Executive Summary

The Internationalisation Monitor describes trends in globalisation and the consequences thereof for the Dutch economy and society. It is published quarterly as part of the Globalisation research agenda at Statistics Netherlands (CBS), commissioned by the Dutch Ministry of Foreign Affairs.

Africa is a continent with an enormous diversity of countries, all different in terms of economic size and wealth. Despite the economic growth in many African countries in recent years, Africa is still a small player in world trade. Due to the growing labour force, Africa is an interesting market for goods and services. According to UNCTAD figures, economic growth in Africa was 2.9% in 2019 and 3.2% in 2018. With this growth in GDP, Africa outperformed Oceania, America and Europe. In 2019 the African countries together exported €420bn and imported €518bn worth of goods. Africa mainly exports raw materials such as oil, cocoa beans and fruit.

In 2020, the Netherlands exported €15.0bn in goods to Africa. With an export share of 3.1%, the continent was a minor destination for Dutch goods. Dutch imports from African countries amounted to €10.9bn, giving Africa a share of 2.6% in Dutch goods imports. However, not every country in Africa is an equally important trading partner from the Dutch perspective. For example, the Africa strategy of VNO-NCW and MKB-Nederland focuses on 15 countries: Algeria, Egypt, Ethiopia, Ghana, Ivory Coast, Kenya, Morocco, Mozambique, Nigeria, Rwanda, Senegal, South Africa, Tanzania, Tunisia and Uganda. Where possible, the analysis in this Internationalisation Monitor focuses on these 15 countries, otherwise on the African continent as a whole.

In this edition, we look at the economic ties between Africa and the Netherlands in terms of trade flows, investments, the characteristics of Dutch companies trading with Africa, and export-induced earnings. Furthermore, goods from Africa may be imported under unilateral or bilateral preferential trade agreements; therefore, we highlight how much use is being made of such agreements, the average import tariffs per country, and how much extra is being paid in import duties by not making use of these trade agreements.

Listed below are some of the main findings presented in this edition:

Chapter 1: Trends in Dutch-African trade

• Goods trade with Africa is very modest compared to trade with other continents. In 2020, Africa’s respective shares in Dutch imports and exports were 2.6% and 3.1%.
• Over the past ten years, exports to Africa have grown at almost the same rate as total Dutch exports. On the other hand, imports from Africa have not held pace with total goods imports.
• Trade with Africa was seriously hit in 2020 due to uncertainty about price agreements on crude oil and the coronavirus pandemic. Due to the pandemic, demand for goods was significantly lower than in previous years. The share of trade in oil and oil products with Africa has been above average. As a result, in 2020 goods imports from Africa (–11%) fell relatively more rapidly than total imports (–8%). The same pattern emerged in goods exports: exports to Africa (–10%) were hit harder than total exports (–6%).
• In 2020, €10.9bn in Dutch goods imports originated from Africa. Almost half of these goods came from Nigeria, South Africa and Ivory Coast.
• More than 9% of goods imported from Africa came from the 33 African countries that belong to the “Least Developed Countries” (LDCs).
• Dutch exports to Africa amounted to €15.0bn in 2020. Nigeria, South Africa and Egypt are the three main export destinations. Together they account for 47% of total Dutch goods exports to Africa.
• The LDCs account for a quarter of total goods exports to Africa.
• As a supplier of raw materials, Africa is very important to both consumers and manufacturers in the Netherlands. 86% of the total value of imports from Africa in 2020 consisted of raw materials. Compared to total imports, the share of raw materials in imports from Africa was more than three times as large, mainly consisting of oil, cocoa beans, fruit, cut flowers, and vegetables.
• Conversely, the Netherlands is a relatively major exporter of motor fuels (e.g. petrol and diesel), machines and devices (e.g. specialised machinery, mobile phones), chemical products (e.g. medicines, pharmaceuticals), and dairy (e.g. milk and cheese) to Africa.
• Africa’s role in Dutch service trade is considerably smaller than in goods trade. Service imports from Africa amounted to €1.9bn in 2019 and the Netherlands exported services worth €3.3bn to the African continent in the same year. Dutch service trade is mainly focused on EU partners as well as on the US and the UK.

Chapter 2: Preferential trade

• Goods from African countries can be imported under different types of preferential trade agreements. The EU has bilateral trade agreements with various African countries under which both parties open up their market. Developing countries are granted preferential access to the European market on the basis of unilateral agreements under which the EU grants the LDCs duty-free and quota-free access.
• The mean import duty on goods from African countries under preferential schemes is between 0 and 1%. This is considerably lower than the duties under the duty scheme for third countries (MFN-duties).
• The available preferential schemes for goods imports from the 15 African countries of focus are very well-used: the preference utilisation rate (PUR) for goods imports is generally over 90%, and for imports originating in the countries under the unilateral system even over 95%.
• The PUR of imports from Africa is relatively higher among SMEs compared to large enterprises.
• In 2019, €279 million in duties were saved by making use of preferential imports from African countries. Another €10 million in duties were paid for imports from African countries which might have been avoided by using trade preferences.

Chapter 3: Foreign investments and multinationals in Africa

• Both inward and outward FDI on the African continent are rather limited. In 2019, Africa received €852bn in inward FDI while outward FDI amounted to €255bn.
• According to UNCTAD estimates, African investments were least affected by the coronavirus pandemic. FDI inflows amounted to €46bn in 2019 and fell to an estimated €38bn in 2020. With this drop of 19%, Africa’s FDI inflow was hit less severely than inflows into the US, Europe and global FDI inflows.
• Relative to 2014, Dutch investment in Africa has grown substantially. In 2018, the Netherlands was even the world’s largest foreign investor in Africa: €68bn. These investments went mainly to Egypt, South Africa, Libya and Nigeria.
• In the Netherlands, the number of African-owned companies increased to 95 in 2018. These companies employed 5 thousand people.
• The top three African countries with the highest number of Dutch subsidiaries in 2018 were South Africa (220), Kenya (60) and Morocco (45), resulting in 14 thousand full-time jobs at these Dutch subsidiaries. Dutch subsidiaries in Africa are mainly active in goods trade and business services.
• 48% of the variance in country-level FDI is explained by the country’s GDP, according to a fitted OLS model. Libya, Egypt, Nigeria and South-Africa receive relatively high levels of FDI from the Netherlands when set off against their relative GDP. Sudan, Uganda and Botswana are countries that receive relatively low levels of FDI from the Netherlands, in comparison with their relative GDP.
• Botswana, Cape Verde and Eritrea receive relatively low levels of FDI from the Netherlands when compared to their relative GDP per capita.
• Togo, Guinea and Senegal receive relatively little FDI from the Netherlands compared to the levels of Dutch exports to these countries.
• Cameroon, Chad, Ivory Coast and Uganda receive relatively low levels of FDI from the Netherlands compared to the levels of Dutch imports from these countries.

Chapter 4: Dutch firms trading with Africa

• A relatively small number of Dutch firms engage in trade with Africa. In 2019, there were around 7 thousand exporters and 3,900 importers. As for trade with other continents, Dutch importers exceed exporters. The average export value in Dutch trade with Africa is lower compared to trade with the EU, America and Asia; conversely, the average import value is relatively higher.
• Only a minor share of the Dutch firms doing business with Africa trade exclusively with this continent. Most of them are small firms (fewer than 10 employed persons) engaged in wholesale trade on a fee or contract basis.
• Most firms engaged in trade with Africa are wholesalers or manufacturers. The vast majority of wholesale exporters sell machinery and non-food products, e.g. clothing, household items and pharmaceuticals. In manufacturing, most exporters sell machinery, food and chemicals. In both the wholesale and manufacturing sector, most of the exporters are focused on South Africa, Egypt and Morocco. Most importers buy food, non-food, machinery and electro-technical equipment.
• Although only 32% of the exporters to Africa are large enterprises, they account for 81% of the total export value. In exports to countries like Nigeria, Algeria, South Africa and Togo, large enterprises account for more than 85% of the export value; Ghana for less than 50%. In Nigeria, Algeria and South Africa, the share of multinationals in the export value is the highest.
• Within the agrofood cluster, most exporters deliver to South Africa, Egypt and Morocco. Between 2015 and 2019, the number of exporters to Africa dropped while the number of importers increased, mainly buying from Morocco, Egypt and Kenya.
• Within the healthcare cluster, the number of firms doing business with Africa hardly changed between 2015 and 2019. Most of this trade concerns wholesale of pharmaceutical products and medical instruments, followed by pharmaceutical products other than raw pharmaceutical materials.

Chapter 5: Dutch earnings from exports to Africa

• Due to the fragmentation of production processes, international trade increasingly consists of semi-finished products, parts and components or intermediates. As more imports are used instead of domestic inputs, the share of net earnings from exports decreases. In general, the Netherlands benefits most from products or services that are largely produced in the Netherlands and least from re-exports.
• In 2019, the value added generated by Dutch enterprises through exports of goods and services to African countries amounted to €5.8bn, of which €4.4bn was from exports to the 15 African focus countries.
• In 2019, around 63% of the value added of exports (€2.8bn) to the 15 African focus countries was due to domestically produced exports, such as refined petroleum products, machinery, medicines, chemical products and dairy. Compared to 2015, this share had increased, as did the earnings from re-exports to the 15 countries. The value added created by exporting services to African countries has decreased since 2015.
• In 2015, the value added generated by the Dutch economy stood at 40 cents per one euro of exports to the 15 African focus countries; in 2019 this was 35 cents. As such, imported raw materials of parts formed a larger share in Dutch exports to these countries than in 2015.
• Exports to Nigeria are most lucrative for the Netherlands, followed by exports to South Africa and Egypt. The combined value added of exports to these three countries made up 61% of total Dutch earnings from exports to the 15 African countries.
• In 2019 the Dutch economy earned €1.1bn by exporting goods and services to Nigeria, up from €1.0bn in 2015. This increase was mainly due to more domestically produced exports to Nigeria, related to the activities of the Dutch pharmaceutical industry, the petroleum industry and wholesale sector.
• Earnings from exports to South Africa have remained stable since 2015, but the composition has changed. Dutch companies active in the IT services and information sector benefited from an increase in earnings; less revenue from domestically produced exports mainly hit the transport equipment industry (excl. cars), the pharmaceutical and the food industry.
• Since 2015, Dutch earnings from exports to Egypt have decreased by 23%. This is due to much less exports of services in 2019 compared to 2015. Earnings from goods exports to Egypt remained stable between 2015 and 2019.
• Almost 20% of the €4.4bn in export earnings is earned by the wholesale sector. Holdings and management consultancy enterprises are in (far) second place and the chemical industry in third place. When all branches of the manufacturing sector are added up, the whole sector earns €1.3bn due to exports to the 15 African countries.
• The sectors of telecommunications, specialised construction, civil engineering, rental of movable property and architectural and engineering firms had lower earnings from exports to the 15 focus countries.
• In 2015, 42 thousand jobs (FTE) in the Netherlands were due to exports of goods and services to the 15 focus countries; by 2019 this had declined to 39 thousand, due to the fact that fewer services were exported, which are relatively labour-intensive.