Wednesday 12 May 2021
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Schlettwein talks Brexit, SA ratings

Schlettwein_Crop brexit

…..Brexit: The possible effects on Africa

Millions of people in the United Kingdom on June 23 go to the polls to decide whether the UK should exit the European Union. However, although the EU is Namibia’s major trading partner, Finance Minister Calle Schlettwein is not too worried about the outcome. The referendum comes after Prime Minister David Cameron promised to hold one if he won the 2015 general election, in response to growing calls from his own Conservative MPs and the UK Independence Party (UKIP), who argued that Britain had not had a say since 1975, when it voted to stay in the EU in a referendum. Having followed the process from the start, Schlettwein says he foresees a very close outcome, adding that any outcome will have little impact on Namibia. “If the effect brings with it a negative impact on the EU with whom we have a free trade agreement, it may harm us but I do not think the effect will be very significant because the UK is a trading partner of lesser significance…our main partner is EU,” said the country’s purse manager.

Even if UK leaves the EU, Schlettwein said, other trading partners such as China and South Africa are still in place.Schlettwein’s comments come days after James Duddridge, the UK’s minister for Africa, recently noted that Africa will benefit from a stronger relationship with the UK if Britain votes to leave the European Union in this month’s Brexit referendum. The UK politician concluded his visit to Namibia earlier this week where he had audiences with both President Hage Geingob and Prime Minister Saara Kuugongelwa-Amadhila. He said the UK will no longer be forced to view Africa through the “prism” of the EU but will “deepen” its direct relations with African countries and other countries which play a significant role on the continent. “We will not have direct hits but, of course, it [UK] is a global economy and as a small open economy we will feel some heat, London is one of [the world’s biggest] financial centres. We have ties with them through bond issuance but I think that component is not threatened by any outcome, I am not too nervous,” said a confident Schlettwein. Brexit is an abbreviation of “British exit” that mirrors the term Grexit. It refers to the possibility that Britain will withdraw from the European Union. It is well known how the European Union’s Common Agricultural Policy subsidises EU farmers, creating hurdles to competition, along with tariff barriers that make it very hard for an African farmer to compete in European markets.

Because of this, a London-based Ugandan by the name Sam Akaki and his organisation, Democratic Institution for Poverty Reduction in Africa, has been urging African-Britons to vote for Britain’s exit (Brexit) from the EU.Schlettwein also shares the same sentiment as Akaki regarding the unfair agricultural policy. “The main issue is that the EU heavily subsidises its farmers and it brings distortion in food commodities. Our farmers do not enjoy such assistance, therefore, when we open the market it is flooded with EU goods that are subsidized and our products are out competed,” he said, indicating that the policy deprives African farmers, who are already disadvantaged, of an income. “The calls for a change in the policy are legitimate that is why we made it our topic in the World Trade Organisation and that is why Africa has always insisted on the completion of Doha Round, specifically the elements of development and agriculture in the free trade agreement but unfortunately the developed did not agree and it failed. It is a real issue which is harmful to our agriculture sector Britain is set to hold a referendum later this month on whether or not to remain in the EU. Broadly speaking, the referendum will help decide the future political and economic character of the United Kingdom and the European Union.

The issues range from economic governance, immigration and welfare benefits to competitiveness. But no one is quite sure what will happen if the UK leaves the EU. Proponents for Britain remaining in the EU, spearheaded by Prime Minister David Cameron, believe that the UK “will be safer, we will be stronger, and we will be better off inside the EU,” and Brexit will only offer the “illusion of sovereignty” and be a huge “leap in the dark”. Others such as the Tory politician, Andrew Mitchell, argue that Brexit is about sovereignty; that Britain would survive outside the EU. “We would govern ourselves without constant petty interference from a European political elite that, like all political elites, is forever seeking greater power and authority. The world is moving to a freer trading regime, and protectionism is declining and discredited.” It is mainly drawing from Mitchell’s assertion of declining and discredited protectionism that Akaki is of the view is that Brexit is the way to go “in order to enable the mother continent to negotiate more equitable trading agreements with the UK”. Writing in The Guardian, he makes a plea against insensitive EU trade practices that make it impossible for Africa to trade itself out of poverty. It is, however, doubtful if Brexit would lead Africa to “equitable trading agreements with the UK”. If Brexit came to be, Britain would have to compete with the EU, with the UK not likely able to unilaterally remove farming subsidies. For political and economic reasons, neither Britain nor the EU would agree to a mutually hurtful position.

So, what is in Brexit for Africa? Perhaps nothing – as long as the continent does not unite, and, in some way, challenge international trade regimes that continue to work against it. Yet, there is a lesson in there somewhere for the East African Community. Speaking for his country, former British Foreign Secretary David Miliband is quoted as saying, “our role in Europe magnifies the power of our ideas, and strengthens our international clout” across the world. Working as a bloc, as the EAC strives to integrate and bring in more members, is the way to go.

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