Crusoe Osagie
The Lagos Chamber of Commerce and Industry (LCCI) has stated that exit of Britain from the European Union poses threats and opportunities for the Nigerian economy.
The Director General, LCCI, Mr. Muda Yusuf in a statement to THISDAY added that although Brexit has a number of immediate and remote implications for the Nigerian economy, it is not all gloomy for the economy.
He added that a weak British currency offers an advantage to importers from Britain, saying that with respect to trade, Britain accounts for only 4.4 per cent of Nigerian global trade and the EU accounts for 38.8 per cent. He maintained that it is unlikely that the Brexit will have a material impact on Nigeria’s balance of trade situation.
“If anything, the trade between Nigeria and United Kingdom (UK) could be further improved on account of the likely depreciation of the British pounds and the affinity with Britain within the context of the Commonwealth,” he said.
He stated that Nigeria is yet to sign the European Partnership Agreement (EPA), which also reduces Nigeria’s exposure to the shocks of the EU economy, especially from a trade perspective, but stressed that there is a diaspora dimension, pointing out that the current sentiments in the United Kingdom are to adopt tougher stance on immigration issues.
”We have over one million Nigerians in the United Kingdom; Nigeria is also a major recipient of diaspora remittances in Africa. Therefore, the unfolding scenario may have some adverse implications for remittances to Nigerians from the UK. This will happen from the perspectives of tougher immigration regulations and enforcement as well as the likely slowdown of the British economy,” Yusuf added.
“On the whole, the impact of Brexit on the Nigerian economy is unlikely to be profound. Besides, negotiations will still take the next two years. Most of the current responses are driven by uncertainties and expectations which will fizzle out in the not too distant future,” he said.
He noted that the outcome of the referendum has triggered some measure of uncertainty and anxiety in the global economy, pointing out that the British economy, which is worth $3 trillion, is the fifth largest economy in the world and the second largest within the EU.
”It is, therefore, a major component of both the global economy and that of the EU. Naturally, therefore, shocks to the British economy will have some transmission effects on the global economy. This perhaps informed the immediate responses of global and domestic financial markets. However, this dimension of the impact is unlikely to endure. They are responses driven by expectations and uncertainties,” he added.
He said there is the currency effect, saying that a high probability that the British economy will suffer some setbacks arising from the resultant weakening of investors’ confidence within the economy.
Furthermore, he said the Brexit implies that investors within the British economy will no longer have free access to the EU market of over $16 trillion and a market size of over 500 million people, and said that it will reflect in the strength of the currency as there is a relationship between the strength of the currency and the robustness of its economy.
