Turkey Economic: Turkey And Africa: A Growing Relationship

British Embassy Ankara

July 2012

Summary

Turkey’s appetite for African markets has gone from strength to strength over the last decade. Exports to Sub Saharan Africa increased by 60% to $3.6bn between 2010 and 2011. Turkish companies are active in both North and Sub-Saharan Africa in sectors ranging from construction to energy. New Turkish Embassies opened, direct flights launched from Istanbul, high level visits and cultural relations are helping to boost bilateral trade relations. Turkish officials have shown a keen interest to collaborate with us across Africa, calling for a jointly-prepared detailed strategy and action plan reflecting public and private sector views.

Detail

In addition to engagement with more traditional markets across Europe and neighbouring countries, Turkey’s relationship with Africa has developed significantly in recent years. The “African Economic Outlook 2011”, published jointly by the OECD and African Development Bank, highlights Turkey’s position as one of the most significant new actors in Africa along with China, India and Brazil. Africa’s share in Turkey’s total exports ($135bn) is roughly 8%, totalling $10.5bn. Turkish presence in North Africa, especially Libya, goes back to the 1980s, and engagement with Sub-Saharan countries has blossomed over the last five years. The Arab Spring led to a decrease in exports to North Africa of 5% in 2011, but exports to major markets such as Egypt and Tunisia increased by 280% and 150% respectively between 2006 and 2011. The Turkish-Sub Saharan trade volume increased by 72% in 2011 over 2010 to reach $7.5bn. Exports to Sub Saharan countries rose from $370m in 2001 to $3.6bn in 2011, a 900% increase.

Turkey’s trade volume with the Sub-Saharan region has grown substantially over the last decade, it has not yet reached the level Turkey seeks, and still has great potential to grow further. Trade volume with this region has increased from $750m in 2000 to $7.5bn in 2011 and the government’s target is to reach $50bn in the period ahead. Turkey conducts most trade in this region with South Africa, Nigeria, Ethiopia and Ghana; although it was with the Central African Republic (3000%), Somalia (720%), and Swaziland (550%) that Turkish exports increased by more than 200% in 2011 year-on-year. Iron and steel, land vehicles, electrical machinery, and appliances dominate Turkish exports, while industrial and agricultural commodities, chemicals, precious metals and stones make up most of the imports.

Turkish investments in Sub-Saharan Africa have also accelerated in the last couple of years, mainly in South Africa, Nigeria, Sudan, Ethiopia, Cameroon and Uganda. Turks mainly invest in contracting (eg. infrastructure, housing, and roads); construction materials; energy; textiles; machinery; furniture; home appliances and the mining sector. The agriculture sector offers significant potential in the Sub-Sahara region, but Turkish investors see it as a relatively risky sector in which to invest.  In addition to SMEs, interest from big Turkish companies in Sub-Saharan Africa has also risen. This region is estimated to constitute about 2% of Turkish contractors’ total world business volume (18% in North Africa). Kolin, a major contracting company, has started a $140m infrastructure project in Uganda, while TAV Construction, the world’s 4th largest airport contractor, is monitoring some large business opportunities in South Africa and Kenya. The Turkish conglomerate Koc Holding (which includes BEKO appliances) acquired South African appliances giant Defy for $324m in 2011. Turkey also signed an agreement for mutual investments with Cameroon on 24 April, and bilateral trade volume is aimed to increase from 153m to $500m in the next four years.

The Turkish Government is also keen to seize trade and investment opportunities in the defence sector in Sub-Saharan Africa. According to press reports based on talks with Turkish Undersecretariat of Defence Industry officials, Turkey, which has a strong defence industry, is targeting South Africa, Ghana, Nigeria, Cameroon, and Kenya as key export markets for armoured vehicles and military electronics. It was also reported that Turkey would sign a Defence Industry Cooperation Agreement with South Africa at the Africa Aerospace Defence Expo which will be held in South Africa in September.  This is expected to allow the two countries to cooperate more closely in the defence and security sectors.

The Economy Ministry has demonstrated a keen interest in developing UK-Turkey business collaboration in Africa to seize opportunities against competition. The Ministry says that we should build on their strengths and expertise especially in terms of joint ventures and technology transfer and proposes that an important first step should be to prepare a detailed strategy and action plan on a sectoral and country basis. This should also reflect the views and participation of the private sector since it would not be effective if collaboration was limited to official level talks such as the JETCO. For large-scale business collaboration (particularly in contracting), Turkish businesses would like the financial element to be facilitated at governmental rather than at company level.

Currently, Turkey has 31 Embassies in Africa, with several opening recently in Mozambique, Zambia, Niger, Gabon, Burkina Faso and Namibia. More new Embassies are expected to be opened in 2012 and 2013. Sub-Saharan countries have eight Embassies in Turkey, but this figure is also expected to increase to 18 in the near future. Turkish Airlines’ direct flights to Africa have also increased with some recent additions including Dar Es Salaam, Entebbe and Accra. Visa procedures for visitors from African countries holding Schengen, UK or USA visas and travelling with Turkish Airlines were simplified significantly in 2011.Over the last three years, President Abdullah Gul has visited Kenya, Tanzania, Congo, Cameroon, Nigeria, Gabon and Ghana while PM Erdogan and Economy Minister Caglayan have taken large business delegations to several African countries . In December 2011, TUSKON (a leading business organisation with close relations to the Government) organised a Turkey-Africa Trade Bridge event in Istanbul, attracting 350 business people from 54 African countries who signed an estimated $300m- worth of trade deals. The second Turkey-Africa Cooperation Summit will be held in 2013, five years after the first summit in 2008, although the host country has yet to be determined. 

Development, aid and cultural relations also played a role in strengthening Turkish-African trade and economic relations. Turkey has a growing aid budget ($1.3bn in 2011), mostly delivered by TIKA (the state aid agency), and through projects focused on Islamic states/communities around the world. The total aid offered by the Turkish government to Sub-Saharan Africa was $40m in 2010. At the UN’s Least Developed Countries (LDCs) Conference, which was held in Istanbul in May 2011, Turkey pledged $200m annually to the LDCs.  This included 33 African countries.  The Turks have close relations with Somalia and Sudan/Darfur, in particular, pledging $70m for Darfur in health, agriculture and education for the 2010-2015 period.

Comment

Turkish businesses and the government are increasing their focus on Africa and especially Sub-Saharan countries, due to problems in the Eurozone and “Arab Spring” countries. New Embassies, more direct flights, trade/investment agreements and aid by public as well as private interest groups are expected to boost relations further.  Investors will closely eye rapidly-growing and urbanising countries such as Ghana, Ethiopia, Angola, Mozambique and Zambia as well as traditional bigger markets such as South Africa and Kenya.

There are important opportunities for UK-Turkey collaboration in the Sub-Sahara in sectors such as contracting, energy and defence. This is consistent with UKTI’s promotion of UK-Turkish partnerships in third markets, building on the natural complementarity of UK expertise with Turkish business’s risk appetite, after-sales service and good relations with many African countries. 

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