On Thursday, the United Kingdom will hold an African Investment Conference as part of its efforts to maintain influence on the continent, which has become a battleground for the world’s top economies in terms of investment.
A virtual event will be kicked off with a video address from the prime minister and will be attended by African ministers, corporate executives, and the head of the World Trade Organization.
Economic ties with Europe are an important aspect of the Global Britain agenda. According to the government’s Integrated Review, the summit, which is the second of its type, is intended at promoting Britain’s overseas investment credentials and a broader campaign to “revitalize economic engagement” in the region.
According to a House of Commons library briefing, aid cuts totalling £943 million were announced for the region in 2021-22, approximately half of the money was contributed in the previous financial year.
Even when aid is cut, the government sees UK Export Finance (UKEF), the export finance agency, as a critical way to demonstrate its commitment to Africa. According to officials, this reflects a trend among consecutive Conservative governments to mix or replace aid with trade.
In the last five years, the agency has provided £4.5 billion in funding to African initiatives. Last year, £2.3 billion was secured, a twenty-year record and a significant increase over previous years.
UKEF provides loans and insurance to businesses to help them finance international exports. The agency, like other government agencies, has been chastised for sponsoring fossil fuel projects in the past, albeit it was ordered to stop doing so in 2021.
Around a quarter of UKEF’s international exposure, which includes loans, insurance, and guarantees, is now tied to African development initiatives. According to UKEF’s own data reviewed by the Independent, it granted seven times more support to initiatives in Africa than the Middle East and Asia, and twenty times more help to undertakings in the Asia-Pacific area in the financial year 2020-2021.
The government is increasingly attempting to demonstrate how its funding has aided initiatives that are more environmentally friendly.
Mabey Bridge, a Gloucestershire-based firm, won a contract to shore up flood defences in Ghana with the help of UKEF. It is expected to build 87 bridges in the West African nation.
Other projects include £280 million to fund six new hospitals in Cote D’Ivoire and £1.2 billion to help Egypt build two electric monorails.
Ms Trevelyan stated that the UK businesses’ expertise is helping African nations to become more resilient to climate change.
“The UK is dedicated to promoting a safer, greener, more open continent that is more resilient to shocks and pressures, utilizing trading partnerships and investment to create long-term growth,” she said.
Some economists say that UKEF’s loans are more ethical than other governments’ approaches to infrastructure investment, particularly in developing nations, because they are made to a corporation and backed by the British government. But only if there isn’t any other option.
While there is profit in such projects for UK firms, they might go ahead without government support. “The UK is dedicated to promoting a safer, greener, more open continent that is more resilient to shocks and pressures, utilizing trading partnerships and investment to create long-term growth,” she said.
Some economists say that UKEF’s loans are more ethical than other governments’ approaches to infrastructure investment, particularly in developing nations, because they are made to a corporation and backed by the British government. But only if there isn’t any other option.
While such projects can be profitable for UK businesses, they may not proceed without government help. In high-risk situations, obtaining commercial financing might be difficult.
Meanwhile, developing countries may find it difficult to raise enough money for infrastructure projects on global bond markets. During the Covid epidemic, investor appetites dropped, and several bond offerings had to be cancelled.
A key criticism of efforts to donate vaccines to African nations has been an underestimation of the logistical challenges of delivering doses presented by poor rural transport infrastructure.
There are still broader ethical concerns thrown up by UK businesses’ activities in Africa, however.
Before the investment conference, the Business & Human Rights Resource Centre stated the UK government should “put in place legal mechanisms to guarantee its investors assess and mitigate their human rights and environmental risks,” citing a number of judicial cases involving UK corporations and human rights abuses and their investments in Africa.
Africa’s rich resources and young population have drawn the attention of global superpowers, and the UK is fighting for influence. India and China have attempted to invest heavily in countries that have access to key raw materials such as minerals needed in electronics.
China’s influence in Africa has been enhanced by massive, often opaque investments in a variety of countries.
These complex loans, which are frequently part of China’s larger Belt and Road Initiative, have come with stipulations that host governments have struggled to meet, resulting in China seizing control of crucial infrastructure.
A recent issue concerning an airport in Uganda is an example of this. According to reports, China and Uganda have a credit deal for airport expansion that might result in the Asian giant seizing the asset if Uganda fails to repay the loan. The claims have been denied by China, but the loan deal has not been made public.
The Sri Lankan government handed over ownership of the Hambantota Port to China in December 2017 because it was unable to fulfil debts provided by the Asian powerhouse for the development of the site, which has significant military and commerce benefits.
