trade between the gcc & ssa: challenges & opportunities

Trade between the GCC & SSA:

Challenges & Opportunities

Dr Edward George

Head of Group Research, Ecobank

Dubai, 17 February 2015

Section 1

GCC-Africa trade flows

3

Leading GCC importers from Africa, US$ millions

Imports are dominated by Saudi Arabia & the UAE

Source: Intracen.

• GCC imports from Africa have almost doubled since 2009, reaching US$12bn in 2013.

• Saudi Arabia & the UAE accounted for 88% of these flows.

• Saudi Arabia is steadily increasing its market share.

© Ecobank Research 2015 | Trade between the GCC and SSA | Dr Edward George | 17 February 2015

0

2,000

4,000

6,000

8,000

10,000

12,000

2009 2010 2011 2012 2013

UAE Saudi Arabia Qatar Kuwait Oman Bahrain

4

Leading GCC exporters to Africa, US$ millions

Other GCC members are growing their export share

Source: Intracen.

• GCC exports to Africa have more than doubled since 2009, reaching US$31bn in 2013.

• The UAE has lost market share as its flows of crude oil to Africa have fallen.

• Kuwait, Oman, Qatar and Bahrain have steadily grown their market share.

0

5,000

10,000

15,000

20,000

25,000

30,000

2009 2010 2011 2012 2013

Saudi Arabia UAE Kuwait Oman Qatar Bahrain


The GCC runs a large trade surplus with Africa

Sources: Intracen, Ecobank Research.

0

2,000

4,000

6,000

8,000

2009 2010 2011 2012 2013

Saudi Arabia UAE Kuwait Oman Qatar Bahrain

• The GCC runs a substantial trade surplus with Africa, estimated at US$18.8bn in 2013.

• The UAE’s surplus has fallen as Saudi Arabia’s has surged, reflecting crude oil flows.

• Despite smaller volumes, Oman, Qatar & Bahrain also run trade surpluses with Africa.

GCC trade surplus with Africa, US$ millions


18%

10%

9%

8%

6% 5% 3%

2% 2%

2%

35%

Gold

Copper

Fruit & vegetables

Live animals

Iron & steel

Diamonds

Petroleum products

Wood

Coal

Coffee & tea

Other

Commodities dominate GCC imports from Africa

% share of GCC imports from Africa, US$, 2013 • Gold is the leading import, worth

US$2.2bn in 2013, used both in

jewellery and for storing value.

• Industrial raw materials (copper,

iron & steel, wood & coal) are the

major import category.

• Livestock, fruit & vegetables are a

growing component of imports,

reflecting the GCC’s dependence

on food imports.

• Petroleum products are the only

notable processed goods

imported from Africa, worth

US$373mn in 2013.



29%

28%

13%

3%

2% 2% 2% 2% 1% 1%

17%

Crude oil

Petroleum products

Plastics

Vehicles

Machinery

Fertiliser

Jewellery

Aluminium

Electronics

Gold

Other

Hydrocarbons & industrial goods make up most exports

% share of GCC exports to Africa, US$, 2013 • Crude oil & petroleum products

made up 57% of exports in

2013, worth US$17.7bn.

• These goods serve refineries

and domestic markets in East,

Central & Southern Africa.

• Other industrial raw materials

(plastics, fertiliser, aluminium)

make up 17% of exports.

• Exports of foodstuffs (notably

rice & palm oil) are absent

from official data, distorting the

true picture of trade flows.



$22m

$5.7bn

$1.6bn

$4m

GCC oil flows are focused on East & Southern Africa

• Most GGC crude & petroleum

products are exported to East

and Southern Africa.

• In 2013 these flows totaled

US$5.7bn to Southern Africa

and US$1.6bn to East Africa.

• Most exports are petroleum

products, owing to the

shutdown of Kenya’s refinery

and the low level of exports

from South African refiners.

• Trade with the rest of SSA was

less than US$30mn.

• This reflects both the distance

to the Gulf of Guinea and the

fact that West African refineries

cannot process heavy crude

from Saudi Arabia.


+$120m

$1.6bn

• RAK Petroleum acquired Mondoil Enterprise in Cote d’Ivoire in 2013.

• A further US$10m was invested in 2014 to increase stake to 9.1%.

• Qatar Petroleum International invested US$1.6bn to acquire 15% of Total Congo (Brazzaville).

• Likely to invest another US$1.5bn to develop the deepwater ‘Moho Nord’ oil field project.

• PetroSaudi to assist Ghana’s Tema Oil Refinery to improve output and operating efficiency

GCC investment is focused on West & Central Africa


GCC food export data wildly underestimate flows

GCC food exports to world, US$ millions



0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2009 2010 2011 2012 2013

Dairy products Vegetable oils

Pasta & wheat-based products Sugar

Fruit juice Dates

• Official data put total GCC food exports to the world market at just US$5.8bn in 2013.

• This data clearly misses the vast majority of food exports, especially to East Africa.

The Somali connection


Mombasa

Kismayo

Bosaso

Somali traders handle vast flows across East Africa


Section 2

Challenges & obstacles to GCC-SSA trade

14

Overlapping trade blocks complicate trade

Trade blocks & bilateral trade agreements

Source: Ecobank Research.

Trader play import duty arbitrage between different regimes


15

The costs of trade are high

All African regions have worse indicators than the rest of the world

• Number of documents required for import/export compares well with other emerging markets.

• But the costs & time to import/export containers are substantially higher.

• Inadequate port and warehousing infrastructure are to blame.

Cross-border trade indicators, 2012


16

SSA scores the lowest of all regions in the world

Country Score Customs Infrastructure International

shipments Logistics

competence Tracking &

tracing Timeliness South Africa 3.46 3.22 3.42 3.26 3.59 3.73 3.57

Senegal 2.86 2.45 2.64 2.75 2.73 3.08 3.52

Uganda 2.82 2.84 2.35 3.02 2.59 2.45 3.52

Latin America (ave) 2.74 2.38 2.46 2.70 2.62 2.84 3.41

East Asia & Pacific (ave) 2.73 2.41 2.46 2.79 2.58 2.74 3.33

DRC 2.68 2.60 2.27 2.56 2.93 2.43 3.20

MENA (ave) 2.60 2.33 2.36 2.65 2.53 2.46 3.22

Tanzania 2.60 2.42 2.00 2.78 2.38 2.56 3.33

Kenya 2.59 2.23 2.14 2.84 2.28 2.89 3.06

Nigeria 2.59 2.17 2.43 2.84 2.45 2.45 3.10

Cameroon 2.55 2.11 2.10 2.69 2.53 2.60 3.16

Cote d'Ivoire 2.53 2.16 2.37 2.44 2.57 2.95 2.73

Ghana 2.47 2.35 2.52 2.38 2.42 2.51 2.67

Sub-Saharan Africa (ave) 2.42 2.18 2.05 2.51 2.28 2.49 2.94

Ethiopia 2.41 2.13 1.77 2.76 2.14 2.89 2.65

Zambia 2.28 2.17 1.83 2.41 2.01 2.35 2.85

Angola 2.25 1.75 1.69 2.38 2.02 2.54 3.01

Tanzania & Kenya score marginally above the SSA average

Logistics performance index, 2012

Source: World Bank Logistics Performance Index 2012.

• SSA ranks lowest of the world’s developing regions, and well below its rivals.

• Tanzania and Kenya score just above the SSA average, despite their inbuilt advantages.


© Ecobank 2014 | Africa-Asia trade: driving South-South flows? | Dr Edward George | 10 September 2014

• In 2012 an estimated

US$45bn was invested in

Africa’s infrastructure.

• The key sectors were

energy (52%), transport

(32%) and water (15%).

• China was the largest

investor, with total flows of

US$13.4bn (1/3 of the total).

• Development banks were

the next largest, led by the

World Bank (US$4.4bn) &

the AfDB (US$3bn) & the

EIB (US$1.8bn).

• Europe & the Americas

managed just US$6.3bn

between them.

• The Arab Coordination

Group invested US$5.2bn.

Sources: Cbi, ICA..

18

Proposed regional/coastal corridors One-stop border posts planned by 2040

Trade corridors could substantially boost regional flows

Source: Ecobank Research.


Thank you

trade between the gcc & ssa: challenges & opportunities

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