AFRICAN leaders gathered in London on the January 20 for the UK-Africa InvestmentSummit. The Summit came as the newly elected British government seeks to jump-start its global trade policy with preparations underway to leave the European Union at the end of the of January, writes Invest Africa CEO Karen Taylor. Speaking ahead of the Summit, Her Majesty’s Trade Commissioner for Africa, Emma Wade-Smith, made the ambition clear: the government wants not only to showcase the existing trade relationship between Britain and Africa but to ‘turbocharge’ it.
Such a large assembly of African heads of states in the UK was certainly unprecedented. A number of Heads of State were in attendance including Nigeria’s President, Muhammadu Buhari, Egypt’s President, Abdel Fattah el Sisi. They were joined by Félix Tshisekedi of the DRC, Alassane Ouattara of Côte d’Ivoire, Nana Akufi-Addo of Ghana, Uhuru Kenyatta of Uganda, Peter Mutharika of Malawi and Pravind Jugnauth of Mauritius.
This gathering of heads of state came on the back of heightened rhetoric from successive British governments surrounding the country’s aspirations to deepen its trade and investment relationship with Africa. David Cameron launched the UK’s Africa Free Trade Initiative in 2011 and Theresa May declared her ambition to make the UK the largest G7 investor in Africa by 2022. More recently, trade relationships with African nations have formed part of Boris Johnson’s ‘Global Britain’ agenda as he prepares to take the country out of the European Union.
Terms of trade
In absolute terms, trade between Africa and the UK remains low. The continent represented only 2.6 percent of imports and exports alike in 2017. This is dwarfed by China where 15 percent of imports come from Africa whilst France, Germany and Italy export more than double the value of goods to Africa than the UK. The landscape for investment is more promising. The UK was the continent’s fourth-largest investor behind China, France and the US between 2014 and 2018 with substantial scope for growth.
Competitive edge
To give British businesses a competitive edge, The Department for International Trade is keen to diversify the country’s economic ties with the continent away from the traditional sectors such as oil and gas, mining and the related infrastructure. Speaking to Invest Africa Insights, Emma Wade-Smith highlighted renewable energy, agri-tech and fintech as key areas where British companies are well placed to support diversification in African economies. ‘In every area,’ Wade-Smith said. There is untapped potential.’ With the financial credentials of the city of London and the size of the British tech industry, the country is certainly well placed to align itself with the future priorities of African economies.
Alok Sharma, the Secretary of State for International Development, has been highlighting these synergies. Amongst the trailblazing British companies were Invest Africa members Winch Energy, a London-based company providing off-grid power solutions across Africa and BBOXX, a clean energy provider that offers pay-as-you-go solar power. In the hope that the UK-Africa Investment Summit would engage businesses not just statesmen, the corporate intelligence company, Asoko Insights, was contracted to run a deal room throughout the Summit to connect projects to investors.
Interest in African markets
However, the British government is not alone in courting closer trade and investment links with African nations. Emmanuel Macron hosted his own private sector-focused ‘Ambition Africa’ conference Paris and is following it up with a year-long celebration of African cultures. Last August the Tokyo International Conference of Africa’s Development (TICAD) saw the Japanese private sector commit $20bn worth of investments over the next three years. Russia held its own Africa Summit in October and Turkey has announced that 2020 will be the year of Africa. Even the United States, which has traditionally been wary of African markets, has boosted its development finance capabilities as part of its Prosper Africa Initiative. Interest in African markets has extended far beyond the traditional actors of the last fifty years and the mounting competition gives African governments and businesses more choice about which partners they collaborate with.
This heightened interest is no surprise. With six out of the ten fastest-growing economies in the world and a population of over 1 billion people, set to increase to over 2 billion by 2050, Africa is a market that cannot be ignored. Crucially, the African Continental Free Trade Agreement has transformed the proposition for investors. Once implemented, the agreement will create the world’s largest free trade area offering businesses the opportunity to move to scale and boosting Africa’s manufacturing base. All the evidence shows that when African countries trade with each other they trade a much higher proportion of manufactured goods – 41.9 percent of regional exports are manufactured compared to just 14.8 percent to the rest of world. Future foreign direct investment will need to align itself with the continent’s economic priorities to remain competitive in an increasingly crowded market.
This is the approach taken by one of Africa’s fastest-growing economies: Ethiopia. With an average growth rate of 10.5 percent since 2004, the government of Ethiopia has focused its development agenda on driving FDI into its priority sectors: manufacturing, infrastructure and human capital. Writing for the Overseas Development Institution, Dr. Arkebe Oqubay, senior advisor to Prime Minister Abiy Ahmed called for ‘the conventional paradigm in advanced economies’ to ‘change from the dominant “donor-recipient” to “new growth generation” that positively feeds Africa’s economic transformation.’
Approach
This sentiment was echoed across Invest Africa’s investment roundtables during the week of the Summit with the delegations from Angola, Malawi, Mauritius and the Democratic Republic of Congo. Ministers and heads of states briefed business leaders on investment opportunities, highlighting privatisation initiatives and ease of doing business reforms. As Rwanda’s President, Paul Kagame told the United Nations General Assembly, it will take ‘a concerted push from all partners, including the private sector’ to accelerate progress towards the Sustainable Development Goals.
Rhetorically at least, the UK-Africa Summit has sought to align itself with these priorities. One of the larger events leading up to the Summit, Start-Up Night Africa!, profiled female entrepreneurs across the continent. The message was delivered clearly to assembled business leaders by Alan Jope, CEO of Unilever, at a pre-Summit manufacturing event: the question is not whether you can afford to be in Africa now but can you afford not to be in ten years’ time. Initiatives like the UK-Africa Investment Summit are a step in the right direction if they can successfully link such projects to investment.