Africa (25-11-08)

 

 Early last month I had an opportunity to visit South Africa and hear the presentations on economic and business environment of six African nations – Angola, Algeria, Egypt, South Africa, Tunisia and Morocco. They were invited to participate in a meeting of the German trade fair organisers – Messe Munich International. All the African participants were Obama supporters and were upbeat about the growth of their economies in spite of the fact that global financial crises reports were pouring in on us every morning.

 

Sitting there I was wondering while China and India are paying much attention to increase their economic relations with African countries which represent a market of about a billion people with imports of more than US$ 150 billion, why it remains low on our priority list. Pakistan’s export to Africa was a little over US$ 1billion in 2007 (i.e. 0.66% of the total exports to Africa).

 

On my return I raised this question with TDAP, who said that they have also realised this short-coming and have prepared a strategy to boost exports to the African markets “As part of a diversification strategy, TDAP has developed an Africa plan to focus on 15 countries identified as the first tranche based on potential and representation support at the initial stage.” These countries are: Morocco, Algeria, Tunis, Libya, Egypt, South Africa, Mauritius, Mozambique, Angola, Kenya, Tanzania, Sudan, Ethiopia, Nigeria, and Senegal.

The 15 countries selected account for about 63% of Pakistan exports to Africa in fiscal year 2005/06, whereas the 6 countries alone (South Africa 26%, Kenya 6.58%, Egypt 6.18%, Mozambique 5.96%, Nigeria, 4.45% and Mauritius 3.345%) accounted for almost 50% of the export of the country to Africa in that year,” Mir Nasir Abbas Director General TDAP explained.

 

South Africa is the jewel in the crown of Africa. It is leading the continent intellectually, politically and economically. Per capita income of South Africa is only second to oil rich Angola in the African continent. But this is a deceptive indicator as it does not reflect the prevailing acute inequality in the country. The major problem of the South African government is that of unemployment, which has soared to 40% and AIDs which has affected 21% of its people. Most South Africans blamed this to the influx of Zimbabwean refugees, who are willing to work on low wages. High unemployment and inequality has created serious breach of law and order. Tourists are warned to avoid late night outings and to be extra-careful. Most palatial houses in Cape Town and Johannesburg are fenced with electric wires. But the good thing is leaders like Nelson Mandela and Bishop Tutu kept their houses in the Soweto District, unlike our leaders who moved to posh localities as soon as they came in power.

 

The ANC government which has led the country peacefully from Apartheid has been in power now for the last 15 years and has been trying to narrow the inequality gap between the white and black inhabitants of the country through an ‘economic empowerment policy’. This is an affirmative policy favouring the black population, who form two-third of the population. They were brutally exploited by the white colonisers of the country for centuries.

 

The beauty of South African anti-apartheid movement was that it was supported by many natives of European and Indian origin, who were opposed to the discrimination with the black Africans. They suffered with their black countrymen and as a result provided a base for the smooth and bloodless transition of power led by Nelson Mandela. Had it been the movement of the black natives of South Africa only, it would have made ‘national reconciliation’ implementation difficult. In countries where the national liberation movements failed to break the ethnic barriers, we have seen bloodshed after the success of the movement. The wrath of the dispossessed against the privileged ethnic or religious communities can only be pacified, if the exploited feel that an enlightened section of the privileged class was supporting them during their struggle.

 

For the last 15-years ANC enjoyed two-third majority in the assembly, which is expected to be diluted in the coming elections in 2009. A powerful group has announced to leave the party and establish South African National Congress led by the former Defence Minister. While some European diplomats and white South Africans are looking at it as a positive development, most blacks were not happy about the split in the party.

 

Pakistan needs to develop this market, as there is substantial demand for textile and construction material in South Africa. Our exports have risen to $318 million in 2007 from $280 million in the previous year. Total import of South Africa stands at around $73 billion as against the exports of over $63 billion.

 

Another African state which offers business opportunities to Pakistan is the oil-rich Angola. Its GDP size is around $86 billion growing at 22% per annum owing to the massive infrastructure development work undertaken by the government. The country has substantial current account surplus as it is exporting oil, timber, diamonds and cotton worth $42 billion against the imports of just $11.43 billion. The country is already importing textile and cement products worth $8.4 million from Pakistan.

 

Oil-rich Nigeria is however one of the worst examples of national wealth plundering. Its $274 billion GDP is highest in Africa. It also has a huge current account surplus as the total imports are $35.5 billion as against the $57 billion exports.  But owing to the large population, mismanagement and corruption the inequality in income distribution is acute. This has resulted in high crime rate and volatile ethnic conflicts.

 

Pakistan should focus on these markets and develop an extensive marketing plan which looks good on the TDAP Strategy paper, but I hope it is implemented quickly. The reason for hurry is that expect for a few products where we may have some edge this middle class market would soon be swarmed by the Chinese products. Some exporters have concerns about the payment systems with African countries, which can perhaps be developed by improving our banking relations and using reliable international banks (which are hard to find these days!). ayazbabar@gmail.com Blog babarayaz.wordpress.com

 

 

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