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Financial it seems that Brexit has created the possibility of some form of economic changes
in Africa. The African Union (AU) leaders have met to analyse the impact of this event and
of course look at ways toward an even bigger continental integration of the continent and
ways to benefit from this momentous event. This would be from both parties, the EU and
UK.
The issues facing Africa’s growth and recovery during this time are hugely influenced by the
slowing down of China's economy (without a doubt the main bilateral trading party). Then
we can see the US Fed raising interest rates and borrowing options become less favourable,
the drought and El Nino and then finally prices of Africa’s main exports – mining, metals and
oil have fallen with low demand and plenty supply.
So this definitely gives rise to rethinking policies and new strategies and approaches for
2016 and beyond.
So for South Africa, and the rest of Africa, but particularly SA, even with our politician’s
having a short-term calendar because of elections, we need macro-economic management
and keep on course for medium to long term policy management. Starting with:
A.) Spending internal money through investments
B.) And in growing human capital and localised business
C.) Strengthen our non-mining and non-financial economies.
Trade with the Trans-Pacific Partnership (TPP) agreements from 2015 with countries which
include the United States, Japan, Canada, Mexico, Australia, Vietnam, Malaysia, and Chile
needs to be a key focus of leaders now.
Of course, the United States is constantly engaged with negotiations of trade with the
European Union and as this will cover about 55 to 60 percent of global GDP – so as Africa is
not involved here will the US share this with Africa and can this work. Or will Africa be
ignored and be confined to a shrinking share of international trade and lose the appeal as a
destination for investment? This is a big danger.
The attraction for the EU and the UK independently, however, lies in the fact that the Africa
Union has committed to completing the African economies integration plan by 2017, which
will result in 54 African countries representing more than a billion people and between R42
and R45 trillion Rands in GDP. So we could see an intra-Africa trade bouncing back by more
than 50% within the next 5 to 6 years. Why would the EU and the UK not want a slice of
that action?
In favour of the African Union, we know that EU has way more financial resources than the
AU and that the AU’s budget amounts to about 1 percent of the EU’s, however, even though
the AU does not have the money they have a population of over a 1,050 million
people—double that of the EU.
Africa has a young and dynamic workforce, with the average age of 20 making up 20% of the
region’s total population – that needs harvesting!
About the author:
Chris Green – Financial Entrepreneur
