BREXIT/AFRICA – After the landmark referendum in which voters in Britain decided to leave the European Union, questions are now being asked on what the consequences of the vote will have on African economies.
In Nigeria, analysts say the vote will not have much of an impact. This is despite the west African nation’s stock exchange halting a three-day rally due to profit taking and dropping marginally by 1.36% on Friday.
“The effect will be neutral because African economies are relatively well diversified, trade is diversified and the UK is not a major importer of African products as such. For example, Nigeria sells no oil in the UK, does not sell gas in the UK, and the country sells only a limited amount of cocoa. So in terms of exports, this has no impact for Nigeria but for imports, it makes them cheaper,” says Bismarck Rewane, finance analyst in Lagos.
But for analysts in South Africa, the continent’s most industrialised nation, they are less optimistic following the outcome of the vote.
Chain reactions could accumulate negatively and this could affect South Africa, impacting the flow of capital and goods in South Africa, and as we are the gateway to the continent, this flow could be weakened for all of Africa
The Brexit vote sent the South African rand tumbling at one point more than 8 percent before paring some of its losses, while government bonds and stocks were also plunged into a tailspin.
“Chain reactions could accumulate negatively and this could affect South Africa, impacting the flow of capital and goods in South Africa, and as we are the gateway to the continent, this flow could be weakened for all of Africa,” says Ian Cruickshanks, an economist at the Institute of South African Race Relations.
What ever the case, this is a new era of economic relations that has been opened between Africa and Britain and only time will tell what the long term effects will be.