Brexit and the economic impact on Ghana

Brexit is simply, British exit or pull out from the European Union (EU). David Cameron on his campaign for a second term in office promised the electorate that he would initiate a national referendum to determine whether Britain still wanted to be in the EU or leave. Many felt it was a mistake to make such promise since he himself was in favour of EU.

A national referendum was called and to Cameron's disbelief, the British public voted to pull out of the EU. The Prime Minister who was pro-EU has promised to resign in October.

The decision to exit from the EU will impact seriously on the British economy. The result of the referendum has given rise to uncertainty among investors. The world markets reacted sharply with a downward surge. The Asian equity markets also fell. It is too early to predict its impact on the global economy. African countries, especially those in the Commonwealth, will definitely feel the impact on their economies.

This article seeks to discuss the economic impact Brexit will have on Ghana.

There are long standing economic ties between Ghana and Britain. Ghana's Foreign Affairs Minister, Mrs Hanna Tetteh, has affirmed that the pull out of Britain from the EU will affect Ghana in many different ways including trade with the United Kingdom.

The main reason for this is that the Gross Domestic Product (GDP) of the United Kingdom would shrink over time, and the economy of UK would become weaker and smaller. Secondly, the British economy would scale back its investment in development projects in Ghana and, of course, in other African countries. Britain is going to be tough with immigration procedures and visa applications for Ghanaians because the population of Ghanaians in the UK is close to half a million.

Britain has been in the EU for more than forty years and her decision to exit after a historic referendum, it is feared, will trigger a domino effect among member countries. Should this happen, the implication and the economic impact on Ghana and other African countries would be significant.

Britain would no longer offer full access to traders and investors from Ghana and other Commonwealth countries since the business environment is feared to shrink because in much the same way, Britain will no longer have full access to the lucrative EU market. When this happens, Ghana would have to renegotiate trade and bilateral agreement with UK. Ghana is currently UK's fifth largest trading partner in Africa with trade between the two countries reaching £1.3billion. Will this continue after Brexit?

Ghana's trade agreement between them and the EU are often negotiated by the European Commission. Ghana has been reaping the benefit of trade, deep integration and socio-economic cooperation with Britain and EU as a whole. With British exit from the EU, Ghana's trade relations with Britain and the EU will seriously be punctured. Ghana will have to wait patiently and observe closely what goes on in the EU.

It is less likely that the union will disintegrate after Brexit. Ghana will then have to wait and join other African countries in their trade and business negotiations with the European Union and Britain.

It is predicted that there may be attempts by the countries that constitute Britain to disagree with or defy the secessionist move by Britain from the EU. Already Scotland voted in favour of EU membership. Scotland will, therefore, want to maintain their membership.

Many people are complaining that they did not understand all the reasons for the pull out. One student confessed that he took the whole referendum as a joke and voted for the pull-out only to regret later when the reality dawned on him that Britain will no longer be part of the European Union.

This student is not the only one who has regretted. Some youth leaders, it is rumoured, are collecting 10,000 signatures to fight against the pull-out. No one can predict whether the entire Britain will regret the pull-out and go back to the EU. Will Brexit finally become Briregret or Regrexit?

There are several reasons that were advanced previously and for so many years by intellectually-minded British in favour of a pull-out. Some of the argument put forward was that British sovereignty was being threatened and compromised by EU.

Former London Mayor, Boris Johnson and Justice Minister, Michael Gove are of the view that for many decades, the EU has reduced and shifted the amount of growing powers of individual membership states to the EU bureaucracy in Brussels. The two British politicians are also of the view that EU is strangling the UK with rules which they found burdensome.

There are several reasons and arguments for Britain to take a historic decision to leave the union but the reasons are not the main focus of this article. The following argument relates directly to what Ghanaians are likely to experience.

The British put forth an argument that they will leave the EU because they will need a rational immigration policy outside the EU. The EU rule requires all member states including Britain to admit all EU citizens to settle in their respective countries whether they have jobs or not, no special skills or no proficiency in the language proficiency. Britain is dissatisfied and can no longer tolerate the influx of EU citizens to UK especially those from the newly admitted countries in the Eastern Europe.

Mr. Seth Terkper, Ghana's Finance minister, has affirmed that Ghana is considering emerging markets for its $750,000 bond. He continued that with Ghana's experience in the core matured market, the exit of Britain from the EU will severely affect the American and European bond markets. Hence a time is coming when Ghana will have to study other markets to maximize Ghana's output.

The news of Brexit caused a fall in the Asian equity markets and this was largely due to the uncertainty about the impact on the world economy. To where will Ghana turn then?

As Britain's economy looms large in Europe, all hands of Ghanaian economists and politicians must be on deck to predict or decide when it will be appropriate to hold talks with Britain concerning bilateral trade agreement. We should not forget to do same with the European Union.

Stephen Atta Owusu is the Author of Dark Faces at Crossroads. Email: stephen.owusu@email.com