Exports to Africa
(3 years ago)
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Lord Popat
To ask Her Majesty’s Government what steps they are taking (1) to raise awareness among United Kingdom businesses of commercial opportunities in African markets, and (2) to support UK exports to Africa.
Lord Popat (Con)
My Lords, I declare my interest as the Prime Minister’s envoy to Uganda, Rwanda and the Democratic Republic of Congo, a role that neatly brings together my main political interests: UK SMEs and Africa. Being African-born, I hope noble Lords will forgive me if I am slightly biased, but I believe that building stronger trade and diplomatic links with Africa post Brexit should be Britain’s first priority to secure our nation’s prosperity and economic future.
Brexit offers us a once-in-a-generation opportunity to reshape our global posture, to shift our focus away from Europe and back to Africa and to rebuild the ties with, and re-establish a strong presence in, the booming economies of Africa. To put the scale of opportunity into context, Africa’s 54 countries cover a land mass of 30 million square kilometres with very fertile soil. That is bigger than China, the US, Europe, Japan and India put together.
Today Africa accounts for 17% of the world’s population but only 3% of global GDP. However, Africa’s population is expected to double by 2050 to 2.5 billion—one-quarter of the world’s population. As Africa’s population goes up, so will demand and consumption in a range of sectors, so there is a real commercial opportunity for the future.
We in the UK look at Africa through a Band Aid lens: a poor continent characterised by poverty, civil war, corruption and dictatorships. However, we are dealing with a new Africa that is embracing free markets, democracy and trade to help drastically increase life expectancy, improve access to education and reduce poverty.
Africa’s young democracies have grown more democratic in the past 30 years. Multiparty elections are common. Opposition parties are gaining ground. Most leaders leave office peacefully rather than in coups. Politics is becoming more competitive. There is a free press and an open society. The job is far from complete and there are still major challenges to doing business in Africa but, as we assess our potential trade partners for the next few decades, it is important that we see Africa as it is now rather than how it was perceived in the 1980s.
Despite many positive sets of economic figures over the past year, our balance of payments remains poor. We have a significant trade deficit for the past four decades that currently stands at over £100 billion a year. In other words, we do not have enough exports to pay for our imports. The UK’s trading relationship with Africa is worth around £27 billion, with £18.5 billion in exports. Not long ago our share of trade was 30%; today it is less than 4%. In comparison, Chinese goods exports to Africa are eight times higher than ours, while we have dropped from being the biggest exporter to the 13th biggest. Most of our large companies left Africa in the early 1980s, including Barclays Bank, which sold its interest last year having been there for more than 100 years.
Perhaps we should see that as a glass half full. By establishing the Department for International Trade in 2016, the Government at least acknowledged a chronic weakness in our economy. The UK is the second largest investor in Africa and our historic ties, particularly with Commonwealth countries, are a major bonus, as is our soft power, with English as a business language.
Africa will continue to develop through this century, with or without our support. We need to be at the forefront of that development, with British firms playing a key role. Through increased trade levels with Africa, we can help to bring about the political and social reforms needed as a by-product, with increased prosperity and stability correlating with increased trade.
What should we be doing now? First, we need a fresh approach to Africa that builds on the deep and historic links we have with the continent and the affection that many Africans have for Britain. Secondly, we need a clear trade plan for each African country, working with our embassies and high commissions to identify the key sectors and opportunities available. Thirdly, the DIT website lists a number of schemes to help businesses, including trade show access, linking businesses with trade advisers and getting local market help. There are a lot of worthwhile ideas involved in the GREAT campaign, but are businesses aware of them? Is it really a comprehensive strategy or just a catchy slogan?
We need to market UK companies, especially SMEs, to showcase the potential Africa has. We need to be advertising regularly, holding trade shows and writing articles on the opportunities available. While the UK-Africa summit was a high-profile beginning to this initiative, there was very little follow-up. We need action on the ground. Global Britain is a fine idea, but it should not be a slogan; it requires re-engagement with emerging markets. Related to that, Ministers are moved too soon and too often. Since 2010, we have had eight Africa Ministers.
I appreciate that my noble friend the Minister will have a list of schemes designed to increase exports ready for his remarks, and I will pre-empt that slightly by saying that the Government do have some worthwhile schemes to help exporters, including UK Export Finance. However, the African Continental Free Trade Area, which came into being at the beginning of this year, will also help by creating the largest free trade area in the world, with 54 countries participating, a population of 1.3 billion and a combined GDP of $3.4 trillion. It will reduce tariffs among member countries, address regulatory measures to ensure high standards, reduce red tape and simplify customs procedures. We need to work with it and make the most of it.
We need to open up African markets and speed up trade agreements. Currently, only eight trade agreements with African countries are in place. We need to create an appetite for UK businesses to increase trade and investment on the continent.
The trade envoy programme is a welcome initiative that can open doors to building contacts. Trade envoys are de facto “Ministers” for the country they cover and can visit more frequently than actual Ministers, allowing our ambassadors to set up important meetings and to work with British businesses and organise trade delegations. However, the trade programme needs to be more entrepreneurial and dynamic if it is to reach its potential. We need to expand the trade envoy programme to cover more African countries.
Without wishing to be self-indulgent, I have witnessed first-hand the tremendous impact the trade envoy programme has had in the region I represent. Our trade with Uganda has gone up fivefold. In fact, a UK company is building an international airport in Uganda, to the tune of £270 million. Just six weeks ago, we managed to sign a trade deal between the Ugandan Government and the British company McDermott, to the tune of $1.9 billion—the largest deal we have done in Africa. Three years ago, I took a mining delegation to Rwanda to negotiate an export contract worth £30 million that involved Arsenal Football Club—despite being a Tottenham supporter.
When I met President Kagame and President Museveni in Kigali, they complained about British Airways having stopped flying to Entebbe, to which it had flown for 60 years. So, I suggested that they set up their own airlines, which they did, acquiring two Airbuses with the help of UK Export Finance, and now there is a direct flight between Kigali and London. Next month, there will be a direct flight between London and Entebbe. It will not be long before there is a direct flight between London and Kinshasa.
On the subject of Kinshasa, DRC is a country with which we have limited trade. It is the richest country on the continent: it has $30 trillion-worth of minerals. Chinese and French influence is wavering, and it is very keen to do business with our country. Some 70% of the world’s supply of cobalt and lithium, which we need for electric cars and batteries, comes from DRC. There is a new democratically elected president in DRC, President Tshisekedi, who I will receive next week for COP 26. He is coming with the largest delegation—150 people.
In conclusion, global Britain will be decided not in the Indian Ocean or the South China Sea but on the continent of Africa. Africa is on the move and poised to play a bigger role in a world that is moving out of the shadows of the past and being replaced by the light that it offers in an interconnected world.
Lord Chidgey (LD)
My Lords, I congratulate the noble Lord, Lord Popat, on securing this debate for us and on the succinct way in which he set out the key issues. I want to speak specifically about exports to Africa, with examples of where I believe we have failed in the past but where we might still succeed in future. I say this advisedly, having spent some 20 years as a chartered engineer and senior executive with a leading London firm of consulting engineers responsible for business development and project management, predominantly in Africa—a continent of more than 50 nation states, each complex, individual and, to some degree, developing. In terms of business development, each requires a blend of flexibility, determination and, above all, tenacity to succeed. Add to that another 25 years on parliamentary committees and delegations to the continent, and it brings my experience full circle.
In these situations, it is often helpful to illustrate with a few horror stories, and I make no exception. When the wind of change was still blowing itself out, I was in west Africa project managing international infrastructure projects, and it so happened that the regional Land Rover salesman was passing through on his quarterly sales tour. There he was, going from ministry to ministry, order book in hand and the pages steadily filling—no matter that nothing would be shipped or delivered for 18 months. The trick here was that the basic Land Rover had been the staple transport across the colonies since the late 1940s. Every bush garage knew how to repair them—never mind a manual—and had a scrapyard round the back where Land Rovers beyond repair were gradually being cannibalised for spare parts. But it could not and did not last. Within a decade, Toyota Land Cruisers began to dominate the streets and the market. It really was a genuine offer that you could buy two Land Cruisers for the price of one Land Rover, complete with a modern maintenance and repair service. The illustration of complacency is quite clear.
In more recent times, in the Ministry of Communications in Senegal, I came across a UK technician maintaining a huge industrial photocopier shipped in from the UK. He had been on his own for a week, progressively finding faults which required replacement parts to be airfreighted in from the UK—whereas in Addis Ababa the Ethiopian Government had adopted a new economic and development policy, leading to industrialisation, and a leading French engineering group had opened an office and distribution centre where replacement parts were available off the shelf.
Even more recently, the Institution of Mechanical Engineers here in London—of which I happen to be a graduate—launched a report on its investigation into global food waste and how to reduce it. Reporting to the United Nations, the president of the institution stated that 40% of all food produced in the world went to waste. She then set out a range of measures that could be used to mitigate this. They included investment in high-efficiency, low-cost mobile refrigeration units for road transport, enhanced warehouse and storage design and construction to minimise the impact of extremes of climate, and, most importantly, investment in low-cost transport and transport networks to get produce from farm to market. This is a good example of how science and manufacturing can work together.
Now for the good news case: the science and materials department of a UK university developed a synthetic material that expands and contracts differentially according to its proximity to water. When flexibly welded to a neutral material, it would bend and curl in the same way as a bimetallic strip bends when exposed to heat. Using this material, the scientists produced a tubular product that would curl up on itself when immersed in water, effectively sealing the tube.
In many parts of Africa, tending and irrigating cash crops is challenging. With a self-closing and opening water supply tube, it is a different picture. With a repurposed oil drum acting as a reservoir and a length of bi-expanding tube run from a saucer-shaped depression in the soil surrounding the plant, you are ready. When the saucer is empty, the tube will open, allowing water to flow and irrigate the plant. When the plant is fully watered, the saucer fills, the tube bends and the flow stops. This system is now widely used in Kenya and is sold under licensed patent all over the world. Sadly, the licence is owned by American investors, as no British funding could be found at the time.
These are just a few examples from my business development scrapbook to demonstrate the importance of flexibility, determination and tenacity not just from the exporting organisation but, most importantly, from the state agency alike.
Lord Hannan of Kingsclere (Con)
My Lords, it is a pleasure to follow the noble Lord, Lord Chidgey, who brought such technical knowledge and experience to the subject.
I begin by congratulating my noble friend Lord Popat. He put his finger on the problem, which is a perception lag. In my experience, national stereotypes can last for decades after they have ceased to apply. We still have the stereotype of Americans as rough, ponderous frontiersmen when, as we all know, they are the primmest and politest people in the West. We still have the stereotype of the militaristic German. In fact, if we want to have stereotypes about our German friends, we would be more accurate in seeing them as a nation of right-on pacifists. We still have the stereotype of terrible British food when this city offers a more diverse and subtle range of cuisines than any comparable place on the planet.
So it is with Africa. We grew up seeing images of gun-toting teenagers and flies crawling across the lips of children with swollen bellies, but look at the facts. According to the IMF, Africa will regain its growth rate of 6.5% by 2025. In the same year, the majority of African countries will qualify as middle-income states. Depending on how you measure it, six or seven of the top 10 fastest-growing economies on the planet are in Africa. Africa is the great unremarked and unreported economic success story of the 21st century, but still we have these perception lags. We still tend to think in terms of ongoing duties, almost as a paternalistic former power.
The noble Lord, Lord Popat, put his finger on the solution when he talked about the way in which air links to Entebbe have been restored. The last time I flew there, I had to go through the Netherlands because, as the noble Lord said, British Airways had withdrawn its flights. However, the cut flowers market is a big deal in Uganda, as the noble Lord knows. It seemed extraordinary to me, as well as to many Ugandans, that they had to go through the Netherlands to get to London. How wonderful that there is now a solution that was indigenous to Africa.
My only quibble with the precise wording of the debate before your Lordships is the implication that it is for the Government to make companies aware of opportunities. Governments are not terribly good at that sort of thing; they were not terribly good at installing telephones or building cars, and they are not terribly good at anticipating what business ought to be doing. What Governments, and our Government more specifically, can do in the current situation is identify specific obstacles and barriers to trade and investment and set about dismantling them.
I am thinking not just of removing tariffs, on which, to be fair, most of the heavy lifting has been done—although, as I said on a previous occasion in this Room, there is more to do. I want to look at our opportunities, particularly in services. Africa has a young and increasingly educated population. Again, the spread of educational opportunity on that continent is one of the great unremarked stories of our age. There will be generations of people coming with skills as coders, computer programmers and so on, looking for opportunities to exploit that combination of skills and cheap wage costs in a global market. As an English-speaking and common-law country, we are exceptionally well placed to benefit from links with African states that share those criteria.
Will my noble friend the Minister consider whether we can do more to move towards a template for Commonwealth trade deals with some of the countries that it might otherwise take us a little bit of time to get round to? I understand that we have bandwidth and capacity issues—we are putting together a trade policy at an extraordinary pace after 50 years of not having one—so it may be a while in the normal scheme of things until we get round to the Malawians, or whatever. But surely there are ways for us to offer not a Commonwealth trade deal, because it would not be regional or legal under WTO terms as things stand, but a template on which you can write the name of a country and say, “Here is the basic offer, and you qualify as a Commonwealth nation”. In particular, I would like to see that deal involving a lot of mutual recognition and reciprocity on services.
I finish by reiterating the point my noble friend made. Pliny was supposed to have said, quoting an ancient Greek proverb, that there is always something new—ex Africa semper aliquid novi—but the new thing now is that Africa is becoming very much like everywhere else: a middle-class consumerist society with people who want better things, just like people in North America, Europe or Asia. Therein lies an immense advantage to us as a country if only we would pursue it. We should stop thinking of Africa as an obligation and start thinking of it as an opportunity.
Lord Mancroft (Con)
My Lords, that was a tour de force from my noble friend, and I follow it with trepidation. In the run-up to this debate, I read an excellent article in the Law Society Gazette written by Andrew Skipper. In a sentence that jumped out at me, he said:
“Put simply, Africa is a continent, which for a range of geopolitical, demographic and business reasons, will be at the centre of global business in the coming years.”
That was what my noble friend was saying and what my noble friend Lord Popat said in opening this debate.
I welcome this debate and thank and congratulate my noble friend Lord Popat on securing it. I declare my interests as set out in the register, which is a rather inadequate way of saying—it is something I disapprove of anyway—that I am involved in two businesses in Africa, one in infrastructure and the other in agricultural commodities.
I put on record my appreciation for the work that my noble friend Lord Popat has done and is doing as trade envoy to Uganda and Rwanda—he has now bravely taken on the Democratic Republic of the Congo as well. I know the work that other trade envoys do across the world, which is remarkable and extremely effective, but nobody works harder or has achieved greater results than my noble friend.
I cannot emphasise enough how a proactive trade envoy such as my noble friend can make a huge difference to opening doors both in relevant countries and within the Government here in the United Kingdom. We have spent an awful lot of time in the last few years, for reasons we all know, talking about our business relationship with Europe. Of course, it is always difficult to open up business opportunities in new countries and new markets—whatever business one is in—but to open up a new market or business in a country that is far away, with a new culture, in a continent that is far away is very difficult at the best of times, so any help that the Government can give to entrepreneurs seeking to do business in Africa is very welcome. Equally, I respect and agree with what my noble friend Lord Hannan said. It is not the Government’s business to fix everything; they cannot fix everything, but where they have a diplomatic presence in countries and an ability to do so, they can open doors, and that is hugely important.
For example, yesterday, here in London, I attended an event hosted by the Ugandan High Commission and the United Kingdom High Commission in Kampala at the same time—so we were here in London and the others were in Kampala; we had them on a screen and they similarly had us on a screen—where there was a discussion with coffee producers, roasters, traders and users of coffee. We discussed all the opportunities to open the doors here in the UK for Ugandan coffee. It is a big business in Uganda; we are huge consumers of coffee in the United Kingdom. We need to put those two together, and they have not really been put together yet. The challenge we face, and we made great strides on it yesterday, is showcasing the best coffees that Uganda has to offer. The opportunities lie with large supermarkets and large roasters opening their doors to Ugandan coffee and creating their own brand of original Ugandan coffee here in England. That is a great new business for both sides. I put on record my congratulations to the Ugandan deputy high commissioner here in London, John Mugerwa, and the United Kingdom high commissioner, Kate Airey, for a really first-class example of what diplomats working for different Governments can do in opening doors and putting that sort of thing together.
There is a huge market not just for coffee but for cocoa, maize, wheat, barley, rice and soya throughout much of Africa. These commodities need to be bought and sold, both for the people of Africa and for the good business they can do. They need to be bought, sold, transported and stored. The market for these is considerably larger in Africa than in Europe. We in the United Kingdom have tremendous expertise in these areas. What plans do the Government have to encourage and facilitate British companies into that market?
My other area of interest is infrastructure. Africa has an almost insatiable and incalculable need—if those are the right words—for better infrastructure. As Africa is now so much more stable than it was, as my noble friend Lord Hannan was saying, it is a good place to do business. It needs roads, ports, airports, hospitals, schools and every other imaginable source of development. Here in the United Kingdom we have a vast pool of expertise in securing such developments, and we need to do whatever we can to help.
I ask my noble friend the Minister to tell the Grand Committee what the Government will do to help open the door for those UK businesses. UK trade export finance is absolutely excellent and has done marvellous work, but it is quite bureaucratic and slow, and it would be great if we could speed it up.
My last point is something that we talk about a lot in this House from time to time: soft power. Soft power in Africa for us means that, although at the moment we are looking at our colonial past, we need also to bear in mind that people in Africa seem, for various reasons, to have respect and affection for us. Most of them do business in law based on English law. That is a huge advantage and one we should use. I hope we will do that in future.
Viscount Waverley (CB)
My Lords, the noble Lord, Lord Popat, made an outstanding introduction. His drawing attention to the necessity for a fresh start was spot-on. I also agree with the noble Lord, Lord Mancroft, on the remarks of the noble Lord, Lord Hannan, that too much is often asked from government. What government can bring is assistance and funding. With funding, we will be in a good position.
Nothing will give more satisfaction than the words of the Chancellor noting that the UK is entering an “age of optimism” with the mantra of global Britain becoming a reality. However, we will not achieve positive results by carrying on as in days of old: relying on historical associations which, with today’s digital world and the proximity of near-neighbour markets, have not stood by for the UK to return to the fold.
It can be said that we carry certain advantages in Africa and can reasonably expect a warm welcome in traditional Anglo-African markets. We should not, however, take anything for granted. We must compete and explore new marketplaces. The bedrock to success must surely be expressed in terms of identifying and fulfilling overseas market opportunities in non-traditional locations. Africa is made up of disparate associations past—anglophone, francophone, lusophone and North African—all rich in culture and opportunity.
My contribution today attempts to move away from Commonwealth links and look to opportunities often overlooked by British interests. The francophone world is keen to extend dialogue beyond the clutches of Paris and is looking to link with the Anglo-Saxon world. At this point, I draw your Lordships’ attention to my entry in the register.
The francophone Africa region, once the preserve of France, presents increased opportunity for investors and businesses. With increased investment in infrastructure and improved business environments, it is expected to show some of the fastest regional growth rates in Africa. As an example of increased infrastructure spending and diversification, Côte d’Ivoire is projected to be the fastest-growing economy. Cameroon represents a market of more than 50 million people, making francophone Africa viewed as a must-do region. Ernst and Young has identified Côte d’Ivoire with agriculture, Senegal with tourism, and countries such as Cameroon, Gabon and the Republic of Congo as reliant on the oil and gas industry. Mining is also growing in prominence in countries such as Burkina Faso and Niger. In terms of a regional hub, I normally associate either Casablanca, Abidjan or Dakar as good places from which to make inroads into the francophone world.
Moving on, the African Continental Free Trade Area is making Africa’s Portuguese-speaking countries an attractive destination for investor interest, with incentives for investors. Angola, Cabo Verde, Guinea-Bissau, Equatorial Guinea, Mozambique and São Tomé are diverse. They have a common heritage and language, and all have close ties with Portugal and Brazil. Public-private sector partnership investments and technical assistance projects are enabling the private sector with access to finance. Although our excellent ambassador in Lisbon, Chris Sainty, will probably not thank me for saying so, Portugal could be considered a gateway.
I am conscious of not overstaying my welcome this afternoon, but I wish to conclude with a final word on north Africa. Africa is Africa and should not be defined in terms of sub-Saharan Africa, which, by definition, excludes the important markets that stretch from the Maghreb to the Arab-speaking countries of Libya and Egypt. North Africa is a region of strategic importance to us, not least as an important energy provider. The Government might wish to consider, for example, unlocking energy supplies to the UK by supporting the trans-Saharan pipeline project, long in the making but not as complicated it seems, with the strategy of just joining up the dots of the disparate pipelines that exist from, for example, Nigeria up to the Mediterranean. Many opportunities for trade exist, beyond building regional value chains but integrating them into global value chains. Regional economic integration, combined with new technologies, would bring a plethora of opportunities.
Knowing that he understands, let me share a direct thought with the Minister. I urge the establishment of a global unit in his department, should one not currently exist, to identify opportunities that transcend language and legal frameworks, possibly providing a matchmaker operation as a winning formula centred around all-important local partnership, which is essential in avoiding pitfalls and providing solutions to local complexities.
Lord Purvis of Tweed (LD)
My Lords, as always, it is a pleasure to follow the noble Lord on the areas of principle in trade with the continent, both the distinct north and south. He and the noble Lord, Lord Hannan, raised the areas of general principle in this debate, while the noble Lord, Lord Mancroft, and my noble friend Lord Chidgey raised specific examples to illustrate. I join them in congratulating the noble Lord, Lord Popat, on bringing this debate to us and introducing it so well. I also commend him for, remarkably, putting loyalty to his country before loyalty to his football club. Not all people would do that; we will make sure that we do not send Hansard to north-east London, just to save his skin.
The noble Lord showed how many areas of this are positive in looking at the growth potential within the continent as a whole; it will become a quarter of the world’s population, as he said. This is also a massive market; it will be the most innovative, youthful and potentially entrepreneurial continent on earth. Notwithstanding the tragedy of Sudan, where I was scheduled to be next Friday, the growth in the stable economies and progress of some of the SDGs, the 2063 African Union strategy and the immensely ambitious African continental free trade area all represent huge, positive opportunity. Africa is the continent of opportunity for the United Kingdom; I agree that this mindset is how we must see it.
However, analysis by Dirk Willem te Velde of the Overseas Development Institute has shown that trade with Africa is now back to 2003-05 levels. In many areas, there is a decline. Imports from Africa since 2021 have been the lowest in a decade. The impact of preference erosion with the UK global tariffs, as well as other technical barriers, is also seeing imports from Africa struggle in many sectors. To see this grow, there must be a change not only in mindset but in strategic approach. One area of concern was raised in this House by the International Relations Committee, which I served on, in its inquiry into sub-Saharan Africa. It analysed what it described as the new strategic approach. In paragraphs 82 and 83, the committee highlighted this:
“It is not a strategy, but rather some broad ideas and themes, and there is little clarity on how the Government plans to put it into action … Communication of the new ‘strategic approach’ to Africa has been confused and confusing … and has relied on jargon”.
There is a need for much more specific plans as far as taking the opportunities that exist is concerned.
The noble Lord, Lord Popat, indicated that the churn of Ministers is seen by many of our African colleagues as meaning that the UK Government are not taking this opportunity seriously. In the last 25 years, there have been 20 Ministers for Africa. The lack of consistency in the strategic approach is an issue.
However, I welcome that the UK is supporting the ODI in its work with the secretariat of the African Union on the Africa Continental Free Trade Area. It has presented an enormously challenging agenda, especially for phase two of that approach, looking at competition and digital trade. This will also lead to key strategic decisions that will have to be made on the regulation of digital trade, the design of the investment protocols, dispute mechanisms and eroding tariff barriers in intra-country trade.
I agree very strongly with the noble Lord, Lord Hannan, that the Commonwealth members have a great opportunity here with not just bringing forward Commonwealth standards and a Commonwealth approach but using a network of consensus and agreement in working with others who are working with Africa when the Africa free trade area is making some of these key strategic decisions. In many respects, in shorthand, this is about whether it is a Chinese, an American or a European approach. I think part of the mindset is saying that there will be an African approach. Therefore, we have to take that relationship very seriously, so I welcome the Government’s support for that work.
I hope that the Minister can give positive remarks on UK aid for trade. He knows that I have asked him repeatedly about us honouring our treaty obligations in the continuity trade agreements. So far, I have not been satisfied that the Government will honour commitments to support the implementation of these trade agreements.
I want to end with a request to the Minister on a proposal that has been put forward by the ODI and others, including myself as co-chair of the All-Party Parliamentary Group on Trade out of Poverty. There is a ripe opportunity for a joint UK-Africa prosperity commission. Theo Clarke MP and I met with the former Africa Minister, James Duddridge, to present a case for a UK-Africa prosperity commission, looking at trade barriers, investment opportunities and critical aspects such as the approach of credit rating companies, the UK City of London, legal frameworks and of course aid for trade support and capacity building.
To take advantage of the enormous potential there is for Africa, the UK needs a coherent and specific plan of action. I hope the Minister might find time to meet with me and colleagues to discuss the opportunities for a UK-Africa prosperity commission, focused primarily on investment, so we can start to realise the enormous potentials that the noble Lord, Lord Popat, has indicated.
Lord Grantchester (Lab)
I thank the noble Lord, Lord Popat, for bringing the important subject of trade with African countries to the attention of the House. With his Ugandan background, he has many notable insights, as Africa continues to present huge challenges to the world from both its colonial past and its own internal problems.
African countries are vastly different from each other in so many ways, including in religion, culture, terrain, economy, development and relationships. In its new status since leaving the EU, with continuity agreements, interim associations or new agreements, Britain now has eight trade agreements with Africa. On the face of it, that is perhaps not a huge number, yet trade between the UK and these countries was worth just under £17 billion in 2019, almost 49% of total African trade that year. Some £11 billion, two-thirds of that £17 billion in trade, was with South Africa, a Commonwealth partner and the UK’s biggest trading partner on the continent. However, this is but a mere 1.2% of all UK trade in 2019.
The Government’s stated ambition is for the UK to be the biggest G7 investor into Africa by 2022—not very far away—on the basis of its post-Brexit ability to agree trade deals and Britain’s historic ties with many African countries. The Government are a long way from achieving that ambition. Indeed, Africa is not just a small part of UK trade, it is a shrinking destination for the UK, with UK goods exports to the whole continent accounting for only 2.6% of total UK goods exports in 2019, down from 4.1% in 2012. Does the Minister have a clear understanding of why that has happened?
We have heard of the many challenges throughout this debate. The fading attraction of UK trade is illustrated by the fact that only 16 of Africa’s 54 heads of state or Government attended the January 2020 UK-Africa Investment Summit in London, compared with the dozens who attended the Russia-Africa Summit that year and attend China’s regular trade summits.
As my noble friend Lord Boateng, chair of the Africa Enterprise Challenge Fund, has said, we have a lot of catching up to do if we are to make the most of what is an historic opportunity to recast the relationship between Africa and the UK away from it being seen solely as a philanthropic exercise, to an opportunity that requires investment, risk-taking and support from the Government for British companies. Can the Minister say what is going to change?
The UK-Africa Investment Summit in January this year was a high-profile beginning to the effort to increase trade and investment significantly. Concerted follow-up will be required. Can the Minister set out the steps that the Government are taking in this respect? The Government provided a detailed response to your Lordships’ International Relations and Defence Committee’s report last year, recognising the challenge as
“a long-term and cross-Government endeavour.”
There were many misgivings that the Government’s merging of the Foreign and Commonwealth Office with the Department for International Development to form the FCDO could work effectively to recognise both the need for aid to encourage development and entrepreneurial relationships to encourage trade. Can the Minister say how his department, the Department for International Trade, is supporting and working with this new department to encourage as a priority throughout potential trading communities that benefits will accrue and be shared with all citizens who create wealth and not merely the top African leaders?
There is also much that Africa needs to do itself to encourage trade, especially around its governance and regulations. Infrastructure in energy, water, communications and logistics should be improved to attract investment. There is much that can be facilitated by the UK. In the final week before COP 26 in Glasgow, that transformation must also include measures to reduce carbon emissions and increase resilience and adaptation to climate change. In its report, your Lordships’ International Relations and Defence Committee also called on the Government to extend their announcement that they will no longer invest in new coal mining, by going further and committing to ceasing all promotion and credit funding of fossil fuel investments. Can the Minister clarify the Government’s position on this?
Finally, the world is still in the grip of a Covid pandemic. While the Government have, to date, committed generous funding to the global COVAX scheme, they have yet to agree the WTO approach to suspending intellectual property protections. A waiver of vaccine patents is one necessary step towards boosting the global vaccine rollout. Many of us put forward a 10-point plan to boost global vaccines to encourage production and distribution. Can the Minister say in his reply to this debate what proposals the Government are now considering to enhance the COVAX scheme?
The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)
My Lords, I thank the noble Lord, Lord Popat, for raising this important question today and giving me the opportunity to share the Government’s vital work with countries across Africa to increase trade and prosperity. I will speak later, if I may, about the excellent work that my noble friend does in this area. I also thank all noble Lords who have contributed today for the expertise that, as always, has been on display.
We already have strong trade and investment relationships with countries across the continent, but the Government are committed to going further. I very much support the pressure that noble Lords put on us in this area. I particularly share the aspiration that my noble friends Lord Popat and Lord Hannan of Kingsclere have in this area. I also absolutely recognise the point made by the noble Viscount, Lord Waverley, about the opportunities available to us in the francophone area, and I will ensure that those are followed up. The long-term opportunities that exist in Africa are truly staggering. By 2050, one in four global consumers will live in Africa and we are committed to increasing trade between the UK and Africa and between Africa and the global economy.
In January 2020, at the UK-Africa Investment Summit held in London, the Prime Minister set the ambition for the UK to become Africa’s investment partner of choice. As the UK’s Minister for Investment, I endorse that aim. The summit laid the foundation for new partnerships between UK and African nations based on trade, investment and our shared values. We have announced £6.5 billion of investment deals, with a further £8.9 billion of commitments at the time of the summit. I am pleased to say that despite the pandemic—and we do not always see this—not one of these deals has been lost since then. In January this year, as a follow-up, we held the Africa Investment Conference to mark the anniversary of that summit. The conference brought together 3,000 delegates, including over 1,000 business delegates from more than 40 African nations, and north of 1,000 business representatives from across every region and nation of the UK. I do not think there can be any better evidence of the opportunities than the fact that businesses small and large came together at that time. The noble Lord, Lord Grantchester, is of course absolutely right that these conferences mean nothing without follow-up afterwards, and part of my role is to ensure that that is done.
I hope I can reassure the noble Viscount, Lord Waverley, that the DIT’s Africa network plays a vital role in helping UK businesses seize opportunities in African markets. It supports commercial projects through its expert advice to companies and works with local officials to encourage UK investment. I believe that our newly independent trade policy is enabling us to reduce barriers to entering African markets and offers increased access to the UK. As we have heard, we have already negotiated nine trade agreements covering 16 countries across Africa that represented almost £22 billion of bilateral trade in 2019. My noble friend Lord Hannan of Kingsclere gives way to no one in his enthusiasm for using free trade agreements to bolster Commonwealth ties, and I really share his aspirations in this area. I see free trade agreements with our Commonwealth friends as a way of rejuvenating and expanding the role of the Commonwealth going forward.
Our generalised scheme of preferences is reducing tariffs on imports from developing countries, further enabling trade. A public consultation on our proposed new developing countries trading scheme—DCTS—has just closed. Policy options are being developed with the aim that the new DCTS is simpler, more generous and less bureaucratic than our current system. I share the belief of the noble Lord, Lord Purvis, in the importance of this; he has raised it with me in the past. My noble friend Lord Hannan is completely right that while removing trade barriers is of course a Government-to-Government activity, the heavy lifting in this area has to be done by the private sector and it is our job to facilitate this. The noble Lord, Lord Mancroft, is also right to stress the importance of door opening in this area.
I will quickly turn back to my noble friend Lord Popat, who is of course one of our 11 trade envoys in Africa, appointed by the Prime Minister. They enhance our trade with the continent by building on the UK’s existing relationships in these markets and joining trade missions to identify export opportunities. Nobody is more hard-working or conscientious in this area than my noble friend Lord Popat in his role as the trade envoy to Uganda and Rwanda over the past five years. Today, we heard some of the practical outcomes of his work, and I thank him for that on behalf of the Government.
Supporting economic growth in Africa is a key priority for the Government. Our vision is to do this through a trading partnership geared towards a safer, greener and healthier continent, one that is ever more resilient to shocks and stresses. We are determined to support countries across the continent to build back better from the pandemic. As I said earlier, the private sector will have a key role to play here, but the Government will be on hand to support exports. I listened very carefully to the noble Lord, Lord Chidgey, who of course spoke from real practical expertise in this area. I think I probably detected a fellow Land Rover enthusiast.
We are launching a refreshed export strategy designed with the needs of our business at its heart. We want to give businesses the flexibility, resilience and capabilities that they need to thrive in this fast-changing global environment. Picking up the point made by the noble Lord, Lord Grantchester, I will ensure that opportunities in Africa are fully taken account of in that strategy.
Demand for UK Export Finance in Africa is booming. It supported more than £2 billion-worth of projects in Africa in 2020-21, which is of course helping us to deliver on our strategy to make the UK Africa’s trading partner of choice. Of course, it is absolutely right and proper that many of these projects have a sustainable impact on the continent. For example, a UKEF loan to the Ghanaian Government will help UK-based Aqua Africa to provide clean drinking water for 225,000 people across the country. However, I will pass on my noble friend Lord Mancroft’s points about the importance of speed and the reduction of bureaucracy as far as possible in this area.
In investment, as many have retracted from Africa, I was very pleased to see that, last week, the CDC Group, our development-oriented private equity business, together with DP World, announced a £1.7 billion partnership to accelerate Africa’s trade potential and improve the economic prospects of millions of people, starting in the ports of Berbera, Dakar and Sokhna. The CDC, working together in partnership with others to bring sustainable investment opportunities to Africa, will become increasingly important. I know that my right honourable friend the Foreign Secretary shares my aspirations in this.
African Governments need to create conditions that attract the private sector and provide a stable environment for investors. We all know that a better-educated, healthier workforce will create the entrepreneurs, start-ups and consumers of tomorrow. Improving access to education and health will help us to deliver the transformational change that the African continent needs to secure growth in the future.
We have heard today many references to the African continental free trade agreement. I agree completely with the noble Lord, Lord Purvis, about the opportunities that this presents. We are pleased to be supporting the secretariat with some practical help. When it is fully implemented, this agreement stands to boost intra-Africa trade by up to one-third, establishing a common African market with a combined GDP of £2.5 trillion and a population of 1.3 billion people. I am very pleased that, in September this year, Ministers signed a memorandum of understanding with the secretariat of the ACFTA, to continue to provide support. It is a testament to our commitment to the continent that the UK is the only non-African country to have entered into such an agreement.
Throughout the G7 presidency we are working with other development finance institutions to increase ambition on investment into Africa in the post-Covid world. I have already had various approaches from sovereign wealth funds elsewhere in the world, to see whether they can join us in this important initiative.
Finally, I emphasise that all the previous steps—we often say this in our House—need to be underpinned by our concern for the environment. Investment and development finance will increasingly flow, and should flow, to those who have clear, sustainable growth plans. COP 26 will provide an opportunity to champion a green economic recovery from Covid-19 across the continent and the rest of the world.
I truly believe that this Government and British business have a significant role to play in Africa’s brighter future. I believe that it is only through trade and investment that countries across Africa can continue to grow and prosper. I am happy to meet the noble Lord, Lord Purvis, to discuss further how we can push prosperity in Africa.
I have tried to deal with as many questions as possible that were raised today. I am conscious that, as always, I have not answered all those that the noble Lord, Lord Grantchester, raised. If I may, I will write to him on some of his specific questions.
I reassure noble Lords that the UK will be on hand to support African countries every step of the way. I must thank again my noble friend Lord Popat for being such a champion for African trade and industry and for allowing us to debate this important topic today.
Viscount Waverley (CB)
My Lords, I apologise for intervening but I would like to draw attention to Emeka Anyaoku, who was Secretary-General of the Commonwealth. He emphasised the importance of a consultative process at the invitation of countries in Africa to consider, sector by sector, what can be done between those sectors in African countries and their opposite number in this country to see how we can work together. I want to put that on record.
Lord Grimstone of Boscobel (Con)
I thank the noble Viscount for that intervention. I will certainly make sure that it is recorded.