White Paper: Opportunities for UK-Africa Trade & Investment in a Time of Geopolitical Flux
Executive Summary
Africa is a strategically important partner for the UK with growing political and economic weight. Strengthening partnerships in Africa is an important pillar of the UK’s wider geopolitical priorities as well as the shared drive towards sustainable development.
UK-Africa trade and investment has historically underperformed with FDI flows from the UK into Africa stagnating over the last decade. With the UK no longer part of the EU, there is now an opportunity to reshape the country’s trading relationship with Africa.
Despite the setbacks of the pandemic and the disruption of the Russia-Ukraine conflict, Africa remains an attractive market for international investors and offers significant opportunities in sectors where the UK has a competitive advantage including tech, renewable energy and financial services.
Businesses interviewed for this paper highlighted a number of barriers to investment in Africa, including weak infrastructure, instability and fragmented markets, as factors dampening UK-Africa trade and investment flows.
With significant development finance commitments through British International Investment and the financial weight of the City of London, the UK has the tools to support alternative financial methods to promote local investment and cross-border solutions in Africa.
British businesses already operating in Africa have been attracted to the continent’s demographic boom and see the region as of long-term strategic importance. Successful businesses in the region have focused on developing local supply chains and investing in understanding individual markets due to current fragmentation.
The African Continental Free Trade Agreement (AfCFTA) demonstrates the ambitious approach of Africa’s policy makers and can provide the framework to support further flows of trade and investment between the UK and Africa by facilitating cross-border trade and investment and promoting regulatory alignment.
Businesses are optimistic about these opportunities over the longer term but are conscious that further support will be needed to ensure a successful implementation of the AfCFTA and create enabling infrastructure for trade. The recent Memorandum of Understanding (‘MoU’) between the UK Government and the AfCFTA Secretariat pledging up to £35m to support the implementation of the AfCFTA is a positive step.
Africa has an essential role to play in the global green energy transition and, to successfully build on the agreements at COP26, driving investment into Africa’s renewable energy sector must be a priority ahead of COP27. British businesses in the renewable energy space have a strong track record of building partnerships with African governments and these should be expanded.
The UK should continue to support Africa’s priorities for sustainable economic and social development as outlined in the African Union’s Agenda 2063 through robust partnerships which will allow the UK and African private sectors to work most effectively together to tackle the pressing challenges facing both regions.