NOMPU SIZIBA: The UK’s trade commissioner to Africa is in town. This is just ahead of the UK-Africa Investment Summit taking place in London on January 20. The trade commissioner is on record as saying that Africa represents a positive opportunity for UK business, citing that eight of the fastest-growing countries in the world are on the continent. Well, to tell us more about the UK’s investment appetite for Africa, with some focus on South Africa, of course, I’m joined in the studio by the UK trade commissioner, Emma Wade-Smith. Thank you very much, Emma, for joining us.
EMMA WADE-SMITH: It’s a pleasure.
NOMPU SIZIBA: Why is it so important for the British government to encourage trade and investment relations with the African continent?
EMMA WADE-SMITH: We have been a presence in a trading investment space across Africa for many, many years, and we have lots of UK companies that are long-term investors, have long-term business partnerships here in Africa. But, of course, we want to continue to build on that success. We see the importance that trade and investment have for people’s lives. It creates and it sustains jobs, which we all know is one of the critical issues here in South Africa and across the continent at the moment and will be for many years.
But it’s also about how we support the creation of prosperity, mutual prosperity, and we recognise that investment plays a really crucial role in giving people the ability to grow their own businesses, to export themselves, wherever they are in Africa. And we are here to support that entire agenda around trade and investment, and thinking about how we work even more closely together, and in even greater volume.
NOMPU SIZIBA: Just give us some stats. Give us a sense of the kind of benefit British firms and the British public get from investments on the continent?
EMMA WADE-SMITH: Currently we’ve got over £38 billion worth of investment stock in Africa, which makes it one of the largest foreign investors here. In South Africa that amount is somewhere north of £10 billion and that’s increased in double digits, actually, over the last year, which I think is a wonderful illustration of how what we are trying to do supports the ambitions and the priorities of African governments as well. Of course we are all so familiar with the drive here in South Africa to bring more foreign investment. So I think it’s a great message that the UK is stepping into that space and looking to drive even more investment flows here.
NOMPU SIZIBA: While a number of African countries are among the top 15 fastest growing in the world, why do you think more broadly that ,of the massive foreign direct-investment global pool, you’ve noted that the continent continues to get but a small slice, about 4% of course – Africa is not one homogenous blob. But why do you think this has been the case?
EMMA WADE-SMITH: Well, when we look at how Africa is integrated into global trading and investment flows, actually that’s sort of 2, 3, 4% piece is kind of where Africa sits. And we all know that that is underperforming, if you like, in relation to the population size and, as we are saying, this growing economic flow.
And so your investment flows in strange ways, sometimes, and I think what we are seeing across Africa is increasing stability, increasing transparency, and growing confidence levels across many parts of the continent. And so investment, when it’s looking for a home, is looking for stability and transparency, and things like the ability to actually get, out of that, investment projects as and when the time is ripe.
And so there has been a lot of work, I think, on the part of all sorts of governments across the continent to increase the ease of doing business, to build a stronger, more enticing investment environment. So we are seeing that in the investment flows we’ve got. As I say, we are working really hard to further improve that environment and crucially make sure that more UK investors understand the scale and the range of opportunities that we see all across Africa.
NOMPU SIZIBA: You sort of pre-empted me, but at the upcoming UK-Africa investment summit, who is likely to be in attendance? What are the likely focus points, what sectors are looking hot on the continent, and which countries are looking conducive for investment?
EMMA WADE-SMITH: We’ve invited 21 African countries at the level of head of state or government to come to London on January 20. We’ve also invited a range of African businesses and some of the multilateral organisations that work really hard in our economic development space. The focus is very much on showcasing existing investment as a way to catalyse further investment flows. So thinking about what the UK government has been doing over the last years to support the creation of a more conducive investment environment, and indeed to put that public-sector development finance in place as a way to encourage more private-sector flows.
So we’ll be talking about the story so far, if you like, but it’s also crucially an opportunity to showcase the investment opportunities that we see. So for government and investment-promotion agencies to be there in attendance, to tell us about these amazing opportunities across so many different sectors.
And we’ll also be shining a spotlight specifically on areas like manufacturing, agriculture-tech, clean energy, and an energy transition piece which is so crucial. But also sustainable finance and infrastructure. So some of these really hot sectors. And of course the technology and the innovation underpins success in all of those areas.
NOMPU SIZIBA: Of course. President Cyril Ramaphosa is on a massive drive to get more foreign direct investment, as you alluded to, here in South Africa. In your engagements with UK business players, what do they see as opportunities and risks in this economy?
EMMA WADE-SMITH: Well, look, South Africa is our largest trading partner on the African continent by some way. And when we look at the overall trade flows in the region of some £34 billion a year, about a third of that is with South Africa alone. And then again, when we look at the investment flows from the UK into Africa again, a sizeable chunk of that comes to South Africa. And the UK continues to be the largest foreign investor here.
What investors are looking for anywhere – this is not South Africa specific – but what they are looking for is a clear understanding of what the opportunities are, a strong sense of confidence in the stability of the investment environment, whether that’s regulatory or legislative. And of course one of the major attractions for South Africa is its very strong judicial system and that rule of law, which is why it continues to be a place where UK investors want to stay.
NOMPU SIZIBA: To what extent will the UK’s withdrawal from the EU impact issues like investment in other countries?
EMMA WADE-SMITH: That’s a great question. Of course, the summit on January 20 will be taking place around 10 days before the UK leaves the European Union. There are a couple of things, really. There’s the broader context around the trading arrangements that we operate within – so the economic partnership agreements and the association agreements that the UK has been part of within the European Union. Over the last 2.5 years we’ve been working really hard with government to transition those, including with South Africa. So we’ve successfully managed to agree that, and that’s currently being ratified, hopefully in time for Brexit Day.
But what I’ve seen over the last few years is an increasing interest among the UK investment and business community to understand markets that they may not previously have thought about, and the African continent and countries like South Africa, which are so familiar to us, where we have such a strong and long tradition of knowing each other and exchanges of people and so on. These are the markets where companies are really starting to ask some questions about what these opportunities are, which is why the investment summit timing is brilliant for us, because it will be front of minds and companies will be, I hope, really keen to head the reality of what these opportunities are.
NOMPU SIZIBA: I want to go back a little to one of the questions I posed to you. I think there were four questions, and I’m not quite sure that you answered one of the questions. Which African countries are looking sexy right now, because we do hear about Rwanda; we hear about Ethiopia – where the prime minister there won a Nobel Peace prize and so on. They seem to be quite progressive, and their economies are growing nicely.
EMMA WADE-SMITH: One of the things that we see in Africa is that there are hot spots all over the place. And other parts of the world, perhaps, where you have your one leading dynamic economy but perhaps the rest of the region is not quite so exciting. Actually in Africa we see so many different markets where there are really exciting opportunities.
So I think what UK companies often look for are things like the size of the market, which is why Ethiopia for example is so exciting, with over 100 million people. Similarly for Egypt – a big economy. And we are excited and looking at the prospects to Sudan – again, a big economy, a big population. So that size of market does matter. And of course East Africa in itself is quite an exciting dynamic part of the continent, and we are seeing that with the increasing integration across that part of the world, because it helps to unite those countries.
NOMPU SIZIBA: And access to markets as well.
EMMA WADE-SMITH: As for Rwanda, I think that’s really important, where you have around 11 million people. But through the East African community companies will then have access to 450 million people. So that makes a big difference as you are looking at your scalability and your return on investment, essentially.
But there are other hotspots as well. Ghana has been your AA hotspot for us over the last few years. Angola with the reforms that we’ve seen there over recent times has been much more interesting. We’ve had some good successes over the last year there with UK companies investing in healthcare and energy reforms and that sort of thing.
NOMPU SIZIBA: Of course we remain curious about the whole Brexit story. After years of uncertainty around it in the UK, are you optimistic that it’s going to be a better year for the UK economy, especially because it did lose out on quite a lot of foreign direct investment in the area of finance, for example, which has traditionally been an area of strength for the UK?
EMMA WADE-SMITH: Well, I think what we have seen is quite different from what some of the more inflammatory predictions were when we had the referendum initially, where there were predictions of all sorts of capital flight and economic doldrums. It’s been a tough year for the UK, but I think it’s been a tough year globally with all the complexity and challenge that we are seeing. I think that the UK economy has held up extremely well in the face of so much global interest.
And I think we are very confident that the fundamentals of the UK economy remain very strong. We have some of the lowest unemployment rates we’ve ever seen since records began. Our inflation is under control. We’ve got economic growth. Of course we all want to see more, that as we are growing as an economy. And we are still seeing some strong levels of foreign direct investment into the UK because it’s that classic case that there are always opportunities. Perhaps the shape of it has changed, but the flow of it remains pretty high.
NOMPU SIZIBA: Super. Awesome talking to you, Emma. Thank you so much for your time.