Moving Indonesia to Africa
The UN predicted that the African population would reach 1.7 billion people, or about 20 percent of the total population in the world in 2030. Countries on the African continent are rich in natural resources and agricultural lands, but they have not yet been properly utilized such as in countries in East Africa.
”Africa is the story. The big story is Africa. This is a market of a billion people, of natural resources.” (Dr Ahmed Heikal, the chairman and founder of Citadel Capital, World Economic Forum 2014)
Indonesia has not thus far fully exploited the economic potential of the African continent.
The United Nations predicted that the African population would reach 1.7 billion people, or about 20 percent of the total population in the world in 2030. Countries on the African continent are rich in natural resources and agricultural lands, but they have not yet been properly utilized such as in countries in East Africa.
The promising projection from Africa has encouraged a number of countries to increase cooperation in various fields, especially the economy. Even though Indonesia is not a new player, its economic relations in Africa lag other countries. Therefore, the IndonesiaAfrica Maritime Dialogue (IAMD), which was held in Bali on Oct. 29 and 30, should serve as a gateway for Indonesia in Africa.
Dominated by China
Seen from the perspective of the trade value between Indonesia and ASEAN member countries, Indonesia is ranked second behind Thailand. The latest data showed that Indonesia’s trade value with Africa reached US$8.94 billion, while Thailand’s was $9.66 billion (Intracen,2018). Indonesia is slightly ahead of Malaysia with a trade value of $7.4 billion. Indonesia’s export percentage to Africa remains small, accounting for only 1 percent of the total imports to African countries.
Overall, China has the highest trade value in Africa. Last year, China\'s trade value in Africa reached $166.52 billion with an export value of $92.61 billion and import value of $73.91 billion. China has a trade surplus of $18.70 billion.
Meanwhile, India and the United States experienced a trade deficit with regards to African countries. India’s trade deficit reached $11.73 billion, while the US has a trade deficit of $12.72 billion.
Gleaned from trade data and the intensity of trade relations between African countries and their partners, China constitutes the biggest contributor to the importation of products, which stands at 19.24 percent. China is also the biggest importer of products from Africa reaching 15.96 percent of the total exports from the African countries to the world.
China is also one of the countries that is aggressively conducting economic and infrastructure cooperation with countries in Africa. Recently, it held the Forum on China-Africa Cooperation (FOCAC) Summit, which further strengthened the influence and presence of its products and investments in Africa. Over the last 18 years, the summit has produced remarkable achievements by improving political, economic, sociocultural relations and intercommunity interactions between China and Africa.
China’s seriousness in cooperating with countries in Africa has reaped sweet rewards with trade volume increasing 17 times last year compared to 2000. It has also been accompanied by significant investment growth that reaches $100 billion, where most of the funds are used for infrastructure and the rest for constructing hundreds of schools, vocational education centers and hospitals.
Indonesia’s opportunities
China’s expansive and massive trade and investment policies show that there are great opportunities for other countries, such as Indonesia, to increase trade and investment in Africa, especially in the light of the future projections and challenges that countries in Africa face within the next 30 years. Issues such as poverty, malnutrition, infrastructure backwardness, conflicts and immigrants will be problems that can be settled in stages through the strengthening of cooperation in the economic field.
The Indonesian government is continuing to hold a series of activities aimed at introducing Indonesian businesspeople and companies to partners in Africa. One of the latest is the Indonesia-Africa Forum (IAF), which led to a business agreement worth $1.89 billion and the potential for other agreements valued at about $500 million.
It does not stop there because after the IAF, the government will continue to work out on the cooperation sector, which is joint interests between Indonesia and African countries. The IAMD in Bali was also held in this framework with the aim of strengthening cooperation in the field of managing the maritime resources between Indonesia and countries in Africa.
Indonesia is also strengthening its competitive financing support for exports, especially to Africa, through Indonesia Eximbank. More Indonesian companies and businesspeople are showing an interest to market products from Indonesia in Africa.
Seen from the perspective of Indonesia’s percentage of exports to Africa that accounts for only 1 percent of the total imports, it shows a vacuum that can be filled with Indonesian products. Moreover, with the population growth projection in Africa, where 20 percent of the world’s population live, gives Indonesia an opportunity to meet the demand in Africa. Five major products from Indonesia have been exported to Africa, namely palm oil, paper, soap, coffee and machinery.
This input can be used by stakeholders to compete with other countries that have stakes in Africa. This is also in line with what President Joko “Jokowi” Widodo about the need to explore markets in Africa because of its huge potential.
It is time for Indonesia to prioritize its economic approach in relations with countries in Africa. This is the appropriate time for Indonesia to make its presence felt in Africa. Not only as a partner to fight against colonizers, but also as a partner in sustainable economic development. It is also time for Indonesia to open itself and enter the African market, both for exports, investment and imports of industrial raw material. If other countries are brave enough to do so, why should Indonesia be afraid.
Ratlan Pardede, Indonesian Ambassador to Tanzania, Burundi, Rwanda and the Comoros