Africa - The worlds next business frontier
Last week’s virtual one-day event organised by the UK Department for International Trade, brought together UK and African business and government leaders to discuss investment and partnership opportunities. Four sectors were under the spotlight: sustainable infrastructure, renewable energy, financial and professional services and agriculture & agri-tech.
Speakers included UK Prime Minister - Boris Johnson, Minister for Africa - James Duddridge, Minister for Investment - Gerry Grimstone, as well as leaders from the Africa Development Bank, Standard Bank, pharmaceuticals firm AstraZeneca and mobile operator Vodacom.
The conference follows on from last year’s successful UK-Africa Investment Summit, hosted in London by the Prime Minister, where 27 trade and investment deals worth £6.5 billion and commitments valued at £8.9 billion were announced.
UK Prime Minister - Boris Johnson commented that although “many things have changed since last year, there is one thing I can tell you that has not changed and that is my ambition for the UK to be Africa’s investment partner.”
However, the last year and its effects couldn’t have been foreseen and as a result much like the rest of the world Africa’s economy shrank (by 2.1%) in 2020 but is expected to grow by 3.4% in 2021 as the global economy recovers from the impact of the COVID-19 pandemic.
UK Minister for Investment, Gerry Grimstone, said growing investment relationships would be central in helping economies recover from the disruption caused by the pandemic “Africa’s economic potential and investment opportunities are huge, and our partnership will help ensure UK and African businesses are able to capitalise on trade and investment opportunities, now and in the future.”
Africa still possesses the same fundamentals that have driven the continent’s phenomenal growth over the last decade. The continent offers ample opportunities in terms of natural resources, innovation, and a young and rapidly urbanising population. The potential presented by the newly launched African Continental Free Trade Area will also support the continent in its development as it aims to create the largest trading bloc in the world, making Africa a prime trading partner post-Brexit.
Opportunities exist – you just have to look
Africa’s potential as a growth market for business remains both underestimated and misunderstood—as does the potential for business to play a role in solving the continent’s biggest challenges.
Ten of the fastest-growing economies are still in Africa with more than 400 companies earning annual revenues of $1 billion or more— on average, they are both faster growing and more profitable than their comparative global peers.
Now is the time to invest in Africa
More than half of global population growth between now and 2050 is projected to occur in Africa; the time to invest in that potential is now. The reality is that investing in Africa is more than a business opportunity; it’s essential for long-term development too if the continent is to meet the estimated $500 billion – $1.2 trillion annual funding gap required to implement the goals for Africa.
The 54 countries of Africa have taken the centre stage of the global investment agenda: The next Asia is Africa. Foreign direct investment and international projects in key areas such as energy, infrastructure and finance have become major driving forces behind the unparalleled growth of African markets. The booming economies of Nigeria, Kenya, Ethiopia, Angola and other nations – many of them expecting GDP growth rates in excess of 7 % per year, every year, for decades to come – offer fascinating opportunities for global business.
African Continental Free Trade Area can help deliver sustainable economic growth
The African continent is one of the most rapidly growing economies in the world. Nevertheless, total continental intra-African trade is only about 17 percent. By comparison, the vast majority of its economic trade is with countries outside the African continent. The reasons for this are numerous, such as intra-African trade barriers, customs duties, and inadequate infrastructure, which make the ease of transporting goods difficult or even impossible.
The new free trade area with a total of 1.2 billion people and 54 states on the African continent promises many economic potentials for the African countries, but also for businesses. It is a single market in which products are to be manufactured, bought and sold between African countries and customs duties are to be largely abolished to enable the free movement of goods and services.
Effective implementation of the African Continental Free Trade Area (AfCFTA) and the African Union’s transformation agenda can strengthen regional value chains, reduce vulnerability to external shocks, advance the digital transition, and build economic resilience against future crises.
In order to become more competitive worldwide in the future and to integrate into world trade in the long term, the time is right for the African continent to reposition itself and become more competitive with the launch of the free trade zone.
The untapped potential for Skills Development in Africa is clearer than ever
Africa is a continent of enormous untapped potential. Skills development and job creation will become critical for the future of the continent. If properly harnessed, this growing working-age population has the potential to drive Africa’s economic transformation.
Evidence has shown a correlation between skills, education, productivity, and economic growth and prosperity. Providing people with the necessary skills and education boosts their capacities to work and enhances their opportunities at work. The future success of any country depends ultimately on the number of persons in employment and how productive and competent they are at work.
Supporting health services
The pandemic has increased pressure on health services across Africa heightening the pressing need for effective solutions through technology, infrastructure and innovation that can speed up the way citizens can access treatment.
This focus and the learnings will be vital beyond the pandemic to bring access to healthcare services closer to patients, to improve the quality of care delivered and to widen the reach of specialist medical services across the continent.
The pandemic has been a catalyst for change in the way that governments, industry and other organisations work together to serve society. With a focus on continuing this collaborative approach will help to rebuild a future that is fair, inclusive and sustainable.
Optimism on the horizon
Covid-19 and Brexit were key issues which set the framework for discussions throughout the conference. Coronavirus has caused investment and other economic activity in Africa to falter, coupled with the UK’s exit from the European Union meaning that the UK needs to build up trade links with other partners to make up for the changing dynamics and slump in imports and exports to EU neighbours.
The UK has managed to roll over the EU’s trade deals with a number of African countries to date, accounting for around £21.4 billion ($29.2 billion) of annual trade. Arrangements with other important partners such as Algeria and Ghana remain under discussion. The UK has also adopted the EU’s generalised scheme of preferences, which gives 35 African countries reduced or zero tariffs for exports to the UK.
This year has been difficult but as Sola David-Borha, chief executive of the Africa region at Standard Bank, the continent’s largest bank put it “Africa’s growth story has been slowed by the Covid-19 pandemic but it has not been derailed”.