Sub-Saharan Africa’s exports to the US, which had begun to pick up after plunging in the wake of Wall Street’s 2008 implosion, dipped again in 2012 — this time by 34 per cent — and do not look like recovering any time soon.
This is not something US trade policy, in the form of the African Growth and Opportunity Act’s preferential tariff treatment for most African products, can do much about in the immediate term, even if the act is made more generous when it comes up for renewal in 2015.
It’s a problem of waning demand. Oil is the primary US import from Africa. The US thirst for imported oil (other than Canadian) is fast diminishing. Blame increased domestic production, the shale gas boom and improving energy efficiency. Last week Citigroup issued a report predicting “North American energy independence” by 2020.
Nigeria’s exports to the US, 99 per cent of which are oil and related products, went from $33.8 billion in 2011 to $19 billion last year, a 44 per cent drop, according to the latest numbers from the US International Trade Commission.
US imports from Angola, again almost exclusively oil, were down 30 per cent to $9.6 billion. Chad, Gabon and the Republic of Congo, the next tier of African oil producers, saw declines of 11 per cent, 72 per cent and 38 per cent respectively.
Interestingly, the drop-off in US oil imports was considerably more pronounced from Africa than it was from the rest of the world, where the overall decline was a more modest 7.4 per cent.
US Customs valued at $46.6 billion the goods AGOA countries shipped to the US in 2012. Of that, 74 per cent, $34.7 billion, was accounted for by oil and its byproducts.
Of the $11.9 billion attributable to something other than oil, the lion’s share, $8.7 billion or 63 per cent, was South Africa’s, and a goodly portion, $1.9 billion or 15 per cent, landed in the form of BMW’s and Mercedes Benzes built in Rosslyn and Port Elizabeth.
Another 7 percent, or $868 million, came from apparel sewn mainly in Lesotho, Kenya, Mauritius and Swaziland to take advantage of AGOA. This figure might have been higher had Congress been quicker last year to reauthorize AGOA’s third party fabric provision giving duty free treatment to clothing made with non-African fabric.
62 964 South African-built cars with an average landed cost of $30 000 apiece were unloaded in US ports in 2012. They were the country’s top export earner in the US, edging out unwrought platinum ($1.8 billion) for the second time (the first was 2009). Beneficiated platinum, in the form of catalytic converters, continued to do well, with US imports worth $226 million, up 2.4 per cent on 2011.
In 2008, the year the wheels came off the global economy, South Africa’s exports to the US hit their all-time high, just shy of $10 billion, before plummeting to under $6 billion in 2009. They clawed back to $9.5 billion in 2011, then stalled again last year at $8.7 billion largely on the platinum price.
One South African product that has not stalled is wine, albeit rising from a low base. US imports from South Africa shot up 34 per cent to in 2012 to a record $59,7 million and we may be at a tipping point (a subject for another day). South Africa is currently the tenth largest source of US imports, just behind Portugal.
South Africa has enjoyed a trade surplus with the US since 1999. The surplus peaked in 2007 at $3.9 billion but fell to $1.6 billion last year as imports from the US reached a new high of $7.1 billion, 3.4 per cent up on 2011, much of it on capital equipment for the government’s infrastructure programme.
Overall, US exports to AGOA countries rose 6.5 per cent to $20.6 billion in 2012. This is healthy. It sends the right signal to the US government and to US business.
The political case for AGOA, and the access to the US market it unilaterally grants eligible countries, is that it will help those countries grow so that they will in turn become growing markets for US goods and services.
Debate of the renewal and expansion of AGOA, though not due until 2015, has already begun. That South Africa makes more use of AGOA than any other African nation is clear to all. Some are asking when it may not be time to graduate South Africa, now that it is the S in BRICS, as too developed to need or deserve AGOA’s benefits.