The UK must seize the big trading opportunities Africa has to offer
Next year, on 23 to 24 April 2024, the United Kingdom will host the UK-African Investment Summit in London. With a year to go, I wanted to highlight the opportunities Africa presents and what can be done in the run up to the summit to make it a success.
With Africa's potential as an economic powerhouse, the continent presents an opportunity for investors and trade partners to engage in mutually beneficial partnerships. The UK, with its long history of ties with Africa, is one such partner, and a renewed focus on a trading relationship between the two regions could unlock tremendous opportunities for both.
It was not that long ago that UK’s share of trade with Africa was 30 per cent and now it is less than 4 per cent. Now that we have left the European Union, we are able to engage with Africa on our own terms and are starting to make progress. The UK currently has nine trade agreements with 18 countries across Africa; six Economic Partnership Agreements (EPAs) in sub-Sahara Africa, and three Association Agreements (AAs) in North Africa. However, we need to do more to break down the barriers of trade and work to engage with Africa.
Africa could emerge as a major player in the global critical minerals market
Over the last 13 years I have campaigned for more engagement with Africa by tackling the negative stereotypes, whilst also working towards addressing valid concerns. The African continent has changed significantly over the last two decades and is home to some of the fastest-growing economies in the world, driven by rising investment in infrastructure, improvements in governance and economic management, and the emergence of a more connected, tech-savvy population. With these trends set to continue, Africa will rise to become a global player and lead the way in growing its economies.
In 2012, I sat on a committee for SMEs to look at the barriers they face, especially in relation to exports. I quickly discovered that many SMEs didn’t export to Africa due to a perception that there was no value in doing so. However, this could not be further from the truth and slowly but surely, I have worked with others to encourage this to happen.
In 2016 I became the Prime Minister’s trade envoy to Uganda and Rwanda, with DRC being added to my brief in 2020. Since then, countless UK business have started to invest in the region and have won major contracts ahead of their competitors from other countries. As an example, trade between Uganda and the UK has increased tenfold. With Rwanda it has increased fivefold including direct flights and a partnership with Arsenal. The UK is waking up to the opportunities Africa has to offer but we are only just beginning to scratch the surface.
The UK is also taking steps to address the trade barriers that exist. Last year in Uganda, I announced that the UK is reshaping trade with developing countries by launching a trading framework: the Developing Countries Trading Scheme (DCTS). The DCTS will be one of the most generous sets of trading preferences of any country in the world, helping to grow trade, boost jobs and drive economic growth. As a result of the scheme, over 99 per cent of all goods exported from Uganda are eligible for duty-free access to the UK. This new scheme demonstrates UK commitment to building long term, mutually beneficial relationships.
One key area of focus for trade between the UK and Africa is agriculture. Africa is home to vast tracts of arable land, and its agricultural sector has the potential to meet both local and global food demand. Additionally, there is a growing interest in sustainable and organic farming practices, which could provide opportunities for UK businesses to export products and knowledge to Africa. For instance, the UK could export its expertise in agricultural technology and irrigation to Africa, helping farmers to improve yields and quality while minimizing waste.
As the UK moves towards a green economy and seeks to strengthen its supply chain security, critical minerals are increasingly in demand. Africa is rich in critical minerals, which are essential to produce advanced technologies such as electric vehicles, wind turbines, and smartphones. As the demand for these minerals continues to grow, Africa presents an immense opportunity for investment and development. The DRC has £30tn worth of minerals including 70 per cent of the world’s cobalt needed for electric cars. There are several challenges that need to be addressed but with the right policies and investments, Africa could emerge as a major player in the global critical minerals market, unlocking economic growth and contributing to the transition to a more sustainable future.
To fully realize the potential of trade between the UK and Africa, it is important to build a strong trading relationship, which requires a concerted effort from both sides to create an environment conducive to trade and investment. Some key steps that could be taken to achieve this include reducing trade barriers, improving infrastructure, strengthening institutions, supporting small and medium-sized enterprises (SMEs), and fostering innovation.
Over the next 12 months, we can work towards addressing the challenges that exist but also to demonstrate the potential opportunities Africa has to offer to ensure that the UK-Africa Investment Summit is a major step in cementing the trading relationship between the UK and Africa. This can be done by UK companies educating themselves on the opportunities that exist whilst African countries demonstrate the changes, they have made to make investment into their countries more attractive.
Africa is changing. The UK can be part of this change or to miss out on a major shift in economic power. Africa’s prosperity can be the UK’s prosperity.
Lord Popat, Conservative peer and the Prime Minister's Special Trade Envoy to Uganda, Rwanda and DRC
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