Anti-immigrant sentiment is seldom fully rational, and one cannot understand Brexit without understanding the anti-immigrant sentiment that drove it. The best guess we can come up with is that a combination of empire nostalgia, dissatisfaction with the political/economic status quo and an influx of immigrants motivated the British people to vote by a slim majority to leave the European Union. This was the political equivalent of a “spur of the moment” decision, and since its medium to long-term ramifications is yet to be fully grappled with, it is a bit brave to speculate on what the impact could be on countries such as Nigeria in the near to medium-term.
Having said that it is possible to look at the key drivers and trends and make some educated guesses because even though the United Kingdom of Great Britain and Northern Ireland is not as influential as it once was, it is still an important nation.
First, one needs to understand the immediate impact within Britain proper. Boris Johnson’s Conservatives won a decisive victory, but the pro-European Scottish National Party did extremely well in Scotland, virtually obliterating majority party control there. So, right after facing the exit from the EU and at the same time as the long trade negotiations that are sure to follow, Mr Johnson will have to deploy his considerable political talents to either prevent another Scottish independence referendum or to prevent a Scottish exit from the United Kingdom. There’s also the precarious situation in Northern Ireland, where Sinn Fein and the republican movement’s great showing at the polls and their stated commitment to preserving the Good Friday Agreement could lead to more agitation to join (or at least preserve closer economic integration with) the Republic of Ireland.
So, Boris Johnson will have to contend with keeping the pro-European parts of the union (a majority of people in Scotland and Northern Ireland voted Remain) while negotiating an exit from the European Union and laying the foundations of a new trade deal with Europe. Such negotiations take time because the European Union is a hydra-headed institution – i.e. it must balance the needs of 28 different members, each with veto power. In addition, the EU has a vested interest in ensuring these negotiations are as painful as possible, for the simple reason that they don’t want to encourage other “errant” members to consider a similar course.
Since negotiations with the European Union are likely to drag on for years, Mr Johnson will have to go to Washington DC, to sign some sort of deal with the only other Western economy larger than the EU, the United States of America. Mr Trump, the US President, loves quick trade deals and is a tough negotiator, but he is also committed to his “America First” doctrine, which translates to, “we win, and you lose”. Another US president might be more sympathetic and less transactional, but Mr Johnson will have to work with Mr Trump, who is at this moment, likely to secure a second term, and there’s nothing he can do about it.
Mr Johnson, the UK Treasury, and the Foreign Service are going to be very busy over the next four to eight years at least, dealing with the most important bilateral and multilateral relationships the UK has, so quite simply, there will be very little time for Nigeria or Africa. If everything goes to plan – i.e. a new trade deal is signed with the US, negotiations are completed with the EU and the UK recovers from a likely recession triggered by Brexit, then Britain will be ready to fully embrace the outside world again, in the mid-term – say, eight years’ time.
So, what would Britain’s competitors be up to in the next eight to 10 years in Africa?
India – Africa trade is likely to exceed $100 billion and a lot of progress would have been made on trade in services (which has been Britain’s area of specialisation in the post-World War era). If the European Union is still a cohesive entity, then the combined strength of Europe’s economic relationship with Africa (over $300 billion in trade in 2015 compared with $36 billion in UK – Africa trade in 2015) would make the competition a lot more challenging. China is already laying the foundation for dominance in e-commerce and logistics on the continent and other rising powers like Turkey (who is now doing $23 billion in trade with Africa) are stepping up their game. Brexit will put New York at an advantage with respect to London as a global financial centre, this will have an impact on the competitiveness of London’s banks, especially with respect to attracting African companies seeking global capital investment.
One of the fundamental problems the UK has is a mismatch between its service-based economy and Africa’s more natural resource-dependent economies (South Africa is an important exception due to its developed services sector). There doesn’t seem to be much enthusiasm on the part of the UK to lay a foundation for the growth of services in Africa (like China is attempting to do with e-commerce), so there is unlikely to be much traction here.
The UK’s manufacturing sector is more geared towards high-technology, high-value products, which once again, doesn’t match Africa’s immediate needs. So, despite a lot of rhetoric about increased UK engagement in the wake of Brexit, we are yet to see activity that matches this rhetoric. There could be an increased focus on “international development”, as the institutions developed to implement it like DFID are world-class and Africa still possesses some serious human capital development needs, but there is some confusion as to whether the UK plans to increase its commitment to foreign aid or move in the other direction. A contracting UK economy may have a deep impact on aid interventions in Nigeria, especially since aid commitments remain a burning political issue in the UK.
The UK will, in the interim, remain focused on exploiting its competitive cultural advantages with respect to Africa’s largest economy, especially in attracting young, high net worth talent to its universities and educational institutions as well as fostering closer links through a combination of official interventions and cooperation on such issues as education, counterterrorism and migration as well as the cultural and financial linkages afforded by Nigeria’s second-largest diaspora population. Linked to this is a likely upswing in skilled Nigerian migration to the UK as Mr. Johnson enacts laws to attract skilled workers and raise revenue for UK businesses such as he has done with the post-study two-year work permits he introduced.
In conclusion, we expect the UK to remain a significant player in Africa, but a less significant player than it is today.
SB Morgen Intelligence
