Cameron tells Africa 'trade not aid'

Published by The Day on Tuesday, 19 July 2011
 
Today the Prime Minister is in Nigeria on a trip promoting trade between the UK and Africa. But is buying and selling enough in the face of multiple humanitarian disasters?

As the hacking firestorm blazes on, Prime Minister David Cameron today is trying to draw attention to a more important issue: Africa. On his two-day trip to South Africa and Nigeria, the PM will lay out his radical new plan for the UK's involvement with the world's poorest continent. His message? Trade, not aid.

Once it was 'China', but now 'Africa' is the word on businessmen's lips. EU economies are floundering, the US is shaky, and Asian growth is slowing, but Africa has a huge projected growth of 5.5% next year, with star performer Ghana expecting a China-beating 13.4%. Where there is growth, there are profits to be made.

Cameron is ostensibly in Nigeria today to push the idea of an African free trade area. Commerce not charity, he says, is the way to help Africa, and since only 12% of African trade is with other countries on the continent, making buying and selling within Africa easier is the first step.

But it seems that Britain also wants a slice of the (rapidly growing) pie. The PM travels with Lord Green, the UK trade minister, and 25 British business leaders, and valuable introductions are being made.

The opportunity for growth and profits in Africa is unprecedented for four key reasons. First, progress in health and education means there is an able workforce and more consumers. Second, a young population means this workforce is massive. Third, governments are becoming more transparent and democratic, providing a stable environment for trade.

And fourth, a few trailblazing technologies like mobile phones have demonstrated how successful investing in Africa can be.

Foreign direct investment (FDI) is key to economic development, and whilst Africa only sees under 5% of the world's FDI, that's an 80% increase on 10 years ago. The World Bank says 'Africa could be on the brink of an economic takeoff, much like China was 30 years ago'. Africa, the cradle of humanity, represents our history, and now it may also be our future.

Ridiculous or riches?

As drought threatens 4.5 million lives in East Africa, wars rage across the continent, and over 23 million in sub-Saharan Africa are living (and dying) with HIV, suggesting trade as the answer seems ridiculous. What might be a route for Ghana or Nigeria is useless to the thirsty, the dead and the dying of Somalia, Zimbabwe and Zambia.

But for Africa's less troubled states increased trade could be miraculous, creating a sustainable escape route from poverty. An African free trade area could increase GDP by $62 billion a year, $20 billion more than current world aid to sub-Saharan Africa. Not only is this great news for Africa, but the more they trade with the outside world, the better it is for everyone else too.

		David Cameron wrote this article for South African paper Business Day on his plan for Africa.
		Despite the trade not aid motto, aid continues to Africa. Here's an article about the recent pledge from the UK for the East African drought.
		A really interesting Guardian blog post on escaping the poverty trap.
		FT article about major consultancy firm Price Waterhouse Cooper expanding its operations in Africa, reflecting the growing trend.
		Piece about the role technology is playing in Africa's growth.