Six takeaways for Africa
- Creating a Resilient Organisation
- Political and Economic Risk Consulting
Six takeaways for Africa after the Brexit vote
- The main short term implications of the Brexit vote are volatility in forex and financial markets. This will primarily filter through to the real economy via the indirect impact of global risk sentiment on commodity prices. The longer term implications – both economic and geopolitical – depend on the terms that are negotiated for the United Kingdom’s exit from the EU, and how this feeds through to Africa through trade, aid and political influence.
- Looking at the bigger picture, we see the main impact of Brexit is that Africa goes further down the global agenda. As political risk has increased in the traditionally safe havens of Europe and with the election in the United States later this year, there is less scope for international cooperation on issues of particular relevance to African countries such as peace and security, development and the impacts of climate change.
- We see the longer term impacts as a continuation of the relative decline of European powers’ influence in Africa. The UK will still retain cultural and trade links through the Commonwealth, but outside the EU bloc, it will likely be more reliant on its own diplomatic channels than going through the EU delegations. This will especially apply where the UK has fewer historical ties such as Cote d’Ivoire, Senegal, Angola and many smaller francophone or lusophone countries.
- The impact of perceptions of increased xenophobia in Britain is relevant in that many see the vote as a sign that Britain will become a more inwardly-focused country with less focus and interest in upholding commitments to human rights and inclusive global development. This is certainly how it’s viewed in certain quarters, with a number of politicians and local media outlets in Southern Africa in particular expressing concern over the referendum result.
- With Brexit, the influence of the UK’s Department for International Development (DFID) on the development agenda is likely to change. DFID has been influential over the past 15-20 years in setting a progressive agenda for EU development aid, not least through a commitment to spend 0.7% of GNP on overseas development aid. The fact that the UK is one of the few countries in the world to meet this target and has enshrined it in legislation underlines the role the country has played to date. Whether that continues under new leadership and beyond is now seriously in doubt, especially if a recession is looming in the UK.
- Trade impacts are probably going to be minimal. For now the UK is still part of the EU so still part of the economic partnership agreements between the EU and African regional blocs. Whatever deal is reached between the EU and the UK will be important as plenty of trade will still come to the UK through the EU.