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Africa is Ready for Growth with Support from Trans-Ocean Transportation

africa

Africa is Ready for Growth with Support from Trans-Ocean Transportation

RTM Lines is a trans-ocean transportation company headquartered in Norwalk, Connecticut, with over 39 years of experience in the global ocean carrier business. As a respected ocean transportation provider, we are continually equipping clients with valuable information and insight related to the ocean transportation industry.  Recently, RTM Lines has invested time and research to better understand the growth of African infrastructure and resources; and how those factors affect opportunities for growth and development in the breakbulk and project cargo markets. Research shows Africa resources and opportunities in key locations such as the Democratic Republic of Congo, Ethiopia, and Northern Mozambique. 

“Right now, the Democratic Republic of Congo (DRC) is sitting on the world’s largest cobalt resource, however the ongoing political turmoil, makes it very difficult to access the cobalt,” said Richard Tiebel, RTM’s Executive Vice President. He states, “Africa is showing more exponential growth than any other continent. Right now, markets like Ethiopia have shown 8% GDP growth, per annum. Analyzation shows there are a number of factors within urbanization, ICT (Telecommunications), and the Extractives Industry (Oil, Gas, and Mining) driving this growth.” 

With an array of potential possibilities for growth in Africa in the coming years, RTM Lines recommends directing attention to trades and the international markets in Africa, specifically in the shipping and trading processes. The growth and opportunities available in the African market, have great potential for clients that develop and understand the Africa market. 

“In the next 4-5 years, city populations in Africa will double, which means the infrastructure will need development. This development will motivate the community to build infrastructure that supply power, water, sanitation, housing developments, and support to serve the new population in the area. Most governments couldn’t support fixed-line infrastructures, but Africa is going through an information, communication, and technological revolution. The private sector is supporting this revolution and allowing Africans to pursue business opportunities. Companies like Microsoft have been investing in some African tech sectors, to develop talent and to take Africa forward,” said Tiebel.

As the International Maritime Organization (IMO) 2020 regulation will soon go into effect, Tiebel shared his perspective on how Africa’s natural resources can positively influence the trans-ocean transportation industry. 

Mr. Tiebel states, “the gas in Northern Mozambique is the world’s 12th largest natural gas resource. A lot of infrastructure will be needed in order to get this gas because the town itself is very small and scarcely has roads to support it, no port, no airport, or even power and electricity. The town of Palma will literally be built up in order to access this gas resource offshore.” He continues, “the cost of the IMO regulatory change on the shipping industry is unknown, and though we know the IMO’s decision will impact refiners, producers, bunker suppliers, and more, Africa offers a variety of natural resources to emerge as a major beneficiary of this regulation. This supply of natural resources has the potential to help the trans-ocean transportation industry control the anticipated spike in fuel costs in 2020.” 

RTM Lines is committed to providing customers the information necessary to ship ocean cargo with confidence. Understanding the changes and regulations in these expanding and shifting markets is key to providing smooth transit for infrastructure, mining, and oil & gas project cargo. RTM Lines is both knowledgeable and competent in global operations. Port to port, RTM Lines strives to improve the global trade market and the quality of the ocean transportation industry.

palm oil market

Africa’s Palm Oil Market – Foreign Suppliers Benefit From Resilient Market Growth

IndexBox has just published a new report: ‘Africa – Palm Oil – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The palm oil market size in Africa is estimated at $8.2B in 2018, an increase of 3.7% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price).

The total market indicated a resilient expansion from 2007 to 2018: its value increased at an average annual rate of +4.6% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, palm oil consumption increased by +9.3% against 2016 indices. The most prominent rate of growth was recorded in 2011 when the market value increased by 24% year-to-year. Over the period under review, the palm oil market attained its peak figure level at $9.9B in 2014; however, from 2015 to 2018, consumption stood at a somewhat lower figure.

Consumption By Country in Africa

The countries with the highest volumes of palm oil consumption in 2018 were Nigeria (1.2M tonnes), Egypt (959K tonnes) and Kenya (705K tonnes), with a combined 31% share of total consumption. These countries were followed by Tanzania, Ghana, South Africa, Democratic Republic of the Congo, Djibouti, Mozambique, Uganda, Togo and Cameroon, which together accounted for a further 42%.

From 2007 to 2018, the most notable rate of growth in terms of palm oil consumption, amongst the main consuming countries, was attained by Djibouti, while the other leaders experienced more modest paces of growth.

In value terms, the largest palm oil markets in Africa were Nigeria ($861M), Egypt ($626M) and Tanzania ($559M), with a combined 25% share of the total market. Kenya, Cameroon, Ghana, Djibouti, South Africa, Togo, Uganda, Mozambique and Democratic Republic of the Congo lagged somewhat behind, together accounting for a further 37%.

In 2018, the highest levels of palm oil per capita consumption was registered in Djibouti (431 kg per person), followed by Togo (40 kg per person), Ghana (18 kg per person) and Kenya (14 kg per person), while the world average per capita consumption of palm oil was estimated at 7.09 kg per person.

From 2007 to 2018, the average annual growth rate of the palm oil per capita consumption in Djibouti stood at +17.6%. The remaining consuming countries recorded the following average annual rates of per capita consumption growth: Togo (+6.9% per year) and Ghana (+3.6% per year).

Market Forecast 2019-2025 in Africa

Driven by increasing demand for palm oil in Africa, the market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +3.9% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 12M tonnes by the end of 2025.

Production in Africa

The palm oil production amounted to 2.4M tonnes in 2018, approximately equating the previous year. Overall, palm oil production, however, continues to indicate a relatively flat trend pattern. The pace of growth appeared the most rapid in 2011 when production volume increased by 3.7% y-o-y. The volume of palm oil production peaked at 2.5M tonnes in 2008; however, from 2009 to 2018, production remained at a lower figure.

In value terms, palm oil production stood at $2.1B in 2018 estimated in export prices. Over the period under review, palm oil production, however, continues to indicate a relatively flat trend pattern. The pace of growth appeared the most rapid in 2011 when production volume increased by 9.7% year-to-year. In that year, palm oil production reached its peak level of $2.8B. From 2012 to 2018, palm oil production growth remained at a lower figure.

Production By Country in Africa

The countries with the highest volumes of palm oil production in 2018 were Nigeria (739K tonnes), Cote d’Ivoire (426K tonnes) and Democratic Republic of the Congo (410K tonnes), together accounting for 65% of total production.

From 2007 to 2018, the most notable rate of growth in terms of palm oil production, amongst the main producing countries, was attained by Democratic Republic of the Congo, while the other leaders experienced more modest paces of growth.

Exports in Africa

In 2018, approx. 462K tonnes of palm oil were exported in Africa; picking up by 7.6% against the previous year. Over the period under review, palm oil exports continue to indicate a prominent expansion. The growth pace was the most rapid in 2014 with an increase of 39% against the previous year. Over the period under review, palm oil exports attained their maximum in 2018 and are likely to see steady growth in the immediate term.

In value terms, palm oil exports totaled $355M (IndexBox estimates) in 2018. The total exports indicated a strong expansion from 2007 to 2018: its value increased at an average annual rate of +6.0% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, palm oil exports increased by +29.9% against 2016 indices. The most prominent rate of growth was recorded in 2014 with an increase of 33% y-o-y. Over the period under review, palm oil exports attained their peak figure in 2018 and are expected to retain its growth in the near future.

Exports by Country

In 2018, Cote d’Ivoire (200K tonnes) was the major exporter of palm oil, making up 43% of total exports. It was distantly followed by Ghana (80K tonnes), Kenya (59K tonnes) and Seychelles (45K tonnes), together creating a 40% share of total exports. South Africa (15K tonnes), Senegal (13K tonnes), Togo (9.5K tonnes) and Liberia (8.9K tonnes) followed a long way behind the leaders.

Exports from Cote d’Ivoire increased at an average annual rate of +7.6% from 2007 to 2018. At the same time, Liberia (+31.6%), Ghana (+23.8%), Senegal (+21.7%), Seychelles (+19.8%), Togo (+13.3%), Kenya (+4.9%) and South Africa (+4.2%) displayed positive paces of growth. Moreover, Liberia emerged as the fastest-growing exporter in Africa, with a CAGR of +31.6% from 2007-2018. While the share of Cote d’Ivoire (+24 p.p.), Ghana (+16 p.p.), Seychelles (+8.3 p.p.), Kenya (+5.2 p.p.), Senegal (+2.4 p.p.), Liberia (+1.8 p.p.) and Togo (+1.5 p.p.) increased significantly, the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, the largest palm oil markets in Africa were Cote d’Ivoire ($133M), Ghana ($73M) and Kenya ($46M), together accounting for 71% of total exports. Seychelles, South Africa, Senegal, Togo and Liberia lagged somewhat behind, together comprising a further 22%.

Among the main exporting countries, Liberia recorded the highest rates of growth with regard to exports, over the last eleven-year period, while the other leaders experienced more modest paces of growth.

Export Prices by Country

In 2018, the palm oil export price in Africa amounted to $769 per tonne, jumping by 2.1% against the previous year. Overall, the palm oil export price, however, continues to indicate a slight contraction. The growth pace was the most rapid in 2008 when the export price increased by 20% year-to-year. Over the period under review, the export prices for palm oil attained their peak figure at $1,084 per tonne in 2012; however, from 2013 to 2018, export prices failed to regain their momentum.

Prices varied noticeably by the country of origin; the country with the highest price was South Africa ($1,021 per tonne), while Cote d’Ivoire ($665 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by South Africa, while the other leaders experienced more modest paces of growth.

Imports in Africa

In 2018, the palm oil imports in Africa stood at 7.1M tonnes, surging by 5.1% against the previous year. Over the period under review, palm oil imports continue to indicate a remarkable expansion. The most prominent rate of growth was recorded in 2014 with an increase of 21% against the previous year. The volume of imports peaked in 2018 and are likely to see steady growth in the near future.

In value terms, palm oil imports totaled $4.8B (IndexBox estimates) in 2018. The total imports indicated a buoyant expansion from 2007 to 2018: its value increased at an average annual rate of +7.2% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, palm oil imports increased by +7.9% against 2016 indices. The most prominent rate of growth was recorded in 2011 when imports increased by 33% against the previous year. Over the period under review, palm oil imports attained their maximum at $5.8B in 2014; however, from 2015 to 2018, imports stood at a somewhat lower figure.

Imports by Country

Egypt (968K tonnes), Kenya (764K tonnes), Tanzania (648K tonnes), Ghana (481K tonnes), South Africa (473K tonnes), Nigeria (425K tonnes), Djibouti (419K tonnes), Uganda (343K tonnes), Mozambique (342K tonnes) and Togo (320K tonnes) represented roughly 73% of total imports of palm oil in 2018. Algeria (198K tonnes) and Angola (178K tonnes) held a relatively small share of total imports.

From 2007 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by Nigeria, while the other leaders experienced more modest paces of growth.

In value terms, the largest palm oil importing markets in Africa were Egypt ($592M), Kenya ($505M) and Tanzania ($455M), together comprising 32% of total imports. Ghana, Djibouti, South Africa, Nigeria, Uganda, Mozambique, Togo, Angola and Algeria lagged somewhat behind, together accounting for a further 45%.

Nigeria experienced the highest rates of growth with regard to imports, in terms of the main importing countries over the last eleven years, while the other leaders experienced more modest paces of growth.

Import Prices by Country

In 2018, the palm oil import price in Africa amounted to $673 per tonne, declining by -10.5% against the previous year. In general, the palm oil import price continues to indicate a mild decrease. The pace of growth appeared the most rapid in 2008 an increase of 29% y-o-y. The level of import price peaked at $1,038 per tonne in 2011; however, from 2012 to 2018, import prices stood at a somewhat lower figure.

Average prices varied somewhat amongst the major importing countries. In 2018, major importing countries recorded the following prices: in Angola ($806 per tonne) and Djibouti ($746 per tonne), while Egypt ($611 per tonne) and South Africa ($627 per tonne) were amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Mozambique, while the other leaders experienced a decline in the import price figures.

Source: IndexBox AI Platform

Mozambique

Mozambique Should Put Privinvest Boats into Operation

The next several months will be critical for Mozambique. A peace agreement signed in August between Frelimo and Renamo, its ruling and opposition parties, has set the stage for national elections on October 15. “Free and fair elections,” with results accepted by all, would bolster national reconciliation in this fragile country and would be a major step away from years of low-level conflict and acrimony. Successful elections would also build momentum for Mozambique to reach its economic potential.

One of the world’s poorest countries, Mozambique suffered from years of civil war beginning soon after its 1975 independence from Portugal. One million Mozambicans died. Earlier this year, Mozambique was hammered by two devastating cyclones. While there is hope for economic progress — the country enjoys abundant natural resources — Mozambicans will need Frelimo and Renamo to overcome their bloody past and work together, whichever party wins the election.

One area of potential cooperation is securing the country’s rich but vulnerable coastline.

Earlier this decade, the Frelimo government committed to invest some $2 billion into boats and related maritime equipment to police Mozambique’s rich fisheries, which are being illegally exploited by China and others. Another aim was to develop Mozambique’s own fishing and maritime industries, including through ship repair and building. Since then, global energy giants have committed tens of billions of dollars to developing the country’s large offshore natural gas fields. This development makes securing its coastal region all the more important for Mozambique.

Unfortunately, this effort fell apart. The international shipbuilder Privinvest, supplier to some 40 navies, delivered over 60 boats, equipment and support systems. Yet these assets remain mostly unused. Almost two dozen former Mozambican government officials, including the then-president’s son, have been charged with corruption that sunk this project. Sadly, this isn’t unusual. Transparency International labels Mozambique’s corruption as “endemic,” having cost the country nearly $5 billion between 2002 and 2014.

Without these boats in use — many are literally rusting in dock — Mozambique is doing little to protect its coast against continued illegal fishing and other harmful activities. No local fishing industry is being built. The is a major lost opportunity. Despite having “great growth potential,” it should be no surprise that fisheries in Mozambique are an “under-performing sector,” according to the World Bank. The bank also has identified “strengthening governance and management” as a key goal in developing Mozambique’s coastal economy.

The new Mozambique government that takes power after the elections should make putting these boats into the water a priority. They are simply too valuable a resource to be wasted.  Overcoming this scandal and making strides to protect and develop the country’s ocean wealth for the benefit of all Mozambicans would send a powerful signal that the country is on the right track. It would also be a tangible example that Mozambique is overcoming its devastating legacy of corruption, which would help attract badly needed foreign investment.

Effectively deploying these maritime assets would require Frelimo and Renamo to shift from the campaign and to work for the common good. The new government should figure out what went wrong but, more importantly, look ahead at what needs to go right to fix the problem. Private operators would probably be best to replace the defunct state-run companies set up to operate the boats; business consultants could help figure out the best way forward. International donors and others would likely want to help recover these fixed costs.

Too often, democracies, both young and more established, suffer from a “winner-take-all” mindset that stifles cooperation and progress. Mozambican politicians, with years of violent conflict, are particularly tested. Unless Frelimo and Renamo cooperate to solve problems, setting aside their hostility, democracy will sputter, and the country will backslide. In that case, coastal problems would only worsen.

Pope Francis just visited Mozambique. He urged “hope, peace, and reconciliation,” praising the peace deal and personal courage shown by Frelimo President Filipe Nyusi and Renamo leader Ossufo Momade. Both men face hard-liner opposition within their parties. Hopefully, this spirit of cooperation and reconciliation will grow in Mozambique.

The new Mozambique government will face many challenges. Expectations by Mozambicans run high, especially with the development of natural gas. Putting idle boats and other maritime assets to work to protect and responsibly develop the country’s natural wealth would be an excellent way to help meet these challenges.

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Tom Sheehy is a former staff director of the Foreign Affairs Committee in the U.S. House of Representatives.