Politics and policy

Emerging economies outpace Japan in the battle for trade with resource-rich Africa

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Thika Road under construction by Chinese firms. Chinese state capital enhances the ability of Chinese companies to engage more wholesomely in high-growth African economies. Photo/WILLIAM OERI

Thika Road under construction by Chinese firms. Chinese state capital enhances the ability of Chinese companies to engage more wholesomely in high-growth African economies. Photo/WILLIAM OERI 

By SIMON FREEMANTLE and JEREMY STEVENS

Posted  Tuesday, September 28  2010 at  00:00
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Japan has traditionally been one of Africa’s most relevant trade partners.

Historical ties have been augmented by a relatively strong increase in trade linkages since 2000.

As such, between 2001 and 2008 Japan-Africa trade increased almost four-fold, from $8.8 billion to $34.3 billion.

This growth has been inspired largely by African exports to Japan, which grew by 366 per cent between 2001 and 2008, compared to growth of African imports from Japan in the same period of 200 per cent.

However, the global economic downturn has exerted severe strain on Japan-Africa trade.

After the 2008 peak, trade almost halved to $18.5 billion in 2009. The bulk of this decline was in African exports to Japan, which slumped by 56 per cent from $21 billion to $9.1 billion between 2008 and 2009.

Meanwhile, African imports from Japan declined less severely, by 29 per cent from $13.3 billion to $9.4 billion. As such, in 2009 Japan ran a rare trade surplus with Africa.

While Japan-Africa trade relations have displayed growth momentum, they have been unable to keep pace with the frenetic rise in Africa’s trade relations with the emerging world.

As such, while Japan-Africa trade roughly doubled between 2001 and 2009, China-Africa trade expanded by almost 1,000 per cent, India-Africa trade swelled by 525 per cent; Brazil-Africa trade by 224 per cent and Russia-Africa trade by 262 per cent.

Where in 2001, China-Africa trade was on parity with Japan-Africa trade; by 2009 the volume of China’s trade with Africa was more than five times that of Japan-Africa trade.

Tracking Africa’s export relations with the BRICs, commodities form the core of the continent’s exports to Japan.

As such, in 2008, $10.3 billion of Africa’s exports to Japan were in the form of mineral fuels, $4.7 billion in precious metals, $1.2 billion in ores and $958 million in iron and steel.

Together, these four commodities accounted for 82 per cent of total African exports to Japan for the year.

Meanwhile, the majority of African imports from Japan is comprised of vehicles and transport equipment and machinery and mechanical equipment.

Given the large weight of commodities in Africa’s exports to Japan, it is no surprise that commodity-rich nations account for the majority of Africa’s exports to Japan.

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