When Britain officially decided to leave the European Union last week, its Brexit opened up a unique opportunity for African nations to flex their collective political muscles and negotiate more advantageous trade deals. The U.K. has kicked off an 11-month transition period where they will try to sign as many new trade deals as possible. African countries are a prime target and the U.K. has already announced deals worth nearly $8 billion, as the continent is home to eight of the world’s fastest-growing economies.
Why This Matters: The U.K. hopes to reverse its dwindling trade with Africa, which fell from 4.2 percent of its total trade in 2012 to just 2.0 percent or $46 billion in 2018. To put that in perspective, China’s 2018 trade with Africa was $204 billion, according to the country’s Ministry of Commerce. The U.K.’s newest deals are expected to cover 43 percent of the country’s total trade with Africa. In 2018, the U.K. exported goods worth roughly $10 billion to the continent, according to EU data.
The U.K.’s newest deals are expected to cover 43 percent of the country’s total trade with Africa
When U.K. businesses expand in Africa the continent stands to benefit greatly from the knowledge, skills and technology they have. These companies also bring money in the form of foreign direct investment. Currently, there are 112 African companies with a market capitalization of around $166 billion listed on the London Stock Exchange. This makes the U.K. the most important center for Africa’s businesses outside the continent.
South Africa, a former British colony and the U.K.’s largest African trading partner, will bear the brunt of Brexit since several companies are listed on both the Johannesburg and London stock exchanges. After South Africa, Nigeria is Britain’s second-largest African market, with Kenya coming in third.
Prior to Brexit trade between Nigeria, Africa’s largest economy, and the U.K. was worth about $7.9 billion, and was projected to reach $26.6 billion by 2020. However, Nigeria has been dealing with falling oil prices, its main source of income. Crude chemicals and allied materials make up almost 25 percent of Nigeria’s trade with Britain.
Situational Awareness: China is Africa’s top trading partner currently with deals worth well over $300 billion. It’s important to understand that any significant percentage of gains that African nations may make from a lucrative trade partnership with post-Brexit Britain, could immediately be canceled out due to their existing debt with China. While Chinese debt cannot stop Africa from forming new partnerships, it’s possible that any future deals could be less profitable.
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This article was written by the Culturebanx Team and published by CultureBanx. It is reposted here with permission. Read the original.
