Nowadays, Africa has become a new interesting export market and an attractive foreign direct investment destination amid the slowing economies of mature markets, namely the USA, EU, China, and Japan. Exporters resort to Africa as a new market with a high potential return, and the second largest market after Asia. Africa bordered Europe and Asia with an approximate area of 3.04 billion hectares, of which 1.12 billion hectares is suitable for agricultural cultivation. Of the total area of Africa, approximately 60% or approximately 1.76 billion hectares is suitable for cultivation. The remaining area consists of approximately 40% or approximately 128,000 hectares of arid desert areas. Its population is about 1.3 billion people, accounting of 16% world’s population. It also has a large number of natural resources. However, Africa is growing economically slower than other continents. The African Development Bank has cut its 2024 growth forecast to 3.8% from 4.3%, citing factors such as the ongoing impact of COVID-19, the prolonged situation in Russia and Ukraine, high inflation, high food and fuel prices, and other domestic factors such as war, political instability, public debt, corruption, poverty, energy (electricity) shortages and a weak local currency.
Africa has the potential to become a global market for agricultural and food products. The African agricultural and food market is expected to reach a value of 1 trillion USD by 2030, up from around 280 billion USD in 2023. Supporting factors include: 1) Africa's interest in developing crop seeds using biotechnology and genetics; 2) Productivity per rai is expected to improve with increased access to fertilizer; and 3) Africa has the potential to expand its agricultural land due to its geography, which still has land suitable for agriculture.
The rubber situation in Côte d'Ivoire, an African country, is worth watching as it emerges as a new rubber producer. Its growth rate is rapid. In 2023, Africa accounted for 14% of global rubber production, with Côte d'Ivoire, Ghana, and Liberia as the main production sources. Côte d'Ivoire produced 1.55 million tons of rubber, making it the third largest producer in the world, and exported 1.64 million tons, ranking fourth globally (source: International Rubber Study Group (IRSG)). In addition, Cote d'Ivoire is ready to export EUDR rubber, ranked second after Thailand, and there are many tire factories located in Africa, which is a good opportunity for Thai entrepreneurs to find new markets with potential. However, Africa still faces more transportation challenges than other continents, as many countries lack the capital to develop modern transport routes. Additionally, the continent's geographical features and diverse environments present further obstacles to transportation. Therefore, Thai entrepreneurs interested in doing business in Africa should assess the financial status of their trading partners and buyers' banks. Moreover, they should set a low-risk payment term along with strict hedging of trade and exchange rate risks.
Based on the data presented, Africa has significant potential for trade and investment, particularly in Côte d'Ivoire, which is an important market for the natural rubber and rubber industry. Its significance is expected to continue to grow in the future. Therefore, there is an urgent need for the government, private sectors, and relevant stakeholders to consider and promote trade, investment, and international relations with Africa as a substitute for weakening mature markets.
Mr. Veerasith Sinchareonkul
President
The Thai Rubber Association
