Brexit saga and its implications for Africa

Brexit saga and its implications for Africa

There are a number of ways Britain’s exit would affect Namibia, and Africa in general.
Currently there is no travel visa requirement between Namibia and the United Kingdom (UK). By virtue of UK being a European Union (EU) member, this catapulted Namibians to have almost automatic free entry to any EU member state. UK exit from the EU will reverse this extended privilege.

Then there is the trade element. We have just signed an EPA agreement with the 28-member EU block. Now the block has been reduced to 27 members. This means we will have to re-negotiate differently with the UK for export of our grapes, beef, fish, and beverages to the UK.

The domino effect is that if the Brexit vote triggers other countries to hold referendums and exit from the EU – countries like France, Italy, Netherland, etc – and then we will begin to see a complete disintegration of the EU as an economic block.

That will immediately imply that Africa must re-negotiate its trade relationship with all individual EU countries – a scenario that nullifies the EPA agreement. This is equally true for Scotland, Northern Ireland and Africa, if the Brexit results in the UK disintegrating too.

Most of our African regional economic blocks, like the Southern Africa Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and others have historically been modelled around the best practices of firstly establishing a political union, to be followed by an economically integrated union.

This is what the EU today is and this is what most African regional blocks are daring to mimic. Now, with the possible decomposition of what we have – for years envied as the best models – it will now mean that we have to approach regional free trade agreements with caution, lest we end up in the same quagmire.

As for Namibia’s beef exports to the EU, there is very little effect this UK referendum outcome will have on our exports to the EU.

The UK is the second largest population of 65 million people in the EU, following Germany at 81 million people. Brexit means, therefore, that 65 million people may in the long run no longer consume our beef exports to the EU.

This implies that demand has dropped and we will have to re-engage the UK separately.

This may be an opportunity. For the EU itself, I believe there are great lessons to be learned. Faced with a glaring threat of oblivion, the EU may now become less arrogant and start to be more receptive and accommodative of other trading countries and economic blocks, treating them differently and hopefully favourably.

In other words, it could be easier for us to enforce our trade conditions or bargain better with a divided continent than a united and arrogant one.

You know long it took Namibia to sign the EPA agreement? It shouldn’t have taken this long. Therefore, I believe those in charge of negotiating Namibia’s trade relations with Europe for our dates, grapes, fish, beef, and other commodities will take advantage of this situation and do some proactive reality checks with all bilateral countries and with the EU to ensure our trade relations are safe or even improved. It is a window of opportunity and it is in our favour to strike while the iron is hot.

However, Britain’s exit has had an immediate negative affect on stock markets around the world. Virtually all major markets have lost ground and are in negative territory a day after the Brexit vote.

Apparently US$2 trillion has already been wiped off the value of stock markets, a mere day after the outcome. In the Americas, all nine major markets have lost substantially.

In Europe all nine major markets – with the exception of OMXS 30 of Sweden – lost dramatically. In Asia, all major markets equally lost ground. Rating agencies, such as Moody’s, have already put the UK’s outlook status in the negative. Investors are pulling out their money from UK-based financial institutions

The Brexit vote also has far-reaching political ramifications. It may now become less likely for Obama to twist the arms of Europe to fall in line with the proposed Transatlantic Trade and Investment Partnership (TTIP) after losing a key bargaining member in the EU, like the UK.

This is why US Secretary of State John Kerry is visiting Europe this week, starting today, as the Obama administration is potentially losing ground of influence. If the further disintegration of the UK becomes a reality after and if Northern Ireland and Scotland step out through referendums, then NATO will lose one of its chief members and that could change the NATO game plan.

Indeed, this insecurity is on NATO’s agenda for its meeting in Warsaw next week. In the wake of US interference in the internal affairs of Ukraine in 2014, the pro-Russian population of the far-East people of Crimea carried out a referendum to decide if they wanted to remain part of Ukraine or be part of Russia.

The results of the referendum were that they chose to re-join Russia. This could have in a way also influenced the mind-set of the British people to exit from Europe.

If the outcome of the Brexit referendum is one to respect, the decision of the Crimeans is also worth respecting and it is time for the EU to rethink their sanctions against Russia.

At the UN Security Council the status of the UK will certainly need to be reviewed in light of its possible subsequent disintegration, especially if Northern Ireland and Scotland break away after a possible referendum.

* Gurvy Kavei holds a PhD in Development Policy and Management and is Head of Department in the Faculty of Economic and Management Science at the University of Namibia’s Rundu

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