UK-Africa Investment Summit: risks and opportunities for development

The UK-Africa Investment Summit on 20 January, which brought together leaders of 20 African countries and UK government, could be a game-changer.

One speaker said that Africa is like China 30 years ago, at the brink of economic take-off. We have reasons to be optimistic.

The summit was buzzing with positive energy about the wealth of opportunities and potential in Africa. Rwanda’s transformation is an inspiring example of how much can be achieved when vision, political will and action go hand in hand. We heard from a range of inspiring female entrepreneurs who were taking control of their own futures.

But we must be sure that official development assistance (ODA) backed investment primarily benefits the poorest people in Africa and doesn’t exacerbate the continent’s inequality. Here are our five takeaways from the summit.

An example of DFID’s convening power and ability to work well across government

The summit was the result of a unique partnership between the Foreign and Commonwealth Office (FCO), the Department for International Development (DFID) and the Department for International Trade (DIT). It was creating a space for foreign aid, trade, investment and diplomacy to complement each other.

It was a good example of how an independent DFID can create the space for departments to work effectively together. The results that ODA had delivered were pasted on the walls, and there was a strong focus on women entrepreneurs and green growth.

Foreign aid being blended with UK trade interests

Poverty is complex and requires a multi-dimensional response with cross-sectoral cooperation on donor and aid recipient level . Aid is a small part of the overall financing needed for everyone to thrive, so inclusive trade is important too. But considering the summit cost approximately £15.5 million of UK aid money, it was disappointing that many of the systemic issues that DFID has been working on for years were side-lined: fighting illicit financial flows, corruption, modern slavery, improving governance, rule of law and supporting human development.

While many speakers noted the need to create 20 million new jobs every year, less was mentioned about labour standards and lifting people out of extreme poverty (about 437 million people across Sub-Saharan Africa) through decent and green jobs.

Many talked about private sector development and the opportunities of technology, but less about the human development that is crucial to growing economy and markets: access to food, safe water, electricity, free healthcare provision and public schools for all.

The SDGs could have been more prominent, but clean growth came to the fore

Eradicating global poverty is one of the Sustainable Development Goals (SDGs) and is a key objective of DFID’s economic development strategy. However, the SDGs and human development, as championed by DFID, weren’t mentioned in the British prime minister’s speech.

The sustainable investment session focused heavily on the goals, with the London Stock Exchange focusing on sustainable finance and green bonds. It was good to hear President Kenyatta launch Kenya’s first Green Bond, and their desire to preferentially incentivise green investment. The work of impact investment targeting communities and poverty reduction was also heartening.

Clean growth was a prominent part of the agenda with many solar solutions in the business hub – and whilst we disagree that oil and gas should be part of that – it is the right direction of travel.

Britain as an investment partner for Africa

This summit is a clear sign of the UK’s post-Brexit approach to African nations, which emphasises the role of trade and investment in prosperity. Boris Johnson’s opening speech promoted Great Britain as the investment partner of choice for Africa, and as a global gateway for finance, investment and education.

Portraying Africa as a home to 1.2 billion consumers, the prime minister talked about creating lasting partnerships of equals creating mutual prosperity. This has the potential to rebalance power with inclusion and sustainability at the core of trade and investment deals to achieve genuine development impact .

If foreign aid is to be used to promote trade and investment, it needs to:

• ensure investment goes to the smallest economies which need investment the most (half of African countries have GDP less than 10bn USD)
• support human development because private finance will not do it
• boost the capacity of local entrepreneurs to produce high value-added products and services using various locally sourced raw products and combining large labour workforce with knowledge and technology transfers
• prioritise SMEs, which tend to employ more people than big companies and have therefore more direct impact on improving people’s lives
• focus on the huge potential of the agriculture sector and explore ways in which to integrate small farmers in bigger supply chains for fairer and regular income
• stop using fossil fuels and treat neutral impact on climate change as a standard

Civil society’s missing voices

It was disappointing that African civil society was not recognised as a legitimate stakeholder and was not invited to the summit. Over 20 leaders of British INGOs were there, but they had no platform and questions were carefully choreographed.

Meaningful engagement with civil society enables better outcomes and can help avoid the negative consequences of economic development. Civil society’s voice is crucial for deciding what investments are prioritised to support inclusive and sustainable development.

While we welcome new approaches to economic development, we want to ensure that the people of Africa are heard. Investments made in their continent through ODA must benefit the most disadvantaged and marginalised.

It is important to have DFID and the UK’s development leadership at the forefront of conversations about the nature of “Global Britain”. But it has to be a great opportunity to shape a more inclusive and sustainable development pathways in Africa (and the UK) that leaves no one behind.

Explore how economic system change could be a gamechanger for global poverty, inequality and climate change at the Bond Conference. Find out more and book your tickets.