Anyone who has decided to venture into the import export trade and has Africa as a target market has most likely asked the question “What does Africa imports?” The answer to this question holds the key to business success and is the very first consideration you would need to make before venturing into the region for business.
One of the most lucrative opportunities offered by the continent is the importation of food items. What informs this choice is the fact that Africa has become one of the world’s top food importers. But what is behind thegradual yet unexpectedchange of the continent from major exporter to importer? And is this trend therefore sustainable?
Why Africa is Importing Food Products
There are a number of reasons behind this complete change and a brief examination of the most pertinent ones will help us to appreciate its sustainability. The expansion of the middle class is one of the main factors that have played the greatest role in reducing food production capacity on this continent and getting it on the list of importers. The effect of this expansion is that more people than ever before are moving from rural areas to the urban space and therefore the labor needed for food production is reduced significantly.
It also means that demand for these products is higher because people who in the past were able to sustain their families’ demand for food from their own farm output are now dependent on the reduced productivity being realized from the low population that is still farming. The increased spending capacity of this group also plays a major role especially in changing the food preference patterns for the emerging countries in the continent. The demand for processed and tinned foods is on the rise but many of the countries rely on more industrialized nations to feed this demand.
Population Growth is another factor that accounts for the continent’s food deficit. This growth is not accompanied by any improvements in food productivity and as a result is bound to cause the demand levels to spiral out of control.There have also been severe fluctuations in weather conditions that have had a negative impact on the agricultural sector as a whole. A majority of the continent’s farmers do not have any form of insurance and after losing their crop several times their capacity to reinvest is greatly reduced so that even when the weather does not fail them their output is still relatively low.Poor Infrastructure is the other aspect that has created a hindrance on agribusiness because so much of farmer’s produce is spoilt on the way to the market.
Seeing as there are no initiatives tailored to repair these and numerous other deficits in the foreseeable future, African imports particularly in the food category are certain to keep increasing. They present a highly lucrative opportunity for the international trader but how can you make the most of this window while it remains open? What goods are imported to Africa particularly in the category of food?
Five Major Food Products Imported into Africa
There are numerous food products that make their way into the African market thanks to an imbalance in supply and demand structures as well as an evolving psychological outlook of a significant portion of its populace. This article examines some of the most popular products experiencing high demand in the region and explains the reasons behind the demand and the predictions of sustainability for any trader wishing to venture into the particular product line.
These make up the biggest bulk of African imports. In fact, South Africa main imports are corn, rice and wheat. This is in spite of the fact that corn is the country’s biggest locally produced crop accounting for over 12 million tons of output annually. The reason behind this is the fact that it is the most popular staple for the country’s populace and even though at times the supply exceeds demand and is exported, other times weather conditions and other factors fail the crop and the country has to rely on external sources.
Wheat on the other hand has consistently experienced fluctuations over the years and the demand for more than three million tons is rarely covered by local production which only accounts for approximately half that amount. This trend is highly likely to continue seeing as there is a downward tendency in the popularity of the crop by local farmers with more and more of them considering alternative options due to the lower profit margins of the crop.
Nigeria is another top importer for cereals with the biggest portion of its rice and wheat supplies coming from overseas. It is ranked top on the world importers of US wheat both white and red, spending almost $2 billion annually on this product alone and the number two on rice, spending almost $1 billion every year. It would require radical reforms to realize any reduction in this demand level and that is the best news for an international trade business person.
Most countries in the continent have a very high demand for meat products. For instance, Africa is a favorite international market for the poultry industry being one of South Africa main imports. Even though the country boasts a reasonable large production capacity for poultry accounting for almost 20% of its agricultural output, this is not sufficient for its populace. It therefore needs to cover the deficit by importing these products, particularly broilers from overseas.
The demand for these products is fuelled by the earlier discussed growth of the middle class and its fairly large disposable income capacity. Statistics show that over the past 10 years there has been a rise of almost 70% in the amount of meat consumed per person per year. The consumption of broiler meat in particular has increased by an 80% margin. The total meat consumption for the country is rated at over 3.5 million tons with poultry products making up over half of this figure. Under the category of poultry products, chicken cuts and offal take up more than half of the total quantity. Deboned meat comes in second occupying approximately 35% of the figure.
The country’s main suppliers for these products are mainly countries in Europe accounting for over 60% and Brazil taking up almost 30%. The US is also taking bold steps in securing a hold on this lucrative market.
Instant foods are also a popular choice for the urban population thanks to their ease of preparation and their relatively low prices. Instant noodles are a case in point, with Nigeria becoming a major importer in the continent. The product rose in popularity from non-existence in 1996 to an over 70% market share in the past few years. It is currently worth over $700 million and likely to keep rising.
Most processed foods share the same advantages with instant noodles, being rather cheap yet very easy to prepare and the current consumer psychology on the continent is bound to keep favoring such products. In fact, predictions estimate that the demand will increase more than seven-fold in the next two decades so now is the perfect time to make a move before the market gets saturated.
Even though the continent was once considered as a promising source of the world’s sugar supplies, industrialization efforts by other countries have seen significant price drops in the commodity on the international trade platform. This has made it a popular import product because with the current production technology in many of its countries, it seems more viable to import than to produce sugar locally.
In the past year, Nigeria landed the 13th position worldwide on the top sugar importers list. Its import total value was around $500 million. Most of its sugar comes from Brazil in raw form and is then processed and partly consumed by its populace and the rest is sold off to neighboring countries.
The amount imported has been steadily rising annually and is bound to continue on an upward trend thanks to the profits being realized from the sales of its excess product. It is particularly favorable for Nigeria to keep on trading with its neighbors due to the weak Naira exchange rate that makes it cheaper for them to buy there. There are still too many challenges for the government of Nigeria to make the country self-sufficient in its production capacity and this spells opportunity for international traders.
By virtue of its high utility, palm oil is in high demand globally and the African imports market is no exception. The rate of consumption is on a steady rise as a result of among other factors, the current evolution of the market demographics in adopting western style food habits. Palm oil is a necessary ingredient for numerous snacks and processed foods that were once the reserve of privileged Western countries. The most affected regions of the continent are the West and East African countries.
It is extremely surprising that a top producer of palm oil like Nigeria is now also a significant importer of the product, a result of its popularity and positioning as a staple in the country. The demand levels currently surpass supply significantly and the country has to rely on foreign markets to fill its need.
The low productivity levels in Nigeria and West Africa as a whole are due to consistent adverse weather conditions that are negatively impacting output, high risks of operation and costs of production as well as reducing international prices on the product. Nigeria blames its reduced capacity on the shift that the country made to crude oil at the expense of agriculture. The only country currently enjoying a surplus is Cote d’Ivoire.
Even though the South African economy would have been expected to stimulate demand for the product, the levels are not predicted to be outstanding because of high competition from other oils and the fact that it is not as popular there as in the West African region. In later years though, it just might make it to the list of South African main imports as the dynamic food manufacture industry in the country creates higher demand for the product.
Malaysia and Indonesia are currently the world’s top producers of palm oil after overtaking Nigeria not too long ago. Nigeria says that even if it were to go back to giving this product the level of attention it once got, it would still take a minimum of four years with optimal weather conditions to realize anything close to its former capacity. This makes palm oil a very viable choice for anyone wishing to import into Africa.
How to Take Advantage of the Lucrative Import Opportunities in Africa
Now that we have the answer to the question “What does Africa import?” it is more than evident that the opportunities in this emerging continent are more than any one business entity could ever wish to exploit to exhaustion. The biggest question now is where to start and how to exploit these opportunities while they are still viable. This is usually the toughest part of any business enterprise, taking the first step. But once you get it out of the way, then you can be sure that you are on your way to success.
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