The export opportunity in emerging markets Africa
In recent research we have conducted, qualitative evidence suggests businesses are looking for new export markets beyond the EU since post-Brexit regulation has made trading with the EU more complicated.
Businesses are seeing opportunity in African markets as they are finding there is now more demand for British goods and services among African nations, and there is less local competition to contend with. For example one member said “we’ve probably looked into North Africa a lot more than we would have done… and they seem to be more open to approaching companies like ours at the moment, which is nice to see”.
Specifically, businesses that have told us they are seeing opportunity in African markets have tended to be from construction, chemicals and homeware industries.
However, many say they do see a certain amount of risk when it comes to developing markets. Firstly, because the business operating environment often changes at a faster pace than in more established economies, businesses need to remain agile, and often need to innovate or invest in R&D in order to stay competitive.
Secondly, some members in advanced sectors are finding they hit a barrier when trading with emerging markets if there is insufficient local regulatory or infrastructural requirements for their products. An example is a member who manufactures and distributes specialised equipment for environmental monitoring and finds that certain African markets do not have the capability for these types of goods or services.
Members have also encountered very high tariffs when trading to certain African markets, particularly when it comes to steel. For example one construction business told us they face 25% tariffs on steel in Kenya, and up to 35% tariffs on steel in Uganda.
In light of hampered business confidence in the wider economic and trading environment, UK exports are not as strong as they perhaps should have been coming out of the pandemic. Markets such as those in Africa therefore present opportunity for both experienced and potential future exporters.
But businesses are calling for more cultural and language-based guidance, which will be especially helpful for markets like those in Africa which sometimes have different and therefore unfamiliar business practices to the UK.
Similarly, it would be helpful for the government to provide an analysis of general advice when exporting to or importing form emerging markets so that businesses can plan a long-term strategy for these markets as they continue to grow and develop.