FKI points to Africa's car market, minerals as sectors for cooperation

Industry

Published: 04 Jun. 2024, 17:53

FKI points to Africa's car market, minerals as sectors for cooperation

William Ruto, president of Republic of Kenya speaks during the first session of the Korea-Africa Summit held Tuesday. [YONHAP]

The Federation of Korean Industries (FKI) suggested consumer goods and minerals as fields of cooperation between Korea and Africa in a report released Tuesday.

The FKI report commissioned to Sogang University Professor of International Trade Jung Jae-wook was published in time for the inaugural summit between Korea and African nations taking place on Tuesday and Wednesday.

The report pointed out the significant growth potential of the continent's vehicle market in naming a sector that Korean companies can target.

Africa's car market, standing at $25 billion at the moment, is expected to grow by an average of eight percent annually for the next five years, according to the report, citing data from Statista.

It also underscored the abundant mineral resources of African nations, which are expected to play a vital role in EV battery supply chains.

The continent possesses more than 60 percent of the world's reserves of cobalt, 75 percent of white gold and 30 percent of diamonds, the report said. Cobalt is a core mineral for EV batteries.

The reserves offer an opportunity for Korean construction firms to advance into the infrastructure and plant businesses there, which have been on a recovery at an annual rate of 13 percent since the end of the Covid-19 pandemic, according to the report.

Africa has emerged as a new economic partner since the launch of the African Continental Free Trade Area (AfCFTA) that brings together 54 African nations as a single market to boost trade. The total population of the continent is expected to reach 2.5 billion by 2050 from the current 1.5 billion, and relatively young demographics with a median age of 19 have also made the region a potentially favorable market to do business with.

Korea has not, however, been active in trading with Africa, with trade volume accounting for only 1.3 percent of the country's total last year, according to the Korea International Trade Association.

The report suggested a tailored trade agreement with African nations to not only overcome trade barriers but also contribute to the development and technological progress of partnering countries.

It noted that Korea is pushing to forge an Economic Partnership Agreement with Morocco, Tanzania and Kenya for such cooperation.

Providing financial assistance to Korean companies advancing into Africa will also boost investment in the emerging market, per the report.

It also added ICT startups and green technology as potentially promising sectors for the two sides to collaborate in.

Meanwhile, Korea's Industry Ministry held a business partnership event on the sideline of the summit on Tuesday evening, with some 56 companies from 17 African nations participating in the event to meet with 170 Korean companies to discuss possible collaboration in the future.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]