Due to the rapid increase of the consumer’s number, the African countries have now become one of the prospective markets for the Ukrainian products.
Taking into consideration the development of the continent, the countries of Africa are constantly increasing the import volume. Therefore, food products supply seems to be the most promising for Ukraine.
As for today, the highest share of the Ukrainian agriculture export to Africa refers to cereals – wheat, corn, barley, as well as sunflower and soya oils, wastes and leftovers of food industry, condensed milk and oilseeds.
In 2015, Ukraine had significantly increased the export volume of its products with benefit: meat, cheese, yogurts, butter, products of vegetables processing, confectionary, water, wine and tobacco.
Having emerged from the crisis, Ukraine is now up to enter the global market. The depreciation of the national currency and the reduced cost for labor force make the export of Ukrainian products more and more advantageous. Those who want to make a profitable investment have to take pay attention to the African market. A research and consulting company “International marketing group” carried out a research on the African market; in addition, it analyzed the working experience of the Ukrainian enterprises in Africa. The research brought out the following advantages of doing business in Africa for the Ukrainian companies.
- Africa represents a high potential for the Ukrainian companies. Comparing to Europe, the barriers to market access are relatively low.
- The number of African consumers is rapidly increasing (more than 40% of global population growth through 2030 will fall on Africa)
- The income and expenses of the urban population is increasing. The main buyers of products and services are young people (due to the fact that the 16-34 age group accounts for 53% of the total earnings)
- There has been an increasing brand loyalty all over Africa (58% of the population)
- The Ukrainian products are demanded because of the reasonable price and the high quality
The first one to draw the investment route in Africa was the vice-prime-minister of Ukraine in foreign economic activity and investments, who built a refrigerators factory in one of the countries of North Africa.
The first one to start a serious business in Africa was one of the main PrivatBank shareholders. He owes Palmary enterprises, one of the cosponsors of which is Ghana Manganese Company, that carries out the extraction of manganese ore in Ghana (1 million tons per year)
However, probably, the biggest Ukrainian investment project in Africa is the exploitation of the Sham El Shavish gas reserve in Egypt. The volume of the governmental investments of Ukraine, including those from the affiliate of NAK “Naftogaz Ukraine” spent on the works in Western desert amounted to $200 million.
In May 2016, the ambassador of Ukraine in Nigeria Valeriy Aleksandruk announced that Ukraine is ready to invest $1 billion in the completion of the metallurgical plant Ajakouta Steel Company. In his view, the participation of Ukraine in this project is determined by the fact that SRI “Harkov StroyPromNIIProekt” designed the Nigerian plant. Moreover, a certain number of other Ukrainian companies invested in Nigerian metallurgy before. Particularly, the “Industrial Union of Donbass” and “Metal Union” worked on the development of the rolling factory Jos Steel Mill.
According to the forecast of the World Bank, in the background of the global economy stagnation, the developing countries will continue to show positive dynamic of progress. Thus, the economy growth rate of Africa will increase by 5% within the next couple of years and that shall make the African continent become the center of interest of the international investors, who have already started a fierce competition for the African market.
The total volume of the foreign investments flow to the African countries has significantly increased over the last five years. As for today, Western Europe accounts for 30%, the countries of Greater Middle East account for 27% and USA account for 20% of the total volume.
The export of the Ukrainian products to the African countries: top Markets
The dynamic of the Ukrainian products demand from the African countries, year 2015
The top markets, within which Ukraine cooperated with the African countries last year, were the food and agricultural markets. The top ten demanded products that Africa ordered from Ukraine in 2015, confirm that (6 out of 10 items belong to those two markets):
Top-10 export products to Africa
Among more than 40 African countries, who sent various requests to Ukraine, the most active buyers are Egypt (bought a lot of sunflower oil), Nigeria (imported many tracks), and Algeria (ordered the greatest quantity of Lucerne):
African countries-importers of the Ukrainian goods
TOP-5 products for TOP-3 Countries of importer
In the nearest future, Ukraine, due to the loss of other markets, will aim at the markets, the entrance to which is relatively easy. In connection with that, the cooperation between Africa and Ukraine is very promising and has the full potential to grow and expand.