As the UK seeks to define itself in a post-Brexit world, Africa presents new opportunities – and familiar challenges

Africa has a fifth of the world’s population, but just 5 per cent of world trade, according to International Monetary Fund data for 2015. Priti Patel, secretary of state for international development, told a conference at the London Stock Exchange in March that she believed the UK’s decision to exit the European Union could prove a catalyst for a new commercial engagement with Africa. There would be an acceleration in the shift away from an aid-based relationship to a more prosperous commercial partnership.

Britain has a long history of trading with Africa, long before the advent of the EU. Unilever and others have been operating successfully in Nigeria for decades. Barclays and Standard Chartered are household names in retail banking. BA has been flying to the continent since Imperial Airways sent flying boats to Cape Town via Lake Tanganyika in 1931.

The terms of trade, however, are beginning to change. Africa typically has supplied raw materials – solid minerals, oil and gas, agricultural products – in return for processed goods, technology and services. But services were a significant part of a surge in UK Foreign Direct Investment in the continent, which grew from £20.8 billion in 2005 to £42.5 billion in 2014. Although extractive industries accounted for more than half the new FDI, financial services were 34.3 per cent of the total.

Since 1975, terms of trade have been channelled through the framework of the Europe- Africa, Caribbean, Pacific partnership, amended in 2000 but now in the process of renewal through more comprehensive Economic Partnership Agreements with Africa’s regional trading blocs.

The EU concluded a deal with the Southern African Development Community in June 2016 but other agreements have proved more delicate. A deal with East Africa, originally agreed in 2014, ran into difficulties amid Tanzanian concerns that it was too favourable to wealthier and more developed Kenya. In West Africa, delays in ratification by the unwieldy, 15-member Economic Community of West African States have prompted Ghana and Ivory Coast to negotiate separate and parallel “stepping stone Economic Partnership Agreements”. Nigeria, Africa’s biggest single market and a major oil producer fears the EPA will make it a dumping ground for European goods and damage prospects for local manufacturing.

Chi Onwurah, MP and Chair of the All Party Parliamentary Group, says the EPA model is “flawed, both due to a lack of transparency and the manner in which EPAs limit the scope
for African governments to make their own development choices and industrialisation plans”. There is some consensus across the political spectrum that, despite all the main uncertainties around the Brexit process, there is a new opportunity for a more effective partnership.

The opportunities, however, are likely to come in different forms. Already London is a major centre for financing, especially in extractives and services, although civil society groups say oversight is weak and governance standards mixed. There are also concerns in Africa about where the continent might find itself in Britain’s crowded set of priorities post Brexit.

According to a senior official in Ghana: “We have always believed that trade is more effective at creating opportunity than aid. But in practice trade policy for a generation has been based around dealing with the EU as a single albeit complicated institution.

“A lot of our trade with Europe is through the UK. We will have to re-create the structure and capacity to deal with both Brussels and London, despite our capacity constraints. It’s also hard to imagine that Ghana or even West Africa will be very high up the pecking order. The bigger companies will be able to adapt but it will be a challenge for the likes of the smaller-scale pineapple producers with deals with British supermarkets.”

Politicians in London are looking at interim measures over duty and quota free access to help reduce uncertainty. But with markets as diverse as South Africa and Sierra Leone, a one-size fits all approach is limited – and may test the capacity of ‘Global Britain’ to reach out to some of the presently small but emerging markets.