‘Africa’s Silk Road’

JOHANNESBURG – Africa is benefiting from the economic rise of China and India, as trade patterns shift and the Asian giants move from exploiting Africa’s raw materials to boosting its nascent industries, a World Bank study said.

The study, entitled ‘Africa’s Silk Road’ after the ancient trade route that linked Asia to the Mediterranean, said Africa already sells some 27 per cent of its exports to Asia, up from 14 per cent in 2000 and three times the amount in 1990. Europe, Africa’s traditional leading trade partner, meanwhile saw a sharp decline, with European Union countries taking 50 per cent less of Africa’s overall export trade in 2005 than in 2000.”This new Silk Road presents a significant and, to date, rare opportunity to accelerate Africa’s growth, expand intra-African trade and hasten the continent’s integration into the global economy,” the report’s lead author Henry Broadman said.Raw materials still constitute the bulk of Africa’s sales to the rest of the world, with China and India increasingly importing African oil, minerals, timber and cotton to keep their economies humming.Oil and natural gas make up 47 per cent of Africa’s exports to Asia, with oil exports from new allies such as Angola accounting for 62 per cent of African exports to China, the study said.Africa is also proving a welcoming market for Chinese and Indian manufactured goods, with Asian exports to the continent rising by about 18 per cent a year, faster than any other region.China’s top three exports to Africa are now footwear, fabric outer garments and knitted garments, while India’s are rice, iron sheets and plates and medicines.But the World Bank study said this pattern – often characterised by critics as an example of Africa sacrificing its commodity wealth for the benefit of export-driven Asian countries – was changing.”The two Asian giants are fast diversifying outside the natural resources sector …in ways that could help Africa move away from over-reliance on a few export commodities.”Among the new focuses of Chinese and Indian investment in Africa are apparel, food processing, retail, fisheries, commercial real estate, light manufacturing and service sector industries.The study noted a “strong complementary relationship” between foreign direct investment and trade between the two regions, with increased trade paving the way for new investment projects.The study cited the example of India’s Tata Motors, which has cited South Africa as the next frontier in its globalisation policy and a gateway to expanding auto trade with Europe.Tata Steel, meanwhile, plans to build a ferrochrome smelter in South Africa, while Tata Tea Ltd has bought a minority stake in Joekels, a SA tea-blending and packing company.The World Bank estimated that more than 700 Chinese enterprises operate in Africa.Nampa-ReutersEurope, Africa’s traditional leading trade partner, meanwhile saw a sharp decline, with European Union countries taking 50 per cent less of Africa’s overall export trade in 2005 than in 2000.”This new Silk Road presents a significant and, to date, rare opportunity to accelerate Africa’s growth, expand intra-African trade and hasten the continent’s integration into the global economy,” the report’s lead author Henry Broadman said.Raw materials still constitute the bulk of Africa’s sales to the rest of the world, with China and India increasingly importing African oil, minerals, timber and cotton to keep their economies humming.Oil and natural gas make up 47 per cent of Africa’s exports to Asia, with oil exports from new allies such as Angola accounting for 62 per cent of African exports to China, the study said.Africa is also proving a welcoming market for Chinese and Indian manufactured goods, with Asian exports to the continent rising by about 18 per cent a year, faster than any other region.China’s top three exports to Africa are now footwear, fabric outer garments and knitted garments, while India’s are rice, iron sheets and plates and medicines.But the World Bank study said this pattern – often characterised by critics as an example of Africa sacrificing its commodity wealth for the benefit of export-driven Asian countries – was changing.”The two Asian giants are fast diversifying outside the natural resources sector …in ways that could help Africa move away from over-reliance on a few export commodities.”Among the new focuses of Chinese and Indian investment in Africa are apparel, food processing, retail, fisheries, commercial real estate, light manufacturing and service sector industries.The study noted a “strong complementary relationship” between foreign direct investment and trade between the two regions, with increased trade paving the way for new investment projects.The study cited the example of India’s Tata Motors, which has cited South Africa as the next frontier in its globalisation policy and a gateway to expanding auto trade with Europe.Tata Steel, meanwhile, plans to build a ferrochrome smelter in South Africa, while Tata Tea Ltd has bought a minority stake in Joekels, a SA tea-blending and packing company.The World Bank estimated that more than 700 Chinese enterprises operate in Africa.Nampa-Reuters