Chi Onwurah is a British Labour Party politician, who sits in the House of Commons as the Member of Parliament for Newcastle-on-Tyne. She also happens to be Newcastle’s first black MP, and chairs the Africa All-Party Parliamentary Group (AAPG). She was a guest speaker at the London office of Ecobank, at a special briefing to discuss the ramifications of the shock ‘Brexit’ referendum decision taken by the British public – and just what that decision could mean for Africa, especially in terms of trade.
She was speaking as the chair of the APGA. But she has extensive experience of working as an electrical engineer in the continent. ‘I have built telephone networks all over the world, including South Africa and in particular, in Nigeria where I worked on MTN’s network. So, I have some experience trading and working in Africa as well,’ she told the assembled analysts and bankers.
She spent some time discussing the statistics relating to the UK and Europe’s trade with Africa. ‘I don’t think we can overestimate the level of the seismic shift that this represents. Brexit, I think, represents opportunities as well as challenges and particularly for Africa because if you move away from trade with Europe which is one of the potential consequences of Brexit, one of the sort of the golden promises which was held out to us by those who took part in the new campaign was the potential for trade elsewhere in the world,’ she told the meeting.
‘When it comes to direct investment this amounts to £42.5bn of UK direct investment in Africa and £3bn of African direct investments in the UK. UK investment in Africa has more than doubled in the last 10 years. (At the current conversion rate of £1/$1.3, this represents $55.25bn and $3.9bn respectively).
‘Africa is an important trading partner for the UK and exports from Africa to the UK represents about 5 percent of Africa’s total exports. Within the European Union, the UK is one of Africa’s largest trading partners.
‘I don’t think we can overestimate the level of the seismic shift that this represents. Brexit, I think, offers opportunities as well as challenges and particularly for Africa because we will move away from trade with Europe, which is one of the potential consequences for the UK with Brexit vote, one of the sorts of golden prospects which was held out to us by those who took part in the “leave” campaign, to trade elsewhere in the world.’
Onwurah drew attention to the fear that the UK economy could fall into a technical recession. Scholars of the Northwest University in South Africa have already argued that Brexit will cause a 0.1 percent decline in the country’s GDP due to the strong trade ties between the two nations. But there are also concerns that the fall in the value of the pound will have a big impact.
There are already indications of an increase in targeted UK exports to other trading areas outside the EU, including Africa and Commonwealth countries. And Onwurah points out that exports to Africa will be cheaper and therefore more competitive – but equally will make Africa’s exports to the UK more expensive.
These are the challenges, but Brexit does offer opportunities in the trade and economy space. In particular, Onwurah talked about the European Economic Partnership agreements. ‘Negotiations for EEPs have been ongoing for some time. They are not without controversy on the impact on Africa’s industrialization efforts, regional integration, and development policy.
‘We were on a trade mission to Nigeria in February where we met the Vice President and the President and the Trade Minister and they had very mixed views on the benefits of the economic partnership agreements. So, there is space for the UK to develop more positive trade agreements in terms of that greater mutual interest with African regional bodies.
‘I suppose it’s ironic in a way that one of the concerns about the EPAs negotiations concerned the lack of negotiating skills on the African side compared to the lawyers and negotiators on the European Union side. It now seems clear that the UK is also suffering from the lack of trade negotiating skills as the EU has been tackling these. So, that may perhaps lead to more equal negotiating opportunities.’
The reduction in commodity prices and particularly the oil price has led to a new emphasis on agriculture as a means for Africa’s economic diversification.
‘The big area I would say is obviously the common agricultural policy,’ Onwurah commented. ‘And with more than 60 percent of Africa’s economically active African population working in agriculture, the subsidies in CAP can be said to take a very important toll on the livelihoods of many Africans. And the UK has been a key opponent of the subsidies.’
So here is a key opportunity, according to Onwurah, who also pointed out that the UK’s largest manufacturing sector is actually food. So it is an opportunity for closer UK-Africa cooperation.