Post-Brexit Africa

In the short term, much depends on whether Brussels can contain the economic uncertainty, market volatility and political risk. In the UK, the referendum has energized the pro-EU Scotland, which might try to stop the Brexit and, if that fails, could also seek ‘Scotexit’ – that is, a divorce from the UK.

In Western Europe, the Brexit is likely to support Euro-skeptics in countries that have an unfavorable view of the EU, including Greece, where living standards have plunged; France, where President Hollande’s pro-EU socialist government is under fire from both left and right and the National Front’s Marine Le Pen is currently the most likely President in 2017; and Spain where the leftist Podemos and anti-system movement have grown into a major political force.

Moreover, several EU economies – including Italy, France, Sweden and Belgium, Netherlands – have already expressed willingness to hold a UK-style EU referendum. If anti-EU forces will win in these countries in the coming months, future history will record the UK referendum as the beginning of the end for the EU.

Internationally, the Brexit is likely to inspire and amplify moderate, opportunistic and extremist separatist efforts. Few countries are entirely immune to such aspirations. Even Nigeria is no exception, as exemplified by Niger Delta Avenger (NDA), the militants in the oil-producing hub of Niger Delta. In this scenario, a series of attacks on oil pipelines since February could pave way to something far more challenging.

A few years ago, President Jonathan ignored Boko Haram’s initial gains, which resulted in a major security risk. As Nigeria’s oil production has been cut by some 600,000 barrels per day in the course of the year, President Buhari cannot ignore the economic, political and security threat of Niger Delta’s militants on oil infrastructure and Nigerian sovereignty.

Brexit Africa

In Africa, South Africa, a former British colony, remains most vulnerable to the Brexit. If the rand had already lost 21 percent against the US dollar this year at the eve of the UK referendum, it plunged another 8 percent against the US dollar after the vote. If the UK were to suffer a post-Brexit recession, it would reduce trade and investment between South Africa and the UK – the former’s fourth-largest trading partner.

If a UK contraction would cause a fall in British consumer demand; other African exporters would take a hit as well. Moreover, if the UK will eventually exit the EU, all UK-African deals – according to some analysts, some 100 trade agreements – would have to be renegotiated since they are currently the EU’s trade deals with Africa.

In late May, Kenya’s Central Bank Governor Patrick Njoroge warned about the Brexit risks to the global economy and markets. Certainly, from Africa’s perspective, a post-Brexit UK would be less inclined to be interested in global development. After all, London’s central role in development initiatives peaked during the UK presidency of the G8 Summit in 2005 when Western leaders agreed to double aid to Africa and eliminate outstanding debts of the poorest countries. Today, the UK remains a critical contributor in the European Development Fund, giving $585 million (or 15% of the total).

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Bill Griss 4 years ago Member's comment

I disagree Dan.