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AFRICA MACRO Namibia, Lesotho, Swaziland, Ghana, Kenya, Tanzania, Uganda, Zambia and Mozambique. It has plans to open a store in Angola and 3 stores in Nigeria via a joint venture. Retailer Pepkor is in Namibia, Botswana, Lesotho and Swaziland and has plans to expand into Nigeria. Meanwhile, Eskom, the South Africa electric company provides electricity to Namibia, Zimbabwe, Botswana, Swaziland, Lesotho, Mozambique and Zambia. United Kingdom Most of East and Southern Africa were once British colonies as were Ghana, Sierra Leone and Nigeria in West Africa. British colonies in Africa once stretched from “Cairo to the Cape” of Good Hope in South Africa. However, British dominance in Africa has long since passed and it is now a relatively modest power in the region, although there are major British investments in South Africa and Nigeria. The British military also maintains a small presence in Kenya, largely for training purposes. Its military intervention was critical in ending Sierra Leone’s brutal civil war in the early 2000s and it is involved in training the Sierra Leone army. In 2009, just 2.8% of the UK’s imports came from Africa and 2.6% of its exports went to Africa (including North Africa). Partly as a result of extensive investments there, South Africa is Britain’s largest trading partner in Africa. As of the end of 2009, UK investments in Africa were £29.4 billion, which represented just 2.9% of total overseas investments. Of the total invested in Africa, 48.5% was in South Africa and 7.4% was in Nigeria. Most of the major UK companies have operations in Africa. Cable and Wireless owns Affinis Communications which has a presence in Algeria, Benin, Burkina Faso, Cameroon, Guinea, Morocco, Niger and Senegal. BP (formerly British Petroleum) operates in 20 countries including Algeria, Angola, Egypt, Mozambique, South Africa, Tanzania and Zambia. GlaxoSmithKline is in Kenya, Morocco, Nigeria and South Africa. Intercontinental Hotels has properties in Johannesburg, Mauritius, Lagos and Lusaka. British American Tobacco has operations in Nigeria and South Africa and Pearson has offices in Ghana, Kenya, Lesotho, Namibia, Nigeria, Uganda, Malawi, Mozambique, South Africa, Uganda, Tanzania, Zambia and, Zimbabwe. Tate & Lyle has subsidiaries in Morocco and South Africa. United States The United States is being surpassed as a major trading partner in Africa by China. Its presence and influence on the continent is under threat as Congress slashes the foreign aid budget to reduce the budget deficit. At a time when Africa is becoming more important in the world, more democratic and a key trading partner with many emerging market powerhouses, the US cannot afford to be left behind in the race to secure a piece of the growing African economy. In an indication of US concern Joab’s Technologies and Research, Natu Court Flat B.

ANALYSIS AND STRATEGY

of the increasing dominance of China in Africa, US Secretary of State Clinton on a visit this year to Zambia warned about “new colonialism” on the continent. While US aid to Africa is under pressure, China has an almost unlimited amount of money to invest and loan to Africa to gain access to its oil, natural gas, mineral resources and consumer market. This is facilitated by the fact that China has the world’s largest foreign exchange reserves at over three trillion dollars. At a time when the US is struggling with a large trade deficit and is experiencing sluggish economic conditions, it is of great importance that US companies take advantage of the strong economic conditions in Africa, which could, in time, become a major export market. Presently however, Africa is hardly on the radar screen for US companies and exporters. General Electric for instance derives just 1.0% of its total revenues from Africa.

The largest export market in Africa for US merchandise goods th is South Africa. It ranked 35 among export markets for the US in the first eight months of 2011, accounting for only 0.52% th of all exports. Egypt was the 38 largest export market and th accounted for 0.32% of total exports and Nigeria occupied 44 place and represented 0.32% of all exports. These three countries have the largest economies in Africa and a combined population of 296.9 million people, which represents 4.3% of the world’s population, yet exports to these nations accounted for just 1.3% of all US exports. Fast growing Angola meanwhile accounted for a paltry .11% of US exports and equally fast growing Ghana had a .08% share. The US exports more to Guatemala than it does to Nigeria and it exports almost as much to Singapore, a country of 5.25 million people, as it does to all of Africa which has 1.052 billion people. Exports to Africa are highly concentrated with South Africa, Egypt, Nigeria and Morocco accounting for 61.3% of all exports to the continent in the first eight months. Africa is strategically important to the US as a source of imports largely because of oil shipments. Nigeria for instance is the fifth largest source of oil imports (measured in volume terms) and the thirteenth largest overall source of imports. Angola is the eighth largest source of oil imports and Algeria is the tenth largest. The US also imports small amounts of oil from Chad, the Democratic Republic of the Congo, Equatorial Guinea, Gabon, Libya and the Republic of the Congo. In the first 8 months of 2011, the US derived 18.1% of all its oil imports from Africa. By 2015, the US may get as much as 25% of its imported oil from West Africa given the recent oil discoveries off the coast of Ghana, Sierra Leone and the Ivory Coast. In addition, with the ousting of Colonel Qaddafi in Libya, the US might become a bigger market for its oil. In the Page 26 of 104

Equity Research in Africa, Like an Electric Train Africa is picking up, a True Emerging Market  

Economic analysis of Africa as a whole, as well as of particular countries and sectors, with special regard to their potential as investment...

Equity Research in Africa, Like an Electric Train Africa is picking up, a True Emerging Market  

Economic analysis of Africa as a whole, as well as of particular countries and sectors, with special regard to their potential as investment...

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