UK-Morocco relations following the UK-Africa Investment Summit 2020
Business Chief looks at some of the major outcomes following the UK-Africa Investment Summit 2020
On 20 January 2020 the UK hosted the UK-Africa Investment Summit in London. As the new Brexit deadline approaches, building upon UK-African relations will build the foundations for partnerships that will drive job creation and economic growth in both nations. Business Chief looks at UK-Morroco relations following the event.
Conor Burns MP, Minister of State at the Department for International Trade (DIT), hailed the future relationship for Morocco and the UK in the future: “We all know about the amazing opportunities emerging in Africa. Africa has a young and rapidly growing population.It is home to 8 of the 15 fastest growing economies.” Burns went on to explain that By 2050 over 2 billion people will live in Africa and that 1 in 4 global consumers will be African. “It is a market we cannot and must not ignore,” he said, going on to emphasise the UK’s need for Britain to create new and lasting partnerships as it leaves the EU.
Burns goes on to say that the last of good relations between the two nations was the leactor factor preventing the increase in trade. “Familiarity is important in business. Contacts are crucial. They give us information, they build trust, they create opportunities. That is why today’s event is so important,” he said.
“I want British companies to think about Morocco when they are developing their export plans.
"I want Moroccan companies to think about the UK when they are looking for new partners and expertise. I want Moroccans and Britons to see each other’s flags as a hallmark of quality whenever they see them. And we are building the groundwork for that shared vision as I speak.”
There have been a number of steps taken to begin building the relationship between the two nations. Before the event, a memorandum of understanding (MOU) was signed between the UK’s Reigate Grammar School and Morocco’s British International School Partners. In addition to this, Coventry University has signed a MOU with Superior Institution of Science & Technology (worth £14mn), which will assist in the development of joint educational facilities and programmes on teacher training, research and staff and student mobility. Most notably, the UK’s Development Finance Institution, CDC, invested US$200mn in BMCE-Bank (which is currently rebranding to The Bank of Africa) in a bid to promote financial inclusion across Africa, the biggest in the world according to Burns.
"Let us embrace the opportunities before us and build our relationships, strengthen our ties, and increase the future prosperity of people in Morocco and the UK," concluded Burns.
For more information on business topics in the Middle East and Africa, please take a look at the latest edition of Business Chief MEA.
Billionaire Kumar Birla Champions Regional Supply Chains
As the head of the Aditya Birla Group, a US$46bn firm that operates in 36 countries, Kumar Mangalam Birla is no stranger to splashy strategic moves. Yet his recent announcement that he no longer wants to acquire globally distributed supply chains stood out. While many companies have struggled to cope with shipping backlogs, his firm has chosen to pivot and focus on regional networks. Said Birla: ‘We wouldn’t look at a company or a business where you source in one corner of the world and sell in another’.
He cited protectionism, the pandemic, and the limited movement of products and people around the world as ABG’s primary causes of lost profits. And they aren’t alone. Over the past year, 900 of the U.S. and Europe’s biggest IT, defence, and financial services firms have lost an average of US$184mn apiece.
An Era of Global Disruption
Over the past few decades, low shipping rates and rapid delivery times have lulled multinational firms into a false sense of security. In the early 2000s, companies chose to take on significant global supply chain risks in exchange for increased profits. First, it made sense to manufacture higher-value goods, such as electronics, in low-cost regions throughout Southeast Asia, India, and Africa. Second, first-tier suppliers started to outsource the manufacturing of specific components to second-, third-, and even fourth-tiers—leaving supply chains with extremely limited visibility.
So when COVID-19 disruptions struck certain regions, companies were caught unprepared. Usually, these events come few and far between. But over the past ten years, we’ve seen a number of ‘black swan’ events that have thrown the supply chain industry into chaos. Here’s a quick history of the most significant events in recent years, thanks to the MIT Sloan Management Review:
- 2010. China creates export quotas for rare earth elements.
- 2011. The Tōhoku Earthquake hits East Japan; flooding sweeps throughout Thailand.
- 2016-present. Trade wars between the U.S. and China hurt suppliers.
- 2020-present. COVID-19 pandemic shuts down international shipping ports.
Now, Kumar Birla is one of many who want to re-evaluate how we run our supply chains. Though his company has acquired 40+ companies in the last quarter decade, Birla intends to build up local hubs rather than expand operations.
Why Pursue Regionalisation?
Combine Chinese economic dominance, global supply chain vulnerabilities, and major government policy shifts around the world, and you have a storm brewing on the horizon for big multinational firms. As Brookings noted, ‘the biggest risk for trading opportunities in the developing world is growing protectionism in more advanced economies, often dressed up as national security protection’.
Altogether, from the U.S. to the European Union, governments are trying to protect their domestic supply chains, secure adequate stockpiles of materials, and build world-class local networks. Consider Biden’s recent executive order, which seeks to bring semiconductor manufacturing back to home soil, or Japan’s bid to open more memory chip fabrication factories near Tokyo. The Aditya Birla Group intends to react in kind. Said Birla: ‘We’re looking at regionalism as a very big theme’.
Will Others Follow Suit?
In the post-pandemic economy, global businesses must decide whether to expand or contract. On one hand, the Alibaba Group’s Cainiao Smart Logistics Network recently launched a direct flight between Hong Kong, China, and Lagos, Nigeria. On the other, the Japanese government is desperate to make its chip manufacturing domestic. Indeed, as two supply chain strategies diverge in a post-pandemic world, the one businesses take may make all the difference.
Yet Birla is confident that regionalisation is the right call. According to his words at the Qatar Economic Forum, even necessary cross-border transactions should be smaller in scope. And as the Bloomberg Billionaires Index now lists his net wealth at US$10.4bn, up 52% from 2020, he may have the cash to test his theories out. ‘Regional hubs, regional presence, regional employment, catering to regional demand’, he stated. ‘We’re a global company rooted in local economics’.