When the UK left the EU back in January 2021, it embarked on trying to establish as many quality trade deals as possible. African countries became a prime target of these trade endeavors, with the UK Prime Minister making early moves at the beginning of 2021 to establish close ties with Mozambique and Ghana. Africa has become a key growing global economy, and as the UK looks to branch out to non-EU global regions, the continent is an appealing trade partner that could help boost the UK economy and enable it to move on from the challenges caused by Brexit.
Africa Is Becoming a Major Player in the Global Economy
Over the last century, foreign direct investment in Africa has mostly been driven by the extraction and export of mineral sources such as gold and diamonds. However, since 2000, investment has shifted towards the potential that Africa’s people offer, rather than its physical exports. Long-term trends reveal that African countries have become increasingly popular as investment destinations.
Africa is currently the only region in the world with projections for strong population growth over the next century. The continent’s total population is predicted to almost quadruple, from the 1.3 billion recorded in 2020, to 4.3 billion in 2100. These predictions are part of why Africa has become a key area of interest in terms of international trade. Experts are seeing the potential in this growing and developing region, and countries around the world are trying to get in on the ground floor.
Investing More in African Countries
The UK is one of the countries that is attempting to strengthen its relationship with Africa. In January of this year, the UK hosted an African Investment Conference in a bid to retain its influence in this increasingly important economic area.
The summit aimed at promoting Britain’s investment credentials in Africa, as well as revitalizing its economic engagement in the region. In recent years, China has strengthened its foothold in Africa, often through significant levels of investment and loans. The loans offered by China are usually part of the Belt and Road Initiative, which are complex and often include terms that host governments struggle to meet. As a result, China has begun taking hold of vital infrastructure in numerous African countries.
It is thus apparent why the UK wants to counter this and strengthen its position in Africa. Mostly, UK funding in Africa is delivered by the export credit agency UK Export Finance (UKEF), which issues loans and insurance to companies wishing to export goods internationally. Currently, around 25% of UKEF’s involvement internationally is linked with projects in Africa. More support is now being given to this region by UKEF than to the Middle East and Asia.
In the coming years, it is likely that we will see the UK make more efforts to strengthen its relationship with countries in Africa. As the continent continues to grow, the way in which individual countries develop will potentially influence how the UK invests and seeks to evolve its relationship with individual African countries and the region as a whole.
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