This article
gives a picture of how African economies could experience the pain of
Britain's exit of EU. The article focus on three aspects, trade and investment,
British development aid to Africa mainly the financial aspect and Africans
based in Britain home remittances. Although UK may have exited EU independently,
the effects of such a move is expected spill-over not only to its neighbours in
Europe but to the African continent. With globalization, will ever no country in
autarky.
Trade and Investment
With
Brexit and Boris Johnson who did not seem to buy the idea of ‘global Britain’
from his predecessor Theresa May, Britain may focus on making itself great
again thus narrowing its space. If that happens, Africa stands to lose as many
countries in Africa were former colonies of the latter and so, ended up
negotiating different trade and investment bilateral deals. However, a trade
deal existed between most African economies and EU before Brexit and British
exiting EU denies it from enjoying those lucrative deals and thus it will be forced
into renegotiating a new trade deal with its African trading partners. The UK-Africa summiit held on 20th January 2020 could be a start Brexit
could also lead to a capital flight witnessed in Africa leading to fall in
exports. An example is Kenya whose main trading partner of cut flowers is
Britain after Netherlands. If Britain’s
economy is affected, then the Kenyan economy will suffer approximately 4billion
Kenyan shilling ($39) from Kenya Flower Industry. If UK’s pound stumble as
a result of Brexit, then UK’s investments outside Britain could be limited as
it will be struggling to remain a major power in the west while convincing the
world that it was worth to exit EU. Other African sectors like tourism will
also be affected.
British development aid to Africa
Brexit
will also affect Britain’s’ development aid to Africa. Britain was one of the
major contributors of the European Development Fund (EDF) which the EU uses to
support development in developing countries. With Brexit, the fund will have
less money and this might affect EU-funded projects in the short-term including
road construction projects like Tanzania. Although China is currently funding
most of development projects in Africa, it cannot immediately fill the shoes
for EU. It’s possible for Britain to directly finance projects in Africa
through its international aid programmes such as Department for International
Development but it can only do so in a small number of countries. That would
therefore leave projects such as education, social entrepreneurs, and other development
initiatives short of financial aid and thus stumbling in the short-run.
The
former Prime Minister, Theresa May while
in South Africa in 2018 pledged four billion pounds ($5.3bn) in support of
Africa economies to create jobs for young people. She also pledged a
fundamental shift in spending aid to focus on long-term security challenges
rather than shot-term poverty reduction. However, it’s unclear if Boris Johnson
carries this vision for Africa as he has sought to focus on getting Brexit done
since he succeeded May in 2019. Again, whether Britain focus on building UK
after the EU divorce or put Africa first in terms of development aid and whether that is what Africa needs is a
question worthy asking.
African based in Britain remittances
African
economies could be facing a sluggish economic growth and Gross Domestic Product
as a result of Brexit. Britain outsourced most of its professional workers from
Africa especially South Africa, Nigeria and Kenya. Most students of
postgraduate studies preferred Britain, the former colony of most African
countries for their research fellowships following the level of advancement in
education in UK. These Africans in diaspora supported most families in Africa through
home remittances. With Brexit, it is unclear if this trend will continue as UK
may decide to keep capital inflow at a higher percentage thus restricting the
cash leaving the country. Even if that didn’t happen, the employment
opportunities offered to UK citizens by EU reduces as they will require to
obtain work permits to work within EU. Therefore, UK will experience unemployment
in the long-term as most money lending businesses and investors based in London
begin to leave the British market. UK’s second largest
insurer Aviva announced in February 2019 that it would move £7.8bn worthy of assets to Ireland as it
prepares for Brexit. Barclays, a British bank moved £166bn
worthy of assets to Irish capital. In May 2019, Honda confirmed it would close its
manufacturing plant in Swindon in 2021 cutting more than 3500 jobs. . This has an impact on the employment rate of UK and
directly affects African economies direct remittances.
