By CultureBanx Team
- The UK announced nearly $8B in trade deals with Africa
- There are 112 African companies with a market capitalization of around $166B listed on the London Stock Exchange
When Britain officially decided to leave the European Union last week, its Brexit opened up a unique opportunity for African nations to flex their collective political muscles and negotiate more advantageous trade deals. The UK has kicked off an 11-month transition period where they will try to sign as many new trade deals as possible. African countries are a prime target and the UK has already announced deals worth nearly $8 billion, as the continent is home to eight of the world’s fastest-growing economies.
Why This Matters: The UK hopes to reverse its dwindling trade with Africa, which fell from 4.2% of its total trade in 2012 to just 2.0% or $46 billion in 2018. To put that in perspective, China’s 2018 trade with Africa was $204 billion, according to the country’s Ministry of Commerce. The UK’s newest deals are expected to cover 43% of the country’s total trade with Africa. In 2018, the UK exported goods worth roughly $10 billion to the continent, according to EU data.
The UK’s newest deals are expected to cover 43% of the country’s total trade with Africa
When UK businesses expand in Africa the continent stands to benefit greatly from the knowledge, skills and technology they have. These companies also bring money in the form of foreign direct investment. Currently, there are 112 African companies with a market capitalization of around $166 billion listed on the London Stock Exchange. This makes the UK the most important center for Africa’s businesses outside the continent.
South Africa, a former British colony and the UK’s largest African trading partner, will bear the brunt of Brexit since several companies are listed on both the Johannesburg and London stock exchanges. After South Africa, Nigeria is Britain’s second-largest African market, with Kenya coming in third.
Prior to Brexit trade between Nigeria, Africa’s largest economy, and the UK was worth about $7.9 billion, and was projected to reach $26.6 billion by 2020. However, Nigeria has been dealing with falling oil prices, its main source of income. Crude chemicals and allied materials make up almost 25% of Nigeria’s trade with Britain.
Situational Awareness: China is Africa’s top trading partner currently with deals worth well over $300 billion. It’s important to understand that any significant percentage of gains that African nations may make from a lucrative trade partnership with post-Brexit Britain, could immediately be cancelled out due to their existing debt with China. While Chinese debt cannot stop Africa from forming new partnerships, it’s possible that any future deals could be less profitable.
CBx Vibe: “Everything’s For Sale” Belly, G Herbo & Wale
