2003 gains offset 2002 pains. (US - Africa Business Summit).

A sharp rise in US-Africa trade in the first quarter of this year has come as a welcome relief after a dramatic decline last year.

The US' 30-month decline in trade with sub-Saharan Africa took a sudden upswing in the first quarter of this year, increasing both its import and export figures by an aggregated $30.4bn over the year, according to figures released by the US Department of Commerce.

American exports climbed 6% above the same period in 2002 to $1.4bn, while U.S. imports surged 71% to nearly $6.2bn. If the projected trade performance holds to first quarter levels, it will mark a historic $30bn-plus watershed.

A significant portion of the trade increases is attributable to higher crude oil prices. Increased shipments of oil and gas field equipment to Angola, Equatorial Guinea, and Gabon offset a 25% decline in sales to Nigeria due to work stoppages in the oil fields. US crude oil purchases doubled, accounting for two-thirds of total imports from the region. At least some of America's increased African oil purchases may reflect President George W. Bush's stated intention of lessening the US' dependence on Middle East oil into more widely spread markets, Africa in particular.

The drought that ravaged widespread areas of southern and north-eastern Africa also boosted US grain sales.

The spike in this year's figures comes as a welcome relief after a marked decline in 2002, the last year for which statistics are available. Despite the helter-skelter figures, the US continues to be Africa's single biggest customer and it seems this will remain the case for some time to come. It's been a roller-coaster ride for the past few years as the two regions adapt to changing economic conditions with Africa continuing to battle for fair market access and the US Africa Growth and Opportunity Act (Agoa) begining to make a difference.

Over the same period, Agoa imports also doubled to $3.4bn, 55% of total imports. However, $2.8bn - 82% of AGOA imports - were energy-related products. Non-energy Agoa imports grew 30%. Textiles and apparel purchases were up by a third to $250m, and transportation equipment was up 37% to $166m. Metals and chemicals also showed strong growth, while agricultural imports fell 10% to $36m. Nigeria, South Africa, Gabon, and Congo-Brazzaville remained the top four Agoa beneficiaries, but apparel shipments boosted Lesotho, Kenya, Mauritius, and Swaziland to fifth through eighth place.

Agoa cushioned 2002 decline

While total trade between the United States and sub-Saharan Africa fell substantially in 2002, as both exports and imports declined the picture would have been even more severe had it not been for the Agoa trading programme. Generally, two-way trade was just under $24bn, down 15% from a year earlier. US exports to the region shrank 13.2% to $6bn, due to declines in sales of aircraft, motor vehicle parts and computer and telecommunications equipment. US imports fell 15.7% from 2001 to 17.9bn, as the US recession caused lower demand for crude oil and platinum group metals.

US exports: Shipments to South Africa, Kenya and Namibia fell dramatically, and increases in Angola, Nigeria and Equatorial Guinea could not offset the decline. Exports recovered in the fourth quarter due to higher oil field equipment sales to Angola and an aircraft delivery to Kenya. However, these items are high volatility and do not indicate that a general recovery is underway.

US imports: Imports from Nigeria plummeted nearly a third, and from South Africa by 9%. Small increases from Angola, Equatorial Guinea and Cameroon did not offset the general decline.

Agoa trade: The African Growth and Opportunity Act prevented an even sharper drop in US imports. Agoa imports increased 10% to $9bn. This figure included duty-free imports from Agoa-eligible countries under both pre-existing US Generalised System of Preferences (GSP) and the expanded Agoa GSP, plus textile and apparel imported duty free and quota-free under Agoa provisions.

Agoa accounted for half of total imports from the region, but three-quarters of the Agoa imports were petroleum products. With these excluded, Agoa imports were less than $2.2bn. Textile and apparel imports more than doubled, to $803m. Transport equipment accounted for $545m, 81% more than in 2001, and agricultural products grew 38% to $212m.

Africa's global trade

Africa's global trade: Sub-Saharan Africa's total merchandise imports climbed 6% in 2001 (the latest year available) to $87.7bn.

South Africa and Nigeria accounted for more than 41% of sub-Saharan Africa's total imports.

South African imports declined 5% to $24.6bn, due to the weak rand. The fall in imports reversed an 8% gain in 2000.

Nigeria's imports were nearly $11.5bn, a 30% increase from a year earlier and a 51% increase in two years, spurred by sharply higher revenues from crude oil exports.

Sub-Saharan Africa's total merchandise exports were $86.2bn, virtually flat from 2000, when high prices for oil, diamonds and platinum metals propelled a 22% spike in export growth. The region's small global trade surplus in 2000 was erased in 2001, although the deficit was smaller than in most previous years. The region's 1.4% decline compared favourably with a 3.1% fall in total world exports in 2001, as well as with developing countries, which suffered a 5.2% drop. Nevertheless, sub-Saharan Africa accounted for only 1.4% of world trade in 2001, virtually unchanged from 2000.

Africa's share of world trade has declined steadily over rime, increasing its isolation from the global economy and its detachment from growing world prosperity. Over the past decade, sub-Saharan Africa's trade has grown 39%, while world trade has increased 85%. In the same period, African GDP grew less than 85%, against a global figure of more than 44%.

Sub-Saharan Africa's economic growth slowed in 2002 to 2.5%, down from 2.9% in 2001. The growth rate was below the 2.8% registered by developing countries in 2002, but well below the 1.7% experienced by the world generally. 2002 marked the second consecutive year that sub-Saharan Africa surpassed global growth, but lagged behind the pace of developing countries.

Share of Africa's import and export markers. Sub-Saharan Africa accounts for less than 1% of US merchandise exports and less than 2% of US merchandise imports. Proportions are slightly higher for the European Union, where sub-Saharan Africa represents 3.5% of total exports and 4% of total imports. Conversely, the US is Africa's largest single country marker, purchasing 26% of the region's exports in 2001. The UK was a distant second at 9.5% and France third at 7.3%. The EU absorbed near 45% of sub-Saharan Africa's exports, up from 40.7% in 2000.

US trade with sub-Saharan Africa Highlights

* Total trade between the United States and the region was nearly $24bn
in 2002, with US exports of $6bn and US imports of $18bn.

* US imports under AGOA were valued at $9bn in 2002, a 10% increase from
2001.

* The U.S. direct investment position in sub-Saharan Africa increased
5.8% at year-end 2001, to $10.2bn, boosted largely by investments in the
petroleum sector

($m)              1999        2000        2001        2002

US exports   5,686,500   5,928,800   6,941,800   6,023,000
US imports  14,042,900  23,480,000   1,286,800  17,934,700

Total       19,729,400  29,408,800  28,228,600  23,957,700

RELATED ARTICLE: OPIC will mobilise more capital

The Overseas Private Investment Corporation (OPIC) is more commercially oriented and has made a $125m guarantee facility available to stimulate economic growth in sub-Saharan Africa. The funds will flow through Citibank, a leading lender in the region, to boost its ability to lend much-needed capital throughout the region.

OPIC, an agency of the US government, helps US businesses to invest overseas, supports economic development in new markets and promotes American foreign policy at the same time. The initial focus will be on Angola, Botswana, Cameroon, Ethiopia, Kenya, Mali, Mozambique, Nigeria, Senegal, Tanzania and Uganda. In an effort to stimulate small businesses, a portion of the fund is reserved for small and medium-sized enterprises (SMEs).

"We are particularly pleased that a portion of the facility will focus on empowering SMEs, which are an important engine of economic growth world-wide," says OPIC president and CEO Dr. Peter Watson, noting that the fund will help Citibank overcome the current disparity between opportunities to provide medium- to long-term loans to local start-up companies in sub-Saharan Africa and the lack of banking capital in the region.

"Access to long-term capital among entrepreneurs in sub-Saharan Africa is at odds with the vitality and capability they possess," observes Watson. "This partnership will help close that gap."

Citibank has maintained a presence in Africa since 1958, and has become one of the region's largest financial institutions offering corporate banking services. It has full corporate banking operations in 17 African countries and provides corporate finance services to an additional 36 countries outside of sub-Saharan Africa.

Opportunities galore in Africa, says US firm

Through its membership of the CCA, a small US firm, ResourceLinc.com has catapulted itself into the international arena and is now urging other small, especially minority businesses, to follow its example.

ResourceLinC.com, with offices located in Pennsylvania and New Jersey, has over 40 years of experience in the information technology field. Selected to do so by the US Department of Defence, it delivered a successful HIV/Aids education, awareness and prevention program for the Botswana Defence Force. The program was so successful that the company was asked to replicate its program for the Malawi Defence Force.

"Recognising the extreme value of using ICT as an integral component of our business model has enabled us to realise that even a small business can become successfully engaged in international opportunities. We are proud of our success and attribute it to the value, support and assistance that CCA has extended to us as members."

As a Board member of the African American Chamber of Commerce of Philadelphia, a member of the Business Advisory Council for Philadelphia's Mayor John Street, ResourceLinC is working aggressively to develop relationships between businesses in Philadelphia and businesses in Malawi, Zambia, Uganda, Kenya, South Africa and Botswana.

It has been appointed as the designated Project Management Agency for the National Smallholder Farmers Association of Malawi (NASFAM) representing over 4,000 associations, to assist them in deploying Edu-TeleCenters across Malawi to facilitate trade, education, literacy, gender equality, HIV/Aids and business-business programs.