Fresh start for UK-Africa relations

In the margins of the Mining Indaba in Cape Town, at a roundtable hosted by the UK’s Department for International Trade (DIT), UK Foreign and Commonwealth Office and private sector delegates discussed expanding trade ties as well as greater involvement in infrastructure with African delegations. Report by Omar Ben Yedder.

Whether one is a ‘remainer’ or a ‘leaver’ – as the two camps against and for Brexit are called – the fact that the UK is leaving the EU could prove to be a boon for African economies as the UK seeks to strengthen its trading relationship with old and new partners across Africa.

This message came across clearly during a roundtable discussion hosted by the UK’s Department for International Trade (DIT) and attended by a number of African delegations, during the Mining Indaba in Cape Town last month. One of the rationales of the ‘leave’ camp is that trade with the EU over the last 20 years has fallen from 50% of GDP to 42% today and that the UK should be able to negotiate trade deals with, among others, the fast-growing emerging markets, unencumbered by EU regulatory regimes. From Africa’s perspective, this approach would mean that the countries will be able to negotiate hopefully more favourable deals on a bilateral basis with the UK. It is likely that some industries and sectors may be subject to less punitive restrictions than is the case currently with the EU – for example, in the heavily protected agriculture sector.

It was acknowledged at the roundtable however that new trade agreements, which are invariably complex, will take quite a long time to finalise.

Holistic approach to infrastructure

Having set the tone for a prospective new and more intense business relationship between the EU and Africa, DIT introduced a promising initiative, the Africa Infrastructure Board. The aim was to put the case for choosing the UK as an ideal partner across the infrastructure sector. This includes mining projects and the related infrastructure with the aim to create a holistic solution that will benefit the wider community by developing the associated infrastructure around the project.

Nigel Casey, the British High Commissioner to South Africa, said that the UK would be increasing its efforts to work more closely with African governments and the private sector.

Mining projects, he argued, involve much more than the actual mining operations, and they cannot work without the associated infrastructure. Without naming names, he mentioned that the UK was aware that there is plenty of competition out there when it comes to offering comprehensive solutions to African partners.

“We felt the need to up our collective game,” he said, “and create a new government-industry partnership called the Africa Infrastructure Board, which brings together all the players in the UK, whether that is government through the Department for International Development (DfID), or UK Export Finance (UKEF), one of our best-kept secrets, or the Commonwealth Development Corporation (CDC), and private sector operators – all operating in one single place to offer an end to end solution.”

Oliver Andrews, Chief Investment Officer at the Africa Finance Corporation (AFC), who was one of the panellists during the roundtable, noted how DfID, the UK government’s development arm, was instrumental in institutionalising the model currently being used in infrastructure project financing, with initiatives such as InfraCo Africa and the Emerging Africa Infrastructure Fund.

He also reiterated the importance of the City of London, especially as most contracts are generally governed by UK law. The support network in structuring these deals, that is, the legal, capital-raising and technical side in London, plays a vital role.

Craig Sillars, from DIT, showcased a number of projects where opportunities in the mining sector are being structured in a way that truly develops the infrastructure, and acts as a catalyst to develop other sectors. DIT, for example, is working with a British investor in Angola on resurrecting an iron ore mine. In addition to the mine, they are developing a smelter, which will ensure in-country beneficiation of natural resources. It will also involve the extension of an existing railway, and the expansion of a port. “There will be 600MW of power attached to that,” he went on to add, “and 25,000 hectares of agriculture land provided to grow biomass to help provide charcoal for the smelter.”

Interestingly, he said that the UK was looking at partnering with China on the Simandou Mine in Guinea, to help them develop a holistic solution and develop the local infrastructure, and sharing with them the designs they have put together to ensure a sustainable project that benefits the local community as well as getting high-quality iron ore to market.

“We have a value proposition for China. It’s not just a case of ‘You’re building lots of railways, can we have a piece of it?’ We want to take the expertise we have already got and apply it to that project, where we have something to offer to you.”

He mentioned a flurry of UK household names involved in that project, ranging from law firms such as Hogan Lovells, to construction giant Mott Macdonald and  botanical and environmental experts such as Kew Gardens and the Natural History Museum. It was this holistic approach, providing a level of expertise throughout the ‘supply chain’ that would present the UK’s competitive advantage, as long as it was offered in a coordinated fashion.

“The approach we are taking,” he told the participants, “is to produce masterplans that will benefit the communities not only for the next four to five years but the next 60 – which is what we are doing in Angola; so that when the mining project is finished, the infrastructure will continue to benefit the whole region.”

Francis Gatare, CEO of the Rwanda Mines, Petroleum and Gas Board, said that most of the Rwandese involvement with the UK had been through government, but that private sector interest was growing. He mentioned that the UK is now leveraging the development support that DfID is able to provide to encourage private sector involvement and strengthening the policy and regulatory environment to help drive investments in energy and infrastructure.

Coming late to the party?

However, some of the delegates felt that the UK was coming late to the party, especially in the infrastructure sector where others have been dominant; nevertheless, they added, the resurgence in interest was welcome. “Diplomatically, the UK has been active,” said the AFC’s Oliver Andrews, “but the private sector has not been present enough in business and industry.”

Most delegates agreed that London would continue to be an important hub for investors in mining and in infrastructure, not only as a financial centre, but also for the legal and technical expertise it offered, and that the resurgent interest from the UK towards Africa can only be a positive development for both the UK and the African continent. NA

The Energy and Infrastructure Roundtable was hosted by the UK’s Department for International Trade and organised by IC Events, the events division of IC Publications, publishers of New African.