Africa-EU - economic indicators, trade and investment

From Statistics Explained

Data from November 2010, most recent data: Further Eurostat information, Main tables and Database.

This article compares the economic indicators of Africa and the European Union (EU) in the period from 2000 to 2009. It examines gross domestic product (GDP) and consumer prices, but also looks at trade in goods and services and foreign direct investment (FDI) between African countries and the 27 EU Member States (EU-27).

The article was prepared jointly by Eurostat and the Statistics Unit of the African Union (AU) Commission, in the framework of the promotion of economic governance as foreseen by the Joint Africa-EU Strategy for the promotion of economic governance.

Contents 1 Main statistical findings 1.1 Per-capita GDP 1.2 Structure of output 1.3 Consumer prices 1.4 Trade in goods 1.5 Trade partners 1.6 Trade in services 1.7 Foreign direct investment 2 Data sources and availability 3 Context 4 Further Eurostat information 4.1 Publications 4.2 Main tables 4.3 Database 4.4 Dedicated section 4.5 Other information 5 External links 6 See also

Main statistical findings

In recent years, African GDP has progressed at a faster pace than in the EU, but this has been offset by a comparatively high increase in consumer prices. Furthermore, the global economic crisis had a considerable impact on GDP and trade in goods in 2009.

Since 2004, the value of extra-EU trade in goods with Africa has risen substantially, with imports (mainly energy products) consistently higher than exports (especially machinery and transport equipment). The economic crisis abruptly ended this trend: in 2009, the value of EU-27 imports from Africa decreased by 33% and EU-27 exports to Africa fell by nearly 10%, resulting in a near trade balance.

In 2009, Libya was the foremost African exporter of goods to the EU-27, and South Africa was the main destination for EU-27 exports to Africa. The EU-27’s small trade surplus observed in the trade of services in 2007 increased to EUR 3.7 billion in 2008.

Between 2000 and 2008, nominal GDP growth in Africa as a whole increased at a faster pace than that of the European Union. In 2008, total GDP in the EU-27 stood 36 index points above its base year value (2000), while that of Africa progressed by 67 index points over the same period. Due to the global economic crisis, GDP in the EU-27 fell by 8 index points in 2009. The corresponding 2009 figure for Africa as a whole is not yet available.

Obviously, aggregate data mask large disparities with regard to the ‘weight’ of the individual countries. The largest contributors to Africa’s GDP are South Africa, Nigeria, Egypt, Algeria, Morocco and Libya. However, the picture changes considerably when considering GDP per capita.

Per-capita GDP

Between 2008 and 2009, per-capita GDP decreased by 2.9 % in Africa, and by 6.0 % in the EU-27

GDP in Africa increased at a fairly high rate between 2003 and 2008. Expressed ‘at current prices’, i.e. valued at the prices prevailing at the time indicated and taking 2000 as the starting point, GDP in Africa stood 67% higher in 2008 than it did in 2000. The average annual growth rate (AAGR) between 2000 and 2008 amounted to13.0%. The corresponding AAGR (nominal growth) for the EU-27 was 3.9%, with GDP standing 36% higher in 2008 than in 2000. If the crisis year 2009 is included (with a 5.7% decrease in GDP between 2008 and 2009), AAGR (nominal growth) in the EU-27 drops to 2.8 %. This trend is also reflected in the per-capita figures (Fig.1). Between 2007 and 2008, GDP per capita in Africa increased by 6.6 %, while in the EU-27 it rose by only 0.4 %. Between 2008 and 2009, Africa’s per-capita GDP decreased by 2.9%, whereas that of the EU-27 dropped by 6.0 %. This should however be balanced against the fact that consumer prices have been increasing considerably faster in Africa.

Structure of output

The industrial sector in Africa is gaining weight

With regard to the structure of the African economy, the weight of the agricultural sector (16 % in 2007 — latest available year), may appear to be smaller than expected. Indeed, countries such as Liberia, Chad or Sierra Leone reported shares of over 50 %. Conversely,agriculture contributed to only a fraction of the economy in South Africa, Botswana and Equatorial Guinea. However, the overall percentage might be understated, as in many African countries parts of the population live on subsistence farming, the output of which is not accounted for economically.

Industry and manufacturing accounted for 40% of GDP in Africa, compared to 34 % in the European Union. In 2007, the highest shares were observed for Equatorial Guinea (95 %), Libya (76 %), Congo (70 %) and Angola (69 %).

Similar disparities were observed at the national level regarding services as a share of GDP. In countries such as Botswana, Burkina Faso, Mauritania, Mozambique or Zambia, the share of services in GDP was close to the African average (44 %). Services represented the largest share of GDP in Mauritius and Seychelles, as both countries are heavily influenced by the tourism sector, and especially Djibouti (78%), which offers very little industry and agriculture, but acts as an important international maritime transshipment and refueling centre because of its location between the Red Sea and the Gulf of Aden.

Consumer prices

Continue to rise in Africa, but stagnate in the EU

The African consumer price index recorded a constant and steep upward trend throughout the period observed. This trend has even accelerated since 2007, driven by an increase in world energy and food prices. Consumer prices in Africa have increased by 25 % between 2005 and 2008 (EU-27: 9 %) and by 38% between 2005 and 2009 (EU-27: 10 %).

The African average masks large differences at country level, ranging from very high inflation in Angola and the Democratic Republic of the Congo to actual deflation in Libya (data not shown). Due to hyperinflation, Zimbabwe has been excluded from the overall African aggregate.

Over the same period, the rise in consumer prices in the EU-27 was less striking. The highest overall price increases were registered in Bulgaria, Romania and the Baltic Member States and the lowest in the Netherlands and France. Between 2008 and 2009, influenced by the economic crisis, consumer prices increased by a single index point. Considering the price of specific goods in the EU-27 consumer price index (according to the Classification of individual consumption by purpose (COICOP)) over the entire period under review, ‘Clothing and footwear’ and ‘Communication’ have become cheaper, but this was not enough to offset the considerable increases registered for ‘Gas’ and ‘Liquid fuels’ (data not shown).

Trade in goods

Steadily increasing EU trade deficit since 2004

After years of relative stagnation, EU-27 trade with Africa accelerated in 2004, a trend that ended abruptly in 2009. Between 2008 and 2009, the value of EU-27 imports from Africa decreased by 33 % (from EUR 158 billion to EUR 106 billion), and EU-27 exports to Africa fell by 10 % (from EUR 119 billion to EUR 107 billion). The EU-27 consistent trade deficit with Africa since the beginning of the decade turned into a near balance in 2009, with a trade surplus of EUR 0.8 billion. The increase in the value of imports in the years prior to 2009 could largely be attributed to energy products, which follow world prices and were mainly imported from Algeria, Libya, Nigeria and Angola.

In 2009, ‘Mineral fuels’ indeed represented the bulk (58% of the total value) of EU-27 imports from Africa (Fig. 6). Compared to 2008, this share remained virtually unchanged, but the value of mineral fuel imports from Africa decreased by 32 %. The total value of imports for all other product categories also decreased, with the most noticeable drops registered in ‘Crude materials’, ‘Animal and vegetable oils’ and ‘Manufactured goods (around -40 % compared to 2008). Exceptions were ‘Food and live animals’, whose total value remained practically unchanged, and ‘Beverages and tobacco’, which progressed by nearly 20 % (data not shown).

‘Machinery and transport equipment’ accounted for the greater part (43 % of the total value) of EU-27 exports to Africa, followed by ‘Manufactured goods’ and ‘Chemicals’. In 2009, almost all export product categories were affected by a drop in value compared to 2008, ranging from -21 % for ‘Mineral fuels’ (mainly to Nigeria, Libya and Morocco) to -2 % for ‘Miscellaneous manufactured articles’. The only exception was ‘Animal and vegetable oils’, with a 2 % increase in value. However, in absolute terms, this category is of minor importance, representing only 0.3 % of the total value of EU exports to Africa, which amounted to EUR 333 million.

Trade partners

Libyan and Algerian gas dominates EU imports; Egypt gains importance for EU exports

In terms of EU-27 imports, the main African partners in 2009 were Libya (98 % of goods from Libya were ‘Mineral fuels’), followed by Algeria (also 98 % ‘Mineral fuels’) and South Africa (with a more diverse product mix in which ‘Manufactured products’ accounted for 29 %). These three countries together represented 49 % of all EU-27 imports from Africa in 2009.

Whereas EU-27 imports from Nigeria (4th in the ranking) were also dominated by oil (share of 91 %), those from Tunisia and Morocco mainly consisted of machinery and miscellaneous manufactured articles. The share of food products from Morocco (27 % of the value of all Moroccan imports, essentially consisting of fish and fruit & vegetables) is also worth mentioning. South Africa led the ranking regarding EU-27 exports to Africa. In 2009, EU-27 exports to South Africa were valued at over EUR 16 billion, half of which consisted of ‘Machinery and transport equipment’, followed by ‘Chemicals’ and ‘Manufactured goods’ (both 14 %). Algeria was ranked second, ahead of Egypt which overtook Morocco. The product mix for Algeria and Egypt was broadly similar, with ‘Machinery and transport equipment’ as the most important product group (42 % share for both countries), followed by ‘Manufactured goods’ (23 % and 15 %, respectively) and ‘Chemicals’ (12 % and 15 %, respectively — data not shown).

Trade in services

Holidays at popular destinations in Morocco, Tunisia and Egypt boosts the EU’s deficit for travel-related services

Overall trade in services with African countries has increased in the period under review: the sum of services sold and services bought increased by 15% between 2006 and 2007, and by 10 % between 2007 and 2008. At the same time, the EU-27 registered a trade deficit in 2006 (EUR 2.8 billion), a near balance in 2007 and a clear surplus in 2008 (EUR 3.7 billion). Whereas the relation between ‘services rendered’ (credit) and ‘services received’ (debit) was fairly balanced for transportation services, a sharp contrast was observed for ‘Travel’ and ‘Other services’. In 2008, the value of travel services received was three and a half times higher than that of services rendered. In other words, many more Europeans travelled to Africa (especially to popular destinations in Morocco, Tunisia and Egypt) than Africans travelled to Europe. In 2008, the EU-27 trade deficit for ‘Travel’ amounted to almost EUR 10.3 billion. This was largely compensated by ‘Other services’, for which the EU-27 recorded a trade surplus of EUR 14.6 billion, meaning that many more such services were supplied to African countries than were received. The two main sub-categories in ‘Other services’ were ‘Construction services’ and ‘Other business services’, the latter especially consisting of business, engineering and technical services (data not shown).

In 2008, South Africa and Egypt (both with a share of 15%) were the EU’s leading partners in terms of total volume of trade in services (i.e. services sold and services bought). Whereas South Africa primarily traded ‘Other services’ (accounting for 50 % of all services traded with the EU-27), ‘Travel’ was the main source of trade in Egypt (44 %) and Morocco (36 %), reflecting their position as popular tourist destinations (data not shown).

Services traded with Nigeria (ranked 4th) primarily concerned ‘Other business services’ (74 %), which mainly included services linked to construction and business. Mauritius appears further down in the ranking (9th position), well in front of far larger countries such as Senegal or Ghana. This small Indian Ocean island bought EUR 521 million worth of services from the EU in 2008; at the same time it sold services worth EUR 985 million. Although detailed data on the services exchanged with Mauritius are not available, it can be reasonably assumed that most services bought by the EU are linked to tourism.

Foreign direct investment

South Africa ahead in terms of foreign direct investment, with France as the main investor

EU-27 foreign direct investment (FDI) stocks held in African countries in 2008 amounted to EUR 153 billion, or 4.7 % of worldwide extra-EU-27 FDI stocks. EU-27 stocks were mainly held with enterprises located in South Africa (30 %) and Nigeria (17 %). France and the United Kingdom in particular have invested substantially in Africa: at the end of 2008, these Member States held respectively 26 % and 13 % of EU-27 stocks in Africa.

Conversely, EU liabilities towards African investors reached almost EUR 25 billion, with nearly one quarter owed to South Africa. Comparatively, French enterprises held the most stock liabilities with African countries.

Looking at FDI flows (Table 5), the EU-27 countries invested in Africa EUR 18.5 billion in 2008, with Egypt having attracted more than half (53%) of this amount. France and the United Kingdom were the main investors in 2008.

Conversely, African enterprises invested more than EUR 6 billion in the EU economy in 2008 (2007: EUR 4.8 billion). Egyptian enterprises were by far the most active investors. Half of all African investments in the EU in 2008 were carried out in France.

Data sources and availability

Data sources

The contents of this article are based on data available in the African Statistical Yearbook – 2010 Edition, prepared by the African Union Commission, the African Development Bank and the United Nations Economic Commission for Africa, and in Eurostat's databases NewCronos and Comext. Please note that although Morocco is not a member of the African Union (AU), figures for Africa provided by AU do include data on Morocco.

African GDP data (Figure 1 and Figure 2) were available in USD only and have been converted to EUR using the average annual rate of exchange (Table: ert_bil_eur_a).

Structure of the economy (Figure 3) For EU-27 data, public administration and community services and activities of households have not been taken into account.

Methodology for external trade statistics

In the methodology applied for statistics on the trading of goods, extra-EU trade (trade between Member States and non-member countries) statistics do not record exchanges involving goods in transit, placed in a customs warehouse or given temporary admission (for trade fairs, temporary exhibitions, tests, etc.). This is known as "special trade". So the partner will be the country of final destination of the goods.

SITC classification

In Figure 6, information on commodities exported and imported are presented according to the Standard international trade classification (SITC) at a more general level (1-digit).

Consumer price index for Africa

The African Consumer Price Index as supplied in the original source has 2000 as the base year. It has been restated to ‘2005=100’ so as to allow a comparison with EU-27 figures (Figure 4).

Data on foreign direct investment (FDI)

Data of foreign direct investment (FDI) are based on the methodological framework of the OECD: Benchmark Definition of Foreign Direct Investment Third Edition, a detailed operational definition fully consistent with the IMF Balance of Payments Manual, Fifth Edition, BPM5. FDI is the category of international investment made by an entity resident in one economy (direct investor) to acquire a lasting interest in an enterprise operating in another economy (direct investment enterprise). Through outward FDI flows, an investor country builds up FDI assets abroad (outward FDI stocks). Correspondingly, inward FDI flows cumulate into liabilities towards foreign investors (inward FDI stocks). FDI flows are components of the financial account of the 'Balance of payments', while FDI assets and liabilities are components of the 'International investment position'.

In this article: 1 billion = 1 000 000 000

Context

This article is based on the first published work prepared jointly by Eurostat and the African Union (AU) Commission’s Statistics Unit under the promotion of economic governance, as foreseen by the Joint Africa-EU Strategy.

Further Eurostat information

Publications

• The European Union and the African Union - A statistical portrait - 2011 edition
• Africa-EU: economic indicators, trade and investement - Statistics in focus 98/2009
• Africa-EU: economic indicators, trade and investement - Statistics in focus 59/2010
• African Statistical Yearbook

Main tables

• Balance of payments - International transactions (t_bop), see:

Balance of payments statistics and International investment positions (t_bop_q)

International trade in services, geographical breakdown (t_bop_its)

European Union direct investments (t_bop_fdi)

Database

• Balance of payments - International transactions (bop), see:

Workers' remittances and compensation of employees (bop_remit)

Balance of payments statistics and International investment positions (bop_q)

International trade in services, geographical breakdown (bop_its)

European Union direct investments (bop_fdi)

• External trade, see:

External trade detailed data (detail)

EU27 Trade Since 1995 By SITC (DS_018995)

Dedicated section

• International statistical cooperation

Other information

• Africa-EU Strategic Partnership - A Joint Africa-EU Strategy (pdf)

External links

• Africa and Europe in Partnership (also in French)

See also

• GDP per capita, consumption per capita and price level indices
• Latin America-EU - economic indicators, trade and investment
• Sustainable development - Global partnership