Report Archives - Istanbul Africa Trade Company

Construction Sector in Africa

Sun, 03 Jan 2021 11:39:26 +0000

Foreword: New Construction Projects, Promising Business Opportunities

African countries have been heavily investing in construction projects, both infrastructure, and superstructure. The construction industry is one of the rapidly growing sectors in the continent and it greatly contributes to employment. Thanks to the population increase and urbanization in the continent, the strong growth of the construction sector is inevitable. However, there are still many crucial challenges to overcome: financing, available electrical grids, transportation, procurement, and skilled employees. In 2019, there was approximately US$500 billion investment to the 452 largest projects in Africa. The total size of the African construction market is approximately US$10 trillion a year. This amount is expected to increase to US$13 trillion in 2022.

There are many successful Turkish companies that secured tenders and completed projects in African countries. Yapı Merkezi is currently responsible for the construction of the Dar es Salaam-Morogoro-Makutupora Railway Line. Summa completed more than 5 projects in Senegal, including Dakar Arena, Dakar International Conference Center, and Blaise Diagne International Airport. In addition to large Turkish construction companies, there are many small and medium-sized construction companies that undertake residential and infrastructure projects.

There are many challenges that Turkish companies face in Africa. The most important challenge is the political and economic stability of host countries. The construction sector is greatly affected by the political and economic shifts. Most of the African countries are far from a stable political condition, and that endangers the future payment and completion of projects. Secondly, the local knowledge of Turkish companies in Africa is not strong yet. It an extra burden to source construction materials, employ local workers, and work with local administrative staff. As Turkish companies complete more projects in Africa, they will be more adapt to local factors and increase their competitiveness.

The demographic and economic trends in Africa offer very profitable opportunities for Turkish construction firms. The population of the African continent is increasing dramatically. Combined with the current underdevelopment, there is a huge need for infrastructure and housing for the masses. The current population of the continent is 1.35 billion and it is expected to reach 2.5 billion by 2050. Secondly, the economy is growing and many people move from the low-income level to the middle-income level. As a consequence of economic growth, there will be more demand for modern residential areas and office buildings. According to the latest estimates of the African Development Bank, Africa’s GDP could increase to over US$15 trillion in 2060, from US$2.6 trillion in 2019.

The aim of this report is to provide information about the potential and challenges of the construction sector in Africa. Turkish companies that are affected by the stagnated construction market in Turkey should look for opportunities abroad. Africa is a great market for Turkish construction companies thanks to the current underdevelopment level and increasing population. There are already successful cases of Turkish companies in the continent and there is still room for other companies to tap into new opportunities.

Top Construction Projects in Africa

North Africa

Hauts-Plateaux Motorway

Location: Algeria

Type of Project: Transportation

Budget: 8.94 Billion USD (Estimated)

Start/End Date: 30 October 2014-2025 (Expected)

Contractor: Chinese consortium: China International Trust and Investment Corporation (CITIC) and China Rail Construction Corporation (CRCC)

Project Information: Project is part of the master plan by 2025 in order to open up and link the cities in the highland areas of the interior, in parallel to the East-West Highway. The total length of the motorway is 1020km and connecting 44 provinces to motorways. The project is divided into ten sections. Each section, requiring 36 months of work, will be attributed to a different consortium of Algerian firms. If work begins on each section at the same time, the project could be completed in less than three years.

Egypt’s New Capital City

Location: Egypt

Type of Project: Real Estate

Budget: 58 Billion USD

Start/End Date: 2017-2022 (Expected)

Contractor: The China State Construction Engineering Corporation (CSCEC

Project Information: Egyptian government decided to move the capital city 35km east of Cairo due to the rapid increase in population. This project will transform the city into powerful economic growth hubs, due to its ability to offer people easier access to education, jobs, and other infrastructural facilities.

East Africa

Nairobi-Naivasha Rail Project

Location: Kenya

Type of Project: Transportation

Budget: 1.5 Billion USD

Start/End Date: 16 October 2019-2021 (Expected)

Contractor: China Communication Construction Company

Project Information: The project is part of the first phase of the Nairobi–Malaba Standard Gauge Railway Project which is a standard-gauge railway that connects Kenya’s capital city of Nairobi to Malaba, at the international border with Uganda. The Nairobi–Malaba SGR is expected to connect to other standard gauge railways in Uganda, Rwanda, Burundi, South Sudan, and the eastern Democratic Republic of the Congo, under the East African Railway Master Plan.

Konza Technology City

Location: Kenya

Type of Project: Real Estate

Budget: 14.5 Billion USD

Start/End Date: 2016 – 2023

Contractor: ICM, Huawei and Parklane Construction Ltd

Project Information: According to Kenya’s Vision 2030 national development plan, Konza will be a world-class city, powered by thriving information, communications, and technology (ICT) sector, superior reliable infrastructure, and business-friendly governance systems. The project is expected to be African silicon savannah where many technological, startup companies will be located.

West Africa

The Mambila Hydroelectric Power Project

Location: Nigeria

Type of Project: Energy & Power

Budget: 5.8 Billion USD

Start/End Date: February 2020-2030 (Expected)

Contractor: Joint venture between China Gezhouba Group (CGGC), Sinohydro and CGCOC (formerly CGC Overseas Construction)

Project Information: The Mambilla Hydroelectric Power Station is a 3,050 MW hydroelectric power project under development in Nigeria. When completed, it will be the largest power-generating installation in the country, and one of the largest hydroelectric power stations in Africa.

Ada Estuary Tidal Power Plant

Location: Ghana

Type of Project: Energy & Power

Budget: 2 Billion USD

Start/End Date: 2014-2016

Contractor: TC’s Energy USA and its partners, Power China Huadong Engineering Corporation Ltd and Seabased of Sweden

Project Information: The project seeks to establish a wave energy park in the Gulf of Guinea in Ghana, about 17 km off the coast of Ada to generate 1,000 megawatts (MW/H) of power from sea waves, employing an environmentally friendly technology – the ‘SEABASED’ Wave Energy Converters (WEC).

Southern Africa

Lauca Hydropower Plant

Location: Angola

Type of Project: Energy & Power

Budget: 4.3 Billion USD

Start/End Date: 2012-2020

Contractor: Odebrecht

Project Information: The Lauca Hydroelectric Power Station is a 2,070 MW hydroelectric power plant. When completed, it will be the largest power station in the country. The power generated is integrated into the national electricity grid and supplies energy to approximately 8,000,000 customers in Angola. The project has provided over 8,000 direct jobs during the construction phase.

Coral South Floating LNG Facility

Location: Mozambique

Type of Project: Oil & Gas

Budget: 4.6 Billion USD

Start/End Date: 2022-2024

Contractor: TechnipFMC, JGC Corporation and Samsung Heavy Industries

Project Information: The Mozambique LNG Project started with the discovery of a vast quantity of natural gas off the coast of northern Mozambique in 2010, leading to a $20 billion Final Investment Decision in 2019. Now, through cooperation and responsible project planning, the project is on track to deliver LNG in 2024. The Project is operated by Total – the world’s second-largest LNG player with a leading presence in Africa which is uniquely qualified to ensure the Mozambique LNG Project helps to meet the world’s increasing demand for sustainable, reliable, and cleaner energy sources.

Central Africa

Lom Pangar Dam and Hydropower Project

Location: Cameroon

Type of Project: Energy & Power

Budget: 0.5 Billion USD

Start/End Date: 2012-2017

Contractor: China International Water & Electric Corporation

Project Information: The development objective of the Lom Pangar Hydropower Project is to increase hydropower generation capacity and reduce seasonal variability of water flow in the Sanaga River and to increase access to electricity.

Country Analysis

Nigeria

The Federal Republic of Nigeria is located in West Africa. It is bordered by Cameroon, Niger, Chad, and Benin. Nigeria is referred to as the `Giant of Africa’, due to its strong economy and large population. Its population reached 191 million in 2018 and Nigeria has the highest GDP in Africa with $375 Billion. Nigeria overtook South Africa in 2014 to become Africa’s largest economy. Nigeria is a member of the African Union, United Nations, OPEC, and Commonwealth.

Turkey and Nigeria have diplomatic relations since the independence of Nigeria. Turkey opened an Embassy in Lagos, the previous capital of Nigeria, in August 1962. Turkish businesses can find important opportunities in Nigeria thanks to its large and diversified economy. Manufacturing and food companies can use Nigeria as a hub to expand to other West African countries. The exports of Turkey to Nigeria are concentrated in industrial goods and agricultural products. Especially, processed iron is important to export goods from Turkey to Nigeria.

Kenya

Kenya is located in East Africa and it is bordered by Ethiopia, Somalia, South Sudan, Uganda, and Tanzania. Kenya’s population is 50 million and its GDP is $74 Billion. Kenya is a member of the United Nations, World Bank, International Monetary Fund, COMESA, East African Community trade bloc, and other international organizations.

The commercial relations between Kenya and Turkey have increased significantly in the last 10 years. Total exports increased from $130 Billion to $190 Billion between 2008 and 2017. Fertilizers are the main export product of Turkey to Kenya with 26% of total exports in 2017. Kenya is an important market for Turkish companies that are willing to enter the East African market. It has one of the largest shipping ports and land connections to other major markets such as Uganda.

Ghana

The Republic of Ghana is located in West Africa and it is bordered by Ivory Coast, Burkina Faso, and Togo. Ghana’s population is 29 million and its GDP is $47 Billion. Ghana is a member state of the Non-Aligned Movement, the African Union, the Economic Community of West African States (ECOWAS), Group of 24, and the Commonwealth of Nations.

The first Turkish Embassy in Accra was opened in 1964. Turkish foreign direct investment in Ghana is around $500 Million and it is expected to increase with new trade agreements. Turkish businessmen visit Ghana on many occasions to explore opportunities. Turkish construction companies have ongoing projects in Ghana such as Kotoka International Airport. Turkish importers can benefit from the cocoa business in Ghana.

Senegal

The Republic of Senegal is located in West Africa and it is bordered by Mali, Guinea, Guinea-Bissau, Gambia, and Mauritania. The population of Senegal is 16 million and its GDP is $16 Billion. Senegal gained independence from France in 1960. French is the official language. Its capital city is Dakar with a population of around 1 million people.

Turkey and Senegal have close commercial relations in the last decade. The exports to Senegal increased from $108 Million to $257 Million in the last 10 years. The development of bilateral relations agreement was signed between Turkey and Senegal in December 2017. Many Turkish construction companies have ongoing activities in Senegal. For example, Yapı Merkezi was the contractor of a €373 Million high-speed train project in Senegal. Finally, due to the development of relations, the General Manager of Turkish Eximbank was given the State Order of Senegal.

Democratic Republic of Congo

The Democratic Republic of the Congo is located in Central Africa and it is bordered by the Republic of Congo, Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, Zambia, and Angola. Congo’s population is 82 million and its GDP is $37 Billion. Congo is a member state of the United Nations, Non-Aligned Movement, African Union, and COMESA.

The first Turkish Embassy in Kinshasa opened in 1974 and Congo opened its embassy in Ankara in 2011. Turkish exports to Congo increased significantly in the last 10 years from $9 Million to $27 Million. The exports are concentrated in the food sector, including chicken meat, pasta, and yeast. Since Congo imports, most of its food, companies in the food sector can focus on exporting to Congo.

Tanzania

The United Republic of Tanzania is located in East Africa and it is bordered by Uganda, Kenya, Mozambique, Malawi, Zambia, Rwanda, Burundi, and the Democratic Republic of Congo. Tanzania’s population is 58 million and its GDP is $42 Billion.

The first Turkish Embassy in Dar es Salaam was first opened in 1979. There have been Turkish Airlines direct flights between Istanbul and Dar es Salaam since 2010 and it impacted the relations between Turkey and Tanzania. Turkish businessmen visit Tanzania on many occasions to explore opportunities. In 2018, agricultural machine companies attended a forum in Dar es Salaam to establish new connections. Turkey’s exports to Tanzania reached $100 Million in 2017. The agriculture and construction sectors are the main areas to be focused on.

Somalia

The Federal Republic of Somalia is located in the Horn of Africa. It is bordered by Ethiopia, Djibouti, and Kenya. Somalia’s population is 15 million and its GDP is $4,7 Billion. Bordered by the Gulf of Aden and the Indian Ocean, Somalia has a vast coastal exposure which represents strong potential for its trade and economy. Despite the pandemic, GDP growth is projected at 3.2% in 2020 and 3.5% in 2021. An improving security situation, normalization of relations with international financial institutions, and prospects of debt relief present opportunities to address economic and social challenges. Somalia is an African country with the greatest infrastructure needs.

Turkey’s economic and diplomatic relations with Somalia date back to the Ottoman Empire. In May 2013, the first Turkish-Somali Business Forum was launched in Istanbul to highlight commercial opportunities in both Somalia and Turkey for Somali and Turkish businesses. Turkey’s bilateral trade volume with Somalia was $250.8 million in 2019. The total value of Turkish investments in Somalia has reached $100 million US Dollars. Construction and Infrastructure investments are growing, with Turkish companies running Mogadishu International Airport and Mogadishu Sea Port.

Ethiopia

The Federal Democratic Republic of Ethiopia is located in North-East Africa and it is bordered by Eritrea, Djibouti, Somalia, Sudan, South Sudan, and Kenya. Ethiopia’s population is 105 million and its GDP is $81 Billion. Ethiopia is the headquarter of the African Union, the Pan African Chamber of Commerce and Industry, the United Nations Economic Commission for Africa, the African Standby Force, and many of the global NGOs focused on Africa.

Turkey and Ethiopia have close economic relations. Most of the Turkish foreign direct investment is in the textiles sector and there are further efforts to increase Turkish investment in Ethiopia. Turkish companies invested more than $2.5 Billion in the country. The construction sector and construction products play an important role in Turkish exports. Raw iron bars had a 24% share in total exports in 2017.

Angola

Located in South-Central Africa, Angola is bordered by Namibia, the Democratic Republic of Congo, and Zambia. It has a population of 30 million people and its economic output is $124 Billion. Angola has vast mineral and petroleum reserves, which increases the growth rate of its economy. Angola is a member of the United Nations, OPEC, African Union, the Community of Portuguese Language Countries, and the Southern African Development Community.

Turkey and Angola established diplomatic relations in 1980. Turkey’s exports to Angola concentrate on the food sector, such as pasta, wheat flour, yeast, and poultry meat. Angola imports almost 50% of its food from foreign countries, and we advise our clients to focus on food products. In 2017, the 1st Session of the Joint Commission on Trade, Economic and Technical Cooperation between Angola and Turkey took place in the Angolan capital. Turkey was represented by the Minister of Customs and Trade, Bulent Tufenkci.

Zambia

The Republic of Zambia is located in South-Central Africa and it is bordered by the Democratic Republic of Congo, Malawi, Mozambique, Zimbabwe, Botswana, and Tanzania. The population of Zambia is 17 million and its GDP is $25 Billion. Zambia gained independence from the United Kingdom in 1964 and the current constitution is effective since 2016. English is the official language. Its capital city is Lusaka with a population of around 2 million people. The headquarter of Common Market for Eastern and Southern Africa (COMESA) is located in Lusaka.

Turkish Embassy in Zambia was opened very recently in 2011. Before the opening of the embassy, Turkish embassies in Nairobi and Pretoria are accredited to Zambia. DEIK and the Turkish Exporters’ Assembly are working closely with Zambian authorities to promote trade and investment between the two countries. According to our research, the construction sector has been developing rapidly in Zambia. Building and construction is the largest sector of Zambia comprising around 25% of the GDP and its growth rate is more than 10% each year. We advise Turkish companies to look for opportunities in contracting and construction materials.

Case Study of Successful Turkish Companies in Africa

Turkish construction companies involved many small to megaprojects across 31 countries in different industries such as below:

Commercial Construction
Residential Construction
Industrial Construction
Infrastructure (Transportation) Construction
Energy and Utilities Construction

Turkish companies improved their local experience and knowledge of the countries’ market by involving projects and eventually bringing their investors to finance their projects in Africa. At each project done in Africa learning has improved for organizations. Now Turkish companies are operating in most of the countries in Africa even the landlocked countries. By bringing the Turkish expertise and quality of construction, stakeholder support is achieved at all levels from local society to the government. Some of the Turkish construction companies are below which have undertaken many construction projects in Africa.

Summa International Construction Co. Inc

Company Info: Summa carries out top-quality operations in 14 countries in various sectors ranging from construction to energy with 2500 employees on 4 continents across the globe.

Number of Countries Operating in Africa: 8

Countries: Libya, Senegal, Niger, Benin, Equatorıal Guinea, Republic of Congo, Rwanda. Swaziland

Type of Projects: International Airport, Hotel, Conference & Congress& Expo Center, Residential Complex, Mall, Government Buildings, Sports Arena.

Dorçe Prefabricated Building And Construction Industry Trade Inc.

Company Info: Dorce Inc. provides Engineering, Procurement and Construction (EPC) services for projects requiring high-quality services in extreme environments and undertakes the following General Contracting Projects for Construction and EPC Services to the clients in Oil, Gas and Energy Industry, Mining Industry, Construction Industry, Governmental Authorities (Ministries, Governorates, Embassies, etc.), Militaries, International and non-profit Organizations, etc. all around the World.

Number of Countries Operating in Africa: 11

Countries: Mauritania, Guinea, Mozambique, Gabon, Sudan, Algeria, Congo, Djibouti, Libya, Niger, Nigeria

Type of Projects: Housing and Residences, Hospitals and Clinics, Industrial Facilities, Business Centers, Shopping Malls, Aircraft Hangars, Sporting Halls, Military Camps

Construction Tender Process

The infrastructure deficit in Africa, estimated at $70 billion every year according to World Bank data, is at the origin of strong demand and a paradox: the financial resources available for infrastructure are largely surplus to the annual need of developed projects. Infrastructure investment in Africa surpassed the $100 billion mark for the first time in 2018 and a large share of potential funding remains unallocated. With a dynamic African construction and infrastructure sector, there are many financing possibilities for projects carried out by companies and private investors. This particular conjuncture is therefore an opportunity for companies able to offer projects with solid returns and risk mitigation. Although some investors provide financial support at the development stage, a strong business plan is required to receive funds from banks and investors.

Furthermore, given the high demand for sustainable infrastructure in Africa, the social and environmental orientation of the project can help to attract larger volumes of financing, especially from development institutions and impact investors.

There are different statuses for a construction company on a project. Either the company responds to tender, in which case it is not responsible for financing the full amount of the project, or the company is the instigator and stakeholder in the financing of the project.

The following paragraphs will explain the different means and players involved in financing the infrastructure projects :

Within the framework of concession or Public-Private Partnership, there are several models of project finance adapted to the specificities of each project.

In the Build-Own-Operate models, BOO, the company finances the project and owns the infrastructure. The revenues of the projects are provided by the users or by the state. The Build-Own-Operate-Transfer model, BOOT, is similar to the BOO system with a slight difference in the final transfer of the infrastructure to the government.

In the Build-Transfer, BT, model, the company designs, finances, and builds the project and then transfers ownership to the government.

In BOO, BOOT and BT, financing is generally based on 20 to 35% equity and 65% to 80% debt provided by a mix of public and private investors which are explained in the next section.

Project and Construction Finance

Governments

The main funders for African infrastructure are African governments. In 2018, they accounted for 37.5% of funds invested in infrastructure development, an increase of 3% over the previous five years. The cancellation of the debt of some African countries could considerably increase their investment capacity in infrastructure. The participation of governments, which invest in PPPs, offers guarantees to access development banks and private funds. African governments participate mainly in the financing of transport projects, which accounted for 55.3% of government-funded projects, and energy projects, for 20.4%.

Development Banks and Funds

Bilateral, multilateral, or national development banks and agencies fund a sizeable of investments in Africa. The construction and infrastructure sector is a target investment sector for institutions whose objective is to support economic, social, and sustainable development. They have multiple financial tools at their disposal to participate in the financing of infrastructure projects and generally offer loans, equity, and guarantees. For example, Proparco, the private sector arm of the French Development Agency, offers the following services:

Short and long maturities loans
Equity and quasi-equity
Solvability and liquidity guarantees
Financing in local currency

Development banks sometimes also provide early-stage funds to fine-tune the project’s design prior to a larger fundraising campaign.

Moreover, development banks are a significant quality label for accessing other sources of financing. For instance, the African Development Bank connects public and private investors through its Africa50 Infrastructure Fund.

Development banks often provide advisory services. They can assist companies in their search for private funds, and provide expertise in project finance and PPPs. They assist companies to improve their operational performance and sustainability and adopt good practices and standards to increase competitiveness and productivity. In the construction sector, IFC offers tools and training to construct buildings that use energy, water, and materials more efficiently.

Principal development banks that finance projects in Africa are listed below:

IFC
Africa Development Bank
European Investment Bank
Islamic Development Bank
Proparco

Institutional Investors

Institutional investors are playing an increasing role in infrastructure financing in Africa. Indeed, in the context of low-interest rates on sovereign bonds, infrastructure debt is a safe haven. Hence, institutional investors are becoming more and more important in the debt financing of infrastructure in Africa, offering stable yields in a long-term, social-oriented perspective that meets institutional investors’ objectives. Infrastructure debt has become a proper asset class for pension funds, insurance companies, and sovereign wealth funds. They now represent a very significant amount of potential finance for infrastructure in Africa.

Social infrastructures such as schools, hospitals, cultural and sports facilities, and other public buildings or transport projects, are particularly targeted by institutional investors.

Commercial Banks

Aside from development banks, commercial banks are the first providers of debt for project finance. They either issue loans or assist companies in bond or Sukuk issuance. In both cases, they propose tailor-made debt solutions. As a capital-intensive sector, Infrastructure financing requires a high level of debt, representing generally between 70% and 90% of the total capitalization of a project.

Commercial banks can issue long-term maturities loans, most times in local currency to avoid currency mismatch between project financing and revenue flows. Depending on the size of the project, direct, co-investment, or syndicated loans are issued.

Banks also guide companies in issuing bonds. These can be traditional bonds, green bonds, or project bonds. Green bonds are recent financial tools that are an interesting option for projects designed to meet ESG criteria. Project Bonds are also a recent and growing trend in infrastructure finance. They are ideal to provide long-term funding for large projects (over $100 million). Sukuk are issued as part of financing by an Islamic bank. It is a debt instrument similar to bonds, which is based on real assets and does not involve the payment of interest.

Most international commercial banks offer infrastructure debt services, and the most active international banks in project finance in Africa are the following:

Societe Generale CIB
BNP Paribas CIB
SMBC Bank International

Exim Banks

Import Export banks and credit agencies offer to finance and guarantee solutions adapted to international projects involving imported resources and materials. The offer differs according to the banks. In the field of credit, Türk Exim Bank mainly offers buyer loans to finance the import of Turkish goods. Türk Eximbank does not finance an entire project but can finance up to 85% of the materials and equipment imported from Turkey. Such financing can be advantageous when the importable materials represent an important part of the construction budget. Among the financing granted by Turk Eximbank, 14% concerned projects in Sub-Saharan Africa. Loans limits depend on the risk profile of the country where the project is conducted.

Moreover, other Exim banks offer direct project financing solutions. This is notably the case of Afreximbank, the African export credit agency, which offers loans of up to seven years for construction and infrastructure projects.

Turk Eximbank and Afreximbank also provide a wide range of guarantee products, including export credit guarantees, sureties, and short, medium, and long-term guarantees which are key factors of risk mitigation.

Infrastructure Funds

Recent players in infrastructure financing, specialized private equity funds are taking increasing stakes in the capital of infrastructure projects. These funds provide a share of the 20-30% of the equity required to contract large volumes of debt. Infrastructure funds can invest capital at different stages of the project, from venture capital to refinancing. This class of financing is experiencing strong growth, (statistics). In the context of lack of infrastructure on the continent, the trend is towards increased private investment as institutional players seek to attract private equity funds to infrastructure investment.

Funds that specialize in the African infrastructure market:

Meridiam
Emerging Africa Infrastructure fund
InfraCo Africa
ARM-Harith
Vantage Capital

Project Management

The management of construction requires state-of-art project management knowledge aiming for completion of project objectives such as time, cost, scope, quality, stakeholder satisfaction, etc. A typical high-level construction schedule can be seen below.

Contract Award

The project is officially started with a mutually signed contract. At the tendering stage, the contractor provided preliminary documents for schedule, budget, procurement, execution plans, etc. After the kickoff meeting contractor will need to prepare detailed plans, work procedures, baselines for the successful execution of the project.

Main Tasks

Commercial negotiations
Contract clarifications
Complying local regulations
A detailed project execution plan
Detailed cash flow preparation

Mobilization

The contractor’s site establishments such as temporary office containers, prefabricated accommodations, etc begin right after the contract award. The contractor will need to mobilize as quickly as possible to start the execution of the project. Personnel recruitment or relocation from different projects and heavy equipment purchasing and leasing start at this phase.

Main Tasks

Local company establishments
Site office establishments
Qualified subcontractor agreements
Local technical personnel recruitment
Work permit procedures for personnel
Logistics planning

Detailed Design & Engineering

Design and engineering start concurrently right after the contract award. This phase is very important in order for a high-quality design which is conforming to client design specifications. Technical disciplines work together with electrical, civil, mechanical, piping, instrumentation, etc to produce the project deliverables. Drawings are generated, checked, and executed within approval cycles.

Main Tasks

Design codes, standards, calculations
Approval of drawings
Value engineering
Material take off planning
Equipment size calculation

Procurement

The construction procurement phase starts with material take-offs form from engineering or architectural drawings. From consumables to long lead items commercial and technical negotiations with vendors are executed before procurement. For timely available materials on-site, buyer, expediting and inspection teams coordinate the procurement process to minimize duration for logistics.

Main Tasks

Long lead items
Inspection
Local Qualified Vendor Lists
Procurement Logistics Route
Expediting

Construction

The execution of the contractual work is done at this phase. The aim is to stay within budget, time, and conform to the quality standards. Most of the budget is spent at this phase, therefore multiple controlling mechanisms are set to track the progress on-site and report to the client.

Scope of work in the contract is checked throughout the contract to execute the full work in the contract.

Main Tasks

Management of change
Management of risk
Cash flow management
Balancing manpower on site
Client-Contractor communications
Collection of acceptance signoffs

Demobilization

This phase includes removal of Contractor’s, Subcontractor’s equipment, container, site establishments, materials, personnel, temporary facilities.

Main Tasks

Equipment leasing checks
Subcontractor materials, equipment, personnel
Environmental checks
Checklist checking
Compliance in the contract

Contract Close-Out

When the contractor’s contractual obligations are completed and work is finished, the close-out phase starts. While the documents are reviewed and audited for any remaining items.

Main Tasks

Collection of remaining payments
Checking Bond Letter
Collection of signoffs

Our Services in Africa

We offer full project management services or partial services listed below with information.

Project Management

We have project management experience of small size project to mega-size construction projects. Our extensive experience can enable projects to finish on time and preventing cost overruns by approaching the project holistically. We coordinate the meetings with project Contractors and Consultants aligned with the Client requirements. Starting from contract award to close out of the project we use our extensive value creation and cost reduction methodologies.

Schedule & Cost Management

To complete the project on time and within budget, progress needs to be controlled with different project control mechanisms. We can create baselines, track, and update the project schedule on Primavera P6 or Microsoft Project depend on the Client requirements. We can provide detailed Cost Reports to track the remaining budget and to manage cash flow. Our Cost Reduction expertise will be given at each phase of the project to increase profits.

Contract & Procurement Management

From preparing the technical and commercial proposals, we know what the client expects. To analyze the estimated project manhours, we benchmark from similar projects to near the expected Client figures. For timely available material or equipment on-site, we use our extensive list of the vendor from multiple locations and countries to seek for best price and quality.

Change & Risk Management

At the beginning of every project, the risk is considered high. Design changes have a significant effect on construction which could lead to cost overrun. We have change and risk management experience to decrease the number of changes and risks for the whole construction period.

Final Notes

African countries offer important economic opportunities for Turkish construction companies who are willing to increase their revenues profitably. The construction sector in Africa is developing faster than other continents, and there are many mega-projects to be completed soon. The projects in each country should be evaluated carefully and Turkish companies should target the right countries where they can leverage their existing business acumen.

There are potential revenues and risks of doing construction projects in African countries. The macroeconomic factors and sectoral trends should be carefully watched during the project completion. The construction companies should work with professional business and legal advisors during the tender process. The contracts have to be carefully reviewed in case something goes wrong in the future. If the projects are financed by local governments, the financial solvency of that government is very important for the fulfillment of future payments. It is crucial to work with financial advisors that give insights about the solvency and financial indicators.

Financing is an important element of construction projects. There are many financing options for Turkish construction companies. They can self-finance their projects if they have enough assets. Alternatively, they can apply to Turk Eximbank to receive low-interest loans. Finally, they can approach international development organizations, such as IFC, EBRC, and Africa Development Bank to finance their projects. The share of Sub-Saharan Africa in the Turk Eximbank portfolio is 14%. Other development banks also focus on Sub-Saharan Africa infrastructure projects and they grant more funds.

Project Management is more complicated in Africa compared to the other regions of the world. Especially the procurement of building materials and human resources is problematic. To solve these problems, Turkish construction companies can consider working with a local partner or mobilizing their human resource onsite from Turkey. The companies that can overcome long lead times and poor quality of materials will have an advantage over their competitors.

As Istanbul Africa Trade Company, we offer full project management services or partial services for construction companies that are willing to undertake projects in Africa:

Project Management
Schedule & Cost Management
Contract & Procurement Management
Change & Risk Management

Authors

Burak Unal - Director of African Markets

burak.unal@istanbulafrica.com

Burak Unal is the founder and the Director of African Markets and Relations of Istanbul Africa Trade Company. In this role, he is responsible for leading the company’s global trade initiatives and client relations. Burak is responsible for managing relations with national business councils and businessmen.

Gürkan Çaylak - Manager of Business Development

gurkan.caylak@istanbulafrica.com

Gürkan Çaylak is the Director of Business Development at Istanbul Africa Trade Company. He is responsible for providing advisory services to Turkish Construction and Oil&Gas companies that are willing to operate in Africa. He manages the tender processes, loan application and construction management.

Dala Koïta - Business Development Specialist

dala.koita@istanbulafrica.com

Dala Koïta is working as a Business Development Specialist at Istanbul Africa Trade Company. In this role, she is responsible for conducting research, creating quantitative models, preparing presentations and communicating with clients.

The post Construction Sector in Africa appeared first on Istanbul Africa Trade Company.

Top 25 Investment and Business Opportunities in Africa

Thu, 01 Oct 2020 13:38:48 +0000

The economy of African countries is developing rapidly and their consumer market is becoming more sophisticated. There are many investment and business opportunities in Africa. Investors, businesspeople and entrepreneurs are searching for profitable business ideas that have minimal risk. We took a closer look at the best investment and business opportunities in Africa.

1. Packaged Food Manufacturing

There are two reasons that make food processing and packaged food manufacturing a very lucrative business in Africa:

Firstly, consumer demand is increasing thanks to the increasing population and urbanization. There are more customers in the urban areas that have the budget to buy packaged food. For example, only in Nigeria, there are more than 100 million people living in urban areas.
Secondly, the majority of packaged food products is imported from other countries. The supply in the domestic market is not sufficient and there is a lack of competition. In Zambia, Trade Kings Group implemented a strategy of manufacturing confectionery products in Zambia and they captured a sizeable market share in the market.

African businesspeople can invest in the packaged food sector by establishing a fully-integrated manufacturing facility. The raw materials are processed in the first line of machinery. Then, the food products are prepared by cooking or with a special formulation. In the end, the packaging machines prepare the final product, ready for distribution and sales.

Istanbul Africa Trade Company offers production lines for all types of food processing facilities. Some of the turnkey projects include the factories of pasta, wafer, cornflakes, vegetable oil, canned food, tomato paste and water bottling.

2. Maize and Wheat Milling

Maize and wheat are two important grains for the nutrition of the population. Both crops have high yields and they are available in many African countries. Maize meal (also known as ugali, ngima, obusuma, mealie meal) are highly consumed by customers in East and Southern Africa Regions.

Following three reasons make maize and wheat milling business a very lucrative opportunity in the Sun-Saharan African countries:

Maize and wheat are already grown in many African countries. There is access to raw material at a reasonable price level.
Secondly, consumer taste for maize meal and wheat flour is already high. The consumer demand is also increasing thanks to the population increase. In Tanzania, Ugali (maize flour) is a traditional dish and it is consumed daily.
Thirdly, the operations to operate a mill are not very complicated. The machines used in the factories are durable and the workers can work after receiving some training.

Milling business is accessible to all businessmen and businesswomen in Africa. The only requirements are flat land and access to electricity. Maize and wheat are sourced from local farmers in rural areas. The final products are packed according to your needs (1kg – 5kg – 10kg – 50kg).

Istanbul Africa Trade Company assists Turkish and African investors with milling projects. We offer turnkey solutions, installation of machinery and training of employees. The facilities include all processing lines and silos for warehousing.

3. Installation of Solar Street Lights

Solar street lighting technology became very efficient thanks to better solar panels and energy efficiency of LED bulbs. In African countries, solar street lights are a better solution than conventional street lights due to the following conditions:

There is an electricity shortage in the national grid of many African countries. Installing conventional street lights could amplify this shortage.
The solar street lights do not require infrastructures such as connection to the national grid or regular maintenance. Solar street lights are very easy to install and operate.
The governments and international organizations invest a huge amount of money for renewables. There are many government incentives for the installation of renewable technologies in daily life.

To invest in the solar street light business, African businesspeople should make an arrangement with a solar street light manufacturer. Then, they acquire training on how to install them. They can bid on national tenders or alternatively, they can install solar led street lights on private premises such as residential sites, factories, warehouses, recreational areas, etc. Last year, Benin awarded a lucrative $24.2 million contract for the supply and installation of 15,000 solar street lights.

Istanbul Africa Trade Company is a supplier of solar street lights. Our solar street lights provide various options to user with its IoT compatible structure. Light level adjustments can be made easily by automatic dimming and Bluetooth remote access features. Thus, the system allows for avoiding light pollution.

4. Installation of Solar Water Heaters

Solar water heating technology provides free hot water for households and industrial facilities. Following the first installation, households access hot water for free with minimal maintenance fees. The solar water heaters come with a pack and installation is very easy. Below is why you should invest in solar water heaters:

Average number of sunny days is high in Africa. Many countries receive direct sunlight through out the year and there is no freezing problem.
It is a relatively affordable technology. There will be many households and companies that would demand solar water heaters.
The installation does not require deep technical knowledge. After giving training to one employee for 3 days, he can manage the installation of new units.

African businessmen and businesswomen should take a look at this profitable and lucrative business model. The solar water heaters that they provide should have warranty conditions and they must be supplied from a renown manufacturer.

We supply solar water heating units and training for our clients. Our galvanized solar water heaters galvanized is an open-loop system with vacuum tubes that are very affordable. Istanbul Africa Trade Company galvanized solar thermal systems may be used at extremely hot and cold weathers. It is suitable to use where the temperature goes below zero degrees, even without the need for a solar liquid.

Polyurethane isolation is standard with our galvanized solar water heaters. Inner tanks are galvanized, outer tanks are special electrostatic powder painted galvanized and inner surfaces of tanks are made of food-grade epoxy coated steel sheets. Copper alloy selective surface vacuum tubes are standard with these systems. Our closed-loop solar water heater is suitable for hot-cold areas with really dirty or hard water. The system never freezes even below 0°C, performs well and its performance remains the same as the first day after long years.

5. Water Purification Systems

Water treatment and purification are very crucial in Africa. Many people have limited access to clean water and there are great potentials in sourcing clean water to households. There are many technologies in water filtration and the equipment varies by size and capacity.

There are many remote villages that lack clean water supply. Government and international aid organizations offer capital for the construction of clean water supply systems.
Middle-income class households prefer filtering the tap water in African cities. There are small home-type water purifiers that can be sold to African consumers.
There are additional revenue streams through regular inspection and maintenance of water treatment systems. For example, revenue can be generated by the initial sale of the system and also with the contractual maintenance scheme.

More and more African companies are interested in the provision of water purification services. They can partner with international players and act as their local distributor and service center.

We are the exporter of high-quality water treatment systems. Our product range includes open case and close case water purifiers. We provide purifiers with OEM or LG-branded filters. You can order purifiers with a pump or without a pump.

6. Distribution of Fast-Moving Consumer Goods

The retail sector in Africa is modernizing and formalizing. Existing supermarket chains are expanding into new countries and they require local distributors that will fill the shelves. With the development of per-capita-income and rise of population, African distribution companies will be in a profitable business area. There are a few reasons why you should consider investing in FMCG distribution:

Modern retailing is becoming more trendy. Middle-income people prefer shopping from grocery stores and supermarket instead of street vendors. These grocery stores and supermarkets need efficient distribution and supply channel.
Many foreign brands are looking into exporting their products to African countries. These companies need strong local distributors to deliver their products to the end-consumers.

In the last decades, many South African retailers (Pick n Pay, Massmart, Woolworths, Game) expanded into new regions (Ghana, Nigeria, Kenya, Tanzania, Uganda, Zambia, Namibia, Mozambique, Botswana, Zimbabwe, etc.). They are working with domestic consumer goods distributors and they also run their own operations. African businesspeople should definitely take a closer look at the opportunities in the distribution of consumer goods and packaged food.

Istanbul Africa Trade Company acts as the exclusive distributor of major FMCG manufacturers in Turkey. We ship our products to the main markets in Africa and work closely with our local distributors. Our product range includes pasta (spaghetti and macaroni), cooking oil, olive oil, canned vegetables, flour, chocolate, biscuits and frozen meat. In addition, we supply household hygienic cleaning products such as detergent, liquid handwash, shampoo, baby diapers, sanitary pads and wet wipes.

7. Furniture and Home Accessories Store

The average per-capita income of African countries is rising. Many countries shifted to middle-income level, Tanzania being one of them. Higher-income means higher spending on houses and accessories. Furniture is one of the sectors that directly develop with the rise in income. Here is why African businesses can find profitable opportunities in the furniture sector:

Average income and the number of the middle-income population are increasing. There is expected to be more spending on furniture and home accessories.
Consumer trends are shifting and many rich people demand luxury furniture and decoration items for their home and office.
The supply of furniture is not enough in Sub-Saharan African countries. The existing items are very expensive due to the lack of distributors. There is great profit potential.

African businesspeople can become the exclusive distributor of foreign furniture brands. The international furniture brands are looking for local and strong distributors. Dogtas is one of the Turkish furniture manufacturers that expanded into Africa. They have a new store in Lusaka, Zambia.

Istanbul Africa Trade Company partners with Turkish furniture factories and evaluates African distributors that apply for exclusivity rights. We provide a complete service including manufacturing, standardization, domestic logistics, customs and international shipping.

8. Distribution of Baby and Children Products

The population of Sub-Saharan African countries is very young. The median age in Africa is 19.7 years. In Niger and Uganda, median age falls to below 16 years. The young population of Africa offers opportunities for baby care and children products. Why you should import baby care products and become a distributor:

The population of Africa is very young. The fertility rate is high. This drives up the consumer market.
Local production of baby care products is not enough. Many products are imported and sold at a very expensive price level. New local distributors can create an efficient way to sell their products.
It is a market that will never end.

African investors can become a distributor of a foreign brand, or alternatively produce their own brands with private label solutions.

Istanbul Africa Trade Company offers baby care products in partnership with Halk Hygienic Products Company. Our brands are Taffy, Gizmo and Amigos. We provide a complete service including manufacturing, standardization, domestic logistics, customs and international shipping. With Halk Hygienic, we offer baby diapers, wet wipes, lady pads and adult diapers.

9. Distribution of Consumer Electronics

Consumer electronics are becoming more trendy in Africa. Consumer electronics can be classified into household appliances, TVs, smartphones, PCs and other accessories. There is an increasing demand for all types of electronics in Africa. Many countries have switched to 4G networks and digitalization is ongoing.

Adoption of technologic and electronic devices by the younger population.
Infrastructural development of the 4G networks and the national electricity grid.
Electronic accessories are cheaper thanks to more efficient and mass production methods.

African businesspeople can look into major Turkish corporations and become their local distributor thanks to our assistance. One of the biggest Turkish corporations, Arcelik, is the owner of Defy Appliances of South Africa. In addition, other Turkish factories export their products to African countries.

Istanbul Africa Trade Company works closely with consumer electronics manufacturers in Turkey. We assist them with business development activities on the African continent. We supply led bulbs, TV sets, laptops, home appliances, air conditioners, fans, heaters, refrigerators and other consumer electronics products.

10. Cosmetics and Makeup Products

African markets offer great opportunities for cosmetics and makeup products sellers. With increasing income-level in the future, more and more people are expected to afford cosmetic and makeup products. Also, the current trends are increasing the consumption of makeup products. We see great potential in this sector thanks to the following points:

The population and income-level are increasing at the same time in Africa. Many people are shifting from low-income level to middle-income level. This will increase the demand for cosmetics and beauty products.
Cosmetic products sell very fast and fast-moving. They are durable and they don’t expire fast. They can stay on the shelf for some years without any defects.

African investors can choose two options when they are entering the cosmetics sectors. Firstly, they can be an exclusive distributor of a foreign famous company. This is suggested for the first years. Secondly, they can create their private-label cosmetic brands. This option will give them more flexibility, however, please note that the initial investment amount is much more. There are already Turkish-African investments in the cosmetics sector. For example, leading Turkish cosmetics company Flormar has operations in Tanzania and some other African countries.

Istanbul Africa Trade Company is the exclusive general distributor of famous Turkish beauty brands. We are looking for local distributors and we support them in terms of marketing and advertising. Our products include perfumes, highlighters, foundations, lipsticks, eye pencils, makeup removal wipes, nail polish, bb creams, etc.

11. Fashion, Apparel and Clothing

Clothing is a business sector that highly correlates with the economic growth of the country. In African countries, there is high demand for clothing and apparel, and there is not enough branded and reasonably-priced clothing companies. There is a huge opportunity for African companies. Find below the advantages of building an African fashion brand:

African consumers follow trends and look for higher quality textile products. Chinese textile products are cheap but they lack quality. European brands are high-quality, however they are very expensive for mass market.
Customization in clothing is easier compared to other sectors. Your products can be custom-branded with a marginal cost increase. You can build your brand with less capital investment and less stocks.

African business people should consider the lead times and product quality before investing in this sector. The fashion trends change very fast and stocks need to be updated regularly. The proximity of the factory to the retail market is very important. Also, the supply chain and logistics should not be interrupted. Finally, the investors should follow the consumer demands in each African country and customize the products according to the market taste.

Istanbul Africa Trade Company uses the geographic location in Turkey and the strong textile manufacturing capacity to serve its African clients. Shipments from Turkey to East African ports take only 20 days and to West African ports only 30 days. Also, the textile factories in Turkey manufacture products according to the needs of African clients. We arrange all the deals and supply-chain arrangement on behalf of our African clients. The competitive products in Turkey are cotton t-shirts, bags, shoes, sneakers, fashion accessories, home textile products.

12. Agricultural Machinery Dealership

Agriculture is the most important economic activity in Africa. It provides employment for about two-thirds of the continent’s working population. Agriculture contributes an average of 30 to 60% of GDP and about 30% of the value of exports for African countries. Yet, arable land occupies only about 6% of Africa’s total land area. Agriculture has been largely confined to subsistence farming and has been considerably dependent on the inefficient system of shifting cultivation. However, with government policies, there is a tendency towards modern farming with technological equipment. A dealership for agricultural machinery and equipment is a very lucrative business due to the following advantages:

The increase in population generates more demand for agricultural products. To meet the demand, private investors and governments have to invest more in agriculture.
In addition, international aid organizations promote sustainable and modern agricultural methods. They allocate funds for purchasing modern equipment.

Investors in African countries are looking into importing modern machinery and equipment to be used in agriculture. With a dealership, companies can keep stocks and also sell items on order. The profit margins and order sizes are large in this sector.

Istanbul Africa Trade Company has distribution agreements with major agricultural equipment producers and we offer our products at a reasonable price level for our African distributors. Our product range includes tractors, soil preparation machine, seeder, fertilizer spreader, sprinkler, drum mower, harvester, pneumatic planter, seed drill machinery, plough, gobley, subsoiler, interrow cultivator, rotary tiller, feed mixer, field sprayer, baler machine, maize chopper.

13. Mining Equipment Repair and Spare Parts Supplier

The mining industry of Africa is the largest in the world. The economy of many African countries depends on mineral exploration and production. Africa mineral reserves rank in the top three for bauxite, cobalt, diamonds, phosphate, platinum and vermiculite. Uranium, platinum, nickel, bauxite and cobalt are exported from Africa to the world. The machines and equipment used in these mines require regular maintenance and spare parts. Being a supplier and repairer for mining machinery and equipment is a profitable business idea due to the following advantages:

The economy of many African countries depends on mining and mines generate huge revenues. The machines in these mines are crucial to the economy and they need to be keep maintained. For example, diamonds generate 85% of Botswana’s export revenues.
International suppliers and OEM manufacturer ask for very high amounts for regular maintenance plans. A local company will cost less. There is a huge profit margin that can be captured by local African companies.

Investors that are interested in the mining sector should consider keeping stocks of mining equipment spare parts. Also, they should consider offering in-house service for the maintenance of mining machines. They can capture a very good and lucrative market opportunity.

Istanbul Africa Trade Company has distribution agreements with major mining equipment manufacturers in Turkey. We supply spare parts for our clients through air shipping and container shipping. Our product range includes Rock Drilling Machines, Jaw Crushers, Vertical & Horizontal Shaft Impact Crusher, Belt Conveyors, Continuous Mixers, Draglines, Dozers, Underground mining trucks, Loaders and Spare parts.

14. Tyre Recycling

Waste and scrap recycling is a very important sector for the sustainability of our world economy. Plus, governments and international development agencies are very supportive of the recycling investments in Africa. They provide funding and economic incentive packages for recycling investments. Recycling tyre is a very profitable business idea for African decision-makers.

The number of cars and trucks is increasing in all African countries. Ony in Nigeria, there are more than 12 million cars. In Kenya, this number is above 3 million. Tyres last around 4 years. This means that there are more than 12 million waste tyres only in Nigeria.
Government incentives and funding from international development organizations facilitate the investment of waste tyre recycling facilities. REDISA, the Recycling and Economic Development Initiative of South Africa, administers a scheme for the collection and recycling of scrap tyres in Africa. There are sustainability grants in other Sub-Saharan African countries as well.

Sub-Saharan African investors can benefit a lot if they invest in the waste tyre recycling business. They have to follow the government schemes and international development organization grants. The end materials of recycled tyres are rubber and scrap wires. They can be sold in the aftermarket. Also, businesses can earn money from government subsidies.

Istanbul Africa Trade Company undertakes turnkey tire recycling plant construction projects. We ship machinery from Turkey and install all the machines in your home country. Our tire recycling facility includes tire recycling line, loading conveyor, double shaft shredder, second shredder loading conveyor, magnetic separation conveyor, crushing machine, material transfer blower, vibrating screen, truck tire debeader, tire cutting machine and textile separation machine.

15. Biogas and Biodiesel Facility

African governments and private sector investors closely look at the opportunities in biofuels. The use of biofuel, biodiesel and biogas contribute to economic growth and employment. They are an important source for revenue generation and they can supply the demand of neighbouring countries. Africa has the advantage of abundant natural resources and low-cost labour.

Biofuels are eco-friendly. Biogas and biodiesel can be used in many areas in the economy, such as organic fertilizers, heating, fuel for cars and trucks.
The facilities to process biodiesel and biogas are not very expensive compared to investments in fossil fuels.

African business owners can benefit from the advantages of biofuels. They can receive government incentives through eco-friendly economic schemes while investing in the facility. Biodiesel and biogas are valuable products and they can easily be marketed and sold.

Istanbul Africa Trade Company undertakes turnkey biogas and biodiesel processing facility construction projects. We ship machinery from Turkey and install all the machines in your home country. Our biogas and biodiesel processing facility includes alcohol tank, mixer, steam boiler, washing reactor, glycerine tank, condenser, distillation tank, vacuum tank, water treatment device and generators.

16. Concrete Brick and Paver Making Factory

Construction projects play an important role in the economies of African countries. There is a steady acceleration in construction activity, especially in Nigeria, Zambia, Angola and Namibia over last 10 years. has the fastest-growing construction industry in Sub-Saharan Africa grew by 6.5% annually and it is the fastest-growing region in the world. Bricks and paver stones are used in every infrastructure and building projects. Here is why investing in concrete brick machinery is a very profitable business idea in Africa:

The construction sector is booming in Africa thanks to new infrastructure and residential projects in African cities. The market is very suitable for selling bricks and paver stones.
Our machines are very durable and they can be customized according to the needs of our clients. For example, the same machine can produce 6″, 8″ and 10″ bricks and paver stones by only changing the mould.

Investors in African countries can use our machines to manufacture concrete blocks and pavers at a very reasonable price. The new construction projects are the target for selling the products. With the increasing demand and scarcity of supply, the prices for bricks are very high in Africa. African businessmen can generate a very good profit from this investment.

Istanbul Africa Trade Company partners with Ibar Machinery, the leading concrete brick machine manufacturer in Turkey. We work together to meet the demand of our clients from Africa. We provide on-site installation and training of your employees. Our machines are manufactured at high-quality standards and they are durable to the conditions in the African environment. We use our own CNC machines for brick moulds. The capacity of our machines ranges from 500 blocks to 10,000 blocks per hour.

17. Mobile and Tower Crane Rental

Mobile and tower cranes are used in many areas, such as construction projects, port operations and factories. Telescopic cranes increase the efficiency of operations thanks to their ease of use and practicality. Cranes and booms can be used in many projects and they offer cost advantages. You can consider buying cranes and renting them to project owners.

Crane rental operations are not common in Africa yet. However, the demand is high as infrastructure projects are ongoing. It is a less competitive business for investors.
Mobile cranes can be rented throughout the year. Depending on the strategy of your rental business, you can only rent the crane, or you can rent both the crane and the operator.

Sub-Saharan African companies can import high-quality Turkish cranes and rent them to projects in their countries. It is a very profitable line of business and the investment pays back approximately in 1 year.

Istanbul Africa Trade Company provides high-quality and reasonably-priced telescopic cranes and tower cranes for its clients in African countries. We can assist you with the business plan for crane rental operations. We provide on-site installation on the truck and training for your employees.

18. Stationary and Mobile Concrete Batching Plant Rental

The stationary and the mobile concrete batching plant provides the required concrete of construction projects. Stationary concrete batching plants are used in long-term and big projects. Mobile batching plants are used in smaller projects and they can be transported to different regions easily. Importing batching plants and renting them in domestics projects is a lucrative business idea in Africa.

In Africa, the construction works have not been fully mechanized yet. Owning concrete batching plants can give cost and speed advantage to projects. The project developers are ready to pay a good amount for the machinery.
Mobile batching plants offer flexibility. They can be used in many regions and on short-term projects. They will generate good rental revenue for African investors.

African investors should consider being a dealer and rental agency of concrete batching plants. The developing construction sector in Africa will help these investors to make great returns.

Istanbul Africa Trade Company is the exclusive distributor of stationary concrete batching plant, mobile concrete batching plant, compact container concrete batching plant and concrete mixer. Interested investors can reach our company for more details.

19. Asphalt Road Paving Contractor

Transportation infrastructure is very important for the economic development of African countries. The asphalt road network in Africa is being developed. There are new road construction projects in every African country. Local contractors are needed to undertake the operations of asphalt paving. Angola recently awarded more than $200 million for new road development. Congo is considering building a new bridge on River Congo. There are many other active road construction projects across Africa.

There are a lot of government tenders for new asphalt road construction. In addition, development banks and international development organizations support the development of the transportation network in Africa.
Road paving is a complicated business. It requires machinery, equipment, skilled machine operators and bitumen raw material. However, once these skills and machines are acquired, it is a very profitable and never-ending business.

African companies should take a closer look at the asphalt road construction business. Working with a credible machinery provider is very important. Also, the raw material of asphalt (bitumen) can be imported by the same company to increase profit margins.

Istanbul Africa Trade Company provides its clients with high-quality asphalt construction machinery. We also send Turkish engineers to African countries for the training of our clients in this business line. Additionally, we can arrange bitumen contracts for your raw material needs. We provide the following machinery: asphalt emulsion plant, asphalt distributor, maintenance asphalt sprayer.

20. General Distributor of Aluminium Composite Panel (ACP)

Aluminium composite panels are used in a wide range of areas: Architectural Facade Cladding, Interior Decorations, Ceiling Coverings, Door Panels and Partition Systems, Advertising and Direction Boards, Tunnels, Display Areas, Partition Walls. The general distribution of aluminium composite panels is a profitable business opportunity thanks to the following advantages:

Aluminum Composite Panel has high rigidity and strength properties. It shows high resistance to external weather conditions and UV rays. It shows acidic and basic strength performance in harsh external environmental conditions. That is why they can be used in many applications.
The business of ACP does not require deep knowledge or training. The products are standardized and they can be easily distributed to consumers.

African importers and distributors can find good potential in the aluminium composite panel trade. They can import the panels and keep in their warehouse. The panels can be cut according to the needs of the client, then can be sold to them. Advertising agencies, construction companies, interior designer are the main buyers of ACP.

Istanbul Africa Trade Company provides its clients with high-quality Aluminium Composite Panels from Istanbul, Turkey. All our products are manufactured in Turkey with the best quality standards. We manufacture ACP according to your requested size and thickness. All items are transported to the nearest port in your country with CIF terms.

21. Exclusive Distributor of PPRC and PVC Pipes and Fittings

PPRC and PVC pipes are widely used for clean water and wastewater systems in buildings. Being a general distributor of pipes and fittings offer many opportunities to African investors.

All the modern buildings require PPRC and PVC pipes for water circulation. With the construction of modern buildings in Africa, there is a huge demand for these pipes and fittings.
The supplier of PPRC and PVC pipes is very important. High-quality pipes can be supplied at a reasonable price level from Turkey. Our pipes and fittings are high-quality and durable.

African companies should consider investing in the building materials and hardware store business. They can distribute their materials to construction projects with a sizeable profit margin. All the products are standardized and it does not require very technical knowledge. Basic construction knowledge would be enough for the dealership of PPRC and PVC pipes.

Istanbul Africa Trade Company works with Plastherm, the leading pipe and fitting manufacturer in Turkey. All our products are manufactured in Turkey with the highest quality standards. You can contact us for more information.

22. Logistics with Fuel and LPG Tankers

Energy demand is increasing in Africa thanks to the adoption of automobiles and construction of new industrial factories. Fuel and LPG need to be transported to different regions in African countries. Investing in fuel tankers and LPG tankers is very profitable in Sub-Saharan Africa.

More and more cars are being used in Africa. There are new gas stations in remote areas and in different regions. Gas providers need fuel tankers and LPG tankers to transport their products.
There are not pipe systems for the transportation of energy resources. Fuel tankers and LPG tankers are the best way of transporting them.

African entrepreneurs can invest in a fleet of fuel tankers and LPG tankers. They can take part in the distribution of gas, diesel and LPG. The tankers are mounted on trucks and they reach every region with the road network.

Istanbul Africa Trade Company is the supplier of all types of fuel tankers. We manufacture aluminium and mild steel fuel tankers. The capacity is as high as 45,000 litres. We provide valves and compartments according to the needs of our clients. They can carry diesel, gasoline and miscellaneous oil.

23. Digital and Online Sales in Africa

The African consumer market is growing very fast. With the adoption of digitalization and the internet, there are many opportunities in digital and online sales in Africa. It is expected that 5oo million people will be mobile internet users by 2025. You can discover online sales for clothing, kitchenware, accessories and electronics.

Internet penetration and smartphone usage have been increasing in Sub-Saharan African countries. This will affect shopping trends and more people will shop online.
Online sales are more profitable compared to traditional sales. Investors do not need physical stores. They only need a warehouse, online sales website and efficient logistics operations.

African investors should consider investing in online marketing and sales. It is the trend of the 21st century. Entrepreneurs in Africa can invest in online marketplaces, digital marketing agencies, digital advertising and online sales.

Istanbul Africa Trade Company is the investor of Africa Showroom (www.africashowroom.com). We assist our clients with the development of their digital sales channels and also with the supply of physical products. For more information, please visit www.africashowroom.com

24. Professional Cleaning and Security Services

Outsourcing cleaning and security services is a common trend in European and American countries. This trend is being adopted in Africa too, especially in Cape Town, Johannesburg, Nairobi and Dakar. Many companies prefer outsourcing their janitorial and security operations to professional companies. African entrepreneurs should consider opening a professional cleaning and security outsourcing company.

Businesses are being more sophisticated. Core areas of companies are done by internal employees. However, cleaning and security operations are outsourced to professional companies. This trend is now happening in big cities in Africa.
Labour cost is reasonable in Africa and janitorial services do not require much training. It is comparatively easy to open a service company in this area.

Professional janitorial and security service business is profitable and offers opportunities for African businessmen. Investors in big cities can consider starting a professional outsourcing company.

Istanbul Africa Trade Company exports professional cleaning equipment, uniforms and worksets. We also provide training in partnership with industry experts in Istanbul, Turkey. We provide professional polishing machines, vacuum cleaners and cleaning chemicals.

25. Your Great Business Idea for Africa

Let us know about your great business idea! Istanbul Africa Trade Company can be the supplier of the products and business services that you will need.

You can send an email to info@istanbulafrica.com or send a Whatsapp message by clicking on the below button.

The post Top 25 Investment and Business Opportunities in Africa appeared first on Istanbul Africa Trade Company.

Top 25 Largest Ports in Africa

Thu, 06 Aug 2020 12:11:16 +0000

1. Port of Durban, South Africa (ZADUR)

The port of Durban is located on the east part of South Africa. The port of Durban has the following port units: Transnet Port Terminals – Durban Container Terminal, Pier 1 Container Terminal, Multi-Purpose Terminal, Durban Car Terminal and Maydon Wharf Terminal.

Durban Container Terminal the largest container terminal in the southern hemisphere. 60% of the total number of containers handled at all South African ports is passing through Durban Port. Port of Durban is an important hub for the entire Southern African region, connecting it to the Far East, Middle East, Australasia, South America, North America and Europe. The Port of Durban is the biggest container port in Africa in terms of capacity. It is South Africa’s main port for containers. The average number of containers using this port is 84 each month. It handles about 1.55 million containers every year. The type of containers it serves is general-purpose containers, reefers, abnormal containers and tanktainers.

The port of Durban is the busiest port in Africa. In 2019, the port of Durban handled 3253 ships with a gross tonnage of 122 million gross tons. The port handled 81 million tons of cargo.

2. Port of Cape Town, South Africa (ZACPT)

Cape Town is the second busiest port in South Africa, after Durban. It handles the largest amount of fresh fruit and vegetables. The Port of Cape Town is located a globally busy trade route, the Port of Cape Town holds a position of strategic and economic importance for South Africa. The port serves as a transshipment destination as well. The Port of Cape Town has maintenance and repair facilities.

In 2009, the Port of Cape Town served to more than 3000 ships carrying a total of 13 million tons of cargo. The container traffic was about 10 million tons in 774 thousand TEUs.

The Port of Cape Town’s Container Terminal consists of water berths. Cape Town’s Container Terminal handled 926 thousand TEUs in 2016.

3. Port of Abidjan, Ivory Coast (CIABJ)

The Port of Abidjan is located in Ivory Coast and it is West Africa’s biggest port. The port is used as a point for transshipments to West and Central Africa with the railroad system in Cote d’Ivoire. After the operations of Vridi Canal, the Port of Abidjan has handled most of the commercial trade for the Cote d’Ivoire.

The Port of Abidjan has facilities of warehouses for different types of commodities. The port handles the cocoa trade as Cote d’Ivoire is the third largest cocoa bean exporter globally. Imported goods in the port include foodstuffs, machinery, equipment, pharmaceuticals, and manufactured goods. Exports are rubber, cotton, timber, fruit, fish, vegetables and cocoa.

4. Port of Apapa, Nigeria (NGAPP)

The Port of Apapa is the port for the City of Lagos in Nigeria. Lagos Port has three major areas, Lagos, Apapa and Tin Can Island. The Port of Apapa is regulated by The Nigerian Ports Authority.

The Port of Apapa Container Terminal is built on 44 hectares and the port can handle up to 22 thousand TEUs of containerized cargo. Port of Apapa Container Terminal has six berths and also contains 6.5 thousand sqm covered storage. The container yard can handle 19.5 thousand TEUs, and it contains 298 reefer plugs.

5. Port Djibouti, Republic of Djibouti (DJJIB)

The Port of Djibouti is a port in Djibouti City, in Republic of Djibouti. The port links Europe, the Far East, the Horn of Africa and the Persian Gulf. The port is located on the south shores of the Gulf of Tadjoura off the Gulf of Aden.

The Port of Djibouti has 18 berths with a total quay length of 2830 meters. The general cargo facility has eight berths. The Container Terminal contains two berths. The Oil Terminal has two berths with alongside depth of 18 meters.

6. Port of Dar es Salaam, Tanzania (TZDAR)

Dar es Salaam port is the most important port in Tanzania. It has a rated capacity of 4 million (dwt) dry cargo and 6 million (dwt) bulk liquid cargo. 95% of the Tanzania’s international trade is handled at the port. The port also serves to Malawi, Zambia, Democratic Republic of Congo, Burundi, Rwanda and Uganda.

Dar es Salaam is Tanzania’s major city with industries and seat of government. The Port of Dar es Salaam is the main export location for most of the country’s agricultural and mineral exports.

7. Port of Beira, Mozambique (MZBEW)

The Port of Beira is located on the northern part of the Mozambique Channel. Central African products are exported through Port of Beira. Thanks to the railways from Zimbabwe, Congo, Zambia and Malawi that end in the Port of Beira, it serves as the main port for inland nations.

Beira is the third largest in Mozambique. The container terminal has 4 berths with a total length of 645 metres. The terminal has a projected capacity of 400,000 TEUs per year.

8. Port of Walvis Bay, Namibia (NAWVB)

Located half way down the coast of Namibia, Walvis Bay is an important port for international trade. It has direct access to major shipping routes. The Port Walvis Bay is the largest commercial port in Namibia and it receives approximately three thousand vessels annually. The port handles 5 million tons of cargo.

The Port of Walvis Bay is equipped with world-class infrastructure and reliable machinery. Cargos are handled in a reliable and secure way. The Port of Walvis Bay handles containers, transshipments, and bulk of commodities.

Namport, the operator of Walvis Bay, constructed a new container terminal. It increased the handling capacity from 350 thousand TEU to 750 thousand TEU.

9. Port Said, Egypt (EGPSD)

The Port Said Port Authority (PSPA) is responsible for the management and operations of the port. Port Said includes Port Said West, El Arish Port and Port Said East. The port is installed with state-of-the-art technologies.

Port Said handles approximately 15 million tons of cargo every year on vessels with 13 meters draft. Port Said contains a Dry Bulk Terminal with combined silos and warehouses, which can store about two million tons. The Container Terminal has 8 berths. The terminal’s capacity is 700,000 TEUs. There are also reefers and refrigerated containers. The General Cargo Terminal has 7 berths.

10. Port of Tanger Med, Morocco (MAPTM)

Tanger Med is the biggest port in North Africa. The Tangiers Port port is located on the Strait of Gibraltar about 40 km east of Tangier, Morocco. It had an annual volume of 3.5 million TEUs in 2018. The port will add six million in capacity after its extension worth of 1.3 billion Euros. After the development, the port will reach volumes of 4.5 million TEU by 2020. It is ranked 18th port in the world.

11. Port of Tema, Ghana (GHTEM)

The Tema Harbour is very close to Accra, Ghana. The harbour is located in the southeastern part of Ghana, along the Gulf of Guinea. The Port of Tema is a member of the International Association of Ports and Harbours (IAPH). There is also Port of Accra (GHACC) that is very close to Port of Tema.

The Port of Tema it is the largest seaport in Ghana. It has rail and road links to Accra and this make it Ghana’s biggest and most important port. The Ghana Ports and Harbour Authority is responsible for the management of Port of Tema facilities. The Port of Tema handles 80% of the nation’s international cargo. In 2006, the Port of Tema handled 8.1 million tons of import and export products. The Port of Tema has five container terminals that receive, store and deliver containerized cargos.

12. Port of Dakar, Senegal (SNDKR)

The Port Autonome de Dakar manages the Port of Dakar. The port is located in the capital city of Senegal. The Port of Dakar was visited by around 2,500 vessels in 2007. In 2007, the Port of Dakar handled over 8 million tons of cargo.

The most transported items in the port are: refined hydrocarbons, crude oil, phosphoric acid, oil, gas, sugar cane, bitumen, caustic soda, chemical products, wine, clinker, sulfur, coal, attapulgite, rice, fertilizer, corn, urea, gypsum and crabs. The total amount of containerized cargo is 425 TEUs.

13. Port of Douala, Cameroon (CMDLA)

The Port of Douala is located in the city of Douala in Cameroon. It contains 11 cargo berths. The port also has 380 thousand sqm of open storage and 8 thousand sqm of storage space for chilled and refrigerated cargoes.

The Port of Douala has 2,300 meters of quay. The Container Terminal has 3 berths and it has capacity for 5 thousand TEUs.

14. Port of Luanda, Angola (AOLAD)

Porto de Luanda is a busy seaport in Angola. The industrialization in the city heavily depends on the port. Main exports are petroleum, diamonds, fish products and iron ore. Imports are iron and steel, coal, machinery and flour.

Porto de Luanda has 4 terminals. There are 5 cargo berths with 180 meters long, and the port is connected to the national railroad.

15. Port of Pointe-Noire, Congo (CGPNR)

The main activity of Congo Terminal is the container-ships and RORO ships. The port is operated by Bolloré. The investment program cost 570 Millions of Euros. New information systems and quays are deployed.

The Congo Terminal became a transhipment platform within central Africa and the entrance of Congo basin door. Congo Terminal is part of the 13 container terminals and 7 ro-ro terminals of Bolloré.

16. Port Sudan, Sudan (SDPZU)

The Sea Ports Corporation (SPC) manages Port Sudan. In 2007, Port Sudan handled a total of almost 8 million tons of cargo. Port Sudan handled 2 million TEUs of containerized cargo. Main cargo items are cotton, oilseed, senna, gum Arabic, hides and skins. Its major imports are fuel oil, machinery, construction materials and vehicles.

The North quays have 11 berths. This part handles primarily general cargo. The Port Sudan South Quays has 4 berths. It handles containers, petroleum and bulk grains.

17. Port of Algiers, Algeria (DZALG)

The Port of Algiers is located in the capital of Algeria. In 2004, almost 1.8 million people lived near the Port of Algiers. The Port of Algiers is one of the most important seaports in North Africa, and it is an important economic, financial, and commercial center for Algeria. Most transporter items are raw materials, industrial products, and supplies. They export wine, oranges, vegetables, phosphates and iron ore.

The Port of Algiers has a newly-constructed container terminal with capacity for over 250 TEUs of containerized cargo.

18. Port of Tripoli, Libya (LBKYE)

The Socialist Ports Company is the port authority responsible for the management of the Port of Tripoli. The port mainly handles general and bulk cargoes and passengers.

The port harbor covers about 300 hectares. The port is visited by 600 ships every year. The port can accommodate ships to 190 meters long with draft of 11 meters.

19. Port of Libreville, Ghabon (GALBV)

Port of Libreville is in Gabon. The Owendo container terminal is in international standards thank to the equipment and properties of the wharf. The port has competitive services for traders. The container capacity reaches to 6,000 TEUs annually.

20. Port of Matadi, DRC (CDMAT)

Matadi Port is the most important port of DRC with 90% of maritime traffic. It handles 2.5 million tons of cargo every year. Matadi port is connected to Kinshasa by railways. The port has 10 quays.

The Matadi Port has recently operated two new cranes of 40T, and increased its ability to offer service for container ships. It can store 6,500 TEUs.

21. Port of Mogadishu, Somalia (SOMGQ)

The Port of Mogadishu is the official seaport of Mogadishu, the capital of Somalia. It is classified as a major class port. The port has the following facilities: Dedicated CFS area, Import Yard Areas divided to four stacks, Empty Container areas seperated for each shipping lines, Warehouses, Reefer Yard Area, Workshop, Administration Building, Port Control, General Cargo, Container and Ro/Ro Piers. The Terminal serves to 15 container vessels each month.

22. Port of Conakry, Guinea (GNCKY)

In 2011, Bolloré was awarded a 25-year concession for the container terminal at the port of Conakry. The other terminals are operated by Conakry Port S.A., Compagnie de Bauxites Kindia CBK and Rusal Frigua.

The channel draft is 13 meters. The capacity of the Conakry Terminal is 8,000 TEU and 2,000 vehicles.

23. Port of Freetown, Sierra Leone (SLFNA)

The Port of Freetown is located in Sierra Leona and it is the principal commercial port. The port is a major logistics hub for Sierra Leone’s imports and exports. Freetown Port has has a well-protected anchorage, a draft at berth of 10 meters, a length of quay of 1,060 meters.

A concession agreement was signed in 2010 between the Sierra Leone Port Authority, the Government, and the National Commission for Privatization, Bolloré Ports and the Freetown Terminal Limited. Six vessels can be berthed and operated at the same time. Bolloré plans to renovate and modernize the container terminal, which now employs hundreds of people at the terminal.

24. Port of Lome, Togo (TGLFW)

The port of Lomé is the only port on the West-African coast from which several cities can be reached by road within one day. Goods can be moved within reasonable time at competitive costs.

Lomé has been recognized by ECOWAS as a Free Trade Zone. Today, the port of Lomé handles 80% of the trade flow in Togo. The port serves to landlocked countries such as Burkina Faso, Mali and Niger. If The Port of Lomé currently handles over 15 million MT in 2015.

25. Port of Alexandria, Egypt (EGALY)

The Port of Alexandria has two harbours. The West harbour is used for commercial shipping and trade. In 2008, more than 5,000 vessels visited the Port of Alexandria.

There are six major zones at the Port of Alexandria consists of six major zones. These zones are used for general cargo, storage yard, covered storage building, roll-on/roll-off cargoes, stuffed bulk cargoes, barges and passengers.

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Trade Blocs and Free Trade Areas in Africa

Tue, 07 Jul 2020 08:14:08 +0000

The African Continental Free Trade Area (AfCFTA) is a free trade area. As of now, 54 of the 55 African Union nations signed the African Continental Free Trade Agreement. After the ratification deposit process by 24 of these countries, the Africa Continental Free Trade Agreement entered into force in 2019 for the 24 countries.

The agreement requires members to remove tariffs in the 90% of goods and to allowing free access to commodities, goods, and services across the continent. It is estimated that the removal of tariffs will boost the intra-African trade.

The objectives of the AfCFTA are:

Creating a single market
Facilitating investment through the movement of capital and people
Moving towards a Continental Customs Union
Promoting industrial development of member states

The Southern African Development Community (SADC) was established in 1980 and it aims to support the economic growth and develop the socio-economic status of member countries. SADC currently has 16 member states: Angola, Botswana, Comoros, Democratic Republic of Congo (DRC), Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, United Republic of Tanzania, Zambia and Zimbabwe.

The SADC region has a population of 350 million people and GDP of $721 Billion. Total import and export figures are $185 Billion and $191 Billion respectively. SADC is headquartered in Gaborone, Botswana.

The SADC Free Trade Area (SADC FTA) was established in 2008 to promote international trade among member countries. All the member states except Angola and DRC participated in the Free Trade Area. SADC (Southern African Development Community), COMESA (Common Market for Eastern and Southern Africa) and EAC (East African Community) formed the Africa Free Trade Zone (AFTZ) in 2008. AFTZ consists of 26 countries.

The Common Market for Eastern and Southern Africa (COMESA) is a free trade area. Currently, there are 21 countries that are part of the COMESA agreement. These countries are: Burundi, Comoros, D.R. Congo, Djibouti, Egypt, Eswatini, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tunisia, Uganda, Zambia, Zimbabwe. The former members of COMESA are Angola, Lesotho, Mozambique, Namibia and Tanzania.

Currently The Common Market for Eastern and Southern Africa covers a population of 560 million and a GDP of $768 Billion. It is headquartered in Lusaka, Zambia.

The Economic Community of West African States (ECOWAS) was founded in 1975 in order to promote economic cooperation and to increase living standards in member countries. ECOWAS has its own free trade area since 1990. The members states are adopting a common import tariff. ECOWAS currently has 15 member countries: Benin, Burkina Faso, Cabo Verde, Cote d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo. The ECOWAS Free Trade Area consists of member countries and it is the largest active free trade area in West Africa. The organization is headquartered in Abuja, Nigeria.

ECOWAS also has monetary policies for its member countries. West African Economic and Monetary Union (UEMOA) is a common organization for ECOWAS members. These countries share CFA franc as the common currency. These countries are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.

The second monetary organization founded by ECOWAS member states is West African Monetary Zone (WAMZ). The six founding members of WAMZ are planning to introduce a common currency, called Eco. The members are Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone.

The Economic Community of Central African States (ECCAS) promotes regional economy in Central Africa. The foundation of ECCAS goes back to The Customs and Economic Union of Central Africa (UDEAC) that was established in 1964. The members states are Angola, Burundi, Cameroon, Central African Republic, Chad, Congo (Brazzaville), Democratic Republic of Congo, Equatorial Guinea, Gabon, Rwanda, Sao Tome et Principe. The headquarters of ECCAS is located in Libreville, Gabon.

The Economic and Monetary Community of Central Africa is a side organization founded by 6 countries that share the same currency (the CFA franc). It aims to promote economic growth and form monetary union among member states.

The East African Community (EAC) is an international organization founded in 2000 by 6 member countries in the Great Lakes Region. Its member countries are Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda. The organization’s administrative center is in Arusha, Tanzania. EAC promotes free trade area and widens economic cooperation among member countries.

The organization achieved East African Customs Union and established a common market for goods. In 2008, the free trade area of EAC is expanded into the SADC region and COMESA region. Monetary union is one of the new aims of EAC.

According to the Customs Union, a common external tariff is exercised by member countries. Also, the trade among members is duty-free. The rates of tariffs depend on the type of material: Raw materials (0%), intermediate products (10%), finished goods (25%).

The Community of Sahel–Saharan States (CEN-SAD) was established in 1998. CEN-SAD was founded to increase regional welfare and improve trade volume among member countries. It promoted free movement of goods, capital and people. Member countries are Benin, Burkina Faso, Central African Republic, Chad, the Comoros, Côte d’Ivoire, Djibouti, Egypt, Eritrea, the Gambia, Ghana, Guinea-Bissau, Libya, Mali, Mauritania, Morocco, Niger, Nigeria, Senegal, Sierra Leone, Somalia, the Sudan, Togo and Tunisia. The organization is headquartered in Tripoli, Libya.

The Intergovernmental Authority on Development (IGAD) is a intergovernmental organization in East Africa. It was created in 1996. It is headquartered in Djibouti City. The member states are Djibouti, Ethiopia, Eritrea, Kenya, Somalia, the Sudan, South Sudan and Uganda. The aim of the organization is to improve trade, investment and financial backgrounds of member states.

The Arab Maghreb Union (AMU) was established in 1989. The member countries are Algeria, Libya, Mauritania, Morocco, and Tunisia. The aims of the organization include the establishment of free trade area, customs union and common market. However, the organization has been dormant due to opposition between Morocco and Algeria. The organization is managed from Rabat, Morocco.

Africa Free Trade Zone (AFTZ) was established at the COMESA-SADC-EAC Summit in 2008. The SADC, COMESA and EAC trade blocs make up the AFTZ. The member countries are Egypt, Libya, Sudan, Angola, Botswana, Burundi, Comoros, Djibouti, Dominican Republic, Eritrea, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Swaziland, South Africa, Tanzania, United Republic Of, Uganda, Zambia and Zimbabwe.

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Africa FMCG and Retail Sector Report

Fri, 29 May 2020 11:16:56 +0000

Foreword: Booming Retail Sector in Africa

The population growth and increase in the disposable income are the main drivers for the size of the consumer goods market. African countries are favorable for packaged food and other FMCG products thanks to their demographic properties and macroeconomic growth numbers. Africa is the second most populated continent with approximately 1.3 billion people living in 54 independent countries. The population is expected to reach 1.6 billion by 2030. In addition, according to the World Bank Data, the cumulative average GDP per capita growth is 1.1% in the Sub-Saharan African countries in the last decade. The increase in GDP per capita on top of the population growth can be translated as a development in average household disposable income.

The distribution and infrastructure network in Africa has been developing rapidly. The African governments are investing in international dryports, railroads and highways. The Port of Durban, located in South Africa, is the largest and busiest shipping terminal in Sub-Saharan Africa. It handles up to 31 million tons of cargo annually. It is the fourth largest container terminal in the Southern Hemisphere, handling 2.5 Million TEU. Tanzania is investing $10 Billion on a new port and special economic zone in the Bagamoyo region. Once completed, it is expected to be the largest port in Africa. In 2018, Turkish construction giant Yapi Merkezi and the Government of Tanzania signed a $1.9 billion contract to design and construct a high-speed railway in Tanzania.

Finally, the supermarket chains are expanding into new territories and formalizing the retail sector. The South African supermarket chains are the leaders in internationalization in the African continent. For example, the Shoprite Group has 2,319 stores in total, primarily in South Africa with 1,957 stores. With 94 stores, Namibia is the second largest market ahead, Angola and Zambia with 48 each; Botswana, Mozambique, Lesotho and Nigeria have less than 40 stores in respective countries. The expansion into Africa is followed by international supermarkets such as SPAR and Carrefour.

Turkish products can already be seen at major African supermarkets. African distributors and retailers source packaged food, candies, baby diapers, detergents and other consumer goods from Turkish companies, due to their high quality, reliability and reasonable price tags. We believe that Turkey is a very strong partner for African countries and African businesspeople should consider Turkish companies as one of their sourcing alternatives.

The 2020 edition of the Istanbul Africa Trade Company’s FMCG and Retail Sector Report provides a comprehensive analysis of the retail sector in Africa. Furthermore, the report provides insights into leading African supermarkets and Turkish packaged food manufacturers. The report was prepared by Istanbul Africa Trade Company management and regional partners. We hope that you will enjoy reading our report and find it useful for your business. Please do not hesitate to contact us for further information regarding trade inquiries between African countries and Turkey.

Macroeconomic Highlights

In 2019, the economic growth of Africa was 3.4%. The growth is expected to continue by 3.9% in 2020 and 4.1% in 2021. Africa’s economy is growing with private consumption, investment and exports. Investment is accounting for the half of the continent’s growth. It is followed by private consumption and exports.

The population of the continent is also increasing rapidly. Currently, the population of Africa is approximately 1.3 Billion people, and it is expected to reach 1.6 Billion people by 2030. The GDP growth and population growth will be translated into bigger market size and developing consumer demands.

Spending patterns are highly affected by income level of the country. World Bank classified countries under four income groups:

Many African countries are in the low-income and lower-middle income groups. The size of the middle-income class is still very low in many countries. However, there is an upward shift in income level. As the proportion of middle-income households increase, the FMCG market will be more favorable for international companies. The consumers will demand branded, high-quality and well-packaged products. And their share-of-wallet will increase for high-quality products.

In this report, five African countries are analyzed in-depth in the next section. From a general perspective, we can tell that African countries developed substantially in the last decade. We are optimistic about the future of African countries. We expect the following macroeconomic trends:

Increased proportion of middle-income households.
Higher consumer demand for branded products.
More average household budget for packaged food and FMCG products.
Formal distribution channels and supermarkets.

Market Analysis

South Africa

South Africa is one of the most developed countries in the African continent. It is bordered by Namibia, Botswana, Zimbabwe, Mozambique, Swaziland and Lesotho. Its population is 57 million and has $350 billion GDP, second after Nigeria. South Africa is one of the founding members of the African Union.

Packaged food reported strong retail sales growth in 2019. The products that are part of the daily diet of South African are the most selling items, such as dairy, rice and pasta. South African customers give importance to the price. The value for money is the key driver in the purchase behavior of South Africans. The adverse economic conditions in South Africa affected the spending pattern of customers and many people cut their spending on non-essential products. The main patterns of these customers are bulk buying, preferring lower-priced products and choosing private label products.

The busy lifestyle in South Africa pushes customers to buy meal solutions, such as snacks that are easy to prepare and healthy. Especially, the demand for ready meals is increasing as the number of single member households is going up. In addition, the health and wellness awareness of packaged food are being trendy. Many manufacturers are following this trend and they use signs like `sugar-free`, salt-free`, `natural` on their packaging. There are more margins on healthy products as the unit price is more expensive. However, targeting this segment limits the sale only to affluent customers

In South Africa, modern retailing is well developed and supermarkets are the leading distribution channel. The packaged food sector is expected to grow in the near future, with convenience and affordability being the main drivers for demand. However, the middle-income and high-income consumers are attracted to value-added products such as healthy and sugar-free food. They are ready to pay more for these products. The lower-income consumers are still very price sensitive and they continue to choose the cheapest product that offers adequate quality.

Nigeria

The Federal Republic of Nigeria is located in West Africa. It is bordered by Cameroon, Niger, Chad and Benin. Nigeria is referred as the `Giant of Africa’, due to its strong economy and large population. Its population reached 191 million in 2018 and Nigeria has the highest GDP in Africa with $375 Billion. Nigeria overtook South Africa in 2014 to become Africa’s largest economy. Nigeria is a member of the African Union, United Nations, OPEC and Commonwealth.

The customer spending power significantly decreased in Nigeria in the last 5 years due to worsening macroeconomic conditions. However, the packaged food sector has been performing well. There are two key drivers that support the growth of the packaged food sector. Firstly, the population of Nigeria is growing rapidly, especially the number of children and teenagers is increasing. Secondly, the consumer trend shifts from unpacked products to packaged products. Manufacturers produce in smaller packs in order to make their products more affordable. With urbanization and changing lifestyles, the market size of packaged food is growing faster.

The deprecation of local currency made import more costly. The foreign brands lost their appeal on customers’ eyes due to their higher price. However, the international players can still penetrate the market by lowering their prices or making their products available in smaller packs. The retail market in Nigeria relies on non-formal trading, such as kiosks, open markets and small grocery stores. The formal and modern retailing increases its share in the total market thanks to new supermarkets, convenience stores and hypermarkets. The Nigerian consumers started to change their shopping style by switching to modern retailers with the opening of new shopping malls.

The Nigerian economy is expected to recover and the consumer buying power is expected to increase. This leads to an opportunity for higher-priced products in the market. In addition, the population of Nigeria is growing swiftly, and the young population will contribute to the size of the packaged food sector.

Kenya

Kenya is located in East Africa and it is bordered by Ethiopia, Somalia, South Sudan, Uganda and Tanzania. Kenya’s population is 50 million and its GDP is $74 Billion. Kenya is a member of the United Nations, World Bank, International Monetary Fund, COMESA, East African Community trade bloc and other international organisations.

Kenya experienced a severe drought in the last years. Due to the drought, the income of households that rely on agriculture decreased and the price of food raw materials increased. Kenyan food manufacturers faced challenging time and they entered into a price competition to attract the remaining consumers. Recently, many firms are investing in better quality and better packaging to attract customers.

The growing middle class in Kenya prefers packaged food over unbranded and unpackaged products. This led to a sizeable growth in the sector in spite of the drought, financial crisis and trade dispute with Tanzania. The international players and local companies compete against each. The local companies have the market familiarity advantage and they know the consumer taste better. However, international companies have the resources to promote their products and offer reasonable prices for price-sensitive consumers.

The modern retailers such as supermarkets and hypermarkets are becoming more popular and they increase their share in total distribution. However, the groceries still dominate the retail market. We expect the increase in modern retailing thanks to new shopping malls and foreign chain supermarkets entering the Kenyan market. We expect a better future for the agriculture production in Kenya, which will contribute to the packaged food sector as lower raw materials cost.

Tanzania

The United Republic of Tanzania is located in East Africa and it is bordered by Uganda, Kenya, Mozambique, Malawi, Zambia, Rwanda, Burundi and the Democratic Republic of Congo. Tanzania’s population is 58 million and its GDP is $42 Billion.

Tanzania is a diverse country in terms of food and nutrition trends. The middle-income and high-income households have a better diet and they tend to consume packaged food, such as snacks and confectionery. However, low-income consumers usually have only one meal per day and they do not have much disposable income to spend on non-essential packaged products. There is also a wide difference between the urban population and the rural population. People living in rural areas tend to grow their own vegetables and fruits. The consumers living in urban areas do not have that chance, and they tend to buy their food from groceries and supermarkets.

In Tanzania, the low-income population mostly eat traditional food such as Ugali (maize). Their decision depends on the price of the food. As the income level increases, the consumers tend to eat rice, potato, pasta and western food. They are less price-conscious and they prefer tasting new dishes. In addition, the population of Tanzania is younger than the world average with 44% of the population being under 14-years-old. This demographic structure is expected to positively affect the consumption of packaged food in the future.

Similar to other African countries, the formal and modern retailing is very limited in Tanzania. Only affluent people shop packaged food in supermarkets. The remaining majority go to street retailers, independent grocery stores and open markets. The infrastructural problems limit the modernization of retailing. The distribution network is very weak due to bad road conditions and many shops in the rural areas do not have fridges. The companies that consider Tanzania as an export market should keep these challenges in their mind and take steps accordingly.

Ghana

The Republic of Ghana is located in the West Africa and it is bordered by Ivory Coast, Burkina Faso and Togo. Ghana’s population is 29 million and its GDP is $47 Billion. Ghana is a member state of the Non-Aligned Movement, the African Union, the Economic Community of West African States (ECOWAS), Group of 24 and the Commonwealth of Nations.

In Ghana, there is a wide difference in alimentation trends between population in urban areas and rural areas. People living in rural areas have access to locally grown fresh food, that is why, packaged food is not common in Ghanaian rural areas.In urban areas, packaged food is more common due to its convenience. Especially, people with higher spending capacity purchase packaged food such as yoghurt, biscuits and confectionery from grocery stores. There is a trend of eating healthy, which is also promoted by the government. This increases the demand for smaller portions and less oily food.

The players in the packaged food industry are diversifying their product ranges and developing smaller packaging sizes to attract new customers. The people in the lower income levels demand products in smaller packs. Accra has a more sophisticated consumer base and western-style confectionery and fast food is getting more popular there among consumers. The busy lifestyle in Accra increases the demand for convenience food and ready-to-preapre food. However, the market size of packaged food is not expected to increase significantly in the rural areas of Ghana.

The young population for Ghana is promising for the future of the FMCG industry. This demographic fact positively affects the consumption of baby food, sweet biscuits and other snacks. In addition, low-income and middle-income people in Ghana shop from informal retail channels, such as open markets in the residential areas. Finally, the distribution network in Ghana is strong in the urban areas. New shopping centers with supermarkets and hypermarkets develop the formal retailing environment.

Major Supermarket Chains in Africa

The retail sector in Africa has been formalized by the expansion of supermarket chains. With a more sophisticated distribution network and an increasing number of middle-income households, the supermarkets expanded into new countries and territories. South African supermarkets are leading this expansion process, however there are also other local and international players that take advantage of the growing market in African countries.

The international supermarket chains will benefit from the integrated African market. African countries are taking serious steps in promoting trade and developing welfare. In March 2018, 44 out of 54 African countries signed the African Continental Free Trade Agreement (AfCFTA) in Kigali, Rwanda. The agreement outlines the removal of tariffs on 90% of goods, allowing free access to commodities, goods and services across African countries. If the African Continental Free Trade Agreement enters into force, the Intra-Africa trade can converge to the level of Intra-Asia or Intra-Europe trade. We believe that the supermarket chains will have lower customs and logistics costs and this will increase their expansion process.

Retail sales in Africa reached to over $500 billion in 2018. Africa is made up of a combination of traditional and modern retailing channels. The sales channels vary by country and are influenced by factors such as economy, development state, consumer preferences and culture. Traditional and informal retailing dominates the continent due to a lack of infrastructural development. Small groceries and kiosks are the main players in the traditional retailing channel. These groceries offer flexible trading times, accessibility and lower-priced products. In these groceries, customers can buy smaller quantities and single items, compared to complete packs at supermarkets, such as single cigarettes, sugar cubes, unpacked rice, etc.

Informal retailing is still a dominant retail sales channel in many African countries. This form of retailing includes open-air markets, street vendors and tabletop merchants. Almost all the products that are sold in supermarkets are also available in informal retail stores. As opposed to the general perception, all levels of society shop through the informal retailing channel.

Africa’s rising middle class is contributing to the modernisation of retailing. New shopping malls are being constructed across Africa. With the rise of disposable income, consumers show brand consciousness and demand for higher quality.

In the next section, we analyzed 10 supermarket chains in Africa. You can find their brief summary, number of stores, regional presence and financial data.

Shoprite

Shoprite Group opened its very first stores in 1979 and grew new acquisitions and innovative expansion strategies building it into the leading food retailer in Africa. The Shoprite Group has business operations in 15 countries on the African continent. The Group has an influential presence in the South African food retailer market with a 30.6% market share. The group, which employs 147,268 people in 15 countries, is a huge job provider in the African continent. The Group provides its food retail service in 4 different groups.

Firstly, Shoprite Stores are the flagship brand, providing goods and services to the mass middle-income market. Secondly, Usave shops are small-format stores that offer a limited range of basic foods for lower-income customers. Checkers are the brand for affluent customers, which prioritises convenience, quality and freshness. Lastly, CheckersHyper is the larger version with wider-range stores with similar products to Checkers.

In 2019, the Shoprite Group achieved around $8 billion in sales revenue. 74.8% of the sales acquired from the South Africa division, other areas contributed 14.2%, the rest of the revenue received from non-supermarket sales, such as furniture and other operations. The Group expanded its operations and opened 126 net new stores and acquired 36 new trucks in 2019.

As of 2019, the Shoprite Group has 2,319 stores in total, primarily in South Africa with 1,957 stores. With 94 stores, Namibia is the second largest market ahead, Angola and Zambia with 48 each; Botswana, Mozambique, Lesotho and Nigeria have less than 40 stores in respective countries.

Massmart

Massmart was founded, with Mikro as the founding entity, with 6 stores in 1990. Massmart, Africa’s second largest retail group, was listed on the Johannesburg Stock Exchange (JSE) on 4 July 2000. The Group is currently a top 40 listed company (by turnover) and is a participant in the JSE Limited’s Socially Responsible Investment Index. Currently, 52% of Massmart’s shares are owned by Walmart (USA).

As of January 2019, Massmart has 436 stores across 13 sub-Saharan countries. Massmart employs approximately 51,000 permanent and flexi-time staff and achieved annual sales of $5.3 billion for the year ending December 2019. Massmart has four divisions each comprising widely recognized, differentiated retail and wholesale formats. Game and Dionwired stores are the general merchandise and food discounter. These mass discounters have a presence in 12 countries with more than 150 stores. Makro is the warehouse division of Massmart Group with 21 stores, which operate only in South Africa. Builders are the building material supplier of Massmart, they are located in South Africa, Botswana, Mozambique and Zambia. Jumb, Cash & Carry and Cambridge are the food wholesaler and retailer division in 7 different countries.

Massmart is the second-largest distributor of consumer goods in Africa, and is the leading retailer of general merchandise, liquor, home improvement and building supplies, and the leading food wholesaler. Massmart’s main operation location is South Africa, where the company has 389 stores and generated 91.3% of the total sales in 2017. Outside South Africa, Massmart has 47 stores.

Pick n Pay

In 1967, the first four Pick n Pay stores were purchased by Raymond Ackerman in Cape Town, South Africa. The Group has grown to encompass stores across South Africa, Namibia, Botswana, Zambia, Eswatini and Lesotho with 1795 stores. Also, Pick n Pay owns a 49% share of Zimbabwean supermarket chain, TM Supermarkets. The company operates through multiple store formats under three brands – Pick n Pay, Boxer and TM Supermarkets – and has the largest online grocery business in Africa. Out of 1,795 Pick n Pay stores in Africa, 1,019 of them are company-owned, 719 of them franchise stores and 57 of them are TM Supermarkets.

The company offers different store formats in different countries. Exclusively in South Africa, 20 Pick n Pay Hypermarkets provides a wide range of products to customers via an average 15,000 m2 store area. Total 552 Pick n Pay Supermarkets are the most common type of Pick n Pay stores in 7 African countries, they are around 3,000 m2 and more than half of them are franchise. In South Africa, BP and Pick n Pay have a partnership. The company provides small 24-hour Pick n Pay Express convenience stores at BP service station forecourts in South Africa. Pick N Pay Liquor stores are situated close to our supermarkets and hypermarkets but with separate entrances. These stores offer a range of wine, spirits and beer, including innovative local craft products. Lastly, Boxer stores provide a “one-stop shop” for middle- to lower-income shoppers in South Africa and Eswatini and are becoming South Africa’s leading limited-range discount supermarket.

Pick n Pay mainly operates in South Africa with 1,647 stores, but it has 148 stores outside South Africa, with established operations in Botswana, Eswatini, Lesotho, Namibia, Zambia and Zimbabwe. These operations generated segmental revenue of around $256 million in 2019.

Spar

SPAR, originally DESPAR, is a Dutch multinational franchise that operates food retail stores. SPAR started with one Dutch store in 1932 and now comprises more than 13,100 stores in over 45 countries on four continents. SPAR has an established presence in 11 countries in Africa over 1,000 stores. SPAR commenced its activities in the African continent initially in South Africa in 1963.

South Africa is a critical hub for SPAR, the company is a dominant player in the South African market with 887 stores and generated almost €5 billion revenue in 2018, second highest turnover after SPAR Austria with €6.88 billion. In addition to South Africa, SPAR has a long-lasting relationship with Zimbabwe since 1969. SPAR Zimbabwe continued to open new company- owned stores in 2018; 14 stores of the 36 are company-owned, retail sales for the year were €154 million, an increase of 39.1%.

In the early 2000s, SPAR invested and started operating in various other African countries such as; Botswana, Namibia, Zambia and Mauritius with 33, 29, 13 and 5 stores, respectively. Botswana is the second highest revenue generator location in Africa with €184 million ahead, Namibia with €159 million and Zimbabwe with €154 million.

Trading conditions and political instability created challenges in Africa but many SPAR stores are performing exceptionally well. In 2018, Botswana grew by 19.2%, Zimbabwe by 39.1%, Mozambique by 56.2% and Cameroon by 65.6%. In Nigeria, SPAR grew sales to €110 million, an increase of 8%.

Choppies

Choppies Enterprises Limited is a Botswana multinational grocery and general merchandise retailer headquartered in Gaborone, Botswana. Initially they were selling only food-based (both fresh groceries and wholesale long-life foods) and other fast-moving consumer goods. The group owns a centralised, in-house distribution network in South Africa, Zimbabwe, Zambia and Kenya.

Choppies is a listed company on the Botswana Stock Exchange and Johannesburg Stock Exchange. First Choppies store was opened in 1986 named “Wayside Supermarket”, the second one followed in 1993. In 2008, Choppies expanded outside of Botswana and opened its first store in South Africa. Later, in 2013 the company acquired some of the SPAR stores in Zimbabwe. The belief in the potential of the African market encouraged Choppies to expand into Zambia and Kenya in 2016 and into Tanzania and Mozambique in 2017.

Choppies stores are filled by their distribution centers with central sourcing. The company’s top-selling products are directly distributed from distribution centers to the stores. Other products are delivered from the manufacturer to the stores. Choppies owns two distribution centers in Botswana. A new 10,000m2 South African distribution center opened in September 2012 for the South African stores. In total, The group is present in 8 Sub-Saharan countries, with over 250 supermarkets and operates 11 distribution centers and employees more than 17,000 people.

OK Zimbabwe

OK Zimbabwe Limited is a leading retail group in Zimbabwe with a product range that extends from groceries and houseware products to clothing and textiles. OK Zimbabwe Limited was first established in 1942. Through the time, the company used various names and historically, the company was incorporated as Springmaster Corporation in 1953, and in 1984 changed its name to Deltrade Limited which was then again changed to the current name in July 2001. OK Zimbabwe, which trades under the popular brand names OK Stores, Bon Marche Stores, and OKmart, operates in three major market categories, namely, groceries, basic clothing and textiles, and houseware products.

Via a diversified distribution channel, the company is able to target all segments of the market, responding to its customers’ requisite for convenience and value. Despite operating in a highly competitive retail sector, OK Zimbabwe has maintained its dominant position, developing its own brands through the Bon Marche Premier Choice and Shopperschoice labels.

OK Zimbabwe Limited operates approximately 61 retail outlets throughout Zimbabwe and owns subsidiaries that complement its diverse product offering; Eriswell (Private) Limited, Swan Technologies (Private) Limited and Winterwest (Private) Limited. Since 2001, the company is listed on the Zimbabwe Stock Exchange.

Uchumis

Uchumi Supermarkets Plc is a Kenya-based company engaged in the retail supermarkets operation. It distributes bakery, wines, meat, fish, vegetables, as well as kitchen appliances and decoration, among others. First Uchumi Store opened in 1975 to create outlets for the equitable distribution of commodities and to create retail outlets for Kenyan manufactures. Uchumi Supermarket grew to become a retail success story in Africa. In the 90s, Uchumi spearheaded the hypermarket concept in Kenya. It was the first in the region to list on the stock exchange in 1992.

Uchumi had hard times in the early 2000s. Uchumi started to experience financial and operational difficulties occasioned by a sub-optimal expansion strategy coupled with weak internal control systems. As a result, on 31st May 2006, the Board of Directors resolved that the Company ceases operations and on 2nd June 2006, the Debenture Holders placed the Company under receivership. Simultaneously, the Capital Markets Authority (CMA) suspended the Company’s listing on the Nairobi Securities Exchange (NSE). Following a framework agreement between the Government of Kenya, suppliers and debenture holders, the company is revived and commenced operations from 15th July, 2006 under Specialized Receiver Manager (SRM) and interim management.

From a negative bottom line in 2006, the company has reported profits in the last three financial years. The lending banks in turn lifted the company’s receivership in 2010 and the company was successfully re-listed in the Nairobi Securities Exchange on 31st May 2011 – exactly five years to the date that it was suspended. The company is indebted in gratitude to the government, lending banks, suppliers, customers and shareholders for their support and commitment to saving one of Kenya’s oldest strongest brands with around 20 stores in major Kenyan cities.

Naivas

Naivas Supermarket is the largest supermarket chain in Kenya, with 62 outlets as of March 2020. Naivas is headquartered in Nairobi, with retail outlets in many urban centers in the country. The chain is the country’s largest supermarket chain followed by its competitor Tuskys.

Naivas Limited started as a family business serving the village of Rongai in the outskirts of Nakuru town in 1992. Later, the company grew into a major wholesale and distribution business and was registered as a company in 1993. The business expanded into Nairobi in 2001, where it opened its first branch on Ronald Ngala Street, closing down its outlets in Rongai and Elburgon.

2013 was a milestone for Naivas, the Johannesburg Stock Exchange-listed Massmart offered to acquire a 51% stake in Naivas at a cost of KSh3 billion, giving Massmart a controlling interest in the retail chain. The bid triggered a feud at family owned Naivas, and some family members asked a court to block the sale. In October 2013, Naivas management stated that they were no longer selling a controlling stake to Massmart.

Naivas now operates with 62 stores as a traditional retailer, but also the company is the largest online supermarket in Kenya. It provides shoppers a convenient platform for online grocery shopping with over 60,000 items on the online supermarket. After the collapse of Nakumatt, a local supermarket chain that had dominated the sector in Kenya, Naivas strengthened its presence in Kenya. In early 2020, a French investment fund acquired 30% of Naivas’s stake.

Melcom

The Melcom Group of Companies consists of six separate entities: Melcom Limited, Century Industries Limited, Crownstar Electronic Industries Limited, Melcom Hospitality, Melcom Travel & Tours Limited, and Melcom Care. Apart from capturing an extensive retail market share with a network of 41 Melcom retail outlets and 3 Cash ‘n Carry stores spread all over Ghana (Melcom Limited), the Group is well-diversified into other businesses.

Melcom Group is best known for its retail chain, Melcom Limited. As Ghana’s largest chain of retail department stores, Melcom is home to thousands of products and hundreds of well-known brands all under one roof.

Melcom Limited started its business in 1989 and grew the number of its stores to 44. The group built the single largest shop in Ghana (Melcom Plus in Kaneshie covering an area of over 130,000 square feet). Melcom Limited offers 25,000 items procured locally as well as from around the globe. Melcom Limited has 1,200 employees at and generates $169.70 million in sales.

Carrefour

Carrefour S.A. is a French multinational corporation specialized in retailing. The first Carrefour store in 1960, within suburban Annecy in France. The Carrefour Group was the first in Europe to open a hypermarket, a large supermarket, and a department store under the same roof. They opened their first hypermarket on 15 June 1963 in Sainte-Genevieve-des-Bois near Paris. The year 1999 was a milestone for the Carrefour Group, which merged with Promedes, known as Continent, one of its major competitors in the French market.

Internationalization started with Belgium in 1973 and then followed by Italy and Spain. The French regulatory context and slowdown in economic growth favored the acceleration of Carrefour’s international development, the company expanded into overseas locations such as Argentina in 1982 and Taiwan in 1989. Then in 1995, Carrefour entered the Chinese market.

At the beginning of the 2000s, the Group bolstered its positions in numerous countries through targeted acquisitions: in France, Romania (Hyparlo, Artima, Penny Market), Belgium (GB), Poland (Ahold), Italy (GS), Argentina (North) and Spain (Plus).

The Carrefour Group has over 100 stores in Africa, especially in North Africa such as in Egypt, Morocco and Tunisia. In October 2016, Carrefour opened its first outlet in Kenya, East Africa’s largest economy. Cameroon, Ivory Coast and Senegal are the other locations, where Carrefour has a presence in Sub-Saharan Africa.

Position of Turkey in the Global FMCG Sector

According to current GDP figures, Turkey ranks as the 18th largest economy in the World and 7th in Europe. The Economic size of Turkey is larger than the combination of Nigeria and South Africa. The economic size of Turkey is $754.8 billion and it has a population of 82.6 million people. Turkey is an export-oriented economy with an estimated $171.5 billion exports in 2019. The leading export markets of Turkey are Germany, UK, Italy, Russia and the United States.

Istanbul is the economic heart of Turkey with 15 million population and a vibrant business life. Ambarli Port in Istanbul is among the 50 largest container ports of the world. Istanbul and neighboring cities (Kocaeli, Tekirdag and Sakarya) are the main body of the Turkish industry. 38 of 271 organized industrial zones in Turkey are located in these cities.

Mersin province also has a major international shipping port and many factories around this port. The Port of Mersin is the base for the city’s economy. The Mersin Industrial Free Zone is adjacent to the port. The artificial harbor at the Port of Mersin exports minerals and agricultural products from southeast Turkey. The city is the location for one of the biggest oil refineries in Turkey.

Turkish companies are specialized in the production of packaged food, household chemicals, diapers, cosmetics and other FMCG products. These companies cater to the domestic demand and also export their products to more than 100 countries. Global and local companies are present in Turkey with their on-site manufacturing plants. P&G, Unilever, Nestle, Reckitt Benckiser and Mondelez are major global corporations and all of them has a production facility in Turkey. Major Turkish companies in the FMCG sector are Eti Gida, Hayat Kimya, Halk Hijyenik and Tat Gida. These companies are active in Turkey and in the international arena, including Africa.

Turkey has been historically targeting the European Union countries as their export partners. In the meantime, Turkish factories meet the demand of Russia, Middle East and North Africa. In 2005, Turkish Government began to improve the relationship with African countries. Turkish Government has had a significant initiative to build Turkish presence in major African countries. The number of Turkish embassies in Africa has more than tripled, from 12 to 41, in the last 15 years. There have been joint business forums and conferences, where companies from different countries found the opportunity to take the first commercial steps. Turkish businessmen have been acquainted with the Africa region and trade volume has significantly increased in the last decade.

Our research includes a list of top 40 Turkish food and beverage manufacturers. In addition, we conducted an in-depth analysis of 10 major companies in the FMCG sector.

Aves

Aves, with close to 25 years’ experience in international commodity trade, is a major player in sunflower oil production and supply in Turkey. The company operates in the production and international trade of vegetable oils and biodiesel; vegetable oil storage, real estate sector, offshore ship loading and unloading platform.

Aves owns the largest fully integrated oilseed processing and biodiesel plant in Turkey. It produces through direct extraction and pressed extraction. The facility was built on 120 acres of land in Mersin, one of the biggest port cities in Turkey. It produces 1 million tons of vegetable oil, pulp and biodiesel per year with 1,500 tons of crushing, 700 tons of refinery and 1,100 tons of filling capacity. The facility, which can operate 2 different seeds at the same time, there are 62.400 tons of seed storage silos and different seeds can be stored in 12 different silos at the same time. It has a horizontal warehouse with a storage capacity of 25,000 tons of soybean meal. For other oilseed meals, there are three 3.000-ton horizontal pulp tanks. The Facility has 84,000 cubic meters silo and 28,000 cubic meters tanks storage capacity and has a shelf storage system built on 3,000 square meters.

In refinery and filling facilities, Aves produces a wide range of products ranging from 1 litre to 18 litre. The company produces sunflower oil under the Safya brand, corn oil under the Sari Dari brand and cotton oil under the Mersina brand.

According to 2018 data, Aves has purchased 460 thousand tons of oilseed cereals and it is strengthening its position and position in the sector by sales revenue over 131 million dollars. Aves ranked 254th in the Istanbul Chamber of Industry Top500 list.

Increasing its international market share with SAFYA branded sunflower oil, AVES realized an export figure of over 65 million USD last year. It mainly exports to the Middle East, Asia Pacific and Africa regions and exports to over 60 countries in total. According to Turkey Exporters Assembly data, it is the 18th largest exporter in its sector.

The company has a significant logistics advantage to its’ competitors, thanks to Aves’ vegetable oil storage facility with 220,000 cubic meter capacity in Mersin and Aves’s offshore ship loading/unloading the port.

Namet

Namet is a leading meat producer in Turkey, with more than 150 various products from processed meat to fresh meat. The company has been operating since 1929. As the fastest growing company among the biggest 500 firms of Turkey, in 2014 Namet acquired Maret, another leading meat produced. Together under the same roof, Namet became the leading meat producer of Turkey.

Offering product groups like pastrami, sausage roasting, salami, smoked wiener, roast beef, Namet takes a role as the pioneer in the whole sector. Namet keeps developing new products for the market.

Operational since 2013, Şanlıurfa Integrated Fattening and Meat Plant is located on open land of the 740,000 square meters. Holding capacity of breeding farm is 40,000, while the annual breeding capacity is 60,000 cattles. An isolation business for 4,200 heads is available within the plant. The processing section of the plant has the capacity of butchering daily 2,500 ovines and 350 cattles. Being one of the special breeding farms in Turkey, this plant gives the taste of Namet products.

Being equipped with state-of-art-technologies, Namet Çayırova Plant started production in 2010. This giant plant is located on a closed area of 34,600 square meters and produces delicatessen, fresh meat, further processed product, frozen meatball and burger. Being indicated as the technological base of taste world, this plant is fit for European and World standards in all terms.

With around 120 vehicles, Namet fleet has the capacity of carrying 1,200 tons of products at one time. In addition, technological infrastructure and cold air stores in regional directorates are reflections of Namet’s perfect quality mentality. Namet accesses to collective consumption and retail channels via Marmara, Mediterranean, Aegean, Anatolia, and East Black Sea Regional Directorates. Namet exports its products to various countries in Asia & Middle East.

Namet Çayırova Factory has quality and food safety system certificates including ISO 9001, IFS, BRC, FSSC 22000 and TSE certificates of product and service compliance. These standards are applied during the production processes of the plant. Namet has also Halal Food Certificate certified by Turkish Standards Institution. Namet always makes all processes of product preparation, all products, and raw materials control firmly. With the help of a retrospective tracking system, auxiliary material and main raw material are monitored automatically and spontaneously via computer systems from the entrance to exit. The products are controlled with micro-biological and chemical analyses carried out in laboratories independent from production sites. Namet always improves its labor force quality with regular personnel trainings .

Kent (Mondelez)

Mondelēz Turkey is the market leader in gum, candy and G&O with strong brands like First, Falım, Kent, Olips ,Bonibon and Jelibon. The company also has a strong presence in the Turkish market in chocolate and biscuits with iconic global brands such as Milka, Toblerone and Oreo. Mondelēz Turkey has a large production facility in Gebze and employs nearly 1,2000 people. The products produced in this plant are exported to more than 50 countries.

Kent started business in 1927 by the Tahincioglu family in Mardin, a small city in southeast Turkey. In 1956, the company moved to Istanbul and carried on its operations in modern facilities. Besides candy, Kent commenced to produce chewing gums in 1960. After the 70’s, the company expanded its confectionery product range such as hard candy, soft candy, chocolate, jellybeans.

After 2000, Kent had some corporate takeovers. In 2002 Cadbury acquired the majority stake of Kent and acquired Intergum, a major Turkish gum producer, in 2007. Cadbury combined two companies and Kent expanded its product catalogue.

In 2010, Cadbury was acquired by Kraft Foods and Kent became a part of Kraft Food companies. Two years later, Kraft Foods separated its business division and Mondelez International was created. Today, Kent is part of Mondelez International.

In 2013, Kent listed in the Top 500 exporters list, and also took place in the Istanbul Chamber of Industry’s Top 500 industrial companies list. The factory of Kent in Turkey is the largest factory of Mondelez in the world in terms of size and capacity. The total area is 85,000m2 and the annual production capacity is 110,000 Tons. Mondelez invested $54 Million in 2019 to increase the capacity of sweetener production line, new product development and R&D investment for gum production.

Mondelēz International, the parent company of Kent, empowers people to snack right in approximately 150 countries around the world. With 2019 net revenues of approximately $26 billion, Mondelez is leading the future of snacking with iconic global and local brands such as Oreo, belVita and LU biscuits; Cadbury Dairy Milk, Milka and Toblerone chocolate; Sour Patch Kids candy and Trident gum.

Mondelēz International is a proud member of the Standard and Poor’s 500, Nasdaq 100 and Dow Jones Sustainability Index.

Mey İçki

Mey was established in 2004 after the privatization of the nationalized Tekel’s (Nationalized Turkish tobacco and alcoholic beverages company) alcoholic drinks division. Mey operates as two separate companies in Turkey, one involved in the manufacture and the other responsible for sales and marketing.

Mey has combined the talents of its employees with the strength of its brands to become one of Turkey’s biggest companies, boasting a staff of more than 2000 employees that includes distributors and sales teams.

Mey’s product portfolio includes Yeni Raki, Tekirdağ Raki, Istanblue and Binboa Votkas, Kayra, Terra and Buzbağ Wines.

Since 2011, Mey has been working under the umbrella of Diageo, an alcoholic beverage manufacturer trading in close to 180 countries with offices in 80 countries. Thanks to Diageo’s know-how and experience in the international scene as a leading producer of distilled alcoholic drinks, beer and wine brands, Mey has strengthened its product portfolio, carrying out the distribution to the domestic market of brands such as Johnnie Walker, Crown Royal, J&B, Windsor, Buchanan’s Whiskeys, Smirnoff, Ciroc and Ketel One Votkas, as well as Baileys, Captain Morgan, Don Julio, and Tanqueray.

Mey continues its operations with a total of 9 factories, producing raki in Tekirdağ and Nevşehir, suma (distilled raki) in Alaşehir and Tarsus, alcohol in Karaman, votka, gin and liqueur in Bilecik, also operating an aniseed processing facility in Acıpayam, and wine production facilities at Elazığ and Şarköy.

Since the foundation of Mey, the export of rakı has taken an important place among the company’s main strategies. While export was limited to twenty countries in 2004, today rakı is exported to more than forty countries, including Germany, USA, UK, Northern Cyprus, Iraq, Benelux, Switzerland, Greece, France, the Turkic Republics, and the countries of Eastern European countries.

In 2004, Mey’s international sales volume was 1.2 million litres. Over the last four years however, the focus on international marketing and operations in many European cities has led to a fourfold increase in international sales, with a volume of 5 million litres in 2014.

The brand Yeni Rakı holds an important position among anise flavoured spirits not only in Turkey, but in the world as well. According to Impact Databank 2012, one of the most important reports in the international sector, Yeni Rakı was the leader brand among anise flavoured spirits market in terms of retail value, and the 13th most valuable spirit brand on the global market. In 2016, Mey had 3.692.633.340₺ revenue.

Arbel Group

Arbel Group consists of Arbel S.A and TURKPULSE has been a leader in the production, processing and export of grains, pulses, and other food products, for over 50 years from its base in Mersin, Turkey.

In 2009, all food related operations of Arbel Group were acquired by AGT Food and Ingredients Inc., adding to a total of 21 facilities in Canada, the U.S., Australia and Turkey.

Arbel now is the largest pulses exporter in Turkey. Arbel maintains its production facilities in Mersin, Turkey with a daily capacity of 4,000 metric tons.

The Arbel Group’s facilities are located on a 100,000 sq meter parcel of land equipped with 50,000 metric tons storage capacity steel silo facilities and more than 70,000 metric tons storage capacity in horizontal production and processing through a continuous Research and Development program. A full-line of commercial packaged pulses, bulgur and beans are available for the domestic Turkish market and for export.

Arbel facilities include cleaning, calibration, peeling, splitting and colour sorting lines for the production, processing and export of red split lentils, whole red lentils, green lentils, chickpeas, dried peas, white beans, bulgur. Trading activities include edible oils and sugar, vegetable oil, salt, high energy biscuits, potatoes, fresh fruit and vegetable; construction materials, such as cement, bricks, steel, wood, electrical cable and electrical equipment, marble, pipes, furniture and housewares.

Arbel Group facilities are located eight kilometres from the Port of Mersin, Turkey’s largest port for the export of agricultural and food products, and include duty-free warehousing facilities in the Mersin Free Zone. This location provides logistical advantages in sea and land connections for the shipment of products to global markets.

Arbel Group ranked number three in the 2009 Turkish Export Rankings by the Istanbul Chamber of Industry, on its annual Second 500 List of Industrial Enterprises.

Other Arbel Group activities include trading of goods such as vegetable oils, crystal sugar, iodized table salt, vitamin-added biscuits, fresh fruits and vegetables. Non-food products traded include poly propylene sacks, jute bags, plastic cover sheets, textiles, blankets, construction materials, timber, iron, cement, briquettes, electric cables, marble, installation pipes, fittings and other home supplies.

Banvit

Starting as a feed producer in 1968, Banvit gradually went into the production of broiler chickens. Today, the company is able to carry out all stages of vertical integration regarding poultry production.

As a result of restructuring that began in 1996, Banvit extended its vision and focused on investments that would lead it toward becoming one of the foremost food producers in Europe. In the wake of the establishment of Banvit Romania, construction of a processed food production facility in Bandırma began in 1999; this facility began operations in May 2001. With the establishment of this further processing plant, the product range broadened to include other meat-based products such as cooked meatballs, kebabs, gyros, burgers and coated products as well as salami, sausages and franks.

Banvit has carried out production in compliance with the HACCP, an important inspection program regarding food safety. In addition, the scope of the ISO 9001 Certificate issued by the BVQI in November 2000 was expanded to include live production; the certificate was updated in January 2002. Furthermore, the renewed waste treatment facility with a daily capacity of 3.500 cubic meters and 200 tons liquid and solid waste respectively, began operation in December 2001. On September 16, 2003, the ISO 14001 Environmental Management Systems Certificate was awarded separately for chicken and turkey production, a rare accomplishment in the sector even in European Union member countries.

Chickens are delivered from the breeder farms to the processing plants where they processed and packed under the most hygienic conditions. The products are finally ready to reach the shelves and kitchens. Refrigerated trucks carry them to the sales units with cold-storage facilities. Banvit’s sales network includes 18 branch offices, 41 main distributors and 10 secondary distributors in Turkey.

Banvit purchased the Tadpi facility in Armutlu, Izmir in 2000 and since May 2001 has been producing turkey products. Currently Banvit’s major markets for exports are Eastern Europe, Middle East and the Far East, there has also been an increased share of exports going to former Soviet Republics. The export team is targeting to expand Banvit’s sales into European countries.

Total domestic sales and export increased by 30% compared to 2018 and reached 4 Billion Turkish Lira in 2019.

Penguen Gida

Penguen Gida was established by Gençoğlu Family in 1989 in an area of 7.500 thousand square meters in Bursa. Penguen Gıda which was established entirely for exportation has grown tenfold in 30 years with its factory designed in line with European standards, machine parks and warehouses. Heading towards the domestic market in 1996, Penguen Gıda is currently making production on a closed area of 75 thousand square meters as well as an open area of 150 thousand square meters.

Penguen Gıda which offers the preserved products in hygienic glass jars at first hand and enriches its 100% local product range consisting of jam, preserved vegetables, ready meals, preserved boiled legumes, tomato and pepper paste, pickles and frozen food delivers all of its products to all parts of Turkey with its distribution channel composed of 8 regional directorates and 40 dealerships.

Exporting 50 % of its production and being one of the most important exporters of its sector, Penguen Gıda has exported its products to 35 world countries including Germany, the USA, France, the Netherlands, Switzerland, Russia and Sweden.

With about 10 thousand farmers, 70 % of those are contracted, and its cultivation fields covering an area of 40 thousand decares, Penguen Gıda is one of the biggest agricultural raw material buyers of Turkey. Having one of the most modern plants of Europe in its sector, Penguen Gıda has great advantages owing to its strategic position in Bursa that is close to regions and ports where raw materials of fruit and vegetable are intensely supplied as well as big cities where intensive consumption occurred within the internal market.

About 80 % of domestic sales is made to national and local market chains whereas the rest of the production is sold to middle sized retailers as well as mass consumption channels including hotels, restaurants and cafeterias. Besides, Penguen Gıda makes Private Label productions for store chains both in the domestic and foreign markets and it also meets intermediate product-treated raw material needs of many food firms.

Shares of Penguen Gıda have been open to the public since 1998 and the firm strengthened its financial structure by concluding successful partnerships with Deutsche Investitions und Entwicklungsgesellschaft mbH (DEG) affiliated to KFW which is one of the leading finance institutions of Germany in 2001 by 12,74 % of its capital and ADM Capital in 2006 by 13,04 % of its capital.

Penguen Gıda was selected as the 927th within the 1000 Big Industrial Organizations 2015 ranking of ISO Turkey. According to the figures of the BTSO (Bursa Chamber of Commerce and Industry), in 2015 Penguen is ranked 130 in the listing of the “Biggest Companies in Bursa” and is ranked 22 in its own sector. Moreover, it is also listed among the first 3 exporters of its sector.

Abalıoğlu Group

Abalıoğlu Group started business in 1969 to build “Turkey’s first private feed manufacturer”. Abalıoğlu Group, which has achieved sustainable growth with its investments, is one of the leading industrial organizations from Turkey in the food sector.

Abalıoğlu Group, which has been maintaining the spirit of industrialism and entrepreneurship for 50 years with the excitement of the first day, produces more value in labor-intensive sectors and always makes continuous investments to achieve better. The company operates with 3 main brands Abalım Yem (Feed), Lezita (Poultry), Lezita Balık (Fishery).

The company, which produces feed with high quality brand “Abalım” for cattle, sheep and poultry farming, contributes significantly to the sustainable development of livestock with an annual production capacity of 2.5 million tons.

As a leader in the Feed Industry, Abalım Yem has an advanced distribution network. With over 500 dealers and specialist sales teams who deliver their products all over Turkey. Abalım Yem has 8 plants to produce different types of feed:

Denizli Feed Factory (1969): The group’s first factory was established on a land of 66.500 m²; 360.000 tons of feed are produced annually, and 144.000 tons of corn are dried in the factory.
Biga Feed Factory (2000): 130.000 tons of feed are produced annually at the Biga Feed Factory, which built on a 41.000 m² land.
Polatli Feed Factory (2006): 200.000 tons of feed are produced annually at the Polatlı Feed Factory, which built on a 25,000 m² land.
Mersin Feed Factory (2010): 200.000 tons of fodder are produced annually at the Mersin Feed Factory, which built on a 37.600 m² land.
Samsun Feed Factory (2012): 200.000 tons of feed are produced annually in Samsun Feed Factory, which built on a 40.000 m² land.
Turgutlu Feed Factory (2013): 000 tons of feed are produced annually in Turgutlu Feed Factory, which built on a 56.000 m² land.
Konya Feed Factory (2017): 000 tons of feed and 43.200 tons of flake are produced annually at the Konya Feed Factory, which built on a 21.400 m² land.
Burdur Feed Factory (2017): 000 tons of feed are produced annually at the the Burdur Feed Factory, which built on a 58.000 m² land.

Besides the Feed Industry, Abalıoglu runs the business as one of Turkey’s biggest chicken meat manufacturers. The group’s brand Lezita is in top 5 chicken meat producers in Turkish market. With a total of 100,000 m² area Factory located in Izmir, Turkey; the company has the chicken processing capacity is over about 400,000 units per day.

Sütaş

Sütaş was founded in 1975 in Bursa, Turkey. While it was founded with a daily milk processing capacity of 5 tons, today its daily milk processing capacity has reached 1,200 tons at the Karacabey facilities, 1,500 tons at the Aksaray facilities and 1,000 tons at the Tire facility. From 1975 onward, Sütaş has been operating with a focus on milk and dairy products only. Today, the company processes 900 million liters of milk per year in its four production facilities located in Turkey, Macedonia and Romania, and offers 78 different products to its consumers. 8 of every 10 households in Turkey has at least one Sütaş package. Sütaş employs 5,000 people and generates 3.8 billion TL annual revenue.

Sütaş operates in an integrated structure consisting of feed plants, dairy cattle breeding farms, dairy plants, education centers and application farms, waste water treatment and biogas production facilities. In Turkey, Sütaş owns three factories in three different regions. (Marmara, Anatolia and Aegean)

Sütaş procures the highest quality milk from 27,500 milk producers in 1,161 villages in 32 cities in Turkey. The company constantly monitors the naturalness and the quality of the milk by testing it with 14 different tests until they reach Sütaş Milk Production Facilities in Karacabey and Aksaray. Sütaş delivers natural flavors every day to 25 regional directorates, 88 distributors and 150,000 sales points with their fleet of 1,550 distribution vehicles. Sütaş continuously monitors vehicle temperatures through satellites to secure the integrity of the cold chain and make sure that the loading doors of the vehicles are always closed except at delivery locations.

Sütaş ensures sustainable food safety and quality performance through the implementation of effective quality management systems compliant with ISO 9001:2015 and FSSC 22000 in all operations. Quality at Sütaş is not only managed during the production process, but in the whole of the supply and distribution chain, as required by a valuable and fragile food like milk. In May 2014, Sütaş converted its existing Food Safety Management System to FSSC 22000 Food Safety Management System that provides stronger GMP management than ISO 22000 Food Safety Management System.

According to its regional export strategy, In 2019, Sütaş exported 16.5 million USD worth of products to 29 countries, including the U.S., Japan, UAE, Qatar, Libya, Iraq, Kuwait and Egypt.

Altınmarka

First founded in 1992, Altınmarka has grown exponentially in the past 25 years to become a major global player. Today Altınmarka is one of the world’s leading manufacturers of industrial cocoa and chocolate, and a trusted solutions partner to leading global brands in over 50 countries worldwide.

The state-of-the-art production plants in Istanbul encompass cocoa processing and industrial chocolate production facilities with a combined annual capacity of 270,000 tonnes, making Altınmarka the 6th largest producer of cocoa and the 2nd largest producer of industrial chocolate in the world. The company supplies highest-grade cocoa powder, cocoa butter and cocoa mass while our chocolate product offer ranges across literally hundreds of liquid or moulded chocolate recipes for chocolate ingredients, inclusions, decorations and finished chocolate products.

Altınmarka sources the majority of all its’ bean imports from “main crop” Ghana and Ivory Coast cocoa preferred by all major chocolate producers for the classical, rich cocoa taste these beans provide. Altınmarka also imports a small percentage of beans from Trinidad and Tobago, Guatemala, Venezuela, Colombia, Ecuador, Madagascar and Cameroon for coloring and taste accents.

Located on a 215,000 square metre site on the outskirts of Istanbul, Altınmarka’s cocoa factory first became operational in 1994. This was followed in 2005 by the establishment of Altınmarka’s chocolate factory – a fully automated, latest generation facility – creating a vertically integrated, high-tech, high-capacity production system. Product freshness is critical to the taste and quality of any chocolate product. Altınmarka supplies chocolate in the shape of 2.5 and 5 kg block, coin, stick and different sizes of drop, chunk and splinter.

Efficiency and speed in internal processes and logistics can significantly prolong a product’s shelf life. Altınmarka’s delivery fleet includes 75, heated liquid road tankers special high-tech refrigerated trucks, vans and silobuses.

The plant’s location in Istanbul is ideal for direct overland delivery to most destinations in neighbouring countries and the wider geographic region within a few days. The convenient geographic location in Istanbul provides our customers with an additional logistic advantage for deliveries to countries across the entire European region as well as Russia, the Caucasus, Central Asia, the Near East and North Africa. At present, the company supplies clients in more than 50 countries in the region and beyond as more and more food and chocolate manufacturers discover the concrete benefits of working with Altınmarka.

Final Notes

African consumer market is developing rapidly thanks to their demographic outlook and increase in average household budget. Local and global companies benefit from the growing market size. The local manufacturers are using their market knowledge and network to their advantage, while the global companies have more marketing budget and global know-how. We believe that the FMCG companies should take a closer look at the African market and promote their products to local consumers.

While analyzing the target country, global companies should give importance on these three factors:

Income Level:

The income level of the targeted population affects their spending behavior. In many African countries, people in the lower-income level do not have spending budget for buying packaged food and many other FMCG products from groceries. FMCG companies should target the growing middle-income class and high-income class.

Urban and Rural Population:

Trends in the urban areas and rural areas are very different. Most people in the rural areas source their food from their land and they only buy essential items from shops. However, urban areas in African countries have a busy lifestyle and urban dwellers give importance on convenience. Middle-income and high-income people in Africa cities prefer to shop from supermarkets and buy packaged food.

Formal and Informal Retailing Channel:

In African countries, most of the products are sold through informal channels, such as open markets, independent grocery stores and street vendors. However, there is a trend towards formal retailing thanks to new shopping malls with modern retailing space. Supermarkets are becoming more popular among middle-income people in African countries.

Turkey is an important trade partner for African countries in the FMCG sector. Turkish manufacturers have expertise in producing high-quality products with excellent packaging at reasonable price level. Turkish products are mainly exported to the European countries and Middle East. Africa is a fast-growing region for Turkish corporations and we observe increasing bilateral trade between Turkey and African countries.

African retailers and distributors should consider Turkey as one of their sourcing markets. Istanbul Africa Trade Company is a reliable partner for your company in Turkey and African markets. For your business inquiries, you can reach our headquarters in Turkey and our regional partners in Ghana and Zimbabwe. We hope that you found this report useful for your business goals.

The post Africa FMCG and Retail Sector Report appeared first on Istanbul Africa Trade Company.

Trade with African Countries

Sun, 05 Apr 2020 08:45:30 +0000

In this article, we discuss the import, export and investment opportunities in the African countries. You can find the individual country profiles and sector analysis through the following links. Africa is a high-growth economy and there are many areas for development. All businesses should have an eye on countries in this continent.

Overview

Africa consists of historically rich and diverse countries. There is an estimated of 1500-2000 African languages, and more than 3000 tribes in the continent. After the African Independence Movement in 1960s, the economic shape of the continent dramatically changed. The newly formed countries not only kept their historical ties with European countries, but also made trade agreements with American and Asian countries. As a result, the Gross Domestic Product of the continent increased significantly.

When we consider the effects of globalism and population increase, the total GDP is expected to rise faster. However, the African continent is still behind other geographic areas, such as Latin America, East Asia and Middle East. This underdeveloment is caused by major political, social and economic issues: most notably civil wars, lack of infrastructural development, health problems and political system. However, there is a great potential for the development of Africa.

The Sub-Saharan Africa region shows unique characteristics when compared with North Africa. That is why, in some analysis, we separate these 2 regions and include North Africa into Middle East. Sub-Saharan African countries does not have similar GDP and GDP-per-capita levels compared to other developing countries in Latin America and East Asia.

Global Trade Trends

Starting from 2018, international trade faced significant challenges after the implementation of tariffs on steel and aluminum by Trump administration. On July 6, USA imposed additional tariffs on Chinese goods worth of $200 billion. These additional tariffs were the beginning of a time called “Global Trade Wars”.

Secondly, the long-term effects of Brexit on global trade is still unknown. United Kingdom’s integration to the European Union single market has not been determined. In March 2019, the Brexit deal will be voted and shaped, however, the market players are still uncertain about its outcomes.

In response to the tariffs from the USA government, China declared the preperation of a new foreign investment law. The new foreign investment law can be used as a leverage during the trade negotiation with USA and could amplify the costs of the trade war. According to the study of The National Bureau of Economic Research, the trade war had a negative annual effect of $7.8 billion on the US economy.

Position of Turkey in Africa

In a negative trade environment, Turkish companies should look for new markets to mitigate risks. The Turkish Government negotiates Free Trade Agreements in the new markets, such as Ghana, Sudan, Djibouti and Cameroon. Also, there are efforts to initiate trade and investment cooperation with West African countries. In the recent years, Turkey hosts international conferences and forums to boost its exports and gain advantage in the international trade arena.

Turkey currently has Free Trade Agreements with Mauritius, Egypt, Morocco and Tunisia in Africa. Also, Free Trade Agreements with Ghana, Sudan, Djibouti, Democratic Republic of the Congo, Cameroon, Chad and Libya are under negotiation. Turkey took part in the Trade and Investment Cooperation Agreement with West African Countries: Benin, Burkina Faso, Côte d’Ivoire Green Cape, Gambia, Ghana, Guinea, Guinea Bisau, Liberia, Mali, Niger, Republic of Nigeria, Senegal, Sierra Leone and Togo.

In a volatile trade environment in the developed markets, Turkish companies can gain important potentials in the African markets. Most of the countries in Africa are net importers and high-growth markets. The infrastructure system is developing fast with recent investments. Finally, Turkey is negotiating Free Trade or Cooperation agreements with major African countries and the investments in this region is expected to be safer in the near future. Turkish companies should follow news from Africa to gain commercial benefits.

Country Profiles in Africa

Algeria

Located in the North Africa, Algeria is the 10th largest country in the world in terms of total land area. Its GDP is $170 Billion and its population is 41 million. Algeria has strong economic relations with Europe and other Arab countries thanks to its ports in the Mediterranean Sea.

Algeria was a French colony until 1962, and they gained independence after Algerian War. Its official language is Arabic and Algiers is the capital city of the country. Sonatrach is one of the most influential Algerian companies, specialized in petrochemicals. It employs more than 100,000 people and has operations in Libya, Mauritania and Yemen.

Their biggest import partner is China and they import products from various sectors, including broadcasting equipments and iron structures. After China, European countries are the main import partners. 94% of Algeria’s exports are petroleum products and they are mainly exported to European countries and to USA.

There have been strong economic relations between Algeria and Turkey. Especially in the construction sector, Turkish companies completed $13.6 Billion worth projects in Algeria by 2016. Turkish exports concentrate on building materials, machinery and vehicles. There are well-established Turkish companies in Algeria, and new investors can find opportunities in construction materials and machinery products.

Angola

Located in the South-Central Africa, Angola is bordered by Namibia, Democratic Republic of Congo and Zambia. It has a population of 30 million people and its economic output is $124 Billion. Angola has vast mineral and petroleum reserves, which increases the growth rate of its economy. Angola is a member of the United Nations, OPEC, African Union, the Community of Portuguese Language Countries, and the Southern African Development Community.

Angola gained independence from Portugal in 1975 and it became a member of United nations in 1976. The official language of Angola is Portuguese and its capital city is Luanda. Angola’s economy is mostly driven by oil sector. Oil production and its supporting activities constitute approximately 50% of GDP, more than 70% of government revenue, and more than 90% of the country’s exports.

Angola’s main trade partner in both imports and exports is China. Angola’s 97% of exports to China is crude petroleum. In return, Angola imports diverse set of products from China, including buses, footwear and electronics. Portugal is the second import partner of Angola thanks to the historical relationships and the imports from Portugal are concentrated in chemicals and food.

Turkey and Angola established diplomatic relations in 1980. Turkey’s exports to Angola concentrate on food sector, such as pasta, wheat flours, yeast and poultry meat. Angola imports almost 50% of its food from foreign countries, and we advise our clients to focus on the food products. In 2017, the 1st Session of the Joint Commission on Trade, Economic and Technical Cooperation between Angola and Turkey took place in the Angolan capital. Turkey was represented by Minister of Customs and Trade, Bulent Tufenkci.

Cameroon

The Republic of Cameroon is located in Central Africa and it is bordered by Nigeria, Chad, Central African Republic, Equatorial Guinea, Gabon and Republic of Congo. The population of Cameroon is 24 million and its GDP is $34 Billion.

Cameroon gained independence from France in 1960 and completed its union with former British Cameroon in 1961. English and French are the official languages. Its capital city is Yaounde and its largest city is Douala, which has a large shipping port and approximately 10 million population. The country has faced civil unrest between English-speaking regions and French-speaking regions in 2017.

Cameroon’s main import and export partners are France and China. Cameroon has petroleum reserve and also has a forestry industry. The country is also specialized in producing cocoa beans and other cocoa products. It imports a wide range of products.

The international and commercial relations between Cameroon and Turkey accelerated after the visit of Cameroonian Presiden Paul Biya to Turkey in 2013. Since that year, multiple cooperation agreements have been signed, and there have been efforts to have a closer partnership. Turkish exports to Cameroon increased significantly in the last 10 years from $32 Million to $97 Million.

Democratic Republic of Congo

The Democratic Republic of the Congo is located in the Central Africa and it is bordered by Republic of Congo, Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, Zambia and Angola. Congo’s population is 82 million and its GDP is $37 Billion. Congo is a member state of the United Nations, Non-Aligned Movement, African Union, and COMESA.

Congo gained independence from Belgium in 1960 and current constitution was established in 2006. French is the official language, and there are 4 recognised national languages: Lingala, Kikongo, Swahili and Tshiluba. Its capital city is Kinshasa with 10 million population.

Congo’s main import and export partner is China. Congo has rich natural resources, including cobalt, copper and diamongs. crude petroleum and cocoa beans also play important role in Congo’s economy. Mineral and metal exports’ share in the economy is more than 80%.

The first Turkish Embassy in Kinshasa opened in 1974 and Congo opened its embassy in Ankara in 2011. Turkish exports to Congo increased significantly in the last 10 years from $9 Million to $27 Million. The exports are concentrated in the food sector, including chicken meat, pasta and yeast. Since Congo imports most of its food, companies in the food sector can focus on exporting to Congo.

Egypt

Egypt is the third largest economy in Africa and it is located in the north part of the continent. Egypt has a population of around 100 million people and its GDP is $235 billion. Egypt has a strategic location and the Suez Canal is located in this country.

Egypt was part of the British Empire until it gained independence in 1922. Its official language is Arabic and capital city is Cairo. The population of Cairo is 20 million and the population of the second biggest city, Alexandria, is around 5 million. Egypt’s economic growth slowed down following the political events in 2011.

Egypt’s biggest import partner is China and they import diverse range of products from them. Egypt especially imports industrial products and food. Egypt mainly exports its products to Middle East, Turkey and Europe. Their exports are concentrated in petroleum, gold and textiles.

Turkey has more than $2 Billion direct investment in Egypt and Turkish companies employ more than 75,000 Egyptian employees. Main sectors of Turkish companies operating in Egypt are textiles, automotive and financial services. There are ongoing initiatives for opening a Turkish-Egyptian University and industrial zones. There are important opportunities in exporting consumer goods and industrial products.

Ethiopia

Federal Democratic Republic of Ethiopia is located in the North East Africa and it is bordered by Eritrea, Djibouti, Somaila, Sudan, South Sudan and Kenya. Ethiopia’s population is 105 million and its GDP is $81 Billion. Ethiopia is the headquarter of the African Union, the Pan African Chamber of Commerce and Industry, the United Nations Economic Commission for Africa, the African Standby Force, and many of the global NGOs focused on Africa.

Ethiopia has an ancient history and the current constitution was established in 1995. The official language of Ethiopia is Amharic. Its capital city is Addis Ababa and its population is around 3.5 million. Eritrea seperated from Ethiopia in 1993 and declared its own independence.

Ethiopia’s main trade partner is China both in imports and exports. 33% of goods is imported from China and 16% of goods is exported there. The country’s economy heavily depends on agricultural products and precious metals. More than 60% of exports is agricultural products such as coffee and oily seeds. 11% of its exports is gold. Turkey is an important import partner with 4.2% share in 2017.

Turkey and Ethiopia has close economic relations. Most of Turkish foreign direct investment is in textiles sector and there are further efforts to increase Turkish investment in Ethiopia. Turkish companies invested more than $2.5 Billion in the country. The construction sector and construction products play an important role in Turkish exports. Raw iron bars had 24% share in total exports in 2017.

Ghana

Ghana gained independence from the United Kingdom in 1957 and current constitution was established in 1992. English is the official language, however there are 20 recognized national languages. Its capital city is Accra.

Ghana’s main import partner is China with 23% of total imports. China is followed by the United States with 8% share. Ghana has gold resources and gold accounted for 49% of total exports in 2017. crude petroleum and cococa beans also play important role in Ghana’s economy.

Ivory Coast

Ivory Coast (Côte d’Ivoire) is located in the West Africa and it is bordered by Guinea, Liberia, Burkina Faso, Mali and Ghana. Ivory Coast’s population is 24 million and its GDP is $40 Billion.

Ivory Coast gained independence from France in 1960. French is the official language, however there are 78 spoken local languages in Ivory Coast. Its capital city is Yamoussoukro. Its largest and commercial city is Abidjan and its population is around 4.5 million.

Ivory Coast’s main import partner is China with 20% of total imports. China is followed by France and Nigeria. The economy of Ivory Coast relies on agricultural and food products. Around 70% of all exports is related with the food sector. Ivory Coast is also one of the leading rubber producers.

The first Turkish Embassy in Abidjan was opened in 2009, however the diplomatic relations were established in 1964 thanks to the embassy in Dakar, Senegal. Turkish exports to Ivory Coast increased significantly in the last 10 years from $47 Million to $142 Million. The exports are concentrated in the construction materials and food sector. Ivory Coast is an important country for food producers thanks to their production of cocoa beans, coconuts and cashews.

Kenya

Kenya is located in the East Africa and it is bordered by Ethiopia, Somalia, South Sudan, Uganda and Tanzania. Kenya’s population is 50 million and its GDP is $74 Billion. Kenya is a member of United Nations, World Bank, International Monetary Fund, COMESA, East African Community trade bloc and other international organisations.

Kenya gained independence from United Kingdom in 1963 and republic was declared in 1964. The official languages of Kenya are English and Swahili. Its capital city is Nairobi and its population is around 3 million. Nairobi is also the biggest city and center of commerce.

Kenya’s main import partner is China with 23% of total imports. China is followed by India with 10% share. The country’s economy heavily depends on agricultural products, especially tea. Textile industry is developing in Kenya in 2017, it accounted for 8% of total exports.

The commercial relations between Kenya and Turkey have incerased significantly in the last 10 years. Total exports increased from $130 Billion to $190 Billion between 2008 and 2017. Fertilizers are the main export product of Turkey to Kenya with 26% of total exports in 2017. Kenya is an important market for Turkish companies which are willing to enter the East African market. It has one of the largest shipping ports and land connection to other major markets such as Uganda.

Libya

Libya is located in North Africa and it is bordered by Egypt, Sudan, Chad, Niger, Algeria and Tunisia. The population of Libya is 6 million and its GDP is $51 Billion. Libya has the 10th-largest proven oil reserves in the world.Libya is a member of the United Nations, the Non-Aligned Movement, the Arab League, the OIC and OPEC.

Libya gained independence from Italy in 1947. Arabic is the official language, and Italian and Berber are widely spoken. Its capital city is Tripoli with approximately 1 million population. Libya had a civil war in 2011 between forces loyal to Muammar Gaddafi and those seeking to change his government.

Libya’s main import and export partner is Italy. Turkey also has a considerable size in imports with 11% total share. Petroleum products play an important part in Libya’s economy, 97% of exports are related with petroleum products. The civil wars in the 2010s affected the economy of the country and decreased its economic output.

Libya and Turkey have close historical and cultural relations. Turkey was the first country to appoint an Ambassador to Tripoli after the Libyan Civil War in 2011.Turkish companies, especially construction companies, had strong influence before the Civil War. After the civil war, the trade between Turkey and Libya decreased significantly. There are ongoing negotiations regarding the unfinished projects in Libya.

Morocco

The Kingdom of Morocco is located in the North West Africa and it is bordered by Algeria. Morocco’s population is 36 million and its GDP is $109 Billion. Morocco is a member of the Arab League, the Union for the Mediterranean and the African Union.

Morocco gained independence from France and Spain in 1956. The official language of Morocco is Arabic and French is a widely spoken foreign language. Its capital city is Rabat and Casablanca is the largest city. Morocco has political conflicts in Western Sahara region and it occupies 70% of lands in Western Sahara.

Morocco’s main trade partners are Spain and France. Almost 40% of the trade volume is with these two counties. Turkey is an important player in Morocco’s trade and it makes up 4% of the total trade volume both in exports and imports. Many European companies have foreign direct investment in Morocco in the textiles and automotive sector. The country has well diversified exports and imports in every sector.

Turkey and Morocco have historical relations since Otoman Empire. Morocco and Turkey have free trade agreement since 2006, which helps Turkish companies to export their products without tariffs. There are many Turkish companies that invested in Morocco and they also formed Turkish-Moroccon Businessmen Association (TUFIAD). Most of the Turkish exports concentrate in the automotive industry, such as cars, engines, iron blocs and trucks.

Nigeria

The Federal Republic of Nigeria is located in West Africa. It is bordered by Cameroon, Niger, Chad and Benin. Nigeria is referred as the `Giant of Africa’, due to its strong economy and large population. Its population reached 191 million in 2018 and Nigeria has the highest GDP in Africa with $375 Billion. Nigeria overtook South Africa in 2014 to become Africa’s largest economy. Nigeria is a member of African Union, United Nations, OPEC and Commonwealth.

Nigeria gained independence in 1960 from the United Kingdom. The official language of the country is English and its capital is Abuja. However, the biggest city and the industrial hub of Nigeria is Lagos. The population of Lagos is more than 20 million. Nigeria’s economy boomed thanks to oil industry. However, the economy of Nigeria is heavily dependent on oil price fluctuations.

China is the most important trade partner of Nigeria. Whereas, Nigeria exports most of its crude petroleum to India and USA. Nigeria has a positive trade balance, it exports more than it imports. However, the trade balance deteriorated due to decreasing oil price in the last years.

Turkey and Nigeria has diplomatic relations since the independence of Nigeria. Turkey opened an Embassy in Lagos, previous capital of Nigeria, in August 1962. Turkish businesses can find important opportunities in Nigeria thanks to its large and diversified economy. Manufacturing and food companies can use Nigeria as a hub to expand to other West African countries. The exports of Turkey to Nigeria are concentrated in industrial goods and agricultural products. Especially, processed iron is an important export good from Turkey to Nigeria.

Senegal

The Republic of Senegal is located in West Africa and it is bordered by Mali, Guinea, Guinea-Bissau, Gambia and Mauritania. The population of Senegal is 16 million and its GDP is $16 Billion.

Senegal gained independence from France in 1960. French is the official language. Its capital city is Dakar with a population of around 1 million people.

Senegal’s trade partners are Mali, France and China. Senegal is one of the most important fishing countries in Africa. Gold and petroleum refinery also play an important role in Senegal’s economy. Finally, Senegal has rich sources of Phosphat. As a member of the West African Economic and Monetary Union (WAEMU), Senegal has close trade relationships Mali and Ivory Coast.

South Africa

South Africa became an independent country in 1931 from the United Kingdom. Its official language is English, however there are local languages in specific regions. Its capital city is Cape Town, and Johannesburg is one of the biggest cities and economic hubs. South Africa is the headquarter of major African corporations, such as MTN Group and Sasol.

China is the most influential trade partner of South Africa. China has the highest share both in imports and exports. The most important export products of South Africa are precious metals such as gold and diamond.South Africa has a positive trade balance, it exports more than it imports.

In South Africa, there have already been big-scale investments of Turkish companies. For example, Arcelik bought Defy, a South African home appliances company, for 324 million dollars in 2011. There are also a considerable number of Turkish textile and mining companies in South Africa.The value of the Turkish investments in South Africa is more than $500 Million.

Sudan

Republic of Sudan is in North East Africa and it is bordered by Egypt, Eritrea, Ethiopia, Central African Republic, Chad and Libya. It has a population of 40 million people and its economic output is $117 Billion. Since 2011, Sudan has been facing political and military conflicts in its southern regions.

Sudan gained independence from the United Kingdom in 1956. The official language of Sudan is Arabic and English. Its capital city is Khartoum. Sudan has rich mineral resources, including gold, granite, gypsum, iron, kaolin, lead, manganese, mica and natural gas. South Sudan contained 80% of Sudan’s former oil reserves.

Sudan’s main import partners are China, United Arab Emirates and India. Turkey is also an important player with 4% share in total imports. Sudan mainly imports food, textiles and machinery. In return, Sudan exports gold, vegetable oil and petroleum. Its biggest export partners are United Arab Emirates, China and India.

Turkey and Sudan has close diplomatic and commercial relations. In 2017, Turkish delegation of more than 150 businessmen visited Sudan to explore opportunities. Sudan is an important export market for Turkey and Turkish exports reached $400 Million in 2017. Turkey mainly exports food products and electric machinery to Sudan. The population and economy of Sudan are growing very fast and there are many opportunities thanks to Sudans’s large economy and close relations with Turkey.

Tanzania

The United Republic of Tanzania is located in the East Africa and it is bordered by Uganda, Kenya, Mozambique, Malawi, Zambia, Rwanda, Burundi and the Democratic Republic of Congo. Tanzania’s population is 58 million and its GDP is $42 Billion.

Tanzania gained independence from the United Kingdom in 1963 and current constitution was established in 1977. Tanzania does not have an official language, however Swahili and English are used nationally. More than 100 local languages are spoken in diffeernt regions of Tanzania. Its capital city is Dodoma, however Dar es Salaam is the largest city with 5 million population. The main commercial ports and industrial zones are located in Dar es Salaam.

Tanzania’s main import partner is China with 21% of total imports. China is followed by India with 15% share. Tanzania has vast gold resources and gold accounted for 30% of total exports in 2017. Agricultural products drive the economy of Tanzania, especially nuts.

The first Turkish Embassy in Dar es Salaam was first opened in 1979. There has been Turkish Airlines direct flights between Istanbul and Dar es Salaam since 2010 and it impacted the relations between Turkey and Tanzania. Turkish businessmen visit Tanzania on many occasions to explore opportunities. In 2018, agricultural machine companies attended a forum in Dar es Salaam to establish new connections. Turkey’s exports to Tanzania reached $100 Million in 2017. The agriculture and construction sectors are the main areas to be focused on.

Tunisia

The Republic of Tunisia is located in North Africa and it is bordered by Algeria and Libya. The population of Tunisia is 11 million and its GDP is $40 Billion. Tunisia is a member state of the United Nations, La Francophonie, the Union for the Mediterranean, the Common Market for Eastern and Southern Africa, the Arab Maghreb Union, the Arab League, the OIC, the Greater Arab Free Trade Area, the Community of Sahel-Saharan States, the African Union and the Non-Aligned Movement.

Tunisia gained independence from France in 1956 and republic was declared in 1957. Arabic is the official language, and French and Berber are widely spoken. Its capital city is Tunis with approximately 10 million population. The Tunisian Revolution in 2011 caused the economy to slow down, however the country maintained parliamentary system.

Tunisia’s main import and export partner is France. Italy and Germany have also strong commercial relations. Tunisia does not have rich mineral resources and its economy relies on machinery production and textiles industry.

Tunisia and Turkey have historical and cultural relations. Turkish companies have strong presence in Tunisia both in exports and foreign direct investments. For example, TAV Airports is entitled to operate Enfidha-Hammamet Airport in Tunisia until May 2047. There are als other notable construction and textiles companies in the region.

Uganda

The Republic of Uganda is located in East-Central Africa and it is bordered by Kenya, South Sudan, Democratic Republic of Congo, Rwanda and Tanzania. The population of Uganda is 43 million and its GDP is $25 Billion.

Uganda gained independence from the United Kingdom in 1962 and the current constitution is effective since 1995. English and Swahili are the official languages. Its capital city is Kampala with a population of around 1.5 million people. The country has faced civil wars and conflicts since its independence. The current president came to power in 1986 after a guerilla war.

Uganda’s main import and export partners are China and the United Arab Emirates. Uganda also has strong commercial relations with its border countries. It exports 45% of its products to African countries. Uganda’s economy is driven by agriculture and gold mining. Coffee constitutes 20% of all exports, while gold constitutes 15%.

Turkish Embassy in Uganda was opened very recently in 2010. Since that time, the political and commercial relations developed quickly. Turkish companies have been looking for business opportunities in Uganda, and Turkish Exporters’ Assembly organized the Turkey-Uganda Businss Forum in 2017. Uganda is expected to extract petroleum in 2020 and Turkish companis can find opportunities in the machinery and construction sector.

Zambia

The Republic of Zambia is located in South-Central Africa and it is bordered by Democratic Republic of Congo, Malawi, Mozambique, Zimbabwe, Botswana and Tanzania. The population of Zambia is 17 million and its GDP is $25 Billion.

Zambia gained independence from the United Kingdom in 1964 and the current constitution is effective since 2016. English is the official language. Its capital city is Lusaka with a population of around 2 million people. The headquarter of Common Market for Eastern and Southern Africa (COMESA) is located in Lusaka.

Zambia’s largest trade partners are Switzerland, China and South Africa. Zambia also has strong commercial relations with its border countries. It imports 58% of its products from other African countries. Zambia’s economy is driven by copper mining and processing. 74% of total exports is raw and refined copper.

Turkish Embassy in Zambia was opened very recently in 2011. Before the opening of embassy, Turkish embassies in Nairobi and Pretoria are accredited to Zambia. DEIK and Turkish Exporters’ Assembly are working closely with Zambian authorities to promote trade and investment between two countries. According to our research, construction sector has been developing rapidly in Zambia. Building and construction is the largest sector of Zambia comprising around 25% of the GDP and its growth rate is more than 10% each year. We advise Turkish companies to look for opportunities in contracting and construction materials.

Zimbabwe

The Republic of Zimbabwe is located in South Africa and it is bordered by South Africa, Botswana, Zambia and Mozambique. The population of Zimbabwe is 16 million and its GDP is $18 Billion.

Zimbabwe gained independence from the United Kingdom in 1965 and the current constitution is effective since 2013. English is the official language. Its capital city is Harare with a population of around 1.5 million people. Zimbabwe experienced hyperinflation in the 1990s and it does not have its own currency. Instead, they are using United States Dollar, South African Rand and other major currencies.

Zimbabwe’s largest trade partners are China and South Africa. Zimbabwe exports 44% of its products to China. On the other hand, 62% of its imports is from South Africa. Tobacco farming is an important driver of Zimbabwe’s economy. There are also precious metal resources such as diamonds and other mineral mines, such as chromium.

Turkey and Zimbabwe signed a memornadum of understanding in 2017 to deepen trade and investment relations. Turkey aims to improve its commercial relations with Africa and increase the share of Turkish companies on the African continent. The number of Turkish business councils with African countries has reached 41 by 2017. Zimbabwe is also one of the target countries for Turkish exporting companies.

Industry Analysis of African Countries

Agriculture

Agriculture is by far the single most important economic activity in Africa. It provides employment for about two-thirds of the continent’s working population and for each country contributes an average of 30 to 60% of GDP and about 30% of the value of exports. Still, arable land and land under permanent crops occupy only about 6% of Africa’s total land area.

Except for countries with sizable populations of European descent—such as South Africa, Zimbabwe, and Kenya—agriculture has been largely confined to subsistence farming and has been considerably dependent on the inefficient system of shifting cultivation.

Construction and Building Materials

Regionally, Africa became a major player in global construction past five years. There is a steady acceleration in construction activity especially in Nigeria over last 10 years.

Sub-Saharan Africa has the fastest growing construction industry among all major regions in the world over the next five years growing on average by a compound annual growth rate (CAGR) of 6.6% a year.

Africa construction market bears huge investment opportunities in energy and infrastructure, cheap labor, and a fast-growing consumer market.

Oil and Gas

Africa has considerable oil and gas resources that can help accelerate growth on the continent if used strategically. Although new resources are discovered progressively, they are not equally distributed. High and volatile oil prices are thus a challenge for all of Africa; they represent an opportunity to be pursued for exporting countries and an obstacle to be tackled for importing countries. Recent oil and gas discoveries coupled with regulatory changes and fast-growing energy demand from expanding local consumer markets offer significant opportunities across the continent

Africa’s oil and gas industry holds huge potential. At the end of 2017, Africa was estimated to have 487.7 tcf of proven gas reserves (7.1% of global proven reserves), whilst Africa’s proven reserves of oil are in the region of 125 billion bbl. Africa’s downstream sector has been fairly static in recent years with total refinery throughput hovering around 2.1 million bbl/d, however as we’ll see a wealth of new refinery upgrades or new builds is set to change this.

Textile

Once, East Africa was a world leader in cotton. Under British colonial rule, a system of poll taxes forced African farmers to meet specific quotas to satisfy the empire’s demands for textiles. The African textile industry is a varied one, but the seeming constant is their cotton market. There are many countries in Africa that currently grow and sell cotton. Six of them grow cotton under the label ”Cotton made by Africa”, which is one of the largest job producers as well, with 450,000 Africans working in the cotton business alone. Companies like H&M have opened mills in Africa, since their wages are less, and the population can support the workers needed. They also create products like thread and yarn for global markets from cotton grown and harvested in Africa.

The textile industry presents a lot of potential for value added benefits and job creation. It is estimated that up to 600% of value can be created along the cotton value chain: from cotton production, spinning and twisting into yarn, to weaving and knitting into fabric, followed by dying, printing and designing. The textile industry in Africa is estimated to grow at a CAGR of ~5% over the forecast period of 2019-2024.

Telecommunication and Internet

The African telecom sector is under a digital revolution. Since its liberalization in the 1980s, the involvement of multinational conglomerates has promoted a healthy competition which led to its flourishing. Most African states had long been resistant to liberalize their telecom markets but had to acknowledge that it was necessary to allow growth and expansion. Due to the deficiencies associated with the state-owned telecom enterprises, the African governments had to realize that only privatization would bring the much-needed financial discipline.

Among all other continents, Africa has been the fastest growing mobile market during the past five years, with more than 170 million mobile users. Mobile telephony has had a significant impact on economic growth, which in many African countries is twice as high as in developed countries. Moreover, mergers and acquisitions (M&A) activity in the technology and telecommunication sectors in Africa quadrupled in 2018, from 2017. M&A in the tech and telecoms sector in Africa and the Middle East was valued at US$1 .2 billion in 2017. This is predicted to increase to US$5.9 billion in 2018.

Transportation and Logistics

There were highly developed transport networks in many parts of Africa in precolonial times, and, during the colonial era that followed, these networks were restructured to penetrate into the interior from the seaports and, in the main, to serve the commercial and administrative needs of the colonial powers.

The emergence in the 1960s of independent African governments who recognized the need to lift economies from their generally very low levels and, above all, to develop agriculture and embark on industrialization heralded improvements in economic planning, the development of transport networks, and the introduction of cheaper freight rates.

Mining

The mineral industry of Africa is the largest mineral industries in the world. For many African countries, mineral exploration and production constitute significant parts of their economies and remain keys to economic growth. African mineral reserves rank first or second for bauxite, cobalt, diamonds, phosphate rocks, platinum-group metals (PGM) and vermiculite.

Metals exported from Africa include uranium, platinum, nickel, bauxite and cobalt. Two of the most profitable mineral exports are gold and diamonds. The continent can produce close to 500 tons of gold a year. Africa generally produces around half of the world’s diamonds, however this has increased in recent years to over 60%.

Utilities and Infrastructure

Africa faces a huge electricity demand challenge. Existing infrastructure is insufficient to meet current requirements, installed power capacity is expected to rise from 2012’s 90GW to 380GW in 2040 in sub-Saharan Africa. Nonetheless 530 million people, primarily in rural communities, are expected to remain without power. An era of rapid technological change is also coming at a pivotal time in the expansion of African power infrastructure.

Sub-Saharan African water utilities have been able to slowly improve water coverage , but overall piped water coverage stands at only 15 percent. Access to sewer services is in its infancy in Africa, with very few utilities providing such services. Africa needs $20 billion dollars for achieving the Water and Sanitation Sustainable Development Goals in 2030; that is three folds to current investment in the sector. Similarly, achieving universal access in electricity by 2030 will require annual investments of $1 billion a year at minimum.

Metal Production

Iron production was a particularly important precolonial African technology, with iron becoming a central component of socioeconomic life in many societies across the continent. The limitations to iron ore mining are not because of the size or grade of the ore, but rather the costs associated with mining the ore and transporting it. It is a capital intensive industry that requires significant investment in infrastructure. Around two billion metric tonnes of raw iron ore is produced every year. The international consumption of iron ore is growing by around 10% every year, and the main consumers are Japan, China, Korea, the European Union and the United States.

Iron is the main component of the steel production. Africa accounted for 1% of the world’s total finished steel production. Egypt and South Africa are the main players in steel production in Africa. Contrarily, Africa’s steel consumption is around two times higher than its production. Africa accounted for 2.2% of the world’s total finished steel consumption. South Africa has 77% of total iron production in Africa in 2016.

Forestry

Africa, the largest continent, currently supplies the smallest proportion of global industrial roundwood 4% of any region. However, more than 70% of the population in Sub-Saharan Africa depends on forests and woodlands for its livelihood; one fifth of rural families’ daily needs come from forests. Also, Woodlands and forests supply approximately 60 percent of all energy. Forest-related activities accounts for a large part of the GDP of most of the continent’s countries.

Africa is home to 675 million hectares or 23% of the overall land area of the continent. In addition, there is an estimated 350 million hectares (13% of the land mass) of “other wooded land.” This is made up of wooded savannah, thickets and shrublands. There are huge volumes of wood contained in “trees outside forests,” which include trees and other woody plants in rural landscapes (farms, pastures, agroforestry and horticultural systems) as well as in urban settings, on private land, along roads, and not forgetting planted forests estimated at about 15 million hectares.

Financial Services

Africa’s banking sector looks promising for the future, Its markets are fast growing and nearly twice as profitable as the global average. Although competition is heightening and regulation is tightening, there is still much room to grow: Africa’s retail-banking penetration stands at just 38 percent of GDP, which is half the global average for emerging markets.

Africa today has the second-fastest-growing banking market -taking retail and wholesale banking together—in the world. Between 2012 and 2017, African banking-revenue pools grew at a compound annual growth rate of 11%. Africa is also the global banking industry’s second-most profitable region: the Return on Equity(ROE) of its banks in 2017 stood at 14.9 percent, second only to Latin America and comparable to other regions such as emerging Asia and the Middle East.

Shipping and Ports

Africa’s minimal integration in world trade is reflected in the contours of its maritime sector yet this portends an enormous opportunity for the world’s youngest and second-most populous continent. The Sub-Saharan African container port system in general remains underdeveloped in comparison to other port systems around the world. Still, maritime shipping is the lifeblood of Africa, with over 90% of the continent’s imports and exports transported by sea. Africa relies heavily on ships and ports to service its intercontinental trade.

While it accounts for approximately 2.7% of global trade by value, the continent contributes higher shares to global seaborne trade 7% and 5% of maritime exports and imports by volume, respectively. While one-third of African countries are landlocked, maritime transport remains the main gateway to the global marketplace. Africa still has problems with its ports from capacity issues to inefficient handling time, poor security and in some places, corruption.

Chemicals

African continent could be the place in the coming years. With a rich source of available raw materials coupled with rising demand from the increasing population and growing income levels, Africa could be an interesting place for chemical companies to explore for growth and investment. Clearly there are challenges to overcome; political instability; complex demographics; unstable energy supply and poor infrastructure; but it is clear that these are starting to diminish in some countries. Indeed, the chemical industry could play a role in helping to overcome some of these challenges.

Food and Beverage

Africa’s food production is solely based on raw consumables and Africa needs to invest more in value-added processing units and branded food products. Basic agricultural production still accounts for more than 60% of the entire value chain, compared to 22% globally. New innovations in the food industry, one of the world’s oldest and largest industries, are creating attractive opportunities for women and youth on the African continent. As on other continents, the agri-food industry in Africa plays a fundamental role in the creation of income and employment opportunities.

Final Remarks

African countries offer important economic opportunities for Turkish exporters and investors who are willing to increase their revenues in a profitable way. However, the risks and business landscape of each country should be carefully identified. In this report, we presented the economic background of 20 African countries and their economic relations with Turkey. There have been significant investments in certain African countries for a long time, such as Egypt and Sudan. On the other hand, Turkish relations with some African countries improved significantly in the last years, such as Senegal and Ghana. In Senegal, Turkish exports increased from $108 Million to $257 Million in only 10 years.

It is very important for African countries and Turkey to improve trade volumes. Turkish Government has had a significant initiative to build Turkish presence in major African countries. The number of Turkish embassies in Africa has more than tripled, from 12 to 41, in the last 15 years. There have been joint business forums and conferences, where companies from different countries found the opportunity to take the first commercial steps. Istanbul Africa Trade Company is a private initiative with a mission of improving trade relationships between Turkey and African countries.

Before making investments or shipping products, we advise our clients to:

Understand the local business law
Conduct counterparty research
Analyze country-specific risks
Work with credible financial institutions

According to the analysis of Lagos Chamber of Commerce and Industry (LCCI), The Nigerian economy is currently losing approximately $1.6 Billion in customs revenue. There have been many unpleasant incidents for inexperienced investors due to corruption and fraud.

Istanbul Africa Trade Company is a reliable partner for your company in the African markets. Istanbul Africa Trade Company:

has well-established partnerships in major African countries
provides its clients with business and risk analysis of target countries
promotes your company and products in African business councils
only works with accredited financial institutions
offers trade solutions at every process
and develops a collaborative relationship with its clients.

For your business inquiries, you can reach our headquarters in Turkey, and our regional partners in Ghana and Zimbabwe. We hope that you found this report useful for your business goals.

The post Trade with African Countries appeared first on Istanbul Africa Trade Company.

Impact of the Coronavirus Epidemic on Africa

Wed, 18 Mar 2020 09:03:20 +0000

The world was shaken by the quick spread of Coronavirus disease. Many countries implement dramatic restrictions on the movement of people and goods to slow down the epidemic.

Relationship between China and Sub-Saharan African countries will be greatly affected by the epidemic

Due to the Coronavirus epidemic, the production output of China decreased dramatically. According to the Chinese National Bureau of Statistics, industrial output fell by 13.5 per cent in the first two months of 2020. The fall in industrial output is accompanied by 20.5 per cent drop in retail sales.

Quarantine measures and social fear also affected the international trade capacity of China. The demand for Chinese products decreased and less business activities are conducted due to quarantine rules.

The effects of the coronavirus on the relationship between China and African countries are expected to become worse due to travel bans for Chinese nationals by African countries. The Democratic Republic of Congo already imposed quarantine measures for Chinese nationals. Ghana, Kenya, Rwanda and Uganda announced similar measures restricting travel.

As a result, we expect a direct slowdown in business travels and trade volume between Africa and China. Depending on the severity of the epidemic, this decline can be dramatic and long-lasting.

The epidemic of COVID-19 might slow down the AfCFTA process

African countries have taken serious steps on The African Continental Free Trade Area (AfCFTA) agreement in the last years. African countries are taking serious steps in promoting trade and developing welfare. In March 2018, 44 out of 54 African countries signed the African Continental Free Trade Agreement (AfCFTA) in Kigali, Rwanda. The agreement outlines the removal of tariffs on 90% of goods, allowing free access to commodities, goods and services across African countries. If the African Continental Free Trade Agreement enters into force, the Intra-Africa trade can converge to the level of Intra-Asia or Intra-Europe trade.

The Coronavirus epidemic puts the AfCFTA process at risk. The national borders are being closed to fight against the spread of the virus. This is a disadvantaged environment for an inter-continental agreement which aims for a common market without borders. Although there hasn’t been any official announcement on the next steps for AfCFTA during the epidemic, we expect a deceleration in the complete implementation of the common market.

While airline and tourism companies suffer, packaged food and healthcare companies might announce higher revenue during the epidemic

It is an undisputable fact that the coronavirus epidemic hit the market and changed the playground. Many airline companies were hit hard amid coronavirus epidemic and closure of borders. European and American airline carriers’ share prices have declined faster than global stockmarkets. The International Air Transport Association (IATA) projected a possible hit to worldwide revenues of up to $113bn.

The shape of the hotel industry is not a different story. Hotel occupancy already fell below 20% in many major cities. The American Hotel and Lodging Association states that 45% of all hotel jobs have been eliminated or will be eliminated in the next few weeks. This situation is reflected in the stock markets: Marriott International (NASDAQ: MAR) stock fell by 20% over the last two weeks.

We identify two industries which can benefit from the coronavirus epidemic. Due to the infection characteristics of the virus, many people could prefer packaged food as an alternative to traditional food. Also, the traditional food supply chain can be hit if the epidemic becomes more severe. In the case of a curfew, many people need to be provided with packaged food and diet. Companies in this sector can increase their sales as the demand rises.

Secondly, the pharmaceutical and healthcare companies can increase their revenues due to the higher need for medical supplies and drugs. Shares of many pharmaceutical companies have increased in the last months. In India, only one company out of ten healthcare companies announced negative share returns. The share price of the other nine companies has been trading higher.

Local industries in Africa can turn this crisis into an opportunity

We expect less trade activity in the coming months amid coronavirus epidemic and border closures. In an unfavorable environment for international trade, the local industries of import-oriented countries can place themselves in a better position. Especially, the economic slowdown of China might make these local companies more competitive and profitable.

However, local companies should watch their supply chain closely. If the raw materials of these companies depend on imports, shortages can cause inefficiency in the production line. In order to prevent this situation, stocks should be kept at an adequate level and alternative suppliers should be identified.

Trade volume is expected to shift from China to less infected regions in the world

This negative landscape is not only limited to China. Italy, one of the countries hard-hit by the coronavirus, is experiencing a downfall in their factories. Fiat Chrysler stated the temporary suspension of operations at some of its Italian factories. In addition, Italian tyremaker Pirelli announced that production cut for several days at its Torino plant in northern Italy.

As these countries that are highly affected by coronavirus have industrial and supply chain problem, the trade is expected to shift to less affected regions in the world. The global situation of the pandemic is not clear yet, however, Turkey stands out as one of the least infected countries with less than 100 confirmed cases as of today. We expect a positive shift in trade volume between African countries and Turkey.

Final Remarks

The coronavirus epidemic disrupted the global market. The closure of borders and implementation of more restrictions have negatively affected the industrial production and international trade. According to our observation, as the epidemic becomes more severe, the economy is also more negatively affected. China suffers the most negative outcome in Asia, while Italy suffers in Europe. In addition, some sectors such as airline and hospitality are much more affected by the epidemic.

In this new playground, some industries and countries can manage to be less affected by the coronavirus epidemic. The countries which can stop the spread of epidemic will suffer less in terms of industrial output and domestic sales. The local industries which cater the domestic demand can increase their competitive advantage as international trade is restricted and their Chinese competitors suffer from the negative effects in their country. Finally, some companies in packaged food and healthcare sectors might increase their revenues due to increased demand.

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Import from Turkey

Mon, 09 Mar 2020 16:04:45 +0000

Overview of the Turkish Economy

In 2018, according to current GDP figures, Turkey ranks as the 18th largest economy in the World and 7th in Europe. Economic size of Turkey is larger than the combination of Nigeria and South Africa.

Turkey is located between Asia and Europe, serving as a bridge geographically, culturally and economically. Its location on two continents gives Turkey a major advantage in serving the markets of Europe, Asia, Middle East and Africa.

The population of Turkey is 81.4 million and it has a diverse economy. Istanbul, where 19% of Turkey’s population lives, has the largest population with 15 million people. Other major cities are the capital city Ankara, İzmir, Bursa, and Antalya.

Turkey is a member state of the United Nations, the Council of Europe, the Organization for Economic Cooperation and Development (OECD), the International Bank for Reconstruction and Development (World Bank), the International Monetary Fund (IMF) and the World Trade Organization (WTO).

Turkey is granted candidate status to the EU on an equal footing with the other candidate states at the Helsinki Summit in December 1999. As agreed by the European Council in December 2004, accession negotiations have been launched on October 3, 2005 with the adoption of the Negotiation Framework by the Council of the European Union.

Foreign Trade

Since 1980, Turkey’s exports have expanded significantly in line with her outward-oriented policy. While exports were USD $ 2.9 billion in 1980, this figure has increased constantly and reached the level of US$ 157 billion in 2017. In 2017, the share of manufactured products in total exports was 93.7%, while agriculture and mining sectors occupied 3.4% and 2.2 % share in total exports respectively.

The OECD countries accounts for 56,3 % of Turkey’s exports and exports to the EU constituted 47 % of the total exports in 2017. Turkey’s export markets are highly diversified. Germany continued to be the largest export market with a share of 10% for Turkish products in 2017. In 2017, Turkey’s second largest export market was the United Kingdom followed by UAE and Iraq.

In 2017, 50 % of total imports originated from the OECD countries. The imports from the EU countries have the largest share (36 %) in this group. The People’s Republic of China (PRC) became the primary source for Turkish imports. The share of China in Turkish imports was 10% in 2017. Germany ranked second as an important source with its 9.1% share. The Federation of Russia, taking a share of 8.3 %, follows it.

Major Industries in Turkey

Turkish companies are specialized in construction, machinery, textiles, furniture, chemical industry and metal production.

Turkey is the 2nd largest producer of plastics in Europe and 7th largest producer globally. In the paint industry Turkey ranks as the 5th largest paint producer in Europe.
Crude steel production in Turkey rose to 37.5 million tons in 2017. Turkey’s crude steel exports also increased in volume by 8.4 percent from 2016 and reached 18.3 million tons in 2017.
In the period between 1972-2018 Turkish contractors have undertaken 9300 projects in 120 countries, with a total value of 360 billion USD.
Turkey is the 3rd largest clothing supplier in Europe and 6th in the world.
Total export value of the machinery industry reached USD 13.4 billion in 2016, up from USD 5.2 billion in 2005.

Agriculture and Food Industry

Turkey is one of the largest producers and exporters of agricultural products in Europe and the Middle East. Total exports of agricultural and food industry products (HS: 01-24) have been US $ 16.9 billion in 2017 and accounted for about 10.7% of Turkey’s total export volume in the same period.

Turkey is one of the important vegetable oil (especially for sunflower oil and margarine) producer and exporter in the world. In Turkey, Vegetable oil production has undergone remarkable developments over the last years, more edible oil facilities have either started to
produce high quality products or increased their production capacity. Today, Turkey has largescale oil facilities with modern bottling lines and high capacities.

As the motherland of olive and olive oil, Turkey has an experience and tradition with thousands of years. Turkey has been one of the major producers of olives among Mediterranean countries and the olive production in Turkey is coming from the coastal region along the Aegean Sea and the Mediterranean Sea. Today, Turkey supplies olives and olive oil of Mediterranean cuisine all over the world.

Machinery Industry

Turkey has shown consistent and stable progress in the machinery industry. The industry has shown rapid adaptation to international manufacturing standards and uses the highest quality machinery and equipment. Machinery and equipment industry almost doubled its production during the last 15 years. Due to its recent development and potential, the share of the machinery
sector in Turkey’s economy and exports is growing rapidly. The Turkish machinery industry established a very strong partnership with Germany. Given the success in the German market and the knowledge gained from this relationship, Turkey is now focused on other important markets to build equally profitable partnerships. The share of Turkish machinery export is 6% in Turkey’s total export. Turkey’s machinery exports has reached USD 8.6 billion in 2016 and USD 9.5 billion in 2017.

The Turkish electronics industry, founded on high added value, innovation, creativity, and extensive research, develops products not only for the local market but also for overseas. The exports of the sector have demonstrated a constant increase since 1990. This is mainly due to intensive R&D efforts and production aligned with the needs of the export markets. Thus,
electronics industry having the most recent technology is another key industry, which has a share of 6.5 % in Turkey’s exports. The most important sub sectors are the electrical machinery, TV sets and durable (white) goods. Turkish TV sets and white durable goods have significant market shares in most of the European countries. The exports of the industry was recorded as
10.2 billion USD in 2017, with an increase of 4 % compared to the previous year.

Turkish iron and steel industry has shown great progress, both in terms of quality and capacity. Raw steel production in Turkey rose to 37.5 million tons and Turkey is the eighth largest steel producing country in the world in 2017. Iron and steel exports in 2017 amounted to US$ 13.8 billion. Turkey as the second largest steel producer in Europe and second largest rebar steel exporter in the world.

Mining

Turkey possesses the greatest mine resources of the world for some minerals. There are 53 exploitable minerals and metals, and 4,500 mineral deposits in Turkey. Turkey’s major minerals produced are boron minerals, marble, basalt, feldspar, magnesite, perlite, pumice, barite and bentonite. A wide variety of primary metallic minerals is produced as well. Chrome and copper ore are the most significant minerals in the metal sector. Turkey is a major world producer of
processed minerals, including refined borates and related chemicals, cement, ceramics and glass. In addition, Turkey is a significant producer of ferrochromium. In 2017, the exports of mining products were US$ 4.7 billion, which represents about 3 % of total exports of Turkey.

Construction and Contracting

Regarding to the Construction Services, Turkish contractors are capable of competing with the world’s leading contractors in the international , construction market with their reliability, creativity and cost effectiveness. Today, they are working in four continents using all the financial, managerial and technological instruments of international contracting standards.

According to the leading international magazine “ENR-Engineering News Record”, with 46 companies among the top 250 contracting companies, Turkey ranked second in the world after China in 2017. The Turkish contracting sector has significant advantages due to their low cost offer, risk-taking abilities, speed of work and experienced employees.

Turkish contractors meet the significant needs of the products and services of the countries in which they are operating or intending to operate. They are catering to those needs with whole package offers consisting of basic or process engineering, feasibility studies, equipment selection and extension of credit.

The Role of Istanbul Africa Trade Company

Istanbul Africa Trade Company improves commercial relations between Turkey and the African countries through professional trade services. Our company is the distributor of 16 major Turkish corporations in the Sub-Saharan African markets. Our partner companies have more than 150,000 square-meters production area, 1,500+ employees and $120 Million annual revenue. We are strongly active in the Machinery, Plastics, Chemicals, Construction, Textile and FMCG sectors.

We conduct regular trade visits for new business development and trade-related activities. We work closely with African businesspeople in order to fulfil their business needs. We provide trade services in the following range of products. Following products are imported from Turkey by our clients:

Machinery:

Concrete Block Making and Paver Machines
Crushers and Screeners
Concrete Batching Plants
Concrete Pipe Making Machines
Industrial Boilers, Burners and Fans
Road Construction and Asphalt Machines
Mobile Crane
Biogas & Biodiesel Facilities
Food Production and Packaging Machines
Industrial Automation Machines
CNC Machines

Consumer Goods:

Baby Diapers
Sanitary Pads
Wet Wipes
Detergant
Soap
Cosmetics
Shampoo
LED Bulbs
Pasta
Olive Oil
Spice Variarities
Dried Fruit
Frozen Food

Building Materials:

PVC and PPRC Pipes and Fittings
Basin Mixers and Shower Sets
Solar Water Heating Systems
Water Purifiers
Solar Lighting Systems
Construction Iron
Turkish Tiles
Marble

Agricultural Machinery:

Gasoline & Diesel Tractors
Soil Preparation Machinery
Mechanical Seeders
Pneumatic Planters
Fertilizer Spreader
Drum Mower
Vegetable Harvester

Refined Petroleum Products:

LDPE
LLDPE
Masterbatch
Fuel
HDPE

Source:

World Bak Factsheet
Republic of Turkey Ministry of Trade Report
IMF Country Reports
Turkey Statistics Institution
UN Comtrade

Country Reports

Sector Reports

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Digital Sales from a Garage Workshop: Dynamics of the New Generation Fashion and Apparel Industry in Tanzania

Thu, 31 Oct 2019 09:17:31 +0000

Every region has its unique business dynamics and rules. The dynamics of the textile industry and entrepreneurship in East Africa have been rapidly evolving. The extensive use of digital media and digital sales leads way to agile companies that combine traditional industry with new sales channels. International companies must understand these trends and the value chain at each industry before making a sizeable investment.

Entrepreneurship without Corporate Financing Solutions

Msafiri Raphael Paschal is a 28-year-old entrepreneur in Dar es Salaam, Tanzania. He owns a clothing workshop which manufactures fashion bags, clothes and all type of accessories with the use of Kitenge fabric (colorful pieces of fabric commonly used in Sub-Saharan Africa). He learned everything about Kitenge from his mother, a lady from the rural areas of Mount Kilimanjaro. Then, he combined their family tradition with some technology and modern production techniques.

He started his company when he was a student at the University of Dar es Salaam at the age of 23. He realized the market opportunity of Kitenge fabric in modern clothes. Firstly, he bought basic t-shirts and sew Kitenge pieces on them in a fashionable way, then sold them to the local markets serving tourists. He rented the sewing machines of another workshop and bought fabric for daily use.

The lack of affordable bank loans and microfinance solutions pushed him to use his University scholarship savings and borrow from family members for buying machinery and equipment. He bought used sewing machines and rented a workshop in Dar es Salaam. Currently, the company has 6 employees who are working at the design, cutting, and sewing of clothes.

The Distribution of Fabrics: From Global Manufacturers to Local Workshops in Tanzania

Msafiri does not keep a high amount of fabric stocks, instead, he buys fabric with new orders to minimize stock costs. The fabrics are mostly made in China or India, however, there are also some local suppliers. The foreign fabric companies sold their products in bulk to local wholesaler, then the products are distributed to workshops through their distribution channel.

These distribution channels should be analyzed very carefully by international textile companies before aiming at the Tanzanian market for fabric sales. The major fabric distributors are located in the city center, and they serve local workshops with available stocks. Although these fabrics are much more expensive compared to the price in international markets, these local workshops cannot undertake the investment of importing them on their own.

The Rise of Digital Sales Channels and Social Media

The use of technology and the internet shapes the Business environment in Sub-Saharan Africa. The penetration of GSM and smartphones is high and there are great opportunities for companies to generate more sales through mobile channels. Msafiri uses this social and technological trend to his advantage.

His company is very active on social media, such as Facebook and Instagram. He primarily shares his new designs and models on these platforms and collects feedback. Also, he mentioned that he had many sales Thanks to referrals on social media. Moreover, he uses Google Ads and Facebook Ads to promote his products.

In terms of sales, he uses three main channels. Firstly, he makes sales in a showroom at his workshop. You can choose from a variety of products and directly buy them at the workshop. If you want some customization, it is done at the workshop instantly. Secondly, he sells to local shops in the touristic areas of Dar es Salaam. Both local people and foreigners are his customers. His products can be found in more than 10 physical stores. Lastly, he cooperated with a Swiss company to sell their ethnic products in Switzerland through an online website. Msafiri ships the orders to Switzerland with air Cargo and they are sold to European customers.

The importance of understanding local consumer trends and supply chain

The consumers and SMEs in Sub-Saharan Africa have their characteristics. The use of mobile technology and an increase in purchasing power have positively shaped the consumer market. However, there are still many obstacles for SMEs. The lack of financing and complications in the supply chain are the main obstacles.

Istanbul Africa Trade Company conducts detailed research on the consumer markets and the local business environment. We have local partners in African countries to facilitate trade and investment. You can reach our other research papers and case studies on our website: www.istanbulafrica.com

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Africa Economic Report – Insights and Strategies

Wed, 17 Jul 2019 13:52:33 +0000

Africa is the second most populated continent with approximately 1.3 billion people living in 54 independent countries. Africa covers 20% of the total world surface, and some of the earliest civilizations emerged in Africa five thousand years ago. However, in economic terms, Africa is far away from its real potential. Its GDP is only above Oceania and GDP per capita is still below $2,000. According to Worldbank research in 2015, 41% of Sub-Saharan population lives below the poverty line of $1.9 per day.

Despite all these economic disadvantages, African countries are taking serious steps in promoting trade and developing welfare. In March 2018, 44 out of 54 African countries signed the African Continental Free Trade Agreement (AfCFTA) in Kigali, Rwanda. The agreement outlines the removal of tariffs on 90% of goods, allowing free access to commodities, goods and services across African countries. If the African Continental Free Trade Agreement enters into force, the Intra-Africa trade can converge to the level of Intra-Asia or Intra-Europe trade.

In the last decade, some African countries were able to attract the attention of foreign investors. Especially, the textiles industry developed rapidly in East Africa. Ethiopia is a great example of industrializaiton for other African countries. In 2017 alone, textiles accounted for the 6.5% of total exports with $144 million total value. 10 years ago, the percentage of textiles was only 2.8% with $53 million total value.

The 2019 edition of the Istanbul Africa Trade Company’s Africa Economic Report provides a comprehensive analysis of each country’s economic outlook and potential synergies in the international trade arena. Furthermore, the report provides insights on import and export products in Africa. The report was prepared by Istanbul Africa Trade Company Management and regional partners. You can find the macroeconomic and trade profiles of 20 African countries.

We hope that you will enjoy reading the report and find it useful for your business. Please do not hesitate to contact us for further information regardig relations between African countries and Turkey.

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