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A guide to trade between Africa and Europe

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A guide to trade between Africa and Europe

The economist Flé Doumbia has published the third edition of the Guide des échanges entre l’Afrique et l’Europe (“Guide to Trade between Africa and Europe”). The author presents his conclusions and recommendations on how to increase Africa exports, and calls for a global agreement between the African Union and the European Union. Hichem Ben Yaïche and Nicolas Bouchet report.

How was this third edition of your guide structured?

We wanted to offer a working tool to decision makers in Africa and Europe..

It enables them to get better acquainted with European markets and to engage in trade in a better way. Three new indicators evaluate the commercial situation of each African country with Europe.

The first indicator concerns African countries’ competitiveness in Europe. It indicates the extent of its outlets and product range in the European common market.

The second indicator is the European market’s penetration of African country. It lists the European countries in which African products are implanted.

For instance, South Africa is implanted in all the 27 countries of the European Union, followed by Egypt (26), Morocco (22) and Tunisia (20).

France, Spain ,Germany and the Netherlands are the most competitive countries and have the best penetration of the African market for their products.

The third indicator is the trade dependency of each African country on the EU, for each product and sector. It allows us to know how dependent Africa is on the European pharmaceutical industry, or in the agro-food sectors, etc.

To what extent do we have reliable sources?

The report uses databases from several institutions and countries. In the fifteen ECOWAS countries of West Africa, two are Portuguese-speaking and eight are French-speaking. Comparing the presence of Portuguese and French products in this area, we see that the competitiveness indicator applied in Portugal shows an index of 86 in Cape Verde and 55 in Guinea-Bissau on a scale of 100. The minimal value of the index to assure some presence in any given country is 10.

Portugal shows a significant presence in four or five countries of this region and especially in the two Portuguese-speaking countries. French products have a particularly strong presence in Côte d’Ivoire and Senegal, with Nigeria in the fifth position. Belgium has the strongest presence of its products in the Democratic Republic of the Congo.

How have you proceeded to compare figures and establish the dynamic snapshot?

We offer now digital tools to make the data available on Smartphone. As such, an African exporter interested in Europe can easily see and understand the presence of African products in any European country.

This work was indispensable to enable Africa to improve its commercial situation with Europe, and to better finance its development through trade. Today Africa only represents 8% of Europe’s trading outside of its borders. This is very little and we need to meet the challenge this represents for Africa.

We provide the market with information, which – up until then – was not available. The tool offers a more global vision of trade relations with Europe, by integrating all African zones and all African countries.

For this third edition, we worked on the 54 African countries, as well as on the 27 countries of the European Union and the United Kingdom. Our project also has the ambition of dealing with the nine African economic zones. We compare the situation among all zones and all countries.

Do your conclusions enable us to better understand each African zone?

Of course, that’s the objective! The third edition of the Guide enables us to compare six zones (North Africa, ECOWAS, CEMAC, COMESA, SADC, WAEMU). The three other zones – ECCAS, EAC and IGAD – are in the process of being added. They will be part of future editions.

A lot of zones and countries suffer in their trade relations with Europe. These countries import a lot of manufactured products but don’t offer similar products for sale in Europe because of a low level of industrialisation. They all suffer from a negative commercial balance to a phenomenal extent! This situation has an impact on Europe’s development policy, and makes it less efficient.

With our Guide, decision makers will have a better understanding of the situation, and will make appropriate decisions for indispensable changes. An entire group of African industrial sectors has an average dependency ratio of 78% on Europe, for instance the pharmaceutical industry. We have to reduce this dependence to less than 50%.

What are the chances of success of AfCFTA ? What actions have to be taken in priority?

In the health sector – which is vital for each country – the trade dependence indicator rises to 99% for the entire African continent. This is a serious and dangerous situation! The pharmaceutical market represents 10 billion dollars.

At the present time, Africa does not have the required industrial capacity to satisfy its needs. A partnership with Europe is necessary for coproductions in essential sectors in order to reduce the trade dependence. It’s a long-term task!

The new edition of the Guide proposes a pilot group of fourteen agricultural sectors as a model: citrus fruit, cocoa, cotton, cashew nuts, coffee, tea… It’s a question of providing concrete solutions to reduce migratory fluxes and for a better development policy.

What are the other priority sectors?

The African mechanical industry also has a dependency rate on the EU of over 90%. Certain specific sectors represent hope, such as tinned fish or meat, in which Africa’s trade dependency vis-a-vis Europe has become almost zero thanks to countries like Morocco, Mauritius, Seychelles, Ghana and Côte d’Ivoire.

The sector of oils (used for food or lotions) on the continental level has a dependence of approximately 30% due to countries like Tunisia, Morocco, Ghana, Côte d’Ivoire and South Africa.

What changes are brought on by the new ACP agreements? They appear to reproduce the same deforming prism of recent years.

One of the major changes is harmonising the financing plan of Europe’s development policy on a world scale. This is now carried out by a new unique instrument, known as the Neighbourhood, Development and International Cooperation Instrument (NDICI).

We’re speaking about a global envelope of 79.5 billion euros, which integrates Sub Saharan Africa, neighbouring Europe, Asia and the Pacific, as well as the Americas and the Caribbean. To get back to our subject, our work is preparing Africa to finance its development by trade with Europe – which is one of Africa’s natural partners – given the geographic proximity. There are many opportunities to develop.

When the agreements of Cotonou were signed in the year 2000, the problem of migratory crises wasn’t as acute as it is today. The presence of China wasn’t as strong in Africa. This also means that this framework did not bring on expected results. We need a new plan, which actually takes into account Africa’s industrial and trade situation.

What are your proposals for solutions?

The South-South partnership is to be taken into consideration in African industry .The membership of Morocco to ECOWAS is an important subject that needs to be examined closely. We need to see how the African Union can contribute to strengthen pan African partnerships.

In the health sector, Egypt and South Africa come out first for the export of pharmaceutical products. We need a plan to bring the African champions together in two or three production poles and to use these poles as a springboard for the growth of these markets. Reinforce the productive capacity of several countries and sectors with the aim of meeting Africa’s needs; that’s what I call South-South co-operation.

The second plan involves the new free trade agreements proposed by the EU. We can see the result in North Africa. We have to repeat that experience on the continental level.

We see each zone negotiate and sign an agreement with the EU but we need a continental mechanism for a continental agreement, with joint negotiations lead by the AU with the EU, in consultation with the different African zones.

Of course, but this mixed approach is not accepted by anyone right now.

And yet the consequences would be enormous! This stage is necessary, it will take time but we have to start putting such a plan into people’s minds. They have to understand the weaknesses of the current system! Should it take ten or twenty years, we have to establish the bases of what will change the situation. 

Further information

Guide des échanges entre l’Afrique et l’Europe (“Guide to Trade between Africa and Europe”) is conceived as a working tool for commercial players, policy and economic decision-makers. It is prefaced by Ms Ann Linde, the Swedish Minister of Foreign Affairs. The work presents the situation of trade of the 54 African countries, the 27 European countries and the United Kingdom, as well as the main African economic zones.

 

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