The United Kingdom is ramping up its investment drive in Africa as the 2nd Africa Investment Conference #AIC2022 was held yesterday , highlighting investment opportunities across #Africa and giving a great networking platform for #UK and African businesses.
London had since last year launched a coordinated agenda to deepen and expand old ties with Africa.
The UK Government has outlined its commitment to improving trade and business links with Africa. In January 2020, it held a UK-Africa investment summit and, since leaving the EU, the UK has agreed eight free trade agreements with African countries and trading blocs.
This article discusses the Government’s plans, and highlights commentary from the House of Lords International Relations and Defence Committee, in advance of a debate on 28 October 2021.
On 28 October 2021, the House of Lords is due to debate the following question for short debate, tabled by Lord Popat (Conservative):
To ask Her Majesty’s Government what steps they are taking (1) to raise awareness among United Kingdom businesses of commercial opportunities in African markets, and (2) to support UK exports to Africa.
Value of trade with Africa in 2019
According to the most recent HM Treasury Pink Book, which details the UK’s balance of payments and trade figures, in 2019:
- UK exports to Africa totalled £18.5 billion, representing an increase compared to 2018. This was 2.7% of total UK exports.
- UK imports from Africa totalled £16.7 billion, a decrease from 2018. This represented 2.3% of total UK imports.
The next Pink Book is due to be published on 29 October 2021.
Government promotion of business with Africa
The Government has signalled its intention to increase trade and business opportunities with countries across the African continent. For example, in January 2020, the Government held a UK-Africa investment summit and stated that it wanted to “ensure the continent’s growing demand for investment is met by the UK’s expertise and innovation”. It said that the Department for International Development and the Department for Trade were engaged in programmes in the region to “boost clean energy supplies, digital networks, and jobs and business opportunities for women, as well as improving trade infrastructure”. The Government also highlighted deals that had already been agreed:
£6.5 billion of commercial deals have already been signed by British companies to deliver jobs, growth and investment across the UK and Africa, with deals worth billions more expected to be made during the course of the day. They are expected to mobilise billions of pounds in private sector investment for Africa, marking a new era of trade between the UK and Africa.
Commenting on the Government’s plans to improve business links with Africa at the same time, the then International Trade Secretary, Liz Truss, said:
Trade with countries across Africa has never been more exciting. As opportunities there grow, it’s great to see so many British firms paving the way in trading and investing in the region to drive growth, create jobs and boost vital infrastructure.
We want the UK to be the investment partner of choice for African businesses and their governments. Our world-leading expertise in finance, tech, and innovation should make us the obvious choice and mark the UK and Africa out as natural partners for mutual prosperity.
Trade agreements after Brexit
Following the UK leaving the EU, the Government has also worked on trade deals with the region and ways to reduce trade barriers. For example, in response to a written question in January 2021, Greg Hands, then Minister of State for Trade Policy, highlighted the eight free trade agreements that have been signed with African countries and also stated that it was focusing on reducing import duties:
On 1 January 2021, the United Kingdom introduced its own generalised scheme of preferences that provides duty-free, quota-free access to the United Kingdom’s market for more than thirty African countries and tariff reductions for other eligible African countries. This year we will launch improvements to the scheme, which will offer the lowest income countries improved terms when trading with the United Kingdom.
Full details on the eight free trade agreements can be found on the Government website. The agreements cover the following African countries and regions:
- Cameroon
- Côte d’Ivoire
- Eastern and Southern African trade bloc (Mauritius, Seychelles and Zimbabwe)
- Egypt
- Ghana
- Morocco
- Southern African Customs Union and Mozambique (six countries, including South Africa)
- Tunisia
The Government has also stated that it is providing support for developing the African Union’s African Continental Free Trade Area (AfCFTA), which began on 1 January 2021.
International Relations and Defence Committee report
The House of Lords International Relations and Defence Committee’s July 2020 report, The UK and Sub-Saharan Africa: Prosperity, Peace and Development Co-operation, discussed many aspects of the UK’s relationship with sub-Saharan African countries (comprising 49 of the countries in Africa).
The report included a chapter on the UK’s trading relationship with the region. The committee made the following comments and recommendations for building trade and business links following Brexit:
Leaving the EU provides an opportunity for the UK to re-cast its trade relationships with African countries and remedy some of the defects in the EU’s Economic Partnership Agreements. We were surprised to hear that no detailed work had yet been done to identify ways in which the UK could offer better access to African exporters than was possible when the UK was in the EU. This gap needs to be filled in [a] UK government action plan on Africa […]
There is appetite within Sub-Saharan Africa to improve trade with the UK; the UK should explore these opportunities with countries in the region. African partners are working to develop the AfCFTA and are likely to seek new agreements which are consistent with this planned continental agreement. In its post-Brexit trade policy, the UK should explore ways of giving better access to Africa’s agricultural exports and supporting the processing in Africa of a greater proportion of its agricultural products.
UK trade with and investment in Sub-Saharan Africa has flatlined over the last decade. The appetite of UK businesses is uncertain, and a concerted effort will be needed by the Government if it is to deliver on its goal significantly to increase trade with and investment in the region. The UK–Africa Investment Summit was a high-profile beginning to this initiative, but concerted follow-up will be required. The Government should set out the steps it is taking in this regard.
The Government must ensure that its provision of export credits is consistent with its commitments to tackling climate change. It should match its announcement at the UK–Africa Investment Summit that it will no longer invest in new coalmining or power production projects with similar commitments on gas and oil.
The Government provided a detailed response to the committee’s points in September 2020, again outlining its commitment to building trade and business with the region. It described its “trade and investment push in Africa” as a “long-term and cross-Government endeavour”. It highlighted the then Department for International Development’s (now part of the Foreign, Commonwealth and Development Office) agricultural programmes on the continent and other programmes being run to help UK and African businesses work together.
Further information on the committee’s report, and on other developments affecting the UK’s relationship with sub-Saharan Africa, can be found in the House of Lords Library briefing: The UK’s Relationship with Sub-Saharan Africa, 10 August 2021.
