Asmita Parshotam, Cyril Prinsloo, and Elizabeth Sidiropoulos have written a thoughtful analysis of the impact on South Africa should the UK vote to exit the European Union on June 23. Their analysis was published June 21 by the South African Institute of International Affairs (SAIIA).
Given the hype about the role of China and the other BRICS (Brazil, Russia, and India) countries, the SAIIA analysis of the role of the EU and the UK in the South African economy is highly useful—and sobering. They make the fundamental point that the economic and financial relationship among the EU, the UK, and South Africa is highly significant. To select only two figures among many that the SAIIA analysts cite: in 2015 twenty-one percent of South Africa’s global exports went to the EU, and EU-South Africa trade accounted for a quarter of South Africa’s global trade. The UK alone accounts for 3.7 percent of South Africa’s global trade. They also describe the importance of EU and UK investment in South Africa.
They conclude that Brexit, if it happens, will have significant and negative consequences for South Africa. Brexit, they predict, will likely lead to financial volatility, with the pound losing value. They suggest that spill over from the resulting uncertainty will likely discourage investors from pursuing emerging markets, such as South Africa. That, in turn, would strain the South African economy, already plagued by near-zero rates of growth. They also make the uncomfortable point that though Brexit would directly affect South Africa, there is literally nothing Pretoria can do to affect the outcome.