Africa: Commercial Opportunities and Exports

Lord Popat Excerpts

Thursday 12th September 2024 Grand Committee

Asked by

[Lord Popat]

To ask His Majesty’s Government what steps they are taking to (1) raise awareness among United Kingdom businesses of commercial opportunities in African markets, and (2) support United Kingdom exports to Africa.

[Lord Popat (Con)]

My Lords, I declare my recent interest, having served as the Prime Minister’s trade envoy to Uganda, Rwanda and the DRC until the election. I am glad to have secured this debate.

Despite some progress, there is still a long way to go to change the narrative on Africa. Our exports to Africa were more than 30% not long ago; today, they are less than 3%. We need to see Africa not as a charity but as a place of opportunity. Politicians and diplomats believe in soft power and diplomacy; coming from a business background, I believe in hard cash.

Despite what some may say, the UK has much to offer the world in many countries, particularly in Africa, as a key trading partner. We still face a significant challenge with our balance of trade. In 2023, our trade deficit was £33 billion—a trend that has persisted for the past four decades. This means we do not have enough exports to pay for imports. The Prime Minister’s long-term goal must be to fix the UK’s current account deficit.

We need access to foreign markets, particularly in Africa. Several car manufacturers have already left the UK due to significant challenges in sourcing batteries, which are critical to electric vehicle production. The uncertainty in supply chains has made the UK less competitive. The shortage of essential materials such as cobalt, much of which come from the DRC, has further strained the UK’s car manufacturers. If we do not secure reliable supply chains for these materials, we will see a further exodus in the car industry. The UK missed the boat in the first wave of electric battery revolution, so we now need to catch up. India, the US, China and Russia all have regular African summits to work on how they can embrace the opportunities that exist. It is a great shame that the last African summit had to be cancelled; I hope that the new Government will put it back on the agenda.

When I first joined the House of Lords, I set up a committee to see what we could do to help our SMEs to export more. Given the vital role that SMEs play in our economy, it is crucial that we support their growth and global expansion efforts. SMEs accounted for 61% of UK employment in 2022, yet only 10% of them export, compared to 30% for the Germans. History teaches us that, if we neglect our own industries, we are at the mercy of global rivals. I welcome the export champions scheme and the King’s award for exports—I declare my interest as somebody who was on the judging panel—and, most importantly, I welcome the UK Export Finance business plan for the next five years, which gives priority to supporting SMEs. Access to finance equals access to growth.

As someone who was born in Africa, I must admit a bias, but I firmly believe that, post Brexit, building stronger trade and diplomatic ties with Africa should be Britain’s top priority in terms of securing our nation’s prosperity. By establishing a programme of trade envoys in 2016—I am glad that many ex-envoys are speaking here today—we recognised the need to restore our old trading relationship and forge new ones. The UK must build on its historic ties, particularly with Commonwealth countries in Africa. We need action on the ground. “Global Britain” is a powerful concept, but it must be more than a slogan; it requires meaningful engagement with emerging markets. The trade envoy programme was a valuable initiative that opened doors for UK companies to export and invest more: we were the marketeers and sales-people for UK plc.

As a former trade envoy to Uganda, Rwanda and the DRC, I want to share some personal experiences to illustrate the impact of the trade envoy programme. I took the Arsenal football team to Rwanda—despite being a Tottenham supporter—and that was worth £30 million a year. The Rwandan Government have doubled their tourism. We supported the sale of two Airbus aircraft to RwandAir with finance from UK Export Finance, and flights now operate seven days a week between our two great countries—London to Kigali. We used to fly to most African cities. British Airways has stopped flying to places such as Entebbe, Dar es Salaam, Lusaka, Blantyre and Freetown. We need to engage with them and build bridges with those African cities.

In January this year, I spearheaded the first ever UK-Rwanda business forum in Kigali, which brought together over 900 delegates from more than 40 countries. We are in discussions about a major development project in Rwanda to build accommodation for 11,000 students and a 600-bed hospital, financed by UK Export Finance.

In Uganda, we are nearing the completion of an international airport worth £280 million—a contract given to a British company. We have facilitated the sale of two Airbus aircraft to the Ugandan Government, and we will soon see direct flights between London and Entebbe. The Gridworks project—which I saw yesterday—in partnership with BII is worth more than £1 billion over the next five years.

The DRC is a country that not many of us talk about in government, but it has enormous potential and can become the beating heart of Africa. It is one of the wealthiest countries globally in terms of natural resources, with $30 trillion-worth of minerals, including 70% of the world’s cobalt. Other nations such as China, India and the US, and the EU, have already signed deals with the DRC, while we are still working on a memorandum of understanding. We must expedite this process; I urge the Minister to look into this as a matter of urgency.

In April, I led a large trade delegation of 26 companies to the DRC, resulting in significant agreements. The DRC Government signed three agreements with UK companies, including a £142 million deal with Westminster Group for airport security and a $215 million agricultural public/private partnership. Global Gases Group also signed a $100 million MoU to invest in medical oxygen and LPG.

I have been working with UK Export Finance to encourage it to review its approach to the DRC, noting the clear demand for its services. In the meantime, I have supported a private investor, Gemcorp, in making up to £500 million available for projects in the DRC. I am glad that its Finance Minister was here in this very building to sign that deal. The Congolese have a clear will and are anxious to work with the UK. The President has been here three times in the past six years, which shows how anxious they are to work and trade with us.

Africa is changing, and I hope we can wake up to what Africa is today. We need to move away from thinking we know best and feeling we need to step in to help. We do not want Africa to be on the menu; we would rather see it at the table with us. When Africa prospers, we prosper.

To conclude, I want to share a story. Three young men started a business delivering parcels door to door in an old Plymouth Duster with unmatched doors. They were Adrian Dalsey, Larry Hillblom and Robert Lynn. Those surnames made a company called DHL. Fast forward 55 years, DHL now has 250 proprietary planes, 32,000 vehicles, 550,000 employees and a presence in almost every country on the earth. Its revenue for 2019 was a whopping €65 billion. The moral of the story is: never give up; we can make it happen. I urge the Minister to make it happen and to show the political will to trade and invest in Africa.