Britain has unveiled plans to channel part of the £14bn aid budget through the City as it seeks to exploit the global reach of the finance sector to boost investment in Africa.
Details of the £395m package were announced by the international development secretary, Alok Sharma, ahead of a high-level UK-Africa investment summit next Monday.
In a sign of the perceived importance of strengthening economic links with Africa after Brexit, the summit will be attended by the prime minister, Boris Johnson, the international trade secretary, Liz Truss, the foreign secretary, Dominic Rabb, the business secretary, Andrea Leadsom, and Sharma.
The government is currently holding a strategic review of Whitehall which at one stage looked as if it would result in the UK’s aid budget being swallowed up in a new department. Downing Street seems to have rejected the idea and Sharma believes the summit is an opportunity to demonstrate the potential for cross-Whitehall cooperation.
The three separate aid budget initiatives are Britain’s response to the massive Chinese investment drive in Africa, which the government says has already left a large footprint on the continent. The cash will be spent on improving the financial systems and regulations of 45 African states; a new investment fund to identify and develop projects; and a joint initiative with the World Bank to nurture local currency bonds.
Sharma said the aim was to help money from private investors such as pension funds flow into Africa by making it easier, quicker and more secure to invest.
“Africa’s substantial investment potential is clear, with many African countries outstripping global economic growth in recent decades. The UK is already the top financial exchange for Africa’s businesses and we want investors to seize the exciting opportunities that Africa offers.
“These new initiatives, announced ahead of the UK-Africa investment summit, will make it easier, greener and more secure to invest in Africa, mobilising billions of pounds of sustainable investment to help end poverty.”
David Malpass, the World Bankpresident, said: “By 2050, one in four global consumers will be African. But Africa currently attracts less than 4% of global foreign direct investment. Strong actions from countries to improve rule of law and take on vested interests could create the right incentives to spur investment by strengthening financial systems, building confidence in financial markets, and enabling more productive private-sector activity.”
