UK flexes muscle in scramble for Africa trade deals

The UK government has signed a pact with three African trading blocs that would see it play a more critical role in the planned merger and economic development in the region, signalling intention to solidify its influence in Africa in the wake of an onslaught by China.

In a deal reached in London between the UK’s Department for International Development (DfID) and the leadership of the East African Community (EAC), Southern African Development Community (Sadc) and the Common Market for Eastern and Southern Africa (Comesa), the former offered to help reinforce growth through various programmes.

“The Memorandum of Understanding (MoU) outlines the basis for a long-term partnership between the tripartite and DfID and formalises DfID’s existing relationship,” they said in a communique.

Mr Gareth Thomas, UK’s minister in-charge of DfID, said his government “looked forward to a deepening of the relationship so that real and tangible results in Africa could be achieved”.

Mr Juma Mwapachu signed the MoU on behalf of the EAC while Messrs Joao Caholo and Sindiso Ngwenya signed on behalf of SADC and Comesa respectively.

In 2008, SADC, EAC and Comesa agreed to form a free trade area (FTA) covering more than 527 million people with an estimated combined gross domestic product of about $624 billion.

The blocs have since inched even closer towards the realisation of their dreams with the creation of a roadmap to guide the process.

The guide sets out the justification for the FTA and includes a memorandum of understanding to be approved by the heads of state, as well as a draft agreement for the eventual establishment of the area.

Members in each of the blocs are finalising analysis of the roadmap and its relevant work plans and are expected to give feedback soon as they set their eyes on having an operational FTA within two to three years.

A preview of the MoU signed in London last week showed that it also aimed at building capacity of the regional economic communities (RECs) and the promotion of donor coordination so as to achieve greater alignment and harmonisation of external assistance with the tripartite’s regional priorities and programmes.

“The specific objectives of the MoU are that the tripartite’s longer term regional cooperation and integration plan and annual work programmes will be presented to co-operating partners as the basis for aligning and harmonising their assistance and which might be co-ordinated through the adoption of a common framework of cooperation,” it said in part.

It further points out that the tripartite will define and prioritise transport corridors and guide the supporting work that requires to be done along their entire length so as to avoid overlap and duplication of effort and promote coherence.

“DfID will, through its trademark programmes ... by working with the other key international financial institutions and donor partners, assist with the rollout of the transport corridors, trade facilitation and the tripartite Free Trade Area,” the MoU indicated.

According to the pact DfID will also strive to work with other donors and international fund institutions to secure additional funds for infrastructure projects along transit corridors and facilitate the conversion of regional funding mechanisms into a tripartite funding framework so as to reduce wasteful competition and duplication.

“Other areas of cooperation will be explored such as in air transport, energy and climate change,” the parties also agreed.

Clip wings

The MoU between the UK government and the SADC, EAC and Comesa is, however ,expected to add to ongoing debate about a conference scheduled for March in Tunis to discuss the fast rising Sino-Africa ties.

DfID is the lead sponsor of the Tunis conference that has widely been viewed as one aimed at “clipping” China’s wings in the wake of a shift in which once dominant western countries such as the UK and the US have lost grip of Africa, losing lucrative deals and other trade and investment ventures.

The Sino-Africa trade and investment pacts have grown significantly over the last 10 years driven by a quest by China to find resources to support its vibrant economic and industrial growth.

Latest statistics show that in 2008, total trade between the two blocs was valued at $106.8 billion, up 45.1 percent on 2007.

According to Premier Wen Jiabao, China invested $875 million in Africa in the first nine months of 2009, marking a 77.5 per cent year- on-year growth.

In November 2009, China further pledged $10 billion in low-cost loans to Africa over three years.