SOFTLY DOES IT

Turkey 2013 | DIPLOMACY | FOCUS: TURKEY & AFRICA

Although there is still a long way to go until Africa represents a major part of Turkey's trade balance, the government is working hard to encourage commerce with the continent and open up new opportunities for Turkish businesses.

Turkey's exporters have been down on their luck in recent years, first suffering due to the economic slowdown in Europe and then seeing exports tumble in Arab Spring nations. In response, the government has begun to look at alternative markets to shore up export opportunities, with Africa currently at the top of Turkey's trade-mission agenda.

In 2003, total trade between Turkey and Africa stood at $5.5 billion, a figure that reached $23 billion in 2013—an increase of 318%. Exports include iron and steel, mineral fuels, lubricants, machinery, vehicles, and plastics, while imports include mineral fuels, lubricants, precious stones, inorganic chemicals, cacao, and steel.

The story doesn't end there, however, with Africa forming a key part of Turkey's Vision 2023 strategy to become one of the top 10 economies in the world. “In the framework of our targets for 2023, trade volume with Africa is expected to reach approximately $100 billion by 2023," said Zafar Çağlayan, Minister of Economy. In order to make this a reality, Turkey's diplomatic machine has worked to open 19 new embassies on the continent in the last three years, taking the total to 32. Trade missions have formed a significant part of Turkey's push into Africa, the last of which took place in June 2013 and was headed by Prime Minister Recep Tayyip Erdoğan. A previous tour took the Prime Minister to Cameroon. “Prime Minister Erdoğan's visit to Yaoundé on March 16-17, 2010 was the first ever by a Turkish leader to Cameroon. Since then, and thanks to our shared determination, relations between our two countries have continued to grow and diversify to the benefit of our two peoples," commented Paul Biya, President of Cameroon.

In addition to its embassies, Turkey has also completed “commercial, economic, and technical cooperation agreements with 38 countries, FTAs with four, agreements on the avoidance of double taxation with eight, and agreements on reciprocal promotion and protection of investments with 12 African countries," according to Minister Çağlayan. These missions have helped to grow Turkish investments in Africa, which are anticipated to reach $20 billion by 2023.

While the majority of Turkish investments are focused on North Africa, Sub-Saharan Africa is looking set to become a larger destination for Turkish exports and FDI. Boosted by greater transport links—in late 2012 Turkish Airlines began direct flights to Niamey, Ouagadougou, Yaoundé, and Douala—commerce with Sub-Saharan Africa hit $7.5 billion in 2011, up from a more modest $742 million in 2000. One such investor south of the border is Yıldırım Group, which sources coal from Mozambique in Southern Africa. “We are expanding our business in Africa at the same time as Turkey is expanding its influence in Africa. That will bring further investment into Turkey," Mustafa Kemal Erkanat, Vice-President for Operations at Yıldırım Group, told TBY. While most investments south of the Sahara are small in scale and the region only represents a fraction of Turkey's $376 billion overall trade balance, significant deals have materialized. Turkish whitegoods manufacturer Arçelik's acquisition of South African counterpart Defy in a deal worth $325 million in 2011 was one example. Indeed, South Africa is Turkey's largest trade partner in Sub-Sahran Africa, followed by Nigeria.

Prime Minister Erdoğan's 2013 tour of North Africa—including visits to Tunisia, Algeria, and Morocco—has highlighted the region's continuing significance to Turkish trade with Africa, however, and goals have been set to boost ties. While in Morocco, the Prime Minister announced plans to boost commerce between the two countries to $3 billion, up from around $1.5 billion at the moment, a figure deemed unsatisfactory. The balance of trade between the two countries tips strongly in Turkey's favor, supported mainly by the Turkish-Moroccan FTA, which was enacted in 2006. Morocco is currently Turkey's 30th largest export destination and purchased over $1 billion worth of Turkish goods in 2012. Algeria represents a more significant market, and is Turkey's 22nd largest export destination—the country purchased $1.8 billion worth of goods from Turkey in 2012 and lies only behind Egypt and Libya in terms of Turkish trade with African countries. Tunisia also featured prominently in the Prime Minister's tour, and is Turkey's 38th largest export market. In 2012, the country purchased $800 million worth of Turkish goods.

Turkey's increasing wealth has also allowed it to ramp up foreign aid in recent years, with $2.5 billion dedicated to aid missions in 2012, double the 2011 figure. The Turkish Cooperation and Development Agency (TİKA) has three regional offices and coordinates projects in Ethiopia, Senegal, and Kenya. Additional work is carried out in Sudan, Egypt, Libya, and Somalia, the latter of which was the focus of a 2011 humanitarian visit by Prime Minister Erdoğan. The plight of Somalia has raised millions of dollars through private donations in Turkey.

The Turkish move into Africa coincides with downturn in its traditional export markets, although it offers more than a temporary respite until markets in Europe and the Middle East recover. Representing 55 countries at the UN, one-quarter of all members, currying favor on the continent could also go a long way to boosting Turkish clout on the international stage. With expanding diplomatic missions from Cape Town to Cairo, Turkey has an opportunity to open up Africa to its business community. As Economy Minister Çağlayan sees it, “With our unique, inclusive, and collaborative approach, which has already been appreciated by every African nation that we have interacted with, we will walk hand-in-hand with our African brothers and sisters to a bright future."