Bilateral Trade: United Kingdom and Africa
(9 years ago)
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Lord Sheikh
To ask Her Majesty’s Government what plans they have to encourage more bilateral trade between the United Kingdom and African countries.
The Earl of Courtown (Con)
My Lords, I take this opportunity to remind the House that this is strictly a 60-minute debate and apart from my noble friend Lord Sheikh, who will have 10 minutes, and my noble friend Lord Maude of Horsham, who will have 12 minutes, noble Lords are restricted to four minutes per speech. Once the counter is on four, noble Lords have had their time.
Lord Sheikh (Con)
My Lords, I am grateful for the opportunity to bring this important subject before your Lordships’ House, and thank all noble Lords who are taking part in this debate.
The African continent holds a very special place in my heart. I was born in Kenya and spent my formative years in Uganda. During my lifetime I have travelled to many African countries in both a personal and a professional context. I have spoken to many African politicians and businessmen, and attended meetings and conferences. I enjoy good relationships with several African ambassadors and high commissioners. I have learnt much about what Africa has to offer.
I have spoken previously in your Lordships’ House about the need to promote more business between the United Kingdom and overseas countries—an issue that is indeed very relevant to African countries. We must focus on fast-growing emerging economies and those that have yet to be tapped. This is important, not least at a time when we are still finishing the job of rebuilding our own economy.
My involvement with Africa stretches beyond your Lordships’ House. Recently I spoke at an event for the Southern African Development Community, and hosted and spoke at an event for the Economic Community of West African States. I also recently made a keynote speech at a major conference on trade with Uganda. More personally, I have met businessmen who are seeking to further trade between the UK and Ghana, including the King of the Ashanti region in Ghana. I was also given a lifetime achievement award by the Association for African Owned Enterprises for my involvement in trade with Africa. Later on today I am hosting and chairing a conference on trade with countries in the Central African Economic and Monetary Community. About four weeks ago, I spent several days in Ethiopia investigating business and investment opportunities in that country.
My engagements continue to reinforce what I have always known. As a continent, Africa is thriving, and its outlook is extremely impressive. Its GDP is expected to grow by 4.5% this year and 5% next year. It is widely predicted that Africa could account for 7% of the global economy by 2040. However, as impressive as this is, we must not fall into the trap of looking at Africa as merely a bloc. It is in fact a rich and diverse region of 54 countries, offering a variety of cultures, languages and histories. From a trading point of view, this means a whole host of varying economies, businesses and Governments with which we can engage. Many different African states are currently or have recently been members of the much-admired “7% club”. Last year, Ethiopia, the Democratic Republic of Congo, Ivory Coast, Mozambique, Chad, Mali, Tanzania and Rwanda all achieved growth of 7% or more.
I believe that the tendency to view Africa as an “all-in-one” model is a major challenge that businesses must look to overcome. There are many specific opportunities in different parts of the continent. I will cite examples from my recent trip to Ethiopia. Ethiopia’s economy has grown by 10.9% per year, on average, over the past decade. I was told of investment opportunities in a number of industries, including agriculture, fishing, mining and, perhaps most notably, infrastructure and construction projects.
There are opportunities in various sectors in different parts of Africa. We should be doing all we can to help our businesses identify and take advantage of these openings. I am aware of the high-value opportunities programme offered by UKTI, which seeks to provide assistance in this respect. Many projects and contracts are very large, and wide in scope; it is important that businesses be able to find specific areas to which their operations are suited. Can the Minister clarify what success this programme has had regarding opportunities in African countries, and whether it provides specialist support for smaller businesses?
We must not underestimate the market for Islamic financial products in many African countries. The UK has the largest Islamic finance industry outside the Muslim world. I am heavily involved in the maintenance and promotion of Islamic finance. I have co-chaired the All-Party Parliamentary Group on Islamic Finance, which is now being re-formed. I also serve as a patron of the Islamic Finance Council. The council recently held an international conference on Islamic finance in Edinburgh, during which I shared a platform with the Emir of Kano in Nigeria. The council has delivered key projects in Nigeria and Kenya. Ethiopia has shown an interest in Islamic finance, which we are pursuing.
On finance for business services, I am pleased that London is a major centre for the provision of funds for overseas investments. This includes British and foreign banks based here. The World Bank lists Benin, Togo, Ivory Coast, Senegal and the DRC as among the most improved economies for ease of doing business.
Much progress has also been made in relation to democracy in the continent. Approximately half the African nations have ratified the African Charter on Democracy, Governance and Elections. Similarly, approximately half have also ratified the African Charter on Human and Peoples’ Rights. These countries are changing, and there should not be the same stigma attached to doing business with them as there once was.
I believe that we can play our part in making it easier to do business by smoothing out our visa regime. I am told that there have been some problems, but I hope the Government will undertake to make our visa regime more accommodating towards building business relationships. Perhaps my noble friend the Minister would like to comment on the question of visas.
Ultimately, we should look to increase the frequency of delegations and trade missions. We must maximise the potential of deploying experienced trade envoys to seek out new opportunities. The main business meeting I had in Ethiopia involved the British Council and DfID, as well as the person dealing with commercial matters at the embassy. Such a cross-party approach was refreshing and very useful. I would like to see and experience more of this type of joined-up thinking in all our embassies and high commissions. Is this indeed the culture at embassies and high commissions overseas, as well as at departments in London? It is desirable to have collaboration between the Foreign Office, DfID and, of course, UKTI. Does the Minister envisage more of our own Ministers visiting Africa and attending trade missions and conferences in London? In addition, will he look at the potential to increase the frequency of missions and the opportunities for businesses to get involved?
I believe that aid and trade go hand in hand. Those in countries such as Nigeria, Kenya and Tanzania receive significant amounts of aid from DfID. This support is very welcome, but only through increased trade will we help communities and economies to flourish in the longer term. We must concentrate on trade as well as aid.
Baroness Scotland of Asthal (Lab)
My Lords, I thank the noble Lord, Lord Sheikh, for instituting this very important debate. Perhaps I may take this opportunity to welcome the maiden speech of the noble Lord, Lord Oates, who I am sure will intrigue us with his strategic delivery, in the same way as he led the Liberal Democrats so well. I also take this opportunity to declare my interests as both the Prime Minister’s trade envoy to South Africa and Dominica’s candidate to be the next Secretary-General of the Commonwealth.
The African diaspora are of critical importance here in the United Kingdom but the way the United Kingdom has engaged in Africa is of enormous importance to us in relation to trade. Noble Lords will know that the Commonwealth has 18 members of the African Union among its members. The Commonwealth itself is responsible for 33% of the global population and has 15% of the world’s GDP, so it is responsible for $3 trillion in annual trade.
I want to take a moment or two to say a few things about South Africa, which has a total stock of United Kingdom investment of around £72 billion. The UK is the largest single foreign investor in South Africa and more than 600 South African companies invest here in the United Kingdom. The annual trade in goods and services alone is worth approximately £10 billion. This market is of enormous importance to us. We all know, too, that the Commonwealth Games will be held in Durban in 2022. It is the first time that Africa will be hosting the Games, and here in the United Kingdom we have real expertise to share with them, which will give us huge trade opportunities. They greatly welcome this opportunity to receive our help and assistance.
As trade envoy, since November 2012 I have been on at least six trade visits to South Africa, each of which created warmth and appreciation for the trade we have enjoyed with them. That has significantly improved our key relationship, and people in South Africa have told me that the trade envoy role is particularly valued because of its consistency and continuity. I am very glad to see my noble friend Lord Risby—and I do see him as a friend—sitting behind the Minister, because he and I are among the six from this House who have been made trade envoys. We have formed a cross-party union to support British trade overseas.
A Minister in the Presidency in South Africa, Jeff Radebe, as well as Rob Davies, the Minister for Trade and Industry, and John Jeffery, the Deputy Minister for Justice, have told me specifically how important they see this relationship, together with the opportunity to build strong relations with the South African high commissioner here in London. We have had a number of successful visits from the Lord Mayor of London, two of which have created real opportunities for trade. The northern powerhouse mission will go early next year and we have been involved in a number of bilateral events. Do the Government intend to remain committed to the trade envoys and the efforts they have been making to enhance trade? What efforts does the Minister intend to make to ensure that the work of the trade envoys is better supported, so that we get real value out of the pro bono commitment that each and every trade envoy gives to the betterment of British trade?
Lord Chidgey (LD)
My Lords, first, how intriguing it was to hear the comments from the noble and learned Baroness. I had not realised her connection with Dominica—a beautiful country which I once visited, and which I think is famous for its ecological tourism. Thank you for that information.
I congratulate the noble Lord, Lord Sheikh, on bringing this issue to us today. Speaking as the co-chair of the All-Party Africa Parliamentary Group, I think his speech told us an awful lot about Africa’s potential. Perhaps I may say how much I, too, look forward to the maiden speech from my colleague and noble friend Lord Oates, who I understand accompanied the noble Lord, Lord Sheikh, to Ethiopia. My noble friend brings to your Lordships’ House a wealth of experience in local and national government, having served as the deputy leader of Kingston-upon-Thames Council and, latterly, as the chief of staff of the Deputy Prime Minister in the last Parliament.
In encouraging bilateral trade between the UK and Africa, a good point of reference is the importance of good governance to investors in creating stable and reliable markets. Accountability, transparency and probity are the new watchwords in the international aid and development world, coupled with an overarching demand to gain value for money for taxpayers in results-based aid and development programmes. So far, so good, but what about encouraging UK bilateral trade at the sharp end by getting into the marketplace ready to negotiate, keen to trade and to set up joint ventures and win business? Questioning one ambassador in Africa on how UK business development was going in his country generated an interesting response. Apparently, a major UK oil company had just secured a multi-billion pound project with the possibility of subcontracts then trickling down to UK firms. In other words, the box for expanding UK trade was well and truly ticked.
In reality, of course, multinational organisations are well equipped to do their own business development and are unlikely to need embassy support, unless they are in diplomatic or political trouble. What we need to know is—I hope that the Minister can start to answer this in his reply—what guidance is given to embassy and high commission staff on assisting small to medium-size enterprises? The SMEs are the companies with the flexibility and the ideas for developing world-beating products. They are critical to our economic growth, but often without the financial resources to pursue African markets, develop products and support their customer base. Can the Minister tell me what training FCO and DfID staff are given in market assessment and business development, for example, and in establishing protocols within which they can assist private sector companies fairly and evenly?
UK-Africa bilateral aid is increasingly influenced by EU trade agreements, particularly the contentious economic partnership agreements, or EPAs. African countries are placing renewed emphasis on developing their food processing industries, creating more employment and adding greater value to their agro-food exports, often in partnership with UK and EU-based companies. A reality is emerging, however, in that in a number of agro-food sectors the rise in imports of these products is generating a disconnect between expanding urban demand and the rural African hinterlands. By removing tariff and non-tariff barriers, the EPAs have led to a massive increase in the value of EU agro-food exports to sub-Saharan Africa. Local African farmers and producers are being severely damaged by EU exports, which now account for nearly 50% of the poultry meat sector, for example, and are closing off their market opportunities. Similarly, expanding EU milk powder exports are substituting for local milk production, to the detriment of local farmers. Far greater scrutiny is needed of how trade and agricultural policies impact on the efforts of African countries and regions to promote the development of agricultural sectors.
In conclusion, will the Government pledge to recognise fully the development needs of African countries in the agro-food sector and that, within the UK’s compass, no sub-Saharan African Government will be obliged to implement trade policy measures that undermine their national agro-food sector strategies?
The Lord Bishop of Southwark
My Lords, I am grateful to the noble Lord, Lord Sheikh, for a debate so pertinent to the times in which we live. I, too, look forward to the maiden speech of the noble Lord, Lord Oates. Although my knowledge of Africa at large is somewhat limited, I am a regular visitor to Zimbabwe, with my diocese having close links to four of its five Anglican dioceses: those of Central Zimbabwe, Manicaland, Matabeleland and Masvingo. The bishops, clergy and people of those places share a good deal of the reality of their lives and faith with me, and demonstrate remarkable resilience and strong hope in the face of adversity.
Zimbabwe has achieved a fragile economic stability through the abandonment of its currency in favour of internationally traded currencies—principally, the US dollar. This is undoubtedly of great significance for commerce and trade and there are goods in the shops, but most of the population are shut out from any prosperity springing from state and private investment. Unemployment is estimated to be well over 80% of the working-age population. Most people, in consequence, have few or no choices beyond the bartering of goods and subsistence farming—in other words, working directly to consume.
Thus, when referring to an entire continent and its welfare, a good deal is to be said for the place of particularity, politics and aid, on which Her Majesty’s Government have an impressive record. Much is changing, but in many places issues around governance, rule of law and infrastructure are key to any future improvement. The wisdom of a focus on trade is telling, but even then one should ask, “On what terms?”. Economic relationships are not always equally balanced.
I will cite one example: the tax treaty between Senegal and the United Kingdom. In the ActionAid briefing in September, the charity highlighted what it believed were the unfair provisions on Senegal that, it claims, are not typical of such tax treaties. We are told that the treaty provides that,
“activities associated with a building site in Senegal conducted by a British firm will not be taxable in Senegal”.
Similarly, ActionAid claims that,
“royalties paid to the UK for radio and TV programmes broadcast in Senegal”,
are not taxable. There are other examples. In many such scenarios, one should therefore ask: who benefits?
One might ask a further question: who lobbies? Who lobbies on such tax treaties that have a bearing on trade? So I ask the Minister: is it not time for the Department for International Development to work more proactively to discourage large UK companies from avoiding tax in developing African countries? This would accord to our international trading partners the same dignity and scrutiny that Her Majesty’s Government are promoting within our own national boundaries.
Lord Risby (Con)
My Lords, I congratulate my noble friend Lord Sheikh on introducing this debate. I have read his report on Ethiopia—a country that has had a difficult past but has certainly made enormous progress—with great interest, and I very much look forward to the maiden speech of the noble Lord, Lord Oates.
Looking back particularly over the past decade or so, we have seen a huge number of African success stories—I pay tribute to the noble and learned Baroness, Lady Scotland, who is trade envoy to South Africa, where such progress has been made, and my role as the Prime Minister’s trade envoy to Algeria is one that I absolutely cherish and enjoy—but the truth is that there are some difficulties on the horizon, in which I believe we can play a role in helping. Many of the economies in Africa have been based on rising commodity prices, but we are now seeing some weakness and there is some concern, and of course the question is how long this will go on for.
A number of African countries have sought to look at diversification, and here we have a unique capability. In the reform of their capital markets and their banking systems—of course, without that their growth would be inhibited—we have a unique offer. We have an outreach programme by the Stock Exchange that interfaces with other countries. We have in this country unique support systems involving lawyers, accountants and insurance specialists, and I have seen all of this on offer to our friends in Algeria. Indeed, I praise the work of the Lord Mayor, who has recently been to Africa, and the previous Lord Mayor, whom I had the privilege of being with in north Africa during her visit.
The second point that I would like to make is that many African countries have a demographic challenge of young people, and we in this country have been quite successful latterly in embracing technological change. We have seen a record start-up rate in this country by international standards, including the establishment of Tech City, and we have set about abolishing some of the red tape, regulation and overprotective employment laws that were inhibiting start-up activity. These are things that, in my role, I have been trying to point out to Algerian friends as very important, and in these aspects of our life we want to share our experience with other African countries, which I believe will welcome what we have done. As my noble friend the Minister contemplates improving business links with Africa, of course there are millions of young Africans who are extremely well educated and motivated and eager to deploy modern technology to start up their own businesses—this is something that I hear everywhere. However, as we look to commodity-rich Africa and help it to grapple with the challenge of diversification, I would just point out that, in a country such as Algeria, which is energy-dependent, it has become very necessary to improve the financial infrastructure—and, again, this is an area where we have an unparalleled advantage.
I would also mention the importance of the expansion of the British Council in a number of African countries. English has become the dominant language of modernity, telecommunications and technology, and in many African countries English is well spoken and can be a key part of our offer. I hope that this aspect, one of the key underpinnings of our relationship, can continue to be offered and expanded.
As my noble friend, who is spearheading so effectively our export effort, contemplates how we can improve our bilateral relationships with a number of African countries, I hope that all these things can be offered to supplement the dynamism and energy that exists in African countries but also to help with the challenge of diversification, which at this juncture is for many of them an important issue that they have to face.
Lord Oates (LD) (Maiden speech)
My Lords, it is an honour to make my maiden speech, albeit necessarily briefly, in this debate. I want first to thank everybody who made my introduction to your Lordships’ House so easy—in particular, Black Rod and his staff, the doorkeepers, attendants and police officers, who have been an unfailing source of directions, advice and, above all, patience. I also want to thank my two supporters, my noble friends Lady Parminter and Lady Suttie, who have been great friends to me over many years.
I have taken the geographic part of my title, Denby Grange, in tribute to my late uncle Lawrence, who was a miner at Denby Grange colliery in West Yorkshire all his life. My title is not only a tribute to him; it is a wider acknowledgement that my good fortune is built on the shoulders of my grandparents and parents, uncles and aunts. They all faced much tougher challenges than I ever have and, through the sacrifices they made, they opened up a whole world of opportunities to their children and grandchildren that they never had themselves.
I am pleased to have the opportunity to speak in this important debate introduced by the noble Lord, Lord Sheikh, whom I first had the pleasure of meeting when we both took part in a delegation to Ethiopia this September. That was not my first visit to Ethiopia. Thirty-one years ago, aged 14, I sat in front of a television set and watched Michael Buerk’s harrowing BBC news report from northern Ethiopia exposing the horrific human tragedy that was unfolding. That broadcast ignited an enormous sense of anger in me. Much of the disaster was manmade. In the West, we sat on millions of tonnes of intervention stocks—the legendary grain mountains and wine lakes—as hundreds of thousands of people starved to death.
I decided that something had to be done and, with the self-righteous certainty of a by-now 15 year-old, I felt that I was obviously the person to do it. So I ran away from home, to Ethiopia, determined to change the world—the full story is actually a little more complicated than that but, given the time constraints, I hope that noble Lords will forgive this rather concise summary. Once in Ethiopia, I rapidly discovered that the demand for unskilled 15 year-old English boys was not huge, and that Colonel Mengistu’s Ethiopia was a particularly terrifying and dangerous place. I was rescued from it by an Anglican clergyman, to whom I owe my life. He told me bluntly that I needed to go home and learn some skills, but he also told me that it would not be long before the TV cameras forgot Africa again. He asked me not to do the same. I never have.
Over the past two decades, I have had the opportunity of living and working in Zimbabwe and later South Africa, where I have learned many important lessons and been nurtured by deep and enduring friendships.
Ethiopia today is a very different place from the Ethiopia of 30 years ago although it remains hugely vulnerable to drought, as Clive Myrie’s BBC news report on Monday underlined. The Ethiopian Government have achieved impressive development successes over the past decade with the help of UK development aid. I was proud to work in the coalition Government when we met the 0.7% target for development aid and when Mike Moore in another place and my noble friend Lord Purvis of Tweed enshrined that in law. But if Ethiopia’s successes are to be sustained, the Ethiopian economy needs to continue to grow sufficiently to support development from its own resources. Trade could and should play an increasing role in that. Expansion of UK-Africa trade offers huge and mutually beneficial opportunities for African economies and British companies. With the right policies, we have a real opportunity to lead the world in a growing trading relationship with Africa.
The Government have rightly put much store by expanding trade with China and India, but we are well behind the pack there. In Africa, we still have the chance to lead. I hope that we will take it.
Lord Alton of Liverpool (CB)
My Lords, the noble Lord, Lord Oates, has chosen a good debate in which to break the ice with his maiden speech and he has acquitted himself with distinction.
The noble Lord referred to his father, who was the one-time rector of St Bride’s in Fleet Street. The noble Lord brings considerable experience to your Lordships’ House, having trod the well-worn and honourable route from local government into national politics. As we heard from the noble Lord, Lord Chidgey, he is a former councillor and deputy leader in the Royal Borough of Kingston upon Thames. He served as director of policy and communications for his party and, from 2010 to 2015, was chief of staff to the right honourable Nick Clegg. His friends describe him as calm and principled, and we saw that in his speech today. Outside politics, his working life has encompassed a number of political, communications and public affairs roles with, among others, Westminster Strategy, Bolland & Associates and Bell Pottinger public affairs. He also served as policy and communications co-ordinator for the Youth Justice Board.
As we have heard today, the noble Lord has considerable international experience, not least knowledge of Ethiopia, which, as he rightly said, is topical again today for sad reasons. While working for the Westminster Foundation for Democracy, he advised the Inkatha Freedom Party in the South African Parliament, working with the Home Affairs Minister, Mangosuthu Buthelezi, and the Reverend Musa Zondi. These rich and diverse experiences will make the noble Lord’s a voice which we will always look forward to hearing, and the whole House will want to congratulate him on his excellent maiden speech.
Today’s short debate focuses on bilateral trade in Africa, but trade cannot be detached from questions of conflict, corruption and governance. I am particularly indebted to the work of Saana Consulting, which works as an external secretariat of the All-Party Group on Trade out of Poverty, for the updates on trade figures which it has provided.
Sub-Saharan Africa, which, with a per capita income of around $1.25 per day, is the least successful region of the world in reducing poverty, should give us all pause for thought. Despite the spectre of war and instability, total trade between the UK and sub-Saharan Africa has increased by nearly 25% from pre-global financial crisis levels up to 2014. However, the UK’s share of the region’s trade with the world has remained unchanged at 3% since pre-crisis levels. Meanwhile, China’s share of the region’s trade increased from 12% to 18% in the same period. We can learn a great deal from the way in which China goes about developing its trade relationships in Africa. A new UK strategy is needed better to understand the way in which China, India and Brazil have increased their trade and investment footprint in Africa in recent years. I think that they have better understood than us the importance of infrastructure projects—for example, the construction of roads and power stations—working with African Governments. I hope that this will be a part of our own strategy. A new UK strategy should also have clearly measurable outcomes and track key indicators year on year, such as the value of new UK business investments and the number of jobs created. We should also expand the UK Prime Minister’s trade envoy programme, referred to by the noble and learned Baroness, Lady Scotland, to more key trade partners in sub-Saharan Africa. We might also establish an annual UK-Africa CEO and heads of state summit on boosting UK-Africa trade and investment.
An African friend summarised the approach which we should take as follows: first, the trade opportunities must offer value; secondly, the approach should be underpinned by a proper understanding of the diverse nature of Africa; thirdly, we should identify and develop new partners and new channels; fourthly, we should be seen to be genuinely looking out for the interests of Africa; fifthly, trade should be genuinely bilateral and not a one-way street, and bilateral trade should offer primary socioeconomic development of Africa in rural communities and agriculture; and, finally, we should eliminate proxies, with too much bilateral trade being done by proxies rather than through direct contact with the true stakeholders involved. These seem to be admirably sensible suggestions and would fulfil the need to listen to African voices and not just to our own.
Lord Popat (Con)
My Lords, I, too, thank my noble friend Lord Sheikh for instigating this important and timely debate. We have a shared love for Africa and a passion to see Anglo-African relations given a greater standing by both the Government and the private sector. I also echo the words of the noble Lord, Lord Alton, in commending the noble Lord, Lord Oates, who made an excellent maiden speech and recalled his experiences in Ethiopia.
On Friday, the Office for National Statistics gave us some good news: our trade deficit fell from £10.8 billion in August to £9.4 billion in September. Our inability to export more than we import has become a largely unchallenged part of the economic make-up of our country. Not since 1998 have we run a trade surplus, and that was only for a short period.
Our leading politicians and business figures fret about our membership of the European Union despite its obvious economic and demographic issues, and many have realised that we have to build stronger relations with India, China and other emerging countries to balance out our continental problems. Yet the incredible rise of Africa—the obvious potential of this brilliant continent—has been ignored by far too many.
Africa is waiting for us to acknowledge that the prism of aid, conflict and corruption that we continue to see the continent through is almost entirely out of date. The recent responses in Burkina Faso and Burundi were a wonderful demonstration of how far Africa has come: two military coups that not only failed but saw organisations such as the African Union and ECOWAS play leading roles in resolving matters peacefully. We need our politicians to acknowledge the tremendous progress that Africa has made and the potential it has. We need to acknowledge that Africa is our partner, not a charity.
The former President of Nigeria correctly said that Africa is the last great frontier of emerging markets. The United States has seen the potential: President Obama held a hugely successful African summit last year. Last month, Prime Minister Modi and the Indian Government held their own African summit, with my good friend Anil Agarwal helping to bring it together. The UK has been behind the curve too many times, allowing others to build trade, economic and strategic relations first and then constantly trying to catch up. Let us not make the same mistake again.
The positive signs are all there: Africa is home to the fastest-growing middle class in the world. Six out of the world’s 10 fastest growing economies are in Africa, and economic growth is averaging around 5% across the continent. Democracy is now winning the long-standing battle in Africa. Whereas before, power was transferred with bullets, increasingly it now relies on the ballot box. In Commonwealth countries, the rule of law and constitutional set-up is largely based on the British system, and as we know, most trade in Africa relies on the English language. As the noble Lord, Lord Alton, said, we must wake up to Africa’s serious economic potential and make improving trade relations with Africa a foreign policy priority.
Perhaps most important is the continuing issue of the trade deficit, particularly in respect of goods. We need to find new markets for British goods and to encourage firms that do not currently export to do so. We need a strategic and targeted approach. If the Government encourage the FCO, UKTI, the British Chambers of Commerce and other organisations to work together, we can reintroduce and rebrand Africa for the British business community.
The Earl of Sandwich (CB)
My Lords, the noble Lord, Lord Sheikh, has raised a fascinating subject, on which I congratulate him. I also congratulate the noble Lord, Lord Oates, on his excellent maiden speech and welcome the Minister to the House and the Front Bench.
As someone with an NGO background, I am interested in the relationship between trade and aid. With the Government’s renewed emphasis on trade support through DfID, and with the increased aid budget, there will be more pressure to find private sector projects. I personally favour using aid for trade, but it must not be tied aid. DfID must develop its own trade expertise, poverty reduction must remain the focus and partnerships with organisations such as SMEs and NGOs must not be exploited, as the noble Lord, Lord Chidgey, and the right reverend Prelate pointed out.
The Minister will know that DfID’s ventures into trade have not been entirely successful. ICAI, the aid watchdog which reports to the Commons International Development Committee, has been keeping a close eye on DfID’s business ventures. In 2013, it showed that TradeMark Southern Africa, promoting a free trade area between Durban and Dar es Salaam, had failed to meet its targets. TMSA was then closed down by DfID, and the Permanent Secretary even had to apologise to the Select Committee.
ICAI also said DfID needed to improve its financial oversight of programmes, and the NAO echoed these findings. DfID has promised to do better, but does the Minister know whether there has been progress, especially in relation to TMSA’s sister programmes, the MRGP—the Mozambique Regional Gateway Programme, which links the north-south corridor to ports in Mozambique—and the older TMEA programme in east Africa? The Commonwealth Development Corporation is being given additional funds to boost private sector investment in such projects as hotels and shopping centres. Does the Minister consider that the revamped CDC is a suitable channel for DfID funds, which are legally required to reduce poverty? DfID will need to develop its expertise in these larger regional programmes because aid money has been, and is being, wasted. I remember some successful large Africa projects in the past, notably customs and excise reform through the Crown Agents in Mozambique.
Of course, the UK must operate through development banks and multilateral agencies, but there is a problem of mounting debt to the IFIs. The investments of the wealthy do not necessarily, as we all know, trickle down to the poor and may accentuate the poverty gap. Why not invest in the poor themselves? NGOs have long put their money into income generation and microcredit in the poorest communities. Trade at the village level was originally pioneered by the Grameen Bank in Bangladesh, and multiplied many times in Africa. Savings and credit schemes can be the most efficient method of starting up small local businesses and stimulating the informal economy. Loan repayment rates among the very poor are the fastest and most efficient you can find.
Finally, another government initiative is the UKTI and FCO’s overseas business risk programme, which with Morocco now covers 16 African countries. Naturally, many of these are conflict states and it is to UKTI’s credit, and thanks to some of DfID’s efforts, that the UK has been successful in attracting investment even to the remoter and more dangerous regions of those countries. Taking Kenya as an example, the presence of terrorism on two of its borders has not been a sufficient deterrent to business, with the Nairobi Securities Exchange up with the leaders in the world and with investment at record levels. As other noble Lords have said, African business has been, for once, a good news story and we all hope it will remain so.
Lord Mendelsohn (Lab)
My Lords, I draw attention to my interests in the register. I congratulate the noble Lord, Lord Sheikh, on introducing this debate, which has been an extremely interesting one with some quite impressive contributions. The noble Lord, Lord Sheikh, has frequently raised the question of Africa in this House, and vividly illustrated in his comments not just his expertise but the huge business opportunities there. We owe him a great debt for raising this topic today. I also congratulate the noble Lord, Lord Oates, on a quite outstanding maiden speech. Through colleagues in the House, I am aware that he did considerable work in South Africa some 15 years ago in helping to improve the processes and training for people’s contributions to the parliament there. Fifteen years later, we are going to be privileged with quite a few improvements and quite a few distinguished contributions. We wish him well in the House.
I will make some very simple points and raise a few questions for the Minister, who has started his task with great aplomb. First, it is always very clear that in a UK context, our priorities have not placed Africa very high up the pecking order. That is to be understood to some extent, given the short-term priorities, but it would be a mistake not to give it the right level of attention. It is also the case that our performance in Africa has declined. Our top export destinations are the US, Germany, France and the like, but five African countries feature in the list of the top 50 markets for the UK: South Africa is 22nd and Nigeria is 34th. So there is not an immediate priority, but the long-term interests are there and our relative performance is starting to decline. France has taken a very strong approach: it has a mission to double trade; it has held a summit with 50 African leaders; it has doubled its aid; it has looked at expanding its soft power through schools, businesses and education; and it is looking to enhance the 5,000 French businesses investing in Africa through access to finance and the establishment of a wide variety of bilateral trade and investment councils. It is a long-term play, and perhaps we should have more focus on those sorts of ideas.
It is certainly true as well that Africa is developing and coming on in leaps and bounds. The population is sure to rise: in the next 25 years, Africa’s working-age population will more than double to more than 1 billion, surpassing both China and India. Africa has also developed quite well in relation to regulation and performance, which is to be encouraged. That leaves us with the dilemma of how best to use these assets and our opportunity to make a difference at this stage.
I would like to ask the Minister about some ideas. We have heard about the trade envoys—I pay tribute to the great work of the noble and learned Baroness, Lady Scotland, and wish her well on hopefully becoming Secretary-General of the Commonwealth, as well as to that of the noble Lord, Lord Risby, and the noble Lord, Lord Hollick, who I know has a role with Kenya and Tanzania, about which I have spoken with him in other places. But are we giving them the right level of support? What is the next phase of using trade envoys more effectively? UKTI has limited resources and a skills base that is based around civil servants. Given the limited resources, and the use that some countries make of their aid budgets, do we have the right skills inside UKTI to leverage them? Are there people inside DfID who have had more experience of how that is done who we should transfer?
Finally, I will make one simple point about entrepreneurs. Africa is going through an explosion of entrepreneurship: a number of people have come over to the West and will go back and establish businesses. Also, the gender parity is quite extraordinary. Are we using the best resources that we have with our industries here to be able to maximise that opportunity as well?
The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Maude of Horsham) (Con)
My Lords, this has been an excellent debate. It gives me great personal pleasure to congratulate the noble Lord, Lord Oates, on a terrific maiden speech—if I can say so from all the veteran status of having been here six months longer than he has. It was charming, humorous, thoughtful and serious. He and I cohabited in the Cabinet Office for the past five years, both physically and politically, and it was always a pleasure working with him. We were very rarely in conflict with each other, despite the occasional tensions of coalition; we were more often in unity to try to get stuff done, which, as we both know, was often the challenge in a system that did not always relish change. It is a great pleasure to see him here, and I thank him for his terrific contribution to this important debate.
I also congratulate my noble friend Lord Sheikh on having sought and achieved this debate; it is incredibly important. He and others made the point that, although there are enormous attractions in increasing our business in China and India, the big growing markets, we should not let that detract from the importance of Africa. There is no one better qualified in this House, with his background in business and his African heritage, to have introduced this debate, as he did in an incredibly knowledgeable and serious way—unless, of course, it might be my noble friend Lord Popat, who also spoke with great knowledge and thoughtfulness on this important subject.
First, I praise the work of a number of noble Lords who have taken on pro bono—unpaid—the work of representing British businesses abroad as the Prime Minister’s trade envoys. We already have my noble friend Lord Risby and the noble and learned Baroness, Lady Scotland, who courteously told me that she had to leave for an important engagement—at Marlborough House, I think she said. I cannot think what that is related to, but we wish her very well in her quest to be the next Secretary-General of the Commonwealth. The noble Lord, Lord Hollick, was here earlier. All of them have done amazing work in Africa: my noble friend Lord Risby in Algeria, the noble and learned Baroness, Lady Scotland, in South Africa, and the noble Lord, Lord Hollick, in Kenya and Tanzania.
There are of course enormous opportunities. My noble friend Lord Sheikh talked about Ethiopia, as did the noble Lord, Lord Oates. It is astonishing: it is the ninth fastest growing economy in the world; it is the second most populous country in Africa; its GDP has increased fivefold since 2000—just in the past 15 years. It is of course just one of many countries in Africa which are replete with opportunity. The scope of opportunities across the continent is wide and varied. In Algeria, as my noble friend Lord Risby said, there are opportunities right across the board in infrastructure, healthcare, education, agriculture, retail and the defence and security sectors. Algeria now has domestic reserves of nearly $160 billion, and it continues to press ahead with its impressive development plan, in which it will be spending $262 billion, so it is replete with opportunity.
My view is that, over the next 25 to 30 years, it is very likely that most of Africa will take off and light up. There will be a huge amount of growth. The truth is that we do not and cannot know precisely in which parts and when that will happen. Given that our resources in terms of government support for trade are necessarily limited, we need to be prepared to support development wherever it is. We must accept, as the noble Lord, Lord Mendelsohn, did, in his typically thoughtful and constructive contribution, that we need to be prepared for the long term, and not be left behind, not to look opportunistic, late to the fair, when opportunities open up. We need to have built the relationships beforehand.
One of the ways we will do that is by appointing more trade envoys to cover much more of Africa. Envoys are a really good way to build long-term relationships with continuity and longevity. Last week, during the visit of President Sisi of Egypt, I was delighted to announce that Jeffrey Donaldson, a Member of the other place, has agreed to become the trade envoy for Egypt.
How do we do that? We need to mobilise the whole of government. As I said in my maiden speech in this House, it struck me when I took on this role that too much of the burden of supporting business and exports from government was falling on UKTI alone. That cannot be right: we need to mobilise the whole of government behind that effort. Abroad, in our posts overseas, the substantial network of the Foreign Office and the Department for International Development is, rightly, increasingly being used to support British businesses in Africa under the joint Africa framework.
UKTI, DfID and the FCO work together as one to push for improvements to the business environment, which are beneficial in themselves to promote development in those markets, and to bring opportunities to the attention of business. This is relevant to the point made by the noble Earl, Lord Sandwich, in his important contribution. It is important to stress that there is no conflict between the role of DfID in promoting home-grown, private sector-led growth in those less well developed countries, with a relentless focus on reducing poverty, and our broader aim of increasing trade and investment in countries that we support with unprecedentedly generous levels of development aid. I am grateful to the right reverend Prelate the Bishop of Southwark for his generous acknowledgement of the scale of that aid. The Conservative Party was committed in its manifesto in 2010 to be the most significant country to meet its UN commitment to spend 0.7% of GDP on aid, and the coalition Government implemented it, at a time of great financial stringency, as he will recall. We should also accept that that brings a great deal of good will in its train.
There is much we can do: lobbying in Ghana for greater transparency in the oil and gas sector; in Mauritius, helping to influence the Government to lift a travel ban; and enabling Nigerian students to come to Middlesex University. This is just the start of what we can achieve on behalf of British businesses. DfID’s support to help the east African skills base has helped to make the oil and gas projects there more competitive in what is a highly competitive world market for hydrocarbons.
As several noble Lords said, the key to economic success is to have stable and secure markets, which is why the whole-of-government approach to supporting our businesses makes such sense. African markets can access a number of UKTI programmes which can help. The High Value Opportunities programme, which several noble Lords mentioned, provides industry-specialist support to help root out opportunity overseas and communicate market entry routes. I stress that it is available to SMEs, as well as big businesses. It is very important that when we support businesses to bid for those opportunities, we do whatever we can to encourage them to bring supply chain from the UK in their train. That is an important part of building our exports.
UKTI’s aid-funded business team works closely with agencies such as the World Bank and the ADB to make sure that British businesses know about and can access the opportunities from the programmes which emerge from those bodies. A recent mission to Uganda and Tanzania focused on that.
My noble friend Lord Sheikh and others asked about ministerial support for outward and inward trade missions. We should do more of this. Trade envoys can play a very important part, especially in those markets which, in the nature of things, will not receive many ministerial visits. However, it should not just be Ministers such as myself. Sector Ministers and FCO geographic Ministers should be taking business delegations with them, and there is no reason why Ministers in DfID, when they visit countries that we are supporting, should not do so. We should be doing more of that, with more focused support. I want to ensure that, as we reconfigure the headquarters of UKTI, we strengthen the support for all that outward activity.
Much is being done and much more can and should be done. UK Export Finance plays an important role here. It offers some degree of cover in most countries across Africa, but we need to do more to raise awareness of what is on offer. We do not always do enough on that.
Trade policy is important to open up opportunities. I shall attend the World Trade Organization meeting in Nairobi in December. We hope to conclude the Doha development round. We are not optimistic that there will be a huge breakthrough, but we acknowledge the concerns raised by the noble Lord, Lord Chidgey. Much more can be done. The noble Lord, Lord Alton, referred to the involvement of China. We can work alongside China on some of those opportunities. I do not wholly sign up to everything that China has done in Africa but there are lessons for us there for the future.
On the Commonwealth, again I wish the noble and learned Baroness, Lady Scotland, well in her endeavour to be the next Secretary-General. We underestimate the strength of the Commonwealth as a network for business. With the advantages we have in this country of the language and time zone we should make more of it.
On visas, we take the points made by my noble friend Lord Sheikh very seriously. There will always be a tension there but we need to make this work better to increase the ease of travel in the ways to which he referred.
Finally, at the beginning of this week we launched our Exporting is GREAT campaign, which encourages particularly SMEs to get stuck in to export. It is not as difficult as they are sometimes made to feel and we can give them much more support, not just from government but by developing interesting, innovative and practical programmes of support to enable them to get over those hurdles. I am grateful to all noble Lords for the seriousness with which they approached this important debate. We will take on board the concerns, ideas and suggestions made.