Much ado about Nothing? BREXIT and its potential impact on the East African Community

Abstract

Brexit has caused considerable concern in Africa regarding its potential impact on trading and investment relations with both the United Kingdom and the European Union. This paper looks at the empirical evidence about the existing strength and depth of those links. We then use a Computable General equilibrium (CGE) model to simulate a hard Brexit scenario, and see how this impacts on trading relations with Africa. We also focus on the potential impact on a sub regional block - the East African Community (EAC). The paper finds that a) direct links through trade and investment are unlikely to be impacted substantially and indeed may even benefit marginally b) indirect links, through Brexit’s impact on the global economy, may be more important and c) a reduction in UK development cooperation is extremely likely over the mid- to long term, which could represent a serious problem for aid-dependent countries. Finally, we argue that the real impact could be in a negative ‘demonstration’ effect, undermining confidence in ‘deep’ regional integration processes like that of the EAC.