The UK-Africa investment summit strengthens Anglo-African economic ties by mobilizing new and substantial investment to create jobs and promote mutual prosperity. Neil Ford examines the prospect
Britain has perhaps the widest range of economic, political, cultural and historical ties with sub-Saharan Africa of any non-African state. However, successive UK governments have taken these relationships for granted to some extent. While France tried to cultivate its ties with Francophone Africa and China rapidly increased its influence on the continent, London took a more relaxed stance.
However, the prospect of Brexit sparked a reassessment of Britain’s African ties under first Prime Minister Teresa May and now under Boris Johnson. With the country’s exit from the European Union seemingly done and dusted, the new Johnson administration needs to sign trade deals with nations around the world to get a more active view of sub-Saharan Africa.
To promote economic ties, Prime Minister Johnson supports the UK-Africa Investment Summit in London on January 20th. The summit aims to strengthen Anglo-African economic ties by mobilizing new and substantial investments to create jobs and promote mutual prosperity.
Many large UK companies are already very active in Africa, including HSBS, Barclays and Standard Chartered. Oil companies BP, Shell and Tullow; British Airways, Unilever, Vodafone, Diageo and GlaxoSmithKline. However, the government hopes to encourage more small and medium-sized businesses to take advantage of the opportunities offered. London has identified technology, finance, renewable energy and agriculture as particularly attractive sectors for UK investment.
In early January, International Development Minister Alok Sharma said: “I want the UK to be the investment partner of choice for African nations by creating new and lasting partnerships that will benefit businesses and people in Africa and the UK alike. British companies are already leaders in investing in Africa. “He quoted Diageo’s new eco-friendly, high-tech brewery in Kenya that supports tens of thousands of jobs. and the solar systems from solar energy company Azuri Technologies, which are installed in thousands of off-grid homes, particularly in East Africa.
The growing economic relevance of Africa is certainly part of the attraction. While the continent has not seen the growth of Asia over the past few decades, its average annual growth of 4.6% since the turn of the millennium has made it a more attractive investment destination. Eight of the 15 fastest growing economies in the world are in Africa.
There is potential for faster growth with less conflict than ever before on the continent over the next 20 years. The technology has the potential to revolutionize many sectors and international companies eager to secure alternative centers for manufacturing outsourcing as wage rates rise in China. Above all, a quarter of the world’s population should live in Africa by 2050.
In August 2018 Theresa May led a delegation of investors to Kenya, South Africa and Nigeria. This made her the first British Prime Minister to visit sub-Saharan Africa since 2013. It was on this trip that the trade agreement between Great Britain and the South was signed. The African Customs Union (SACU) and Mozambique were announced. Trade between the UK and the six countries was £ 9.7 billion (US $ 12.6 billion) last year.
Diageo Global Director of Government Affairs Wilson Del Socorro said: “In principle, Diageo very much welcomes the news of an agreement between the UK-South African Customs Union and Mozambique. International trade is vital to Diageo as it gives us the opportunity to reach more consumers and markets around the world. Africa is an important growth region for Diageo, including export markets such as South Africa for Scotch whiskey. “
Some African governments, including the Seychelles, Mauritius, Madagascar and Zimbabwe, have already agreed to give the UK the same trade agreements it had as a member of the EU. However, it is possible that Brexit will allow African states to negotiate better trade deals with both the EU and the UK. The EU will negotiate a new aid and trade agreement with Africa, the Caribbean and the Pacific (ACP) so that Brussels and London can compete for the best deals.
UK Trade Commissioner for Africa Emma Wade Smith has highlighted the benefits of investing for UK companies, including making profits for their shareholders and UK finances through taxes. The average productivity of UK companies investing overseas and receiving overseas investments is £ 88,000 per worker per year compared to just £ 44,000 for those who do not. She added, “There is evidence that UK companies investing overseas are becoming more competitive and productive. They draw on new technology and local business expertise that are then brought back to the UK. “
There are also tremendous benefits to Africa and the Africans, as Britain, along with other major economies, competes for influence on the continent, encouraging trade and thereby helping to finance infrastructure. The larger the pool of interested parties, the better the offers for African economies. After Brexit, there could be more opportunities to export goods to the UK, including agricultural products and textiles. The African heads of state and government are positive about stronger economic ties. Following Johnson’s election victory in December, Ghana’s President Nana Akufo-Addo said: “Together we have an opportunity to renew and strengthen relations between our two countries, focus on improving trade and investment, and prosperity for our peoples to increase.”
Direct investment more than trade
IIt is strange that the importance of African trade to Britain has actually diminished. In 1997, 7% of all African imports came from Great Britain. Today only 2% of UK imports of goods and services come from Africa, with oil and gas, precious stones and fresh fruit being the top three commodities at the moment. Exports to Africa are only slightly higher at 3%; In contrast, European trade accounts for 54% of UK trade. However, the volume of Anglo-African trade has increased, rising 7% to £ 33.1 billion in 2018, according to the Office for National Statistics (ONS).
There is general acceptance that Britain has been too passive in its relations with Africa. Lord Paul Boateng, chairman of the Africa Enterprise Challenge Fund, told the BBC: “The Chinese, French, Indians, indeed Korea, Japan and even Germany have tended to be much more proactive in doing business in Africa than we have traditionally been. We have a lot of catching up to do in making the most of an historic opportunity to reshape the relationship between Africa and Britain, without viewing it as just a philanthropic exercise … an opportunity that requires risk and investment Government support to UK businesses. “
The UK is much more important in terms of foreign direct investment (FDI) as well, and London has an ambitious goal of becoming the largest G7 investor in Africa by 2022. UK foreign direct investment in Africa reached £ 42.7bn in 2016, ahead of France with £ 38bn and China with £ 31bn, but just behind the US with £ 44.3bn. Trade Commissioner Wade Smith said: “The nature of the quality investments that UK businesses bring to Africa is critical to driving growth, creating jobs and strengthening infrastructure.” Still, Africa could secure a larger share of FDI in the UK than the 4% share it is currently attracting.
Soft power benefits
The UK government will not be able to give Africa the same financial support as China or the US. But it can make the most of its cultural ties and provide support in key areas like governance and institution building. Britain’s great strength lies in its soft power, including its diplomatic presence across the continent.
Many African heads of state and other high-profile politicians have at some point been trained in the UK, be it in school or university. Many return to the country when they need medical treatment and have a second home in London. Hundreds of thousands of Africans live in the UK and many more have worked or studied there before returning to their home countries. British universities attract tens of thousands of African students each year, while the British Council provides a wide network of educational centers across the continent.
English is either an official language or a lingua franca in much of Africa, largely due to the fact that Britain has the largest colonial African empire, but also to the language’s global importance. It is used in the two largest economies in sub-Saharan Africa, Nigeria and South Africa. in some of the most innovative economies like Kenya; and in some of the fastest growing, including Ghana. At the same time, most Anglophone African countries have legal systems based on the common law used in England and Wales.
In addition, the BBC opened its largest office outside the UK in Nairobi in November 2018 with £ 289m in UK government funding and has another major center in Lagos. An incredible 600 BBC journalists work in or on Africa, half of them in Nairobi where many African journalists are trained. In addition to English, the BBC World Service also broadcasts 12 African languages, including Amharic, Yoruba and Tigrinya. World Service aims to reach 500 million people with its programs by 2022, compared to 250 million in 2018.
The UK has the world’s second highest aid budget after the US at £ 13.9 billion in 2017, with much of that money going to Africa. Prime Minister Johnson has announced that the Department of International Development (DfID) will not face the reduced budgets imposed on other departments during this term.
Since 2018, the focus of DfID in Africa has shifted from short-term poverty reduction to long-term economic development and the promotion of security. In September, DfID announced £ 90 million UK aid to support more than £ 500 million in private sector investment in financial markets to help small African financial services companies and startups grow. It is hoped that the investment will create 50,000 new jobs and provide 12.5 million people, half of them women, with better access to financial services.