Another reason why the West needs Africa.

 

 

20170330_184026It was recently reported in the Telegraph (a popular British media outlet), that the Bank of England may use palm oil (yes you read that right) on a new £20 note, following an outcry from animal rights lobbyists and religious groups, over the use of animal fat in the new plastic £5 notes. The paper went on to say that the Bank has backed the move given that the vegetable oil is one of the world’s most commonly used oil, making it a viable alternative.

palm oil

 

It is a well-known fact that Africa is rich with natural resources. Since the earliest days of colonisation, Africa has been one of the largest exporters of raw materials to western countries. Traditionally, exports took the form of agriculture and industry i.e. crude oil, steel etc. Raw materials were exported to industrialised economies, where goods were refined into consumer produce used in construction (steel) and oil and gas (crude oil).

However, in recent times, there has been a focus shift away from Africa in favour of closer trading ties within geopolitical blocs. In Europe, this shift came in the form of the European Union (EU); a political and economic union consisting of 28 member states. Created in the 1950’s, its focus was to ensure the free movement of people, goods, services and capital within an internal single market system. The system also established and standardised laws, rules and practises for all member states with the union. A monetary union in the form of the euro currency was also created in 1990, for the purposes of using a single currency within the union.

For many European countries, including the United Kingdom, the EU served as an important geopolitical trading bloc, because its member states shared a similar history, and held European values and ideals. As a famous democratic theorist once said, “Democracies rarely or never go to war with one another” – Francis Fukuyama. What Fukuyama meant by this statement was that democracies don’t fight each other because they have similar interests, belief systems, values and ideals. This argument, therefore, strengthens the case for a geopolitical trading bloc, because economic blocs foster mutual cooperation and reduce the likelihood of war and conflict within such a bloc. It also makes trade much easier, faster and cheaper for members within the union. As such, the EU quickly became the largest exporter of goods and services to member states within the union. According to a report by the UK Department for Environment, Food and Rural Affairs, by 2014, 27 percent of food consumed in the UK originated from EU, while only 4 percent came from Africa. African countries such as South Africa and Kenya account for this small percentage of imports, with South Africa being the second biggest source of fresh fruit to the UK after Spain, and wine after France, while Kenya accounts for a quarter of fresh vegetables- beans, peas, flowers and more than half of tea exports to the UK.

However, with recent political developments unfolding in the region; regarding the UK’s decision to leave the European Union, analysts predict that exports from Africa are expected to rise. A survey of UK retailers in August 2016 revealed that the UK is expected to see a rise in the import of products such as fruit and vegetables from Africa, following the UK’s vote to leave the EU. One reason for the shift towards African exports is linked to potential changes to EU tariffs. The UK’s decision to leave the EU will make it harder and more complex for the UK to trade within the EU. This is largely due to import duties (previously not applied to the UK). As such, Africa will become an attractive alternative because it has considerably lower tariff rates and lesser trade barriers than the EU, making it much easier to trade with African countries. The falling value of the sterling is another reason why UK retailers are looking further afield to Africa for imports. The falling pound means that goods and services are now more expensive than ever before because importers need to spend more than they did previously to obtain the same quantity of goods. Since African products are relatively cheaper to produce, it is much more cost effective for UK retailers to trade with African countries and get more value for their money. Lastly, UK retailers are looking to reduce cost, (in an uncertain post-Brexit economic climate). This, coupled with the fact that Africa has a comparative advantage in the production of primary goods, due to cheap labour, makes Africa an economically viable option.

Brexit will only serve to strengthen trade ties with countries that already have established trade ties to the UK, and possibly improve trade relations with old partners. The recent revelation by the Bank of England that it may possibly turn to palm oil as an alternative to animal fat in the production of new £20 notes is case in point. This further supports the need for stronger trading ties with Africa. The UK will need to improve and consolidate trade links with countries like Nigeria and Ivory coast, known to have a comparative advantage in the industry.

Body shop

Agriculture is not the only industry to benefit from African exports. Since the 1970’s, exports from Africa has contributed significantly to the cosmetics industry. The world-famous cosmetics company- the Body Shop established by British businesswoman Anita Roddick in 1976, is renowned for sourcing most of its ingredients from the African continent. Many of its internationally acclaimed products trace its roots to West, East, Southern and Central Africa. It’s Cocoa and Shea butter is sourced from Ghana, while cotton comes from Madagascar. Its Argan oil is sourced from Morocco, while Ximenia oil comes from Northern Namibia. It’s Tea tree from Kenya, honey, from Ethiopia and Beeswax from Cameroon, to name a few.

 

 

 

 

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