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What are the Likely Implications of Brexit for Africa?

What are the Likely Implications of Brexit for Africa?

Niamh Gaynor (Dublin City University)

During a week-long trip to several African countries last month, Prime Minister Theresa May pledged to deliver “a radical expansion of the U.K.’s presence in Africa” post-Brexit. This follows a long and, in many ways, successful relationship where the continent has played an important role in consolidating the UK’s influence on the global stage. Following Brexit, this relationship looks set to become even more important. Speaking in Cape Town in South Africa on the first day of her trip last month, Prime Minister May committed to maintaining the UK’s current level of development cooperation which, at 0.7 per cent of national income, is one of the highest among OECD countries. However, she also noted that she was “unashamed about the need to ensure that our aid programme works for the UK”. The question is – will what works for the UK also work for Africa? And if so, who in Africa will it work for?

The UK has a long record of a high level of aid spending in Africa. It met the United Nations 0.7 per cent target in 2013 and, despite stringent cuts elsewhere, has maintained this level ever since. It is currently the third largest donor country in the OECD, spending US$ 18.4 billion on development aid in 2017. Thirty-six per cent of this was channelled through multilateral agencies while the remaining 64 per cent was administered bilaterally. The UK has been a generous contributor to the EU’s aid programme, contributing approximately 15 per cent of the EU’s European Development Fund and its exit will certainly impact on this, at least in the short term. Overall, its contributions to multilateral agencies appear likely to fall post-Brexit as the country increasingly focuses on its own strategic priorities which emphasise the UK’s national interests as well as those of Africa.

While the UK’s current Development Strategy, published in 2015, includes four priorities – strengthening global security; resilience and response to crisis; promoting global prosperity; and tackling extreme poverty – just two of these – strengthening global security; and promoting global prosperity – would appear to be the focus of the UK’s engagement in Africa post-Brexit. On the first – global security, noting that “African and British security are inextricably linked”, Prime Minister May has committed to increasing the UK presence in Chad, Niger and Mali. The Sahel will quite likely become an increasingly important site of EU-UK military cooperation. On the second – promoting global prosperity, increasing UK trade and investment on the continent will be key priorities moving forward. This is reflected in the targeting of middle income countries, some of whom – e.g. Ethiopia and Tanzania – rank among the world’s fastest growing economies at present; and in the reduction in funding to DfID, the UK’s main aid provider. This level has already been falling. DfID managed 86 per cent of the overall aid budget in 2014. This fell to 74 per cent in 2016. The UK government now plans to allocate an increasing share of its aid budget through other ministerial departments and there are even controversial proposals to include investment by private for-profit companies and pension funds in the 0.7 per cent official aid allocation.

So what will this mean for Africa? In the area of trade, it remains unclear. Bilateral trade levels have been low compared to other G-7 states. Some commentators are optimistic that Brexit will provide an opportunity for African states to negotiate more favourable terms on trade agreements to those forged within the EU. Current EU trade agreements have proven controversial as they require countries to cut tariffs on imports from the EU thereby jeopardising their own domestic industries. While back in December 2016, then Development Minister Priti Patel was indeed talking of “leaving the EU to free up trade with the world’s poorest”, more favourable terms would seem unlikely as the UK has always been a strong proponent of liberalisation. The biggest impact post-Brexit would seem to be in the area of investment. This has steadily been increasing over the years, doubling between 2005 and 2014 and currently standing at approximately £43 billion. Prime Minister’s May’s £4 billion investment strategy, announced during her visit to the continent last month, aims at leveraging a further £8 billion and involves partnering African companies with the City of London for mentoring and technical assistance.

While these developments certainly offer new opportunities for Africa, commentators have expressed concerns that using a significant portion of the aid budget to boost trade and investment could increase inequalities within and across countries, thereby compromising the significant strides made in the past in achieving poverty reduction and pro-poor growth. Allied to this an important, and often overlooked aspect of development cooperation, is the role played by remittances. The World Bank estimates that over three times as much finance flows into African countries through remittances than through development aid. Home to a large migrant population, the UK is the 10th largest source of remittances worldwide. The fall in the value of the pound will have an adverse effect on these. And the UK’s migration policy post-Brexit will most likely have an even more significant impact if the noises coming from Downing Street are anything to go by. Let us not forget what prompted Brexit in the first place. In 2015, then Foreign Secretary (and now Chancellor) Philip Hammond claimed that the UK’s number one priority was to find a way to make it easier to send would-be asylum seekers home. Prime Minister May has repeatedly committed to tackling illegal migration. Last week, she went one step further in proposing an end to free movement “once and for all”, allowing only highly skilled migrants into the UK. Many countries who are heavily reliant on remittances (e.g. Senegal where 14 per cent of its GDP comes from remittances; or Liberia (27 per cent of GDP)) are likely to suffer the inevitable consequences.

Overall therefore, while the UK’s post-Brexit strategy for Africa would seem to offer important opportunities in trade and investment, a win-win outcome for all parties, most notably the continent’s poor, appears less likely. It would certainly be a shame to undo the significant progress made in the areas of poverty reduction and pro-poor growth in the past, most notably when we are now learning that this very investment is one of the key factors underpinning the success of some of the continent’s fastest growing economies.

 

Niamh Gaynor is an Associate Professor at Dublin City University, specialising in the politics of inequality and development, citizen participation and democracy, and evolving forms of governance, both formal and informal. Niamh has worked in DCU since 2008. Previously she worked in international and community development in Africa and Ireland. Niamh’s research specialises in how social and political inequalities come to be produced and reproduced. Her work to date has focused on exploring the conditions under which more marginalised groups and communities wield an influence at local and national levels.

Niamh Gaynor will participate in the DCU Brexit Institute event on Brexit and International Development Cooperation in Dublin on 11 October 2018. More information here.

 

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