Following the UK-Africa Investment Summit in London on 20 January 2020, AidEx gathered perspectives from regional experts across sectors about economic development opportunities shaping the continent over the oncoming decades.
Over the next two years, £2 billion worth of investments were pledged to African businesses by the UK’s development finance institution, the CDC Group. But when China-Africa trade has been exponentially growing over the last two decades, with the UK’s annual two-way trade less than a quarter that of China’s, the west has some catching up to do.
As a negotiator newly independent of the EU, how meaningful is Britain’s promise to be Africa’s “obvious partner of choice” and will their offering be enough for a continent comprising of over half of the world’s fastest growing economies?
Stephen Chege, Chief Corporate Affairs Officer of Safaricom PLC felt the Summit was a meaningful opportunity to meet with senior government representatives and to pass on key messages about what is required to achieve desired transformations for customers and society.
Amref Health Africa, Kenya Country Director Dr Meshack Ndirangu viewed the event as symbolic of Africa’s fate as a key player in the global economy. But he argued “such conversations need to happen in Africa, with more African leaders engaged in order to be fully aligned to Africa’s development needs.”
Just 16 leaders attended the Summit in London – notably fewer than the number who attended similar recent events in Russia, Japan and China. Genevieve Leveille, Chief Executive of AgriLedger noted this implied the relevance and value of what was on the table for African nations. The UK prime minister’s pledge to overhaul the British visa system with his “people before passports rhetoric” for instance is reflective of a continued domineering, pretentious attitude which carries colonial sentiment.
Leveille believes “within the next decade visas will become a thing of the past”. People from developing countries she predicts need not emigrate to the same extent as opportunities within Africa increase and technology enables flexible work location-wise, and the opportunities to prosper as an immigrant in Europe and the US become more and more limited. “People put themselves less at risk for a “better life” in hope of their own countries improving.
Professor Carlos Lopes from The Mandela School of Public Governance at the University of Cape Town remarked on Africa’s strategic position on the map of discussions. However, he discerned:
“The bottom line will continue to be how much such well-intentioned gatherings translate into real changes in the way partners engage the continent. Almost the totality of the deals announced were related to natural resources exploration and trade. That is passé.”
In line with this thinking, Development Reimagined CEO Hannah Ryder comments on the UK’s aid, trade and investment patterns reflecting an “old picture of Africa, a picture that remains rooted in colonial and paternalistic mind-set”.
Senior Research Fellow at ODI, Dr Max Mendez-Parra reinforced summits like these are “useful and effective, but far from being sufficient”. Whilst a one-day event is no silver bullet for solving all problems he says, focus on investment was wholly positive, as Mendez-Parra places faith in how British expertise can help Africa to achieve their development objectives such as industrialisation. The real challenge he asserts is ensuring continuity of these pledges to avoid it being a “one-off media event.”
Aid vs trade
With criticism from civil society about their lack of involvement in the summit, the question of whether aid and trade can co-exist complimentarily comes to the fore. Camilla Knox-Peebles, Chief Executive of Amref Health Africa UK says it can.
“It is vital that UK aid continues to go where it’s needed most, and where it can make the most difference,” but there is a need to continue investing in Africa too she says, as “through trade and investment, the UK can support that development and ensure it’s sustainable.”
Knox-Peebles stressed the need for DFID to remain independent with its own Secretary of State in order to ensure funding continues to support frontline health workers, who bridge the gap between people and services.
Sharing this view, Oxfam’s regional team representing Horn, East and Central Africa broadly welcome the UK’s change and emphasis on investment in Africa. They said:
“Africa provides a huge opportunity for the UK to maintain its global economic standing: one in every four consumers worldwide will be African by 2050, while eight of the 15 fastest growing economies are in Africa. The best way of serving Britain’s — as well as Africa’s — interests is to ensure a healthy trade and investment relationship that helps African economies thrive. Investing in Africa is an investment in the future.”
As many African governments set investment as their top development priority, in order to avoid a mass jobs gap of 50 million by 2040, investment must be geared towards manufacturing, agro-processing, tourism and information and communication technology. Oxfam asserts those who need the most support are the small, informal businesses which are deeply linked into local economies and consequently have the most impact.
They also stress the need to develop an alternative strategy to a financially exploitative model; one that is based on the principles of cooperation, solidary, protecting human and workers’ rights, tax justice, ending gender inequality, and facilitating a just transition to a zero-carbon economy.
Is Africa the next China?
ODI’s Mendez-Parra says, “clearly Africa is at a point where China was in the 1970; it has a lot of potential”. As the continent with the youngest population this opens a huge labour force capacity. The challenge will be how to create all those jobs. “Foreign donors are coming to terms with the fact they cannot afford not to be involved with the continent”, he remarks.
Creating productive capacity goes beyond just infrastructure and requires knowledge, time and expertise – and getting investment is one of the most effective ways to develop that capacity quickly. He predicts in 40 years’ time Africa could well be an economic growth power that China is now.
There is concern amongst some such as the Kenyan academic Professor Bitange Ndemo. Was the Summit a means of “wooing” Africa post-Brexit? If so, there is a danger of negotiations favouring Britain’s benefit. He believes the current structure of FDI reliance undermines African countries’ capacity to negotiate independently and achieve a more equal trade balance where Africa is not just being exploited for its raw materials but exporting products from its developed industries. Whilst the Summit discussed initiatives like Import Promotion Service, Trade Connect, Manufacturing Africa programme and the Africa Free Trade area – Ndemo questions how these will work without proper and detailed frameworks being in place.
There is strong consensus about Africa’s bright future. Whilst the UK can be an important player despite Brexit, this will depend on how it chooses to develop its relationship with the African continent. One-way resource trading must become a balanced partnership if Africa’s productive capacity is to be fulfilled, to avoid mass job gaps and exploitation.
In terms of development aid, as we enter an era focused on trade and prosperity it will be crucial for donor’s commitment to the 0.7% not to falter or be diluted through dissolving bodies like DFID in the UK if we want to see poverty alleviation as well as economic progress, and ultimately to achieve the SDGs. For this to happen, it is imperative for foreign investments to be sustainable, transparent, ethical and accountable.