MOMENTS after Britain’s historic decision to leave the European Union, EU, countries in Africa began to feel the negative consequences of the exit. Director-General, Nigerian Institute of International Affairs, NIIA, Professor Bola Akinterinwa, had on Friday, said the negative impact of Britain’s exit from the union would be bilaterally and multilaterally felt not only in Nigeria, but in the African continent. “Politically, Brexit can bring a weakened European economy; it will be weakened in various respects because Britain accounts for about 15 percent of EU’s operational budget. This will create more burden for countries like France and Germany, the two main countries carrying the financial burden of other member-states. With that relationship with the European Union, other members will also be weakened. “When it comes to insolvency, the amount of money given to Nigeria either as development grant or whatsoever, cannot but be reduced. So, these are some of the implications,” he said. He said it is at the level of multilateral configuration that Nigeria may be slightly affected. “Britain is a member of the EU and Nigeria is a member of Commonwealth and in this case, Britain is both an active member of the EU and Commonwealth. Nigeria has been benefitting from the free trade tariff access of the British to the EU; now with the Brexit (Britain Exit), that one (free trade tariff access) may become a little bit difficult for Nigeria,” he said, adding that Nigeria’s economic relationship with the EU might also be affected with the development, explaining that it would jeopardise Economic Partnership Agreement, EPA, with the EU. “With the withdrawal of the British from the EU, now the EPA will no longer apply to Nigeria within the framework of its bilateral relationship with the British,” he said. Akinterinwa added that Brexit could also affect Nigeria and ECOWAS’ relationship with the EU. According to him, since Britain is not part of the Schengen Visa Regime, anyone going to Britain must apply for visa directly for Britain. “Since the purpose for withdrawing from the EU is to emphasise British sovereignty, the British will now be in a better position to deal with international migrants in its context. There are three million migrants in the UK, while we talk about 1.2 million Britons living in other parts of Europe. In this case, the issue of migration becomes an important matter on the strategic calculations of government. “It means that immigrants are likely to cut a rough deal; they are not likely to be given the type of accommodation they currently have. The UK border will now be in a better position to control the inflow and outflow of tourists,” he explained. Professor Akinterinwa’s informed opinion has already begun to manifest. Results of the referendum in the United Kingdom has not only left the European Union shocked, markets across the globe, with over $2 trillion were wiped out in a single day, but African economies have not been spared the volatility that the Brexit vote caused on different asset classes. Currencies, stocks and bonds plunged across the continent after the UK’s vote to leave. Africa’s largest economies – that have been struggling with commodity prices rout – were the most affected as investors anticipated a slowdown in inflows as a rush to safe havens like US markets and precious metals ensured. Brexit also caused uncertainty over the future of trade relations between the UK and Africa. Here is how some African markets reacted after the Brexit referendum: South Africa: South Africa was the most affected market in Africa by the Brexit outcome due to its strong ties with the European economy. In 2015, South Africa sent 23 percent of its manufactured exports to Europe including the UK and 36 percent of its agricultural exports. The rand tumbled nearly eight percent against the dollar in trade on Friday after Britain voted to leave the European Union. It touched a record low against the Japanese Yen. At the Johannesburg Stocks Exchange, the benchmark share index fell the most since May 2010 to a third weekly decline, led by stocks with listings in London and by diversified mining companies, Bloomberg reported. South Africa’s Minister of Finance, Pravin Gordhan, moved on Friday to reassure the country that its financial institutions could withstand the effects of Brexit, reported. Nigeria: Last week was eventful for the Nigerian market with a new exchange rate policy being introduced and the UK’s exit from EU affecting commodity prices, particularly causing a slide in oil prices, which is the leading export from the West African nation. These two events affected Nigerian markets differently. The decision to withdraw UK from the EU ended a three-day rally on the Nigerian Stock Exchange, while on the foreign exchange market,
the naira gained against the dollar and British pound, but depreciated against the euro, Venture Africa reported. “With Brexit, the Pound Sterling fell as against the U.S. Dollar; the Euro too has also fallen. Investors, immediately, for fear of the unknown began to move their investments thinking of relocation and that immediately affected the value of the Pound and it began to fall. “So, the parity of the naira to the pound sterling, if the pound sterling is falling, is good for Nigeria; it is a welcome development at that level,” Akinteriwa had predicted. Egypt: Egypt was the hardest hit market in North Africa by the Brexit vote, as investors became concerned that fund inflows into the country could shrink as the global market turmoil would make it harder to attract funds. The country’s stock market dropped sharply and closed 5.5 percent lower at 6,852 points near its intraday low, Reuters reported. Kenya: There was little impact on Kenyan stocks and foreign exchange markets from Brexit after the country’s central bank governor, Patrick Njoroge, assured markets that regulators were ready and capable of intervening in case of any jitters, Reuters reported. There was concern that the decision by British voters to exit the European Union would affect the amount of tea that the UK imports from Kenya, due to anticipated decline of its re-export market to other nations. The UK is a major re- exporter of Kenyan tea and in 2014, it exported 17 percent of the beverage it imported, Daily Nation reported. Tea is one of the largest hard currency earners for East Africa’s largest economy. Rwanda: According to The East African, transactions in pound sterling stalled across Rwanda as dealers anticipated the withdrawal of Britain from the European Union. Rwandan remittance startup, Mergims, suspended buying the pound sterling for eight hours, following similar moves by international money transfer agencies, Transferwise and Azimo, which suspended pound sterling transactions for 24 hours during the referendum vote.