While African countries are busy trying to woo new foreign investors, British companies have been quietly disinvesting from English speaking African countries. This sobering conclusion is contained in a recent Working Paper published by the Institute of Development Studies, University of Sussex. The implications for the countries involved could be devastating.
According to the report published by the Institute of Development Studies, British companies have been quietly disinvesting from English Speaking African countries (ESA) since the beginning of the 1980s. Over the past five years however (1989-94) the trickle has become if not a flood, at least a swiftly flowing river.
Contrary to established opinion, the report says that strict adherence to Structural Adjustment has not helped African countries to stem the tide, but, if anything, SAPs have accelerated the rate of disinvestment.
The conclusions of the report are bound to deeply worry ESA countries since British Direct Foreign Investment (DIF) forms the backbone of their manufacturing sectors.
Over 90% of UK manufacturing in Africa as a whole (excluding South Africa and Namibia) was located in ESA in the early 1990s. Furthermore, according to the report, British corporate investment comprises between 50-80% of all manufacturing FDI in each ESA country.
Between 1989 and 1994, over half UK manufacturing companies based in ESA have disinvested. In mid 1989, there were 90 British companies with a total of 336 equity involvements; by mid 1994, there were only 65 companies with equity stakes in 233 manufacturing enterprises. Of the companies that have disinvested, 28 (31.1%), have done so completely while 20 (22.2%) have disengaged partially.
Three African countries have borne the brunt of this disinvestment: Kenya, Nigeria and Zimbabwe, where around 65% of British equity involvement was located.
Some of the most important disinvesting companies include: Chloride and Lucas (car batteries), Leyland Trucks (vehicle assembly), Courtaulds (paper, packaging), Boots and Welcome (pharmaceuticals), Low and Bonar (textiles, plastics, engineering), Pilkington (glass), Raleigh (bicycles), Norcros (metal doors and window frames), Silentnight (furniture), Whitecroft (plastics, office equipment), Bain and RTZ (tools, implements), Lonrho (paper, printing and packaging, food and drink), and Allied Lyons and Dalgety (food).
"Probably the largest and in many ways, the most symbolic disinvestment was the sale...