Despite the re-assurance of Nigeria’s Foreign Affairs Minister Geoffrey Onyeama that the exit of United Kingdom from the European Union (EU) through a referendum will have no adverse effect on Nigeria, fresh information at the disposal of Daily Times has shown that indeed, there is cause for alarm as economic and security ties between the two countries is bound to face several years of disruption.
A report on Tuesday by ExxAfrica, a business risk specialist intelligence company indicated that the main impacts of a ‘Brexit’ on Nigeria would be further deterioration of the country’s already struggling economy, which has been caused by the fall in global oil prices and a steep drop in local crude production due to an insurgency in the Niger Delta.
According to the report, the economy would be hard it as the extensive trade and security cooperation between the UK and Nigeria would likely face several years of disruption as the UK departs from the EU.
‘A slowing UK economy on the brink of a departure from the EU and potential disruption as the UK renegotiates its trade agreements, would likely reduce trade flows, foreign direct investment, and Nigerian remittances’ the report said
Bilateral trade between the two countries is currently worth USD8.3 billion and projected to reach USD25 billion by 2020 as Nigeria is the UK’s second-largest export market in Africa
The UK is also Nigeria’s largest source of foreign investment, with assets worth over USD1.4 billion. Moreover, UK-Nigerian remittances account for USD21 billion a year. The UK is also one of the largest development assistance donors to Nigeria, although Nigeria is not as aid-dependent as most continental counterparts.
There is also no guarantee that other EU countries will make up the UK shortfall in trade and investment, as other EU countries look to Iran for more reliable access to oil and to Asia for cheaper labour.
Beyond trade and investment, the UK is also a key partner in Nigerian security. The UK has been crucial to drawing international attention to the Islamist Boko Haram insurgency in Nigeria’s northeast. There is a risk that the UK would become distracted from international security threats, such as those by Boko Haram, as it negotiates its departure from the EU. However, the US and France have proven more crucial partners than the UK in combating Boko Haram, thus mitigating the effect on counter-insurgency efforts.
Similarly, Mr Tony Ejikeoyen, President the Abuja Chamber of Commerce and Industry (ACCI), has also said that Britain’s decision to leave the European Union (EU) will have negative consequences on Nigerian economy.
“The markets anticipate that Brexit may be bad for the economy, and so investors are likely to move their money out of the UK,” he said.
“Thus, a decelerating British economy could impact a drop in investment, trade, and also remittances from the Nigerian diaspora who sent home over 20 billion dollars in 2015.
“In addition, reduced trade and investment from Britain may not necessarily be taken up by the rest of the EU,” he said.
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