The UK-Africa trade relationship

The Department for International Trade (DIT) hosted the 2021 Africa Investment Conference, showcasing the breadth of existing UK-Africa investment relations while encouraging other companies to do the same. Emma Wade-Smith OBE, Her Majesty’s Trade Commissioner for Africa and Andrew Skipper, co-Chair of the AIC and Head of Africa Practice had a reflective Q&A discussion about the AIC’s achievements.

Question 1: One year on from the UK-Africa Investment Summit, what did the Africa Investment Conference (AIC) aim to achieve?

Emma Wade-Smith OBE – Building on last year’s UK-Africa Investment Summit, hosted in London by the British Prime Minister, the UK’s Department for International Trade (DIT) designed and hosted the 2021 Africa Investment Conference with the ambition of showcasing existing UK-Africa investment relationships with a view to encouraging more companies to follow suit. As Government, we felt it would be most compelling to hear the voice and experiences of businesses that are actively engaged in Africa, especially against the global backdrop of the COVID-19 pandemic and international economic and business recovery efforts. The virtual conference, which attracted close to 7000 registrations, brought together UK and African businesses from key sectors such as infrastructure, renewable energy, financial & professional services and agri-tech to discuss the reality of doing business in Africa and to “match-make” British investors with African projects and entrepreneurs in search of funding.

Andrew Skipper – For the private sector and with the Africa Investors Group representing a broad range of business interests on the continent, this was a good opportunity to reset and reemphasise our practical commitment both to partnering in Africa and supporting further investment from the UK to the continent and vice versa. The AIC allowed us to reach out virtually to a vast number of potential investors and opinion formers with a clear and positive message about the attractiveness of the UK as a place for investment and partnership. It is great that Emma and her team were determined to host the event notwithstanding the global circumstances and the number of registrants is a testament to its success.

Question 2: Over the last year, how has the UK strengthened its trade and investment relationship with Africa?

Emma Wade-Smith OBE – Firstly, we have been growing. The UK Government’s trade and investment network in Africa has more than doubled in size over the last two years, in recognition of the growing and untapped commercial opportunities that we see across the continent.

At the UK-Africa Investment Summit in January 2020, the UK Government announced 27 deals worth a combined £6.5 billion, with a further £8.9 billion of other deals and commitments publicised on the day. Since then, we have been working hard to maintain momentum around our ambition to establish the UK as Africa’s investment partner of choice. To help harness investment appetite, we launched DIT Africa’s online Investment Deal Room, in partnership with Asoko Insight, to showcase African investment projects to UK investors. Over the last year, the Deal Room has published 86 projects with a combined value of some £550 million.

To ensure that we are supporting existing UK investors in Africa, we launched the Africa Investors Group (AIG) – that Andrew and I co-chair– to ensure that our Government efforts are providing our companies with the support they need and that, collectively, we can design the most effective approach to inspiring more companies to invest in Africa. Over the period ahead, the UK’s work in Africa will have a strong focus on maximizing the potential of the green economy to support sustainable economic recovery from COVID-19, which will help create new jobs and protect long-term growth and stability.

Andrew Skipper – there is no doubt that COVID has made life more challenging in global terms, and not least in Africa where being on the ground and developing mutual relationships is so important. In the case of my own business, we set ourselves the challenge of remaining “present” on the continent even when we could not be physically there. We have achieved this through a range of innovative and virtual means such as the A Perspective podcasts, which have allowed our core business and relationships on the continent to thrive even during the pandemic. The truth is that all the issues which required investment in Africa have been enhanced rather than reduced and our commitment has therefore simply been reenergised. More broadly, we have seen that business on the continent has remained resilient, notwithstanding the impact of the pandemic. There is still much activity and investment (and interest) in Africa remains strong.

Question 3: With the development of the African Continental Free Trade Area Agreement (AfCFTA), how do you see the UK-Africa relationship developing?

Emma Wade-Smith OBE – The UK welcomed the start of trading under African Continental Free Trade Area Agreement (AfCFTA) terms on 1 January. We see the enormous potential that this has to boost intra-African trade and offer even greater business opportunities for UK companies over the years ahead. The UK directly supported the AfCFTA negotiations through our African Union Support Programme, by providing targeted technical assistance to its negotiators. We have also boosted our team on the ground in Accra, to be able to work closely with the AfCFTA Secretariat based there as they pursue their important work of realising the benefits that can be enjoyed from this Agreement.

The UK is a strong advocate of free trade. Alongside the implementation of the nine trade agreements that we have signed with 16 African countries and the UK Generalised Scheme of Preferences, we will continue to support the liberalisation of trade across the continent. We are also focused on working with Africa’s business and political leaders to reduce the non-tariff barriers that constrain the ability of businesses to grow and create more jobs.

Andrew Skipper – The AfCFTA should be a game changing opportunity for Africa to deliver scale and added value on the continent through the opening of trade barriers and borders, which in turn should provide stability and growth. This should also give those outside the continent who are prepared to work in partnership with local businesses and government, an opportunity to drive business and create mutual benefit for the long term. The UK with its approach towards long-term and sustainable investment outcomes, should be well placed to support growth, but success will be hard won in a globally competitive market and UK business will have to ensure an intensity of effort is applied along with a clear commitment to listen and to develop and support relationships on the continent.

Question 4: What are the current investment opportunities across Africa for British businesses?

Emma Wade-Smith – With a fast-growing market of 1.2 billion potential consumers and predicted economic growth returning across the region this year, the dynamism and evolution of Africa’s economies and the talent and innovation of its people will continue to generate exciting investment opportunities for UK businesses. In line with our focus on rebuilding cleaner, greener and more inclusively, I see particular growth potential for technology and innovation as well as across the green economy. This includes sustainable infrastructure; renewable energy; agri-tech; education and skills; as well as healthcare and financial and professional services. But we do not need to limit ourselves to these areas; Africa is incredibly vibrant and entrepreneurial, so there are possibilities everywhere.

Andrew Skipper – In my business, and from the businesses we talk to, we see a range of continuing opportunities, but these vary between different places. Africa is of course, notwithstanding the promise of AfCFTA, not a homogeneous market but a complex and vast range of different opportunities in 54 countries. These require businesses intending to invest first in understanding each market and learning to respect them. As a provider of services which form the majority of the UK’s GDP it is clear that the opportunities for developing relationships and business across a range of sectors are and will be strong. This applies equally to the traditional sectors, as well as infrastructure and natural resources, in addition to new tech, education and life science. So, one size does not fit all, but the infinite variety gives real opportunity.

Question 5: How do you support British businesses looking to enter the African market?

Emma Wade-Smith OBE – The UK Department for International Trade’s Africa network supports UK businesses and African buyers, to increase trade and investment flows between the UK and Africa. Our network consists of over 140 trade and investment experts located in over 20 African markets. We also provide advisory services to UK companies interested in exporting to and investing in Africa, helping them through dedicated, market-specific support, including market entry and access advice and information on market barriers. My teams are only an email away – I encourage any UK company with business queries about Africa to get in touch with us at [email protected].

Andrew Skipper – In addition to Emma’s overview, the AIG is keen to help support investment and encourage it in collaboration with the government.

Question 6: As we head towards COP26, how is the UK supporting Africa’s green energy transition?

Emma Wade-Smith OBE – We are already seeing a strong interest in developing and increasing renewable energy in many of Africa’s economies. A number of UK companies are already accessing these opportunities, for example in Senegal and Ethiopia. We want to enable even more renewable energy projects, including with support from the UK’s export credit agency, UK Export Finance (UKEF), which has allocated £2 billion to support clean growth projects. Last year, for example, UKEF supported the construction of 108 rural healthcare clinics in Zambia, which will be powered by solar energy. In addition, thousands of Ghanaians will get access to drinking water through Aqua Africa’s solar-energy powered water project, with a direct loan from UKEF. Additionally, the UK's development finance institution, CDC Group is shifting its focus towards greener investment priorities, with more than $1 billion of climate finance committed over the past three years and an ambition for their investment portfolio to be net zero by 2050.

Andrew Skipper – there is no doubt that the global focus on renewables and clean tech will be a critical part of the future. Africa has an enormous role to play in this, including in educating the rest of the world in the unique challenges it faces and has already overcome. The private sector will reflect this. There are of course a range of sensitivities in dealing with this based on history and a balance of necessity. This means that a partnering, fair and mutual approach is especially important.

Authored by Andrew Skipper