PUBLISHED ON January 21st, 2015

No going back for Turkey-Africa trade

Turkey’s moves to gain more influence in African trade is “at the point of no return” and “should go on” despite the presence of giant competitors on the continent.

This was the view of economic analysts speaking ahead of President Recep Tayyip Erdogan’s 12-country-African visit starting this week.

Erdogan will begin the first visit of 2015 by visiting two East African states – Ethiopia and Djibouti.

Turkey has increased its interest in the largely developing Sub-Saharan countries in the last decade and has had a significant impact in the Horn of Africa region.

Sedat Aybar, an economist from Istanbul’s Aydin University, said Turkey is at the “point of no return” in the region and its opening-up to Africa should be supported for the country to reach “the strategic place Turkey has drawn for herself as a global player in world affairs.”

Turkey has opened 27 more embassies in African countries since 2002, mainly in the Sub-Saharan region – a signal of its diplomatic focus – while Turkey’s cooperation agency, TIKA, has nine offices in the region.

The second Turkey-Africa Partnership Summit was held in Nov. 2014 in Malabo, the capital of Equatorial Guinea, six years after the first one in 2008; this period has seen Turkey become one of the largest donor countries with an aid volume nearing $1 billion, according to Aybar.

The national flag-carrier, Turkish Airlines, now has flights to more than 42 destinations in 27 African countries.

Between 2005 and 2013, Turkish trade with Sub-Saharan nations increased by more than 30 percent, while total trade volume of the country surged by more than 20 percent, with trade volume reaching $7.5 billion in 2013.

Adding in North African countries, where Turkey’s closest business partners are located, this trade volume figure almost triples to more than $20 billion.

Despite the surge, this number cannot compete with the giant Chinese economic machine which is eyeing further partnerships with African countries. The trade volume between Africa and China exceeded $200 billion in 2013 and is expected to go up to $280 billion by this year.

Aybar accepts that Africa accounts for a “still miniscule” part in Turkish trade, but its growth is faster than any other region as Turkey eyes $50 billion of trade volume with African countries by 2023 in its centennial goals.

The ambitious interest of Chinese investors has not been, of course, out of the blue, as the Sub-Saharan countries grew by 4.7 percent in 2013 and are expected to go over 5 percent in 2015, according to the World Bank, at “moderately rapid pace.”

According to the IMF’s 2014 outlook, six of the world’s top 10 most growing countries were from the African continent.

“For a win-win case, it is in Turkey’s best interest to promote co-operation rather than competition and vice versa,” says Sedat Aybar.

Aybar adds that Turkey should co-operate more with other emerging countries in its investments to provide “complementary sectorial inputs,” especially in infrastructure.

Turkish policy focuses more on the east Africa, where its influence is stronger than in any other region; as Aybar puts it, the horn is “an important bridge-head for Turkish entry into Sub-Saharan Africa.”

Somalia is the first country which enjoyed Turkish donations of more than $360 million in recent years, according to Foreign Ministry figures. Turkey has given away more than $1 billion to African countries so far, says Aybar.

Turkey’s presence in Somalia has become prominent, when then-premier Erdogan paid a visit to the country in 2011 to attract world’s attention to a famine crisis.

Recently, Turkish economy minister Nihat Zeybekci was in Addis Ababa and signed a deal to lease a 5 million square meter area for 99 years to build a trade center for Turkish companies.

“Somalia also provides a case for promoting Turkey’s opening-to-Africa strategy which is officially based on humanitarian grounds,” said Aybar as Turkey enforces a policy of “African solutions to African problems.”

However, according to Hasan Basri Yalcin, professor of international relations at Istanbul Commerce University, although this sort of soft power can take Turkey up to a point, success ultimately depends on financial capabilities.

“When it comes to the trade deals, it is true that money has no religion. Therefore, I do not believe this kind of an approach would be prevalent,” says Yalcin, referring to comments that Turkey aims to use its cultural ties to strengthen business relations.

The coordinating chairman of Turkish-African business councils in Turkey’s Foreign Economic Relations Board, Tamer Taskin, says that the biggest challenge for Turkish companies operating in Africa is financing.

He urged more funding from Turk Eximbank, which supports Turkish international trade, and more Turkish bank branches in Africa to finance further infrastructure and construction bids.

Turkey offers products at “European standards with Asian prices,” according to Taskin, pointing at automotive, chemical and agricultural investments as areas for further cooperation areas.

Taskin says that Turkish direct investment increasingly flows into African countries, ranging from a white goods factory in South Africa to a textile factory in Ethiopia. Turkish FDI to Africa reached $6 billion in total up to 2014m, according to foreign ministry data.

Turkish companies’ spotlights will be locked on African states as the country attempts to move from a humanitarian perspective to providing scholarships to African students.

As Professor Yalcin puts it, African markets will continue to draw Turkish interest for especially diversifying its business partners around the globe, as Turkey’s largest trade partner – the European Union countries – seem to remain in a near-term stagnation.

Source: Turkish Press

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.