What Brexit Could Mean For African Exports?

LAGOS (Capital Markets in Africa) – Although many consider Brexit to be purely a European issue, its consequences actually stand to reach all corners of the world. This rings especially true for major British trading partners, of which there are many in Africa. African exports, in particular, will likely see a wave of consequences in the aftermath of Brexit (should it ever come to fruition).

For example, this site has posted before about how South Africa will see the most fallout in the region when the British finally leave the EU. This is largely because of the country’s reliance on foreign money, but it’s also due to the fact that South Africa is the UK’s largest trading partner on the continent.

Digging into more detail, an article this past April explained that there are different scenarios for how South African exports could ultimately be affected. Currently, South Africa trades with the UK under the European Union-Southern African Development Community Economic Partnership Agreement (EU-SADC EPA). What this means is that 99% of South African goods can enter the UK market duty-free or partially duty-free. Whether South African exports will continue to enjoy such a deal depends entirely on how the independent UK eventually deals with the EU. It could remain part of the EU-SADC EPA for a short transition period, or it could abruptly cut ties. The first option means that South Africa could enjoy its competitive advantage for a while longer; the second would bring about major trade disruptions.

Meanwhile, Nigeria would also stand to be directly affected. Currently Africa’s largest economy, Nigeria would be subjected to a number of duty payments and other changes if Brexit were formalized. Without an agreement of its own similar to the EU-SADC EPA, Nigeria would likely see its products become far less competitive in markets abroad.

Other countries in the region have taken note, moving quickly to sign trade continuity agreements with the UK. These countries are the Comoros, Madagascar, Mauritius, Seychelles, and Zimbabwe, all of which signed an EPA with the UK in 2009 before there were serious talks of the kingdom leaving the EU. These ongoing developments speak to the level of urgency that much of Africa feel to make sure that this transition, should it ever occur, goes smoothly.

Meanwhile, Brexit could also impact a different sort of “export” altogether: African immigrants. This is not to compare people to goods, but given that Brexit promises intensified border control (and, in a more unspoken way, fewer immigrants), it’s likely that Africans could have a harder time gaining entry to the country. One can even imagine a scenario in which this results in a major international story, simply because it could affect the world of sports. Consider someone like Liverpool’s Mo Salah. The Egyptian star broke through in 2017/18 and has maintained his stardom in 2018/19. He seized the top odds to be the Premier League’s top scorer in April and carried through, finishing in a tie for most goals in the league. And he’s also led Liverpool to the Champions League final. He’s as big a star as there is in European football right now, and yet Brexit raises the question of whether or not the “next” Mo Salah could be kept out of the country.

That would make for a high-profile issue, and it would certainly be a problem. However, it would also speak to what figures to be a bigger and less visible issue, which is that ordinary people – potentially African workers of all different sorts hoping to live and work in the UK – may in fact not be allowed to do so. In other words, the independent UK keeping a prominent football player out would be a story, but just imagine a scenario in which a skilled worker, or a doctor, or a promising student is also prohibited from making his or her way in Britain. Again, we don’t want to compare people to goods or finances, but this too could represent a virtual end to a precious sort of export as well.

All in all, it’s not a terrific outlook. Though there are certain steps that African countries can take to brace for the impact, Brexit increasingly looks like it will negatively affect African exports.