4 December 2012

Tanzania: China Gains Market Share in Africa

CHINA exports to Africa are projected to surpass 200 billion US dollars this year, up from 166 billion US dollars last year.

A report by Standard Bank Economists Mr Jeremy Stevens and Mr Simon Freemantle made available to the 'Daily News' noted that China continues to gain market share in Africa.

The bank estimates that 18 per cent of Africa's imports were sourced from China this year up from 16.8 per cent in 2011, and as low as 4.5 per cent a decade ago, while Africa's share of China's exports is steadily increasing from 3.3 per cent last year to 5 per cent this year.

Mr Stevens, Standard Bank Group's Beijing-based economist, noted that African markets matter more to China and vice versa, as China's exports to Africa have grown at a pace five percentage points faster than to any other region this year. He added that China's imports from Africa have increased by 26 per cent this year, which is twice the speed of China's imports from any other region.

"Africa is China's fastest-growing export destination and trade partner. China's trade with Africa has grown nearly twice as fast as its trade with Latin America, which is the second strongest performer," Mr Stevens noted. He added that Chinese firms, confronting subdued activity in mature markets and tasked with shifting up the value chain, have recognized the importance of selling goods to the large emerging economies.

"Especially, the highly populated and increasingly wealthy ones in Africa, demand from African countries, especially the largest ones such as Kenya, Egypt, Angola, Nigeria and South Africa (KEANS), has simply become even more important to Chinese firms," he added.

Mr Stevens noted that China's exports of industrial goods are continuing to squeeze out producers from mature economies as sellers move up the value chain to offset rising costs. The report also notes that the rise in China's imports from Africa this year is virtually single-handedly on the back of sales of crude oil, notably from Angola.

China's imports of African iron ore are flat, while copper, steel and aluminum have slumped by 29 per cent, 54 per cent and 60 per cent respectively, during the first ten months of the year, according to the report. Early this year, Tanzania signed a Memorandum of Understanding with the China Council for the Promotion of International Trade (CCPIT) in bid to improve trade and investment between the two countries.

Currently, more than 20 companies from China have invested in Tanzania in different areas, including construction and agriculture. Between 1990 and 2011 the Tanzania Investment Centre (TIC) registered investments with Chinese interests worth 868 million US dollars in various sectors including manufacturing, tourism, services and trade.

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