From OKORO CHINEDU in Lagos, Nigeria
LAGOS, (CAJ News) – THE withdrawal of the United Kingdom from the European Union will have adverse impacts on three of the UK’s most important African markets: South Africa, Nigeria, and Kenya, a business risk intelligence firm has projected.
The UK-based EXX Africa said the effective implementation of a new foreign exchange mechanism and liberalisation of the fuel sector will face fresh hurdles as the UK withdrew from the European bloc as announced recently.
“The main impact of a ‘Brexit’ on Nigeria would be further deterioration of the country’s already struggling economy, which has been caused by the fall in global oil prices and a steep drop in local crude production due to an insurgency in the Niger Delta,” said EXX Africa.
Further , it adds the South African economy is now more likely to fall back into recession and extreme currency volatility indicating that a downgrade of its credit rating to non-investment grade in December is now almost inevitable. Bi-lateral security cooperation and aid programmes face less disruption.
It noted there had been extensive trade and security cooperation between the UK and Nigeria that would be likely to face several years of disruption as the UK departs from the EU.
Nigeria is the UK’s second-largest export market in Africa.
Bilateral trade between the two countries is currently worth US$8,3 billion and projected to reach USD25 billion by 2020.
Trade between the two countries is currently worth US$8,3 billion and projected to reach $ billion by 2020.
The UK is also Nigeria’s largest source of foreign investment, with assets
worth over $1,4 billion.
Moreover, UK-Nigerian remittances account for $21 billion a year.
The UK is also one of the largest development assistance donors to Nigeria, although Nigeria is not as aid-dependent as most continental counterparts.
Beyond trade and investment, the UK is also a key partner in Nigerian security, EXX Africa.
The UK has been crucial to drawing international attention to the Islamist Boko Haram insurgency in Nigeria’s northeast.
EXX Africa said there was a risk that the UK would become distracted from international security threats, such as those by Boko Haram, as it negotiates its departure from the EU.
“ However, the US and France have proven more crucial partners than the UK in combating Boko Haram, thus mitigating the effect on counter-insurgency efforts.”
On a positive side Kenyan markets are said to be relatively stable following the ‘Brexit’ vote, although any disruption in EU trade negotiations would negatively impact the cut flowers export market.
It is likely that the UK would prioritise trade negotiations with Kenya, which could even benefit Kenya and other EAC members
– CAJ News