Although there has been much press on the negative effects of the UK’s decision to leave the EU, key measures announced in the Autumn Statement underscore our view that Brexit may yield some opportunities for investors in Africa, notably in its strong agricultural and mining sectors. In addition, Brexit may allow African countries the opportunity to leverage fairer trade terms with both Britain and the EU.

Chancellor of the Exchequer for the UK, Phillip Hammond, announced that UK Export Finance’s risk appetite will double which will result in nearly £2.5 billion of additional support for UK exporters and that the Department for International Trade will receive over £79 million to develop and deliver an independent international trade policy.

International Trade Secretary Dr Liam Fox commented that “Leaving the EU presents the UK with new opportunities in trade and investment, and this Autumn Statement sends the clearest message to the world that the UK is open for business.” So what does this mean for investors in Africa?

Agricultural investors in particular may well find opportunities in the current climate. Agricultural exporters to the UK may be able to capitalise on a relaxation of tariffs and quotas. EU tariffs on agricultural products average 18% and the EU common agricultural policy has come under severe criticism for, among other things, making it difficult for African agricultural producers to compete with European producers. Calestous Juma, at the Harvard Kennedy School, calculates that in 2014 Africa earned nearly $2.4bn from coffee grown in Africa and picked by African workers but by contrast, Germany’s coffee processing industry makes $3.8bn from roasting imported raw beans and then re-exporting them – to protect this industry the EU imposes a 7.5% charge on roasted coffee imports.

Whilst some EU members have significant domestic agricultural and food processing sectors the UK’s economy relies far less heavily on these industries and imports over 40% of total food consumed. Some commenters have speculated that this may lead to a more liberal approach to agricultural trade which can only be good news for a number of African economies.

In its “Inquiry into the UK’s Africa Free Trade Initiative” report published in October 2016 an Inquiry Committee appointed by the All-Party Parliamentary Group for Trade Out of Poverty noted that the UK’s withdrawal from the EU may “…open up possibilities for the UK to take a more specific and targeted approach to its trade relations with Africa aligned with the Sustainable Development Goals, to work to reduce protectionism, particularly as regards technical barriers in areas like agriculture, and to design new trade agreements that would be development-friendly and potentially more liberal.”

Further good news for agricultural investors is the likelihood of a relaxation of plant health regulations. The sheer size and bio-divergence of the EU has resulted in some very strict regulations. For example, the EU in 2013 imposed a ban on most imports of citrus from South Africa over concerns that a fungus known as citrus black spot may be transmitted to European orchards. The import ban was designed primarily to protect Italian, Spanish and Portuguese citrus growers but impacted the entire EU. The UK has no citrus and is unlikely to be concerned by this which may open the door to trading relations with South Africa once again. This example serves to highlight the larger point than a trade relationship directly with the UK will necessarily be subject to fewer competing pressures than those arising from the whole of the EU.

Another sector that has seen some positive press since June 2016 is mining. In a report from Grant Thornton it was noted that the total market capitalisation of all the AIM quoted miners was £3.9 billion immediately before 23 June 2016 and a month later had risen 19% to £4.6 billion. They posited that a combination of investors rushing to commodities as a safe haven investment class and a weaker sterling making equities appear cheaper to foreign investors are likely to be the main drivers. Accenture similarly released a report in October 2016 commenting that “commodity prices are not likely to retreat sharply, simply because many commodities are already priced so low that they are barely covering operating costs. And although Brexit may or may not assist world economic growth, it is at least, in the worst case, not expected to destroy the global recovery—and ultimately, that reality should play the largest role in shaping global trade and investment in the mining industry”.

Perhaps the most significant opportunity for African economies will be the opportunity to renegotiate trade terms. It is expected that the UK will be wholesale renegotiating all trading relationships and Africa’s increasing trend towards negotiating as regional blocks rather than individual countries may ease this process. Certain commentators have noted that Brexit may allow African countries to leverage fairer trade terms with the EU also. The East African Community was due to sign a long negotiated economic partnership agreement with the EU in June 2016 when Tanzania halted the signing citing the turmoil the EU is experiencing following the UK referendum as its reason. A weakened EU, or even just the perception of one may provide good leverage to African countries revisiting trade terms.

As the partner for over a quarter of Sub-Saharan Africa’s trade there is little doubt that decisions made in the EU will significantly impact Africa’s economies but as with all seemingly negative economic events there will be opportunities for those investors willing to seek them out.