Overseeing UK trade with Africa at the UK Department for International Trade, Trade Commissioner Emma Wade-Smith also follows up developments in the Egypt-UK Association Agreement designed to increase UK investment in Egypt.
She explained her department’s thinking on both in an interview with Al-Ahram Weekly.
A year-and-a-half after the UK-Africa Investment Summit, what has been achieved so far with regard to efforts to expand trade and investment in Africa?
Despite the multiple challenges that the Covid-19 pandemic has presented us with, I’ve been really pleased that all of the commercial deals we announced at the UK-Africa Investment Summit in January 2020 have continued to progress or remain in play. We announced deals of £6.5bn and secured an additional £8.9bn of commitments at the UK-AIS, all of which remain in play. In the first quarter of this year, between April and June, we have secured over £980m in new UK investment
On the first anniversary of our UK-Africa Investment Summit, we held a virtual conference that brought together over 3,000 business people from Africa and the UK. As well as hearing from successful UK investors in Africa, we celebrated over £2 billion of new investment announcements, as well as UK Export Finance (UKEF)’s largest-ever financing for an overseas infrastructure project: £1.7 billion to build the Cairo Monorail. We also welcomed Vodafone’s investment of over £380 million in Egypt last year, which will expand network capacity to meet the growing demand for reliable, high-quality voice and data services.
The last few months also witnessed sealing many investment deals by British companies. The list includes a major expansion of sugar mills by Associated British Foods in Tanzania; a new overseas hub for Coventry University in Rwanda; Ox Global developing an electric vehicle — the OX Truck — and accompanying digital ecosystem to provide affordable electric transport in Rwanda and rural Sub-Saharan communities; and a Vodafone-led international consortium winning an exclusive licence to develop Ethiopia’s telecoms infrastructure. We are seeing investment in key sectors such as infrastructure and renewable energy. Also, in 2020, the UK’s Development Finance Institution, the CDC Group, invested around £900 million in Africa.
We are also getting an increasing number of enquiries from UK companies interested in understanding the opportunities to do business in Africa, and we have an exciting programme of trade missions, supplier fairs, and webinars to bring African buyers and UK sellers together over the months ahead.
What is the potential of Africa as an investment destination for UK investors? Is there a role they can play to boost the continent’s development?
Over the next 30 years, one in four global consumers will be African. With some of the fastest-growing Internet markets in the world and fast rates of urbanisation, that’s a mouth-watering market for any company to consider. I see opportunities across multiple countries and in an ever-increasing range of industries and sectors. In recognition of the growth and diversification of economic opportunities, the UK’s Department for International Trade has increased its workforce in Africa.
The Covid-19 pandemic has accelerated the application of tech-based solutions and the growing effects of climate change has increased appetite to invest in renewable energy to power Africa’s future economic growth in a low-carbon and sustainable way. In addition, there are numerous prospects in education and skills, healthcare and life sciences, sustainable infrastructure, mining, and agriculture.
Added to this exciting prospect, we have the potential for the African Continental Free Trade Area (AfCFTA) to significantly increase intra-African flows of goods and services and, along with that, support even stronger economic growth across the continent.
Prior to the pandemic, Africa had eight of the 15 fastest-growing economies in the world. Rolling out Covid-19 vaccinations will be vital for the continent to realise its economic potential over the next few years. The UK is playing a leading role in the global campaign against Covid-19. It helped to establish the COVAX programme last year and is its fourth-biggest donor, pledging £548 million to the scheme. COVAX has so far provided 81 million Covid-19 vaccine doses to 129 of the world’s poorest countries. Ninety-six per cent of these were the Oxford-AstraZeneca vaccine, the development of which was funded by the UK.
Additionally, at the G7 Summit just a few weeks ago, the UK pledged to donate at least 100 million surplus coronavirus vaccine doses within the next year, including five million in the coming weeks. Finally, the UK has confirmed a responsive funding package of more than £700 million, including a £130 million contribution to the UN, £65 million of which is allocated to the WHO.
What are the latest updates on the UK-Egypt trade deal that came into effect in January?
The UK-Egypt Association Agreement entered into force in 2021 and supports the continuity of trade between Egypt and the UK. The agreement provides for tariff-free trade on industrial products, as well as liberalising trade in agriculture, agri-foods and fisheries, making business easier and delivering significant savings to companies in both the UK and Egypt. Our shared goal is that the agreement helps to increase UK-Egypt bilateral trade in the years ahead so that, together, we realise the full commercial potential of what both our countries have to offer.
The agreement also provides a framework for furthering trade, political, economic, social and cultural links, reflecting the breadth and depth of the relationship between our two countries.
How do you perceive the role Egypt plays in the development of Africa?
We saw during Egypt’s presidency of the African Union in 2019 this country’s commitment to Africa’s development and progress. Egypt’s location, the diversity of its economy, and its membership of multiple free-trade agreements make it a powerful contender for the coveted title of being a gateway into Africa. Egypt can also benefit enormously from the new trading environment that the AfCFTA will create, by giving Egyptian products access to markets with which they could not trade freely with previously.
Added to this, Egypt is an influential regional actor, and the UK is committed to working with Egypt as well as joining forces with civil-society partners, companies and leaders on the frontline of climate change ahead of the anticipated UN Climate Change Conference (COP26), which is scheduled in November.
With the UK-Egypt Association Agreement in force, UK businesses can base themselves in Egypt and extend their business reach across the continent. This potential makes it one of the most-promising markets for British businesses looking to trade across Africa. We are currently working with the government of Egypt to address specific market-access issues that will help companies in the health and renewables sectors to invest and operate in Egypt.
How do you see Egypt’s investment and doing-business environment?
Despite a nearly 40 per cent drop in recorded foreign direct investment (FDI) flows into Africa in 2020, Egypt remained the highest recipient of FDIs into the continent, according to the UN Conference on Trade and Development (UNCTAD). Egypt was also one of the few countries globally that recorded economic growth (about 1.5 per cent) in 2020, supporting UK-Egypt bilateral trade in 2020 worth around £2.7 billion.
This speaks to investor confidence in Egypt, including from UK companies who are some of the most important foreign investors in the country. It also reflects the positive impact of newly implemented economic reforms, which have helped to improve the business environment and stimulated economic growth and business opportunities. Although the pandemic disrupted trading activity, the swift introduction of fiscal and monetary policy measures, coupled with the International Monetary Fund (IMF) support and concessional borrowing, have helped restore confidence in Egypt.
What is the role of the UK Export Finance Agency (UKEF) in strengthening UK-Egypt trade ties?
UKEF, the UK’s world-class export credit agency, works with UK exporters and overseas buyers to find the right support to facilitate more trade. This includes attractive financing options, such as loans in Egyptian pounds and Sharia-compliant financial products.
£1 billion of UKEF financial support is available to support UK exports to Egypt.
We have a terrific example of how UKEF financial support can enable even stronger commercial links between the UK and Egypt with the recent £1.7 billion backing to supply rolling stock for the Cairo Monorail project. This is an important strategic sustainable infrastructure project for Egypt, which will increase the capacity on public transport by 40,000 passengers per hour, reducing the number of cars on the roads in one of the Africa’s most-congested cities. It also represents the largest amount of financing that UKEF has ever provided for an overseas infrastructure project.
Which sectors are expected to drive Egypt’s recovery and development over the medium and long terms?
Egypt has a diverse economy, with manufacturing, tourism, agriculture, and hydrocarbons all playing a major role. Manufacturing and agriculture are likely to be key sectors for future adaptation and to contribute to sustainable economic growth. I also see technology and clean growth featuring heavily in the future as drivers of all sectors of the economy as well as research and development.
The UK and British businesses are already global leaders in clean growth through their sustainable models, expertise, offer and product lines. As a government, we have found great support and cooperation from the authorities and businesses in Egypt, who are keen to collaborate on a growing number of areas that will facilitate a sustainable recovery from Covid-19.
The UK is also encouraging investments in Egypt’s growing renewable-energy sector. ACTIS-Lekela signed a £233.66 million agreement with the Egyptian Electricity Transmission Company for the 250 MW West Bakr Wind project in the Gulf of Suez. This project will increase Egypt’s wind energy capacity by 18 per cent and will be a key pillar of Egypt’s ambition to generate 20 per cent of its electricity from renewable energy sources by 2022.
Additionally, the UK’s development finance institution, the CDC Group, has invested £69.7 million in the Benban Solar Park, which will support the generation of 400 MW of clean energy, providing over 20 per cent of the total generating capacity.
*A version of this article appears in print in the 8 July, 2021 edition of Al-Ahram Weekly