Ninety-two per cent of UK-based business people who currently trade with Africa believe there are opportunities for British companies in the continent.
This according to a recent Barclays survey where the bank conducted interviews with 250 UK business leaders doing business with Africa.
Approximately three out of ten (32%) respondents reckon there is a ‘huge opportunity’ for UK businesses in Africa. Two thirds (64%) indicated that they expect the opportunities in Africa to increase over the next five years.
When asked what provides the biggest opportunity for UK business in Africa, the reputation of British goods and services were cited most, followed by growing infrastructure spending across Africa and an expanding middle class.
Just over half of respondents consider traditional Commonwealth ties helpful for doing business in Africa. According to John Gachora, managing director and head of corporate banking at Barclays Africa, the UK’s history with Africa is more important than some people realise. “Historic trade links from colonial times form the basis of today’s trade. There’s also a strong tradition of wealthy African families educating their children in the UK,” said Gachora.
South Africa is the top African country for UK exports, with 60% of the respondents saying they currently export there. Other prominent destinations for UK exports are Nigeria (37%), Egypt (35%), Ghana (24%) and Kenya (23%).
“South Africa, led by Johannesburg, has traditionally been the central financial hub of the continent and the benchmark African countries hold themselves to,” commented Kah Chye Tan, Barclays global head of trade and working capital.
However, when comparing Africa to other developing countries, the vast majority of respondents still see more potential in markets such as Asia and Eastern Europe. Only 14% said that Africa is the emerging market with the most potential.
How challenging is it for these UK companies to do business with Africa? Nearly three out of ten (29%) respondents said it is ‘very challenging’ to trade with the continent, while 41% said it’s ‘somewhat challenging’ and 30% finding it ‘pretty straightforward’.
Several of the challenges experienced by these companies stem from the fact that many African countries are landlocked.
Overall, corruption (20%) was identified as the biggest challenge of doing business in Africa. Other difficulties are related to payment systems (19%) and poor infrastructure (16%).
“Many view Africa like a half-empty glass, citing its relatively small GDP, which is less than the UK’s. I can’t help but look at the continent as a glass half full. It represents a huge opportunity for UK business in terms of its future growth prospects alone. And with its population, huge land area and untapped natural resources, Africa’s potential is significant,” said Barclays’ Kah Chye Tan.