UK-Africa trade: What will Brexit change?

The United Kingdom is set to host a virtual UK-Africa conference on Wednesday to promote trade and investment opportunities in African markets.

The meeting takes place on the anniversary of the inaugural 2020 UK-Africa summit hosted with great fanfare by British Prime Minister Boris Johnson, who famously skipped the World Economic Forum in Davos to lead the event.

At last year's summit, Johnson said Britain had all it took to become Africa's "obvious partner of choice" for doing business post-Brexit when it was no longer tethered to European Union trade agreements with the continent.

The British government promised it would improve on the EU-Africa trade model and better protect the interests of African nations.

But the post-Brexit trade deals between the UK and African nations aren't much different than the old EU ones.

At the same time, Britain — despite its post-Brexit vision for a "Global Britain" and its long history in Africa as a former colonial power — is further falling behind as a trading partner and investor on the continent. 

New trade deals basically the same as the old ones

Leaving the EU theoretically allows the UK to make independent trade agreements better tailored to individual African nations.

So far, UK has inked post-Brexit trade deals with 13 African countries. But these new agreements, which offer duty-free and quota-free access to British markets, aren't much different to the old ones.

That's because they are primarily so-called rollover agreements — that is, they simply transfer the conditions in the EU deals into bilateral agreements between the UK and the African nation, or blocs.

The members of the Southern African Customs Union (SACU) — which includes Botswana, Eswatini (formerly known as Swaziland), Lesotho, Namibia and South Africa, along with Mozambique — have signed one such agreement.

A similar deal was rolled over for Ivory Coast and Cameroon, as well as for the Eastern and Southern Africa bloc, covering Madagascar, Mauritius, Seychelles and Zimbabwe.

Kenya's trade deal drives a rift through East African trade bloc

Kenya has also signed a continuity trade deal with Britain, one of its top five trading partners in 2019. This allows Kenya to continue to export tea, coffee and spices, as well as vegetables and flowers to the UK without paying duties.

But the agreement has been harshly criticized for risking the integration of the East African Community (EAC), a trading bloc which is also working to negotiate a post-Brexit deal with the UK.

There's concern Kenya's go-it-alone deal will escalate trade tension within the EAC, which also includes Uganda, Rwanda, Tanzania, Burundi and South Sudan.

The agreement could push the different trade tensions between the EAC's partner states over the edge, Ugandan-based policy analyst Africa Kiiza told Politico EU.

That's because the group's members are already blocking goods from each other.

"When you analyze the integration of the EAC, the EAC is shaky," Kiiza said. "It is disintegrating."

Least-developed countries enjoy preferential trade

Post-Brexit Britain has adopted the EU's "Everything But Arms" trade preferences. This means least developed countries in Africa exporting to Britain enjoy "quota-free access and nil rates of import duty on all goods other than arms and ammunition," according to Gov.uk, the official government website.

Developing nations such as Ghana — and more importantly Nigeria, Africa's largest economy — are excluded from this preferential trade treatment, however.

Both Ghana and Nigeria failed to seal an agreement with the UK before the end of the Brexit transition period on December 31, 2020.

Nigeria is probably unwilling to maintain the old trade status quo of exporting crude oil and agricultural raw materials to Britain and importing machinery and technology goods from the UK, according to economist Dirk Kohnert.

"Nigeria increasingly gets its industrial goods from Asian countries such as China and India," said Kohnert, a former researcher of African economies at Germany's GIGA Institute.

"Global trade is shifting from the Atlantic to the Pacific, and the concept of 'Global Britain' will be difficult to implement in Nigeria."

Long live the Commonwealth

Britain has long come under fire for favoring the 19 African Commonwealth nations, most of which are former British colonies or have historical ties to the UK. The only two which don't are Rwanda and Mozambique.

With Johnson and his allies promising post-Brexit Britain will occupy a bold new place on the world stage under "Global Britain," it was thought that this might change. 

But the new trade deals reinforce the UK's bias toward Africa's English-speaking nations, criticizes trade economist Rolf Langhammer from the Kiel Institute for the World Economy in Germany.

"The countries with which Great Britain has already concluded rollover agreements are almost without exception English speaking," Langhammer told DW. "So far Britain has hardly concluded any agreements with the large French-speaking countries in West Africa."

"It looks as if the British are now strengthening their old colonial relations and have no regard for the French- or Portuguese-speaking countries."

Top export nation

When it comes to buying products from the continent, Britain isn't that important for many African nations.

Goods and services from Africa make up just a tiny share of the UK's imports, accounting for 2.5% of the total goods imported into Britain.

Only eight nations from sub-Saharan Africa — mostly former colonies — count the UK in their top 10 export destinations, including Rwanda, Mauritius, Seychelles, Sierra Leone, Ghana, Mozambique, Kenya and South Africa.

The UK is South Africa's fourth biggest market for exports, after China, the US and Germany, accounting for more than 5% of South Africa's exports. These are primarily gold, diamonds and precious metals, followed by vehicles, fruit and nuts.

Trade expert Langhammer believes the UK could become even less important.

"Trade and direct investment depend on economic conditions. The UK will in all likelihood suffer large losses due to leaving the EU," he said. "Import demand will be negative and that will have a negative impact on demand for African products."

Britain faces stiff competition on the continent

Britain has been long criticized for undervaluing trade with Africa. The amount of products Britain sends to Africa isn't just small, it's also shrinking.

UK goods imported to the whole of Africa in 2019 represented only 2.6% of the total. These were mainly commodities, including motor cars, petroleum oils, turbojets, aircraft and aircraft parts, pharmaceuticals, used clothing and electric generators.

France and Italy — whose economies are around the same size as the UK's — export considerably more to sub-Saharan Africa. Even Sweden, Belgium and Portugal, whose economies are considerably smaller, send more goods to the continent.

"As it stands, the UK has not demonstrated enough vigour and commitment to improving its bilateral trade relationships with key trading partners in the African continent post-Brexit," warned Dele Bello-Williams and Kieran Davis in a January 2020 article on the future of UK-Africa trade relations for the National Institute for African Studies.

British investment in Africa could fall

Britain plays more of a role in Africa when it comes to investment, however. It's the continent's fifth source of direct foreign investment after China, France, the US and the United Arab Emirates, according to the Africa Attractiveness Report from Ernst & Young.

Currently, this investment is heavily focused on extractives — natural resources — and on South Africa.

But the dual shock of the coronavirus pandemic and Brexit means the investment sentiment in Britain is low, said economist Dirk Kohnert.

"My guess: The UK, under the current coronavirus terms, won't be able to deliver on its generous investment promises for Africa," he said.

Antonio Cascais contributed to this article.