12 May 2017

Southern Africa: Brexit Effects Yet to Be Known - EU Chief

The exit of the United Kingdom (UK) from the European Union (EU), popularly known as Brexit, should not be a cause for concern for Botswana and probably most of Southern African countries, with the exception of South Africa.

Speaking at an investment symposium on the future of Botswana exports to EU markets post Brexit and implications for trade relations, EU head of delegation to Botswana and SADC, Mr Alexander Baum said cause for concern in Botswana should be to increase investments in Botswana in non-mining production.

"Botswana needs to remain an open economy and an open minded economic policy, and work on those conditions that are conducive for competitive production, above all investments in human resources and openness to bring in the skills and talents that are not readily available in Botswana," he said.

He said the EU market was there to be conquered and opportunities were available with or without the UK.

Mr Baum noted that the economic implications of the Brexit, for the UK, EU and all third countries were difficult to assess as long as details of the exit agreement were unknown.

He further said the EU, without the UK would contain 445 million consumers and a GDP of 16.6 trillion USD, which still made it the second largest economy after the US.

"As the period until March 2019 includes ratification process, the actual timeframe for these extremely complex negotiations is actually about a year and a half. Until the final exit, the UK remains a full member of the EU with all rights and obligations," he said.

Mr Baum went on to state that even without the UK, EU imports US$ 6.7 trillion in goods and services, which made it the largest export market for a larger number of countries.

Speaking on what Botswana needed to do to increase the number of investors it attracted, he said Botswana had a positive image with stability and macroeconomics high up in the list.

"Other elements such as size of the market, regional integration with other SADC countries and big African economies such as South Africa are also important," he said.

He said other things affecting investors coming to Botswana were the timelines it took to set-up businesses, sourcing out permits for various things and infrastructural deficiencies.

"And these can be corrected," he continued.

He said trade statistic for Botswana and the EU was by itself not easy to read.

"Notably many products that come to Botswana through South Africa are not recorded as trade between the EU and Botswana. The current trade flows and notably the exports are also not diversified. Botswana imports from Europe mainly semi-manufactured and manufactured goods, transport equipment and machinery including electrical machinery and chemicals including pharmaceuticals. Botswana exports essentially diamonds, other mining products and beef. Beef represents by itself only 1.7 per cent of Botswana's exports in 2015 according to Bank of Botswana data and is exported to Europe mainly via the UK and Norway," he concluded.

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