As the wheels of Brexit begin slowly to churn into motion, a clearer image is starting to emerge as to what it means for the UK’s trade relations with the rest of the world. While much has been made of Britain’s need to strike deals with major emerging economies like India, China, and Brazil, the appointment of Priti Patel as International Development Secretary – a vocal critic of the department’s focus on aid in the past – signals a shift in emphasis towards a pro-development trade policy for Africa. If handled intelligently this could present a significant opportunity for Britain to hitch its chariot to a region which is set to be the world’s fastest growing over the next century.
The secretary is already keeping to her word. On a recent visit to several African countries, Ms. Patel unveiled a series of ambitious projects that go beyond the traditional British tradition of spending billions in aid every year through international organizations and individual commitments. Kenya will receive £95 million over four years for new infrastructure projects while a separate £30 million “Invest Africa” programme will seek to create 90,000 jobs across the region in sectors that would attract British investors.
Whilst vowing to maintain the UK’s commitment to ring-fencing 0.7% of its budget for international aid, Ms. Patel has also promised to stop development money from being “stolen” and “wasted on inappropriate projects”. If she gets her way, more money will be allocated for projects that drive investment and foster trade opportunities between Britain and the developing world. With the UK’s foreign direct investment into Africa amounting to a paltry $2.6 billion compared to France’s $18.3 billion, the scope for British businesses to expand in Africa is huge.
A recent report by the Overseas Development Institute makes some useful suggestions on how post-Brexit UK can go about establishing a more substantial footprint on the African continent. Firstly, it strongly recommends maintaining the preferential trade policies for Least Developed Countries (LDCs) to which the UK had signed up as member of the EU. By keeping these in place after leaving the bloc, London can maintain undiminished ties to Africa. Proposing a pan-African Free Trade Agreement to guarantee duty free access to each other’s markets would come next, contributing billions of pounds to the British economy every year. These FTAs could be further expanded by going beyond the traditional trade in goods and including as well, along with harmonized rules regarding investment, regulations and competition.
It’s not just France the UK would be competing with for Africa’s economic hearts and minds – China has grown over to become the continent’s biggest trade partner, with countries like Congo, Angola, and Sudan counting on the Chinese market for fully half their exports. However, with so much potential for growth in bilateral ties, London should not be meek. What could set the UK apart from others would be to make the “pro-development trade policy with Africa” a reality. As such, London should not try to beat the Chinese at their own game – namely investing in infrastructure and extractive industries – but should seek to promote development policies that can unlock Africa’s growth potential.
Take, as just one example, the practice of Illegal, Unregulated and Unreported (IUU) fishing, which is having a catastrophic effect on African fishing industries. West Africa losing $1.3 billion every year to IUU, and in other parts of the continent, IUU is responsible for blocking countries in cycles of reduced economic growth. Mozambique in East Africa has gone into debt with international creditors after its EMATUM agency used government-backed loans to buy patrol boats to secure a coastline routinely poached by Chinese fishing vessels. According to one estimate, only one out of the 130 boats operating in its waters was of Mozambican origin. Even after making headlines a few years ago after one of the world’s largest deposits of natural gas was found offshore, Mozambique has not been able to reap the benefits of its natural wealth because of economic uncertainties. The effects of IUU, however, are felt continent-wide. If solved, 300,000 jobs would be created and an extra $3.3 billion would be added to these countries’ economies.
The UK could invest in African countries’ coastal infrastructure in exchange for a share of the profits, in addition to enforcing strict rules of the origin for fish entering the British market. Stamping out the practice would lead to more prosperous African societies that in turn would be less dependent on food aid and more capable of buying British goods.
Another area where the UK could make a difference would be in promoting the sustainable, responsible use of Africa’s abundant natural resources. Chinese projects have too often been accused of either not creating enough jobs or creating low-paying jobs that do not contribute to the overall prosperity of the areas where its companies are investing. Worse, the Chinese have been involved in trading conflict minerals from Congo, thereby bankrolling militia forces involved in the bloody civil war and prolonging the violence. In stark contrast to China’s devil-may-care attitude to environmental standards and labour laws, London can help African countries emulate Botswana’s success in capitalizing on its diamond riches and creating long-term growth without ruining its ecosystem.
There would, of course, be another advantage to pursuing new trade agreements in Africa and working alongside African governments to combat the most pressing issues assailing the continent. That kind of approach would go a long way towards redeeming the UK in the eyes of the world, and after the ridicule and criticism Britain has drawn since the fateful decision to leave the EU, it would certainly make for a welcome change of pace.
