Bilateral agreements between Namibia and the United Kingdom (UK) will serve as concealment for Namibia from direct harsh economic impacts which will be caused by the shocking decision by that country to leave the European Union (EU), commonly known as Brexit.
The joint agreements give each nation a favoured trade status concerning to certain goods obtained from the signatories, and has set purchase guarantees and removes trade barriers between the two countries, Public Relations Officer at the office of the Prime Minister (OPM), Saima Shaanika said.
Analysts on the other hand say that Namibia’s direct exposure to the UK from a trade perspective has declined significantly with EU trade accounting for over 90% of both imports and exports, which moderates the risk of a direct fall-out in our trade dynamics.
“Furthermore, we believe this may provide an opportunity to diversify our export markets and renegotiate trade agreements being a member of the commonwealth with which the UK has indicated will strengthen relationships.
The nature and severity of the impact it (Brexit) could have on different countries and industries depend on the political will of the UK and Europe to negotiate new terms on trade arrangements amongst other things.
Another concern is that this event may trigger calls in other EU countries to follow the UK’s example, for instance there are semblances of contagion in Slovakia and the Netherlands, while Scotland may opt to leave the UK and retain its EU membership,” Ngoni Bopoto, Research Analyst at the Namibia Equity Brokers (NEB) said.
Meanwhile, Namibia’s exports to the UK was estimated at N$1 billion, while imports from the UK valued at N$983 million in 2014. British commercial projects currently ongoing in Namibia include Weatherly’s new Tschudi copper mine in Tsumeb and the development of Namibia’s offshore Kudu gas deposit.
However, trade volumes between the UK and Namibia changed substantially between 2012 and 2013 due to the decision by diamond corporation, De Beers, to move its trading and sorting operations from London to Botswana’s capital Gaborone.
In 2015, according to statistics by the Namibia Statistics Agency, trade with the UK has dropped as exports fell 86% to N$893 million and imports dropped 75% to N$431 million. Over the same period, exports to the European Union (EU) (while excluding UK) fell by 6% to N$8.6 billion while imports surged 15.2% to N$6.2 billion.
Meanwhile, the Financial Times Stock Exchange (FTSE) also felt the pinch as FTSE wiped out about N$2.6 trillion (about £125 billion) on Friday when world markets struggled to come to grips with the decision to exit the EU.
“The one argument against leaving the European Union that does hold water, in my view, is that we are in for a period of increased uncertainty. It appears that both the markets and the Brexit campaigners were caught unprepared for the outcome of Thursday’s vote. The fall in the GBP seen at the close on Friday was a 6+ sigma event, and it doesn’t look likely that this selloff is quite over yet. Financial markets, much like many individuals and institutions, seemed to panic on Friday. However, markets are notoriously good at overreacting, and after a brutal sell-off on the open, the UK’s FTSE 100 index ended up closing down just over 3%, back to a level it was at just three days before. Despite the supposed turmoil, it actually closed up for the week. How long this will last, however, remains to be seen,” economic analyst, Rowland Brown stated in a report this week.
Brown said that the likelihood that Britain will be able to negotiate multi or bi-lateral agreements with commonwealth countries (many of which are large and fast growing), giving it preferential access to their markets, it becomes incredibly hard to buy the bulk of the voters who favoured UK to remain in the EU’S trade claims. Moreover, Brown added, since the vote took place, many nations have already expressed their interest in continuing to trade with Britain on a preferential basis, including a number of countries within the EU.