Last week, leaders from across Africa were in London for the UK-Africa Investment Summit (UKAIS). This unique event was a chance for the UK to demonstrate why it is the investment partner of choice for African nations. Africa is home to some of the world's fastest growing economies, but the continent receives less than 4% of global foreign direct investment.
In 2018/19, trade-in good and services between the UK and Africa was worth £36bn.
(Source: Numbers for the year ending Q2 2019, ONS, UK Trade)
Our Managing Director - James Crawford attended as a board member of the Scottish Africa Business Association (SABA) who were invited to attend the UK government's flagship summit. Our attendance with SABA further showcased the value that partnership working offers to Scottish companies looking to engage and work in Africa. There were a number of key side events in which SABA were involved and also unique opportunities to meet some very senior African government and business figures.
In addition, there was a whole host of insight, data, and opinion which we have narrowed down to the following trends which are shaping opportunities in Africa:
The rate of change
The rate of change throughout Africa is fast and varied across the different countries which make up the continent. This change has few signs of slowing, with a growing and increasingly urbanised and middle-class population – creating new opportunities for investment and growth.
Africa’s individual economies still face challenges. Yet Africa’s collective GDP market value of $2.19 trillion dollars is among the world’s most rapidly growing economic regions. This acceleration is a sign of progress and significant opportunity.
Creating an enabling environment
Africa is working hard to look at the legislation, regulation, and policies needed to capitalise on the rate of change and positive momentum which exists in relation to trade.
The ‘African Continental Free Trade Area’ is a new common free trade agreement, removing tariffs to trade between African countries whereas pre-2018 the tax was placed at a higher rate to trade between African countries than outside Africa. The agreement initially requires members to remove tariffs from 90% of goods, allowing free access to commodities, goods, and services across the continent. The United Nations Economic Commission for Africa estimates that the agreement will boost intra-African trade by 52 percent by 2022.
Africa is a continent that has immense opportunities. It has a huge demographic capacity, plenty of natural resources, and untapped potential in many sectors.
Inclusive growth was mentioned throughout the conference and is termed as economic growth that is distributed fairly across society and creates opportunities for all.
Last year, Africa was home to five of the 15 fastest-growing economies in the world. Now it is home to eight, and Scottish and UK businesses can have an active role in the region’s success. The companies capitalising most on this growth provide something different to the individuals they serve and communities they operate in – they offer good jobs and prospects to individuals but they also do something good whether directly or indirectly.
Growth has been supported by reforms and improved policies helping develop economic and social conditions. A good example of this is incomes increasing by 50 percent on average in the region including in Mozambique, Angola, Rwanda, and tripling in Ethiopia.
Entrepreneurship is also seen as a positive driver of growth with Sub Saharan Africa having the highest percentage of female entrepreneurs globally.
Africa is vast and each country within it has its own drivers, key sectors, challenges and areas they want to focus on for growth.
The opportunities that exist require involvement and engagement with a range of stakeholders including governments and businesses working together to maximise success.
African delegates have been very impressed with the sheer depth and capability of businesses in Scotland and the UK. A partnership-led approach to opportunities in Africa is key to creating better harmonisation and coordination of trade.
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