The reverberations from Britain’s fateful choice extend far beyond Europe. The U.K. retains deep ties with many African states, and the turbulence is causing anxiety from the Johannesburg stock exchange to the battlefields of Somalia.
Where have all the flowers gone?
More than a third of the flowers sold in the European Union come from Kenya. The U.K. is one of the most valuable export markets for some of the largest African economies. One-third of Kenya’s cut flowers arrive in Europe, where the U.K. is the second-largest buyer behind the Netherlands. Rather than negotiating with the European bloc, Kenya will now need to negotiate new deals with the U.K., as well as absorbing losses as the British economy retracts. It is a similar story for Nigeria, where a projected figure of £20 billion, or U.S. $26.5 billion, in bilateral trade by 2020 will now be revised downwards, and South Africa, which will need to make up shortfalls in wine exports.
Leave by example
The pro-independence message has found an echo in the Eastern Nigerian state of Biafra, where activists have launched a campaign for the majority-Igbo region to secede. The movement has existed on the fringes for decades, following a violent bid for separation in the late 1960s, but in this new era of uncertainty, calls for ‘Biafrexit’ are gaining fresh momentum.
Britain is one of the largest contributors to the European Development Fund in both funding and strategic planning, and its exit from the EU has raised fears that Europe will scale back its commitment to development programs. One of the main beneficiaries currently is Tanzania, which is seeing new roads and agricultural upgrades arrive through the fund. Should these grind to a halt, the wider economy will suffer, as will the popularity of new President John Magufuli.
South African stocks
The former British colony has the closest financial ties with the U.K. — and the greatest exposure. Many leading South African companies are dual listed on Johannesburg and London stock exchanges, and South African banks lean heavily on British cash reserves. The impact of Brexit was felt immediately with a steep drop in the rand, and although the currency has climbed since, confidence will remain shaky.
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