Africa’s growing trade preference with Asia

“It is only those who live in the past that still believe that the West can help us. The Asian continent has great regard for Nigeria as a country,” Nigerian High Commissioner to India, Ndubuisi Amaku recently said. In fact, Nigeria is working towards boosting economic ties with Asia, and has agreed to double its bilateral trade volumes with the regions’ countries from $40bn to over $80bn within the next two years. This shift in trade preference towards Asia is one that is growing and will likely continue to do.

Indeed South-South trade is on the rise. According to UNCTAD, total developing economies’ exports now account for 45% of the world total. This rise in such trade is evident between Asia and Africa. For example, trade between China and Africa has grown from $10bn in 2000 to more than $200bn in 2013, making China Africa’s largest trading partner.

However, this trade is uneven as almost 80% of Chinese imports from Africa are mineral products. On the other hand, African imports from China include machinery, textiles, chemicals and plastics and rubber.

Of course, China is not the only Asian country to trade with Africa. It is estimated that India represents about one third of all Asian-African trade. Trade between India and South Africa for example was estimated at $11.15bn in 2013.

How does this trade impact the logistics market? Not surprising, it impacts it in a big way such as the need for improvements in Africa’s infrastructure in order to facilitate trade in the most efficient manner. Investments and projects are on the rise despite risks such as political unrest. Foreign direct investment (FDI) into Africa has increased dramatically in the last decade and a half, and continues to grow. In 2013, FDI to Africa increased by 9.6% to about $56.6bn and representing 5.7% of global FDI. FDI is forecast to exceed $60bn in 2014.

A growing number of logistics providers such as Agility and DHL provide services within and between the two locations. Other providers such as FedEx are expanding into Africa to take advantage of not only the potential domestic African opportunity but its expanding international reach as well.

Emerging markets are playing a larger role in global trade. Which of these emerging markets presents the best opportunities for logistics providers? Does the Asia-Africa trade lane offer the greatest potential for future growth?

To answer these questions and more, please take part in the 2015 edition of the Emerging Markets survey by clicking here. Each participant will receive a copy of the white paper. Now in its sixth year, the Emerging Markets Survey collects the opinions of industry leaders and offers those with knowledge of the world’s most dynamic logistics markets the chance to share their insights and inform thought leading debate.

For more information on the Emerging Markets Survey, please contact Cathy Roberson.