares,

in percent.

The types of analysis that could be derived from the information in the tables is as

follows:

(A) An SRCA index that is larger than zero suggests that the

country has a comparative advantage in that product; and an

SRCA index that is smaller than zero suggests that the country

does not have a comparative advantage in that product. Thus,
E-4

positive SRCA values suggest products whose exports could

increase under more facilitating domestic and international

conditions.

(B) A positive annual change in an SRCA index suggests that the

country’s comparative advantage in a particular product has

improved; a negative change suggests the opposite. A relatively

small increase or decline in an SRCA index may not be a

significant indicator of a change in comparative advantage. A

relatively large change, however, suggests that significant

economic developments have taken place in that countryproduct case. Thus, large changes in SRCA suggest products

that are rapidly penetrating the world market and may hold

potential for further growth.

(C) The market share measures exports from an AGOA-eligible

country as a share of the imports by a destination market.

Relatively large values for normalized standard deviation

indicate that exports of the product are relatively concentrated.

Thus, a product with large normalized standard deviation

values suggests products that may have potential for increasing

exports by penetrating additional markets.

The following tabulation defines the abbreviations used in the 37 country

tables:

Abbreviations list

HS 4-digit . . . . . . . Harmonized schedule, 4-digit level

SRCA . . . . . . . . . . Symmetric revealed comparative advantage index

US . . . . . . . . . . . . . United States

EU . . . . . . . . . . . . . European Union (EU-15)

JPN . . . . . . . . . . . . Japan

AUS . . . . . . . . . . . Australia

CND . . . . . . . . . . . Canada

LMI . . . . . . . . . . . . Lower- and middle-income countries1

ROW . . . . . . . . . . . Rest of world1

Norm. SD . . . . . . . Normalized standard deviation 1 The composition of LMI and ROW is specified in table D-1.
E-5

Table E-1Angola: Revealed comparative advantage analysisHS Product

Rank by

share of

exports

Rank by

SRCA

(00-03)

Rank by

SRCA

trend

(00-03)

Rank by

Norm. SD

Share in

co’s trade

(avg 00-03)

Avg

SRCA

(00-03)

Avg yearly

change

 in SRCA

(00-03)

Avg yearly

growth in

world mkt

(93-03) US EU JPN AUS 

Percent )))))Index)))))) )))))))))))))))))))))))Import market share (p

0208 Other meat and edible meat offal, . . . . . . . 8 0.00 -1.00 0.00 9.21 0.00 0.00 0.00 0.00 0303 Fish, frozen, (excl. those of 03.04 . . . . . . . 7 9 0.08 -0.39 -0.14 5.11 0.00 0.23 0.00 0.00 0306 Crustaceans, fresh, chilled or frozen . . . . . 5 4 0.28 0.13 -0.02 4.83 0.00 0.61 0.00 0.00 0307 Molluscs & aquatic invertebrates, . . . . . . . 6 5 0.11 0.09 0.01 6.08 0.00 0.37 0.08 0.00 0702 Tomatoes, fresh or chilled . . . . . . . . . . . . . 7 0.00 -1.00 0.00 11.29 0.00 0.00 0.00 0.00 0808 Apples, pears and quinces, fresh . . . . . . . . 10 0.00 -1.00 0.00 8.74 0.00 0.00 0.00 0.00 0902 Tea, whether or not flavored . . . . . . . . . . . 9 0.00 -0.92 0.15 5.97 0.00 0.00 0.00 0.00 1008 Buckwheat, millet and canary seed . . . . . . 1 0.00 -0.64 0.49 5.54 0.00 0.01 0.00 0.00 1605 Crustaceans... and other aquatic in . . . . . . 8 0.03 -0.35 -0.06 8.62 0.00 0.00 0.25 0.00 2505 Natural sands of all kinds, . . . . . . . . . . . . . 3 0.00 -0.99 0.00 8.46 0.03 0.00 0.00 0.00 2516 Granite, porphyry, etc, and other . . . . . . . . 8 3 10 0.07 0.53 0.14 9.51 0.00 0.73 0.00 0.00 2603 Copper ores and concentrates . . . . . . . . . . 4 0.01 -0.83 0.24 8.84 0.00 0.00 0.00 0.00 2620 Ash and residues containing metals . . . . . 9 0.00 -0.96 -0.01 8.42 0.00 0.00 0.00 0.00 2709 Petroleum oils and oils obtained . . . . . . . . 1 1 90.31 0.88 -0.01 13.61 3.91 1.08 0.43 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . . . 3 7 1.84 -0.10 -0.04 12.03 0.53 0.00 0.00 0.00 2711 Petroleum gases and other gaseous . . . . . 4 0.29 -0.68 -0.10 16.59 0.00 0.00 0.00 0.00 4203 Articles of apparel and clothing . . . . . . . . . 1 0.00 -1.00 0.00 2.60 0.00 0.00 0.00 0.00 4504 Agglomerated cork and articles of . . . . . . . 6 0.00 -0.79 0.21 10.18 0.00 0.03 0.00 0.00 5207 Cotton yarn (excl. sewing), put . . . . . . . . . . 10 2 0.00 -0.53 0.46 3.88 0.00 0.00 0.00 0.00 5307 Yarn of jute or of other textile . . . . . . . . . . . 5 0.00 -0.77 0.23 11.20 0.00 0.00 0.00 0.00 7102 Diamonds worked/not worked but not . . . . 2 2 6.38 0.74 -0.07 12.66 0.11 2.40 0.00 0.00 7301 Sheet piling or iron or steel . . . . . . . . . . . . 7 0.00 -0.88 0.19 5.23 0.00 0.03 0.00 0.00 7308 Structures and parts of structures . . . . . . . 10 3 0.05 -0.68 0.32 10.70 0.00 0.00 0.00 0.00 8409 Accessory parts suitable for engine . . . . . . 6 0.00 -1.00 0.00 12.27 0.00 0.00 0.01 0.00 8905 Navigation vessels, floating or . . . . . . . . . . 5 0.00 -0.90 -0.06 10.85 0.00 0.38 0.00 0.00 9009 Photo-copying, thermo-copying . . . . . . . . . 4 0.00 -1.00 0.00 2.64 0.00 0.00 0.00 0.00 9015 Surveying equipments, appliances, . . . . . . 9 6 8 0.06 -0.01 0.17 9.38 0.00 0.33 0.00 0.05 9704 Postage, revenue stamps, postal . . . . . . . . 2 0.00 -1.00 0.00 9.02 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-6

Table E-2Benin: Revealed comparative advantage analysisHS Product

Rank

by

share

of

exports

Rank

by

SRCA

(00-03)

Rank by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA

(00-03)

Avg yearly

growth in

world mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))------)))))))Import market share (percen

0101 Live horses, asses, mules and . . . . . . . 8 0.00 -0.99 0.00 12.75 0.00 0.00 0.00 0.00 0106 Other live animals, . . . . . . . . . . . . . . . . 10 0.25 0.94 0.00 9.32 0.79 0.05 0.04 0.00 0508 Coral; shells of molluscs, . . . . . . . . . . . 5 0.00 -0.22 1.51 0.66 0.06 0.00 0.00 0.00 0603 Cut flowers and flower buds for . . . . . . 9 0.00 -1.00 -0.02 7.52 0.00 0.00 0.00 0.00 0801 Coconuts, Brazil nuts and cashew . . . . 2 4 7.91 0.99 0.00 6.11 0.00 0.03 0.00 0.00 0803 Bananas, including plantains, fresh . . . 7 0.00 -1.00 0.00 6.87 0.00 0.00 0.00 0.00 1207 Other oil seeds and oleaginous . . . . . . 4 6 3.51 0.99 0.00 7.99 0.00 2.62 0.09 0.00 1214 Swedes, mangolds...and similar fora . . 4 0.00 -1.00 0.00 3.93 0.00 0.00 0.00 0.00 

1503 Lard stearin, lardoil, oleostearin, . . . . . 8 0.09 0.97 -0.03 18.87 0.00 0.00 0.00 0.00 2306 Oil-cake and other solid residues, . . . . 6 7 1.71 0.97 0.02 1.98 0.00 0.34 0.00 0.00 2402 Cigars, cigarillos, cigarettes, etc . . . . . 9 1.44 0.71 0.03 7.50 0.00 0.00 0.00 0.00 2523 Portland cement, aluminous cement, . 10 1.37 0.85 0.32 7.53 0.00 0.00 0.00 0.00 2616 Precious metal ores and concentrate . 1 0.00 -1.00 0.00 12.50 0.00 0.00 0.00 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . 5 3.31 0.19 0.29 12.03 0.01 0.00 0.00 0.00 2849 Carbides . . . . . . . . . . . . . . . . . . . . . . . . 8 0.02 0.19 1.18 7.43 0.00 0.00 0.00 0.00 3211 Prepared driers . . . . . . . . . . . . . . . . . . 10 0.00 0.16 1.04 10.01 0.00 0.00 0.00 0.00 3501 Casein, caseinates and other casein . . 6 0.16 0.77 1.44 6.24 0.00 0.00 0.00 0.00 4105 Sheep or lamb skin leather, without . . . 8 1.53 0.90 -0.04 5.53 0.00 0.93 0.00 0.00 4106 Goat or kid skin leather, without . . . . . . 3 5 4.14 0.99 0.01 10.24 0.00 2.91 0.00 0.00 4414 Wooden frames for paintings, . . . . . . . 10 0.00 -0.99 -0.01 10.36 0.00 0.00 0.00 0.00 4904 Music, printed or in manuscript . . . . . . 3 0.50 0.99 0.00 6.03 0.00 0.00 0.00 0.00 5201 Cotton, not carded or combed . . . . . . . 1 2 53.79 1.00 0.00 7.25 0.00 1.61 0.06 0.00 5202 Cotton waste (incl. yarn waste and . . . 9 0.26 0.97 0.01 7.82 0.00 0.37 0.00 0.00 5207 Cotton yarn (excl. sewing), put . . . . . . . 3 0.01 0.69 1.67 3.88 0.00 0.07 0.00 0.00 5515 Other woven fabrics, <85% synthetic . . 7 1.69 -0.37 0.05 2.58 0.00 0.00 0.00 0.00 5601 Wadding of textile materials and . . . . . 7 0.03 0.28 1.28 8.22 0.00 0.00 0.00 0.00 7101 Pearls natural, cultured, graded/ . . . . . 6 0.00 -1.00 0.00 8.70 0.00 0.00 0.00 0.00 7102 Diamonds worked/not worked but not . 5 0.05 -0.90 0.07 12.66 0.00 0.00 0.00 0.00 7108 Gold (platinum plated) unwrought, . . . . 3 0.04 -0.79 -0.23 8.78 0.00 0.00 0.03 0.00 7301 Sheet piling or iron or steel . . . . . . . . . 2 0.06 0.78 1.75 5.23 0.00 0.00 0.00 0.00 8406 Steam turbines and other vapour . . . . . 4 0.20 0.63 1.61 6.81 0.00 0.00 0.00 0.00 8459 Machine-tools for drilling, boring . . . . . 9 0.05 0.16 1.14 5.86 0.00 0.00 0.00 0.00 9604 Hand sieves and hand riddles . . . . . . . 1 1 0.59 1.00 1.95 9.42 0.00 0.00 0.00 0.00 9701 Hand made decorative materials, other 2 0.00 -0.94 -0.02 4.64 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-7

Table E-3Botswana: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA

(00-03)

Avg

yearly

growth

in

world

mkt

(93-03) US EU JPN AUS C

Percent ))))Index )))) ))))))))))))))))))))))Import market share (pe

0201 Meat of bovine animals, fresh or . . . . 3 5 5.73 0.90 -0.04 8.39 0.00 0.78 0.00 0.00 00202 Meat of bovine animals, frozen . . . . . 5 7 2.92 0.85 -0.06 3.64 0.00 1.55 0.00 0.00 00507 Ivory, tortoise-shell, whalebone . . . . . 6 0.02 0.86 0.00 -2.24 0.00 1.36 0.00 0.00 01103 Cereal groats, meal and pellets . . . . . 1 0.01 0.06 1.13 1.60 0.00 0.00 0.00 0.01 01202 Ground-nuts, not roasted or . . . . . . . . 9 0.00 -0.65 0.70 2.77 0.00 0.00 0.00 0.00 01522 Degras; residues of fatty substance . . 4 0.03 0.90 -0.16 13.66 0.00 0.00 0.00 0.00 02501 Salt and pure sodium chloride; sea . . 9 8 0.73 0.84 -0.10 7.55 0.00 0.00 0.00 0.00 02517 Pebbles, gravel, etc; macadam of . . . 10 0.02 -0.16 0.63 6.67 0.00 0.08 0.00 0.00 02530 Mineral substances not elsewhere . . . 4 0.00 -0.81 -0.02 8.02 0.00 0.00 0.00 0.10 02834 Nitrites; nitrates . . . . . . . . . . . . . . . . . 4 0.01 0.04 0.81 9.11 0.00 0.00 0.00 0.00 04104 Leather of bovine or equine animals 8 0.74 0.33 -0.11 8.70 0.00 0.12 0.00 0.00 04107 Leather of other animals, without . . . . 1 0.00 -0.66 0.00 2.69 0.00 0.00 0.00 1.28 0

4302 Tanned or dressed furskins (excl. . . . 10 0.00 -0.74 -0.01 7.11 0.07 0.00 0.00 0.00 04401 Fuel wood, in logs..., etc; wood . . . . . 7 0.00 -0.99 0.00 4.09 0.00 0.00 0.00 0.00 04823 Other paper..., cut to size or . . . . . . . 7 0.13 -0.10 0.71 5.93 0.00 0.00 0.00 0.00 04906 Handwritten plans...for . . . . . . . . . . . . 2 0.00 -0.92 -0.16 12.88 0.00 0.00 0.16 0.00 0

4907 New stamps; stamp-impressed paper; 8 0.05 0.41 0.70 22.42 0.00 0.00 0.00 0.00 05310 Woven fabrics of jute or of other . . . . 2 0.00 -0.42 1.02 1.83 0.00 0.00 0.00 0.00 05408 Woven fabrics of artificial filament . . . 8 0.00 -1.00 -0.01 -0.59 0.00 0.00 0.00 0.00 05505 Waste (incl. noils, yarn waste and . . . 10 0.01 0.67 0.00 7.54 0.00 0.02 0.00 0.00 06109 T-shirts, singlets and other vests, . . . 10 0.58 0.21 -0.17 12.48 0.02 0.04 0.00 0.00 06110 Jerseys, pullovers, cardigans and . . . 7 1.54 0.18 -0.24 8.19 0.01 0.06 0.00 0.00 06811 Articles of asbestos-cement,of cell . . 6 0.02 0.03 0.72 10.57 0.00 0.00 0.00 0.00 07102 Diamonds worked/not worked but not 1 3 62.70 0.94 0.00 12.66 0.09 4.85 1.02 0.00 07105 Dust,powder of natural,artificial . . . . . 5 0.00 -0.95 0.06 1.20 0.00 0.00 0.00 0.00 07401 Copper mattes;cement copper . . . . . . 6 2 2.61 0.99 -0.01 31.33 0.00 0.00 0.00 0.00 407501 Nickel mattes,oxide sinters, . . . . . . . . 2 1 12.62 0.99 0.00 10.66 0.00 0.00 0.00 0.00 878307 Flexible tubing of base metal with . . . 5 0.00 -0.61 0.76 10.41 0.00 0.00 0.00 0.00 08544 Insulated wire,cable,other insulate . . . 4 3.58 0.56 -0.12 10.59 0.00 0.16 0.00 0.00 08601 Rail locomotives powdered by . . . . . . 9 0.02 0.82 0.00 11.40 0.00 0.00 0.00 0.00 08607 Parts of rail,tramway locomotives/ . . . 3 0.03 -0.51 0.98 13.90 0.00 0.00 0.00 0.00 09701 Hand made decorative materials, . . . 9 0.00 -0.99 0.00 4.64 0.00 0.00 0.00 0.00 09702 Original engravings, prints, . . . . . . . . 6 0.00 -0.74 0.00 1.93 0.00 0.00 0.00 0.00 09703 Original sculptures and statuary, . . . . 3 0.00 -0.95 -0.01 7.25 0.00 0.00 0.00 0.05 0Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-8

Table E-4Burkino Faso: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share

in co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA

(00-03)

Avg

yearly

growth

in

world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))Import market share 

0101 Live horses, asses, mules and . . . . . . . . . 10 0.00 -0.76 0.03 12.75 0.00 0.00 0.00 0.00 0208 Other meat and edible meat offal, . . . . . . 2 0.03 -0.11 1.68 9.21 0.00 0.02 0.00 0.00 0507 Ivory, tortoise-shell, whalebone . . . . . . . . 9 0.05 0.92 0.01 -2.24 0.00 0.89 0.00 0.00 0705 Lettuce and chicory, fresh or . . . . . . . . . . 2 0.00 -0.95 0.00 6.09 0.00 0.00 0.01 0.00 0708 Leguminous vegetables, shelled or . . . . . 8 3 1.61 0.99 0.00 11.94 0.00 0.95 0.00 0.00 1207 Other oil seeds and oleaginous . . . . . . . . 2 2 4.95 0.99 0.00 7.99 0.54 0.72 4.48 0.00 1605 Crustaceans... and other aquatic . . . . . . . 4 0.00 -0.97 0.00 8.62 0.00 0.00 0.00 0.00 1701 Cane or beet sugar and chemically . . . . . 4 3.71 0.92 -0.01 9.03 0.00 0.09 0.00 0.00 2101 Extracts and preparations of coffee . . . . . 6 0.07 0.29 1.28 13.15 0.00 0.00 0.00 0.00 2402 Cigars, cigarillos, cigarettes, etc . . . . . . . 3 4.17 0.90 0.19 7.50 0.00 0.00 0.00 0.00 2508 Other clays, andalusite, kyanite, . . . . . . . 1 0.00 -0.67 -0.15 9.73 0.16 0.00 0.00 0.00 2808 Nitric acid; sulphonitric acids . . . . . . . . . . 8 0.00 -0.36 0.94 16.32 0.00 0.00 0.00 0.00 2820 Manganese oxides . . . . . . . . . . . . . . . . . . 6 0.40 0.97 0.10 3.76 0.00 0.00 0.00 0.00 2828 Hypochlorites; commercial calcium . . . . . 3 0.02 0.66 1.61 8.96 0.00 0.00 0.00 0.00 3605 Matches (excl. pyrotechnic articles . . . . . 7 0.07 0.94 0.38 6.45 0.00 0.00 0.00 0.00 4105 Sheep or lamb skin leather, without . . . . . 5 5 2.37 0.98 0.00 5.53 0.00 1.11 0.00 0.00 4106 Goat or kid skin leather, without . . . . . . . . 6 4 1.95 0.99 0.00 10.24 0.00 1.03 0.00 0.00 4204 Articles of leather used in machine . . . . . 9 0.00 -0.37 0.91 2.51 0.00 0.00 0.00 0.00 4407 Wood sawn or chipped lengthwise, . . . . . 8 0.01 -0.96 0.01 3.71 0.00 0.00 0.00 0.00 5201 Cotton, not carded or combed . . . . . . . . . 1 1 44.54 1.00 0.00 7.25 0.00 2.43 0.02 0.00 5301 Flax, not spun; flax tow waste (inc . . . . . . 4 0.04 0.68 1.37 22.98 0.00 0.00 0.00 0.00 5512 Woven fabrics of >=85% synthetic . . . . . . 10 0.03 -0.10 0.90 1.79 0.00 0.00 0.00 0.00 5806 Narrow woven fabrics; narrow fabric . . . . 5 0.18 0.17 1.36 10.11 0.00 0.00 0.00 0.00 7108 Gold(platinum plated) unwrought, . . . . . . 9 1.47 0.55 -0.07 8.78 0.05 0.05 0.00 0.00 7112 Waste,scrap of precious metal or of . . . . 3 0.00 -0.99 0.00 9.84 0.00 0.00 0.00 0.00 7116 Articles of natural/cultured pearls . . . . . . . 6 0.00 -0.47 0.45 2.23 0.00 0.00 0.00 0.00 7614 Stranded wire, cables, etc. the like, . . . . . 10 7 0.09 0.92 1.15 11.28 0.00 0.00 0.00 0.00 7805 Lead tubes, pipes and tube or pipe . . . . . 8 0.01 0.93 0.00 18.47 0.00 0.00 0.00 0.00 8446 Weaving machines (looms) . . . . . . . . . . . 1 0.19 0.74 1.70 3.80 0.00 0.00 0.00 0.00 8703 Motor cars and other motor vehicles . . . . 10 1.35 -0.61 0.00 10.65 0.00 0.00 0.00 0.00 8704 Motor vehicles for the transport of . . . . . . 7 1.85 0.12 0.01 10.17 0.00 0.00 0.00 0.00 9015 Surveying equipments, appliances, exc . . 9 0.00 -0.83 -0.56 9.38 0.00 0.00 0.01 0.00 9029 Revolution counters, mileometers, . . . . . . 7 0.00 -0.98 0.02 11.06 0.00 0.00 0.00 0.00 9704 Postage, revenue stamps,postal . . . . . . . 5 0.00 -0.63 0.26 9.02 0.06 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-9

Table-E-5Cameroon: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share

in co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))))Import market shar

0803 Bananas, including plantains, fresh . . . . . . . 3 3 8.43 0.98 0.00 6.87 0.00 6.33 0.00 0.00 0901 Coffee; coffee husks and skins; . . . . . . . . . . 8 9 2.51 0.90 -0.01 8.74 0.07 1.25 0.00 0.02 1801 Cocoa beans, whole or broken, raw . . . . . . 5 2 5.42 0.98 0.00 13.58 0.01 6.38 1.15 0.00 1803 Cocoa paste, whether or not . . . . . . . . . . . . 1 1.72 0.99 0.00 20.47 9.30 6.76 0.00 0.00 2528 Natural borates and concentrates; . . . . . . . . 2 0.00 -0.79 0.00 7.72 0.00 0.00 0.00 4.17 

2605 Cobalt ores and concentrates . . . . . . . . . . . 8 0.00 0.02 0.71 53.76 0.00 0.00 0.00 0.00 2616 Precious metal ores and concentrate . . . . . 1 0.00 -0.99 -0.25 12.50 0.00 0.00 0.00 0.00 

2709 Petroleum oils and oils obtained . . . . . . . . . 1 42.84 0.76 -0.01 13.61 0.11 0.61 0.00 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . . . . 9 2.26 -0.01 -0.10 12.03 0.17 0.04 0.00 0.00 2821 Iron oxides and hydroxides; earth . . . . . . . . 6 0.00 -0.62 0.75 5.81 0.00 0.00 0.00 0.00 2827 Chlorides...etc; bromides...etc; . . . . . . . . . . 9 0.01 -0.28 0.70 7.80 0.00 0.05 0.00 0.00 3302 Mixtures of odoriferous substances . . . . . . . 5 0.00 -1.00 0.00 16.53 0.01 0.00 0.00 0.00 4001 Natural rubber... and similar gums, . . . . . . . 10 8 2.04 0.93 0.00 9.86 0.37 3.68 0.00 0.00 4403 Wood in the rough or roughly square . . . . . 4 4 6.56 0.95 -0.01 0.73 0.04 3.24 0.08 0.00 4406 Railway or tramway sleepers (cross- . . . . . . 10 0.08 0.89 -0.03 8.47 0.89 3.51 0.00 0.00 4407 Wood sawn or chipped lengthwise, . . . . . . . 2 5 13.52 0.94 0.01 3.71 0.12 3.22 0.02 0.02 4408 Veneer sheets and sheets for plywood . . . . 7 1.31 0.94 0.01 7.11 0.22 2.27 0.00 1.42 5201 Cotton, not carded or combed . . . . . . . . . . . 7 6 3.72 0.94 0.00 7.25 0.00 4.00 0.31 0.00 5607 Twine, cordage, ropes and cables . . . . . . . . 8 0.00 -0.97 0.00 6.30 0.00 0.00 0.04 0.00 5609 Articles of yarn, strip, etc, twine . . . . . . . . . . 10 0.00 -0.26 0.61 12.96 0.04 0.00 0.00 0.00 5702 Carpets and other textille floor . . . . . . . . . . . 4 0.00 -1.00 0.00 5.46 0.00 0.00 0.00 0.00 6112 Track-suits, ski-suits and swimwear . . . . . . . 10 0.00 -0.90 -0.01 8.21 0.00 0.00 0.00 0.00 6308 Sets of woven fabric and yarn, for . . . . . . . . 1 0.00 0.26 1.25 4.78 0.00 0.09 0.00 0.00 6701 Prepared skins of birds with . . . . . . . . . . . . 9 0.00 -1.00 0.00 4.38 0.00 0.00 0.00 0.00 7012 Glass inners for vacuum flasks or . . . . . . . . 3 0.00 -0.09 0.90 -3.91 0.00 0.00 0.00 0.00 7112 Waste,scrap of precious metal or of . . . . . . 2 0.05 -0.05 0.91 9.84 0.00 0.07 0.00 0.00 7228 Other bars and rods of alloy steel; . . . . . . . . 4 0.04 -0.08 0.86 11.75 0.00 0.00 0.00 0.00 7601 Unwrought aluminium . . . . . . . . . . . . . . . . . 6 3.76 0.80 -0.02 10.99 0.00 1.00 0.00 0.00 8308 Claps, frames, buckles, hooks, eyes, of . . . 6 0.00 -0.97 -0.04 5.22 0.00 0.00 0.00 0.00 8310 Sign, name, address plates, of base . . . . . . 5 0.02 -0.08 0.85 8.19 0.00 0.27 0.00 0.00 9108 Watch movements, complete and . . . . . . . . 3 0.00 -1.00 0.00 -3.58 0.00 0.00 0.00 0.00 

9605 Travel sets for personal toilet, . . . . . . . . . . . 7 0.00 -0.41 0.52 7.34 0.00 0.00 0.00 0.00 9704 Postage, revenue stamps, postal . . . . . . . . . 7 0.00 -0.62 0.72 9.02 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-10

Table E-6Cape Verde: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank by

SRCA

trend

 (00-03)

Rank

by

Norm.

SD

Share in

co’s trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))Import market sha

0502 Pigs'... bristles; brush making . . . . . . . . . . . . 9 0.07 0.96 0.00 7.53 0.00 0.03 0.00 0.00 0602 Other live plants, cuttings and . . . . . . . . . . . . 10 2 2.36 0.96 1.74 12.62 0.00 0.02 0.00 0.00 0708 Leguminous vegetables, shelled or . . . . . . . . 8 0.00 -0.90 -1.19 11.94 0.00 0.00 0.00 0.00 0710 Vegetables, frozen . . . . . . . . . . . . . . . . . . . . . 7 0.03 -0.34 1.29 9.89 0.00 0.00 0.00 0.00 0802 Other nuts, fresh or dried, . . . . . . . . . . . . . . . 10 0.00 -1.00 -0.02 7.05 0.00 0.00 0.00 0.00 2524 Asbestos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 0.38 0.98 0.19 -4.45 0.00 0.00 0.00 0.00 2711 Petroleum gases and other gaseous . . . . . . . 3 1 10.71 0.84 1.83 16.59 0.02 0.00 0.00 0.00 2817 Zinc oxide; zinc peroxide . . . . . . . . . . . . . . . . 7 0.39 0.98 0.00 9.75 0.00 0.00 0.00 0.00 3102 Mineral or chemical fertilizers, . . . . . . . . . . . . 8 2.85 0.95 -0.01 11.14 0.00 0.00 0.00 0.00 3105 Mineral or chemical fertilizers, . . . . . . . . . . . . 10 8 2.48 0.95 1.28 9.39 0.00 0.00 0.00 0.00 5508 Sewing thread of man-made staple . . . . . . . . 9 0.02 0.66 1.27 6.03 0.00 0.01 0.00 0.00 6107 Men's or boys' briefs and similar . . . . . . . . . . 5 4 4.77 0.99 0.01 11.42 0.00 0.12 0.00 0.00 6202 Woman's or girls' overcoats, and . . . . . . . . . . 7 0.04 -0.30 0.31 5.72 0.00 0.00 0.00 0.00 6203 Men's or boys' suits, ensembles, . . . . . . . . . . 9 2.66 0.78 0.02 7.80 0.00 0.01 0.00 0.00 6204 Women's or girls' suits, ensembles, . . . . . . . . 6 4.55 0.84 0.29 8.53 0.01 0.00 0.00 0.00 6205 Men's or boys' shirts . . . . . . . . . . . . . . . . . . . . 4 5.16 0.96 0.00 2.98 0.01 0.04 0.00 0.00 6208 Women's or girls' slips, petticoats . . . . . . . . . 3 0.14 0.69 1.66 2.63 0.00 0.00 0.00 0.00 6217 Other made up clothing accessories; . . . . . . 5 0.01 -0.44 0.24 10.38 0.01 0.00 0.00 0.00 6406 Parts of footwear; removable in- . . . . . . . . . . 2 3 14.19 0.99 0.00 4.73 0.00 0.20 0.00 0.00 6812 Fabricated asbestos fibres; mixtures . . . . . . . 4 0.01 0.65 1.62 -2.75 0.00 0.00 0.00 0.00 7007 Safety glass,consisting of . . . . . . . . . . . . . . . . 9 0.00 -0.96 -0.40 11.58 0.00 0.00 0.00 0.00 7118 Coin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.03 0.57 -0.08 80.09 0.00 0.06 0.00 0.00 7206 Iron,non-alloy steel in ingots/ . . . . . . . . . . . . . 7 1 4.22 1.00 0.00 12.16 0.00 0.00 0.00 0.00 7315 Chain and parts thereof, of iron or . . . . . . . . . 5 0.08 0.62 1.61 6.22 0.00 0.00 0.00 0.00 8411 Turbo-jets ,turbo-propellers and . . . . . . . . . . 1 15.22 0.92 0.00 9.91 0.00 0.02 0.00 0.00 8424 Mechanical appliances for . . . . . . . . . . . . . . . 2 0.03 -0.55 0.08 11.06 0.00 0.00 0.01 0.00 8428 Other lifting, handling, loading, . . . . . . . . . . . 10 0.14 0.19 1.18 7.69 0.00 0.00 0.00 0.00 8469 Typewriters and word-processing . . . . . . . . . 6 0.05 0.94 1.52 -17.55 0.00 0.00 0.00 0.00 8529 Accessory parts for the apparatus . . . . . . . . . 6 0.08 -0.69 -0.04 13.83 0.00 0.00 0.00 0.00 8532 Electrical capacitors, fixed, . . . . . . . . . . . . . . . 4 0.59 -0.29 0.27 12.14 0.05 0.00 0.00 0.00 8542 Electronic integrated circuits and . . . . . . . . . . 1 0.01 -1.00 0.00 15.01 0.00 0.00 0.00 0.00 8907 Other floating structures (rafts, tan . . . . . . . . 5 0.32 0.98 0.47 22.68 0.00 0.14 0.00 0.00 9103 Clocks with watch movements, . . . . . . . . . . . 8 0.11 0.97 0.00 -1.02 0.00 0.08 0.00 0.00 9705 Scientific collections and . . . . . . . . . . . . . . . . 2 1.41 0.99 0.09 7.96 0.77 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-11

Table E-7Chad: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank by

SRCA

trend

 (00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))Import market shar

0703 Onions, shallots, garlic, leeks . . . . . . . . . 8 5 1 0.63 0.94 1.93 8.50 0.00 0.00 0.00 0.00 1202 Ground-nuts, not roasted or . . . . . . . . . . . 10 0.43 0.75 0.29 2.77 0.00 0.00 0.00 0.00 1301 Lac; natural gums, resins, gum- . . . . . . . . 2 1 11.38 1.00 0.00 4.07 11.26 4.11 1.35 0.00 2305 Oil-cake and other solid residues, . . . . . . 4 0.03 0.94 0.00 -9.28 0.00 0.00 0.00 0.00 2402 Cigars, cigarillos, cigarettes, etc . . . . . . . 7 0.64 -0.02 -0.41 7.50 0.00 0.00 0.00 0.00 2616 Precious metal ores and concentrate . . . 8 0.21 0.89 0.00 12.50 0.00 0.03 0.00 0.00 2709 Petroleum oils and oils obtained . . . . . . . 3 7.59 -0.25 0.74 13.61 0.01 0.00 0.00 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . . 5 1.70 -0.38 0.61 12.03 0.01 0.00 0.00 0.00 2811 Other inorganic acids and other . . . . . . . . 5 0.02 -0.38 1.06 11.06 0.00 0.00 0.00 0.00 3605 Matches (excl. pyrotechnic articles . . . . . 7 0.06 0.00 0.97 6.45 0.00 0.00 0.00 0.00 4013 Inner tubes, of rubber . . . . . . . . . . . . . . . . 10 0.01 -0.16 0.81 1.90 0.00 0.00 0.00 0.00 4103 Other raw hides and skins, fresh or . . . . . 3 0.36 0.98 0.08 8.77 0.51 0.34 0.04 0.00 4407 Wood sawn or chipped lengthwise, . . . . . 9 0.51 -0.21 0.74 3.71 0.01 0.00 0.00 0.00 4602 Basketwork, wickerwork and other . . . . . . 8 0.00 -0.70 0.19 4.46 0.00 0.00 0.00 0.00 5201 Cotton, not carded or combed . . . . . . . . . 1 2 65.85 1.00 0.00 7.25 0.00 4.09 0.25 0.00 5202 Cotton waste (incl. yarn waste and . . . . . 6 0.17 0.93 0.01 7.82 0.00 0.05 0.00 0.00 5601 Wadding of textile materials and . . . . . . . 9 0.32 0.88 0.05 8.22 0.00 0.00 0.00 0.00 5901 Textile fabrics, gum-coated; . . . . . . . . . . . 6 0.00 0.08 0.98 10.95 0.00 0.00 0.00 0.00 6108 Women's or girls' panties and . . . . . . . . . 2 0.00 -0.97 -0.08 10.88 0.00 0.00 0.00 0.00 6208 Women's or girls' slips, petticoats . . . . . . 7 0.00 -0.98 -0.01 2.63 0.00 0.00 0.00 0.00 6505 Hats and other headgear, knitted or . . . . 6 0.00 -0.91 0.00 7.01 0.00 0.00 0.00 0.00 6804 Millstones, grindstones, grinding . . . . . . . 4 0.02 -0.41 1.08 8.73 0.00 0.00 0.00 0.00 6812 Fabricated asbestos fibres; mixtures . . . . 9 0.01 0.63 0.82 -2.75 0.00 0.00 0.00 0.00 7004 Drawn glass and blown glass, etc. . . . . . . 7 0.09 0.91 0.47 10.70 0.00 0.00 0.00 0.00 7320 Springs and leaves for springs, of . . . . . . 3 0.00 -0.93 0.06 10.23 0.00 0.00 0.00 0.00 8001 Unwrought tin . . . . . . . . . . . . . . . . . . . . . . 10 0.14 0.82 0.00 1.72 0.00 0.04 0.00 0.00 8411 Turbo-jets, turbo-propellers and . . . . . . . 6 0.95 -0.16 -0.07 9.91 0.00 0.01 0.00 0.00 8485 Machinery parts, non-electrical . . . . . . . . 8 0.22 -0.10 0.89 8.31 0.00 0.00 0.00 0.00 8523 Prepared unrecorded media for sound . . 10 0.00 -0.99 0.00 4.29 0.00 0.00 0.00 0.00 8543 Electrical machines, apparatus with ..... 3 0.23 -0.21 1.10 12.11 0.00 0.00 0.00 0.00 8714 Parts and accessories of vehicles . . . . . . 9 0.01 -0.81 -0.03 5.78 0.00 0.00 0.00 0.00 8802 Other aircraft, spacecraft, and space .... 4 2.04 0.09 -0.32 6.92 0.00 0.01 0.00 0.00 

9014 Direction finding compasses; other . . . . . 2 0.40 0.72 1.72 6.45 0.00 0.01 0.00 0.00 9701 Hand made decorative materials, . . . . . . 4 0.00 -0.99 0.01 4.64 0.00 0.00 0.00 0.00 9703 Original sculptures and statuary, . . . . . . . 5 0.00 -0.98 0.00 7.25 0.00 0.00 0.00 0.00 9705 Scientific collections and . . . . . . . . . . . . . 1 0.00 -0.51 -0.60 7.96 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-12

Table E-8Democratic Republic of the Congo: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (

0101 Live horses, asses, mules and . . . . . . . . . . . 10 0.00 -1.00 0.00 12.75 0.00 0.00 0.00 0.00 0106 Other live animals, . . . . . . . . . . . . . . . . . . . . 10 0.09 0.80 0.02 9.32 0.03 0.48 0.08 0.00 0302 Fish, fresh or chilled (excl. those . . . . . . . . . 5 0.00 -0.98 0.00 7.38 0.00 0.00 0.00 0.00 0901 Coffee; coffee husks and skins; . . . . . . . . . . 8 1.08 0.71 -0.06 8.74 0.03 0.28 0.00 0.03 1302 Vegetable saps and extracts derived . . . . . . 8 0.48 0.82 0.09 8.60 0.09 0.74 0.00 0.00 2302 Brans, sharps and other residues, . . . . . . . . 6 0.13 0.85 0.02 5.07 4.74 0.00 0.00 0.00 2524 Asbestos . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0.01 0.28 0.92 -4.45 0.00 0.00 0.00 0.00 2530 Mineral substances not elsewhere . . . . . . . . 6 0.00 -0.94 -0.01 8.02 0.00 0.00 0.03 0.00 2605 Cobalt ores and concentrates . . . . . . . . . . . 3 1 6.05 1.00 0.00 53.76 0.00 92.56 0.00 0.00 2608 Zinc ores and concentrates . . . . . . . . . . . . . 8 0.02 -0.33 0.67 10.84 0.00 0.00 0.00 0.00 2609 Tin ores and concentrates . . . . . . . . . . . . . . 4 7 0.14 0.96 0.02 0.67 0.00 0.00 0.00 0.00 2611 Tungsten ores and concentrates . . . . . . . . . 5 0.01 0.90 0.00 22.87 0.42 0.00 0.00 0.00 2615 Niobium, tantalum, vanadium or . . . . . . . . . 7 0.28 0.83 0.48 16.54 2.45 1.07 0.00 0.00 2709 Petroleum oils and oils obtained . . . . . . . . . 2 11.40 0.33 -0.05 13.61 0.14 0.03 0.07 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . . . . 6 2.19 -0.30 0.25 12.03 0.14 0.00 0.00 0.00 2716 Electrical energy . . . . . . . . . . . . . . . . . . . . . . 4 3.95 0.53 0.46 16.84 0.00 0.00 0.00 0.00 2832 Sulphites; thiosulphates . . . . . . . . . . . . . . . . 1 0.01 -0.09 1.78 5.24 0.00 0.00 0.00 0.00 4403 Wood in the rough or roughly square . . . . . 7 1.09 0.74 0.02 0.73 0.01 0.42 0.00 0.00 4407 Wood sawn or chipped lengthwise, . . . . . . . 9 0.79 0.28 0.13 3.71 0.00 0.10 0.00 0.00 4414 Wooden frames for paintings, . . . . . . . . . . . 9 0.00 -1.00 0.00 10.36 0.00 0.00 0.00 0.00 4819 Cartons, boxes, etc; box files, etc . . . . . . . . 2 0.00 -1.00 -0.01 12.01 0.00 0.00 0.00 0.00 5703 Carpets and other textile floor . . . . . . . . . . . 1 0.00 -1.00 0.00 6.18 0.00 0.00 0.00 0.01 5704 Floor coverings of felt, not tufted . . . . . . . . . 3 0.00 -0.86 0.14 9.88 0.00 0.00 0.00 0.07 6803 Worked slate and articles of . . . . . . . . . . . . . 8 0.00 -0.68 0.00 13.48 0.00 0.00 0.00 0.00 7102 Diamonds worked/not worked but not . . . . . 1 3 64.72 0.97 0.00 12.66 0.16 3.89 0.36 0.00 7313 Barbed,twisted,single wire of iron/ . . . . . . . . 4 0.00 0.31 1.31 3.76 0.00 0.00 0.00 0.00 7401 Copper mattes; cement copper . . . . . . . . . . 9 0.01 0.82 0.27 31.33 0.00 0.00 0.00 0.00 7403 Refined copper and copper alloys, . . . . . . . 10 0.62 0.41 -0.16 7.12 0.19 0.10 0.92 0.00 7902 Zinc waste and scrap . . . . . . . . . . . . . . . . . . 6 0.01 0.42 0.74 6.36 0.00 0.00 0.00 0.00 7903 Zinc dust, powders and flakes . . . . . . . . . . . 9 0.08 0.61 0.66 6.05 0.00 0.00 0.00 0.00 8103 Tantalum and articles thereof, . . . . . . . . . . . 7 0.02 0.09 0.68 24.78 0.00 0.00 0.00 0.00 8105 Cobalt mattes, intermediate prdts of . . . . . . 5 2 2.84 0.99 0.00 6.56 4.35 6.16 2.86 0.00 8112 All the other base metals (beryllium . . . . . . . 3 0.01 0.31 1.31 12.52 0.00 0.00 0.00 0.00 8484 Gaskets and similar joints of metal . . . . . . . 4 0.00 -0.93 0.00 8.96 0.00 0.00 0.04 0.00 8604 Rail, tramway maintenance, service . . . . . . 2 0.02 0.57 1.57 8.15 0.00 0.00 0.00 0.00 9305 Parts, accessories of articles of . . . . . . . . . . 10 0.01 -0.31 0.59 6.20 0.00 0.02 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-13

Table E-9Djibouti: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))Import market shar

0104 Live sheep and goats . . . . . . . . . . . . . . . . 9 7 2.87 0.99 0.10 6.83 0.00 0.00 0.00 0.00 0106 Other live animals, . . . . . . . . . . . . . . . . . . 4 5 4.65 0.99 0.03 9.32 0.00 0.00 0.00 0.00 0305 Fish, salted, dried...; smoked fish; . . . . . . 5 0.15 0.55 0.07 5.10 0.01 0.00 0.00 0.00 0410 Edible products of animal origin, . . . . . . . 3 0.00 -0.15 0.00 8.11 0.00 0.00 0.00 0.00 0904 Pepper of the genus Piper, Capiscum . . . 10 0.01 -0.08 1.03 9.13 0.00 0.00 0.00 0.00 1001 Wheat and meslin . . . . . . . . . . . . . . . . . . 5 4.00 0.70 0.93 7.94 0.00 0.00 0.00 0.00 1005 Maize (corn) . . . . . . . . . . . . . . . . . . . . . . . 9 0.10 -0.31 1.09 6.44 0.00 0.00 0.00 0.00 1105 Flour, meal, flakes, granules and . . . . . . . 4 2 0.02 0.18 1.32 12.39 0.26 0.00 0.00 0.00 1403 Vegetable materials used primarily . . . . . 4 0.15 0.99 0.00 -1.15 0.19 0.00 0.00 0.00 1510 Other oils and their fractions, . . . . . . . . . . 9 0.13 0.99 0.01 21.17 0.00 0.00 0.00 0.00 2005 Other vegetables preserved other . . . . . . 7 0.15 0.01 0.60 8.33 0.00 0.00 0.00 0.00 2501 Salt and pure sodium chloride; sea . . . . . 1 2 10.64 1.00 0.00 7.55 0.00 0.00 0.00 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . . 7 3.40 0.02 0.02 12.03 0.00 0.00 0.00 0.00 2713 Petroleum coke, bitumen and other . . . . . 3 4.97 0.98 0.25 14.05 0.00 0.00 0.00 0.00 3404 Artificial waxes and prepared waxes . . . . 1 0.19 0.89 1.88 9.17 0.00 0.02 0.00 0.00 4014 Hygienic or pharmaceutical articles . . . . . 6 7 2.19 0.99 1.18 11.00 0.00 0.00 0.00 0.00 4110 Waste... of leather or of . . . . . . . . . . . . . . 8 0.35 0.99 0.00 9.42 0.00 0.00 0.00 0.00 4420 Wood marquetry, inlaid wood; casket . . . 8 0.00 -0.64 -0.06 8.01 0.00 0.00 0.00 0.00 5513 Woven fabrics, <85% synthetic . . . . . . . . 6 0.06 0.38 1.23 -0.68 0.00 0.00 0.00 0.00 5805 Hand-woven tapestries of the type . . . . . . 9 0.00 0.47 0.00 1.86 0.00 0.00 0.00 0.00 6001 Pile fabrics (incl. long pile and . . . . . . . . . 5 0.03 -0.30 1.27 9.26 0.00 0.00 0.00 0.00 6111 Babies' garments and clothing . . . . . . . . . 6 0.39 -0.05 -0.03 11.96 0.00 0.00 0.00 0.00 6204 Women's or girls' suits, ensembles, . . . . . 4 0.00 -0.98 -0.01 8.53 0.00 0.00 0.00 0.00 7108 Gold (platinum plated) unwrought, . . . . . . 8 2.91 0.64 -0.18 8.78 0.00 0.00 0.00 0.00 7210 Flat-rolled products of iron/ . . . . . . . . . . . 6 3.40 0.89 0.43 11.60 0.00 0.00 0.00 0.00 7215 Other bars and rods of iron or . . . . . . . . . 2 0.15 0.84 1.74 6.73 0.00 0.00 0.00 0.00 7306 Other tubes, pipes and hollow . . . . . . . . . 3 0.26 0.50 1.37 9.81 0.00 0.00 0.00 0.00 7802 Lead waste and scrap . . . . . . . . . . . . . . . 1 0.43 1.00 0.03 6.75 0.00 0.00 0.00 0.00 8468 Machinery and apparatus for . . . . . . . . . . 8 0.01 0.17 1.15 6.74 0.00 0.00 0.00 0.00 8474 Machinery for sorting, screening, . . . . . . . 10 0.13 -0.11 0.76 7.15 0.00 0.00 0.00 0.00 8703 Motor cars and other motor vehicles . . . . 2 4.97 -0.07 0.01 10.65 0.00 0.00 0.00 0.00 8704 Motor vehicles for the transport of . . . . . . 10 2.51 -0.04 -0.17 10.17 0.00 0.00 0.00 0.00 8804 Parachutes (dirigible), rotochutes, . . . . . . 3 1.05 1.00 0.01 10.27 0.00 1.36 0.00 0.00 8908 Vessels and other floating . . . . . . . . . . . . 10 0.73 0.99 0.00 14.00 0.00 0.00 0.00 0.00 9701 Hand made decorative materials, . . . . . . 1 0.00 -0.91 0.05 4.64 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-14

Table E-10Ethiopia: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA

 (00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market sh

0201 Meat of bovine animals, fresh or . . . . . . . . . 10 0.01 -0.91 0.01 8.39 0.00 0.00 0.00 0.00 0510 Ambergris, castoreum, civet and mus . . . . . 9 0.17 0.98 0.00 -0.11 0.00 1.27 0.10 0.00 0708 Leguminous vegetables, shelled or . . . . . . . 7 1.16 0.99 0.00 11.94 0.00 1.30 0.00 0.00 0713 Dried leguminous vegetables, . . . . . . . . . . . 5 3.47 0.97 0.00 6.79 0.19 0.70 0.00 0.00 0901 Coffee; coffee husks and skins; . . . . . . . . . . 1 3 46.44 0.99 0.00 8.74 0.66 2.33 6.99 1.58 0906 Cinnamon and cinnamon-tree flowers . . . . . 5 0.00 0.09 1.08 -0.49 0.05 0.00 0.00 0.00 1105 Flour, meal, flakes, granules and . . . . . . . . . 8 0.00 -0.32 0.67 12.39 0.49 0.00 0.00 0.00 1205 Rape or colza seeds . . . . . . . . . . . . . . . . . . 3 0.00 -0.98 0.00 8.02 0.00 0.00 0.00 0.00 1207 Other oil seeds and oleaginous . . . . . . . . . . 2 1 10.75 1.00 0.00 7.99 7.87 1.32 1.68 0.00 1301 Lac; natural gums, resins, gum- . . . . . . . . . . 8 0.49 0.98 0.00 4.07 0.21 0.63 0.06 0.00 1403 Vegetable materials used primarily . . . . . . . 5 0.09 0.99 0.01 -1.15 2.31 0.00 0.00 0.00 1521 Vegetable waxes (excl. triglyceride . . . . . . . 6 0.23 0.99 0.00 8.02 1.49 0.63 3.31 0.00 2103 Sauces and sauce preparations; . . . . . . . . . 4 0.00 -1.00 0.00 11.97 0.00 0.00 0.00 0.00 2308 Vegetable materials, waste, residue . . . . . . 1 0.00 -0.26 -0.33 -1.29 0.00 0.00 0.00 0.00 2702 Lignite (excluding jet) . . . . . . . . . . . . . . . . . . 8 0.00 -0.10 0.89 0.87 0.00 0.00 0.00 0.00 4102 Raw skins of sheep or lambs, but . . . . . . . . 3 2 7.29 1.00 0.00 14.57 0.00 6.16 26.49 0.00 4104 Leather of bovine or equine animals . . . . . . 9 1.73 0.80 0.08 8.70 0.00 0.15 0.00 0.00 4105 Sheep or lamb skin leather, without . . . . . . . 8 10 2.11 0.98 0.00 5.53 0.00 1.12 0.14 0.00 4106 Goat or kid skin leather, without . . . . . . . . . . 6 4 3.38 0.99 0.00 10.24 0.00 3.07 0.07 0.00 4206 Articles of gut (excl. silk-worm), . . . . . . . . . . 2 0.00 -1.00 0.00 5.98 0.00 0.00 0.00 0.00 5201 Cotton, not carded or combed . . . . . . . . . . . 10 1.41 0.84 0.11 7.25 0.00 0.08 0.00 0.00 5601 Wadding of textile materials and . . . . . . . . . 10 0.01 -0.22 0.77 8.22 0.00 0.00 0.00 0.00 6404 Footwear with rubber, plastic, . . . . . . . . . . . 9 0.00 -0.99 -0.05 6.02 0.00 0.00 0.00 0.00 7018 Glass beads, imitation pearls, . . . . . . . . . . . 6 0.00 -0.89 0.04 9.55 0.00 0.00 0.00 0.04 7108 Gold (platinum plated )unwrought, . . . . . . . . 4 1 3.89 0.82 1.81 8.78 0.00 0.00 0.00 0.00 8304 Filing cabinets, of base metal other . . . . . . . 7 0.01 0.52 0.93 7.85 0.00 0.00 0.00 0.00 8411 Turbo-jets,turbo-propellers and . . . . . . . . . . 7 2.37 0.24 0.03 9.91 0.00 0.05 0.00 0.00 8469 Typewriters and word-processing . . . . . . . . 3 0.00 0.27 1.23 -17.55 0.00 0.00 0.00 0.00 8540 Thermionic, cold cathode or photo- . . . . . . . 9 0.48 -0.21 0.78 5.41 0.00 0.00 0.00 0.00 8545 Carbon electrodes, lamp carbons, with . . . . 6 0.03 0.04 1.04 7.48 0.00 0.03 0.00 0.00 9007 Cinematographic cameras, projectors . . . . . 2 0.03 0.55 1.54 8.26 0.00 0.00 0.00 0.00 9701 Hand made decorative materials, . . . . . . . . 7 0.00 -0.94 0.00 4.64 0.00 0.00 0.00 0.00 9702 Original engravings, prints, . . . . . . . . . . . . . 5 0.00 -0.97 0.00 1.93 0.00 0.00 0.00 0.00 9704 Postage, revenue stamps, postal . . . . . . . . . 4 0.01 0.46 1.23 9.02 0.11 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-15

Table E-11Gabon: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

 in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))))Import market share (pe

0301 Live fish . . . . . . . . . . . . . . . . . . . . . . . . . 1 0.00 -0.99 -0.24 3.90 0.00 0.00 0.00 0.08 0306 Crustaceans, fresh, chilled or frozen . . . 8 0.48 0.38 0.02 4.83 0.00 0.42 0.00 0.00 0603 Cut flowers and flower buds for . . . . . . . 6 0.00 -1.00 0.00 7.52 0.00 0.00 0.00 0.00 0702 Tomatoes, fresh or chilled . . . . . . . . . . . 8 0.00 -1.00 0.00 11.29 0.00 0.00 0.00 0.00 1106 Flour and meal of the dried . . . . . . . . . . 3 0.00 -0.19 0.63 7.07 0.00 0.09 0.00 0.00 2302 Brans, sharps and other residues, . . . . 7 0.05 0.55 -0.06 5.07 1.79 0.00 0.00 0.00 2602 Manganese ores and concentrates, . . . 3 1 4.26 0.99 0.00 3.99 72.79 34.43 1.88 0.00 2709 Petroleum oils and oils obtained . . . . . . 1 4 75.57 0.86 -0.01 13.61 2.11 0.13 0.21 0.79 2710 Petroleum oils, etc, (excl. crude); . . . . . . 6 0.65 -0.57 -0.09 12.03 0.03 0.00 0.00 0.00 2802 Sulphur, sublimed or precipitated; . . . . . 3 0.00 -1.00 0.00 10.92 0.00 0.00 0.00 0.00 2816 Hydroxide and peroxide of magnesium . 6 0.00 0.58 0.17 9.50 0.00 0.00 0.00 0.00 2820 Manganese oxides . . . . . . . . . . . . . . . . . 8 0.02 0.51 -0.12 3.76 0.00 0.01 0.00 0.00 2844 Radioactive chemical elements/ . . . . . . 9 9 0.25 0.42 -0.35 8.67 0.00 0.40 0.00 0.00 3606 Ferro-cerium, pyrophoric alloys; . . . . . . 4 0.00 -0.40 0.57 6.92 0.00 0.04 0.00 0.00 4403 Wood in the rough or roughly square . . 2 2 14.05 0.98 0.00 0.73 0.05 5.55 0.40 0.00 4407 Wood sawn or chipped lengthwise, . . . . 5 0.95 0.38 0.14 3.71 0.01 0.25 0.00 0.01 4408 Veneer sheets and sheets for . . . . . . . . 4 3 1.61 0.94 0.03 7.11 1.32 3.31 0.00 0.75 4412 Plywood, veneered panels and . . . . . . . 7 5 0.51 0.61 0.00 1.57 0.01 0.74 0.00 0.00 4413 Densified wood, in blocks, plates, . . . . . 9 0.00 -0.02 0.38 7.46 0.00 0.10 0.00 0.00 4705 Semi-chemical wood pulp . . . . . . . . . . . 1 0.01 -0.19 0.91 17.07 0.00 0.00 0.00 0.00 4806 Vegetable parchment, greaseproof . . . . 10 0.00 -0.99 0.00 10.63 0.00 0.00 0.00 0.00 4906 Handwritten plans for . . . . . . . . . . . . . . . 2 0.00 -0.96 0.01 12.88 0.00 0.01 0.19 0.00 4909 Printed or illustrated postcards; . . . . . . . 7 0.01 -0.11 0.42 10.79 0.00 0.11 0.00 0.00 5404 Synthetic monofilament; strip and . . . . . 4 0.00 -0.95 -0.09 8.02 0.00 0.00 0.00 0.17 5506 Synthetic staple fibres, carded, . . . . . . . 2 0.00 -0.22 0.66 2.93 0.00 0.00 0.00 0.00 7209 Flat-rolled products of iron/ . . . . . . . . . . 10 0.09 -0.36 0.31 7.74 0.00 0.00 0.00 0.00 7613 Aluminium containers for compressed . . 5 0.00 -0.23 0.44 5.64 0.00 0.07 0.00 0.00 8442 Machinery, apparatus (other than . . . . . 6 0.01 -0.57 0.43 3.17 0.00 0.03 0.00 0.00 8532 Electrical capacitors, fixed, . . . . . . . . . . . 7 0.00 -0.97 -0.01 12.14 0.00 0.00 0.00 0.00 8802 Other aircraft, spacecraft, and space . . . 10 0.17 -0.75 0.10 6.92 0.00 0.02 0.00 0.00 

9503 Other toys; reduced-size models, . . . . . 9 0.00 -1.00 0.00 7.45 0.00 0.00 0.00 0.00 9701 Hand made decorative materials, . . . . . 5 0.00 -0.99 0.00 4.64 0.00 0.00 0.00 0.00 9703 Original sculptures and statuary, . . . . . . 8 0.01 -0.30 0.40 7.25 0.14 0.00 0.00 0.00 9705 Scientific collections and . . . . . . . . . . . . 10 0.02 0.42 -0.07 7.96 1.29 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-16

Table E-12The Gambia: Revealed comparative advantage analysisHS Product

Rank

 by share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth in

world mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))))Import market share 

0306 Crustaceans, fresh, chilled or frozen . . . 8 3.82 0.92 0.01 4.83 0.00 0.06 0.00 0.00 

0708 Leguminous vegetables, shelled or . . . . . 4 2.50 1.00 0.00 11.94 0.00 0.36 0.00 0.00 0801 Coconuts, Brazil nuts and cashew . . . . . 6 4.27 0.97 0.04 6.11 0.00 0.08 0.00 0.00 1202 Ground-nuts, not roasted or . . . . . . . . . . . 3 3 7.97 1.00 0.04 2.77 0.35 0.74 0.00 0.00 1206 Sunflower seeds . . . . . . . . . . . . . . . . . . . . 3 0.19 0.90 1.80 11.56 0.00 0.01 0.00 0.00 

1508 Ground-nut oil and its fractions . . . . . . . . 5 10 5.64 0.98 0.02 18.57 0.00 2.98 0.00 0.00 1804 Cocoa butter, fat and oil . . . . . . . . . . . . . . 9 1.26 0.98 0.01 10.68 0.00 0.09 0.00 0.00 2305 Oil-cake and other solid residues, . . . . . . 10 1 2.54 1.00 0.00 -9.28 0.00 5.22 0.00 0.00 2606 Aluminum ores and concentrates . . . . . . 7 5 4.12 0.99 0.00 1.51 0.00 0.00 0.00 0.00 2615 Niobium, tantalum, vanadium or . . . . . . . 9 2 3.42 1.00 0.00 16.54 0.00 0.00 0.00 0.00 2819 Chromium oxides and hydroxides . . . . . . 6 0.04 0.89 1.73 7.42 0.00 0.00 0.00 0.00 2930 Organo-sulphur compounds . . . . . . . . . . 6 0.00 -0.99 -0.22 11.36 0.00 0.00 0.00 0.00 3505 Dextrins and other modified . . . . . . . . . . . 7 0.05 -0.15 1.70 8.92 0.00 0.00 0.00 0.00 4006 Other forms and articles of . . . . . . . . . . . . 2 0.03 0.87 1.86 6.80 0.00 0.00 0.00 0.00 5308 Yarn of other vegetable textile . . . . . . . . . 1 0.00 -1.00 0.00 -0.24 0.00 0.00 0.00 0.00 

5402 Synthetic filament yarn, nprs . . . . . . . . . . 9 0.65 0.71 1.69 9.19 0.00 0.00 0.00 0.00 5602 Felt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 0.04 0.74 1.55 7.96 0.00 0.01 0.00 0.00 5702 Carpets and other textile floor . . . . . . . . . 10 0.00 -0.90 0.09 5.46 0.00 0.00 0.00 0.00 6914 Other ceramic articles . . . . . . . . . . . . . . . 9 0.00 -0.90 -0.07 6.54 0.00 0.00 0.00 0.00 7102 Diamonds worked/not worked but not . . . 2 8.16 0.18 -0.48 12.66 0.00 0.03 0.00 0.00 

7319 Sewing needles, for hand use needles . 7 1 0.26 0.98 1.88 4.36 0.00 0.00 0.00 0.00 

7609 Aluminum tube or pipe fittings . . . . . . . . . 6 0.61 0.99 0.00 13.22 0.00 0.00 0.00 0.00 8213 Scissors, tailors' shears and similar . . . . . 5 0.00 -0.48 -0.10 4.02 0.00 0.00 0.00 0.05 8502 Electric generating sets and rotary . . . . . 4 8 6.62 0.98 1.46 8.72 0.00 0.00 0.00 0.00 8607 Parts of rail, tramway locomotives/ . . . . . 4 0.92 0.92 1.79 13.90 0.00 0.00 0.00 0.00 8701 Tractors (other than tractors of . . . . . . . . 4 0.51 0.53 0.66 13.77 0.00 0.00 0.32 0.00 8705 Special purpose motor vehicles . . . . . . . . 8 0.61 0.90 1.70 8.82 0.00 0.00 0.00 0.00 8802 Other aircraft, spacecraft, and space . . . 1 19.99 0.95 0.00 6.92 0.00 0.00 0.00 0.00 

9002 Lenses, prisms, mirrors, other such . . . . 3 0.00 -0.96 0.02 12.84 0.00 0.00 0.00 0.00 9005 Astronomical instruments, mountings, . . . 7 0.00 -0.54 0.43 6.73 0.00 0.00 0.00 0.02 9006 Photographic apparatus, flashbulbs . . . . 8 0.01 -0.81 -0.07 3.69 0.00 0.00 0.00 0.01 9601 Worked ivory, bone, tortoise-shell, . . . . . 5 0.01 0.78 1.78 2.96 0.00 0.00 0.00 0.00 9701 Hand made decorative materials, . . . . . . 2 0.00 -0.89 0.10 4.64 0.00 0.00 0.00 0.01 

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-17

Table E-13Ghana: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg yearly

change

 in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))))Import market share (pe

0408 Birds' eggs, not in shell, and egg . . . . . . 5 0.00 -0.99 0.00 12.27 0.00 0.00 0.00 0.02 0714 Roots and tubers with high starch . . . . . 9 0.53 0.96 0.01 -2.80 2.40 2.36 0.02 0.01 0804 Dates, figs, pineapples...etc, . . . . . . . . . 8 8 2.90 0.97 0.01 14.23 0.00 3.16 0.00 0.00 1604 Prepared or preserved fish; caviar . . . . . 4 10 4.68 0.96 0.00 7.33 0.00 2.69 0.00 0.00 1801 Cocoa beans, whole or broken, raw . . . 1 1 33.85 1.00 0.00 13.58 6.03 17.12 69.63 24.32 1802 Cocoa shells, husks, skins and . . . . . . . 2 0.26 1.00 0.00 22.31 68.61 19.03 0.00 0.00 1803 Cocoa paste, whether or not . . . . . . . . . 4 1.95 0.99 0.00 20.47 6.32 2.68 2.17 0.22 1804 Cocoa butter, fat and oil . . . . . . . . . . . . . 10 5 2.82 0.98 0.00 10.68 3.58 3.62 0.84 0.55 2602 Manganese ores and concentrates, . . . 7 3 3.42 0.99 0.00 3.99 0.72 5.30 3.22 0.00 2615 Niobium, tantalum, vanadium or . . . . . . 3 0.03 0.59 1.58 16.54 0.00 0.00 0.00 0.00 2616 Precious metal ores and concentrate . . 6 0.01 -0.37 0.32 12.50 0.42 0.02 0.02 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . 6 3.91 0.27 -0.04 12.03 0.17 0.02 0.00 0.00 2715 Bituminous mixtures based on . . . . . . . . 7 0.00 -0.10 0.83 2.74 0.00 0.00 0.00 0.00 2832 Sulphites; thiosulphates . . . . . . . . . . . . . 6 0.00 0.05 1.05 5.24 0.00 0.00 0.00 0.00 2851 Other inorganic compounds; liquid . . . . 4 0.00 -0.95 -0.19 9.05 0.00 0.00 0.00 0.31 4106 Goat or kid skin leather, without . . . . . . . 3 0.00 -0.99 0.00 10.24 0.01 0.00 0.00 0.00 4404 Hoopwood; split poles; piles, etc; . . . . . . 10 0.00 0.05 0.20 9.34 0.00 0.04 0.00 3.58 4407 Wood sawn or chipped lengthwise, sl . . 3 6.80 0.89 0.00 3.71 0.15 0.86 0.02 0.31 4408 Veneer sheets and sheets for . . . . . . . . 5 6 4.24 0.98 0.00 7.11 3.84 3.51 0.01 2.91 4415 Packing cases... of wood; cable- . . . . . . 1 0.00 -0.91 0.03 17.75 0.00 0.00 0.00 1.85 

4906 Handwritten plans...for . . . . . . . . . . . . . . 2 0.00 -0.99 0.00 12.88 0.00 0.00 0.00 0.08 

5501 Synthetic filament tow . . . . . . . . . . . . . . 5 0.02 0.11 1.11 8.69 0.00 0.00 0.00 0.00 6115 Panty hose, tights, etc, and . . . . . . . . . . 10 0.09 -0.35 0.51 7.79 0.21 0.00 0.00 0.00 6212 Brassieres, girdles, corsets, . . . . . . . . . . 7 0.00 -1.00 0.00 11.09 0.00 0.00 0.00 0.00 7001 Cullet and other waste and scrap of . . . 4 0.00 0.26 1.24 11.10 0.00 0.00 0.00 0.00 7012 Glass inners for vacuum flasks or . . . . . 8 0.00 -0.29 0.70 -3.91 0.00 0.00 0.00 0.00 7102 Diamonds worked/not worked but not . . 9 2.86 0.44 -0.15 12.66 0.11 0.10 0.02 0.01 7601 Unwrought aluminum . . . . . . . . . . . . . . . 2 10.02 0.92 -0.01 10.99 0.25 1.63 0.00 0.00 7806 Other articles of lead . . . . . . . . . . . . . . . 9 0.00 -0.35 0.64 5.33 0.00 0.13 0.00 0.00 8906 Other vessels including warships, . . . . . 7 1 1.67 0.98 1.97 8.85 0.00 0.00 0.00 0.00 9005 Astronomical instruments, mountings, . . 2 0.06 0.63 1.63 6.73 0.00 0.33 0.00 0.00 9102 All types of portable watches other . . . . 9 0.00 -0.98 0.00 4.37 0.00 0.00 0.00 0.00 9208 Musical boxes, fairground organs, not . . 8 0.00 -0.91 0.01 -3.40 0.00 0.01 0.00 0.15 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-18

Table E-14Guinea: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

export

s

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (

0303 Fish, frozen, (excl. those of 03.04 . . . . . 6 7 2.62 0.86 0.04 5.11 0.00 0.30 0.01 0.00 0306 Crustaceans, fresh, chilled or frozen . . . 8 0.85 0.57 0.10 4.83 0.00 0.21 0.00 0.00 0901 Coffee; coffee husks and skins; . . . . . . . 7 10 1.56 0.82 0.00 8.74 0.08 0.06 0.00 0.00 1801 Cocoa beans, whole or broken, raw . . . 9 0.77 0.72 0.03 13.58 0.00 0.17 0.00 0.00 1802 Cocoa shells, husks, skins and . . . . . . . 2 0.29 1.00 0.00 22.31 0.00 15.20 0.00 0.00 2302 Brans, sharps and other residues, . . . . . 5 0.13 0.88 0.01 5.07 0.62 0.00 0.00 0.00 2513 Pumice stone; emery; natural . . . . . . . . 7 0.01 0.17 0.59 6.30 0.61 0.00 0.00 0.00 2530 Mineral substances not elsewhere . . . . . 10 0.00 -0.97 0.01 8.02 0.00 0.00 0.00 0.01 2603 Copper ores and concentrates . . . . . . . . 5 4 5.00 0.95 0.05 8.84 0.00 0.85 0.00 0.00 2606 Aluminium ores and concentrates . . . . . 1 1 44.44 1.00 0.00 1.51 27.10 54.89 0.00 0.01 2616 Precious metal ores and concentrate . . 3 0.12 0.55 0.15 12.50 0.06 0.02 0.00 0.00 2709 Petroleum oils and oils obtained . . . . . . 4 10.00 0.26 0.01 13.61 0.00 0.02 0.00 0.00 2818 Artificial corundum; aluminium . . . . . . . . 2 3 14.66 0.99 0.00 8.29 0.00 2.24 0.00 0.00 3808 Insecticides, rodenticides . . . . . . . . . . . . 9 0.01 -0.94 0.00 12.14 0.03 0.00 0.00 0.00 4004 Waste, parings and scrap of rubber . . . . 1 0.01 0.70 1.70 13.98 0.00 0.00 0.00 0.00 4106 Goat or kid skin leather, without . . . . . . . 1 0.00 -1.00 -0.02 10.24 0.00 0.00 0.00 0.00 4406 Railway or tramway sleepers (cross- . . . 6 0.03 0.87 0.00 8.47 0.00 0.00 0.00 0.00 5201 Cotton, not carded or combed . . . . . . . . 10 0.70 0.72 -0.06 7.25 0.00 0.32 0.00 0.00 5202 Cotton waste (incl. yarn waste and . . . . 9 0.05 0.86 0.00 7.82 0.00 0.00 0.00 0.00 6216 Gloves, mittens and mitts . . . . . . . . . . . . 6 0.00 -0.61 0.69 4.04 0.00 0.03 0.00 0.00 6307 Other made up articles (incl. dress . . . . 6 0.00 -0.99 0.00 13.65 0.00 0.00 0.00 0.00 7018 Glass beads, imitation pearls, . . . . . . . . 8 0.01 -0.40 0.58 9.55 0.00 0.00 0.00 0.00 7102 Diamonds worked/not worked but not . . 3 8 12.72 0.86 -0.03 12.66 0.11 0.53 0.01 0.00 8407 Spark-ignition reciprocating or . . . . . . . . 4 0.00 -1.00 0.00 8.69 0.00 0.00 0.00 0.00 8439 Machinery for making pulp of . . . . . . . . . 8 0.00 -0.99 -0.03 7.69 0.00 0.00 0.01 0.00 8447 Knitting machines, stitch-bonding, . . . . . 9 0.01 -0.48 0.52 3.22 0.00 0.00 0.00 0.00 8461 Machine-tools for planing, shaping, . . . . 5 0.03 0.07 0.83 6.18 0.00 0.00 0.00 0.00 8516 Electric instantaneous, domestic . . . . . . 5 0.00 -0.99 -0.01 9.02 0.00 0.00 0.00 0.00 8524 Records, tapes for sound/ similarly . . . . 7 0.00 -0.99 0.01 9.71 0.00 0.00 0.00 0.00 8540 Thermionic, cold cathode or photo- . . . . 2 0.00 -1.00 -0.02 5.41 0.00 0.00 0.00 0.00 

8545 Carbon electrodes, lamp carbons, with 2 0.17 0.66 1.52 7.48 0.00 0.00 0.00 0.00 8901 Cruise ships, excursion/ferry-boats, . . . . 10 0.11 -0.50 0.50 8.98 0.00 0.02 0.00 0.00 9023 Apparatus, models designed for demon 3 0.05 0.57 1.23 5.25 0.00 0.00 0.00 0.00 9306 Bombs, grenades, torpedoes, . . . . . . . . 4 0.03 -0.07 0.91 4.22 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-19

Table E-15Guinea-Bissau: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0302 Fish, fresh or chilled (excl. those . . . . . . 1 0.02 -0.71 0.19 7.38 0.00 0.00 0.00 0.00 0303 Fish, frozen, (excl. those of 03.04 . . . . . 4 5 2.53 0.91 0.00 5.11 0.00 0.06 0.00 0.00 0304 Fish fillets and other fish meat, . . . . . . . 3 0.74 0.78 1.50 9.77 0.00 0.00 0.07 0.00 0307 Molluscs & aquatic invertebrates, . . . . . 9 8 1.35 0.87 0.00 6.08 0.00 0.07 0.01 0.00 0801 Coconuts, Brazil nuts and cashew . . . . . 2 1 33.44 1.00 0.00 6.11 0.01 0.02 0.00 0.00 0905 Vanilla . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0.01 0.40 0.00 24.42 0.00 0.00 0.00 0.00 1207 Other oil seeds and oleaginous . . . . . . . 4 0.28 0.92 0.06 7.99 0.00 0.08 0.00 0.00 2302 Brans, sharps and other residues, . . . . . 7 0.09 0.90 0.03 5.07 0.00 0.00 0.00 0.00 2523 Portland cement, aluminous cement, . . 5 3 5 2.19 0.95 1.24 7.53 0.00 0.00 0.00 0.00 2709 Petroleum oils and oils obtained . . . . . . 1 9 41.35 0.81 0.06 13.61 0.00 0.00 0.00 0.00 2711 Petroleum gases and other gaseous . . . 7 1.78 0.24 0.00 16.59 0.01 0.00 0.00 0.00 3808 Insecticides, rodenticides, and . . . . . . . 10 0.11 -0.02 0.97 12.14 0.00 0.00 0.00 0.00 4013 Inner tubes, of rubber . . . . . . . . . . . . . . . 4 0.02 0.56 1.49 1.90 0.00 0.00 0.00 0.00 4202 Trunks, suit-cases...; handbags... . . . . . 5 0.00 -0.99 0.00 7.07 0.00 0.00 0.00 0.00 

5201 Cotton, not carded or combed . . . . . . . . 6 6 1.80 0.91 0.00 7.25 0.00 0.18 0.00 0.00 5204 Cotton sewing thread . . . . . . . . . . . . . . . 7 0.00 0.13 1.13 3.49 0.00 0.00 0.00 0.00 6204 Women's or girls' suits, ensembles, . . . . 4 0.00 -1.00 -0.02 8.53 0.00 0.00 0.00 0.00 6210 Garments, made up of fabrics of. . . . . . . 10 0.00 -0.91 -0.05 12.46 0.00 0.00 0.00 0.00 6302 Bed linen, table linen, toilet . . . . . . . . . . 8 0.00 -0.98 -0.01 8.99 0.00 0.00 0.00 0.00 6811 Articles of asbestos-cement, of . . . . . . . 8 0.01 0.38 1.11 10.57 0.00 0.00 0.00 0.00 6913 Statuettes and other ornamental . . . . . . 3 0.00 -0.91 -0.02 2.68 0.00 0.00 0.00 0.00 7010 Carboys, bottles, flasks, jars, etc. of . . . 1 0.21 0.70 1.69 12.30 0.00 0.00 0.00 0.00 

7013 Glass articles used for indoor . . . . . . . . 6 0.01 -0.78 0.11 6.70 0.00 0.00 0.00 0.00 8439 Machinery for making pulp of . . . . . . . . . 2 0.27 0.12 1.51 7.69 0.00 0.00 0.00 0.00 8531 Electric sound/visual signalling . . . . . . . 6 0.09 -0.42 1.16 14.62 0.00 0.00 0.00 0.00 8532 Electrical capacitors, fixed, . . . . . . . . . . . 8 1.62 -0.04 0.81 12.14 0.00 0.00 0.00 0.00 8535 Electrical apparatus for making . . . . . . . 10 0.29 0.79 0.75 6.37 0.00 0.00 0.00 0.00 8802 Other aircraft, spacecraft, and space . . . 3 9 3.14 0.65 0.99 6.92 0.00 0.01 0.00 0.00 

9206 Percussion musical instruments (drum . 7 0.00 -0.60 -0.01 8.74 0.00 0.00 0.00 0.00 9304 Other arms (spring, air or gas guns, . . . 10 2 0.96 1.00 0.00 17.46 0.00 0.00 0.00 0.00 9609 Pencils (other than 96.08), crayons, . . . 9 0.00 -1.00 0.00 5.95 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-20

Table E-16Kenya: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in

world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))Import market share (pe

0209 Pig and poultry fat, fresh, chilled . . . . . . . 9 0.00 -0.66 -0.91 16.44 0.00 0.00 0.00 0.00 0304 Fish fillets and other fish meat, . . . . . . . . 6 3.12 0.92 0.00 9.77 0.09 0.35 0.39 5.94 0506 Bones and horn-cores . . . . . . . . . . . . . . . 1 0.00 -0.97 0.00 3.32 0.00 0.00 0.00 0.00 0603 Cut flowers and flower buds for . . . . . . . . 3 4 9.66 0.99 0.00 7.52 0.07 6.01 1.12 3.21 0708 Leguminous vegetables, shelled or . . . . . 5 2 4.42 1.00 0.00 11.94 0.00 22.33 0.00 4.24 0709 Other vegetables, fresh or chilled . . . . . . 8 10 2.47 0.94 0.01 9.71 0.00 1.75 0.00 0.00 0901 Coffee; coffee husks and skins; . . . . . . . . 4 6 6.74 0.96 0.00 8.74 0.76 2.23 0.45 1.62 0902 Tea, whether or not flavoured . . . . . . . . . 1 3 17.17 1.00 0.00 5.97 5.79 18.12 1.41 3.01 0903 Mate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0.00 -0.61 -0.37 17.10 0.00 3.09 0.00 0.00 1003 Barley . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.03 -0.14 0.86 8.99 0.00 0.00 0.00 0.00 1208 Flours and meals of oil seeds or . . . . . . . 6 0.13 0.49 0.66 10.01 0.00 0.00 0.00 0.00 2008 Fruit, nuts and other parts of plan . . . . . . 9 9 2.43 0.94 0.00 6.89 0.10 2.17 0.02 0.00 2526 Natural steatite, crude roughly tri . . . . . . . 3 0.00 -0.83 -0.06 6.97 0.00 0.00 0.00 0.35 2529 Felspar; leucite nepheline and . . . . . . . . . 5 0.59 0.97 0.00 8.11 0.00 3.05 1.50 0.00 2611 Tungsten ores and concentrates . . . . . . . 1 0.01 0.87 1.85 22.87 0.74 0.00 0.00 0.00 2615 Niobium, tantalum, vanadium or . . . . . . . 9 0.03 0.26 0.51 16.54 0.00 0.00 0.00 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . . 2 12.04 0.69 -0.01 12.03 0.00 0.01 0.00 0.00 2836 Carbonates; peroxocarbonates; . . . . . . . . 8 1.34 0.94 0.01 8.75 0.01 0.00 0.00 0.00 3704 Photographic plates, film, paper . . . . . . . 4 0.00 -0.58 -0.28 7.86 0.00 0.00 0.90 0.00 4401 Fuel wood, in logs..., etc; wood . . . . . . . . 6 0.00 -0.99 0.00 4.09 0.00 0.00 0.00 0.00 5304 Sisal, etc, raw or processed but . . . . . . . . 1 0.52 1.00 0.00 7.05 0.48 16.98 55.77 68.29 5906 Rubberized textile fabrics . . . . . . . . . . . . . 7 0.00 -0.94 -0.03 10.85 0.00 0.00 0.07 0.00 6203 Men's or boys' suits, ensembles, . . . . . . . 10 1.55 0.59 0.11 7.80 0.38 0.01 0.00 0.00 6204 Women's or girls' suits, ensembles, . . . . . 7 2.71 0.64 0.10 8.53 0.50 0.00 0.00 0.00 6803 Worked slate and articles of slate . . . . . . 8 0.00 -0.98 0.00 13.48 0.00 0.00 0.00 0.00 7110 Platinum, unwrought, in . . . . . . . . . . . . . . 10 0.00 -0.99 -0.01 13.56 0.00 0.00 0.00 0.00 7406 Copper powders and flakes . . . . . . . . . . . 7 0.00 -0.43 0.56 11.94 0.00 0.00 0.00 0.00 8001 Unwrought tin . . . . . . . . . . . . . . . . . . . . . . 8 0.02 -0.19 0.53 1.72 0.04 0.00 0.00 0.00 8002 Tin waste and scrap . . . . . . . . . . . . . . . . . 7 2 0.01 0.94 1.68 7.41 0.00 1.32 0.00 0.00 8006 Tin tubes, pipes, tube or pipe . . . . . . . . . . 5 0.00 -0.05 0.70 35.13 0.00 0.00 0.00 0.00 8105 Cobalt mattes, intermediate prdts of . . . . 4 0.14 0.81 0.76 6.56 0.00 0.02 0.00 0.00 8112 All the other base metals (beryllium . . . . . 10 0.00 -0.55 0.45 12.52 0.00 0.03 0.00 0.00 9104 Instrument panel clocks, similar . . . . . . . . 5 0.00 -0.71 0.00 7.46 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-21

Table E-17Lesotho: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0304 Fish fillets and other fish meat, . . . . . . . 7 0.01 -0.91 -0.02 9.77 0.00 0.00 0.00 0.00 1102 Cereal flours, (excl. wheat or . . . . . . . . . 2 0.01 -0.06 1.23 10.80 0.00 0.00 0.00 0.00 1403 Vegetable materials used primarily . . . . 3 0.01 0.79 0.00 -1.15 0.00 0.00 0.00 3.16 1806 Chocolate and other food . . . . . . . . . . . . 6 0.00 -1.00 0.00 11.73 0.00 0.00 0.00 0.00 2009 Fruit juices (incl. grape must) and . . . . . 7 0.04 -0.56 0.80 9.35 0.00 0.01 0.00 0.00 2102 Yeasts; other single-cell micro- . . . . . . . 9 0.00 -0.66 0.67 9.76 0.00 0.00 0.00 0.00 2301 Flours, etc, of meat, fish, etc, . . . . . . . . . 3 0.03 -0.35 1.20 3.50 0.00 0.00 0.00 0.00 2507 Kaolin and other kaolinic clays, . . . . . . . 9 0.00 -0.79 0.41 5.44 0.00 0.00 0.00 0.00 2520 Gypsum; anhydrite; plasters . . . . . . . . . 9 0.15 0.88 0.00 5.22 0.00 0.00 0.00 0.00 2523 Portland cement, aluminous cement, . . 10 0.86 0.35 -0.12 7.53 0.00 0.00 0.00 0.00 4401 Fuel wood, in logs..., etc; wood . . . . . . . 4 0.00 -0.89 0.00 4.09 0.00 0.00 0.00 0.00 5102 Fine or coarse animal hair, not . . . . . . . 10 0.07 0.86 0.00 10.95 0.00 0.11 0.00 0.00 5105 Wool and fine or coarse animal hair . . . 6 0.20 0.45 0.83 7.22 0.00 0.00 0.00 0.00 6001 Pile fabrics (incl. long pile and . . . . . . . . 4 0.02 -0.47 1.05 9.26 0.00 0.00 0.00 0.00 6103 Men's or boys' suits, ensembles, . . . . . . 8 1 3.43 0.97 0.01 11.65 1.57 0.01 0.02 0.00 6104 Women's or girls' suits, ensembles, . . . . 4 2 6.84 0.97 0.01 4.84 1.18 0.01 0.01 0.00 6105 Men's or boys' shirts, knitted or . . . . . . . 9 6 3.24 0.96 0.01 7.00 0.58 0.00 0.00 0.00 6106 Women's or girls' blouses, etc, . . . . . . . 7 5 3.68 0.96 0.01 11.41 1.11 0.00 0.00 0.00 6109 T-shirts, singlets and other vests, . . . . . 6 8 4.18 0.88 -0.02 12.48 0.32 0.00 0.01 0.00 6110 Jerseys, pullovers, cardigans and . . . . . 1 3 29.62 0.97 0.00 8.19 0.78 0.01 0.01 0.00 6203 Men's or boys' suits, ensembles, . . . . . . 2 4 20.90 0.96 0.00 7.80 0.78 0.00 0.00 0.00 6204 Women's or girls' suits, ensembles, . . . . 3 7 16.83 0.94 0.00 8.53 0.46 0.00 0.00 0.00 6207 Men's or boys' underpants, briefs, . . . . . 1 0.09 0.17 1.29 5.53 0.16 0.01 0.00 0.00 6211 Track suits, ski suits and swimwear . . . . 10 0.13 -0.06 0.67 4.55 0.04 0.01 0.00 0.00 6403 Footwear, with rubber, plastics, . . . . . . . 8 0.02 -0.92 -0.02 6.14 0.00 0.00 0.00 0.01 6911 Tableware, kitchenware, other house . . 2 0.00 -0.99 0.01 4.45 0.00 0.00 0.00 0.00 7102 Diamonds worked/not worked but not . . 5 4.56 0.16 -0.92 12.66 0.00 0.04 0.00 0.00 7210 Flat-rolled products of iron/ . . . . . . . . . . 8 0.10 -0.57 0.74 11.60 0.00 0.01 0.00 0.00 9005 Astronomical instruments, mountings, . . 5 0.00 -0.99 0.00 6.73 0.00 0.00 0.00 0.00 9006 Photographic apparatus, flashbulbs . . . 5 0.04 -0.57 0.85 3.69 0.00 0.00 0.00 0.00 9018 Medical instruments, veterinary . . . . . . . 10 0.02 -0.93 -0.05 12.93 0.00 0.00 0.00 0.00 9702 Original engravings, prints, . . . . . . . . . . 1 0.00 -0.98 0.00 1.93 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-22

Table E-18Madagascar: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0306 Crustaceans, fresh, chilled or frozen . . . 2 8 14.36 0.97 0.00 4.83 0.01 3.21 0.61 0.00 0710 Vegetables, frozen . . . . . . . . . . . . . . . . . 6 0.01 -0.70 0.27 9.89 0.00 0.00 0.00 0.00 0810 Other fruit, fresh, . . . . . . . . . . . . . . . . . . 7 6 3.86 0.97 0.00 9.91 0.00 2.55 0.00 0.00 0814 Peel of citrus fruit or melons, . . . . . . . . . 9 0.00 -0.56 0.38 3.09 0.00 0.02 0.00 0.00 0905 Vanilla . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 16.87 1.00 0.00 24.42 63.80 55.00 62.88 33.71 0907 Cloves . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2 6.64 1.00 0.00 20.90 41.23 28.55 33.62 34.40 1401 Vegetable materials of a kind used . . . . 4 0.62 0.99 0.00 1.13 5.32 4.93 0.20 4.21 1402 Vegetable materials used primarily . . . . 4 8 0.00 -0.02 0.78 -5.41 0.00 0.00 0.00 0.00 1604 Prepared or preserved fish; caviar . . . . . 8 3.55 0.94 0.00 7.33 0.00 1.28 0.00 0.00 2308 Vegetable materials, waste, residue . . . 10 0.00 -0.99 -0.26 -1.29 0.00 0.00 0.00 0.00 2504 Natural graphite . . . . . . . . . . . . . . . . . . . 5 0.55 0.99 0.00 3.51 5.40 6.13 0.00 2.06 2523 Portland cement, aluminous cement, . . 2 0.13 0.25 1.24 7.53 0.00 0.00 0.00 0.00 2525 Mica, including splittings; mica . . . . . . . . 10 0.05 0.95 0.00 5.70 0.14 0.41 2.61 0.00 2601 Iron ores and concentrates, . . . . . . . . . . 9 0.00 -1.00 0.00 7.18 0.00 0.00 0.00 0.00 2614 Titanium ores and concentrates . . . . . . . 2 0.00 -1.00 0.00 7.42 0.00 0.00 0.00 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . 9 1.85 -0.14 0.02 12.03 0.00 0.00 0.00 0.00 4206 Articles of gut (excl. silk-worm), . . . . . . . 1 0.00 -0.33 0.10 5.98 0.00 0.06 0.00 16.07 4401 Fuel wood, in logs..., etc; wood . . . . . . . 5 0.00 -0.92 0.01 4.09 0.00 0.00 0.00 0.00 5109 Yarn of wool or of fine animal hair . . . . . 1 0.00 -0.24 1.45 5.30 0.00 0.00 0.00 0.00 5202 Cotton waste (incl. yarn waste and . . . . 6 0.00 -0.48 0.52 7.82 0.00 0.00 0.00 0.00 5207 Cotton yarn (excl. sewing), put . . . . . . . . 3 0.01 0.16 0.91 3.88 0.00 0.00 0.00 0.00 5304 Sisal, etc, raw or processed but . . . . . . . 3 0.51 1.00 0.00 7.05 0.00 15.53 9.96 0.00 5510 Yarn of artificial staple fibres, . . . . . . . . . 5 0.01 -0.36 0.58 13.30 0.00 0.01 0.00 0.00 6109 T-shirts, singlets and other vests, . . . . . 10 1.68 0.70 -0.10 12.48 0.14 0.17 0.00 0.01 6110 Jerseys, pullovers, cardigans and . . . . . 3 14.00 0.92 0.00 8.19 0.50 0.74 0.01 0.01 6203 Men's or boys' suits, ensembles, . . . . . . 6 4.76 0.85 -0.02 7.80 0.29 0.25 0.00 0.00 6204 Women's or girls' suits, ensembles, . . . . 5 4.80 0.80 0.02 8.53 0.26 0.16 0.01 0.00 6214 Shawls, scarves, mufflers, . . . . . . . . . . . 7 1.52 0.97 0.00 6.25 0.01 2.61 0.00 0.00 6502 Hat-shapes, plaited or made by . . . . . . . 3 0.00 0.74 0.12 3.53 0.00 0.00 0.00 26.55 6504 Hats and other headgear, plaited or . . . 9 0.12 0.97 0.00 4.71 0.86 0.32 5.19 1.78 6704 Wigs, false beards, eyebrows and . . . . . 4 0.00 -1.00 0.00 10.45 0.00 0.00 0.00 0.00 7003 Cast glass, rolled glass, in sheets . . . . . 7 0.00 -0.51 0.43 9.69 0.00 0.01 0.00 0.00 7114 Articles of gold/silversmiths wares . . . . . 10 0.00 -0.32 0.37 3.07 0.06 0.00 0.00 0.00 8432 Agri, horti, forestry machinery for . . . . . . 8 0.01 -0.57 0.43 8.94 0.00 0.01 0.00 0.00 8504 Electrical transformers, static . . . . . . . . . 7 0.00 -0.99 0.00 11.95 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-23

Table E-19Malawi: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0405 Butter and other fats and oils . . . . . . . . . 9 0.03 -0.14 0.85 9.33 0.00 0.00 0.00 0.00 0713 Dried leguminous vegetables, . . . . . . . . 9 5 0.80 0.89 0.01 6.79 0.05 0.05 0.00 0.16 0802 Other nuts, fresh or dried, . . . . . . . . . . . 5 4 1.06 0.89 0.02 7.05 0.63 0.05 0.82 0.00 0901 Coffee; coffee husks and skins; . . . . . . . 7 1.03 0.77 -0.02 8.74 0.01 0.11 0.01 0.03 0902 Tea, whether or not flavoured . . . . . . . . 3 2 7.97 0.99 0.00 5.97 6.30 2.05 0.14 0.77 0904 Pepper of the genus Piper, Capiscum . . 7 0.28 0.89 0.02 9.13 0.03 0.31 0.00 0.27 1207 Other oil seeds and oleaginous . . . . . . . 8 0.20 0.83 0.20 7.99 0.00 0.02 0.00 0.00 1404 Vegetable products not elsewhere . . . . . 10 0.00 -0.22 0.72 5.88 0.00 0.00 0.00 0.00 1701 Cane or beet sugar and chemically . . . . 2 3 8.55 0.97 0.01 9.03 1.00 1.04 0.00 0.00 2401 Unmanufactured tobacco; tobacco . . . . 1 1 65.50 1.00 0.00 3.96 6.36 4.37 6.35 7.61 3805 Gum, wood or sulphate turpentine . . . . . 2 0.00 0.48 1.43 7.14 0.00 0.00 0.00 0.00 4103 Other raw hides and skins, fresh or . . . . 6 0.07 0.89 0.01 8.77 0.00 0.38 0.00 0.00 4401 Fuel wood, in logs..., etc; wood . . . . . . . 10 0.00 -0.99 0.00 4.09 0.00 0.00 0.00 0.00 4413 Densified wood, in blocks, plates, . . . . . 7 0.00 0.06 0.90 7.46 0.00 0.00 0.00 0.00 4414 Wooden frames for paintings, . . . . . . . . 1 0.00 -0.99 -0.02 10.36 0.00 0.00 0.00 0.01 

4807 Composite paper and paperboard, . . . . 6 0.01 -0.09 0.91 6.82 0.00 0.00 0.00 0.00 4907 New stamps; stamp-impressed paper; . 8 0.25 0.13 0.86 22.42 0.01 0.00 0.45 0.00 5201 Cotton, not carded or combed . . . . . . . . 8 1.03 0.79 -0.03 7.25 0.00 0.03 0.00 0.00 5407 Woven fabrics of synthetic filament . . . . 7 0.00 -0.99 0.00 2.35 0.00 0.00 0.00 0.00 5514 Woven fabrics, <85% synthetic fibre . . . 4 0.04 0.42 1.13 5.87 0.00 0.00 0.00 0.00 6103 Men's or boys' suits, ensembles, . . . . . . 9 0.43 0.82 0.07 11.65 0.11 0.00 0.00 0.00 6105 Men's or boys' shirts, knitted or . . . . . . . 10 0.65 0.82 0.05 7.00 0.11 0.00 0.00 0.00 6203 Men's or boys' suits, ensembles, . . . . . . 4 1.93 0.66 0.02 7.80 0.05 0.00 0.00 0.00 6204 Women's or girls' suits, ensembles . . . . 10 0.67 -0.03 0.17 8.53 0.02 0.00 0.00 0.00 6205 Men's or boys' shirts . . . . . . . . . . . . . . . . 6 1.05 0.76 -0.02 2.98 0.04 0.00 0.00 0.00 6402 Other footwear with outer soles and . . . 3 0.00 -1.00 0.00 5.45 0.00 0.00 0.00 0.00 6602 Walking-sticks, seat-sticks, whips, . . . . . 9 0.00 -0.77 0.11 12.81 0.00 0.00 0.00 0.06 7114 Articles of gold/silversmiths wares . . . . . 1 0.06 -0.03 1.93 3.07 0.00 0.49 0.00 0.00 7606 Aluminum plates, sheets and strip, . . . . 5 0.19 0.02 1.02 11.53 0.00 0.00 0.00 0.00 8435 Presses, crushers machinery for . . . . . . 3 0.01 0.20 1.20 8.70 0.00 0.00 0.00 0.00 8532 Electrical capacitors, fixed, . . . . . . . . . . . 5 0.00 -1.00 0.00 12.14 0.00 0.00 0.00 0.00 8535 Electrical apparatus for making . . . . . . . 2 0.00 -0.93 0.06 6.37 0.00 0.00 0.05 0.00 8541 Diodes, semi-conductor devices, light . . 4 0.00 -0.99 0.00 14.13 0.00 0.00 0.00 0.00 9701 Hand made decorative materials, . . . . . 6 0.00 -0.99 0.00 4.64 0.00 0.00 0.00 0.00 9703 Original sculptures and statuary, . . . . . . 8 0.00 -0.97 -0.01 7.25 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-24

Table E-20Mali: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0106 Other live animals, . . . . . . . . . . . . . . . . . . 8 0.33 0.96 0.00 9.32 0.19 0.30 0.05 0.00 0804 Dates, figs, pineapples...etc, . . . . . . . . . . 8 0.78 0.91 0.02 14.23 0.00 0.15 0.00 0.00 0906 Cinnamon and cinnamon-tree flowers . . . 1 0.01 -0.04 1.84 -0.49 0.00 0.00 0.00 0.00 1006 Rice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.67 0.61 0.97 12.04 0.00 0.00 0.00 0.00 1503 Lard stearin, lardoil, oleostearin . . . . . . . . 2 0.37 0.99 0.01 18.87 0.00 0.00 0.00 0.00 1522 Degras; residues of fatty substance . . . . . 3 0.09 0.99 0.15 13.66 0.00 2.51 0.00 0.00 1701 Cane or beet sugar and chemically . . . . . 6 1.04 0.23 0.61 9.03 0.00 0.00 0.00 0.00 2304 Oil-cake and other solid residues, . . . . . . 7 0.13 -0.31 1.26 13.46 0.00 0.01 0.00 0.00 2401 Unmanufactured tobacco; tobacco . . . . . 5 0.13 -0.17 0.36 3.96 0.00 0.00 0.00 0.44 2502 Unroasted iron pyrites . . . . . . . . . . . . . . . 2 0.00 0.82 1.64 1.81 0.00 0.00 0.00 0.00 2509 Chalk . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.00 0.45 1.42 4.82 0.00 0.00 0.00 0.00 2712 Petroleum jelly; paraffin wax . . . . . . . . . . 5 0.04 0.38 1.38 10.63 0.00 0.00 0.00 0.00 3811 Anti-knock preparations, oxidation . . . . . . 8 0.11 0.25 1.24 4.44 0.00 0.00 0.00 0.00 4102 Raw skins of sheep or lambs, but . . . . . . 4 0.11 0.72 -0.11 14.57 4.53 0.03 0.00 0.00 4103 Other raw hides and skins, fresh or . . . . . 4 0.61 0.98 0.01 8.77 1.68 1.35 0.13 0.00 4105 Sheep or lamb skin leather, without . . . . . 7 10 0.95 0.95 0.01 5.53 0.00 0.47 0.00 0.00 4106 Goat or kid skin leather, without . . . . . . . . 10 5 0.74 0.96 0.00 10.24 0.22 0.38 0.00 0.00 4809 Carbon paper, self-copy paper, etc, . . . . . 4 0.03 0.38 1.38 5.60 0.00 0.00 0.00 0.00 5201 Cotton, not carded or combed . . . . . . . . . 1 1 60.76 1.00 0.00 7.25 0.00 3.46 0.00 0.00 5406 Man-made filament yarn (excl. . . . . . . . . . 7 0.04 0.96 0.00 5.70 0.00 0.00 0.00 0.00 5508 Sewing thread of man-made staple . . . . . 6 0.01 -0.04 0.95 6.03 0.00 0.00 0.00 0.40 6310 Used or new rags, scrap twine, cord . . . . 6 0.01 0.41 1.36 6.66 0.00 0.00 0.00 0.00 7102 Diamonds worked/not worked but not . . . 5 1.19 0.09 -0.05 12.66 0.00 0.01 0.00 0.00 7309 All types of reservoirs with or . . . . . . . . . . 10 0.02 0.20 1.15 6.76 0.00 0.00 0.00 0.00 7310 Tanks, casks, drums, cans, boxes . . . . . . 3 0.00 -0.81 0.14 8.31 0.00 0.00 0.07 0.00 8006 Tin tubes, pipes, tube or pipe . . . . . . . . . . 9 0.00 0.95 0.00 35.13 0.00 0.40 0.00 0.00 8411 Turbo-jets, turbo-propellers and . . . . . . . 2 0.07 -0.86 0.00 9.91 0.00 0.00 0.00 0.08 8419 Machinery, plant or lab equipment . . . . . . 9 0.03 -0.79 0.19 8.53 0.00 0.00 0.00 0.00 8469 Typewriters and word-processing . . . . . . 9 0.00 0.16 1.16 -17.55 0.00 0.00 0.00 0.00 8471 Automatic data processing, magnetic, . . . 3 1.93 -0.39 0.30 10.57 0.00 0.00 0.00 0.00 8473 Parts suitable for use solely or . . . . . . . . . 9 0.74 -0.61 0.01 12.97 0.00 0.00 0.00 0.00 8478 Machinery for making up tobacco not . . . 1 0.00 -0.98 -1.12 4.56 0.00 0.00 0.00 0.03 8531 Electric sound/visual signalling . . . . . . . . 10 0.01 -0.93 0.04 14.62 0.00 0.00 0.00 0.00 8542 Electronic integrated circuits and . . . . . . . 2 5.81 -0.01 -0.05 15.01 0.00 0.00 0.00 0.00 9106 Time of day recording apparatus, . . . . . . 7 0.00 -0.95 -0.42 4.35 0.00 0.00 0.00 0.01 9206 Percussion musical instruments (drum . . 6 0.25 0.96 0.01 8.74 0.04 0.53 0.14 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-25

Table E-21Mauritania: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0302 Fish, fresh or chilled (excl. those . . . . . . 4 5 3.99 0.95 0.00 7.38 0.00 0.57 0.00 0.00 0303 Fish, frozen, (excl. those of 03.04 . . . . . 3 3 21.77 0.99 0.00 5.11 0.00 1.18 0.01 0.00 0304 Fish fillets and other fish meat, . . . . . . . 7 10 0.81 0.72 0.05 9.77 0.00 0.12 0.00 0.00 0305 Fish, salted, dried...; smoked fish; . . . . . 8 6 0.58 0.86 0.04 5.10 0.00 0.13 0.00 0.00 0306 Crustaceans, fresh, chilled or frozen . . . 6 8 1.54 0.74 0.13 4.83 0.00 0.24 0.00 0.00 0307 Molluscs & aquatic invertebrates, . . . . . 2 1 21.80 0.99 0.00 6.08 0.04 2.60 4.16 0.00 1801 Cocoa beans, whole or broken, raw . . . 4 0.08 0.17 0.95 13.58 0.00 0.03 0.00 0.00 2207 Ethyl alcohol, undenatured of >=80% . . 6 0.01 -0.16 0.83 7.17 0.00 0.00 0.00 0.00 2301 Flours, etc, of meat, fish, etc, . . . . . . . . . 5 4 1.94 0.95 0.02 3.50 0.00 0.05 0.00 0.00 2530 Mineral substances not elsewhere . . . . . 1 0.00 -0.87 -0.02 8.02 0.00 0.00 0.00 0.35 2601 Iron ores and concentrates, including . . 1 2 41.66 0.99 0.00 7.18 0.00 7.12 0.00 0.00 2616 Precious metal ores and concentrate . . 10 0.00 -1.00 0.00 12.50 0.00 0.00 0.00 0.00 2711 Petroleum gases and other gaseous . . . 9 0.00 -1.00 0.00 16.59 0.00 0.00 0.00 0.00 2808 Nitric acid; sulphonitric acids . . . . . . . . . 9 0.01 0.73 0.00 16.32 0.00 0.00 0.00 0.00 2903 Halogenated derivatives of . . . . . . . . . . 3 0.00 -0.99 0.00 7.15 0.00 0.00 0.00 0.01 3401 Soap; organic surface-active . . . . . . . . . 10 0.02 -0.37 0.62 13.64 0.00 0.00 0.12 0.00 3506 Prepared glues and adhesives, nes; . . . 5 0.26 -0.10 0.90 12.07 0.00 0.00 0.00 0.00 3605 Matches (excl. pyrotechnic articles . . . . 1 0.00 0.17 1.17 6.45 0.00 0.00 0.00 0.00 4205 Articles of leather or of . . . . . . . . . . . . . . 5 0.00 -0.91 0.02 17.56 0.00 0.00 0.00 0.06 4818 Toilet paper..., bed sheets, etc, . . . . . . . 7 0.12 -0.15 0.80 13.50 0.00 0.00 0.00 0.00 4821 Paper or paperboard labels of all . . . . . . 4 0.00 -0.99 0.01 12.46 0.00 0.00 0.01 0.00 4907 New stamps; stamp-impressed paper; . 2 0.00 -0.77 0.21 22.42 0.00 0.00 0.55 0.00 6203 Men's or boys' suits, ensembles, . . . . . . 9 0.39 -0.06 0.15 7.80 0.00 0.02 0.00 0.00 7309 All types of reservoirs with or . . . . . . . . . 3 0.03 0.28 1.00 6.76 0.00 0.04 0.00 0.00 8472 Other office machines (hectograph, . . . . 8 0.04 -0.23 0.77 10.54 0.00 0.00 0.00 0.00 8540 Thermionic, cold cathode or photo- . . . . 10 2 0.38 0.09 1.09 5.41 0.00 0.07 0.00 0.00 8708 Parts and accessories of the motor . . . . 6 0.00 -1.00 0.00 10.81 0.00 0.00 0.00 0.00 8804 Parachutes (dirigible), rotochutes, . . . . . 7 0.02 0.85 0.00 10.27 0.00 0.28 0.00 0.00 8908 Vessels and other floating . . . . . . . . . . . 7 0.01 -0.07 0.00 14.00 0.00 0.88 0.00 0.00 9007 Cinematographic cameras, projectors . . 9 0.00 -0.61 0.68 8.26 0.00 0.01 0.00 0.00 9701 Hand made decorative materials, . . . . . 8 0.00 -1.00 0.00 4.64 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-26

Table E-22Mauritius: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0106 Other live animals, . . . . . . . . . . . . . . . . . 2 0.81 0.98 0.01 9.32 5.16 4.26 0.04 0.00 0303 Fish, frozen, (excl. those of 03.04 . . . . . 8 3.32 0.89 0.00 5.11 1.19 0.12 0.24 0.36 0509 Natural sponges of animal origin . . . . . . 7 0.00 -0.15 0.63 5.14 0.00 0.00 0.00 0.00 0812 Fruit and nuts, provisionally . . . . . . . . . . 5 0.00 -0.23 0.76 -3.22 0.00 0.00 0.00 0.00 0814 Peel of citrus fruit or melons, . . . . . . . . . 2 0.00 -0.33 0.90 3.09 0.00 0.03 0.00 0.00 1513 Coconut (copra), palm kernel or . . . . . . 8 0.09 0.54 0.61 9.39 0.00 0.00 0.00 0.00 1604 Prepared or preserved fish; caviar . . . . . 7 10 3.61 0.95 0.01 7.33 0.00 2.19 0.00 0.00 1701 Cane or beet sugar and chemically . . . . 1 1 16.37 0.98 0.00 9.03 0.79 10.32 0.00 3.02 1703 Molasses resulting from the extract . . . . 5 0.46 0.96 0.01 4.16 4.23 1.58 0.00 0.00 2501 Salt and pure sodium chloride; sea . . . . 7 0.00 -0.83 0.08 7.55 0.01 0.01 0.00 0.19 2831 Dithionites and sulphoxylates . . . . . . . . 4 0.01 0.38 0.78 4.27 0.00 0.00 0.00 0.00 2833 Sulphates; alums; peroxosulphates . . . . 8 0.00 -0.93 0.01 7.78 0.00 0.00 0.00 0.07 2835 Phosphinates, phosphonates, . . . . . . . . 9 0.00 -0.79 0.12 7.19 0.05 0.00 0.00 0.22 2842 Other salts of inorganic acids or . . . . . . 3 0.00 -0.82 0.00 31.37 0.00 0.00 0.00 0.39 2926 Nitrile-function compounds . . . . . . . . . . 5 0.00 -0.89 0.00 9.91 0.00 0.00 0.00 0.18 3823 Prepared binders; chemical products . . 10 0.03 -0.77 0.07 11.24 0.00 0.00 0.00 0.22 5302 True hemp, not spun; tow and waste . . . 1 0.00 0.40 1.03 6.06 0.00 0.00 0.00 0.00 6105 Men's or boys' shirts, knitted or . . . . . . . 9 7 3.11 0.96 0.00 7.00 0.31 3.78 0.05 0.03 6109 T-shirts, singlets and other vests, . . . . . 2 4 13.56 0.96 0.00 12.48 0.26 2.88 0.03 0.12 6110 Jerseys, pullovers, cardigans and . . . . . 3 11.38 0.91 0.00 8.19 0.31 1.37 0.02 0.05 6203 Men's or boys' suits, ensembles, . . . . . . 4 8.11 0.91 -0.01 7.80 0.93 0.61 0.03 0.02 6204 Women's or girls' suits, ensembles, . . . . 5 6.87 0.86 0.00 8.53 0.71 0.26 0.03 0.00 6205 Men's or boys' shirts . . . . . . . . . . . . . . . . 6 8 6.47 0.96 0.00 2.98 1.52 1.67 0.09 0.04 6502 Hat-shapes, plaited or made by . . . . . . . 6 0.00 -0.24 0.74 3.53 0.00 0.11 0.00 0.00 7102 Diamonds worked/not worked but not . . 10 2.74 0.48 0.01 12.66 0.06 0.16 0.01 1.22 7110 Platinum, unwrought, in . . . . . . . . . . . . . 6 0.00 -0.95 -0.08 13.56 0.00 0.00 0.00 0.00 7116 Articles of natural/cultured pearls . . . . . . 6 0.37 0.96 0.00 2.23 0.00 0.07 0.00 0.00 7206 Iron, non-alloy steel in ingots/ . . . . . . . . 10 0.00 -0.70 0.56 12.16 0.00 0.00 0.00 0.00 7508 Other articles of nickel . . . . . . . . . . . . . . 4 0.00 -0.88 -0.01 9.67 0.00 0.01 0.00 0.21 7803 Lead bars, rods, profiles and wire . . . . . 3 0.00 -0.07 0.88 1.71 0.00 0.00 0.00 0.00 8526 Radar, radio navigational aid . . . . . . . . . 9 0.06 -0.36 0.59 10.25 0.00 0.00 0.00 0.00 8804 Parachutes (dirigible), rotochutes, . . . . . 3 0.10 0.96 0.00 10.27 0.00 3.39 0.00 0.06 9105 Other clocks . . . . . . . . . . . . . . . . . . . . . . 2 0.00 -0.99 0.00 3.85 0.00 0.00 0.00 0.03 9113 Watch straps, bands, bracelets, and . . . 9 0.50 0.95 0.02 1.70 0.01 2.64 0.03 0.00 9701 Hand made decorative materials, . . . . . 1 0.01 -0.85 0.01 4.64 0.00 0.00 0.00 1.03 

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-27

Table E-23Mozambique: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0301 Live fish . . . . . . . . . . . . . . . . . . . . . . . . . 7 0.00 -1.00 -0.06 3.90 0.00 0.00 0.00 0.00 0306 Crustaceans, fresh, chilled or frozen . . . 2 5 13.77 0.96 -0.01 4.83 0.00 1.87 0.50 0.00 0307 Molluscs & aquatic invertebrates, . . . . . 10 1.77 0.90 0.08 6.08 0.00 0.00 0.00 0.00 0801 Coconuts, Brazil nuts and cashew . . . . . 7 2 3.12 0.97 0.00 6.11 0.73 0.04 0.00 0.00 1101 Wheat or meslin flour . . . . . . . . . . . . . . . 7 0.31 0.81 0.64 10.48 0.00 0.00 0.00 0.00 1103 Cereal groats, meal and pellets . . . . . . . 2 0.03 0.68 1.32 1.60 0.00 0.00 0.00 0.00 1203 Copra . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0.63 1.00 0.00 -0.89 0.00 13.43 0.00 0.00 1212 Seaweeds, algae, sugar beet and . . . . . 1 0.02 0.35 1.35 3.64 0.00 0.00 0.00 0.00 1214 Swedes, mangolds...and similar fora . . . 3 0.02 0.11 1.09 3.93 0.00 0.00 0.00 0.00 

1511 Palm oil and its fractions . . . . . . . . . . . . 9 0.12 0.13 0.50 18.53 0.00 0.00 0.00 0.00 1701 Cane or beet sugar and chemically . . . . 8 2.81 0.85 0.47 9.03 1.30 0.25 0.00 0.00 1702 Other sugars in solid form; sugar . . . . . . 8 0.00 -0.95 -0.39 9.23 0.00 0.00 0.00 0.00 2302 Brans, sharps and other residues, . . . . . 10 0.23 0.93 -0.01 5.07 0.00 0.00 0.00 0.00 2401 Unmanufactured tobacco; tobacco . . . . 3 8 4.27 0.95 0.03 3.96 0.00 0.57 0.16 1.01 2516 Granite, porphyry, etc, and other . . . . . . 6 1.22 0.96 -0.01 9.51 0.00 0.96 0.00 0.00 2614 Titanium ores and concentrates . . . . . . . 3 0.00 -0.99 -0.01 7.42 0.00 0.00 0.00 0.01 2619 Slag, dross, etc, from the . . . . . . . . . . . . 10 0.00 -0.31 0.49 9.43 0.00 0.00 0.00 0.00 2620 Ash and residues containing metals . . . 6 0.02 -0.18 0.71 8.42 0.00 0.00 0.00 0.00 2705 Coal gas, water gas, producer gas . . . . 3 0.00 0.97 0.00 28.70 0.00 0.00 0.00 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . 9 2.24 -0.11 -0.07 12.03 0.00 0.00 0.00 0.00 2716 Electrical energy . . . . . . . . . . . . . . . . . . . 4 4.02 0.71 0.28 16.84 0.00 0.00 0.00 0.00 3810 Pickling preparations for metal . . . . . . . . 5 0.01 -0.23 0.77 12.13 0.00 0.00 0.00 0.00 4302 Tanned or dressed furskins (excl. . . . . . 5 0.00 -0.98 0.02 7.11 0.00 0.00 0.00 0.00 4403 Wood in the rough or roughly square . . 6 3.65 0.91 0.00 0.73 0.01 0.03 0.01 0.00 5201 Cotton, not carded or combed . . . . . . . . 5 3.80 0.93 -0.01 7.25 0.00 1.33 0.00 0.00 5904 Linoleum; floor coverings with coat . . . . 4 0.00 -0.78 0.00 7.60 0.00 0.00 0.00 0.15 7112 Waste, scrap of precious metal or of . . . 2 0.02 -0.55 -0.55 9.84 0.00 0.00 0.00 0.00 7224 Other alloy steel in ingots etc. . . . . . . . . 7 0.46 0.95 0.00 20.97 0.00 0.00 0.00 0.00 7316 Anchors, graphnels and parts thereof . . 9 0.04 0.94 0.00 9.59 0.00 0.00 0.00 0.00 7415 Stationery articles except of . . . . . . . . . . 9 0.00 -0.85 -0.05 11.81 0.00 0.00 0.00 0.04 7601 Unwrought aluminum . . . . . . . . . . . . . . . 1 4 44.79 0.97 0.03 10.99 0.00 4.54 0.00 0.00 8420 Calendering, other rolling machines, . . . 4 0.02 0.40 0.90 6.30 0.00 0.00 0.00 0.00 8902 Fishing vessels; factory ships other . . . . 8 0.09 0.07 0.54 9.04 0.00 0.00 0.00 0.00 9206 Percussion musical instruments (drum . 10 0.00 -0.95 -0.08 8.74 0.00 0.00 0.00 0.02 9701 Hand made decorative materials, . . . . . 6 0.00 -0.99 -0.01 4.64 0.00 0.00 0.00 0.00 9703 Original sculptures and statuary, . . . . . . 1 0.00 -0.82 0.00 7.25 0.00 0.00 0.00 0.22 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-28

Table E-24Namibia: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

 trade

 (avg

 00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

 in

world

 mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))))Import market share 

0104 Live sheep and goats . . . . . . . . . . . . . . . . . . 4 0.25 0.41 1.10 6.83 0.00 0.00 0.00 0.00 0201 Meat of bovine animals, fresh or . . . . . . . . . 5 9 5.59 0.95 0.00 8.39 0.00 0.95 0.00 0.00 0202 Meat of bovine animals, frozen . . . . . . . . . . 10 1.48 0.89 0.00 3.64 0.00 0.87 0.00 0.00 0302 Fish, fresh or chilled (excl. those . . . . . . . . . 7 10 4.35 0.95 -0.01 7.38 0.02 0.82 0.01 0.00 0303 Fish, frozen, (excl. those of 03.04 . . . . . . . . 2 4 14.60 0.98 0.00 5.11 0.07 4.44 0.09 0.07 0304 Fish fillets and other fish meat, . . . . . . . . . . 1 2 22.16 0.99 0.00 9.77 0.57 3.68 0.00 3.72 0409 Natural honey . . . . . . . . . . . . . . . . . . . . . . . . 2 0.00 -0.81 0.00 15.08 0.00 0.00 0.00 0.55 

0504 Guts, bladders and stomachs of . . . . . . . . . 3 0.02 -0.43 1.14 7.79 0.00 0.03 0.00 0.00 0905 Vanilla . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0.00 -0.98 0.00 24.42 0.00 0.00 0.00 0.00 2403 Other manufactured tobacco and . . . . . . . . 7 0.01 -0.53 0.93 10.32 0.00 0.02 0.00 0.00 2519 Natural magnesium carbonate . . . . . . . . . . . 2 0.01 -0.36 1.26 6.71 0.00 0.04 0.00 0.00 2529 Felspar; leucite nepheline and . . . . . . . . . . . 3 1.21 0.99 0.00 8.11 0.00 4.14 0.00 0.00 2607 Lead ores and concentrates . . . . . . . . . . . . 5 0.66 0.97 0.00 14.68 0.00 0.00 0.00 0.00 2617 Other ores and concentrates . . . . . . . . . . . . 1 0.00 -0.95 0.05 16.92 0.00 0.00 0.00 0.85 

2710 Petroleum oils, etc, (excl. crude); . . . . . . . . . 9 2.40 -0.17 0.11 12.03 0.03 0.00 0.00 0.00 2844 Radioactive chemical elements/ . . . . . . . . . 4 6 8.36 0.97 0.00 8.67 0.88 1.10 0.00 0.00 3102 Mineral or chemical fertilizers, . . . . . . . . . . . 6 0.07 -0.34 1.07 11.14 0.00 0.00 0.00 0.00 3105 Mineral or chemical fertilizers, . . . . . . . . . . . 10 0.03 -0.56 0.86 9.39 0.00 0.02 0.00 0.00 3704 Photographic plates, film, paper . . . . . . . . . 7 0.07 0.97 0.00 7.86 0.00 1.07 0.00 0.00 5807 Labels, badges... of textiles, in . . . . . . . . . . . 3 0.00 -0.98 0.01 10.25 0.00 0.00 0.00 0.05 6104 Women's or girls' suits, ensembles, . . . . . . . 8 0.45 -0.25 0.90 4.84 0.29 0.00 0.00 0.00 6207 Men's or boys' underpants, briefs, . . . . . . . . 9 0.00 -0.95 0.04 5.53 0.00 0.00 0.00 0.04 7001 Cullet and other waste and scrap of . . . . . . 5 0.00 -0.45 1.08 11.10 0.00 0.03 0.00 0.00 7102 Diamonds worked/not worked but not . . . . . 3 14.14 0.75 0.00 12.66 0.00 0.56 0.00 0.00 7314 Cloth (endless bands), frill, netting, . . . . . . . 7 0.00 -0.95 0.01 10.69 0.00 0.00 0.03 0.00 7402 Unrefined copper; copper anodes for . . . . . 6 1 5.04 0.99 0.00 8.50 3.90 0.94 0.00 0.00 7901 Unwrought zinc . . . . . . . . . . . . . . . . . . . . . . . 8 8 2.77 0.96 0.00 6.36 1.99 0.72 0.00 0.00 8202 Hand saws, blades for saws of all . . . . . . . . 10 0.03 -0.58 0.00 8.44 0.00 0.00 0.00 0.00 8532 Electrical capacitors, fixed, . . . . . . . . . . . . . . 8 0.00 -0.99 0.01 12.14 0.00 0.00 0.00 0.00 8602 Other rail locomotives; locomotive . . . . . . . . 1 0.07 -0.08 1.83 10.92 0.00 0.00 0.00 0.00 9113 Watch straps, bands, bracelets, and . . . . . . 6 0.00 -1.00 0.00 1.70 0.00 0.00 0.00 0.00 9508 Roundabouts, shooting galleries, . . . . . . . . 4 0.00 -0.89 0.14 9.66 0.00 0.00 0.00 0.29 9609 Pencils (other than 96.08), crayons, . . . . . . 9 0.00 -0.55 0.89 5.95 0.00 0.03 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-29

Table E-25Niger: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0507 Ivory, tortoise-shell, whalebone . . . . . . . 8 0.00 0.56 1.53 -2.24 0.00 0.08 0.00 0.00 0508 Coral; shells of molluscs, . . . . . . . . . . . . 1 0.00 -0.09 1.81 0.66 0.00 0.08 0.00 0.00 0714 Roots and tubers with high starch . . . . . 10 0.23 0.84 0.06 -2.80 0.00 0.19 0.00 0.00 1006 Rice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.71 0.47 0.04 12.04 0.00 0.00 0.00 0.00 1101 Wheat or meslin flour . . . . . . . . . . . . . . . 9 3 0.89 0.97 0.66 10.48 0.00 0.00 0.00 0.00 1102 Cereal flours, (excl. wheat or . . . . . . . . . 2 0.35 0.97 0.66 10.80 0.00 0.00 0.00 0.00 1513 Coconut (copra), palm kernel or . . . . . . 10 0.00 -0.95 0.05 9.39 0.00 0.00 0.00 0.00 1520 Glycerol (glycerine), glycerol . . . . . . . . . 9 0.09 0.84 0.00 15.68 0.00 0.00 1.23 0.00 1701 Cane or beet sugar and chemically . . . . 8 0.89 0.47 0.08 9.03 0.00 0.00 0.00 0.00 1903 Tapioca and substitutes prepared . . . . . 4 0.08 0.95 0.34 10.01 0.00 0.00 0.00 0.00 2402 Cigars, cigarillos, cigarettes, etc . . . . . . 3 0.11 -0.36 0.08 7.50 0.03 0.00 0.00 0.00 2605 Cobalt ores and concentrates . . . . . . . . 7 0.02 0.86 0.00 53.76 0.00 0.00 0.00 0.00 2709 Petroleum oils and oils obtained . . . . . . 1 37.13 0.77 -0.07 13.61 0.00 0.02 0.00 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . 5 1.77 -0.34 -0.06 12.03 0.00 0.00 0.00 0.00 2711 Petroleum gases and other gaseous . . . 3 3.31 0.08 0.00 16.59 0.00 0.03 0.00 0.00 2828 Hypochlorites; commercial calcium . . . . 10 0.01 0.65 1.46 8.96 0.00 0.00 0.00 0.00 2838 Fulminates; cyanates and . . . . . . . . . . . 5 0.02 0.94 0.00 7.89 0.00 0.00 0.00 0.00 2844 Radioactive chemical elements/ . . . . . . 2 1 31.93 0.99 0.00 8.67 0.24 2.65 0.00 0.00 2906 Cyclic alcohols and their . . . . . . . . . . . . 4 0.04 0.71 1.71 9.79 0.00 0.02 0.00 0.00 2935 Sulphonamides . . . . . . . . . . . . . . . . . . . 5 0.00 -1.00 0.00 13.07 0.00 0.00 0.00 0.00 3212 Pigments used for paint making; . . . . . . 7 0.00 -0.99 0.01 13.41 0.00 0.00 0.00 0.00 3301 Essential oils...; resinoids; . . . . . . . . . . . 4 0.02 -0.23 0.73 6.88 0.00 0.00 0.00 0.39 4003 Reclaimed rubber in primary forms . . . . 6 0.02 0.92 0.00 8.90 0.10 0.00 0.00 0.00 4006 Other forms and articles of . . . . . . . . . . . 6 0.01 0.63 1.61 6.80 0.00 0.00 0.00 0.00 4414 Wooden frames for paintings, . . . . . . . . 9 0.00 -0.98 0.02 10.36 0.00 0.00 0.00 0.00 4812 Filter blocks, slabs and plates, . . . . . . . . 1 0.00 -0.83 0.00 12.69 0.00 0.00 0.00 0.48 

5101 Wool, not carded or combed . . . . . . . . . 2 0.23 0.76 1.76 3.66 0.00 0.04 0.00 0.00 5201 Cotton, not carded or combed . . . . . . . . 10 0.77 0.79 0.01 7.25 0.00 0.16 0.00 0.00 5802 Terry towelling and similar woven . . . . . 8 0.00 -0.50 0.01 6.04 0.00 0.00 0.23 0.00 5806 Narrow woven fabrics; narrow fabric . . . 4 1.86 0.37 0.65 10.11 0.00 0.00 0.00 0.00 5908 Textile wicks for lamps...; . . . . . . . . . . . . 3 0.00 -0.10 1.73 -1.57 0.00 0.00 0.00 0.00 6909 Ceramic wares for lab, chem etc. . . . . . 7 0.02 -0.18 1.61 11.85 0.00 0.00 0.00 0.00 7204 Ferrous waste, scrap remelting scrap . . 7 0.91 0.38 0.38 11.42 0.00 0.00 0.00 0.00 8004 Tin plates, sheets and strip of a . . . . . . . 9 0.00 0.56 1.52 7.02 0.00 0.02 0.00 0.00 8102 Molybdenum and articles thereof, . . . . . 8 0.04 0.85 0.87 12.86 0.47 0.00 0.00 0.00 8430 Other moving, grading, machinery for . . 6 0.05 -0.28 0.04 9.25 0.00 0.00 0.62 0.00 8432 Agri, horti, forestry machinery for . . . . . . 2 0.00 -0.83 0.13 8.94 0.00 0.00 0.05 0.00 

9613 Cigarette lighter, and other, . . . . . . . . . . 5 0.07 0.73 1.70 1.47 0.05 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-30

Table E-26Nigeria: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth in

world mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))))))Import market share (p

0306 Crustaceans, fresh, chilled or frozen . . . . 7 0.31 0.18 0.00 4.83 0.03 1.65 0.03 0.00 0908 Nutmeg, mace and cardamoms . . . . . . . . 6 0.00 -0.97 0.00 12.21 0.00 0.00 0.00 0.00 1109 Wheat gluten . . . . . . . . . . . . . . . . . . . . . . 10 0.00 -0.64 0.18 9.40 0.00 0.00 0.00 0.00 1207 Other oil seeds and oleaginous . . . . . . . . 10 10 0.11 0.71 -0.03 7.99 0.02 0.43 9.89 0.00 1211 Plants and parts of plants, of a . . . . . . . . 7 0.01 -0.66 0.25 0.93 0.10 0.15 0.00 0.00 1212 Seaweeds, algae, sugar beet and . . . . . . 5 0.01 -0.23 0.35 3.64 0.00 1.29 0.01 0.00 1213 Cereal straw and husks . . . . . . . . . . . . . . 8 5 0.00 -0.46 0.23 2.80 25.94 0.00 0.00 0.00 1301 Lac; natural gums, resins, gum- . . . . . . . . 8 0.03 0.74 -0.03 4.07 1.39 2.19 0.25 0.00 1801 Cocoa beans, whole or broken, raw . . . . 4 2 1.31 0.91 0.00 13.58 1.84 12.37 0.76 0.00 2008 Fruit, nuts and other parts of . . . . . . . . . . 9 0.00 -0.98 0.00 6.89 0.00 0.00 0.00 0.28 2301 Flours, etc, of meat, fish, etc, . . . . . . . . . . 10 0.00 -1.00 0.00 3.50 0.01 0.00 0.00 0.00 2302 Brans, sharps and other residues, . . . . . . 7 0.09 0.80 0.00 5.07 14.67 0.00 0.00 0.00 2609 Tin ores and concentrates . . . . . . . . . . . . 6 0.05 0.83 0.02 0.67 0.00 0.05 0.00 0.00 2610 Chromium ores and concentrates . . . . . . 9 0.00 -0.70 0.20 8.03 0.00 0.00 0.00 0.00 2611 Tungsten ores and concentrates . . . . . . . 2 0.00 -0.18 0.45 22.87 0.00 1.86 0.00 0.00 2615 Niobium, tantalum, vanadium or . . . . . . . 8 4 0.20 0.87 0.02 16.54 8.51 0.29 4.27 0.00 2705 Coal gas, water gas, producer gas . . . . . 3 0.00 -0.82 0.02 28.70 12.50 0.00 0.00 0.00 

2709 Petroleum oils and oils obtained . . . . . . . 1 3 88.33 0.88 -0.01 13.61 9.56 4.32 1.07 0.45 2710 Petroleum oils, etc, (excl. crude); . . . . . . . 3 2.69 0.08 -0.11 12.03 1.64 0.06 0.22 0.00 2711 Petroleum gases and other gaseous . . . . 2 4.35 0.49 0.08 16.59 0.92 1.53 0.39 0.00 2802 Sulphur, sublimed or precipitated; . . . . . . 4 0.00 -0.83 -0.17 10.92 12.30 0.00 0.00 0.00 3002 Human blood; animal blood; . . . . . . . . . . 2 0.00 -1.00 0.00 18.85 0.00 0.00 0.00 0.34 

4105 Sheep or lamb skin leather, without . . . . . 6 5 0.32 0.85 0.00 5.53 2.95 13.10 0.31 0.00 4106 Goat or kid skin leather, without . . . . . . . . 5 1 0.33 0.92 0.00 10.24 0.02 15.07 0.17 0.00 4108 Chamois (incl. combination chamois) . . . 9 0.01 0.72 -0.05 12.63 0.00 4.62 0.00 0.00 4403 Wood in the rough or roughly square . . . 9 0.19 0.08 -0.12 0.73 0.05 0.03 0.00 0.00 4405 Wood wool; wood flour . . . . . . . . . . . . . . . 1 0.00 -0.48 0.45 6.00 0.00 0.00 0.00 0.00 4907 New stamps; stamp-impressed paper; . . 1 0.00 -1.00 -0.08 22.42 0.00 0.00 0.21 0.00 5006 Silk yarn, put up for retail sale; . . . . . . . . . 3 0.00 -0.61 0.39 15.38 0.00 0.00 0.00 0.00 6116 Gloves, mittens and mitts, knitted . . . . . . 8 0.00 -1.00 0.00 10.84 0.00 0.00 0.00 0.00 7106 Silver (plated with gold, platinum) . . . . . . 4 0.01 -0.63 0.37 10.56 0.00 0.00 0.00 0.00 8461 Machine-tools for planing, shaping, . . . . . 7 0.00 -0.97 0.02 6.18 0.00 0.00 0.00 0.00 8906 Other vessels including warships, . . . . . . 6 0.00 -0.73 0.26 8.85 0.00 0.01 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-31

Table E-27Republic of the Congo: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0306 Crustaceans, fresh, chilled or frozen . . . 7 0.31 0.18 0.00 4.83 0.03 1.65 0.03 0.00 0908 Nutmeg, mace and cardamoms . . . . . . . 6 0.00 -0.97 0.00 12.21 0.00 0.00 0.00 0.00 1109 Wheat gluten . . . . . . . . . . . . . . . . . . . . . 10 0.00 -0.64 0.18 9.40 0.00 0.00 0.00 0.00 1207 Other oil seeds and oleaginous . . . . . . . 10 10 0.11 0.71 -0.03 7.99 0.02 0.43 9.89 0.00 1211 Plants and parts of plants, of a . . . . . . . 7 0.01 -0.66 0.25 0.93 0.10 0.15 0.00 0.00 1212 Seaweeds, algae, sugar beet and . . . . . 5 0.01 -0.23 0.35 3.64 0.00 1.29 0.01 0.00 1213 Cereal straw and husks . . . . . . . . . . . . . 8 5 0.00 -0.46 0.23 2.80 25.94 0.00 0.00 0.00 1301 Lac; natural gums, resins, gum- . . . . . . . 8 0.03 0.74 -0.03 4.07 1.39 2.19 0.25 0.00 1801 Cocoa beans, whole or broken, raw . . . 4 2 1.31 0.91 0.00 13.58 1.84 12.37 0.76 0.00 2008 Fruit, nuts and other parts of . . . . . . . . . 9 0.00 -0.98 0.00 6.89 0.00 0.00 0.00 0.28 2301 Flours, etc, of meat, fish, etc, . . . . . . . . . 10 0.00 -1.00 0.00 3.50 0.01 0.00 0.00 0.00 2302 Brans, sharps and other residues, . . . . . 7 0.09 0.80 0.00 5.07 14.67 0.00 0.00 0.00 2609 Tin ores and concentrates . . . . . . . . . . . 6 0.05 0.83 0.02 0.67 0.00 0.05 0.00 0.00 2610 Chromium ores and concentrates . . . . . 9 0.00 -0.70 0.20 8.03 0.00 0.00 0.00 0.00 2611 Tungsten ores and concentrates . . . . . . 2 0.00 -0.18 0.45 22.87 0.00 1.86 0.00 0.00 2615 Niobium, tantalum, vanadium or . . . . . . 8 4 0.20 0.87 0.02 16.54 8.51 0.29 4.27 0.00 2705 Coal gas, water gas, producer gas . . . . 3 0.00 -0.82 0.02 28.70 12.50 0.00 0.00 0.00 2709 Petroleum oils and oils obtained . . . . . . 1 3 88.33 0.88 -0.01 13.61 9.56 4.32 1.07 0.45 2710 Petroleum oils, etc, (excl. crude); . . . . . . 3 2.69 0.08 -0.11 12.03 1.64 0.06 0.22 0.00 2711 Petroleum gases and other gaseous . . . 2 4.35 0.49 0.08 16.59 0.92 1.53 0.39 0.00 2802 Sulphur, sublimed or precipitated; . . . . . 4 0.00 -0.83 -0.17 10.92 12.30 0.00 0.00 0.00 3002 Human blood; animal blood; . . . . . . . . . 2 0.00 -1.00 0.00 18.85 0.00 0.00 0.00 0.34 

4105 Sheep or lamb skin leather, without . . . . 6 5 0.32 0.85 0.00 5.53 2.95 13.10 0.31 0.00 4106 Goat or kid skin leather, without . . . . . . . 5 1 0.33 0.92 0.00 10.24 0.02 15.07 0.17 0.00 4108 Chamois (incl. combination chamois) . . 9 0.01 0.72 -0.05 12.63 0.00 4.62 0.00 0.00 4403 Wood in the rough or roughly square . . 9 0.19 0.08 -0.12 0.73 0.05 0.03 0.00 0.00 4405 Wood wool; wood flour . . . . . . . . . . . . . . 1 0.00 -0.48 0.45 6.00 0.00 0.00 0.00 0.00 4907 New stamps; stamp-impressed paper; . 1 0.00 -1.00 -0.08 22.42 0.00 0.00 0.21 0.00 5006 Silk yarn, put up for retail sale; . . . . . . . . 3 0.00 -0.61 0.39 15.38 0.00 0.00 0.00 0.00 6116 Gloves, mittens and mitts, knitted . . . . . 8 0.00 -1.00 0.00 10.84 0.00 0.00 0.00 0.00 7106 Silver (plated with gold, platinum) . . . . . 4 0.01 -0.63 0.37 10.56 0.00 0.00 0.00 0.00 8461 Machine-tools for planing, shaping, . . . . 7 0.00 -0.97 0.02 6.18 0.00 0.00 0.00 0.00 8906 Other vessels including warships, . . . . . 6 0.00 -0.73 0.26 8.85 0.00 0.01 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-32

Table E-28Rwanda: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (p

0303 Fish, frozen, (excl. those of 03.04 . . . . . 5 0.16 0.17 1.16 5.11 0.00 0.00 0.00 0.00 0603 Cut flowers and flower buds for . . . . . . . 5 1.27 0.82 -0.08 7.52 0.00 0.04 0.00 0.00 0813 Fruit, dried, . . . . . . . . . . . . . . . . . . . . . . . 3 0.02 0.50 1.25 8.20 0.00 0.00 0.00 0.00 0901 Coffee; coffee husks and skins; . . . . . . . 2 4 21.39 0.99 0.00 8.74 0.14 0.41 0.00 0.10 0902 Tea, whether or not flavoured . . . . . . . . 7 10 0.53 0.86 -0.01 5.97 0.03 0.06 0.01 0.00 1206 Sunflower seeds . . . . . . . . . . . . . . . . . . . 4 0.00 -0.96 -0.67 11.56 0.00 0.00 0.00 0.00 2203 Beer made from malt . . . . . . . . . . . . . . . 6 0.15 -0.51 0.00 10.16 0.00 0.00 0.00 0.00 2609 Tin ores and concentrates . . . . . . . . . . . 4 2 2.39 1.00 0.00 0.67 0.00 0.00 0.00 0.00 2611 Tungsten ores and concentrates . . . . . . 3 0.39 1.00 0.00 22.87 1.62 6.80 0.00 0.00 2615 Niobium, tantalum, vanadium . . . . . . . . 3 1 19.51 1.00 0.00 16.54 1.82 0.95 2.12 0.00 2620 Ash and residues containing metals . . . 9 0.03 0.21 -0.76 8.42 0.00 0.00 0.00 0.00 2709 Petroleum oils and oils obtained . . . . . . 1 42.16 0.82 0.01 13.61 0.00 0.00 0.00 0.00 2803 Carbon (carbon blacks and other . . . . . 10 0.02 0.02 0.95 12.58 0.00 0.00 0.00 0.00 2815 Hydroxides and peroxides of sodium . . . 7 0.07 0.54 1.10 11.70 0.00 0.00 0.00 0.00 2849 Carbides . . . . . . . . . . . . . . . . . . . . . . . . . 9 0.11 0.84 0.96 7.43 0.00 0.00 0.00 0.00 3601 Propellent powders . . . . . . . . . . . . . . . . 7 0.00 -0.30 0.46 4.82 0.00 0.00 0.00 0.00 3808 Insecticides, rodenticides, and . . . . . . . . 8 0.14 -0.29 0.63 12.14 0.05 0.00 0.00 0.00 4103 Other raw hides and skins, fresh or . . . . 9 0.14 0.88 0.02 8.77 0.00 0.16 0.00 0.00 4702 Chemical wood pulp, dissolving . . . . . . . 8 0.30 0.92 0.00 4.31 0.00 0.00 0.00 0.00 4801 Newsprint, in rolls or sheets . . . . . . . . . . 6 0.16 0.12 1.11 2.76 0.00 0.00 0.00 0.00 5403 Artificial filament yarn, nprs . . . . . . . . . . 8 0.15 0.81 1.00 2.61 0.02 0.00 0.00 0.00 5514 Woven fabrics, <85% synthetic fibre . . . 2 0.03 0.40 1.34 5.87 0.00 0.00 0.00 0.00 6217 Other made up clothing accessories; . . 1 0.00 -0.99 0.00 10.38 0.00 0.00 0.00 0.00 7015 Clock or watch glasses, glasses for . . . . 2 0.00 -1.00 0.00 1.42 0.00 0.00 0.00 0.00 7018 Glass beads, imitation pearls, . . . . . . . . 3 0.00 -1.00 0.00 9.55 0.00 0.00 0.00 0.00 7108 Gold (platinum plated) unwrought, . . . . . 10 0.42 0.21 -0.64 8.78 0.00 0.01 0.00 0.00 7206 Iron, non-alloy steel in ingots/ . . . . . . . . 8 6 0.49 0.97 0.00 12.16 0.00 0.00 0.00 0.00 8001 Unwrought tin . . . . . . . . . . . . . . . . . . . . . 9 7 0.42 0.95 0.49 1.72 0.00 0.00 0.00 0.00 8103 Tantalum and articles thereof, . . . . . . . . 6 5 1.04 0.97 -0.03 24.78 0.00 0.00 0.00 0.00 8527 Reception apparatus for radio- . . . . . . . 5 0.07 -0.65 0.33 2.47 0.00 0.00 0.03 0.00 9004 Spectacles, goggles and the like, . . . . . 1 0.07 0.40 1.40 10.18 0.01 0.00 0.00 0.00 9503 Other toys; reduced-size models, . . . . . 10 0.00 -1.00 0.00 7.45 0.00 0.00 0.00 0.00 9507 Fishing rods, nets, butterfly nets . . . . . . 4 0.01 -0.39 1.21 5.20 0.00 0.01 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-33

Table E-29São Tomé & Principe: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-

03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))))Import market shar

0302 Fish, fresh or chilled (excl. those . . . . . . . . . . 8 2.62 0.92 0.92 7.38 0.00 0.02 0.00 0.00 0303 Fish, frozen, (excl. those of 03.04 . . . . . . . . . 3 8.35 0.76 -0.06 5.11 0.00 0.18 0.01 0.00 0304 Fish fillets and other fish meat, f . . . . . . . . . . 10 0.16 0.34 1.27 9.77 0.00 0.00 0.00 0.00 0402 Milk and cream, concentrated or . . . . . . . . . . 10 2.06 0.94 0.00 5.80 0.00 0.00 0.00 0.00 1210 Hop cones and lupulin, fresh or . . . . . . . . . . . 3 1.03 1.00 0.00 -3.52 0.00 0.44 0.00 0.00 1504 Fats and oils and their fractions, . . . . . . . . . . 9 0.24 0.96 0.03 7.75 0.00 0.03 0.00 0.00 1601 Sausages and similar products; food . . . . . . . 2 0.25 0.90 1.81 10.72 0.00 0.00 0.00 0.00 1801 Cocoa beans, whole or broken, raw . . . . . . . 1 2 23.22 1.00 0.00 13.58 0.00 0.22 0.03 0.00 2208 Undenatured ethyl alcohol of an . . . . . . . . . . 7 0.05 -0.57 0.01 5.64 0.00 0.00 0.00 0.00 2610 Chromium ores and concentrates . . . . . . . . . 2 0.02 0.70 0.00 8.03 0.00 0.00 0.00 0.00 3916 Monofilament >1mm, rods, sticks and . . . . . . 6 0.07 -0.13 1.68 15.85 0.00 0.00 0.00 0.00 4016 Other articles of vulcanized rubber . . . . . . . . 9 0.08 -0.44 -0.04 12.23 0.00 0.00 0.00 0.00 4202 Trunks, suit-cases...; handbags... . . . . . . . . . 6 0.00 -0.98 -0.04 7.07 0.00 0.00 0.00 0.00 

4908 Transfers (decalcomanias) . . . . . . . . . . . . . . 5 0.03 -0.04 1.75 5.31 0.01 0.00 0.00 0.00 5504 Artificial staple fibres, not . . . . . . . . . . . . . . . . 7 0.48 0.97 0.00 6.78 0.00 0.00 0.00 0.00 5603 Nonwovens . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 0.20 0.60 1.51 10.34 0.00 0.00 0.00 0.00 6206 Women's or girls' blouses, shirts . . . . . . . . . . 9 0.17 0.36 1.31 1.75 0.00 0.00 0.00 0.00 6214 Shawls, scarves, mufflers, . . . . . . . . . . . . . . . 4 0.00 -0.77 0.00 6.25 0.00 0.00 0.00 0.00 7020 Other articles of glass . . . . . . . . . . . . . . . . . . 10 0.44 0.96 0.52 14.03 0.00 0.03 0.00 0.00 7113 Jewelry and parts of precious . . . . . . . . . . . . 5 0.00 -1.00 -0.01 7.41 0.00 0.00 0.00 0.00 7310 Tanks, casks, drums, cans, boxes and . . . . . 3 0.24 0.82 1.77 8.31 0.00 0.00 0.00 0.00 8302 Base metal mountings, fittings for . . . . . . . . . 10 0.01 -0.79 0.15 12.15 0.00 0.00 0.00 0.00 8428 Other lifting, handling, loading, . . . . . . . . . . . 7 0.17 -0.18 1.60 7.69 0.00 0.00 0.00 0.00 8445 Machines for prepar textile fibres, . . . . . . . . . 7 6 3.15 0.98 0.00 0.10 0.00 0.00 0.00 0.00 8462 Machine-tools for working metal . . . . . . . . . . 9 2.49 0.26 -1.44 5.36 0.00 0.00 0.00 0.00 8471 Automatic data processing, magnetic, . . . . . . 6 3.28 -0.27 0.08 10.57 0.00 0.00 0.00 0.00 8519 Record/cassette players, other sound . . . . . . 4 0.60 0.04 1.77 3.02 0.00 0.01 0.00 0.00 8520 Magnetic tape recorders, apparatus . . . . . . . 3 0.08 -0.10 0.79 -1.57 0.00 0.00 0.00 0.00 8802 Other aircraft, spacecraft, and space . . . . . . . 5 4.52 0.77 0.27 6.92 0.00 0.01 0.00 0.00 8901 Cruise ships, excursion/ferry-boats, . . . . . . . . 4 8 4.63 0.96 1.12 8.98 0.00 0.00 0.00 0.00 8902 Fishing vessels; factory ships other . . . . . . . . 5 1.79 0.99 0.01 9.04 0.00 0.00 0.00 0.00 8908 Vessels and other floating . . . . . . . . . . . . . . . 2 1 9.84 1.00 0.00 14.00 0.00 0.41 0.00 0.00 9027 Instruments, apparatus for physical . . . . . . . . 8 0.03 -0.70 0.10 11.13 0.00 0.00 0.00 0.00 9508 Roundabouts, shooting galleries, . . . . . . . . . 1 0.06 -0.03 1.92 9.66 0.00 0.02 0.00 0.00 9601 Worked ivory, bone, tortoise-shell, . . . . . . . . . 4 0.21 0.99 0.00 2.96 0.00 0.00 0.00 0.00 9701 Hand made decorative materials, . . . . . . . . . 1 0.00 -0.91 -0.83 4.64 0.00 0.00 0.00 0.00 

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-34

Table E-30Senegal: Revealed comparative advantage analysisHS Product

Rank

 by share

 of exports

Rank

 by

SRCA

(00-03)

Rank by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (

0302 Fish, fresh or chilled (excl. those . . . . . . . . . 4 7 7.25 0.97 0.00 7.38 0.07 1.26 0.00 0.00 0303 Fish, frozen, (excl. those of 03.04 . . . . . . . . 8 4.06 0.92 0.00 5.11 0.00 0.69 0.01 0.00 0304 Fish fillets and other fish meat, . . . . . . . . . . 6 5.27 0.95 0.00 9.77 0.00 0.95 0.01 0.02 0306 Crustaceans, fresh, chilled or frozen . . . . . . 5 5.60 0.93 0.00 4.83 0.00 1.04 0.00 0.00 0307 Molluscs & aquatic invertebrates, . . . . . . . . 3 6 9.05 0.98 0.00 6.08 0.01 2.43 0.50 0.00 0408 Birds' eggs, not in shell, and egg . . . . . . . . . 6 0.00 -0.09 0.91 12.27 0.00 0.00 0.00 0.00 0501 Human hair and waste, unworked . . . . . . . . 5 0.00 0.10 0.94 21.86 0.00 0.03 0.00 0.00 0708 Leguminous vegetables, shelled or . . . . . . . 5 1.54 0.99 0.00 11.94 0.01 2.92 0.00 0.00 1206 Sunflower seeds . . . . . . . . . . . . . . . . . . . . . . 4 0.01 0.01 1.00 11.56 0.00 0.02 0.00 0.00 1301 Lac; natural gums, resins, gum- . . . . . . . . . . 9 0.31 0.97 0.00 4.07 0.00 1.76 0.00 0.00 1505 Wool grease and fatty substances . . . . . . . . 2 0.01 0.75 1.74 12.92 0.46 0.00 0.00 0.00 1508 Ground-nut oil and its fractions . . . . . . . . . . 2 2 9.85 1.00 0.00 18.57 27.70 45.24 0.00 0.00 1604 Prepared or preserved fish; caviar . . . . . . . . 9 3.37 0.94 0.00 7.33 0.00 0.80 0.00 0.00 2305 Oil-cake and other solid residues, . . . . . . . . 1 2.17 1.00 0.00 -9.28 0.00 55.47 0.00 0.00 2501 Salt and pure sodium chloride; sea . . . . . . . 10 8 2.20 0.97 0.01 7.55 0.00 0.00 0.00 0.00 2505 Natural sands of all kinds, (excl. . . . . . . . . . 1 0.00 -0.99 -0.09 8.46 0.00 0.00 0.00 0.02 

2506 Quartz; quartzite . . . . . . . . . . . . . . . . . . . . . . 1 0.02 0.01 1.80 10.18 0.00 0.60 0.00 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . . . . 7 4.06 0.07 -0.33 12.03 0.00 0.00 0.00 0.00 2715 Bituminous mixtures based on . . . . . . . . . . . 9 0.02 0.54 0.80 2.74 0.00 0.00 0.00 0.00 2809 Diphosphorus pentaoxide; phosphoric . . . . 1 4 14.09 0.99 0.00 7.85 0.00 0.00 0.00 0.00 2835 Phosphinates, phosphonates, . . . . . . . . . . . 9 0.41 -0.31 -0.60 7.19 0.00 0.00 0.00 0.00 3602 Prepared explosives, (excl. . . . . . . . . . . . . . 10 0.00 -0.20 0.78 13.88 0.00 0.00 0.00 0.00 4905 Maps, etc (incl. atlases, wall maps . . . . . . . . 10 0.00 -0.82 0.16 8.77 0.00 0.00 0.00 0.10 4906 Handwritten plans for . . . . . . . . . . . . . . . . . . 3 0.03 0.65 1.63 12.88 1.98 0.00 0.00 0.00 5811 Quilted textile products in the . . . . . . . . . . . . 2 0.00 -0.97 0.00 17.14 0.00 0.00 0.00 0.00 6704 Wigs, false beards, eyebrows and . . . . . . . . 10 0.62 0.97 0.00 10.45 0.23 3.53 0.00 0.00 7118 Coin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.00 -0.99 0.00 80.09 0.00 0.00 0.00 0.00 7319 Sewing needles, for hand use needles . . . . 4 0.00 -0.99 -0.05 4.36 0.00 0.00 0.00 0.01 8004 Tin plates, sheets and strip of a . . . . . . . . . . 3 1.90 1.00 0.32 7.02 0.00 0.00 0.00 0.00 8410 Hydraulic turbines, water-wheels and . . . . . 7 0.05 0.18 0.87 7.96 0.00 0.02 0.00 0.00 8801 Balloons, dirigibles; gliders, hang . . . . . . . . 8 0.00 0.16 0.84 12.85 0.00 0.00 0.00 0.00 9017 Drawing, marking equipments not . . . . . . . . 8 0.00 -0.98 0.00 2.35 0.00 0.00 0.00 0.01 9307 Swords, cutlasses, bayonets, lances, . . . . . 7 0.00 -0.82 -0.16 0.00 0.00 0.00 0.00 0.12 9705 Scientific collections and . . . . . . . . . . . . . . . 5 0.00 -0.76 0.07 7.96 0.00 0.00 0.18 0.00 9706 Antiques of an age exceeding one . . . . . . . 6 0.00 -0.97 -0.31 4.61 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-35

Table E-31Seychelles: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in

world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))))Import market share 

0302 Fish, fresh or chilled (excl. those . . . . . . . . . 10 0.99 0.80 -0.01 7.38 0.23 0.04 0.09 0.00 0303 Fish, frozen, (excl. those of 03.04 . . . . . . . . 2 2 21.46 0.98 0.00 5.11 0.41 1.05 0.41 0.00 0304 Fish fillets and other fish meat, . . . . . . . . . . 3 3.46 0.84 -0.09 9.77 0.76 0.07 0.00 0.00 0306 Crustaceans, fresh, chilled or frozen . . . . . . 6 1.58 0.71 0.04 4.83 0.00 0.11 0.02 0.00 0701 Potatoes, fresh or chilled . . . . . . . . . . . . . . . 4 0.02 -0.06 0.76 15.27 0.00 0.00 0.00 0.00 0906 Cinnamon and cinnamon-tree flowers . . . . . 5 0.09 0.96 -0.01 -0.49 0.00 1.09 0.00 9.14 1212 Seaweeds, algae, sugar beet and . . . . . . . . 1 0.02 0.42 1.38 3.64 0.00 0.04 0.00 0.00 1604 Prepared or preserved fish; caviar . . . . . . . . 1 1 56.51 1.00 0.00 7.33 0.00 6.03 0.00 0.00 2001 Vegetables, fruit, etc, preserved . . . . . . . . . 9 0.10 0.40 0.62 11.06 0.00 0.00 0.00 0.00 2301 Flours, etc, of meat, fish, etc, . . . . . . . . . . . . 9 8 1.07 0.92 0.01 3.50 0.00 0.02 0.48 2.10 2504 Natural graphite . . . . . . . . . . . . . . . . . . . . . . 7 0.10 0.92 -0.03 3.51 0.89 0.00 0.00 0.00 2708 Pitch and pitch coke, obtained from . . . . . . . 3 0.32 0.97 0.00 8.94 0.00 0.00 0.00 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . . . . 5 2.06 -0.33 0.27 12.03 0.02 0.01 0.00 0.00 2815 Hydroxides and peroxides of sodium . . . . . . 7 0.03 -0.13 0.67 11.70 0.00 0.00 0.00 0.00 2911 Acetals and hemiacetals and their . . . . . . . . 6 0.03 0.94 -0.05 3.63 0.00 0.00 0.00 0.00 2924 Carboxyamide-function; amide- . . . . . . . . . . 7 0.00 -0.98 0.00 4.84 0.00 0.00 0.00 0.00 2938 Glycosides and their salts, ethers, . . . . . . . . 2 0.00 -0.99 0.00 4.78 0.00 0.00 0.00 0.00 3102 Mineral or chemical fertilizers, . . . . . . . . . . . 7 9 1.32 0.87 0.00 11.14 0.00 0.00 0.00 0.00 3912 Cellulose and its chemical . . . . . . . . . . . . . . 8 0.02 -0.26 0.65 9.31 0.00 0.01 0.00 0.00 5007 Woven fabrics of silk or of silk . . . . . . . . . . . 10 0.00 -0.99 -0.06 -2.57 0.00 0.00 0.00 0.00 5210 Woven cotton fabrics with man-made . . . . . 9 0.00 -0.96 0.00 6.71 0.00 0.00 0.00 0.00 5212 Other woven fabrics of cotton, . . . . . . . . . . . 4 0.00 -0.87 -0.10 14.37 0.00 0.00 0.00 0.00 5309 Woven fabrics of flax . . . . . . . . . . . . . . . . . . 3 0.00 -0.99 -0.02 9.50 0.00 0.00 0.00 0.00 7114 Articles of gold/silversmiths wares . . . . . . . . 10 0.00 -0.42 0.54 3.07 0.00 0.01 0.00 0.00 7118 Coin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0.00 -0.91 0.02 80.09 0.00 0.00 0.00 0.00 

8215 Spoons, forks, skimmers, cake-servers, . . . 2 0.03 0.21 1.17 7.00 0.00 0.00 0.00 0.00 8453 Machinery for preparing, tanning . . . . . . . . . 3 0.01 -0.12 0.76 -3.93 0.00 0.00 0.00 0.00 8462 Machine-tools for working metal . . . . . . . . . 6 0.01 -0.86 0.13 5.36 0.00 0.00 0.00 0.04 8520 Magnetic tape recorders, apparatus . . . . . . 8 0.00 -0.99 -0.07 -1.57 0.00 0.00 0.00 0.00 8548 Electrical parts, machinery not else . . . . . . . 5 0.02 -0.20 0.73 5.36 0.00 0.00 0.00 0.00 8903 Yachts, other vessels for pleasure/ . . . . . . . 6 0.05 -0.15 0.70 14.96 0.00 0.01 0.00 0.00 9018 Medical instruments, veterinary . . . . . . . . . . 4 3.02 0.67 0.19 12.93 0.04 0.06 0.00 0.00 9020 Other breathing appliances, gas mask . . . . 8 1.08 0.80 -0.04 11.37 5.61 0.05 0.00 0.00 9301 Military weapons, except revolvers, . . . . . . . 4 0.30 0.96 0.00 11.83 0.00 0.00 0.00 0.00 9508 Roundabouts, shooting galleries, . . . . . . . . 10 0.21 0.87 -0.04 9.66 0.00 0.37 0.00 0.00 9705 Scientific collections and collect . . . . . . . . . . 5 0.00 -0.76 -0.38 7.96 0.00 0.00 0.08 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-36

Table E-32Sierra Leone: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth in

world mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))))))Import market share (p

0303 Fish, frozen, (excl. those of 03.04 . . . . . . . 8 1.52 0.67 0.07 5.11 0.00 0.00 0.03 0.00 0502 Pigs'... bristles; brush making . . . . . . . . . . 7 0.00 -0.63 0.00 7.53 0.00 0.00 0.00 0.07 0508 Coral; shells of molluscs, . . . . . . . . . . . . . . 9 0.04 0.94 0.05 0.66 0.00 0.34 0.00 0.00 1210 Hop cones and lupulin, fresh or . . . . . . . . . 5 0.11 0.95 0.23 -3.52 0.00 0.38 0.00 0.00 1403 Vegetable materials used primarily . . . . . . 2 0.06 0.98 0.00 -1.15 0.12 0.69 0.00 0.91 1801 Cocoa beans, whole or broken, raw . . . . . 5 6 2.10 0.95 0.00 13.58 0.00 0.16 0.00 0.00 1802 Cocoa shells, husks, skins and . . . . . . . . . 1 0.08 0.99 0.00 22.31 0.00 1.07 0.00 0.00 2208 Undenatured ethyl alcohol of an . . . . . . . . 4 3.19 0.87 0.35 5.64 0.00 0.12 0.00 0.00 2301 Flours, etc, of meat, fish, etc, . . . . . . . . . . . 4 0.08 0.43 1.34 3.50 0.00 0.00 0.00 0.00 2302 Brans, sharps and other residues, . . . . . . . 7 0.31 0.95 0.26 5.07 0.82 0.00 0.00 0.00 2815 Hydroxides and peroxides of sodium . . . . . 7 0.07 0.33 1.24 11.70 0.00 0.00 0.00 0.00 2824 Lead oxides; red lead and orange . . . . . . . 10 0.06 0.94 0.71 7.72 0.00 0.00 0.00 0.00 2910 Epoxides... with a three-membered . . . . . . 2 0.06 0.44 1.40 11.09 0.35 0.00 0.00 0.00 2938 Glycosides and their salts, ethers, . . . . . . . 5 0.00 -0.78 0.00 4.78 0.00 0.00 0.00 0.00 3908 Polyamides in primary forms . . . . . . . . . . . 3 0.17 0.41 1.35 13.08 0.06 0.00 0.00 0.00 4107 Leather of other animals, without . . . . . . . . 3 0.01 -0.04 0.14 2.69 0.00 0.01 0.00 0.00 5511 Yarn (excl. sewing thread) of man- . . . . . . 10 0.00 0.29 1.11 8.01 0.00 0.01 0.00 0.00 6301 Blankets and travelling rugs . . . . . . . . . . . . 6 0.05 0.51 1.27 11.90 0.00 0.00 0.00 0.00 6704 Wigs, false beards, eyebrows and . . . . . . . 4 0.01 -0.46 0.91 10.45 0.00 0.00 0.00 0.00 7002 Glass in balls (other than . . . . . . . . . . . . . . 9 0.05 0.43 1.21 9.65 0.00 0.00 0.00 0.00 7101 Pearls natural, cultured, graded/ . . . . . . . . 6 0.00 -0.99 0.00 8.70 0.00 0.00 0.00 0.00 7102 Diamonds worked/not worked but not . . . . 1 25.54 0.91 0.00 12.66 0.01 0.22 0.00 0.00 7227 Bars and rods, hot-rolled, in . . . . . . . . . . . . 5 0.05 0.61 1.30 11.55 0.00 0.00 0.00 0.00 7320 Springs and leaves for springs, of . . . . . . . 2 0.00 -1.00 0.00 10.23 0.00 0.00 0.00 0.00 8006 Tin tubes, pipes, tube or pipe . . . . . . . . . . . 4 0.00 0.96 0.00 35.13 0.00 0.20 0.00 0.00 8404 Auxiliary plant for use with boiler . . . . . . . . 8 0.02 0.26 1.23 7.73 0.00 0.00 0.00 0.00 8473 Parts suitable for use solely or . . . . . . . . . . 6 1.68 -0.34 0.26 12.97 0.00 0.01 0.00 0.00 8509 Electro-mechanical domestic . . . . . . . . . . . 7 1.63 0.69 0.17 11.26 0.00 0.08 0.00 0.00 8522 Parts and accessories of apparatus . . . . . 1 0.00 -1.00 -0.01 6.58 0.00 0.00 0.00 0.00 

8533 Electical resistors (rheostats, . . . . . . . . . . . 9 1.16 0.41 0.34 7.70 0.01 0.16 0.00 0.00 8702 Motor vehicles for the transport of . . . . . . . 1 0.30 0.55 1.54 11.61 0.00 0.00 0.00 0.00 8703 Motor cars and other motor vehicles . . . . . 3 9.76 -0.47 -0.39 10.65 0.00 0.01 0.00 0.00 8705 Special purpose motor vehicles . . . . . . . . . 10 1.12 0.92 0.41 8.82 0.00 0.15 0.00 0.00 8902 Fishing vessels; factory ships other . . . . . . 3 0.53 0.97 0.01 9.04 0.00 0.00 0.00 0.00 8908 Vessels and other floating . . . . . . . . . . . . . 8 0.04 0.73 0.04 14.00 0.00 1.20 0.00 0.00 9401 Seats whether or not convertible . . . . . . . . 2 8 17.25 0.95 0.13 13.72 0.00 0.23 0.00 0.00 9701 Hand made decorative materials, . . . . . . . 10 0.00 -0.94 0.02 4.64 0.00 0.00 0.00 0.00 9704 Postage, revenue stamps, postal . . . . . . . . 9 0.00 -0.27 -0.35 9.02 0.00 0.00 0.21 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-37

Table E-33South Africa: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share

in co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percen

t ))))Index )))) )))))))))))))))))))))))))Import market share (p

2601 Iron ores and concentrates, . . . . . . . . . . 10 1.60 0.76 0.00 7.18 0.26 3.99 4.65 0.00 2602 Manganese ores and concentrates, . . . 4 0.44 0.95 0.00 3.99 16.04 20.02 60.14 85.15 32604 Nickel ores and concentrates . . . . . . . . . 9 0.03 0.52 0.33 21.17 1.32 0.00 0.00 0.00 2610 Chromium ores and concentrates . . . . . 3 0.23 0.96 0.00 8.03 95.94 74.04 50.15 81.08 32612 Uranium or thorium ores and . . . . . . . . . 1 0.00 -0.97 -0.50 661.22 0.00 0.00 0.00 0.00 

2614 Titanium ores and concentrates . . . . . . . 8 0.46 0.94 0.00 7.42 28.76 19.87 6.40 0.00 42615 Niobium, tantalum, vanadium or . . . . . . 6 0.42 0.95 0.00 16.54 6.68 32.32 28.70 13.39 12616 Precious metal ores and concentrate . . 5 0.66 0.95 -0.01 12.50 0.00 31.36 0.00 0.00 2617 Other ores and concentrates . . . . . . . . . 1 0.01 0.26 0.43 16.92 0.65 5.29 27.88 3.33 2618 Granulated slag (slag sand) from . . . . . 7 0.11 0.94 -0.01 9.99 29.75 2.96 53.16 0.00 2619 Slag, dross, etc, from the . . . . . . . . . . . . 1 0.23 0.97 0.00 9.43 15.67 47.83 1.55 0.00 2701 Coal; briquettes, ovoids and . . . . . . . . . 2 6.99 0.90 0.00 5.56 0.98 22.88 0.67 0.00 2710 Petroleum oils, etc, (excl. crude); . . . . . . 9 1.67 -0.16 0.05 12.03 0.04 0.02 0.01 0.29 2911 Acetals and hemiacetals and their . . . . . 2 0.00 -0.81 -0.07 3.63 0.00 0.00 0.00 25.31 

4301 Raw furskins (excl. raw hides and . . . . . 7 0.00 -0.95 -0.07 8.21 0.08 0.00 0.00 2.36 4815 Floor coverings on a base of paper . . . . 2 0.00 0.80 0.42 6.79 0.00 0.21 0.00 0.00 5106 Yarn of carded wool, not put up for . . . . 6 0.00 -0.82 0.01 1.37 1.10 0.00 0.00 0.00 15110 Yarn of coarse animal hair or of . . . . . . . 3 0.00 -0.28 0.40 12.33 36.06 0.61 0.00 0.00 5306 Flax yarn . . . . . . . . . . . . . . . . . . . . . . . . . 7 0.00 -0.61 0.38 12.14 0.00 0.98 3.12 0.00 5405 Monofilament; strip and the like . . . . . . . 4 0.00 -0.61 0.11 10.95 0.53 0.00 0.00 30.94 7102 Diamonds worked/not worked but not . . 4 6.47 0.73 0.02 12.66 4.02 7.59 0.10 1.59 7105 Dust, powder of natural, artificial . . . . . . 6 0.04 0.09 0.38 1.20 0.01 5.47 0.00 0.00 7108 Gold (platinum plated) unwrought, . . . . . 3 6.92 0.89 -0.01 8.78 0.02 16.62 1.48 0.00 7109 Base matals/silver, clad with gold . . . . . 5 0.00 -0.30 -0.12 -3.77 0.00 0.32 0.00 74.28 7110 Platinum, unwrought, in . . . . . . . . . . . . . 1 2 10.85 0.96 0.00 13.56 36.57 25.41 54.30 12.52 17202 Ferro-alloys . . . . . . . . . . . . . . . . . . . . . . 6 10 3.45 0.93 0.00 10.12 21.91 13.94 20.73 31.50 27408 Copper wire . . . . . . . . . . . . . . . . . . . . . . 10 0.01 -0.80 0.03 12.94 0.01 0.00 0.00 8.48 7501 Nickel mattes, oxide sinters, . . . . . . . . . 8 0.01 -0.70 -0.43 10.66 0.00 0.00 0.00 0.00 17506 Nickel plates, sheets, strip and foil . . . . . 9 0.00 -0.78 -0.05 10.37 0.00 0.09 0.00 10.88 7601 Unwrought aluminum . . . . . . . . . . . . . . . 8 2.08 0.68 -0.02 10.99 0.60 0.72 5.64 0.08 8004 Tin plates, sheets and strip of a . . . . . . . 4 0.01 0.83 0.40 7.02 0.00 0.05 0.00 10.24 8006 Tin tubes, pipes, tube or pipe . . . . . . . . . 5 0.00 0.24 0.39 35.13 0.00 0.00 0.00 0.00 8111 Manganese and articles thereof, . . . . . . 9 0.13 0.94 0.00 8.69 57.27 10.23 21.62 24.68 48421 Centrifuges, centrifual dryers; . . . . . . . . 7 2.97 0.81 0.03 11.37 4.38 11.05 1.97 1.60 8703 Motor cars and other motor vehicles . . . 5 5.17 -0.02 0.11 10.65 0.21 0.44 6.26 3.73 8901 Cruise ships, excursion/ferry-boats, . . . . 3 0.00 -0.98 -0.41 8.98 1.13 0.00 0.00 0.01 8902 Fishing vessels; factory ships other . . . . 10 0.02 0.45 0.31 9.04 0.00 0.56 0.00 10.97 9301 Military weapons, except revolvers, . . . . 8 0.01 0.04 0.35 11.83 0.21 5.35 0.00 0.02 

Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-38

Table E-34Swaziland: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))))Import market share (pe

0106 Other live animals, . . . . . . . . . . . . . . . . 3 0.03 -0.34 0.90 9.32 0.67 0.00 0.00 0.00 0805 Citrus fruit, fresh or dried . . . . . . . . . . . 6 6 3.71 0.95 -0.01 8.78 0.00 0.40 0.78 0.00 1701 Cane or beet sugar and chemically . . . 1 2 22.44 0.99 0.00 9.03 1.58 3.12 0.00 0.00 2008 Fruit, nuts and other parts of plan . . . . 7 7 2.68 0.95 0.00 6.89 0.04 0.54 0.04 0.16 2106 Food preparations not elsewhere . . . . 2 3 9.14 0.97 0.00 10.44 0.00 0.05 0.00 3.24 2825 Hydrazine...and inorganic salts; . . . . . . 2 0.00 -0.99 0.00 11.16 0.00 0.00 0.00 0.00 2938 Glycosides and their salts, ethers, . . . . 9 0.00 -0.94 0.06 4.78 0.00 0.00 0.00 0.00 3302 Mixtures of odoriferous substances . . . 4 5 6.54 0.96 0.01 16.53 0.00 0.01 0.00 0.00 3306 Preparations for oral or dental . . . . . . . 8 0.00 -0.97 -0.01 15.44 0.00 0.00 0.00 0.02 3404 Artificial waxes and prepared waxes . . 2 0.01 -0.52 0.94 9.17 0.00 0.01 0.00 0.00 4703 Chemical wood pulp, soda or . . . . . . . . 5 9 6.05 0.92 0.00 11.90 0.13 0.03 0.18 0.08 4704 Chemical wood pulp, sulphite, other . . 4 0.93 0.96 0.00 6.92 0.00 0.00 0.00 0.00 4907 New stamps; stamp-impressed paper; 1 0.00 -0.46 0.00 22.42 0.00 0.00 0.00 0.91 4908 Transfers (decalcomanias) . . . . . . . . . 7 10 0.00 -0.60 0.75 5.31 0.00 0.00 0.33 0.00 5105 Wool and fine or coarse animal hair . . 4 0.04 0.26 0.00 7.22 0.00 0.00 0.00 0.00 5203 Cotton, carded or combed . . . . . . . . . . 3 0.00 -0.17 -0.81 10.92 0.00 0.00 1.65 0.00 5210 Woven cotton fabrics with man-made . 4 0.01 -0.48 0.88 6.71 0.00 0.00 0.00 0.00 5402 Synthetic filament yarn, nprs . . . . . . . . 9 1.58 0.79 -0.04 9.19 0.00 0.13 0.00 0.25 5803 Gauze, other than narrow fabrics of . . . 5 0.00 -0.50 0.76 3.47 0.00 0.00 0.00 0.00 5805 Hand-woven tapestries of the type . . . . 1 0.00 -0.04 1.14 1.86 0.18 0.00 0.00 0.00 6110 Jerseys, pullovers, cardigans and . . . . 3 8.24 0.88 0.01 8.19 0.31 0.00 0.00 0.00 6203 Men's or boys' suits, ensembles, . . . . . 10 1.36 0.32 0.45 7.80 0.09 0.00 0.00 0.00 6204 Women's or girls' suits, ensembles, . . . 8 1.64 0.21 0.49 8.53 0.08 0.00 0.00 0.00 7215 Other bars and rods of iron or . . . . . . . 10 0.00 -0.68 0.63 6.73 0.00 0.00 0.00 0.00 7508 Other articles of nickel . . . . . . . . . . . . . 10 0.13 0.92 0.00 9.67 0.00 0.00 0.00 0.00 8005 Packed, printed tin foils not exceed . . . 8 0.02 0.94 0.00 17.00 0.00 0.00 0.00 0.00 8435 Presses, crushers machinery for . . . . . 1 1.03 0.99 0.00 8.70 0.00 0.00 0.00 0.00 8440 Book-binding machinery, including . . . 8 0.06 0.26 0.69 5.81 0.00 0.00 0.00 0.00 8459 Machine-tools for drilling, boring . . . . . 5 0.15 0.25 -0.12 5.86 0.00 0.00 3.74 0.00 8507 Electric accumulatlors including . . . . . . 6 0.01 -0.88 -0.15 13.88 0.00 0.00 0.06 0.00 9111 Watch cases and parts thereof . . . . . . 7 0.00 -0.97 0.03 1.29 0.00 0.00 0.00 0.00 9113 Watch straps, bands, bracelets . . . . . . 6 0.00 -0.61 0.75 1.70 0.00 0.00 0.00 0.00 9706 Antiques of an age exceeding one . . . 9 0.02 -0.55 0.63 4.61 0.01 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-39

Table E-35Tanzania: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share

in co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in

world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))Import market share (pe

0304 Fish fillets and other fish meat, . . . . . . . . . . 1 5 17.18 0.98 0.00 9.77 0.21 2.75 0.50 1.95 0507 Ivory, tortoise-shell, whalebone . . . . . . . . . . 7 0.10 0.98 0.00 -2.24 0.41 4.33 0.81 0.00 0713 Dried leguminous vegetables, . . . . . . . . . . . 10 2.32 0.95 0.01 6.79 0.05 0.46 0.00 0.00 0801 Coconuts, Brazil nuts and cashew . . . . . . . . 4 3 6.58 0.99 0.00 6.11 0.26 0.10 0.70 0.00 0901 Coffee; coffee husks and skins; . . . . . . . . . . 2 8.95 0.97 0.00 8.74 0.11 0.94 2.50 0.09 0903 Mate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 0.00 -0.11 1.74 17.10 0.00 0.00 0.00 0.00 0907 Cloves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.97 1.00 0.00 20.90 3.60 0.89 49.31 9.41 1207 Other oil seeds and oleaginous . . . . . . . . . . 9 1.50 0.98 0.00 7.99 0.00 0.00 5.52 0.00 1510 Other oils and their fractions, . . . . . . . . . . . . 7 0.00 0.51 1.51 21.17 0.00 0.00 0.00 0.00 1521 Vegetable waxes (excl. triglyceride . . . . . . . 6 0.18 0.98 0.00 8.02 1.56 0.84 6.15 0.00 2401 Unmanufactured tobacco; tobacco . . . . . . . 3 10 7.78 0.97 0.00 3.96 0.24 1.31 0.38 1.02 2505 Natural sands of all kinds, (excl. . . . . . . . . . 1 0.00 -0.99 -0.07 8.46 0.00 0.00 0.00 0.04 

2603 Copper ores and concentrates . . . . . . . . . . . 7 3.71 0.86 0.05 8.84 0.00 0.00 1.63 0.00 2605 Cobalt ores and concentrates . . . . . . . . . . . 3 0.01 -0.09 1.74 53.76 0.00 0.00 0.00 0.00 2616 Precious metal ores and concentrate . . . . . 9 2.48 0.94 0.61 12.50 0.00 0.01 11.77 0.00 2617 Other ores and concentrates . . . . . . . . . . . . 8 0.00 -0.96 -0.06 16.92 0.00 0.00 0.00 0.00 2828 Hypochlorites; commercial calcium . . . . . . . 5 0.01 0.56 1.55 8.96 0.00 0.00 0.00 0.00 3201 Tanning extracts of vegetable . . . . . . . . . . . 8 0.27 0.98 0.00 4.45 0.00 0.33 0.00 0.00 4301 Raw furskins (excl. raw hides and . . . . . . . . 2 0.01 -0.52 -0.16 8.21 0.08 0.00 0.00 2.48 

4413 Densified wood, in blocks, plates, . . . . . . . . 4 0.00 -0.84 0.02 7.46 0.04 0.00 0.00 0.20 5201 Cotton, not carded or combed . . . . . . . . . . . 5 5.10 0.96 0.00 7.25 0.00 0.43 0.01 0.00 5304 Sisal, etc, raw or processed but . . . . . . . . . . 1 1.10 1.00 0.00 7.05 0.00 20.70 33.24 0.00 6804 Millstones, grindstones, grinding . . . . . . . . . 5 0.00 -0.97 0.02 8.73 0.00 0.00 0.00 0.03 7018 Glass beads, imitation pearls, . . . . . . . . . . . 6 0.00 -0.99 0.01 9.55 0.00 0.00 0.00 0.00 7102 Diamonds worked/not worked but not . . . . . 8 3.41 0.49 0.10 12.66 0.00 0.12 0.00 0.00 7103 Precious, semi-precious stones . . . . . . . . . . 6 4 4.36 0.99 0.00 -1.76 1.59 0.65 0.06 0.25 7112 Waste, scrap of precious metal or of . . . . . . 10 0.03 -0.19 0.81 9.84 0.00 0.00 0.00 0.00 7118 Coin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 0.01 0.77 1.29 80.09 0.00 0.22 0.00 0.00 8103 Tantalum and articles thereof, . . . . . . . . . . . 10 0.02 0.17 1.17 24.78 0.00 0.00 0.00 0.00 8112 All the other base metals (beryllium . . . . . . . 3 0.00 -0.99 0.02 12.52 0.00 0.00 0.00 0.01 8801 Balloons, dirigibles; gliders, hang . . . . . . . . 6 0.00 0.64 1.53 12.85 0.00 0.13 0.00 0.00 8901 Cruise ships, excursion/ferry-boats, . . . . . . . 2 1.95 0.80 1.80 8.98 0.00 0.00 0.00 0.00 8902 Fishing vessels; factory ships other . . . . . . . 9 0.13 0.88 1.26 9.04 0.00 0.00 0.00 0.00 9016 Balances of a sensitivity of 5cg . . . . . . . . . . 7 0.00 -0.57 -0.55 2.83 0.00 0.00 0.00 0.34 9201 Pianos, automatic pianos, harpsichord . . . . 9 0.01 -0.52 0.44 5.64 0.00 0.00 0.76 0.00 9301 Military weapons, except revolvers, . . . . . . . 1 0.07 0.85 1.80 11.83 0.00 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-40

Table E-36Uganda: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-03)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in

world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) )))))))))))))))))))))))Import market share 

0304 Fish fillets and other fish meat, . . . . . . . . . . 2 3 17.70 0.98 0.00 9.77 0.25 1.16 0.41 5.53 0305 Fish, salted, dried...; smoked fish; . . . . . . . . 10 0.97 0.91 0.03 5.10 0.00 0.00 0.00 0.00 0507 Ivory, tortoise-shell, whalebone . . . . . . . . . . 5 0.11 0.98 0.01 -2.24 0.00 1.06 3.65 0.00 0602 Other live plants, cuttings and . . . . . . . . . . . 8 1.40 0.92 0.03 12.62 0.00 0.21 0.01 0.00 0603 Cut flowers and flower buds for . . . . . . . . . . 5 6 3.61 0.96 0.01 7.52 0.00 0.46 0.00 0.00 0801 Coconuts, Brazil nuts and cashew . . . . . . . . 8 0.02 -0.16 0.82 6.11 0.00 0.02 0.00 0.00 0901 Coffee; coffee husks and skins; . . . . . . . . . . 1 2 37.90 0.99 0.00 8.74 0.43 2.46 0.04 0.47 0903 Mate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0.00 -0.82 -1.07 17.10 0.00 0.00 0.00 0.00 0905 Vanilla . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1 2.95 1.00 0.00 24.42 5.10 2.09 2.57 0.00 1205 Rape or colza seeds . . . . . . . . . . . . . . . . . . 1 0.00 -0.95 -0.01 8.02 0.00 0.00 0.00 0.00 1401 Vegetable materials of a kind used . . . . . . . 4 0.00 -0.99 -0.48 1.13 0.00 0.00 0.00 0.00 2401 Unmanufactured tobacco; tobacco . . . . . . . 3 4 10.78 0.98 0.01 3.96 0.00 1.04 0.47 0.98 2502 Unroasted iron pyrites . . . . . . . . . . . . . . . . . 2 0.00 -0.99 0.00 1.81 0.00 0.00 0.00 0.00 2530 Mineral substances not elsewhere . . . . . . . . 9 0.05 0.44 0.82 8.02 0.00 0.00 0.00 0.00 2601 Iron ores and concentrates, . . . . . . . . . . . . . 10 0.00 -1.00 0.00 7.18 0.00 0.00 0.00 0.00 2611 Tungsten ores and concentrates . . . . . . . . . 7 0.05 0.96 -0.02 22.87 0.77 3.47 0.00 0.00 2942 Other organic compounds, . . . . . . . . . . . . . . 1 0.05 0.68 1.59 4.71 0.00 0.00 0.00 0.00 3201 Tanning extracts of vegetable . . . . . . . . . . . 5 0.02 0.75 1.00 4.45 0.00 0.00 0.00 0.00 3822 Composite diagnostic or laboratory . . . . . . . 6 0.00 -0.97 0.00 18.14 0.00 0.00 0.00 0.01 4101 Raw hides and skins of bovine or . . . . . . . . 7 10 2.67 0.95 0.02 5.57 0.00 0.05 0.00 0.00 4903 Children's picture, drawing or . . . . . . . . . . . . 6 0.01 -0.43 0.99 6.33 0.00 0.00 0.00 0.00 5201 Cotton, not carded or combed . . . . . . . . . . . 4 9 4.76 0.95 0.00 7.25 0.00 0.78 0.05 0.00 5202 Cotton waste (incl. yarn waste and . . . . . . . 8 0.00 -0.66 -0.05 7.82 0.00 0.00 0.12 0.00 5309 Woven fabrics of flax . . . . . . . . . . . . . . . . . . 7 0.02 0.01 0.98 9.50 0.00 0.02 0.00 0.00 6209 Bables' garments and clothing . . . . . . . . . . . 3 0.00 -0.94 0.05 9.12 0.00 0.00 0.00 0.00 6215 Ties, bow ties and cravats . . . . . . . . . . . . . . 3 0.02 0.18 1.18 2.19 0.00 0.00 0.00 0.00 7613 Aluminium containers for compressed . . . . . 10 0.00 -0.10 0.75 5.64 0.00 0.00 0.00 0.00 8105 Cobalt mattes, intermediate prdts of . . . . . . 9 8 1.03 0.96 0.07 6.56 0.43 0.09 0.17 0.00 8532 Electrical capacitors, fixed, . . . . . . . . . . . . . . 9 0.00 -0.99 0.00 12.14 0.00 0.00 0.00 0.00 9016 Balances of a sensitivity of 5cg . . . . . . . . . . 4 0.01 0.38 1.11 2.83 0.00 0.05 0.00 0.00 9701 Hand made decorative materials, . . . . . . . . 7 0.01 -0.84 0.01 4.64 0.00 0.00 0.00 0.00 9702 Original engravings, prints, . . . . . . . . . . . . . 2 0.02 0.70 1.47 1.93 0.00 0.12 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.
E-41

Table E-37Zambia: Revealed comparative advantage analysisHS Product

Rank

 by

share

 of

exports

Rank

 by

SRCA

(00-3)

Rank

by

SRCA

trend

(00-03)

Rank

by

Norm.

SD

Share in

co’s

trade

(avg

00-03)

Avg

SRCA

(00-03)

Avg

yearly

change

in SRCA 

(00-03)

Avg

yearly

growth

in

world

mkt

(93-03) US EU JPN AUS 

Percent ))))Index )))) ))))))))))))))))))))))Import market share (p

0603 Cut flowers and flower buds for . . . . . . . . 8 8 3.01 0.96 0.00 7.52 0.03 0.61 0.00 0.02 0708 Leguminous vegetables, shelled or . . . . . 5 0.93 0.98 0.00 11.94 0.09 1.64 0.00 5.78 1102 Cereal flours, (excl. wheat or . . . . . . . . . . 7 1 0.22 0.97 1.96 10.80 0.00 0.00 0.00 0.00 1104 Cereal grains otherwise worked . . . . . . . . 10 0.12 -0.33 0.65 2.35 0.00 0.00 0.00 0.00 1701 Cane or beet sugar and chemically . . . . . 7 3.04 0.90 0.07 9.03 0.00 0.43 0.00 0.00 2401 Unmanufactured tobacco; tobacco . . . . . 6 3.18 0.92 0.02 3.96 0.00 0.22 1.13 0.58 2502 Unroasted iron pyrites . . . . . . . . . . . . . . . 2 0.00 0.78 1.76 1.81 0.00 0.00 0.00 0.00 2605 Cobalt ores and concentrates . . . . . . . . . 4 0.67 0.98 -0.01 53.76 0.00 12.63 98.07 100.00 2615 Niobium, tantalum, vanadium or . . . . . . . 8 0.10 0.83 0.83 16.54 0.00 0.00 0.00 0.00 2617 Other ores and concentrates . . . . . . . . . . 2 0.00 -0.54 0.17 16.92 0.00 0.01 0.00 0.52 2705 Coal gas, water gas, producer gas . . . . . 10 0.00 0.95 0.00 28.70 0.00 0.00 0.00 0.00 3103 Mineral or chemical fertilizers, . . . . . . . . . 4 0.06 0.70 1.32 8.35 0.00 0.00 0.00 0.00 4201 Saddlery and harness for any animal . . . 9 0.00 -0.98 0.00 11.72 0.00 0.00 0.00 0.00 4301 Raw furskins (excl. raw hides and . . . . . . 1 0.00 -0.88 -0.14 8.21 0.02 0.00 0.00 0.13 4303 Articles of apparel, clothing . . . . . . . . . . . 4 0.00 -0.97 0.00 5.76 0.00 0.00 0.00 0.02 4401 Fuel wood, in logs..., etc; wood . . . . . . . . 5 0.00 -0.90 0.01 4.09 0.00 0.00 0.00 0.00 5201 Cotton, not carded or combed . . . . . . . . . 5 3.55 0.93 0.01 7.25 0.00 0.04 0.00 0.00 5205 Cotton yarn, with >=85% cotton, not . . . . 4 3.81 0.94 0.00 9.65 0.00 1.03 0.00 0.00 5805 Hand-woven tapestries of the type . . . . . . 7 0.00 0.31 0.88 1.86 0.08 0.07 0.00 0.00 5807 Labels, badges... of textiles, in . . . . . . . . . 6 0.00 -0.92 0.07 10.25 0.00 0.00 0.00 0.00 7103 Precious, semi-precious stones . . . . . . . . 9 6 2.73 0.98 0.00 -1.76 0.36 0.22 0.03 0.02 7110 Platinum, unwrought, in . . . . . . . . . . . . . . 10 0.01 -0.95 -0.05 13.56 0.00 0.00 0.00 0.00 7118 Coin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.00 -0.22 0.39 80.09 0.00 0.04 1.06 0.00 7316 Anchors, graphnels and parts thereof . . . 6 0.00 0.08 1.07 9.59 0.00 0.00 0.00 0.00 7401 Copper mattes; cement copper . . . . . . . . 9 0.04 0.95 -0.01 31.33 0.00 0.00 11.05 0.00 7403 Refined copper and copper alloys, . . . . . 1 2 40.14 0.99 0.00 7.12 0.00 0.25 16.78 0.00 7408 Copper wire . . . . . . . . . . . . . . . . . . . . . . . 10 2.24 0.93 0.00 12.94 0.00 0.00 0.00 0.00 7409 Copper plates, sheets and strip of . . . . . . 3 3 10.29 0.99 0.01 9.71 0.00 0.00 0.00 0.00 7616 Other articles of aluminum . . . . . . . . . . . . 8 0.00 -0.99 -0.07 12.93 0.00 0.00 0.00 0.00 7803 Lead bars, rods, profiles and wire . . . . . . 5 0.00 0.52 1.30 1.71 0.00 0.00 0.00 0.00 8105 Cobalt mattes, intermediate prdts of . . . . 2 1 10.30 1.00 0.00 6.56 4.60 2.00 12.19 1.25 8602 Other rail locomotives; locomotive . . . . . . 3 0.03 0.56 1.42 10.92 0.00 0.00 0.00 0.00 9701 Hand made decorative materials, . . . . . . 7 0.00 -0.97 0.01 4.64 0.00 0.00 0.00 0.00 9704 Postage, revenue stamps, postal . . . . . . . 9 0.00 -0.28 0.65 9.02 0.03 0.00 0.00 0.00 Source: World Bank, World Integrated Trade Solution database, retrieved Feb. 1, 2005; and Commission analysis.

APPENDIX F

STANDARD DATA DEFINITIONS AND SOURCES

F-3

Table F-1Standard data definitions and sourcesTable Indicator Definition SoTable 1 GDP (current US$,

millions)

GDP at purchaser's prices is the sum of gross value added by all resident producers

in the economy plus any product taxes and minus any subsidies not included in thevalue of the products. It is calculated without making deductions for depreciation offabricated assets or for depletion and degradation of natural resources. Data are incurrent U.S. dollars. Dollar figures for GDP are converted from domestic currencies

using single year official exchange rates. For a few countries where the officialexchange rate does not reflect the rate effectively applied to actual foreign

exchange transactions, an alternative conversion factor is used.

WoDev

GDP growth (annualpercent, based onlocal currency)

Annual percentage growth rate of GDP at market prices based on constant local

currency. Aggregates are based on constant 1995 U.S. dollars. GDP is the sum of

gross value added by all resident producers in the economy plus any product taxes

and minus any subsidies not included in the value of the products. It is calculatedwithout making deductions for depreciation of fabricated assets or for depletion and

degradation of natural resources.

GDP per capitagrowth (annualpercent, based onlocal currency)

Annual percentage growth rate of GDP per capita based on constant local currency.GDP per capita is gross domestic product divided by midyear population. GDP atpurchaser's prices is the sum of gross value added by all resident producers in theeconomy plus any product taxes and minus any subsidies not included in the valueof the products. It is calculated without making deductions for depreciation offabricated assets or for depletion and degradation of natural resources.

Inflation, consumerprices (annualpercent)

Inflation as measured by the consumer price index reflects the annual percentage

change in the cost to the average consumer of acquiring a fixed basket of goodsand services that may be fixed or changed at specified intervals, such as yearly.

The Laspeyres formula is generally used.

External debt, total(current US$,millions)

Total external debt is debt owed to nonresidents repayable in foreign currency,

goods, or services. Total external debt is the sum of public, publicly guaranteed, and

private nonguaranteed long-term debt, use of IMF credit, and short-term debt.Short-term debt includes all debt having an original maturity of one year or less andinterest in arrears on long-term debt. Data are in current U.S. dollars.

Total debt service(percent of exports ofgoods and services)

Total debt service is the sum of principal repayments and interest actually paid in

foreign currency, goods, or services on long-term debt, interest paid on short-termdebt, and repayments (repurchases and charges) to the IMF. Exports of goods andservices includes income and workers' remittances.
F-4

Table F-1—ContinuedStandard data definitions and sourcesTable Indicator Definition SoTable 1–Cont. Exports of goods and

services (percent ofGDP)

Exports of goods and services represent the value of all goods and other market

services provided to the rest of the world. They include the value of merchandise,

freight, insurance, transport, travel, royalties, license fees, and other services, such

as communication, construction, financial, information, business, personal, and

government services. They exclude labor and property income (formerly calledfactor services) as well as transfer payments.

WoDev

Trade (percent ofGDP)

Trade is the sum of exports and imports of goods and services measured as a

share of gross domestic product.

Official exchange rate(local currency unitper US$, periodaverage)

Official exchange rate refers to the exchange rate determined by national authoritiesor to the rate determined in the legally sanctioned exchange market. It is calculated

as an annual average based on monthly averages (local currency units relative to

the U.S. dollar).

Population, total(millions)

Total population is based on the de facto definition of population, which counts all

residents regardless of legal status or citizenship--except for refugees not

permanently settled in the country of asylum, who are generally considered part ofthe population of their country of origin.

Population growth(annual percent)

Annual population growth rate. Population is based on the de facto definition ofpopulation, which counts all residents regardless of legal status or

citizenship--except for refugees not permanently settled in the country of asylum,

who are generally considered part of the population of the country of origin.

Labor force, total(millions)

Total labor force comprises people who meet the International Labour Organizationdefinition of the economically active population: all people who supply labor for theproduction of goods and services during a specified period. It includes both theemployed and the unemployed. While national practices vary in the treatment ofsuch groups as the armed forces and seasonal or part-time workers, in general thelabor force includes the armed forces, the unemployed, and first-time job-seekers,

but excludes homemakers and other unpaid caregivers and workers in the informal

sector.

Labor forceparticipation rate,total (percent)

Labor force refers to economically active persons aged 10 years and over, andincludes the unemployed and the armed forces, but excludes housewives, studentsand other economically inactive groups. Definitions of sectors are identical to thosein the macroeconomic indicators section.

Afr“Coww
F-5

Table F-1—ContinuedStandard data definitions and sourcesTable Indicator Definition SoTable 1–Cont. Literacy rate, adult

total (percent ofpeople age 15 andabove)

Adult illiteracy rate is the proportion of the population 15 years of age and older whocannot, with understanding, read and write a short simple statement on everyday

life.

Afr“Coww

Primary schoolenrollment ratio, total(percent)

Enrollment (primary school) is the number of pupils enrolled at the primary level of

education, regardless of age, expressed as a percentage of the populationcorresponding to the official school age of primary education in a given country.Where figures are more than 100 percent, total enrollment includes repeaters and

pupils above and below the primary school age.

Secondary schoolenrollment ratio, total(percent)

Enrollment (secondary school) is the total number of students enrolled at the

secondary level of education, regardless of age, expressed as a percentage of the

population corresponding to the official school age of secondary education in a

given country.

Land use, arable land(percent of total)

Arable land includes land defined by the FAO as land under temporary crops(double-cropped areas are counted once), temporary meadows for mowing or for

pasture, land under market or kitchen gardens, and land temporarily fallow. Landabandoned as a result of shifting cultivation is excluded.

WoDev

Gross capitalformation (percent ofGDP)

Gross capital formation (formerly gross domestic investment) consists of outlays onadditions to the fixed assets of the economy plus net changes in the level ofinventories. Fixed assets include land improvements (fences, ditches, drains, and

so on); plant, machinery, and equipment purchases; and the construction of roads,

railways, and the like, including schools, offices, hospitals, private residential

dwellings, and commercial and industrial buildings. Inventories are stocks of goodsheld by firms to meet temporary or unexpected fluctuations in production or sales,

and "work in progress." According to the 1993 SNA, net acquisitions of valuables

are also considered capital formation.

Gross fixed capitalformation (percent ofGDP)

Gross fixed capital formation (formerly gross domestic fixed investment) includesland improvements (fences, ditches, drains, and so on); plant, machinery, andequipment purchases; and the construction of roads, railways, and the like,

including schools, offices, hospitals, private residential dwellings, and commercialand industrial buildings. According to the 1993 SNA, net acquisitions of valuablesare also considered capital formation.
F-6

Table F-1—ContinuedStandard data definitions and sourcesTable Indicator Definition SoTable 1–Cont. Foreign direct

investment, netinflows (percent ofGDP)

Foreign direct investment is net inflows of investment to acquire a lastingmanagement interest (10 percent or more of voting stock) in an enterprise operatingin an economy other than that of the investor. It is the sum of equity capital,reinvestment of earnings, other long-term capital, and short-term capital as shown inthe balance of payments. This series shows net inflows in the reporting economy.

WoDev

Table 5 Closing a business “Doing Business” examines the time and cost of insolvency proceedings involving

domestic entities. The data are derived from survey responses by local law firms, all

members of the International Bar Association. Answers were provided by a seniorpartner at each firm, in cooperation with one or two junior associates.

WoBushttpDoJan

Getting credit “Doing Business” constructs measures on credit information sharing and the legal

rights of borrowers and lenders. One set of indicators measures the coverage,

scope, quality and accessibility of credit information available through public or

private credit registries. A second set describes how well collateral and bankruptcylaws facilitate lending. Data on credit information sharing are built in two stages:first, the respective banking supervision authorities as well as public information

sources are surveyed to confirm the presence/absence of public credit registries

and private credit information bureaus. Second, when applicable, a detailed surveyon the public or private credit registry's structure, laws, and associated rules followsto collect data in five areas: coverage of the market; scope of information collected

and distributed; access to the data; quality of data; legal framework for informationsharing.The credit information index measures rules affecting the scope, access and qualityof credit information available through either public or private bureaus. A score of 1is assigned for each of the following six features of the credit information system: (1)

both positive and negative credit information (for example on payment history,

number and kind of accounts, number and frequency of late payments, and any

collections or bankruptcies) is distributed; (2) data on both firms and individuals are

distributed; (3) data from retailers, trade creditors and/or utilities as well as financial

institutions are distributed; (4) more than five years of historical data is preserved;(5) data on loans of above 1 percent of income per capita is distributed; and (6) by

law, consumers have the right to access their data. The index ranges from 0 to 6,

with higher values indicating that more credit information is available from either a

public registry or a private bureau to facilitate lending decisions. 

The legal rights index measures the degree to which collateral and bankruptcy laws

facilitate lending. It is based on data collected through research of collateral and

insolvency laws supported by the responses to the survey on secured transactionslaws. It includes three aspects related to legal rights in bankruptcy, and seven 
F-7

Table F-1—ContinuedStandard data definitions and sourcesTable Indicator Definition SoTable 5–Cont. aspects found in collateral law. The indicators related to creditor rights in bankruptcy

are based on the methodology of La Porta and others (1998). A score of 1 isassigned for each of the following features of the laws: (1) secured creditors are

able to seize their collateral when a debtor enters reorganization—that is, there isno "automatic stay" or "asset freeze" imposed by the court; (2) secured creditors are

paid first out of the proceeds from liquidating a bankrupt firm, as opposed to otherparties, such as government or workers; (3) management does not stay inreorganization. An administrator is responsible for managing the business during

reorganization, rather than the management of the bankrupt debtor; (4)general—rather than specific—description of assets is permitted in collateral

agreements; (5) general—rather than specific—description of debt is permitted incollateral agreements; (6) any legal or natural person may grant or take security; (7)a unified registry including charges over movable property operates; (8) securityprovides priority outside of bankruptcy; (9) parties may agree on enforcement

procedures by contract; and (10) creditors may both seize and sell collateral out ofcourt. The index ranges from 0 to 10, with higher scores indicating that collateral

and bankruptcy laws are better designed to expand access to credit.

WoBushttpDoJan

Enforcing contracts The indicators on enforcing contracts measure the efficiency of the judicial (or

administrative) system in the collection of overdue debt. The data are built following

the step-by-step evolution of a payment dispute either before local courts or through

an administrative process, if such a process is available and preferred by creditors.

The data are collected through research of the codes of civil procedures and other

court regulations, as well as surveys to local litigation lawyers. At least two lawyersparticipate in each country and, in a quarter of the countries, judges complete thesurvey as well. To ensure comparability, survey respondents are provided with

significant detail, including the amount of the claim, the location and maincharacteristics of the litigants, the presence of city regulations, the nature of theremedy requested by the plaintiff, the merit of the plaintiff's and the defendant's

claims, and the social implications of the judicial outcomes.

Registering aproperty

“Doing Business” covers the full sequence of procedures necessary to transfer the

property title from the seller to the buyer when a business purchases land and abuilding in a peri-urban area of the country’s most populous city. Every required

procedure is included, whether it is the responsibility of the seller, the buyer, or

where it is required to be completed by a third party on their behalf. Local propertylawyers and property registries provide information on required procedures, as wellas the time and the cost to fulfill each of them. In most countries, the data are based

on responses by lawyers and officials in the property registries.
F-8

Table F-1—ContinuedStandard data definitions and sourcesTable Indicator Definition SoTable 5–Cont. Starting a business “Doing Business” records all generic procedures that are officially required for an

entrepreneur to start an industrial or commercial business. These include obtainingall necessary licenses and permits and completing any required notifications,verifications or inscriptions with relevant authorities. The survey divides the process

of starting a company into distinct procedures, and calculates the costs and time

necessary for accomplishing each procedure under normal circumstances.Information is also collected on the sequence in which procedures may becompleted and whether procedures may be carried out simultaneously. The

assumption is that the required information is readily available and that allgovernment and non-government entities involved in the process function efficiently

and without corruption.

WoBushttpDoJan

Employment “Doing Business” focuses on the regulation of employment, specifically the hiring

and firing of workers and the rigidity of working hours. The data on hiring and firingworkers are based on a detailed study of employment laws and regulations, as wellas relevant constitutional provisions. The employment laws of most countries are

available online in the NATLEX database, published by the International Labour

Organization. Constitutions can be found through the law library of the U.S.

Congress. In all cases, actual laws and secondary sources are used to ensureaccuracy. Conflicting answers are further checked in two additional sources,including a local legal treatise on employment regulation. Secondary sourcesinclude the International Encyclopedia for Labour Law and Industrial Relations and

Social Security Programs Throughout the World. Finally, all data are verified and

completed by local law firms through a detailed survey on employment regulations. 

The difficulty of firing index has eight components: (i) whether redundancy is notgrounds for dismissal; (ii) whether the employer needs to notify the labor union or

the labor ministry for firing one redundant worker; (iii) whether the employer needsto notify the labor union or the labor ministry for group dismissals; (iv) whether the

employer needs approval from the labor union or the labor ministry for firing one

redundant worker; (v) whether the employer needs approval from the labor union orthe labor ministry for group dismissals; (vi) whether the law mandates training orreplacement prior to dismissal; (vii) whether priority rules apply for dismissals; and

(viii) whether priority rules apply for re-employment. If the answer to any question isyes, a score of 1 is assigned; otherwise a score of 0 is given. Questions (i) and (iv)

have double-weight in the construction of the final index. The difficulty of hiring index measures (i) whether term contracts can only be usedfor temporary tasks; (ii) the maximum duration of term contracts; and (iii) the ratio ofthe mandated minimum wage (or apprentice wage, if available) to the averagevalue-added per working population. A country is assigned a score of 1 if termontracts can only be used for temporary tasks, and a score of 0 if term contractscan be used for any task. A score of 1 is assigned if the duration of term contracts is
F-9

Table F-1—ContinuedStandard data definitions and sourcesTable Indicator Definition SoTable 5–Cont. 3 years or less; 0.5 if the duration is between 3 and 5 years; and 0 if term contracts 

can be used for any task. A score of 1 is assigned if the duration of term contracts is

3 years or less; 0.5 if the duration is between 3 and 5 years; and 0 if term contracts

can last more than 5 years. Finally, a score of 1 is assigned if the ratio of minimumwage to average value added per worker ratio is higher than 0.75; 0.67 for ratiosbetween 0.50 and 0.75; 0.33 for ratios between 0.25 and 0.50; and a score of 0 ifthe ratio is below 0.25.The rigidity of hours index has five components: (i) whether night work is restricted;(ii) whether weekend work is allowed; (iii) whether the workweek consists offive-and-a-half days or more; (iv) whether the workday can extend to 12 hours or

more (including overtime); and (v) whether the annual paid vacation days are 21days or less. If the answer is no on any of these questions, the country is assigned

a score of 1, otherwise a score of 0 is assigned. The rigidity of employment index is the average of three sub-indices: a Difficulty of

Hiring index, a Rigidity of Hours index, and a Difficulty of Firing index. 

WoBushttpDo

Jan

Import tariffs Average applied tariff rates (overall, agricultural, and nonagricultural) for most

recent year available.

WTNovhttpofil

Table 6 Economic freedom:

Overall score

The Index of Economic Freedom includes the broadest array of institutional factors

determining economic freedom: (1) corruption in the judiciary, customs service, and

government bureaucracy; (2) nontariff barriers to trade, such as import bans andquotas as well as strict labeling and licensing requirements; (3) the fiscal burden ofgovernment, which encompasses income tax rates, corporate tax rates, and trendsin government expenditures as a percent of output; (4) the rule of law, efficiencywithin the judiciary, and the ability to enforce contracts; (5) regulatory burdens on

business, including health, safety, and environmental regulation; (6) restrictions on

banks regarding financial services, such as selling securities and insurance;(7) labor market regulations, such as established work weeks and mandatoryseparation pay; and (8) informal market activities, including corruption, smuggling,piracy of intellectual property rights, and the underground provision of labor andother services. 

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Trade policy The trade policy score is based on a country’s weighted average tariff

rate—weighted by imports from the country’s trading partners. The higher the rate,

the worse (or higher) the score. Gathering data on tariffs to make a consistent

cross-country comparison can be a challenging task. Unlike data on inflation, for

instance, countries do not report their weighted average tariff rate or simple averagetariff rate every year; in some cases, the last time a country reported its tariff data

could have been as far back as 1993. To preserve consistency in grading the trade

policy factor, this report uses the most recently reported weighted average tariff rate
F-10

Table F-1—ContinuedStandard data definitions and sourcesTable Indicator Definition SoTable 6–Cont. for a country from a primary source. If another reliable source reports more updated

information on the country’s tariff rate, this report notes this fact and may review thegrading of this factor if there is strong evidence that the last reported weighted

average tariff rate is outdated. 

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Fiscal burden ofgovernment

The score for the fiscal burden of government has three components: the top

marginal income tax rate, the top marginal corporate tax rate, and the year-to-year

change in government expenditures as a share of GDP. The authors followed

several steps in scoring this factor. First, a country’s individual income tax scorewas assigned a score between 1 and 5 based on the top marginal income tax rate.Second, a country’s corporate tax score was assigned a score between 1 and 5

based on the top marginal corporate tax rate. Third, a country was assigned a scorebetween 1 and 5 based on the year-to-year change in government expenditures asa percent of GDP. 

Governmentintervention in theeconomy

Government consumption as a percentage of GDP is evaluated separately fromgovernment production. First, the level of government intervention in the economy is

determined. The higher the rate of government consumption as a percentage of

GDP, the more resources the government is pulling from the private or free marketand, therefore, the lower its level of economic freedom and the higher its Indexscore (lower ranking). 

Monetary policy This factor’s score is based on a country’s weighted average annual rate of inflation

from 1994 to 2003. First, the Heritage Foundation weighted inflation rates for each

of the past 10 years, giving the year farthest from the present the least weight andthe current year the greatest weight. Then it calculated an average of these

weighted rates. In some cases, data were not available for all 10 years; for thesecountries, the Foundation used as many years of data as were available. Thereader should be aware that when governments have comprehensive price and

wage controls, measured inflation probably is distorted. 

Capital flows andforeign investment

This factor scrutinizes each country’s policies toward foreign investment in order todetermine its overall investment climate. Policies examined include the presence of

a foreign investment code that defines the country’s investment laws and

procedures; whether the government encourages foreign investment through fairand equitable treatment of investors; whether there are restrictions on access to

foreign exchange; whether foreign firms are treated the same as domestic firms

under the law; whether the government imposes restrictions on payments, transfers,and capital transactions; and whether specific industries are closed to foreigninvestment. This analysis helps to develop an overall description of the country’sinvestment climate. The Foundation then grades each country based on those

variables. 
F-11

Table F-1—ContinuedStandard data definitions and sourcesTable Indicator Definition SoTable 6–Cont. Banking and finance The banking and finance factor measures the relative openness of a country’s

banking and financial system. The Foundation scores this factor by determining

specifically whether foreign banks and financial services firms are able to operatefreely, how difficult it is to open domestic banks and other financial services firms,how heavily regulated the financial system is, how great the presence ofstate-owned banks is, whether the government influences the allocation of credit,

and whether banks are free to provide customers with insurance and invest in

securities (and vice versa). The Foundation uses this analysis to develop adescription of the country’s financial climate. 

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Wages and prices The Foundation scores this factor by the extent to which a government allows the

market to set wages and prices. Specifically, this factor looks at which productshave prices set by the government and whether the government has a minimum

wage policy or otherwise influences wages. The factor’s scale measures the relativedegree of government control over wages and prices. The lowest score of 1represents wages and prices that are set almost completely by the market, whereas

the highest score of 5 means that wages and prices are set almost completely by

the government. 

Property rights This factor scores the degree to which a country’s laws protect private property

rights and the degree to which its government enforces those laws. It also accounts

for the possibility that private property will be expropriated. In addition, it analyzesthe independence of the judiciary, the existence of corruption within the judiciary,

and the ability of individuals and businesses to enforce contracts. The less certain

the legal protection of property, the higher a country’s score; similarly, the greaterthe chances of government expropriation of property, the higher a country’s score. 

Regulation This factor measures how easy or difficult it is to open and operate a business. The

more regulations that are imposed on business, the harder it is to establish one. The

factor also examines the degree of corruption in government and whether

regulations are applied uniformly to all businesses. Another consideration is whether

the country has state planning agencies that set production limits and quotas. The

scale establishes a set of conditions for each of the five possible grades. These

conditions also include such items as the extent of government corruption, how

uniformly regulations are applied, and the extent to which regulations impose a

burden on business. A “very low” score of 1 indicates that corruption is virtuallynonexistent and regulations are minimal and applied uniformly; a “very high” scoreof 5 indicates that corruption is widespread, regulations are applied randomly, and

the general level of regulation is very high. A country need only meet a majority of

the conditions for a particular score to receive that score. 
F-12

Table F-1—ContinuedStandard data definitions and sourcesTable Indicator Definition SoTable 6–Cont. Informal market

activity

This factor relies on Transparency International’s (TI) Corruption Perceptions Index

(CPI), which measures the level of corruption in 102 countries, to determine the

informal market scores of countries that are also listed in the Index of Economic

Freedom. As the level of corruption increases, the level of informal market activityrises as well. Citizens often engage in corrupt activity, such as bribing an official, so

that they can enter the informal market. Because the CPI is based on a 10-point

scale in which 10 equals very little corruption and 1 equals a very corruptgovernment, it was necessary to transform the CPI to a 5-point scale consistent with

the other nine factors graded in the Index. To do this, the authors regressed the CPI

on the informal market Index of Economic Freedom score. After estimating therelationship between the two variables, the authors substituted the CPI into theequation to arrive at a number between 1 and 5. They then rounded the numbers to

the nearest half point (0.5 point). If 2003 Transparency International data were not

available and 2002 TI data were available, the authors used the 2002 TI data. 

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Table 7 Roads, total network

(km)

Total road network includes motorways, highways, and main or national roads,secondary or regional roads, and all other roads in a country.

WoDev

Roads, paved(percent of totalroads)

Paved roads are those surfaced with crushed stone (macadam) and hydrocarbonbinder or bituminized agents, with concrete, or with cobblestones, as a percentage

of all the country’s roads, measured in length.

Transport services(percent of serviceexports, BoP)

Transport (% of service exports, balance of payments basis) covers all transport

services (sea, air, land, internal waterway, space, and pipeline) performed byresidents of one economy for those of another and involving the carriage ofpassengers, movement of goods (freight), rental of carriers with crew, and related

support and auxiliary services. Excluded are freight insurance, which is included ininsurance services; goods procured in ports by nonresident carriers and repairs of

transport equipment, which are included in goods; repairs of railway facilities,harbors, and airfield facilities, which are included in construction services; and rental

of carriers without crew, which is included in other services. Service exports refer toeconomic output of intangible commodities that may be produced, transferred, andconsumed at the same time. International transactions in services are defined by

the IMF's Balance of Payments Manual (1993), but definitions may neverthelessvary among reporting economies.
F-13

Table F-1—ContinuedStandard data definitions and sourcesTable Indicator Definition SouTable 7–Cont. Transport services

(percent of serviceimports, BoP)

Transport (% of service imports, balance of payments basis) covers all transportservices (sea, air, land, internal waterway, space, and pipeline) performed byresidents of one economy for those of another and involving the carriage ofpassengers, the movement of goods (freight), rental of carriers with crew, andrelated support and auxiliary services. Excluded are freight insurance, which isincluded in insurance services; goods procured in ports by nonresident carriers and

repairs of transport equipment, which are included in goods; repairs of railwayfacilities, harbors, and airfield facilities, which are included in construction services;and rental of carriers without crew, which is included in other services. Services

imports refer to economic output of intangible commodities that may be produced,transferred, and consumed at the same time. International transactions in services

are defined by the IMF’s Balance of Payments Manual (1993), but definitions may

nevertheless vary among reporting economies.

WoDev

Fixed line and mobilephone subscribers(per 1,000 people)

Fixed lines are telephone mainlines connecting a customer's equipment to the

public switched telephone network. Mobile phone subscribers refer to users ofportable telephones subscribing to an automatic public mobile telephone service

using cellular technology that provides access to the public switched telephone

network.

Internet users (per1,000 people)

Internet users are people with access to the worldwide web network.

Mobile phones (per1,000 people)

Mobile phones refer to users of portable telephones subscribing to an automaticpublic mobile telephone service using cellular technology that provides access tothe public switched telephone network, per 1,000 people.

Telephone mainlines(per 1,000 people)

Telephone mainlines are telephone lines connecting a customer's equipment to the

public switched telephone network. Data are presented per 1,000 people for theentire country.

Electric powertransmission anddistribution losses(percent of output)

Electric power transmission and distribution losses include losses in transmissionbetween sources of supply and points of distribution and in the distribution toconsumers, including pilferage. Production less transmission and distribution losses,

own-use, and transformation losses, is equal to end-use electricity consumption.

Energy imports, net(percent ofcommercial energyuse)

Net energy imports are calculated as energy use less production, both measured inoil equivalents. A negative value indicates that the country is a net exporter.Commercial energy use refers to apparent consumption, which is equal to

indigenous production plus imports and stock changes, minus exports and fuelssupplied to ships and aircraft engaged in international transport.

Source: As cited. Compiled by the Commission.