Nigeria: UK's Increased Collaboration With Nigerian Businesses
The British Prime Minister has highlighted the need for the UK to have a 'new, long-term approach to Africa', one that addressees the long-term demographic and economic challenges and establishes the UK's position on this continent in a post-Brexit world.
Africa matters to the UK: the UK/Africa trading relationship is worth over $30 billion, the UK is the second largest investor on the continent, and our shared history in many countries enables close business and familial links. As the largest economy in Africa it's particularly important that Nigeria drives positive growth across the continent and we want to be part of that growth. We have high ambition for a deeper, broader and stronger trade relationship between the UK and Nigeria.
The economic turbulence over recent years in Nigeria seems to be subsiding. I'm encouraged to see the positive outlooks for Nigeria from the World Bank, IMF and WTO for 2018. PWC is predicting a cautiously optimistic 2018 with headlines focused on stability on oil prices around $60pb leading to a projected 2% growth this year with decrease in inflation in parallel. The country has also been working hard to challenge perceptions about doing business here with a climb of 24 places from 2016 on the Ease of Doing Business Index to 145 presenting a more conducive environment in which to attract increased trade, although there's some way to go. And Nigeria's growing population presents opportunities as well as challenges. The UK hosts the world's second largest population of Nigerian diaspora. These strong bonds and a shared history will help prepare the UK to exit the European Union. We want to help business export, drive investment, open up markets and champion free trade.
And we mean business. We have leading edge capabilities in the UK particularly in subsea oil and gas, infrastructure, agribusiness, education, financial and legal services and IT, particularly in the cyber sector. We want to share our expertise, trade, invest and help Nigeria diversify its economy from its heavy reliance on oil and gas.
We're happy to put our money where our mouth is. The news that the UK Government's export credit agency, UK Export Finance (UKEF), will now be able to provide loan guarantees through local banks in Naira to support Nigerian businesses procuring from the UK, is a positive, practical step forward in increasing our bilateral trading relationship. Nigerian businesses have found it immensely difficult to finance or sustain projects due to foreign exchange fluctuations. These businesses will now be able to buy British products (where UK exporters are willing to accept payment in Naira), and repay in Naira at an attractive interest rate with long tenures, effectively managing foreign currency risk.
The British government can provide finance for up to 85% of the contract value of a project with a competitive minimum of just 20% UK content. With long tenures at low interest rates, this long-term financing makes sourcing from the UK highly attractive. The UK export financing offer is far more pragmatic and competitive than any other country, a huge £750 million has been earmarked by UKEF for Nigeria.
Naira is one of only three West African currencies on the list. UKEF is the only export credit agency to guarantee loans in Naira demonstrating our commitment to do things differently, demonstrating that Africa is very much part of that.
UK companies already have deep footprints in Nigeria. I took my Foreign Secretary, Boris Johnson, to Diageo's Nigeria Guinness brewery in Lagos last August. Our Prime Minister's Trade Envoy, John Howell, visited Unilever and got a sense of the scale of rapidly growing Lagos from a Bristow's helicopter during his November visit. And we look forward to welcoming the Africa Trade Commissioner at the end of this month. Over 500 UK companies already import from this dynamic country. I'd like to see this grow and diversify.
I'm delighted to see that the Department of International Trade's Africa Trade Services Unit kicked off a two-week tour across the UK on 5th February promoting markets across the continent, further illustrating our desire to challenge the perceptions around doing business.
Exciting days lie ahead for both our nations with the UK moving to a post-Brexit world and Nigeria heading towards the next round of elections with a cautiously optimistic economic backdrop. I hope that Nigeria continues to make the news for all the right reasons: incentives for business pioneers and innovators; digitizing business processes and cogent policy reforms; and increased pressure on everyone to contribute to this great nation through payment of taxes. We're proud to say that we're a long-standing friend as we approach the Commonwealth Heads of Government Meeting in London in April, doing what friends do best: encouraging, supporting and benefiting from our shared prosperity