UK and East Africa: Partnering on future opportunities

Foreign Office Minister Mark Simmonds spoke at the East Africa Oil & Gas Summit on 10 June 2014.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Mark Simmonds

East Africa’s energy and economic success are critical, not only to the interests and prosperity of its people – but to the UK. The recent oil and gas discoveries there show the potential is vast. So we have a real opportunity here – both for East African countries to realise their economic potential and for building our own prosperity through partnerships.

But if East Africa’s potential is not to be squandered, leaders must continue to invest in long-term prosperity by supporting good governance; investing in skills for young people; and ensuring that business deals are fair both for companies and local communities.

Through initiatives like our High Level Prosperity Partnerships, the UK can help. The Department for International Development, UK Trade and Investment, and the Foreign & Commonwealth Office are working as one team with business and the governments of Tanzania and Mozambique, as well as Angola, Cote d’Ivoire and Ghana.

These Partnerships are a personal priority for me, as Minister for Africa; for international energy and climate change; and as the Minister leading the drive on what we call the High Value Opportunity of the East African oil and gas sector. And for me, the word ‘partnership’ is crucial. It’s not about a one-sided relationship. To reach East Africa’s full potential and to support British business, we are working together - as equals.

It will take time to develop energy sector capabilities in the region, just as it took time for the UK in the North Sea.

In the 1960s, Aberdeen’s population had fallen; there was high unemployment; and its economy focused on farming, fishing and textiles. But with the discovery of oil, the city reinvented itself to become a global centre of excellence in the oil and gas industry. And British companies now have world-class expertise. A key factor in Aberdeen’s success was its investment in building the right skills in the local population through its colleges and universities. And just as impressive is the way Aberdeen is reinventing itself yet again - to become a centre of expertise for renewable energy.

East Africa can, and is, drawing on that expertise, which could bring huge gains. So I was delighted that last year, the President of Mozambique, and this year the President of Tanzania, visited Aberdeen, to see it for themselves.  

Of course, we are not the only ones with expertise – and I know Willy Olsen has a strong focus in this area. That is why I proposed a new UK-Norway initiative to support the development and management of East Africa’s oil and gas resources. We can build on our joint experiences in the North Sea, and coordinate our work on development, transparency, trade and investment. Together, we can have more impact helping African governments to manage their resources in the best way, building up local industries and jobs.

But while the potential is huge, governments in East Africa - like all governments - face challenges if they are not to squander it. That is why it is so important that they continue their work on open markets, human rights, stability and investment in skills - to create conditions in which prosperity and growth can flourish.

Information and accountability are vital too – to ensure that resources are used well by holding people, companies and institutions to account.  

So Britain fully supports their work - because transparency drives global growth through building a more open and level playing field for business.

We work with Governments, business and civil society to build transparency, accountability and capacity to enable countries to generate the best returns.

We bring British policy expertise to the region and encourage regional governments to implement open, fair, and transparent procurement processes and revenue management systems.

We encourage efforts to unlock barriers to markets; reduce the cost of doing business; and stamp out corruption.

Our ‘Good Business’ Action Plan shows how human rights and good governance don’t just make good moral sense – they make good business sense too. The transparency surrounding our business practices also ensures local communities benefit from partnerships with the UK.

And we strongly support the Extractive Industries Transparency Initiative’s efforts in Africa, where 27 nations are already compliant, including Tanzania and Mozambique. Other nations, like Ethiopia, continue to sign-up. We announced our candidacy at last year’s G8 and we are encouraging others to follow suit.

Another risk to the potential in East Africa is conflict. The business sector wants to see political and economic stability. So the UK is playing a leading role in improving security across Africa. We work with the African Union on crisis response and peace-keeping. We work on counter terrorism in Kenya and Somalia. And we contribute to the naval missions combating piracy off the Horn of Africa, keeping energy supply routes open.

But the final risk that could hold back the East African oil and gas industry is a lack of investment in education and skills. As I said, Aberdeen’s success story was largely due to the investment in the skills of its young people.

So work has started in East Africa to identify how the UK can provide oil and gas training and education, tailored to each country’s needs.

For example, using our one-team approach, DFID, UKTI and the FCO are exploring potential options for generating public and private investment in local training institutions in the region, drawing on British and international expertise to train local people in the skills the oil and gas industry need. It aims to ensure local communities benefit from jobs, opportunities and internationally recognised qualifications. And it offers a huge opportunity for UK skills providers bringing their experience from the North Sea to East Africa.

But while Government can help with spotting long term opportunities, creating the right business environment, and pushing trade and investment, economic development ultimately relies on businesses. I firmly believe that British companies are well-placed to support the development of Africa’s energy sector. And the Government stands ready to support them.

The UK has sent a number of successful trade missions to the Region - most recently from the London and Aberdeen Chambers in March, along with the Energy Industries Council.

UKTI offers quality advice to British businesses on developing sustainable local content agendas and partnership programmes – generating jobs; providing skills and training to local people; and ensuring the economic benefit remains in the region.

British companies already play a leading role in financial services, infrastructure, consultancy, and natural resources. But we will break new ground when the Lord Mayor of the City of London heads a high level financial services mission to Uganda and the wider region in September.

And Lord Hollick’s appointment as the Prime Minister’s Trade Envoy for Kenya and Tanzania underlines just how important the region is to the UK.  

But what I am most proud of are our five High Level Partnerships for Prosperity in Africa, which I set up with UKTI and DFID. As I mentioned, two of them are with Mozambique and Tanzania. And it is no coincidence that these Partnerships encompass all the elements for realising East Africa’s potential that I have been talking about – British and international expertise; supporting business; investing in local skills; and improving the business environment.

Let me take Mozambique first - one of the most dynamic economies in Sub-Saharan Africa, growing by 7 percent last year, and one of the fastest growing economies in the world. Mozambique has macro-economic stability and a favourable geographic position. Our bilateral trade in visible goods rose 14% in 2013 year-on-year to over £150 million, and the UK is its sixth biggest investor.

By designating Mozambique a High Level Partner we recognised the shift in our relationship from development partner to economic partner. And our message to the private sector is that the time is right for British companies to engage with Mozambique.

Under the Partnership, we have put together a set of targets and activities to push trade and investment through trade missions, senior ministerial visits and working to bring down barriers to trade so that the private sector can thrive.

For example, the UK already provides funding through the World Bank to the Mozambican Government, supporting capacity building in the public sector management of the mining and petroleum sectors. Through our partnership, DFID are also opening up new opportunities for British companies by supporting other, less developed sectors - like transport infrastructure, financial services and agriculture.

The British Council are building English-speaking capacity on courses designed for oil and gas workers through educational institutions like Eduardo Mondlane University.

And we have been working with the Mozambican government, civil society, and national and foreign companies, to promote the Ruggie and Voluntary Principles –principles that support economic growth by companies actively considering governance and human rights issues in their daily business. I discussed this only last week with the Mozambican Justice Minister, and we are both keen to see these principles firmly established in practice.

My fellow speaker this morning, His Excellency Carlos dos Santos, Mozambique High Commissioner to London, has played a key role in this new partnership and I thank him for his unstinting support.

Now to Tanzania, where as an investor, the UK is in a league of its own, commanding a 36% share of foreign direct investment. Scottish company ASCO recently won a £62 million contract for the management of Mtwara port. BG is in pole position in offshore gas, having already invested nearly £1 billion. And it is poised to jointly invest with others in a £24 billion liquefied natural gas plant.  

Through our High Level Prosperity Partnership, the FCO, DFID and UKTI are working closely together with Tanzanian partners to address market access issues, and encourage inward investment and local content partnerships in priority sectors like oil and gas.

The Partnership’s other priority sector is renewable energy, where British company Aldwych International are in discussions with the national energy supplier TANESCO about a wind farm project.

And DFID is funding President Kikwete’s ‘Big Results Now’ initiative to increase growth to double digits and reach middle income status by 2025 by targeting priority sectors.

I have focused on two countries, but that is not to say that we are not active in pursuing opportunities and support elsewhere in the region. There are Ministers and senior officials here this week from across East Africa, and it’s an excellent opportunity for businesses here to engage and learn more about the huge potential for the region.

So, to conclude: the UK offer to the East African Oil and Gas industry is about building genuine partnerships - not just winning contracts. It draws on the UK’s world-class strengths across the whole supply chain and on regulation, licensing and safety; offshore development; research and education; and low-carbon goods and services.

It’s a powerful partnership that can benefit both East Africa and the UK, for our genuinely mutual prosperity. Its’ a huge opportunity. But we must get it right, through sustainable growth, democratic values and investment in people.

Thank you, and I look forward to hearing about your deliberations during the Summit – it is a very exciting agenda.

Published 10 June 2014