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This article was first published in the September 2016 international edition of Accounting and Business magazine.

From the moment the British people voted to leave the EU in the 23 June referendum, Africa started to count its losses. Over the next few days as sterling fell heavily against the South African rand and other major African currencies, the Johannesburg stock exchange registered a major downward drop. The plummet was mirrored on many of Africa’s other exchanges. 

Sterling fell to a 31-year low against the US dollar, from $1.50 to $1.28 for £1, squeezing bond yields and sending those stock exchanges tumbling. Prices of high-risk commodities such as oil fell fast – oil lost just over 8% in just four days. The safe haven commodity of gold surged to a spot rate of over US$1,371 per ounce, a price level not seen since 2014. The Central Bank of Mauritius announced on 24 June that it had raised its gold and US dollar reserves to cushion the country’s exposure to sterling.

The online news site CNBC Africa anticipates continued volatility in the global commodity markets and hence heightened currency risk for the African countries producing those commodities. Ghana, Zambia and Angola are the countries most at risk.

Kenya’s cut flower industry is also likely to suffer because its biggest buyer is Britain; British demand may fall and the country lacks ready access to other European markets. The Netherlands, its second biggest buyer of cut flowers, is also facing calls for an EU exit referendum. As the UK exits the EU, it will have to renegotiate all its trade deals – a process that could take years, leaving trade relations between the UK and Africa in limbo.

The Washington Post reports that remittances from Africans in Britain may fall because of the weakening of sterling. That could have a substantial impact. Nigerian immigrants in the UK, for example, sent an estimated £2.7bn back home in 2014 – the equivalent of about 0.6% of Nigeria’s economy that year.

Official UK aid to Africa may be worth less for the same reason. Sierra Leone, for example, received £238m in UK aid in 2014, making up nearly 6.8% of the African country’s economy, and sterling lost 8.5% against the leone on the day the referendum result was announced. In other words, exchange rate fluctuation alone could cut the size of the Sierra Leonean economy by 0.5%.

There may also be further reductions as a result of a potential slowdown of the British economy.

Razia Khan, chief economist for Africa for Standard Chartered Bank, says ‘many emerging market and frontier asset markets will come under pressure’, and that trade deal renegotiation is likely to ‘create more uncertainty for Kenyan exports’.

Longer-term issues loom on the horizon too. There are questions over how Brexit will affect the EU’s agricultural subsidy programme, which has hurt African farmers. Britain has been a staunch opponent of EU farming subsidies, so the country’s exit may lead to more pain for farmers in Africa.

Long-term infrastructure projects are also threatened because of potentially poorer access to international capital markets. China has been a major player in Africa in big infrastructure projects, but as a result of its own economic slowdown it may not keep pace with the continent’s growing needs. 

As the dust settles, analysts will be looking closely to see what mitigations are introduced to balance these risks, and if not, what remedies can be taken. 

A great deal will depend on how quickly some sort of financial market stability can be restored.

Alnoor Amlani FCCA is an independent consultant based in East Africa