Africa: Potential Market for Vietnamese Exports

In recent years, African economies grew 6 per cent per annum on average. Amid global economic recession, the International Monetary Fund (IMF) forecast Africa’s GDP growth at 4.9 per cent. This has made this locality attractive to investors and companies to do business with Africa. For Vietnamese exporters, Africa is a really potential market.

With 53 countries, Africa is a very large continent but has been dragged down by long-standing difficulties such as backward infrastructures and undeveloped traffic systems. African companies normally have weak financial capacities; thus, they have to rely on third-party intermediaries. Thus, this is a very potential market. Africa needs a wide range of imported products in both quantity and variety. The most important imports in Africa with fast-growing population are machinery and materials for economic development, followed by foodstuff and consumer goods. On the other hand, Africa does not have strict requirements on product quality, model and hygiene while technical barriers are not as many as in other regions.

 

Key African markets are Egypt, Algeria, Morocco in Northern Africa, Tanzania and Kenya in Eastern Africa, Nigeria, Côte d'Ivoire and Senegal in Western Africa, and South Africa and Angola in Southern Africa. These countries are seen as potential destinations for Vietnamese exported goods.

 

At present, Vietnamese goods have gradually won the trust of African consumers. All 53 African countries are using Vietnamese commodities. Major Vietnamese exports to Africa are farm produce but this market has begun importing Vietnamese consumer goods, electronic household appliances, machinery and equipment. Rice is always the most important commodity, followed by apparel, footwear, pepper, rubber, electronic goods, machines, plastic wares and coal. All these items have consolidated strong foothold on the black continent. The diversification of exported goods will help Vietnam to approach and expand the market and sell products of Vietnamese advantage. Besides, thanks to adopting economic reform, restructuring and market-oriented economy and boosting regional and international economic integration, African economies recorded considerable high growth rates in the past years, incomes gradually increased and the business environments are getting better.

In 2008, Vietnam remarkably exported US$1.33 billion worth of goods to Africa, up 95 per cent from 2007. This was the first year Vietnam earned more than US$1 billion from exports to the black continent. Vietnamese goods were present in all 53 African countries. Egypt was the largest importer of Vietnamese goods with US$167 million, followed by Angola with US$152 million, South Africa with US$147 million and Senegal with US$104 million.

 

Rice remained the largest export item to Africa with US$587 million, accounting for 44 per cent of Vietnam’s total export value to this continent. Other key exported goods included apparels and textiles (US$99 million), coffee (US$86 million), footwear (US$37 million), pepper (US$32 million), seafood (US$85 million),  computers, electronic products and parts (US$41 million), steel (US$34 million) and tyres (US$22 million).

 

In early months of 2009, Vietnam’s exports to Africa declined as a result of global economic slump. Shipments to all African markets declined, except for South Africa. However, there are many signals for the recovery like higher export earnings in February than in January. Vietnam expects to earn US$1.5 billion from exports to Africa in 2009 and US$1.8 billion in 2010.

 

The expansion of exports to Africa is now playing a very meaningful role as demands from Vietnam’s traditional markets are denting. Recently, the Department of African, West Asian and South Asian Markets under the Ministry of Industry and Trade, has cooperated with trade promotion centres in Can Tho City, Ba Ria - Vung Tau province and Long An province to organise three seminars to introduce the Middle East and African markets to enterprises in the country. Each seminar attracted around 100 participants from State-owned agencies, industry associations and enterprises in southern Vietnam which were mainly involved in farm produce, seafood, foodstuff, handicraft and consumer goods. Ms Le Thi Kim Thu, Director of Can Tho International Exhibition and Trade Fair Company, said the seminar was one of major events in the framework of the Mekong Expo 2009 which was aimed to provide market information to enterprises in Can Tho city and Mekong Delta region. Participants lauded the provided information and answers to their questions.

 

In the coming time, to facilitate Vietnamese enterprises to expand African markets, the government agencies and enterprises need to take more consistent actions and measures. They need to have strong determination and clear strategies to approach and penetrate these markets.