Cameron tells Africa 'trade not aid'

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.

You Decide

  1. Do you think your country should give money to help the East African countries affected by drought? Why?
  2. How do you think an African free trade zone (which is like the free trade zone in the EU) would affect world trade?

Activities

  1. A debate: aid versus trade.
  2. Research the economic development of your country. Can Africa use the same tactics? Why?

Some People Say...

“Giving someone a job is better than giving them handouts.”

What do you think?

Q & A

What is it that's growing?
Traditionally in Africa, the most economically important sector is commodities like oil or gold. A lot of Zambia's growth is linked to rising prices of its main export copper.
So what's changed?
Whilst commodities are still important, and oil is the source of many countries' wealth, what's exciting is that's not the only source of growth. Telecoms have taken off: there are half a billion mobile phones in Africa. Ghana has a booming service sector, servicing its newly growing middle class.
Is anyone else interested in investing?
Absolutely. Recent report 'Africa Attractiveness Survey' suggests that the whole world sees Africa as a much more attractive investment than previously.

Word Watch

Ostensibly
Apparently, but not necessarily actually.
Foreign Direct Investment
Investment by a company in an economy other than its own. For example Nike setting up a factory in Kenya.

Subjects

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