Now that the British voted to leave the European Union, African economies are already struggling from slowing demand from China. Flat commodity prices have now been thrown into confusion along with the rest of the world.
Many emerging markets and frontier asset markets will come under pressure. Much will depend on how quickly some sort of financial market stability can be restored. All thanks to the implications of Britain’s vote to leave the European Union “Brexit” for African economies.
However, according to Control Risks report, the longer-term impacts on Africa from Brexit are speculative and depend as much on the attitude of future British governments as on the terms of the exit.
The long term implications, both economic and geopolitical, hinge on what the terms of Britain leaving the EU are, and how this feeds through transmission mechanism to Africa through trade, aid and soft power and political influence.
Jean Devlin, Director for Africa Analysis at Control Risks, notes that ultimately, the impact of Brexit for the continent will be defined by the global agenda in the coming months. She adds that political risk has increased in the traditionally safe havens of Europe.
Having election in the US later this year will lead to less scope for international cooperation to address issues of particular relevance to African countries such as peace and security issues, development, impacts of climate change.
“We see the longer term impacts as a continuation of the relative decline of European powers’ influence on the continent that has been a feature of the past decade with increasingly diverse sources of investment from outside Africa,” Devlin notes.
“Britain will still retain cultural and trade links through the commonwealth, but outside the EU bloc it will likely be more reliant on its own diplomatic channels. This will especially be the case in countries where it has fewer historical ties such as Cote d’Ivoire, Senegal, Angola and many smaller francophone or Lusophone countries,” she added.
Many observers in Africa see the UK’s “leave” vote as a sign that Britain will become a more inwardly focused country with less focus and interest in upholding commitments to human rights and inclusive global development.
Whether this is just a perception or reality, the influence of the UK’s Department for International Development (DFID) on the development agenda is likely to change.
DFID has played an influential role over the past 15-20 years in setting a progressive agenda for EU development aid, not least through a commitment to spend 0.7% of GNP on overseas development aid.
The fact that the UK is one of the few countries in the world to meet this target and has enshrined it in legislation underlines the role the country has played to date, but whether that continues under new leadership and beyond is now more seriously in doubt than many realize, especially if a recession is looming in the UK.
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