On Brexit, Emefiele attributed ongoing Brexit controversy in the United Kingdom (UK) to immigration and trade opportunities.
The CBN governor said: “I would say that though Britain and Nigeria have trade relationship, but it is not as strong as what we have with China and the United States (U.S.) For instance, China is Nigeria’s largest trading partner, followed by the U.S. And I had imagined that Britain comes quite low on the scale.
“So, if you look at that, you would find that, in my view, there is not going to be any adverse consequences on Nigeria, but we are reviewing it to see the implication, which I expect, would naturally be positive.”
But a “Yes” vote on June 23 has far-reaching implications than a reduction in the size of the economy. For one, as the world’s fifth largest economy, there is a risk of a contagion effect beyond the borders of the island nation. The impetus for the politics of nationalism within the UK and the EU would also increase, fostering anti-immigration around the world.
While the UK would be placed in the difficult position of renegotiating its economic relations with other EU countries, its economic ties with non-EU countries like Nigeria would remain unchanged. The theoretical argument is that trade agreements between EU countries and non-EU countries are negotiated by the European Commission, albeit on behalf of EU member states. In reality, investment in Britain would be less attractive to foreign investors since the country would no longer offer full access to the lucrative EU market.
UK Overseas Trade Statistics for April 2016, published by HM Revenue and Customs, already shows that UK recorded a trade deficit of £35.2 billion for the first quarter of 2016, a 14.5 per cent increase from a £30.8 billion deficit posted in Q1 2015. According to the World Bank, exports of goods and services as a percentage of UK’s GDP is 28.4 per cent. This shows the importance of trade to the UK economy. The increase in trade deficit may not be unconnected to uncertainty due to a potential vote to leave the EU. The country’s GDP growth rate also slowed to 0.4 per cent in Q1 of 2016.
As a member of the British Commonwealth, Nigeria has strong ties with Britain. After South Africa, Nigeria is Britain’s second largest trading partner in Africa, with £6 billion (about N2.4 trillion or $8.52 billion) in bilateral trade volume last year. As of December 2014, the UK Department for International Development had a portfolio of 40 projects in Nigeria with a planned budget of £232 million for 2014/2015, which include grants to non-profits, technical assistance and partnerships with other development agencies. A weaker and smaller UK economy would scale back its investment in development projects in Nigeria, even if temporarily.
To a large extent, the conception of regional economic blocs in Africa has been predicated on the success of the European Union. To further the agenda to facilitate free movement of persons, goods and services around the continent, the African Union has announced the commencement of the e-passport for Africa. However, all the argument about the benefits of deepening integration and socio-economic development through economic blocs in Africa would be punctured in the event of Brexit.