Cooperation With Africa Chance For UK To Flex Trade Muscles Despite Brexit Uncertainty

Cooperation With Africa Chance for UK to Flex Trade Muscles Despite Brexit Uncertainty

Monday's unprecedented trade conference between UK and African officials has otherwise sounded a fairly optimistic note despite the ongoing process of the United Kingdom's departure from the European Union, with both experts and state leaders appearing relatively confident of strengthening ties, researchers told Sputnik

LONDON (Pakistan Point News / Sputnik - 24th January, 2020) Monday's unprecedented trade conference between UK and African officials has otherwise sounded a fairly optimistic note despite the ongoing process of the United Kingdom's departure from the European Union, with both experts and state leaders appearing relatively confident of strengthening ties, researchers told Sputnik.

The UK-Africa Investment Summit saw politicians and business leaders from 21 African states gather in London to hear UK Prime Minister Boris Johnson saying that the UK is set to become the "ultimate one-stop shop for the ambitious, growing international economy," a claim some skeptics may find hard to sustain in the face of doubts over the nation's economic future outside of the European Union.

Experts in both the UK and Africa do appear relatively confident that something positive may yet be on the horizon, although the advent of the much-touted Brexiteer notion of an economically prosperous "Global Britain" remains uncertain.

Speaking to Sputnik, Abebe Shimeles, the director of research at the Kenyan-based African Economic Research Consortium (AERC), showed that guarded optimism for UK-Africa ties could be justified following London's announcement of plans to undertake significant investments in a myriad of projects across the continent.

"Approximately 8 billion pounds [about $10.5 billion] worth of investment has been signed, of which Kenya's deal came closer to 2 billion pounds. The UK government also announced significant boost in its ODA [Official Development Assistance] for Africa. Hence, something positive definitely has come out of this summit and it is right for African leaders to feel optimistic. But the economic considerations for investment have mutual benefits on both sides," the researcher argued.

Africa has in recent years been a relatively minor area of interest for UK business, with sizable markets such as the United States generally attracting the lion's share of the UK's financial interest. As of 2018, the UK Office for National Statistics (ONS) believed the US attracted up to 31 percent of UK investment, with major European powers also being points of interest. Although the ONS maintains that Africa's share of UK foreign direct investment (FDI) rose by over 60 percent since 2008, the continent has generally been comparatively neglected when it comes to UK business, containing a mere 5 percent of foreign investments.

Africa does, however, contain four of the fastest-growing economies in the world, according to the World Bank, with Cote d'Ivoire, Ethiopia, Ghana, and Rwanda enjoying a stellar 2019. Many believe that the continent's otherwise generally modest growth rate could arguably become of greater interest to investors as the UK attempts to re-orient itself to the global market as an independent, non-EU power.

Such a scenario would necessarily depend on what post-Brexit trade structure would be ready to put into place once the transitional period of the UK officially exiting the EU single market comes to an end in December 2020. Although the UK is said to be preparing to make the most of the situation, underinvestment in Africa could remain a concern, especially given that during the transition period, UK-African trade will continue to operate under the same provisions currently negotiated under the auspices of the EU.

This is compounded by the issue of how African producers themselves may benefit from any upsurge in economic ties with the UK, given a well-established patronage system instilled over existing EU-negotiated trade deals. Much of the continent's exports to the UK remain tied to the multitude of stipulations outlined in the Economic Partnership Agreements (EPA's) negotiated with Brussels. According to Shimeles, renegotiating such agreements and providing African exporters with duty-free access to the UK market may provide a crucial boost.

"Africa could improve the scope of its trade relationship with the UK by renegotiating and targeting 100 percent DFQF [duty free, quota free] access to the UK market whilst gradually liberalizing its own markets to UK goods and protecting infant industries, unlike the limited access provided by the current EU-Africa EPAs," he said.

Professor Alex de Ruyter, the head of the Center for Brexit Studies at the UK's Birmingham City University, raised similar points. Commenting to Sputnik on Thursday, the researcher noted that trade between the UK and Africa remains relatively minor in comparison to other markets, although it remained "too early to tell" as to how this may change following Monday's conference.

"In terms of substantive economic links, these will be FDI-driven and if one considers manufacturing, the lack of UK-owned companies mitigates against UK investment of this sort. The US, China and Germany continue to be the main players in this regard, with Volkswagen, for example, having set up production in Rwanda and also investing in Ghana, so the UK has a lot of catching up to do," De Ruyter said.

The professor emphasized historical and linguistic links between the UK and Africa, which may serve as a crucial venue to strengthen economic ties, remarking the large diaspora of English-language African students obtaining a higher education, especially from Nigeria, as an example.

Another option for the UK that is not bound by EU statutes may lie in decoupling the economy from political concerns, a controversial point likely to draw the ire of the human rights community. Current provisions under existing Economic Partnership Agreements between the EU and African, Caribbean and Pacific (ACP) nations at times involve a so-called non-execution clause that permits any EU state to "suspend its trade commitments whenever it deems that any of its African partners have failed to respect human rights, democratic principles, and the rule of law, even when such actions do not directly contravene the existing Economic Partnership Agreements," Shimeles explained.

Some analysts are thus claimed to be in favor of removing said clauses from any future trade negotiation, although how that may impact the human rights landscape in Africa remains a point of concern. Johnson has already drawn criticism for his hosting this week of Egyptian President Abdel Fattah Sisi, which human rights activists believe constitutes an unwarranted prioritization of economic interests over alleged human rights abuses committed by Sisi's government.

"Although African governments believe in the principles of rule of law and good governance, such politically important issues should not be entangled in trade agreements which should be based on purely economic principle," Shimeles posited.

In any event, whereas optimism may be lukewarm when it comes to the potential of future trade relations, little is set to change as the UK edges closer towards its new "Brexit Day" of January 31. The UK will also continue to be bound by the existing framework of the EU Customs Union and Single Market until December 31.

There are concerns that such uncertainty will remain a sizable factor, not least in terms of how foreign powers may react in the event of the UK entering a period of economic downturn should it fail to reach an amicable post-2020 trade deal with the EU. For the time being, however, the UK government seems content to make the most of the situation, and if Monday's summit is any indication, African leaders are of like mind.