What is the likely impact of Brexit on Africa?
For those passionately interested in the ongoing development of Africa as a continent, and who believe that trade and education are the only real answers to the economic development of the continent, it could be said that the Brexit vote has come as a bit of a shock.
In fairness it was a profound shock for almost everybody!
If one values the relentlessly negative reporting of some of the news outlets, particularly the BBC, then Brexit it seems is nothing short of a disaster for Africa. The nearest that particular institution has come to a positive response has been to say that, “the only certainty is uncertainty”.
One envies the remarkable prescience of such journalists and pundits who just know that it is all going to be bad news. But is it?
Of course it is true that Sterling tumbled against almost all currencies and that stock markets across the world took a beating in consequence of the vote; although several have subsequently recovered. As indeed it is true that many African economies view aid from the UK as a significant part of their capital investment inflows (although only 8% across the continent and most of that in South Africa) and that trade agreements with the EU, many hard fought for over too many years, are seen as an economic lifeline in this uncertain world. Might these agreements be endangered by Brexit?
Investors are also worried that African countries will have less access to international capital markets, which could halt large infrastructure and other projects, at least those in the pipeline (no pun intended) and not yet approved. A possible recession in the UK could impact on the quantum of the aid package of course and it is feasible that the UK could find itself with a regressive anti-trade government…feasible but not likely.
Not that much trade actually takes place between Africa and the UK, as it turns out. Combining data from the UK’s Office for National Statistics and the Nations Conference on Trade & Development 2014, the latest year for which there is comparable data, africaisacountry.com calculated that exports from Africa to the UK represent about 5% of Africa’s total exports. Africa, they logically believe, is more worried about a slowdown in China, its biggest trading partner by far.
Large numbers of Britons have extensive links to Africa through education and the voluntary sectors but the UK has nothing like the trading influence on the continent that it did decades ago. Time for a positive change then?
This should be seen as an opportunity for both the UK and the most enterprising African nations to re-double efforts to increase trade in both physical goods and services.
This should be seen, in my view, as an unprecedented opportunity to work together to build a better future and also, potentially, right some historic wrongs.
Graham Palfery-Smith is a Board Advisor to a number of companies in various parts of the world including Executives in Africa