Exports: Africa and the Commonwealth
(6 years, 11 months ago)
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Lord Popat
To ask Her Majesty’s Government what progress they are making in increasing the export of goods and services to Africa and the Commonwealth.
Lord Popat (Con)
My Lords, it is a privilege to open today’s debate on what is my biggest political passion and a subject of great importance. I am grateful to all noble Lords who are bringing their expertise and opinions to today’s debate, and on behalf of all of us I welcome my noble friend Lady Fairhead to the Front Bench. She brings with her decades of private sector experience, as well as a background as a business ambassador for the then UKTI and her time at the BBC. She is a very welcome addition to our ministerial team, and I have no doubt that she will rise to the challenge of making her maiden speech today while responding for the first time to a debate as a Minister.
Before I delve into the economic potential of Africa and the Commonwealth, I will briefly explain why this debate is so important. Britain has run a balance of payments deficit for decades. Quite simply, we do not export enough to pay for our imports. This is neither desirable nor sustainable, yet it receives very little attention or coverage outside of your Lordships’ House. Last year, Britain voted to leave the European Union. While I supported remaining at the time, I have come to see that decision as an invaluable moment for our country; it has, I hope, allowed us to wake up and reassess many aspects of our economic set-up, including how pitiful we have become at exporting, especially exporting outside the European Union. Our EU membership has resulted in a form of paralysis; far from making us free-trading global entrepreneurs, it has—with a few exceptions—made our businesses insular, complacent and risk-averse.
Possibly the greatest victim of our insular approach has been the great continent of Africa. Only a few decades ago, Britain could boast of having 25% of total trade with Africa; now it is barely 4%. It continues even now, as we sit idly by, as our leading brands like British Airways and Barclays Bank depart Africa to focus elsewhere. We often speak of emerging markets in this House, and given that I was born in Uganda I may be biased, but I believe that Africa is the emerging continent. Democracy is becoming more firmly established across the continent; six of the 10 fastest-growing economies in the world are there; it has some of the most innovative and largest cities, 52 of which now have a population of over 1 million; and Africa is home to a third of the world’s natural resources.
Africa is a continent with a wonderfully bright future, yet we hear so little of that in Britain. Perhaps we have some form of post-colonial guilt that prevents us seeing the rising success in Africa, or perhaps the images of Band Aid are still too prevalent in our minds. Whatever the reason, not only are we failing to recognise the amazing improvements that have helped Africa develop, but we are also failing to wake up to the commercial opportunities that are there for British firms.
Last week, I led a delegation of 16 businesses in the oil and gas sector to Uganda. Two of the British companies, Fluor and CB&I, have been shortlisted to build a major oil pipeline to the value of just over $2 billion. This week, the Ugandan Parliament will approve a loan of £315 million for a British company, Colas Ltd, to build an international airport in Uganda. This is the largest UK Export Finance loan to Africa. Those examples show the tremendous opportunities there are in Africa if only we spread our wings.
I should now like to touch briefly on the Commonwealth. Again, it is clear to me in hindsight that our membership of the European Union was detrimental to the Commonwealth. This amazing group of nations that has been so brilliantly led and held together by Her Majesty the Queen has not been a central part of our foreign policy for decades. Similarly, the Commonwealth itself has lacked a real purpose. Perhaps it is difficult for those born in this country to understand quite how powerful the Commonwealth is. The sense of identity that it gives those of us born in other member nations and the strength of the ties that bind us together are things that perhaps only others can appreciate. However, the Commonwealth remains a vital part of Britain’s soft power. As my noble friend Lord Howell has often said, the Commonwealth is our family.
These unique nations are getting together in London next year for a Commonwealth Heads of Government Meeting. Our Prime Minister has spoken of Britain becoming a leading advocate for free trade, and I urge the Government and the Commonwealth Secretariat to take their lead from her comments and to put trade at the heart of next year’s proceedings. It is the one subject in which all the nations have an interest and a desire to see improvements. Another summit that revolves around human rights or the Commonwealth charter will, predictably, end up in disagreement, so let us try a different approach and make the Commonwealth of the 21st century the champion of trade. I am pleased to say that my noble friend Lord Marland made a great start earlier this year by leading a brilliant initiative—the Commonwealth Trade Ministers’ meeting. I hope that he will continue that momentum during the CHOGM meeting.
I will come in a moment to a few suggestions on what we need to do to increase our exports to Africa and the Commonwealth, but I want to make one additional Brexit-related comment. As I intimated earlier, I believe that Brexit is an opportunity to remould our economic make-up into something more global, export orientated and, ultimately, more prosperous. Making a success of Brexit is as much about realising where we have been going wrong for the past 30 years and acting on those realisations as it is about maintaining the bits of EU membership that we liked. However, there is an additional reason why I think that today’s debate is timely and it is a factor that I do not think has previously been present—namely, the political will to make Britain a nation of global entrepreneurs again. We need to put more energy into making this happen.
Previous Governments have been happy to let our global ties slip in favour of a more European and domestic-focused economy, yet this current Government seem to grasp the argument that I, and many others, have been making—that the real economic prosperity is elsewhere. The creation of the Department for International Trade is perhaps the best political decision taken in this country in decades. It is a clarion call that demands action and an acknowledgement that we need to be better at creating the right conditions and relationships to foster trade. Similarly, the appointment of trade envoys to a diverse range of markets is very welcome. Those things, together with the huge increase in support for UK Export Finance that the Chancellor set out last year, all point towards a Government who realise that we need to get back in the game.
In the brief time that I have remaining, I would like to set out a few areas where I feel that the Government need to act to improve our competitive strengths in the world market. First, we need a national mission to encourage more businesses, particularly our SMEs, to export more. We cannot rely on those companies that already export to send more abroad; we need new exporters and lots of them.
Secondly, we need to build the infrastructure so that we can deliver our goods to foreign markets. Our aviation policy is the first place to start. It is a national embarrassment that we still have no additional runways at Heathrow or Gatwick. How can we build links with emerging markets in Africa if we cannot even arrange direct flights from our capital city?
Thirdly, to help us meet this huge appetite for new infrastructure investment in the Commonwealth, I would like to propose what I have mentioned in your Lordships’ House before: the introduction of a Commonwealth bank that would demonstrate our commitment to our family, showing that Britain is still an outward-looking trading nation. We already have a World Bank and a European bank, so why not a Commonwealth bank—something like the Asian Infrastructure Investment Bank, of which Britain is a founding member? Will the Minister commit to exploring the idea before next year’s Commonwealth Heads of Government Meeting?
Finally, we need a commitment from all the main political parties to make exporting a central part of their time in government. At the moment, we are lucky to have an outstanding Secretary of State for International Trade, Dr Liam Fox, in post, who has an evangelical belief in the power and importance of trade, but too few politicians share his zeal and we cannot risk the good work of one Government or Minister being undermined by their replacements.
I end by saying that this debate speaks to the greatest challenge of our age and to what kind of country post-Brexit Britain will be. I look forward to hearing noble Lords’ contributions and, of course, the Minister’s maiden speech.
Lord Howell of Guildford (Con)
My Lords, I thank my noble friend Lord Popat for promoting this debate and for his excellent opening speech. I look forward to the maiden speech of my noble friend Lady Fairhead. She will not only be making her maiden speech but speaking for the Government, and no doubt will tell us all the things the Government will be doing in this area—which is quite a lot.
It is a lot more than in the past because, as my noble friend Lord Popat, has reminded us, next spring, in the middle of April, Her Majesty’s Government will be holding an enormous conference of the 52 nations of the Commonwealth—there may be more by then—and arranging a gathering, to which the Queen will give her welcome at Buckingham Palace and Windsor Castle, on a scale that has not been replicated for many years. There has been a vast change in the emphasis and interest of Whitehall, the Government and policy-making circles about the Commonwealth recently. To give a statistic: the Foreign and Commonwealth Office used to have a brave unit of about six to seven people looking after the Commonwealth, struggling over the years and not getting much interest, and now there are more than 60 officials working in the Cabinet Office and a special unit directly under the Prime Minister, in preparation not only for the summit but for a vast expansion of bilateral links with the Commonwealth network throughout the world.
This has all taken a long time. Twenty-two years ago some of us put forward a report in the House of Commons saying that the Commonwealth was going to be the new thing; that the general view that it was of the past was wrong; that it was full of potential; that the great new markets of the world would link up with the Commonwealth; and that we should put it at forefront of our thinking. No one took the slightest notice in those days—it fell on completely fallow ground—and the media were deeply uninterested. The late 1990s was a low point in interest in the Commonwealth.
Why has it changed, as it has, in the past year or two? Obviously the Brexit story has wakened a lot of minds to the potential of the Commonwealth and the realisation that it is where the great new markets will lie. Also, the simple fact is that trade with the Commonwealth over the past 20 or 30 years, particularly with Africa, has been rather small. It was falling from the much higher levels of the post-war years to very low levels—and small trade means small interest. The statistics are rather minimal: 9% or 10% of our total trade was with the Commonwealth, and considerably less with Africa.
My message this evening is simply: do not look at the trade statistics, look at the trends. The trends are moving very fast indeed and unless we keep up with them, we will find ourselves badly wrong-footed. The trends point strongly all the way to the Government’s correctness in being more interested by the day in the Commonwealth network and in seeing the Commonwealth as part of our UK policy in the future rather than as a sideshow.
Why? There are six reasons. First, the Commonwealth turns out to be, in this age of connectivity, a gigantic transmission engine of our soft power—which is considerable, which we have not applied nearly effectively enough and which we can now deploy much more effectively.
Secondly, there is the Commonwealth network—and it is a network. It is not a matter of bilateral links between Britain and 52 countries but a network between 52 countries, which adds up to about 1,376 different network connections. It is a gateway to the new markets of Asia and Africa and to the supply chains that have now developed in the digital age. These are completely different from the trade patterns of even 20 years ago. They wind through Africa, Latin America and Asia; we are a part of them and Africa is increasingly becoming a part.
Thirdly, the trend is towards services. We live in a gigantic service economy. Knowledge and data transmission products dominate world trade, earning, according to McKinsey, more resources and returns than physical trade by containers, railways and so on. There is a huge change there. What is the best transmission mechanism for services? The English language is a wonderful incentive and a fertile ground for expansion of services, and that is what we will see not only in Africa but in other parts of the Commonwealth as well. That is where our service trade will prosper most.
Fourthly, there is its connectivity. Contrary to the mythology of Africa—that it is backward, moving slowly and so on—it is alive with developments in mobile technology. Kenya is one of the most advanced countries in the world in that, as is South Africa. The mobile telephone, the iPad and the world wide web have brought about a total transformation of the African economies. Our supplies of equipment, knowledge, communication and technology are very important and growing more so in that area. We will do increasingly well the more we concentrate on it.
Fifthly, there is the China factor. This does not much feature in a lot of the briefing I have seen for this debate, but everyone is interested in trade with China. China is deeply involved in almost every economy in Africa and we have to work alongside China and, in many cases, have a triangular relationship with it when developing joint projects in a way that we would never have dreamed of doing in the past. This is the new pattern of the future. China and to some extent India are both deeply involved in Africa, so we have to be involved with China and India to be effectively involved in Africa.
Sixthly, the simple fact is that Africa is expanding. It is heading for a population of 400 million people by 2025 or 2030, so it is a colossal new market and one in which we would be very foolish to be running behind; we have to run ahead. We have this marvellous instrument of the Commonwealth network, which, although neglected for years, we can now pick up and use to connect with the 19 African countries that are members of the Commonwealth and, of course, their neighbours, two or three of which are looking over the wall into Rwanda and other successful economies and saying, “Why can we not join the club as well?”.
I shall say a final word in my eight minutes on the scene in Zimbabwe. It is a gigantic country that is miserably run down and has been misruled over the years. Nevertheless, the nation has maintained real educational excellence. How the Zimbabweans have done it amid all that deprivation I do not know, but it is an amazing achievement. The Zimbabweans are the best educated people in Africa, and that is where we can help. In due course, when things settle down, and if they go the right way with democracy developing in the country, I should like to see Zimbabwe apply to rejoin the Commonwealth, of which it was once a member. I hope that it does so when the time is ripe. In the meantime, if we really want to help—not to interfere but to help—it will be through educational support, technology, research and the soft power developments, on which we can do an enormous amount. In that way we can help this great country to return to the prosperity it deserves and which it can certainly achieve. This is a fascinating scene and it is one more area where we need to be ahead of the curve, rather than behind it. We should not look at the statistics of the past, which are miserable, but at the trends of the future, which are extremely exciting.
Viscount Waverley (CB)
My Lords, I offer a warm welcome to the Minister and should let her know that we are here to help—although on occasion it might not seem so. I congratulate, too, the noble Lord, Lord Popat, on securing this debate. One of the great joys in life is waking up to an African dawn.
Notwithstanding the continued march of globalism, cross-border global trade remains plagued by multiple barriers. These impede economic development in emerging economies, and particularly in small and medium-sized enterprises which take disproportionately little in world trade. The challenge has to be to address the factors that inhibit or prevent SMEs from exporting. A number of overarching principles ought to be considered central to increasing cross-border trade. These include targeting policy, especially towards SMEs and emerging markets, constructing policies in consultation with key stakeholders, growing an export culture, and raising international ambition, particularly through government briefings, school education, the improved teaching of modern languages and advisory services. I would encourage the Minister to have her team examine, if it is not already doing so, the range of existing policies and best practices from around the world, particularly on the challenge of removing informational asymmetries between market participants.
Trade is a multidimensional process that is based on four primary pillars: logistics, commerce, finance and insurance. But there is little linking within global value chains. More importantly, while the world is digitising many of its processes, this is being done in piecemeal fashion. Much of the progress to date has been between business and consumers, with relatively little from business to business. The core element, logistics, is the weakest link. The logistics industry as a whole is generally fragmented and inefficient. While some individual companies’ logistics are digitised—for example, the likes of FedEx and DHL—this has generally been done only vertically within each large company or has been limited to specific tiers within a supply chain. A horizontally integrated world trade digital economy platform would bring considerable benefits.
The digitisation and integration of these four elements, underpinned by a multidimensional platform, would bring efficiency gains, substantial reductions in the cost of trade and an expansion in the volume of world trade. The economic, social and developmental benefits globally, in particular for SMEs in emerging economies, would be significant. Such a platform would also include the de-risking of the business process, the improved provision of trade finance and insurance, the creation of new jobs, increased cargo security, reduced fraud and tax evasion, including VAT, expedited disaster relief responses and increased post-harvest yield and strengthened contaminated food containment. This would offer increased buying power in middle and lower-income countries, which could then buy our high-value goods and services.
I have been briefed on the technology of the public/private partnership Global Coalition of Efficient Logistics, GCEL, which has already been proved in practice. The first pilot test involving complex supply chains was across the US/Canada border, one of the world’s busiest land borders. The first benchmark trade lane is in the process of being deployed between China, Japan and Indonesia, at the request of their Governments. In addition, Asia-Pacific Economic Cooperation leaders have recently signed a memorandum of understanding for GCEL to digitise the operation of ports throughout the APEC region.
This trade digital economy platform technology could be an additional way to cement relationships within the Commonwealth and pan-Africa. The upcoming CHOGM, which we all look forward to—we wish the Government the best and welcome all our friends from around the world—could afford an opportunity for the UK to introduce a pioneering initiative of substance as a partner nation. I have no doubt that many small nations would take an interest.
Being innovative and achieving more with less is key to strengthening the UK’s position in tomorrow’s world. The UK is enviably well placed to spearhead and pioneer global development of the new digital economy, with our core skills and qualities of IT, innovation, finance, insurance, an educated workforce, a stable population, and the rule of law. However, we need to get a move on in readiness for the challenges and opportunities that will shortly be upon us.
Lord Risby (Con)
My Lords, I thank my noble friend Lord Popat for so effectively introducing the debate this evening. It is so timely. As we leave the EU, it is absolutely necessary that we forge new relationships with countries abroad. My noble friend is, like me, one of the Prime Minister’s trade envoys. He brings immense experience of the real world of business that is so valued in his role.
It is also a profound pleasure to welcome my noble friend the Minister to the Front Bench. She brings to your Lordships’ House immense professional experience. We greatly look forward to her contributions to our debates and discussions, born of her considerable professional experience, and, of course, to her maiden speech this evening.
There are 28 Prime Minister’s trade envoys across the party divides and in both Houses of Parliament. Indeed, it is an honour and privilege to be one of them, in my case in Africa, specifically Algeria. In the five years I have undertaken this role I have seen a much greater drive to make our exports more coherent and efficient, but, as my noble friend Lord Popat observed, we continue to run a trade imbalance.
In trying to remedy this, and simply as an example of real life, I will touch on our commercial activities in Algeria. Very well-known energy-related companies have been operating there for years, such as BP and Petrofac. Of BP’s five major international projects, two are in Algeria. In addition, there is at hand and on offer British experience on renewables and our unique experience in the North Sea. But the dramatic fall in the price of petrol and oil was a wake-up call for Algeria. This is now a reason for it to want to diversify its economy. Indeed, that is exactly the advice the IMF gave it: to increase fiscal revenues from non-hydrocarbon sources.
There is one area of our national life where we are simply the world’s best. No country—this applies to a number of African countries—can fully realise its potential without a fully functioning financial sector. In October, the Lord Mayor of London generously threw open Mansion House to welcome the Algerian Minister of Finance and his highly professional team to a conference identifying key areas for financial innovation and reform. Specific visits were made to the London Stock Exchange, with its excellent outreach programme, Lloyd’s and Tech City. As a result, three weeks later, we together in Algiers identified key areas such as stock exchange development, Islamic finance, which is of growing importance, and regulatory reform proposals. That was a very important moment in our exemplary bilateral relationship. No other country in Europe can offer what we do in this key area for any country that wishes to develop and have a more sophisticated economic base.
Another area where we can offer the highest-quality guidance and state-of-the-art technology is the defence sector. I thank the DSO for its drive and skill, which I saw in action recently when 20 British companies engaged with their Algerian counterparts. So many countries, not least in Africa, realistically face threats from terrorism and cyberwarfare, and they often have porous borders. I see all the time outstanding companies, such as Rolls-Royce and BAE Systems, offering the highest-quality solutions to those challenges, as do so many smaller, specialised companies. The expansion of UK Export Finance is welcome and has enhanced our capacity to provide financial support. I applaud the Secretary of State for advancing so dynamically the interests of small and medium-sized companies. Our start-up rate, particularly in digital and communications technology, is outstanding. In this country, we have developed fiscal and employment incentives and know-how we can readily share with business partners abroad. Tech City is a shining example to the world; it is open and welcoming.
However, it is worth making some other observations. In our efforts to promote British goods and services, we need to reflect on the additional pressure that it is putting on our embassies abroad. As the Prime Minister’s trade envoy, I see what it adds to the embassies’ workload. There is a debate to be had about the size and scope of our overseas aid budget, but I point out the disproportionality of our commitment to foreign aid relative to the funding and proper staffing of our embassies, which respond magnificently in my experience, despite the far more comprehensive funding of embassies and trade personnel by our trade rivals.
In addition, over the years our visa-granting system has become centralised. For Africa, it is in Johannesburg, with much reduced flexibility being given to our ambassadors. This has led to excruciating and sometimes embarrassing delays in granting visas, if at all, to key individuals who are important to us in promoting trade and in political partnerships. This issue needs to be revisited.
Penultimately, I pay fulsome tribute to my noble friend Lord Howell, who has unrivalled understanding of the world at large and who so effectively champions the cause of the Commonwealth and its potential. There are many countries, such as Algeria, that would like to have associate status—something I have raised with the Secretary-General of the Commonwealth—which would add to the force and influence of the Commonwealth, which is a compelling international asset for all its members.
I also applaud the significant energy and efforts of my noble friend Lord Marland. All African countries have enormous young populations who easily grasp modern technologies. We can and should do more to assist in training programmes and in encouraging the right fiscal framework to stimulate new business activity. We have the major asset of the English language—the language of modern-day expression and communication.
With the excellent back-up I have received from DIT and the Foreign Office, the brilliance of UK goods and services is now becoming much more recognised. The opportunities for us in Africa are enormous, and I am proud that we are increasingly seizing the opportunity to engage and encourage British businesses to exploit the considerable market opportunities there.
Lord Taylor of Warwick (Non-Afl)
My Lords, I too thank the noble Lord, Lord Popat, for securing this timely debate. I warmly welcome the Minister to her post and I am confident that the House will benefit greatly from her skills.
In 1974 a choir of schoolchildren sang a song called “Join Together” at the Commonwealth Games. The song became popular all over the world for its powerful lyrics. Noble Lords may be relieved to hear that I will not attempt to sing the song—I can sing it if you wish. No, perhaps not, but the chorus went:
And people, black and white, will come
from all parts of the world …
We’ll get to know them well
And hope that in the future
Our relationships will tell
This 1970s song was full of excitement and expectation that the bond expressed by the Commonwealth Games would be not only in sports but in other relationships, such as trade. Nearly 45 years later, the sad truth is that that has not happened. We as a nation have been distracted by the dazzling headlights of the European Union. Leaving the EU through Brexit gives us a real opportunity to expand our trading policy and rekindle our relationships with other nations of the Commonwealth. This is essential because there are compelling facts about the Commonwealth that are worth emphasising. Trade in goods within the Commonwealth is now worth about £250 billion each year to its members and is projected to be worth nearly £1 trillion by 2020. However, according to the latest available figures, only 9% of total UK exports go to the Commonwealth, compared to 44% to the EU. The EU also accounts for 53% of UK imports, compared to a miserly 8% from the Commonwealth. More than a third of Commonwealth members are African nations, including giant economies such as South Africa and Nigeria, yet UK exports to Africa remain extremely low compared with EU trading. Exports to Germany are more than five times that of UK exports to all 18 African Commonwealth nations.
However, more than the facts, the Commonwealth is a family. It shares a number of benefits, such as the English language, the rule of law, education, parliamentary democracy and Queen Elizabeth as sovereign. With such poor trading figures, is this how we treat family? Surely not. My father came to Britain in the late 1940s after serving as a sergeant in the British Eighth Army in the Second World War. As a Jamaican, he was a member of the Commonwealth and in coming to England he did not see himself as travelling to foreign parts but coming home to the motherland. From the Caribbean, his first stop was LA. That sounds glamorous, but LA was in fact lower Acton in west London. Eventually, he found his paradise: a bedsit room off the Paradise ring road near the gasworks in Birmingham. His big break came when he was signed to play professional cricket for Warwickshire. He was used to tropical rainstorms interrupting play, but on his debut for the county he had the experience of playing cricket during snowfall, which he had never seen before. Despite the shock of his hypothermia and mild frostbite this was the beginning of a very happy 20-year career with the club. His story, and that of many immigrants to Britain from the rest of the Commonwealth, builds upon that concept of family, which we have to keep emphasising.
In Britain, as in other Commonwealth countries, Christian and other faith communities are networks of leadership and expertise. I have been involved with several of them for some decades, but I have yet to see a true partnership between government and the Commonwealth faith groups in addressing the vital issue of trade. In Britain alone there are more than 5,000 black-majority churches. Black churches attract thousands of people to each service, week by week. Those who go to these churches are mainly from Africa and the Caribbean. I have had the honour of being a keynote speaker at many of these churches, including at a major congress in Lagos, Nigeria. The audience present was more than one million people and many more watching on cable television. The vice-president of Nigeria is a member of that Church, so just imagine the leadership potential. Just over a year ago it made me an elder of its worldwide network. Some of the young leaders of that Church have been trained through the Warwick Leadership Academy, which I started some years ago. Many of the members of these faith groups are highly skilled professionals. They are part of a wider Commonwealth diaspora, living and working in Britain, and have been waiting in the wings for too long to help with issues such as trade. Will the Minister please indicate whether the Government have a strategy to embrace the untapped contribution of Commonwealth faith groups?
The issue of identity and belonging to the Commonwealth family is vital but it needs a fresh vision. There are opportunities. I certainly agree with the noble Lord, Lord Popat, that there should be a Commonwealth bank. We have a World Bank and a European bank, so why not a Commonwealth bank? Why not a Commonwealth university to further promote education across a region where almost half of the people are under 25? This is especially relevant on the day that the Government launched their industrial strategy, which will require a highly skilled workforce, including those travelling here from abroad. In this context, why not a Commonwealth passport? The Government’s news release today was somewhat overshadowed by the announcement of an engagement between a young couple I believe named Harry and Meghan from Kensington. I am delighted that Prince Harry is following my example in marrying a beautiful and brilliant American lady, as I did with Lady Taylor. Having worked for the BBC for some years, I have seen from the inside the role that the media play. The European Union has its own newspaper and the Euronews TV channel, so why not a Commonwealth newspaper and a Commonwealth TV channel? Those outlets would be powerful tools to strengthen the ties within the Commonwealth.
We all recognise the visionary leadership of Nelson Mandela. When Mr Mandela was President of South Africa, he came to London and I was privileged to have lunch with him. We discussed at length the concept of the united states of Africa. There are 18 African nations in the Commonwealth but the UK does not have trade envoys for 10 of them; nor are there any for the entire Caribbean Commonwealth region. This is not right, in my view, bearing in mind the UK’s strong ties with the Caribbean. I had the honour some years ago of being invited to open the Jamaican expo at Olympia with the Jamaican high commissioner. My theme that day was that Jamaica is open for business, and it still is.
We are all children of the Commonwealth. We may have come over in different ships but we are all in the same boat now. For too long trade with Africa and the Commonwealth has been overshadowed by our focus on the European Union. Brexit will not end but mend our trading links, by strengthening them around the world. Our trade with Africa and the Commonwealth has to be turned from lacklustre to robust. We are a great trading nation but we can be even greater. It is not too late to be what we might have been.
Lord Sheikh (Con)
My Lords, I congratulate my noble friend Lord Popat on securing this debate and on his excellent speech. I also welcome my noble friend the Minister to her new role on the Front Bench.
I was born and brought up in east Africa. I am a strong supporter of the Commonwealth and the African countries. I have visited a number of countries overseas and know their ambassadors and high commissioners in London. I have also met members of their diaspora in the United Kingdom.
I have spoken in your Lordships’ House several times previously on various aspects of trade with the Commonwealth and the African countries. Today, I will talk specifically about the Islamic finance market in the United Kingdom and the opportunities to promote this in the Commonwealth and the African countries.
I declare an interest as the co-chair of the All-Party Parliamentary Group on Islamic Finance. My background is in financial services and I have a long and strong connection with the City of London. In fact, my full title is Baron Sheikh, of Cornhill in the City of London. The APPG is a robust body and enjoys strong cross-party support in both Houses of Parliament.
The UK has the largest Islamic finance industry outside the Muslim world. We have five fully sharia-compliant licensed banks and 20 banks offering Islamic finance services. We were the first western nation to secure a sovereign sukuk. The net assets of Islamic funds in the UK are $728 million, and 65 sukuks issued at $48 billion have been listed on the London Stock Exchange.
The global market for Islamic financial assets grew by 7% last year and it stood at $2.3 trillion at the end of December 2016. With global Muslim population numbers expected to rise from 1.6 billion in 2010 to 2.8 billion in 2050, the demand for Islamic finance products and instruments will indeed continue to grow.
Islamic finance is also an attractive proposition for non-Muslim consumers who wish to have a more ethical form of finance. Although penetration of the industry as a whole is low, the levels of public awareness and understanding of Islamic financial products and services are increasing. I believe that there are still considerable opportunities to develop and grow Islamic finance in Muslim and non-Muslim countries, particularly across Africa and the Commonwealth.
The APPG on Islamic Finance aims to promote the understanding and development of Islamic finance in the UK as well as in overseas countries. The UK has been providing Islamic financial services for more than 40 years, while government policy over the last decade has created a fiscal and regulatory framework that encourages the growth of Islamic finance.
Services in the UK are offered by financial intermediaries, asset managers, insurance providers and more than 30 international law, accountancy and consultancy firms. A number of them attended the stakeholders meeting that I will refer to later. The UK is the leading centre of Islamic finance education training, with four professional institutions and nearly 70 universities and business schools offering Islamic finance courses and degrees.
The APPG believes that, by harnessing our status as the leading western hub, Islamic finance can offer a great way to build new relationships and access new overseas markets. This is particularly important post Brexit. As the global market for Islamic finance expands, UK organisations and institutions are well placed to help develop, support and optimise Islamic finance frameworks within the emerging sectoral markets where there is growing domestic demand.
This very point was made at the dinner that the APPG recently hosted in London for 30 guests. They represented around 16 countries and were visiting London for the Global Islamic Finance and Investment Group, which is an important platform to discuss the global opportunities and barriers facing Islamic finance. We can certainly play a role in this regard.
Last week, the APPG held its inaugural stakeholders meeting, which was attended by 30 Islamic finance practitioners. The discussion addressed the very matter of exporting our Islamic finance capability, and there was a desire among the stakeholders to be more involved in overseas activities. I believe the time is now right to better understand the global demand and develop a UK proposition that meets this need.
DfID can play a greater role in achieving this objective. I had a meeting with DfID about three weeks ago to discuss the matter, and we were pleased that DfID attended last week’s stakeholders meeting. It has a growing interest in Islamic finance from a financial inclusion and development perspective. We welcomed DfID’s suggestion of working with the APPG and the stakeholders to develop export opportunities for the UK Islamic finance sector.
In conclusion, I believe that our domestic capabilities, coupled with the growing demand for Islamic finance in Africa and Commonwealth countries, present a great opportunity for the UK to export its expertise in this area. I request that the Government, regulators and our Islamic finance industry work together to showcase our capability in Islamic finance at a global level.
What are my noble friend’s views on the export of Islamic finance activities, and would she would be willing to work with the APPG and the stakeholders to promote these activities?
Lord Bilimoria (CB)
My Lords, the EU as a bloc is the UK’s largest trading partner by far. In 2016, it accounted for 43% of UK exports of goods and services and 54% of imports. Among individual countries, the United States is of course by far the biggest trading partner, with 18% of the total, and Germany comes second, with £49 billion. Ten of the UK’s top 25 export markets in 2016 were European Union member states, as were 13 of the top 25 countries from which the UK imports. Trade with China is growing, as it is with India, while the Commonwealth accounts for just 10% of the UK’s trade.
The elephant in the room in this whole debate is Brexit, which causes huge uncertainty. There is absolutely no expectation that there will be ready-to-sign deals on the table by March 2019. The devil is in the detail, and we are in dreamland if we think that it is going to happen. I thank the noble Lord, Lord Popat, for initiating the debate and congratulate him on the wonderful work that he does as our envoy. Look at what he has achieved in Uganda, leading the delegation just now and securing $2 billion-worth of deals and $350 million for the new airport. I also welcome the noble Baroness, Lady Fairhead, whom I have known for many years, and wish her all the very best in her extremely important role for our country.
Comments have been made that we have ignored the Commonwealth in the past and will now be able to go and trade with it in the future. Well, the only Commonwealth country to enjoy a free trade agreement with the EU so far is South Africa. However, there are other free trade agreements between the EU and 32 Commonwealth countries waiting to be adopted. Various claims have been made about partners in the Commonwealth. The continent of Africa is home to the largest number of Commonwealth members, so the noble Lord, Lord Popat, is right to initiate this debate. There are all sorts of deals and special relationships between the EU and the African, Caribbean and Pacific group of states, the ACP. There are deals known as economic partnership agreements, or EPAs, while there are others that make use of unilateral duty-free access to the EU market under a scheme called Everything but Arms.
All this is the reality, as opposed to any British allegiance to Commonwealth countries. On leaving the EU, the UK will cease to be party to EU trade agreements, and third countries will lose this access to the UK. Trade with the UK accounts for only a small proportion of total African goods exports. Let us guess the figure—3.6%. We have negotiations coming up that will require 500 to 750 experienced negotiators. Could the Minister tell me how many negotiators have been employed so far?
What is certain is that, following Brexit—this is a point that is missed—we will lose our influence in the world, and that will be important. The weakening of the pound affects countries that export to us. Everyone says that it is great for British exports, but what about African countries exporting to us? India is the most effective Commonwealth country, and it is potentially forgoing close to $1.4 billion out of its exports and remittances received from the UK. The UK is the fifth-largest economy in the world, so this could have a huge impact on us.
Most Commonwealth nations are also members of several trading blocs involving non-Commonwealth countries, and they are all looking for greater deals with the big countries: the USA, Japan and the big bloc, the EU. If you were to ask India what is more important to it, the EU/India free trade agreement or a potential free-trade agreement with the UK—let us get real, the EU is far more important to India. Commonwealth countries include existing European Union countries, so that makes the situation even more complicated. As we have heard, the Commonwealth makes up a very small part of UK trade: 9% of total UK exports go to Commonwealth countries compared with 44% to EU countries, while 53% of the UK’s imports come from the EU but only 8% from the Commonwealth.
So we have to put all this in context. Some of the major trading partners in the Commonwealth, specifically Australia, Canada and India, are among the largest economies in the world, while a number of Asian and African countries are fast growing—so there is potential. India is of course a great country, but then the UK exported much more to Germany alone—£48.5 billion-worth in 2015—than to Australia, Canada, India, Malaysia, New Zealand and Singapore combined. South Africa is the UK’s biggest trading partner among the African Commonwealth countries but overall exports to Africa remain strikingly low. This is the reality of it all. Africa accounted for 5.1% of global GDP compared with 2.4% for the UK—UK GDP is half that of the whole continent.
Looking ahead, the export potential for Commonwealth countries is there and we could increase it. UK trade is heavily focused on these few countries—Australia, Canada, India, Singapore and South Africa —which accounted for 70% of UK exports to Commonwealth countries. With regard to trade, as I said, two Commonwealth countries being members of the EU further complicates the whole issue.
I turn to our great Trade Minister, the noble Baroness’s boss, Liam Fox. Last year he caused an absolute furore when he said:
“This country is not the free-trading nation that it once was. We have become too lazy and too fat on our successes in previous generations. What is the point of us reshaping global trade, what is the point of us going out and looking for new markets for the United Kingdom, if we don’t have the exporters to fill those markets? … We’ve got to change the culture in our country. People have got to stop thinking about exporting as an opportunity and start thinking about it as a duty—companies who could be contributing to our national prosperity but choose not to because it might be too difficult or too time-consuming, or because they can’t play golf on a Friday afternoon”.
My friend Richard Reed, a co-founder of Innocent Drinks and one of the most successful entrepreneurs in this country, said:
“It’s absolutely disgusting … He’s a representative of this country and he turns around and slags us off, calls us fat and lazy. He’s never done a day’s business in his life … How dare you talk down the country that you damaged?”.
Reed added:
“He’s a terrible, terrible voice for British business”.
Even Nicholas Soames, of his own party, said Fox needed to “keep quiet”. Chuka Umunna described the comments as a “complete disgrace”, while Vince Cable said that business was,
“handicapped by Brexit not golf clubs”.
The British Government have repeatedly promised to get immigration down to the tens of thousands, and recently the Indian high commissioner, Mr Sinha, said that a free-trade deal between the UK and India might be possible by 2030 because we need to talk about the movement of people. He said:
“I’m not talking about unfettered access or unrestricted travel, I’m talking about movement of professionals, movement of doctors, technicians, engineers. I think both sides will benefit”.
This is the key. Boris Johnson was told in no uncertain terms when he went to India that the UK would have to change its immigration rules and its attitude to students, who are still categorised as immigrants, and to their not being allowed to work after they study.
Last week Liam Fox repeated himself by saying he cannot do these free trade deals because British businesses do not want to export. How dare he insult us as businesses? Does he realise how hard it is to start and build a business and raise finance for it? I have exported for 25 years, and it is tough—but I want to export more. Who is he to say I am not exporting enough?
I conclude by saying that the UK has amazing soft power, but that is no good without the hard power. If we have defence cuts coming along, that will hamper our ability to export and trade. The work of DfID is so important. The GREAT campaign has been great: it has been a wonderful benefit to our country.
I sum up with this. Liam Fox and the Brexiteers say, “Let’s go out and go global”. The Canada-EU free trade deal has just taken eight years. What proportion is EU to Canada trade? Ten per cent. What proportion is the EU’s trade to us? Fifty per cent. If you add to that 17% for the 50 countries who have free trade agreements with the EU, and Japan, which is just signing a free trade agreement with the EU, you have 70% of our trade with and through the EU. Would you want to jeopardise that by leaving the EU to go after 30%? India has nine free trade agreements, not one with a western country.
It is madness. We have a partner in this world. This is a debate about Africa, and I conclude with the famous African saying, If you want to go fast, go alone; if you want to go far, go together.
Lord Chidgey (LD)
My Lords, I, too, congratulate the noble Lord, Lord Popat, on securing this debate and giving us the opportunity to show our experiences in trade in goods and services in Africa. The noble Lord, Lord Bilimoria, has just given us a fine example of his take on it. But it is not just about Africa; it is also about the Commonwealth. I also congratulate the House of Lords Library on the excellent briefing paper for this debate, which I note that the noble Lord dipped into readily and frequently. It provides enough facts, figures and forecasts to support a full-scale debate in the Chamber in prime time on another day.
I also congratulate the Minister, the noble Baroness, Lady Fairhead, on joining us and bringing all her knowledge and experience from her illustrious career. I think I am right in saying that as well as her work in business and finance, she is also a qualified pilot and scuba diver. That is an ideal background for the ups and downs of high office.
The continent of Africa and the Commonwealth of Nations each contain more than 50 nation states. Africa as a continent offers massive potential to develop trade across a huge spectrum of activity. In southern and northern Africa, incomes are rising, the middle classes are developing and demand for consumer-durable goods and high-quality packaged food is escalating, along with demand for efficient and reliable public services. As the noble Lord, Lord Popat, noted, the Uganda airport project is a reminder that UK construction expertise is still sought after in Africa.
We know that the total export value of Commonwealth countries’ goods and services was $3.4 trillion in 2013, that intra-Commonwealth trade is forecast to be $1 trillion by 2020 and that Commonwealth countries’ share of total exports to developing countries is 46%. The eye-catching figure is that it is 19% cheaper for Commonwealth countries to trade between each other than with other country pairs.
According to the 2015 Commonwealth Trade Review, the growing significance of developing countries in the world economy presents vast trading opportunities for all Commonwealth members. Some 25% of Commonwealth developed countries’ merchandise exports goes to developing countries, up from over 16% a decade ago. UK goods exports to the Commonwealth rose from £13 billion in 1999 to £30 billion in 2013, but fell back to £25 billion in 2015, although UK services exports to the Commonwealth almost tripled to £22 billion in 2015.
Looking further at trade between the UK and Africa, apart from between 2009 and 2011, the UK has been in trade deficit with Africa since 2004, as the noble Lord, Lord Popat, pointed out. However, the noble Lord, Lord Howell, said, “Don’t look at the figures, look at the trends”. That is very important. Services exports are tripling. The noble Lord, Lord Risby, made the point that our network of trade envoys is beginning to prove its worth.
Anyone with a decade or more of experience in project management in Africa and at board level with a leading international engineering SME practice will be pretty familiar with the realities of winning trade in goods or services from contracts overseas, as the noble Lord, Lord Bilimoria, pointed out. Ministers can agree as many trade deals as they like, but that is just the start of the process. There is a high risk at the end of the ministerial international cocktail round that too many speculative export deals will never bear fruit.
Our SMEs are now expected to be in the vanguard of securing new exports and, as the noble Baroness will know only too well, SMEs do not have the comfort of multinationals’ capacity and resources—essential cushions to the costs of export business development. As I know, they need collective, committed, sustained and expert support from government agencies to break into the highly competitive export markets that we seek. SMEs do not need accusers’ unfounded accusations that they are growing fat and lazy, presumably in readiness for deflecting blame upon them, should policies prove ill-judged.
There are specific areas that the Government have to consider, which I would be grateful if the noble Baroness could address, either tonight or perhaps in writing. The Government have been a strong advocate of the economic partnership agreements—EPAs—developed by the EU with a number of regions in the developing world. Of course, the intention to work in partnership to strengthen developing economies, improving the quality of goods and services and broadening the access to EU products in a free trade regime, is admirable. However, field studies by the Africa All-Party Parliamentary Group in the Southern African Development Community, and the discussions I held as co-chair of that group with African Finance Ministers at the African Union in Addis Ababa, revealed some worrying experiences.
Apparently, EPA deals had been struck behind closed doors by professional and highly skilled negotiators from the EU, which the best efforts of their African counterparts just could not match. There was little or no input from the Parliaments they were dealing with, and no public debate. Apparently, the conditions imposed in the EPAs were not scrutinised, and there was no analysis of the long-term impact that their restrictions would have on the economies of the countries they were dealing with.
Can the noble Baroness provide an update on the Government’s assessment of the impact of the EPAs now in place in Africa and in the Commonwealth, and how this could affect the UK’s trading position post-Brexit, now and in the long term? Reflecting on trade policy with Africa and the Commonwealth, can the Minister respond to the following major issues, or write later, as appropriate?
What are the prospects for using the alignment of certain Commonwealth countries to spur on a number of global initiatives—for example, the roles of Australia, New Zealand, Canada and the UK in promoting services liberalisation in the WTO built-in agenda? If an independent trade policy can lead to more openness to the agricultural products of developing countries, what role should the Commonwealth developing countries play in helping their developing country colleagues to overcome preference erosion and transition to new trade terms?
The Commonwealth of Nations, as a multi-tiered networks, has the potential to greatly increase trade, investment and entrepreneurial opportunity among its citizens. The modern Commonwealth network operates on three levels: a collection of member states; a set of intergovernmental institutions; and 2.3 billion Commonwealth citizens capable of building on Commonwealth strands of identity, commonalities of language, legal systems and democracy—making connections at all three levels easier between them and, if I may say so, a natural home for the United Kingdom.
Lord Mendelsohn (Lab)
My Lords, I declare an interest as the president of the Commonwealth Jewish Council, with commercial interests in Africa and the Commonwealth in gaming, natural resources, agriculture and technology. I thank the noble Lord, Lord Popat, for his excellent tour d’horizon at the start of this debate and for initiating it. He is a great advocate of the expansion of UK trade and a doughty campaigner on issues relating to Uganda. This has been an excellent debate and at one point I even thought we were going to hear the noble Lord, Lord Taylor, break into song to add melody to the words.
This debate is also notable for the Minister’s maiden speech. The noble Baroness is the first woman to hold the post of Minister in the Department for International Trade. This is a singular honour for someone with such a distinguished business career as a consultant in aerospace and in some of the UK’s great industrial champions, ICI and Pearson. Like the noble Lord, Lord Chidgey, I was interested to find that the noble Baroness is a qualified pilot and scuba diver. It came as some comfort to me to realise that her interest in “Blue Planet” owes more to David Attenborough than to travelling the world on behalf of the Conservative Party. We wish the noble Baroness very well in her task. As the noble Viscount, Lord Waverley, said, there are many here who wish only to help.
We have a new reality and are looking to significantly boost trade relations between the UK, Africa and the Commonwealth in the long term. We have to recognise that, in the short to medium term, there are as many problems as opportunities. The UK is held in high esteem across Africa and the Commonwealth for the British model of doing business: an open and dynamic method, underpinned by UK law. However, the Brexit process will take its toll and create obstacles to trade deals. The noble Lord, Lord Bilimoria, made very careful note of many of the challenges that we face. Africa is very close to us; there is an advantage in its location. For example, our country is still responsible for 40% of exports to Botswana and the Seychelles and for 20% to Gambia, Equatorial Guinea, Mauritius, Kenya and South Africa. However, our overall trade performance has not been excellent. Among the seven Commonwealth countries which the UK exports most to, we are the largest EU exporter to none. Germany exports more goods than the UK to Australia, Canada, Singapore, India, South Africa and Malaysia. Switzerland, Germany and Belgium all export more goods to India.
We have many great opportunities here. The noble Lord, Lord Risby, raised a number that were available in Algeria, not just in hydrocarbons but in financial services—a matter also raised by the noble Lord, Lord Sheikh, with the opportunities in Islamic finance. We have drifted behind and the UK’s export of goods to the Commonwealth has fallen by 16%—or £4.8 billion—compared to falls in exports to the EU of 11%. Since 2012, UK exports to African countries have fallen by 24%. Our services to the Commonwealth have plateaued since 2010. It is very important that we use this as an opportunity to redouble our efforts, because things have changed.
As the noble Lord, Lord Howell, said, the issue of China looms large. The EU in general has declined in significance as a trading partner because of the interest of China in Africa as well as much greater intra-African trade. We face remarkable competition with China’s belt and road approach. African development relies on the right infrastructure—electricity and transport—and on expansion of the internet, as penetration in Africa is quite low. Nigeria’s internet penetration is 97%, but Egypt’s is the next largest at 48% and Kenya’s is under 35%. Feature phones are common across Africa and we face a huge challenge with the Chinese devotion to getting their equipment and platforms—Alibaba, Baidu, Weibo and the others—there, as well as the China Bank. The noble Lord, Lord Howell, might be better directed to creating a triangular partnership with India into Africa than with China.
It is very important that we do what we can. SME trade is extremely important—a point also made by the noble Viscount, Lord Waverley, and the noble Lord, Lord Chidgey. We have to use the advantages that we have. This is why it has been so enormously tragic that our relationship with the Commonwealth has, in many ways, been allowed to go to rack and ruin when we had such a great opportunity. I pay tribute to the vision of the noble Lord, Lord Taylor, to the doughty campaigning on this by the noble Lord, Lord Howell, and even to the vision of the noble Lord, Lord Risby, who said that Algeria will be seeking to gain some status with the Commonwealth. It should be understood that there are many countries seeking to join the Commonwealth, because it is a different beast from what it was before. It is a free association of nations, very different from the way many people in this country conceive of it, as something to which the UK has certain rights. We do not. We have to deal with it in a very modern way. In fact, that relationship has been pioneered by the noble Lord, Lord Marland. I think that we will see some very positive developments at the Commonwealth summit as it has been approached on a reasonably surefooted basis. There are massive benefits to be gained from working with the Commonwealth, such as that of language. There is also an economically measurable advantage as there is a boost to trade and FDI for countries in the Commonwealth. However, a Commonwealth-wide agreement might be difficult. Malta and Cyprus are still in the EU and we have to handle this extremely well.
A huge number of complexities is involved in trading with Africa. The noble Lord, Lord Chidgey, raised some of those in regard to the EPA and some of the experiences which the all-party group has had, whose report I read with great interest. There is much that we can do to try to find new ways to establish our relationships there. We can look to build on our existing strengths rather than reinvent the wheel. We should take advantage of aspects of trade agreements that we are working on which are working well for African countries and their partners. A particular opportunity for us arises from the generalised system of preferences. We should try to keep this to enable African products to compete with UK and EU goods.
We should look more at how we can harmonise standards as part of our general approach to harmonising standards with the EU and the US. We should look at how we can project our soft power, how we can add to the voices developing rather interesting and useful regional trade models, and at how we can make sure that we maintain a real sense of understanding development priorities and regional integration. We should also look at other areas in which we have not been particularly successful in trade agreements, such as rules of origin and issues around transfer pricing to ensure support for regional supply chains, given that the velocity of increasing trade creates its own virtuous circle. Indeed, we should also make sure that future trade agreements are subject to democratic debate and consultation with civil society. That is important not just for development but because many of these people have a lot of valuable experience that can be of great advantage to us.
I ask the Minister to give us a sense of how we will look at these trade agreements in important priority markets. I would be very interested to hear her comments on the approach that we plan to take when dealing with South Africa. Are we looking to modify slightly the recently signed economic partnership agreement to cover a transitionary period or are we going to accept the existing EPA agreement in full? Have we taken the view that the EU negotiators have properly taken into account the interests of the UK or are we looking to negotiate a new South African/UK agreement? Would this not lead to another round of protracted negotiations which may be more complex and difficult, but does that present the greatest opportunity? Are we looking to accept the EPA but try to renegotiate agricultural access to the UK market because we might move out of the CAP regime?
It will be essential for us to understand all these things in comprehending how we are going to approach this opportunity. I would be very grateful if the Minister could give us her thoughts on that. We on these Benches feel that there is so much for us to try to achieve in a short period of time. We hope that we have the necessary resources and expertise to do so. We certainly have the good will but perhaps much more resource should be applied to our export opportunities not just around the world but in our areas of priority opportunities—namely, Africa and the Commonwealth.
The Minister of State, Department for International Trade (Baroness Fairhead) (Con) (Maiden Speech)
My Lords, it is an extraordinary honour and privilege to address your Lordships’ House. As a tomboy growing up in the north-east, I defy anyone to have predicted that I would be standing here today, and I do so with humility.
I congratulate my noble friend Lord Popat on calling this important debate and on being such a great champion of international trade. I look forward to addressing some of the challenges raised.
While spending most of my life outside politics, I have never doubted the significance and seriousness of this place. About 20 years ago, I spent a day visiting this Chamber and the committee rooms as part of the Industry and Parliament Trust. I was impressed by the quality of debate, the rigour of the analysis and the sage advice from these Benches, and that respect has never wavered.
But over the past few weeks, I confess also to being bowled over by the generosity, warmth and exceptional levels of patience shown from right across this House. I particularly thank my noble friends Lady Evans of Bowes Park, the Chief Whip, Lord Courtown, Lord Younger, Lady Sugg and Lady Neville-Rolfe, who have been a source of immense support. So too have the doorkeepers, police officers, the Clerk of the Parliaments and Black Rod, who have guided me through the mass of corridors, procedures and protocols with unfailing accuracy—and welcome smiles. Finally, I offer my special thanks to my supporters, my noble friend Lord Sherbourne and the noble Lord, Lord Burns, whose wise counsel both now and through the years has been utterly invaluable.
So why, after three decades in the private sector, do I now feel drawn to public service, and to international trade in particular? It is because I think it matters, and no more so than now. I believe that business should and can be a force for good. I have seen companies large and small bring jobs, opportunity and hope to families up and down the country. I have seen the private sector rise to the challenges on national issues, whether to support universities or to support the peace process in Northern Ireland, and I am proud to have played a small part in the Northern Ireland Challenge, a private sector initiative aimed at building economic wealth.
However, business can only succeed if government responds to its needs, provides the right environment and gives the right support. Nowhere is that more critical than in the area of international trade, and here I hope to be of some help. International trade has been one of the three defining elements in my life, alongside family and education. My parents grew up in the tenement buildings of Leith in Edinburgh; none of their predecessors had been to university, but, supported by their families, their lives were transformed by university and actuarial education and the opportunities of international business. For my part, that support of a loving family and education at Yarm grammar school, Cambridge and Harvard opened up a world of opportunities, allowing me to work for global companies in sectors as diverse as chemicals and education, financial services and aerospace.
Family remains at the heart of my life, and it certainly keeps me grounded. I remember an occasion, just after I had been promoted, when my children left a screensaver on my computer. It was a picture of a tractor on top of a telegraph pole and it read: “Just because you’re at the top doesn’t mean you’re useful!”. Such darlings. But they made an important point; we all need to stay useful.
I believe that the most successful businesses are those that focus on clear, inspiring goals with everyone working towards that end. This requires genuine collaboration, where challenge is embraced and addressed, not shied away from. This is true for government too. Our ability to drive real change depends upon collaboration—across departments, across countries, across parties—towards a shared goal, and I think that we have some today that we do share.
I turn first to Africa, a glorious, dynamic region whose workforce is predicted to exceed that of China and India by 2034, and where business spending and household consumption is growing. Yet, as many noble Lords pointed out, the UK is not taking full advantage of these huge trading opportunities. Indeed, although UK trade with Africa has doubled since 1999, trade with this great continent has decreased since its peak in 2012. There must be no shying away; we need to act.
The good news is that by focusing on Africa there are some signs of building momentum. Over the last year, UK goods exports to sub-Saharan Africa have grown. A key goal for the Department for International Trade, established just over a year ago, is to help businesses increase exports and investment. This involves firing up, galvanising and supporting the ambitions of UK companies to export more by removing barriers to trade, giving tailored support, promoting the UK’s capabilities and opening up new markets. I hope that noble Lords will be pleased to hear that those things will form the backbone of an export strategy on which I will be leading and will be asking for input from noble Lords in the new year.
The noble Viscount, Lord Waverley, called for an improvement in information and asymmetric access to information. He also talked about a multidimensional logistics platform. I want to engage with noble Lords on such areas to see how we can build that into our programme.
A number of noble Lords—notably the noble Lord, Lord Chidgey, and my noble friend Lord Popat—talked about the need to focus on SMEs. I absolutely agree. This is a national asset that we should galvanise and we are starting to do that. Seventy-nine per cent of £3 billion of UK finance has gone on SMEs. They are supported by a network of ITAs and by the GREAT.gov.uk website, where they can identify opportunities. But there is more that we can do and I look forward to working with your Lordships on that.
However, this debate is about Africa and the Commonwealth, so what does that mean in practice for Africa? I shall give your Lordships a flavour. We are being clearer about our priority sectors and markets, focusing on opportunities where UK companies have both the appetite and the capacity to compete. As my noble friend Lord Howell said, we need to look at the trend, not the statistics, and that is very important in Africa. We have doubled the funding available in most African countries through UK Export Finance to over £20 billion, and we now provide financial support in six African currencies for projects that involve UK suppliers. In Uganda, for example, UKEF has supported the construction of an international airport at Kabaale, pulling through £100 million of exports for UK businesses. Here, I pay testament to my noble friend Lord Popat, who has been utterly instrumental in championing that region.
We are also trying to improve co-ordination. One of the nine newly announced regional trade commissioners will be based in Africa, and next month we will launch the Trade Services Unit with a data hub platform as a one-stop shop for business leads and information. We have established an innovative, consortia-led approach to infrastructure projects with the Africa Infrastructure Board. It was established by the DIT Africa team and had its inaugural meeting in Johannesburg in September. Through this approach, we hope that the board will help land the biggest infrastructure deals where we have real experience on the continent, pulling through the UK supply chain.
We are also investing in critical Government- to-Government relationships, with eight ministerial visits in the last year, including those by the Secretary of State to Uganda, Ethiopia, South Africa and Mozambique. I have visited Africa many times. It is a truly great continent and I look forward with relish to making my first visit there as a Minister early next year.
These visits are augmented by the excellent work of our superb embassy staff. I noted the concern expressed by my noble friend Lord Risby about the embassy staff and their disconnection in terms of their locations. I am advised by my officials that we have over 300 visa application centres around the world and that the average processing time is less than eight days. My officials are working closely with Home Office colleagues and I will ensure that my noble friend’s comments are passed on. My noble friend Lord Risby has been an excellent trade ambassador and I commend him for what he has done in Algeria.
I shall be working closely with DfID and the FCO to help developing communities across Africa. That is why I come on to the important point about EPAs and unilateral trade preference schemes. The noble Lords, Lord Mendelsohn and Lord Chidgey, asked about this policy. We will try to roll over in the first instance all the existing ones with the intention of going further. The noble Lord, Lord Chidgey, asked some specific questions and I will write to him on those points.
The noble Lord, Lord Bilimoria, asked probing questions about the trade deals. We have working groups set up to establish these. We cannot enter into negotiations until we have left the EU but these groups will be working to build more business.
There is much more to do. At the G20 this year, my right honourable friend the Prime Minister signalled a new long-term approach to Africa. We are taking on this challenge and I expect to come back with progress at a later date.
Noble Lords also mentioned the importance of Britain harnessing the ties of the Commonwealth. As a seven year-old I remember attending the Commonwealth Games in Edinburgh. It is a true family of nations, as the noble Lord, Lord Taylor, so eloquently described. The Government hope to rekindle that shared spirit when hosting next year’s Commonwealth Heads of Government Meeting and welcoming 52 Heads of Government. I pay significant tribute to my noble friend Lord Price for his immense contribution. CHOGM is a spectacular opportunity. The first time we host the event it will have four areas of focus: trade and prosperity, sustainability, new security challenges and fairness. A Cabinet Office team is working on the actions to feed into that agenda and I would like a number of tonight’s points to be fed into it.
My remit is clear: I want to make a difference—or, to use my children’s words, to remain useful. The prosperity and stability of Africa and Commonwealth trading partners is inextricably linked to our own. We have started to see the green shoots of improvement but there is a lot to do. Now is the time to grab the initiative. We will need to work across government with businesses and trading partners. I want to harness the considerable experience and expertise in this House and would like to hold a meeting in early January to share these views with noble Lords and to take further views and suggestions. I conclude simply by saying that I very much look forward to working with you and to building on this incredibly important agenda for this country.