Emerging African economies have strong future of growth

The report emerged just as KPMG published its global manufacturing outlook which placed a changing attitude to supply chain risk at the top of the agenda. Euler Hermes revealed that intra-regional trade in Africa grew by 465% between 2000–2012. The report found that longer-term trade between developed countries is likely to decline, trade between advanced and emerging economies will increase and trade between emerging economic regions is likely to grow significantly. “Companies will find potential demand growth through 2015 in the leading importing countries, which have favourable growth fundamentals,” said Ludovic Subran, Chief Economist at Euler Hermes. “Asia is confirming its dominance, taking the top four spots in the Euler Hermes rankings, followed by two African countries—Angola and Nigeria.”hideAt the sector level, in terms of import potential for the next three years Euler Hermes emphasised the strength of chemicals (+21%) and automobiles (+20%), followed by pharmaceuticals (+15%), agri-food (+10%) and electronic components (+9% ). “The change in global trade is certainly linked to the weaving of new industry roads,” explained Mr Subran. International trade contains opportunities for development, according to the report, ‘on condition they are accompanied by financing and protection’. There is potential for additional demand in many countries, fuelled by growing needs in terms of volumes and rising wealth levels. Emerging countries clearly form the cornerstone of this favourable process for growth in international trade, reinforced by the high proportion of recently-signed trade agreements. In fact, these opportunities will only crystallise if they are accompanied by financing and protection. Short-term bank credit is essential, playing a role in around 80% of international trade credit. It also needs to be supplemented by hedging against political and trade risks. In addition, credit insurance to assist the healthy management of receivables—including internationally—appears crucial in a changing environment with insufficient knowledge of the ins and outs of destination markets, which are more geographically and culturally (business environment) removed and sometimes present volatile economic dynamics. Overall, the report found ‘in the long term, in terms of growth: trade between developed countries is expected to weaken, trade between developed and emerging countries should intensify and trade between emerging zones should experience strong growth. The (new)emerging economies will be the cornerstone of future trade growth’. Meanwhile, the KPMG Global Manufacturing Outlook 2013, based on a survey of 335 senior executives representing five industries: aerospace and defence, automotive, conglomerates, engineering and industrial products, and metals, including respondents from Africa, pointed to the importance of the supply chain. The key findings included: Global manufacturers are increasing transaction activity to take advantage of growth opportunities in global markets, while reassessing operations and product portfolios to control costs. Companies are viewing their channel partners as more of a ‘network’ which is critical to achieving a ‘demand-driven’ supply chain, ie one that provides a real-time view to total demand, supply and capacity information. Visibility is the new watchword in supply chain optimisation and a major opportunity for many companies. Increasingly, companies are placing the supply chain at the cente of their strategies to innovate. Companies see value in both breakthrough and incremental innovation to stay competitive.

Emerging African economies have strong future of growth

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