Britain has voted to leave the European Union (EU), and the move is expected to shake financial markets all over the world, Nigeria’s included.
British voters supported the move by a 52 percent to 48 percent margin recorded in a referendum which held on June 23, 2016.
The debate for “Brexit”, as Britain’s departure from the EU is being called, was fuelled by concerns at the rate of immigration into the country due to the union’s principle of free movement for citizens.
The decision has resulted in the resignation of Prime Minister, David Cameron who said that he will vacate the office in October as it would not be right for him to be the “captain that steers the country to its next destination.”
“The British people have made the very clear decision to take a different path and as such I think the country requires fresh leadership to take it in this direction,” Cameron said on Friday, June 24.
“I do not think it would be right for me to be the captain that steers our country to its next destination,” he added.
Experts are predicting that Brexit could cause a recession which would possibly affect African economies, many of which are already fragile.
“The immediate impact of a vote in favour of Brexit would be financial market volatility which would affect [sub-Saharan African] markets adversely as well,” Razia Khan, Chief Economist for Africa at Standard Chartered, told The Africa Report.
“In a risk-off environment, external financing conditions for African economies, already difficult, would likely become even more constrained. Longer term, trade agreements would need to be renegotiated with the economic uncertainty likely to impact growth negatively,” he added.
Since Nigeria is one of Africa’s largest economies, it is likely to be heavily affected by Brexit, especially in the area of trade and development, as Britain will have to start negotiating its own trade deals with the rest of the world.
“The exit of Britain from the EU portends a possible fall in UK investment into Nigeria and a temporary level of uncertainty in trade negotiations, as the UK and Nigeria will have to come to new trade agreements on tariffs as well as other trade instruments,” economic analyst, Chuba Ezekwesili told Pulse.
“If the UK leaves the European Union, the British economy may shrink, and if it does, they may be unable to do the same level of business they used to do with Nigeria,” Bismarck Rewane, Managing Director of Financial Derivatives told Business Day.
“This means the trade merchandise from London will dip, hence affecting balance of payment between the two countries. Also, for Nigerians who own properties in the UK, rental income from such assets will come down,” he added.
Brexit has, so far, plunged the pound to its lowest level since 1985, and is expected to cause long-term uncertainty in various sectors.
However, the full effect of Brexit on Nigeria, and the world at large, can only be determined with the passage of time.