August 28, 2018 / 3:15 PM / 2 months ago

Breakingviews - UK-Africa trade is tiny plaster for Brexit wounds

LONDON (Reuters Breakingviews) - Add Africa to the locations Theresa May is hoping will help shore up Britain’s post-Brexit future. The prime minister on Tuesday promised to tweak her government’s generous aid budget to open doors for UK companies on the continent of a billion people. The longer-term shift to “trade not aid” will have to be dramatic if it is to compensate for the setback of severing close ties with the European Union. 

Britain's Prime Minister Theresa May is greeted by South African President Cyril Ramaphosa in Cape Town, South Africa, August 28, 2018. REUTERS/Mike Hutchings.

There are strong reasons for Britain to promote African development. As May noted in a speech in Cape Town, a more prosperous continent is less likely to breed international jihadists or economic migrants eager to sneak into Europe. The economic rationale, however, looks more suspect. 

Total trade with Nigeria, South Africa and Kenya – the stops on May’s three-country trip – amounted to 13.1 billion pounds in 2016, according to UK government figures. That’s less than 2.5 percent of the 554 billion pounds in goods and services that Britain exchanged with the European Union in the same year. In other words, if UK trade with the bloc drops by 2 percent after it departs, commerce with the three countries – which include Africa’s two largest economies – would have to almost double to make up the difference. 

At the moment any pickup looks a stretch. Over the last decade, the value of UK-Africa trade has grown at around 1 percent a year – a trend that is likely to continue given the subdued economic trajectories in South Africa and Nigeria. Besides, the EU already has a trade deal with South Africa, suggesting limited scope for any dramatic gains. 

Nor can Britain rely on a fountain of goodwill from its former colonial outposts, especially when compared with the diplomatic and commercial clout of China, far and away Africa’s biggest trading partner. Nigeria’s Muhammadu Buhari, a former military dictator who is running for re-election next year, has been reluctant to join a pan-African free trade deal on the grounds of protecting domestic industry.

In contrast to Chinese President Xi Jinping, a regular visitor, May is the first British leader to venture south of the Sahara in five years. While greater UK-Africa trade would be welcome, it’s a tiny plaster for Britain’s Brexit wounds.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below