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Home Africa

Opinion: BREXIT – Potential African consequences

Rafael Carvalho by Rafael Carvalho
January 20, 2020
in Africa, Brexit, Cooperation, Trade
Reading Time: 3 mins read
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BREXIT potential african consequences
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BREXIT potential African consequences may be on the horizon, as the final terms of BREXIT come to its closing chapters. One has to wonder what would the effect of a no-deal BREXIT look like for African countries.

If a no-deal BREXIT (a withdrawal of the United Kingdom from the European Union with no agreement under the accord) goes forward, can the unprecedented growth of the African continent over the last 30 years be hampered in any way?

As it happens, the answer seems to be YES and NO.

Let’s start with the YES (which in this case, ironically, is rather negative): the UK is indeed a significant contributor to several development funds in Europe; in such a scenario, let’s state the obvious: if done wrong, BREXIT will not look good for African countries receiving assistance from the UK and its development partners, at least not on the short term.

As of 2016, 0.7 per cent of the UK’s Gross National Income (GNI) was channeled for development aid, a good portion of which bound for the development of African nations. If the predicted decrease of 7.5 per cent in GNI over the next 15 years (as a result of a no-deal BREXIT) holds water, it seems only natural that a reduction in UK-originated foreign aid would follow suit; any African nation with a heavy reliance on such aids, would have to restructure their funding to account for that.

Add to that the risk of declining direct investment coming from the UK, provided that their economy drops significantly, as some more pessimistic predictions would like to see confirmed. In practical terms, and according to the IMF’s Coordinated Direct Investment Survey (CDIS), the UK is amongst the top five economies providing inward investment into Uganda, Zambia, Botswana, and Nigeria, making these countries the most likely to feel the effects of a decrease in financing from the UK.

Stats from the Office for National Statistics (ONS), again as of 2016, show that the UK represents 4.8% of total African exports, with China, as a means of comparison, racking up 15%.

These few examples show that a no-deal BREXIT would definitely be felt across the board in African countries, more so than in the UK, if left unattended.

Now that we have peeked in to the half empty part of this huge glass of BREXIT water, let’s make the case as to why it actually looks like it’s more of a half full kind of a deal.

Like I stated above, a no-deal BREXIT would not, essentially, mean good news, from the point of view of African countries, if left unattended. The thing is, the African market potential, not only in connection to the UK but in a worldwide scale, is anything but unattended in the past few decades.

In one of our previous articles we’ve mentioned some of the recent statements from Emma Wade, Her Majesty’s Trade Commissioner for Africa appointing that the UK has been hard at work in the negotiation table to guarantee that after it leaves the European Union,” it secures the continuance of a tariff-free market access with some 36 African countries on the ‘everything but arms’ scheme”. In other words, not only does this show that the UK recognises the importance of the African market in this new, uncharted territory that is the future outside of the restraints of EU trade policies, but also that a whole contingency plan is already in motion, and the UK is not looking back, but rather looking far south, towards the African fertile domain.

The question here is: is all this motivated solely by the UK’s own self-interest, or can Africa as a whole benefit from, let’s say, a fresh start and an opportunity of capitalizing in stronger economic ties with the UK, as they in turn aim to show to the world they can transform what appeared to be a stumbling exit into a graceful entrance into a new, positive outcome? They sure do want to prove everyone else wrong, and that’s where I believe they can be more lenient and agree on more evenhanded agreements that can strengthen Africa’s growth more than hinder it.

With the UK showing signs of good faith in the form of better terms and negotiation perks, why shouldn’t African countries demand the same from other European countries?

 

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Tags: Access Bank NigeriaafricaBotswanaCDISCoordinated Direct Investment SurveyEmma WadeEuropean UnionFeatureIMFNigeriaOffice for National Statisticspost-BrexitRafael CarvalhoUgandaZambiaафрикаأفريقياアフリカ非洲
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Rafael Carvalho

Rafael Carvalho

Currently the Managing Editor of furtherafrica.com, I am passionate about writing, in its myriad forms. As I started writing and editing content about Africa, I came to the realisation that, just like our ancestors hailed from the motherland, so is the future, too, very much African-oriented. Join me then, as we learn more about a future that is welcoming, multicultural and full of promise. The future that is Africa.

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