New UK-Africa Partnerships to Deliver More Investment, Jobs and Growth

New UK-Africa Partnerships to Deliver More Investment, Jobs and Growth

On 20 January 2020 the UK will host the UK-Africa Investment Summit in London.

Africa is home to 8 of the 15 fastest growing economies in the world. By 2050, over 2 billion people will live in Africa and 1 in 4 global consumers will be African. And yet African countries receive less than 4% of foreign direct investment.

Data from the Office of National Statistics shows UK direct investments in Africa amounted to more than £38bn in 2018. Africa’s success matters to the UK, says the UK’s Trade Commissioner to Africa Emma Wade-Smith. The type of quality investment that UK firms bring to Africa is vital to drive growth, create jobs and boost infrastructure. Investment is life-changing: it can create sustainable jobs, boost access to education, improve public services and gives young people the opportunity to shape their own futures.

The UK is already a leading investor in Africa. In 2018 alone, the UK’s development finance institution CDC made investments supporting over 370,000 jobs across Africa. Since 2002 the UK’s Private Infrastructure Development Group has invested over £1.95bn in 146 infrastructure projects across Africa. The stock of UK investment in Africa was worth £39bn in 2018.

Industry leaders working in Africa also emphasise the unique potential of the African region:

How exactly can UK investments overseas benefit British businesses?

1. Overseas investment increases the UK bank balance

In 2018, UK companies’ net earnings from their investments abroad were roughly £94bn. These profits can be brought back to the UK to benefit shareholders and the wider public through taxation.

2. Businesses that invest abroad are more productive

Evidence shows that UK companies that invest overseas become more competitive and productive. They pick up new technologies and local business know-how, which are then brought back to the UK.

3. These ideas are tried and tested: successful traders tend to also be investors

In a study of more than two thousand decision makers in businesses with turnover of more than $2m, roughly half both traded and invested, or were investigating opportunities.

With huge growth predicted in so many African markets in sectors like technology, finance, renewables and agriculture, now is the time for UK businesses to seize these opportunities. And UK businesses are already investing sustainably across Africa. Examples include Diageo with its environmentally friendly brewery in Kenya, the solar energy provider Azuri Technologies from Cambridge, and Northamptonshire-based Blue Skies Fruit which invests in fruit farming.

“In meetings with Ministers, officials and UK and African businesses which are invested across the continent, I have explained the breadth and depth of the UK’s offer,” says UK Africa Investment Summit Envoy Philip Parham. “Visits to Egypt, Tunisia, Ethiopia, Morocco and Algeria have all shown me that there is appetite for a closer partnership with the UK. We want to increase both the quantity and the quality of UK investment, and for the UK to be the investment partner of choice for African nations.”

As we wrote earlier, the AfCFTA came in to force on 30 May 2019. Aiming to create a free trade region among the African Union members, AfCFTA will become the world’s largest free movement and single-currency union. The total population of the AfCFTA union will be 1.2 billion people, and the potential market size is expected to reach $2.3 trillion.

Image: Skyline of capital city Luanda, Angola, Africa, by Fabian / Adobe Stock

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