As chairman of the Commonwealth Enterprise and Investment Council (CWEIC) - I am acutely aware of the wealth of opportunity that exists within our family of nations.
Home to 2.4 billion citizens spread across 56 countries that are bound by a common language, shared history, and a combined economic value of $13 trillion, the Commonwealth has huge potential for increased trade that is being underutilized – particularly on the African continent, where 21 of our member states are located. Slowly but surely my country, the United Kingdom, is taking notice of this fact and adopting a leading role in boosting business and investment, which will set a path for others to follow.
The incentives for building trade ties with Africa are clear to anybody that has taken the time to look. Much like other nations within the Commonwealth, the prevalence of the English language in Africa allows for easy and effective communication; the familial legal and administrative systems, based on common law, eases access to business environments; and a lively global diaspora network brings companies and commerce closer together.
While the Commonwealth is not a formal trading bloc, this “Commonwealth Advantage” brings significant economic benefits to its member nations. Trade within the group is on average 21 per cent cheaper than trade with non-Commonwealth countries, a driving factor behind why they trade 20 per cent more with one another than with the rest of the world.
This same Commonwealth Advantage applies to investment, which is 27 per cent higher between Commonwealth nations. Those numbers could be even higher if the leaders of our countries went further in removing the artificial barriers to trade that exist within the bloc and serve only to constrain our collective prosperity.
The incentive for doing this is self-evident: the Commonwealth’s collective GDP has risen by a quarter since 2017, to $13.1 trillion. The markets and economies across the group are growing and their GDP is projected to balloon by another 50 percent within the next five years, to a figure of $19.5 trillion.
One of the key forces driving this growth in the African region is the African Continental Free Trade Area (AfCFTA), which, despite only being in place for less than three years, is the world’s largest trade-based agreement in terms of number of signatory countries, second only to the World Trade Organization. If the Commonwealth’s largest economies do more to support the AfCFTA and unlock its full potential the rewards could be extraordinary. Starting with the £35 million in funding that the UK pledged to the AfCFTA Secretariat.
The reasons for doing this are simple and would benefit both sides. Africa, much like the wider Commonwealth, contains a myriad of complementary economies that produce goods that the UK is unable to. The nations of the East African Community, for example, are not competing economies like most of the UK’s continental European neighbours who produce and consume many of the same goods, products, and services – and because of that leave neither with much room to grow trade with each other. With the EAC it is different: we cannot in Britain produce coffee, tea, or tobacco – just three examples of products the EAC is famous for.
Now with Brexit enabling a new, separate trade policy to be forged by Britain outside of the constraints of Europe, it means we seek to produce and source more for ourselves that once we imported from the EU. The EAC has brand new opportunities to supply us with the raw materials, as well as produce complete products for export to the UK, the world’s fifth largest economy.
That is helped by the introduction of the new UK Global Tariff, which offers preferential measures to third countries or territories with which the UK has signed a new trade agreement or arrangement. It is a great model to build upon: perhaps in the not-too-distant future we might see the creation of a UK Commonwealth Tariff as a mechanism for stimulating trade within the bloc. But the swiftest way the UK could spearhead the growth of opportunity across our family of Commonwealth nations in Africa is by signing a comprehensive free trade agreement with AfCFTA.
45 members of the 55 African Union nations have fully signed up to AfCFTA and another nine are in the process of ratifying their agreements. With a combined GDP of $3 trillion, which is equivalent to that of the UK economy, it is obvious why a deal should be done as soon as possible. This makes it ever more urgent for the UK to seize the initiative and chart a path for other Commonwealth members, like India, Australia, and Canada, to follow. Because if we do not take this opportunity there are plenty of others who will, as we have seen with China - and getting there first is always the moment of maximum opportunity. It would be incredibly self-defeating to let that slip away.
Lord Marland of Odstock is Chairman of the Commonwealth Enterprise and Investment Council (CWEIC).