Trade flows between Latin America and Africa are under-developed when compared with trade flows between Africa and Asia, highlighting a new dynamic to the increasingly significant nature of south-south trade.

A re-balancing of global trade is being driven by huge amounts of African crude oil, gas and LNG products being exported to China and other Asian economies, while an increasing amount of food imports from Asia feeds African populations.

In contrast, GTR has learnt that trade between Latin America and Africa is less significant, principally because of the different trading requirements of both regions.

“The reason that trade between Latin America and Africa is underdeveloped compared with trade between Africa and Asia is commodities,” says head of soft commodities research at Ecobank Edward George.

“It’s about what’s being traded. Generally speaking, Latin America and Africa are major producers and exporters of commodities to the global market, and so actually have very little need for each other’s commodities.”

Brazil is by far Latin America’s largest trade partner with Africa, making up about 80% of trade flows. Sugar counts for a third of Brazil’s exports to Africa, while meat, maize and soybean oil make up a further 22%. Capital goods and industrial raw materials represent a further third of exports to Africa.

Hydrocarbons and fertiliser made up 82% of all Brazilian imports from Africa over the past decade, with Nigeria accounting for two thirds of Brazil’s crude oil imports from Africa. 80% of fertiliser imports come from Morocco, the source of a third of the world’s phosphates.

“Trade flows between Latin America and Africa boils down to two simple things: in one direction from Africa you’re getting oil, gas and fertilizer and in the other direction you’re getting food, either sugar to north-west Africa for refining or meat, maize and wheat,” adds George.

Limited trade between economies in these two continents is being overshadowed by strengthening trade flows between Africa and Asia. China is importing huge amounts of crude oil from countries like Sudan and Angola, as well as other products like LNG. These products fetch higher prices in Asia, pulling trade flows eastward.

Perhaps surprisingly, African food imports from Asia are growing significantly. Rice, mainly from Thailand and Vietnam, is becoming a major part of the African diet. 40% of global rice imports take place in Africa, while the continent counts for just 5% of total global trade.

“The truth is that Africa can’t feed itself at the moment because distribution is such a big problem there. Africa will remain heavily dependent on food imports, specifically from Asia,” says George.

Another long-term trade flow between Africa and Asia is palm oil, with the vast majority of palm oil consumed in Africa coming from Indonesia or Malaysia.

George tells GTR he believes these emerging trade flows are indicative of a broader re-balancing that will affect global trade flows over the next decade.

“Ten years ago, 60% of global trade was north-north, mainly between North America and Europe, whereas south-south trade represented just 10%. But this re-balancing means that in five or ten years, it will probably be more likely that a third of global trade will be north-north, a third south-south and a third north-south.”