As Britain focuses on what its relationship with the European Union might look like once it leaves the bloc, sometime during 2019, the rest of the world is already girding for the post-Brexit era.
For many African countries in particular, preparing for the inevitable divorce is not only prudent; it may be a matter of economic necessity.
Many analysts obsessively track China’s economic footprint in Africa (in 2015, there were an estimated 2 650 Chinese development projects underway on the continent).
But the United Kingdom has been a far more committed investment partner to the continent over the years.
At the end of 2014, British foreign direct investment in Africa was £42.5 billion ($54.1 billion), more than double the £20.8 billion that UK interests invested in 2005.
British FDI has flowed largely to the telecommunications and financial services sectors, but development aid and infrastructure projects have also been a focus.
This upward trend is likely to reverse, however, if Brexit negotiations with the EU lead to an erosion of confidence in the British market.
As Britain is forced to shore up its own economy, looking for opportunities abroad might seem less justifiable.
By far the most significant impact of a “hard Brexit” for Africa would be felt in the financial services sector.
In negotiating the UK’s exit from the EU, Prime Minister Theresa May’s government will be seeking to ensure that the City of London retains its place as Europe’s premier financial center.
But even if May fails, London-based financial institutions could simply pull up stakes and decamp to continental Europe.
Africa, however, could suffer as a result.
For example, the strengthening of the African banking sector in recent years – including the expansion of cross-border banking activities – has been made possible in part by innovative fintech (financial technology) products developed in London.
Cutting-edge finance solutions used to modernize institutions like Standard Bank, Africa’s largest bank, depend on the expertise housed at UK-based institutions.
Continued next page
(178 VIEWS)
