Africa is the next frontier for Malaysian exports, says Matrade

Malaysia External Trade Development Corporation (Matrade) is encouraging more exporters to venture into Africa due to its rising market opportunities.

Among the potential areas that Matrade has identified are automotive components and parts, building materials, infrastructure concessions including highways, ports, public housing and government buildings, information communications and technology (ICT), agriculture and halal industry.

It said growth is expected to be strong in East Africa, supported by foreign direct investment (FDI) flows into natural gas resources in Tanzania and oil production in Uganda and Kenya.

“It is important to learn about the culture and geographic location of the country where you will be doing business.

“The most common challenge faced by businessmen is logistics,” said Matrade in a statement today.

Among the landlocked countries identified are Botswana, Zimbabwe, Zambia, Ethiopia, Uganda, South Sudan, Central African Republic, Chad, Niger, Mali, and Burkina Faso.

As seaports are not available in those countries, Matrade said this would increase the cost of transportation to reach these countries.

“Malaysian companies are advised to keep abreast with the changes on regulations and documentations of importing countries.

“In terms of tariff, Nigerian Customs and Duty rates vary from zero per cent to 35 per cent with the average duty rate at 16.96 per cent, while value-added tax (VAT) is levied on imports at a standard rate of five per cent on the sum of the cost, insurance and freight (CIF) value,” said Matrade.

Therefore, Malaysian small and medium enterprises (SMEs) must take into consideration these tariff rates when they do their pricing.

It noted that the African government also prohibited imports of certain goods for security reasons as well as to protect local industries.

Matrade offices in Africa would continue to provide the list of prohibited items and it is important for the business community to always be updated, it said.

Other challenges are to get the approval for conformity and certification for importations, which require investment both monetary and time for exporters.

Nevertheless, Africa’s fast-growing population and markets offer massive opportunities for Malaysian businesses, said Matrade, adding that incomes are rising across the continent which generates new business opportunities in the consumer market.

African consumers’ and businesses’ annual spending is expected to reach US$6.66 trillion (RM27.6 trillion) by 2030, up from US$4 trillion in 2015.

The number of internet users in Africa has shot up more than 260 per cent since 2010 and total consumer spending is expected to exceed US$5 trillion by 2030, according to research compiled by Standard Bank of South Africa Limited.

These trends are spurring growing markets in a range of sectors where Africans have unmet needs, including food and beverages, pharmaceuticals, financial services, healthcare, and education.

“Through the spirit of South-South cooperation, Malaysia is driving the commitment to strengthen and exploring trade and investment opportunities across Africa,” said Matrade.

Despite the challenges faced during the pandemic, trade between Malaysia and the whole of Africa was sustained with an export value totalling US$4.62 billion in 2019, and increased to US$4.69 billion in 2020.

However, imports from Africa decreased slightly to US$2.78 billion in 2020 from US$3.33 billion in 2019.