Don’t wait for Brexit to be resolved, there’s much more to do now

1 May 2019
Insight
BA flight bound for Ethiopia is loaded at Stansted. Photo: David Levene/Oxfam (CC BY-NC-ND 2.0)

Brexit is dominating the policy debate in the UK, but Foreign Secretary Jeremy Hunt’s visit to Africa this week shows there’s no need to wait and see what will (or won’t) happen with the UK’s relations with the European Union (EU) to take decisive action to boost bilateral trade and investment. There are many areas where the UK has (and had) control over its trade policy.

Increase flights and transparency around airport security

For example, air transport is key for Nigerian exporters, but the Nigeria–UK Bilateral Air Services Agreement (BASA) allows for only 21 weekly flights between the two countries. With no Nigerian airlines operating services to the UK, connections are limited to three daily flights by British carriers. Flights are always heavily booked, and prices are extremely high. A new BASA that liberalises frequencies will benefit Nigerian and British travelers and exporters. The UK and each African country can work to have an adequate offer of air services between them.

Stringent British security rules ban cargo originating in ‘red-coded’ airports from being transferred to other flights at UK airports.* This prevents exporters from taking advantage of the global transport options UK hubs offer (given poor road and port infrastructure in many African countries, many exporters rely on air transport), and means a loss of business for British carriers.

Whilst security is paramount, there is a lack of transparency and information about what airports and countries need to do to increase their levels of security and be removed from the risk list. The UK could work with affected countries to help them increase security at their airports and get themselves removed from the risk list.

Help exporters to develop UK business links

Even where exporters in developing countries conform to EU/UK sanitary and phytosanitary standards, they may fail to meet the quality requirements of UK retailers. Products may be safe, but they aren’t attractive or are of low quality. The UK could help exporters become Global GAP-compliant (as well as other certifications). It could also help develop business links with major British retailers. This would help businesses in developing countries sell to the UK (and to many other retailers in the rest of the world), increase the offer of products in the UK and perhaps help overcome the disruption Brexit is causing to value chains.

UK products and inputs are recognised for their quality and their use may boost productivity and competitiveness of exports in many African countries. But for many producers, using British intermediates and machinery is often unaffordable, and a lack of funding prevents many importers from sourcing from the UK. UK Export Finance should provide more direct funding (in addition to guarantees to commercial banks) to help African businesses import inputs and machinery from the UK.

Support British investors in Africa

The poor business climate in many developing countries can be a deterrent to foreign investors. Corruption is a real risk, and investments often require rates of return as high as 30% (in dollar terms) to compensate for changing and challenging circumstances.

In addition to supporting reforms to improve the business climate in these countries, the UK could provide more mentorship and support to British investors in Africa, including information. It could also help with applying for licences and permits, reducing the instances of corruption and bureaucratic burden.

The bilateral investment treaties the UK has with many developing countries focus exclusively on investment protection and dispute settlement but fail to address key issues associated with investment facilitation and promotion. Addressing these issues in new treaties will help boost investment in these countries, as well as opening up more opportunities for British investors. The UK and many African countries should revise existing investment treaties to make this happen.

Other areas may require work at the regional and continental level. The African Continental Free Trade Area (AfCFTA) provides an excellent opportunity for the UK to work with African partners to boost bilateral trade and investment. The gradual replacement of Economic Partnership Agreements (EPAs) with a comprehensive UK–Africa trade agreement involving goods, services and investment must be on the agenda. 

Independent of the outcome of Brexit, there are many areas where the UK and developing countries can work together to boost trade and investment. A combination of aid, trade and investment is the most powerful tool to generate opportunities to boost economic transformation and economic growth.

 

* A recent (March 2019) request to the Civil Aviation Authority under the Freedom of Information Act indicated that it is a matter of national security and consequently confidential, revealing the relevant regulations associated to the determination of the level of risk of airports and other related regulations. This restriction was revealed by airline cargo operators.