US moves in on Chinese dominance

In a region where logistics is shaped by thousands of years of shifting political and economic landscapes, bilateral trade has grown from US$1 billion in 1995 to $45bn by 2011, according to the African Development Bank. By 2014, bilateral trade is anticipated to climb to more than US$75 billion. India is the main exporter to the region’s two biggest economies – Tanzania and Kenya, followed by China. A policy of “looking East” away from the European trading links established by da Gama and subsequent colonial rulers has seen a revival in Chinese trade with East Africa. China established diplomatic relations with Kenya in 1963. Bilateral trade was worth around US$2.8 bn in 2013. However, China now has a new competitor – in the form of the United States. In May 2014 the Kenya National Bureau of Statistics (KNBS) reported that the United States had overtaken China to become Kenya’s second-largest source of imports. The value of US exports to Kenya rose to around US410m in May compared to China’s US$24m, according to KNBS data. Kenyan exports to the United States totalled US$410m in May. The region’s history has been one of ongoing conflict and territorial disputes. European nations formally colonised most of the countries in the region during the 1881-1914 “Scramble for Africa”. Trade ties therefore remain strong, with the Netherlands and United Kingdom being in the top five export destinations for Kenyan goods. The UK is also listed among the top five exporters to Kenya. The list includes India, China, South Africa, and Japan – with Japan potentially being replaced by the US if the May trend continues. But East Africa remains in the news more for conflict than economic success. Mozambique’s civil war is currently threatening to reignite in the northern provinces. However logistics companies – dating back to the early traders in dhows and sailing ships – will find ways to keep freight moving. A new scramble for East Africa has been ignited by significant oil and gas finds in Kenya, Mozambique, Tanzania and Uganda. “It is important to bear in mind that East Africa remains one of the world’s poorest, least developed regions,” says Bill Page in the introduction to the 2013 Deloitte Guide to Oil and Gas in East Africa. “Low levels of development are also reflected in an inadequate and poorly maintained infrastructure. The development of oil and gas will provide a major stimulus to the local economies and will require extensive upgrading of the existing infrastructure,” he says. This is happening, with multi-billion dollar investments in port, road and rail infrastructure throughout the region. The infrastructure will help boost agriculture and revive the region’s manufacturing sector – which some economists believe will compete against China and India in the medium term. And logistics companies will be there to help the freight move. INSERT The development of oil and gas will provide a major stimulus to the local economies and will require extensive upgrading of the existing infrastructure.