Post-Brexit Africa

In contrast, the Brexiteers argue that development aid would be more effective when the UK is not part of the EU. In a post-Brexit UK, immigration controls would be more stringent than within the EU, while some argue it could actually foster trade relations with African economies if the UK would ease immigration controls for Commonwealth citizens. Nevertheless, these arguments have not been substantiated with persuasive evidence.

Post-Brexit Nigeria

Nigeria’s naira dipped by 31 percent on June 20, the first day of trading following a currency float; just days before the Brexit referendum. Previously officially pegged around 197-199 per dollar, naira sold at less than 290. After one week with the new foreign exchange regime in place and amid the Brexit volatility, Naira firmed to 282.

Though a former British colony, Nigeria is not among the most exposed economies to the Brexit waves. Nevertheless, it would have a negative impact on bilateral trade between Nigeria and the UK, which currently amounts to £6 billion and has been projected to climb to £20 billion by 2020. As the UK is Nigeria’s largest source of foreign investment, the Brexit would also endanger all investment flows.

In the short-term, some effects might be counter-intuitive. For instance, the drastic plunge of the UK pound and its central role in the Commonwealth could improve Nigeria’s terms of trade with the UK and some other economies. In the long-term, challenging scenarios could not be avoided, however. While an eventual Brexit would have a series of direct and indirect effects on Nigeria, the ensuing uncertainty in the UK – and the dissolution threat in the EU– could have severe repercussions. After all, the UK accounts less than 5 percent of Nigeria’s global trade, whereas the share of the EU amounts to close to 40 percent.

Typically, most estimates of the Brexit impact focus on trade, investment and banking, which are typical to advanced economies, but ignore the migration channel (read: remittances), which are vital to emerging and developing economies. In 2015, Diaspora Nigerians sent back home some $21 billion, which makes the country the sixth largest remittances recipient worldwide. As long as more than 1 million Nigerians live in the UK, an eventual Brexit, as well as associated uncertainties, will be reflected in their remittances.

Indirectly, the contagion venues will be equally hard to avoid. Take, for instance, the trade channel. More than half of Nigeria’s exports go to India, Brazil, Netherlands, Spain, South Africa and France. Of these countries, South Africa, Netherlands, Spain and France are relatively highly exposed to the Brexit. While India and Brazil are more insulated from the Brexit, reform momentum has slowed in the former and the latter is amid its worst economic crisis in a century.

What’s next in the British ‘House of Cards’

Unlike Germany, Brussels is urging London to exit soon, but that requires the UK government to trigger the Article 50 of the EU Treaty, which would start a formal withdrawal process. When UK Prime Minister David Cameron resigned, he indicated that a new PM must oversee the Article 50 process. That unleashed floods of largely misguided speculation. As The Economist forecast that Boris Johnson, a volatile Brexiteer leader, would become Cameron’s successor, Johnson himself announced that he would not run for prime minister.

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Bill Griss 4 years ago Member's comment

I disagree Dan.