“Turkey will attach more importance to Africa in 2020” stressed Turkey’s Trade Minister Ruhsar Pekcan on a visit to Nigeria and Morocco during the week of January 13, 2020. One week later, it was President Recep Tayyip Erdogan’s turn to embark on a three-nation African tour. The Turkish President paid an official visit to Algeria, Gambia and Senegal on the week of January 27, 20201.
Turkey’s interest and engagement in Africa has been growing exponentially in recent years. Starting in 2003 when Turkey adopted its “strategy for enhancing the economic and commercial relations with Africa” and in 2005 when the “Year of Africa” was declared.2 In 2019, Turkey’s trade with North Africa saw a 10% increase and a 12% increase with other African countries3. Historically more involved as subcontractors, Turkish companies have demonstrated more recently their capacity to win major infrastructure projects, such as the one to build the Ethiopian Awash Weldiya Railway, estimated at more than 1 billion US Dollars, in addition to airport and other infrastructure projects across the continent4. Turkish companies have also significantly increased their involvement in projects in the energy and natural resources sectors as evidenced by Karpowership which supplies 26% of the electricity produced in Ghana and 60% in Gambia5.
Turkish companies’ economic activism is also supported by the Turkish government’s proactive policy towards Africa. In 11 years, the number of Turkish embassies has increased from 7 to 42 embassies across the continent and Turkish Airlines now flies to 54 destinations compared to 14 in 20116. Turkey is also a development and humanitarian aid provider to African countries through the Turkish Cooperation and Coordination Agency (TIKA) and the Turkish Red Crescent and has become the most-spending country in the world in global humanitarian assistance7.
Yet the opportunities for Turkish companies in Africa can still be expanded. Africa’s fast growing population and markets in an environment of slowing global growth makes Africa a land of opportunity for Turkish investors. According to the World Bank, in 2018, 6 of the 10 fastest growing economies in the world were African with Ghana at the top of the world ranking8. In addition, the World Bank’s 2019 Doing Business index, 5 of the 10 most improving countries are in Africa, and one-third of all reforms implemented globally were in Sub-Saharan Africa9.
In view of the sectors in which Turkish companies historically carry out their outbound investments and Africa’s resources and specific development needs, the areas of opportunity for Turkish companies in Africa are numerous and include:
Natural resources and mining:
Africa has the world’s largest reserve of manganese, cobalt, vanadium, gold, aluminum, chromium representing 30% of the total mining reserves in the world10. In addition, according to a report from the African Natural Resources Center, the continent’s proven oil reserves constitute 8% of the world’ stock and those of natural gas amount to 7%11.
With nearly 65% of the uncultivated arable land, Africa has the potential to be a major supplier in the global food market. Business study reports have shown that Africa could double to triple their production of cereals and grains, which would result in adding 20% more cereals and grains to the current worldwide 2.6 billion tons of output. Similar increases are expected to be seen in the production of livestock as well as horticulture crops12.
Annual investments have doubled to around 80 billion US Dollars since the beginning of the century. Infrastructure spends in Africa is estimated to grow to 180 billion US Dollars by 2025 compared to 70 billion US Dollars in 201413.
Digital and technology:
Africa’s future is intertwined with technology and digitization and offers investment opportunities across many economic sectors such as transportation, mobile banking, education (for example, the Rwandan government has set an target to achieve digital literacy for all youths aged to 16 to 30) or agriculture (as demonstrated for instance by applications such as Plantheus which uses artificial intelligence and image recognition to help farmers to run disease diagnosis on crops). Considering that Africa is expected to achieve the fastest rate of new broadband connections in the near future, Turkish investors will have significant investment opportunities in the digital and technology sectors.
1 Zehra Nuz Duz, ‘Number of Turkich embassies in Africa rises from 12 to 42’, Anadolu Agency, 2019
2 Eleonora Bacchi, ‘A timeline of the Turkish Africa policy,’ 2015
3 Merve Ozlem Cakir, Turkey to prioritize Africa in 2020, 2020 https://www.aa.com.tr/en/turkey/turkey-to-prioritize-africa-in-2020/1704440
4 Moustapha Abdelkerim Idriss, Analysis – Turkey-Africa partnershop : a development-oriented approach, 2020 https://www.aa.com.tr/en/africa/analysis-turkey-africa-partnership-a-development-oriented-approach/1696640
6 Reuters, Turkish Airlines profits in Africa, where others fear to fly, 2017
7 Development Initiative’s, Global Humanitarian Assistance Report, 2018
8 The World Bank’s, Global Economic Prospects Report, 2020 https://www.worldbank.org/en/publication/global-economic-prospects#firstLink51618
9 A World Bank Flagship Report, Doing Business 2019 – training for reform, 2019 https://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-report_web-version.pdf
10 African Natural Resources Centre, Catalyzing growth and development through effective natural resources management, 2016 https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/anrc/AfDB_ANRC_BROCHURE_en.pdf
12 McKinsey, Winning in Africa’s cultural market, 2019
13 PWC, Optimism and opportunities abound in Africa’s infrastructure space, https://www.pwc.com/ng/en/press-room/opportunities-abound-in-africas-infrastructure.html
14 James Tasamba, Sub-Saharan Africa’s future linked to technology, 2019 https://www.aa.com.tr/en/africa/sub-saharan-africa-s-future-linked-to-technology/1556198