Pro-Brexit demonstrators gathered in Parliament Square in London on
March 29, 2019, when Theresa May suffered a third defeat. PHOTO | AFP
African industry captains see a silver lining in the rocky exit
of the United Kingdom from the EU (Brexit) at a time when a continental
free trade area is about to come into force.
A survey
by Deloitte on how companies are prepared to exploit the broad market of
$3 trillion and a population of more than 1.2 billion people found that
three-quarters of executives polled were confident of benefiting from
the African Continental Free Trade Area and that competition was the
least of their worries.
Instead they were anxious about
how the business climate was cyclically affected by elections, small
fragmented markets, inadequate financing, high cost of financial
transactions and energy.
While most have a strategic
plan on integration, the survey found that it was focused on
diversification, going Pan-African and proof of concept approach, where
experiments are done in segments and countries before being scaled up
across businesses and terrain.
Interestingly, few were
thinking of going global because of uncertainties surrounding world
trade, with the UK about to exit the EU, and China, US and Europe always
one drastic decision away from a trade war.
The UK Trade Commissioner for Africa Emmah Wayde-Smith, however, told The EastAfrican they have, over the past two years worked to ensure continuity of trade with Africa, irrespective of what form Brexit takes.
Prime Minister Theresa May had pledged to quit if her proposal
is adopted. It had already failed twice among seven other options,
creating more anxiety over Africa’s access to the UK market.
On
Friday, British MPs rejected Ms May’s EU divorce deal for a third time,
opening the way for a long delay to Brexit or a potentially
catastrophic “no deal” withdrawal in two weeks.
No deal?
During
yet another dramatic day in the House of Commons, Parliament voted down
the Withdrawal Agreement by a majority of 58 – a smaller margin than
when they rejected it for a second time in February by 149. The result
is a devastating blow for the premier, who has tied her personal
leadership to the success of this deal — but it is now dead in the
water.
It means the UK could leave the EU with no deal
on April 12 — in just 14 days’ time. It is more likely, however, that
the UK will seek a much longer extension as it seeks to extract itself
from the EU.
For this to happen, the UK will have to
present a new plan to Brussels by April 10, which the EU would have to
accept for Brexit to be pushed back any further.
An extension would also mean the UK takes part in European elections in May.
“There
is a complex unfolding with no clarity on what form the withdrawal will
take. The opportunities are yet to be discussed in detail but we have
frameworks to ensure trade with Africa is not disrupted,” Ms Ward-Smith
said.
Among the safeguards is UK applying the
Unilateral Preferences law for qualifying countries in the Africa
Caribbean and Pacific (ACP) countries.
Another is the
Taxation (Cross-Border Trade) Act 2018, which was signed into law by the
Queen in September 2018. It allows the UK to continue with the least
developed countries’ services waiver.
Tanzania and
Uganda are in this category. For Kenya and Rwanda, the UK would
replicate the preferences already agreed with the EU. This would be in
place until 2021.
Trade between the UK and the ACP hit
$28.8 billion in 2017. The UK is the third-largest foreign investor in
Africa, second largest in Rwanda, and top in South Africa.
The
EU has five economic partnership agreements with Africa and five
association agreements, which she said could be tweaked once the UK
exits the European bloc.
The UK has committed to the Sustainable Development Goals on free trade access for least development countries.
“We will replicate the EU preferences,” Ward-Smith said.
In
A briefing to ACP representatives last October, UK Trade Policy
Minister George Hollingbery said non-EU trade had become increasingly
important to the UK and the imperative was “about facing out to the
World.”
“We will be looking at how we can improve our
trade preferences scheme by making it more generous, simpler to attain
and easier to use,” he said.
The UK has already signed a
Statement Agreement with Botswana, eSwatini, Lesotho, Namibia, South
Africa and Mozambique to transition the EU agreement ahead of Brexit.
The
UK is also giving its companies $1.8 billion aid for trade programmes
to enable them strengthen export competitiveness and helping their
African counterparts address logistics costs through organisations like
Trade Mark East Africa.
Mr Hollingbery added that the
UK would also us its independent voice a the World Trade Organisation
for better access to world markets by African countries. To exploit
these openings, CEOs are being asked to pursue alternative financing for
small and medium-sized enterprises.
“Africa is coming together when other continents appear to be splitting,” said Diane Karusisi, Bank of Kigali CEO.
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