The potential had always been there, but so far, the African continent had failed to materialize all those positive prospects surrounding its ability to rise as a new global economic power. The latest trends though, especially when it comes to sourcing and exporting its vast commodities' resources, have favored this transition, thus providing a positive boost for the global shipping industry.
According to a report from shipbroker Intermodal, "Africa had been largely left behind in the wave of globalization, while up until recently has been considered more as a continent-sized barrier to the East-West trade rather than as a place of opportunity for world trade – with ships having to navigate around her instead of calling at her ports (something that brought about terms such as “Suezmax” or “Capesize”).
However, after decades of stagnation, Africa is rising at last. Since 2000, sub-Saharan Africa has grown faster than the global average and its growth rate is now second only to Asia. Even in the middle of the 2009 global economic recession, Africa was the only region – along with Asia – that grew positively at about 2%. With its rich natural resources, the very young age structure and the fast emerging middle class, the shipping entrepreneurs seem to turn their attention to what is looking likely to be the next market hot spot".
According to Sales and Purchase broker, Tasos Papadopoulos, "abundant coal and iron ore in countries such as South Africa, Liberia, Zambia, Mauritania or Guinea has attracted the interest of the mining giants while Chinese firms are seeking alternate supplies of iron ore in Africa which would enable to break the oligopoly of supply enjoyed by BHP, Vale and Rio and swift away from Australian and Brazilian iron ore imports! Chinese president Xi Jinping, during his recent visit in Tanzania commented “The African lion is galloping faster and faster, while China also maintains a good development momentum. We each view the other’s development as our own opportunity,” Papadopoulos says.
He added that "China – amongst others - has been investing aggressively in the continent; China’s trade with African countries has grown about 20 times over the past decade, while the two sides aim to increase their bilateral trade up to $300 billion by 2015. Also, Japanese firms seeking diversification of sources or raw materials, thus to strengthen their position and extract more favorable trading terms from other resource producers. Japanese companies are heavily investing in coal operations; tapping coking coal used for steelmaking. It has been recently reported that a Mozambican project backed by Nippon Steel & Sumitomo Metal Corp. and Nippon Steel Trading Co. will receive a multi-billion investment. India, Brazil, Russia are also active in the area, with ex “colonial powers” keeping a watchful eye in order to maintain their influence in the region", he said.
Meanwhile, new sources of both oil and LNG in countries like Sudan, Mozambique or offshore Angola are set to fuel fresh growth. In the meantime, Africa’s emerging middle class and new-found stability in Nigeria, Ghana, Ethiopia and of course South Africa, shall boost the volumes of containerized goods. Mozambique saw container trade grow around 10-fold in the decade from 2000. Investors are also responding ever more favorably to all these developments. Copper-producing Zambia last year issued 10-year government bonds that were met with strong demand. Rwanda recently issued its first sovereign bonds.
According to Intermodal's analyst, "it goes without saying that much remains to be done so as Africa can continue achieving such high economic growth and in turn provide further support to world trade; the gaping income inequality, corruption, poor infrastructure and the inherent risk of doing business there are problems that need to be urgently addressed. The majority of Africans still live in extreme poverty; the per capita gross national income in the sub-Saharan region stands at about US$ 1,300 but this is close to the same level as China was in 2003…! If some of the revenue from natural resources is invested in education and infrastructure, the workforce shall become more productive and the youth may contribute to economic expansion both as workers and consumers", Papadopoulos concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
