After a transition period of four years, Britain officially departed the EU on January 31, 2020. This means that some of the former aspects and polices were forsaken to set forth into motion several agreements to guide the new UK-EU relations. As a result, three agreements were signed between the EU and Britain including the trade and cooperation agreement, the information security agreement and the nuclear cooperation agreement. In particular, some aspects of trade in goods and services such as Value Added Tax (VAT) are now required for those importing goods into UK from other European countries. In this regard, the free access to service markets will no longer apply between UK and EU. Thus, some of the UK regional trade opportunities in economic sectors such as financial services, construction, mining and agriculture are likely to be redirected to Africa and the rest of the world.
An opportunity to increase Africa’s exports to the UK
As one of the largest colonisers of the African continent throughout the 19th and 20th centuries, Britain has 19 countries in her Common Wealth Network. In particular, four East African Community (EAC) member states of Uganda, Rwanda, Kenya and Tanzania subscribe to the network. According to a 2018 Journal of African Trade study, these nations are likely to benefit from creation of new export opportunities in specific economic sectors such as agriculture. For instance, the European Union’s Common Agriculture Policy (CAP) hinders African agricultural exports to enter into the region’s market. With Brexit, this policy is likely to be revised to allow African countries deal directly and take their export to the UK rather than having to comply with the EU.
Projections in the report further indicate that there’s going to be increase in Foreign Direct Investments (FDI) between East Africa and the UK. Given that the UK itself includes England, Wales, Northern Ireland and Scotland, a broad market for firms, companies and individuals exists in sectors such as pharmaceutical industry, agriculture and finance. In other words, investors from Africa can enter and open up their business in the UK countries and vice versa. This is based on the previous performance of particular goods exported from Uganda as an example to the UK including flowers, vegetables and fruits, coffee, tea and cocoa, tobacco, crude animal and vegetable oils. On the other hand, the ones that were most imported to Uganda include medicinal and pharmaceutical products, industrial chemicals, scientific instruments, road equipment and cars.
Challenges
Reduction in foreign aid is one of the negative effects that Brexit will have for the East African Community. The UK is the leading donor to the region but part of that aid has been coming in through both bilateral and multilateral agreements with World Bank, USA and European Union. Now that the UK is no longer part of the EU, there’s going to be a change in foreign aid policies which makes it difficult to lobby in the post Brexit period for the African aid dependent countries like Rwanda and Tanzania.
The Journal of African Trade report further highlights that the United States of America in 2018 under President Trump administration, the time when Brexit was in motion announced to cut back on the international foreign aid budget that was found not to be important for UN global development goals for Africa. However, there’s there will be increase in aid directed to support the fight against terrorism and crime across Africa. The reduction in foreign aid could be a blessing in disguise for East Africa since the region’s leading economies such as Kenya and Uganda had declared to reduce their dependence. This has its effects on the expansion and integration that has seen DR Congo and South Sudan join the community. Overall, it’s not easy to predict whether the reduction in aid hamper the political direction for integration in the long run.
All in all, the opportunities and challenges that Brexit will have for Africa are a direct result of the impact it has had already on the global economy. The World Bank report 2017 shows that there are fears for global trade wars such as Russia-Ukraine war that lead to fluctuation of prices of goods such as natural gas in Europe and fuel in Africa. So, as much as there’s uncertainty when it comes to international trade, investment and development, Brexit alone might be not enough to destabilise global economy in general the report indicates. This is seen in the steady growth that continued to happen especially in Africa when economic crisis hit the western world in 2008.
