As the UK moves away from the European Union, African Business spoke to Emma Wade-Smith – UK Trade Commissioner for Africa and the British government’s most senior trade official in Africa. She discusses with Tom Collins a variety of new possibilities for UK-Africa trade that might emerge in the wake of Brexit.
The UK’s Department of International Trade (DIT) promotes UK trade and champions free trade across the world. How do UK-Africa trade relations stand right now?
We’ve got a UK-Africa trading relationship that’s worth more than £27bn and the UK is the second-largest investor in Africa, with over £21bn of investment. From a DIT perspective, I have a team in 24 locations across Africa, and 21 countries. We focus at the moment on oil and gas, infrastructure, agricultural technology, renewable energy, and defence and security.
As the UK moves away from the EU, how do you see these relationships developing?
The decision for the UK to move away from the European Union (EU) provides an opportunity to re-engage and refresh the way we operate across Africa. There is much more we can and want to do. There’s everything from ensuring continuity in our existing trade agreements through to figuring out how we realise the full potential of those trade agreements.
The British government has been very clear that Brexit provides this opportunity for us to project a Britain that is still thinking globally and still out there in the world as champions of free trade. This is an exciting moment to explore what that means for us in Africa. There should be more opportunity as we see more British companies exploring markets outside the EU.
The government is very clear that no trading relationships should be worse off because of Brexit. We want to ensure that existing duty-free, quota-free relationships endure and are not affected by the UK’s departure from the EU, and that we secure continuity in existing trading arrangements.
We’re engaging with all countries where we have existing trade agreements, and we’re working together to ensure continuity and clarity for businesses, consumers and investors. What we are not able to do while we remain a member of the EU is to negotiate new trading arrangements, so this is a technical exercise to maintain the effect of existing agreements.
Because we’re not actually able to formally negotiate new trade agreements till we’ve left the European Union, this is not an opportunity to change the existing structures. What we are saying, though, is that after leaving the EU the UK will be able to implement an independent trade policy – this would make it possible to revisit and improve existing agreements where appropriate. We’ll be looking to see how we can create an ever-more vibrant commercial relationship between the UK and our African partners.
Whether it is DIT, or Department for International Development or the Foreign Office, we are working with African governments to see what is causing a block to further trade and investment. Is it the regulatory environment, can we use the UK’s experience to improve that? Are there legislative barriers, are there things around infrastructure that we can help improve? How do we work with African governments to enable them to build the vibrant, diverse, mature economy that they need?
So it’s not just us trying to promote UK goods and services but about how we engage and help to improve the overall business environment. Free-trade agreements are just one aspect of that.
Are there off-the-record conversations happening with potential African partners?
We aren’t allowed to talk about that future or formally negotiate new agreements until we’ve left the EU, but we do have people across the continent who are talking to people and to governments to understand blocks in the existing trading arrangements that we could look to improve upon in the future.
That’s why we’ve been having these conversations as well and we’ve got various projects and programmes that are looking to see what we can do to address some of these market access barriers in the meantime.
What is the role of the UK’s new Africa Infrastructure Board? Is this a new model in which the UK will project itself bringing together private and public and associated benefits to provide valuable knowledge transfer and expertise to the African continent?
I hope so. It’s a pilot or experiment at the moment. It came about because as I was going around the continent talking to business and governments it became really clear there was room for us to improve the way that we interacted with one another, whether that’s the UK government supporting UK companies and talking to African governments and business, and the sense that some of our competitors were better able than the UK to build a strong consortium and bid for some of the more complex infrastructure projects around the world.
As I was doing that colleagues in the UK were thinking the same way and they created the Infrastructure Exports UK board (IEUK). The Africa Infrastructure Board is modelled on that.
It’s co-chaired between the UK government and UK industry and focuses on identifying projects where we think we’ve got UK capability and how we can bring our expertise together to better promote a coherent UK offer.
There are a huge amount of untapped projects across the continent that are either waiting for a feasibility study or have bankability concerns. The idea is that we look at some of those, where we believe that we’ve got a UK offer that can make a difference.
Is it a question of financing and what can we do to bring in our UK Export Finance capability or the City of London? Or is it an expertise issue, in which case can we think up an ingenious offer between government and industry that will help to tackle that issue and enable that project to move forward.
In some cases we want to have strategic partnerships with our African host governments and be able to say, here is a set of projects that you could put together, here would be a UK offer to deliver that – not purely UK in many cases.
It’s about mobilising some of these projects to get them off of dusty shelves and get them into practicability and help promote UK capability so we’ve got good quality, needed infrastructure going in across Africa that will really help to fire up these economies to create jobs and see the growth that we want and need.
We’re also looking at whether this is a model we could achieve in other sectors, whether that is healthcare or financial and professional services.
What is the UK’s competitive advantage in Africa?
UK companies have a long history on the continent. We do our research and when we come to do busi- ness in Africa we tend to do it really well. It’s not just a question of the range of abilities we have across the UK – everything from technology and project management and financing and planning and design – we’ve also got the standards and values that we represent as UK companies. I think that is increasingly important for Africa as we look to introduce resilience and good infrastructure and solutions that will be sustainable to Africa.
We’ve got that standards and values approach, we’ve got huge innovation in the UK, so when we come we bring the latest techniques and the latest products, so we’re not trying to flog old stock. We come with huge technical capability, which stems in part from really impressive research and development capabilities and, of course, we bring some pretty impressive financing credentials too, whether that is through public-private partnerships or through being able to access venture capital and City of London capability, or it’s our export credit agency.
And British companies that are active in Africa genuinely care. They want to do good business – and that isn’t just about profit, that is about doing the right thing, and investing in the communities they are operating in.
And it’s amazing how many community support schemes are being run by British companies as a result either of their investment into Africa or their exporting relationship.
What can UK Export Finance do for Africa?
UK Export Finance is the world’s oldest export credit agency. There aren’t yet enough people who know enough about it, but where they do I think it’s proving to be really successful in supporting British companies to land deals.
In Africa we have a risk appetite of over £21bn – that’s £21bn we could be investing in Africa, that African partners can be accessing. And we have a really competitive offer there in that we have an expectation of just a minimum of 20% of UK content for any of these sorts of projects.
That is world class as an offer, and it partly demonstrates the extent to which the UK business environment is so interconnected around the world. We build these consortia and we’re fairly comfortable with having a minority stake in some of these things. I think that’s good for everybody.
In Africa we’ve got nine countries where UK Export Finance offers local-currency financing options. That means if you’re an African buyer and you’re looking at ways to bring in medical supplies and you’re looking at the UK, you can engage in that contract and secure a loan in your local currency. It’s helping to facilitate deals all across Africa. And we’re working really hard to get more financing people based on the continent, to help promote that offer.
How can African countries capture the opportunities presented as the UK seeks a new trade logic?
For Africans and Brits alike, I would say, come and talk to us. You will find us wholly receptive and keen to talk and understand, whether you’re an African buyer or whether you’re looking for investment, we want to know that so that we can promote those opportunities back into the UK business world, and similarly help to connect businesses in the UK that are looking to either establish a foothold in Africa or expand their existing business in Africa.
We operate on both sides, for supply and demand. African businesses and governments can come and talk to us. We’re in 24 locations and where we are not we do have usually a UK ambassador or high commissioner who equally would be happy to talk, so we can explain what we can offer as the UK and how we can help African governments really deliver their development goals and build their economies.
I haven’t yet come across a government that doesn’t want to create jobs. When you look at the demographics of Africa that job creation and wealth creation can be so critical for the future and trade is the only way that we’re going to really build that prosperity we want to see. So we’re poised and ready.
Over the last three months we’ve created a new structure within our team in Africa, the Trade Services Unit, to provide a single source of enquiry for any trade or investment questions to do with the UK or Africa. Through that we’re able to provide a much swifter response and more professional service and publish opportunities as we hear about them and try and connect them with our supply side.
In terms of trade, is Africa the place to go next? Absolutely. If you think about Southeast Asia 15–20 years ago and how excited everybody was, everyone should be even more excited about the opportunities in Africa.
I think people understand that and as we at the Department for International Trade move to mature our own approach to doing business and really looking to establish that longer-term strategic relationship, I think that Africa is absolutely the place we can demonstrate where this works.