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Sub-Saharan Africa: Factors Affecting Trade Patterns of Selected Industries U.S. International Trade Commission COMMISSIONERS Daniel R. Pearson, Chairman Shara L. Aranoff, Vice Chairman Deanna Tanner Okun Charlotte R. Lane Irving A. Williamson Dean A. Pinkert Robert A. Rogowsky Director of Operations Karen Laney-Cummings Director, Office of Industries Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 www.usitc.gov Sub-Saharan Africa: Factors Affecting Trade Patterns of Selected Industries Second Annual Report Investigation No. 332--477 Publication 3989 April 2008 This report was prepared principally by the Office of Industries Project Leader Falan Yinug Deputy Project Leader James Fetzer Andrea Boron, Gail Burns, Ray Cantrell, Jonathan Coleman, Daniel Cook, Alfred Dennis, Erland Herfindahl, Brendan Lynch, Erick Oh, Laura Rodriguez, Mark Simone, and Ralph Watkins Primary Reviewers Nannette Christ and Cathy Jabara Office of Economics Kyle Johnson Administrative Support Phyllis Boone, Monica Reed, and Wanda Tolson Special Assistance David Lundy, Cynthia Payne, and Laura Polly Under the direction of Michael Anderson, Chief Advanced Technology and Machinery Division Abstract his report examines factors that contributed to the shift in global export patterns in sub-Saharan Africa (SSA) during 2002–06 for 11 industries: T coffee; shea butter; spices (primarily vanilla, cloves, pepper, and ginger); tropical fruit (primarily bananas and pineapples); footwear; natural rubber; processed diamonds; textiles; wood furniture; aviation services; and communication services. The value of global SSA exports increased in nine of the 11 industries during 2002–06, ranging from a 12 percent increase in the value of textile exports to a 262 percent increase in the value of natural rubber exports. For the most part, the nine industries benefited from three common factors: (1) increased global prices as a result of demand growth exceeding supply growth; (2) investment in new and expanded production capacity; and (3) implementation of policies and programs to promote industrial development, whether targeted to a specific industry or applied generally to all industries. Other factors that contributed to the development of these industries and facilitated export growth include: (4) growth of private enterprise and emergence of key business relationships; (5) infrastructural improvements; (6) deeper regional integration; (7) improved product quality; (8) liberalized market regulations; (9) effects of tariff preferences; (10) improved industry organization; and (11) product differentiation. The value of global SSA exports declined for three of the selected industries during 2002–06: spices, wood furniture, and the pineapples sector of tropical fruit, industries which experienced decreases of 47, 46, and 5 percent, respectively. Factors contributing to decreased export values or mitigating export growth included; (1) increased competition in key markets; (2) low crop yield due to weather; (3) political instability; (4) overproduction; (5) effects of exchange rate changes; (6) reduced resource supply; (7) and increased local demand. The change in volume of global SSA exports for most industries varied, ranging from a 28 percent decrease for pineapples to a 15 percent increase for natural rubber, with an exceptionally large increase for shea butter of 660 percent. i CONTENTS Page Abstract ............................................................... i Executive Summary ............................................... xiii Chapter 1 Introduction and Overview ...................... 1-1 Industry and country coverage ............................................ 1-1 Information used in the report............................................. 1-2 Approach............................................................. 1-3 Organization of report................................................... 1-3 Overview of SSA sector export trade ....................................... 1-4 Agriculture......................................................... 1-5 Mining and manufacturing............................................. 1-6 Services ........................................................... 1-6 Chapter 2 Agricultural and Fisheries Sector Profiles .. 2-1 Coffee............................................................... 2-2 Summary of findings................................................. 2-2 Industry overview ................................................... 2-4 Ethiopia......................................................... 2-5 Kenya........................................................... 2-6 Uganda.......................................................... 2-6 Côte d’Ivoire..................................................... 2-7 Tanzania ........................................................ 2-7 Rwanda ......................................................... 2-8 Sub-Saharan Africa trade in the global context............................. 2-8 Leading exporters ................................................. 2-8 Leading export markets ............................................ 2-9 Factors affecting export patterns ........................................ 2-10 Price increases and demand growth .................................... 2-11 Ongoing liberalization of SSA coffee sectors ............................ 2-12 Ethiopia....................................................... 2-12 Kenya......................................................... 2-13 Côte d’Ivoire................................................... 2-13 Tanzania ...................................................... 2-13 Success in differentiating coffee from a homogenous commodity ............ 2-14 Shea butter ........................................................... 2-19 Summary of findings................................................. 2-19 Industry overview ................................................... 2-19 iii CONTENTS–Continued Page Chapter 2 Agricultural and Fisheries Sector Profiles—Continued Shea butter—Continued Sub-Saharan Africa trade in the global context.............................. 2-23 Leading exporters .................................................. 2-24 Leading export markets .............................................. 2-28 Factors affecting export patterns ......................................... 2-28 Rising cocoa butter equivalent demand.................................. 2-29 Increased prices .................................................... 2-29 Growing consumer awareness......................................... 2-30 Training/funding for improved production ............................... 2-31 Increased private sector investment ..................................... 2-31 Spices ................................................................ 2-35 Summary of findings.................................................. 2-35 Industry overview .................................................... 2-35 Sub-Saharan Africa trade in the global context.............................. 2-38 Leading exporters .................................................. 2-39 Vanilla ......................................................... 2-39 Cloves ......................................................... 2-39 Pepper ......................................................... 2-40 Ginger ......................................................... 2-41 Leading export markets .............................................. 2-41 Vanilla ......................................................... 2-42 Cloves ......................................................... 2-42 Pepper ......................................................... 2-42 Ginger ......................................................... 2-42 Factors affecting export patterns ......................................... 2-43 Production and price instability ........................................ 2-43 Growing global demand ............................................. 2-44 Programs to promote production and investment .......................... 2-44 Political unrest ..................................................... 2-45 Tropical fruit........................................................... 2-48 Summary of findings.................................................. 2-48 Industry overview .................................................... 2-49 Bananas.......................................................... 2-51 Pineapples........................................................ 2-52 Sub-Saharan Africa trade in the global context.............................. 2-53 Bananas.......................................................... 2-53 Pineapples........................................................ 2-54 Leading exporters .................................................. 2-55 Bananas........................................................ 2-55 Pineapples...................................................... 2-56 iv CONTENTS—Continued Page Chapter 2 Agricultural and Fisheries Sector Profiles—Continued Tropical fruit—Continued Leading export markets .............................................. 2-57 Factors affecting export patterns ......................................... 2-60 Demand growth for bananas and pineapples.............................. 2-61 Bananas........................................................ 2-61 Pineapples...................................................... 2-61 Development of new pineapple variety.................................
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