A report on Africa
February, 04th 2011
ELECTRONICS & HOUSEHOLD APPLIANCES :
Row upon row of glittering shops in Dubai's fabled souks, stacked ceiling-high with the latest attractions from the world's leading consumer electronics manufacturers, present a sight that not only lures shoppers from around the Middle East and its adjoining areas but from as far afield as the Confederation of Independent States, the Far East, Europe and Africa. Electronics, like gold, has always been one of Dubai's greatest attractions for the shopper and tourist alike. The finest products from the best known manufacturers are available here at what are, perhaps, the best prices in the world. Whatever it is you are looking for - from a nifty personal CD player and the most sophisticated component system to snazzy camcorders and projection television sets - chances are you will find the right product to satisfy all your needs in Dubai.
Recently East African buyers have emerged as the new bulk purchasers of consumer and electronic goods in Dubai, which they ship from here so that they can sell it at a premium in their country.
The demand for computers and computer-related products and services has registered a marked increase in Africa, due to the ongoing process of computerization that is sweeping through most African countries at the moment. The UAE computer market represents one of the largest trading sectors in the country. Its turnover is estimated to be almost at par with consumer electronics and electrical appliances. The retail network for computers in Dubai is next in size only to the network of foodstores, textiles, gold and electronics. The annual turnover of this market is estimated at about US$1 billion per year. Little wonder then that the UAE has emerged as the IT centre for the Middle East and African markets.
COSMETICS & PERFUMES :
The availability of vast range of products at competitive prices attracts African buyers to Dubai's booming cosmetics market .Africa presents one of the fastest developing markets in the world and the demand for cosmetics is growing at a frantic pace. Not only is there a huge pent-up demand for upmarket products from Europe and North America but also for the entire range of beauty and personal care products from major manufacturers around the world.
When it comes to looking their best at all times, Africans are second to none. As such, there is a huge demand for products such as beauty soaps, face washes, shampoos, conditioners, body and skin lotions, toners, astringents, cold creams and other moisturizing formulations, perfumes, hair colours, dyes, powders, eye and face packs, to mention just a few. While there is now a considerable level of manufacturing activity taking place within Africa itself, there is an ever assertive and growing segment of consumers who are demanding the best products available in the world.
Enterprising traders are keen to source such goods from all the reputed manufacturers but are often hamstrung by the volumes of purchases required. Most manufacturers are not interested in supplying quantities that do not run into several container loads at least. Often it is not viable for buyers to go in for such large volumes. Secondly, there is also the question of sourcing products from different countries and even continents. For instance, an African importer may be interested in PERFUMES from Europe, toiletry from the Far East and herbal cosmetics from the USA. But this would place immense logistics constraints and would involve travelling around the world and opening of letters of Credit with a host of banks. Often, all these obstacles would prove insurmountabe and many exporters would be put off by the sheer magnitude and complications of the whole exercise.
In such a scenario, Dubai offers African importers the ideal market place. "African buyers can source all their requirements from just one location," says Mohd Al Khatib, Managing Director, Siblin Cosmetics (LLC), a leading supplier of salon equipment.
"Buyers can select from a vast range of merchandise and buy just the quantities they require and then transport the goods back to their home countries at very competitive freight costs," he says. The profit margins in this business are high and plenty of African buyers are flocking to the United Arab Emirates to meet growing requirements for cosmetics, perfumes and salon equipment in their own countries. "We are in a position to meet any specific requirements African buyers may have and are able to source all that they need. Even if we do not carry adequate stocks, we are able to get fresh supplies from our principals at very short notice," says Kamal Khatib, Managing Director of Maram Cosmetics. "We specialize in salon products and are very happy with the interest shown by African buyers in our products," he adds.
Dubai's strength in the cosmetics business is based on low-priced goods and low import duties. "We have excellent connections and contacts with Far Eastern and European suppliers and are able to offer their products to African buyers at very competitive prices due to the fact that we operate on low profit margins and a very low-cost environment in terms of import related tariffs," says Ziad Sabbagh of Al Nasaem Company. "As such, African buyers are very happy to deal with us and we have a large number of repeat orders from them.
MEETING THE RISING DEMAND FOR SPARE PARTS :
From second-hand cars to ball bearings, spare parts, lubricants and tyres - the UAE is the best place to source. We take a look at the various factors that have helped Dubai emerge as one of the leading suppliers of automobile spare parts to the African continent... The rapid industrialization and modernization currently sweeping through many African countries has resulted in an increased demand for capital goods such as machinery, lubricants, spare parts, ball bearings and other mechanical goods and accessories. The market for automobile spare parts, in particular, has been an attractive sector for UAE-based enterprises, who have emerged as the leading supplier of these goods to many countries in East, Central and Southern Africa. Most of the African buyers are buying substantial quantities of automotive batteries, tyres, spare parts, ball bearings, water pumps and a host of electronic goods from Dubai for selling them at a profit in their own countries. "The African customers price-sensitive - they are looking for low priced goods and are not much concerned about the quality aspect," says Ahmed of Popular Tyres Trading, one of the largest stockists of tyres, tubes and batteries in the UAE. "Chinese tyres are in great demand in African markets as they are cheap and provide excellent value for money," he says.
“Dubai continues to be number one for buying anything from second hand cars to automobile spare parts and ball bearings,” says Pradeep Gupta of Ameeco Marketing, a leading supplier of ball and roller bearings. Analysts say sales of automobile spare parts and accessories in the Gulf has risen by 20-25 percent. Each visitor is estimated to spend a minimum of $10,000 in local shops. More than a quarter of this goes on automobile spare parts and related products. As the spare parts trade to Africa gains in stature, there is bound to be new demands from within the African market. The UAE, with its strategic location and its well established distribution network, can reap rich dividends by catering to the increasing demand for automobile spares, ball bearings and lubricants in the fast developing markets of Africa
STATIONERY ITEMS IN DEMAND THROUGHOUT AFRICA
Dubai-based traders focus attention on African markets as demand for stationery items registers unprecedented rise Africa represents a huge market for stationery. Dubai has emerged as a major supplier of stationery and office automation products and has developed an extensive network of retailers, wholesalers and stockists with an impressive track record.Demand for stationery products has registered a two-fold increase in most East African countries because of the increase in the number of educational institutions as well as commercial organisations.
In the absence of a truly self-reliant manufacturing sector, most African countries have to depend on overseas imports to fulfill demands within their own countries.
In this respect, Dubai offers itself as a viable and reliable sourcing centre for a variety of goods and services - its geographical proximity to the East African coast makes it an ideal business partner as low freight costs result in higher profit margins for African importers.The fact that Dubai has excellent shipping connections means that African buyers can ship their purchases to literally any destination on the continent. Thus, not only do African stationery dealers have in Dubai the ideal location where they can find all their requirements in one city but also have the means of transporting it back home very conveniently and cheaply.
The Jebel Ali Free Zone has become a major centre for the manufacturing and export of stationery products from the United Arab Emirates. Several companies based in the Jebel Ali Free Zone have been actively feeding the African markets. Most of these companies have been vigorously promoting their brand names in the African markets through their exclusive dealers and distributors.Speaking about his experience in the stationery trade with Africa, Ramakant Sherke, General Manager of Majlan Stationery, said that it is very profitable to do business with African buyers because they are generally ‘cash’ customers and regularly come up with repeat orders. "The market for stationery products in Africa is growing at a fast pace and the prospects for the short-term future remain very bright," he said. Among the major destinations for stationery products from the the UAE to Africa is Kenya which has indeed become a very important trading partner.
TELECOMMUNICATION PRODUCTS :
Africa presents great opportunities in the telecom sector. The liberalization of the sector, the extension of services by multinational conglomerates and the active competition currently in place in the sector have all contributed to the telecom revolution. Since the processes of liberalization and privatization have been taken into consideration by African countries such as Uganda, Tanzania, Nigeria, the Sudan, South Africa and Kenya, their telecommunication infrastructures have improved drastically.
As a result, the telecom sector in Africa has opened up new vistas of business opportunities. Africa has been the fastest-growing mobile market in the world during the past five years. There are now more than 82 million mobile users in Africa: Nigeria's mobile market is growing at over 100% per year. Mobile telephony has a positive and significant impact on economic growth, and this impact may be twice as large in developing countries as in developed countries.
That mobile phone use is growing faster in Africa than anywhere else shouldn't come as much of a surprise, given a moment's thought. Only 6 per cent of African citizens owned a mobile phone in 2004, so as prices drop (and low-cost phones made for the developing world come to market), there's a huge potential market available. In Asia, North America and Europe, conversely, mobile phone use approaches saturation, so any remaining growth will be far slower.
MEDICAL PRODUCTS :
The healthcare sector in Africa is showing signs of remarkable improvement as the quality of hospitals and the availability of qualified doctors has dramatically improved over the last few years. By making the transformation from traditional medicine to a modern and well structured healthcare system, many African countries have been able to meet the growing demands for quality healthcare services for their people.
The Council for Health Services Accreditation for Southern Africa (COHASA) has been accrediting many hospitals under its jurisdiction that meet the applicable predetermined and published standards. However, Africa’s healthcare industry is characterized by a huge division between the private and public sectors both in terms of facilities and funding. Perhaps the biggest problem facing the public sector currently is the rising incidence of HIV/AIDS, which is and will continue to place considerable strain on the public health system in many African countries.
As a result, there exist immense opportunities for the supply of a wide range of hospital equipment, instrumentation, machinery and allied medical products. Most of the requirements of the healthcare sector in Africa are imported from Dubai. Being a price-sensitive market, African buyers are always on the lookout for high quality, competitively priced goods to meet their requirements.