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Brexit: What implications for Africa?

Brookings Institute assessed the impact of Brexit on Africa in a publication prior to Thursday's vote.

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On Thursday, Britain voted to leave the European Union. play

On Thursday, Britain voted to leave the European Union.

(AFP)

Prior to the UK referendum on Thursday, the Brookings Institute published an article  assessing the costly economic consequences of Brexit on Africa.

It claims the biggest consequence will be Britain ending its engagement with the continent.

"Perhaps the biggest impact of the Brexit on Africa would be the end of British “outwardness”—the country’s concern with and responsiveness to global development issues—which, from an African development perspective, reached its peak in 2005 with the U.K. presidency of the G-8."

The institute argues that another area Africa could suffer is in development assistance.

"An exit from the European Union would also have dire consequences for development assistance," the authors say.

EDF contribution share per country play

EDF contribution share per country

(ODI)

 

"The U.K. is one of the biggest contributors to the European Development Fund, the EU’s development assistance arm, which provides funds to developing countries and regions.  The U.K. currently contributes £409 million—$585 million— making up 14.8 percent of contributions to the fund (Figure 1). The fund is one of the world’s largest providers of multilateral concessional aid, with disbursements exceeding ones channeled through the World Bank’s International Development Association (IDA)," the authors added.

The authors further argued that Brexit could decrease trade volumes between UK and Africa.

Share of bilateral trade with sub-Saharan Africa, in relation to the total EU trade with sub-Saharan Africa play

Share of bilateral trade with sub-Saharan Africa, in relation to the total EU trade with sub-Saharan Africa

(UNCTAD)

 

"Analysts have stated that the Brexit would weaken trade ties between the U.K. and African nations. The renegotiation of trade agreements can be a lengthy process, which could cause a decrease in trade volumes between the U.K. and Africa. Indeed, a Brexit would prompt the United Kingdom to renegotiate over 100 trade agreements."

On Thursday, Britain voted to leave the European Union.

The Leave supporters won by 52%.

Meanwhile, the Kenya central bank says it is ready to 'intervene' if Brexit decision caused instability.

In a series of tweets, the bank said:

"News reports this morning are predicting the outcome of yesterday's UK referendum-Brexit- to leave the European Union.

 

"CBK stands ready to intervene in the money and forex exchange markets to ensure their smooth operation. AfterBrexit

 

"Other major central banks have also announced their readiness to intervene to minimize disruption in their markets. AfterBrexit"

 

Britain is Kenya's third largest export market and an ally.

Also, Ghana's  Finance Minister Seth Terkper has downplayed the impact of Britain leaving the EU on the economy.

Foreign Minister Hannah Tetteh commenting on the Brexit said Ghana will begin bilateral trade agreement talks with Britain immediately.

“Even though Britain has not formally exited the EU, and the UK remains bound by previous agreements signed under the EU, Ghana will immediately start talks with the UK on a bilateral trade agreement” she said.

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