23 Jun 2016 11:10am
WINDHOEK, 23 JUN (NAMPA) - A possible exit by Britain from the European Union (EU) would have an impact on the Namibian economy but could take about two years for the effect to hit Namibia, a local economist says.
Whether it will be a bad or negative impact, only time will tell, said Frans Uusiku from financial services firm Simonis Storm.
He told Nampa on Monday that Namibias beef export to the EU would be affected should Britain leave the regional bloc.
Namibia exports beef to the EU and the UK is one of the entry points for meat distribution.
Uusiku added that Brexit would actually see a revision in custom practises upon which Namibias exports would be based.
Brexit, a term coined from Britain and exit, dates back to 2013 when the United Kingdoms Conservative government pledged to hold a referendum on Britains EU membership before the end of 2017. The British electorate hit the polls on Thursday to vote on whether to stay in the EU or leave. Motivation for leaving the EU evolves around many factors of regional integration but can be summarised into two: border control and trade. Being a member of the EU means citizens from any member state can settle and work in another member state without a visa or permit and with a relaxed EU policy on asylum, some Britons are of the opinion that they are losing jobs to migrants while the social grant system is milked to the core. Concerning trade, being an EU member means paying a large lump sum for regional block membership, while abiding to trade agreements with other large global players like the United States of America that is allowed to export goods into the EU without much regulation.
Uusiku said Britains exit would also affect the EUs trade practices, which could mean an increase in the cost of doing business with EU members.
European trade practices are very much influenced by other European countries, for example the movement of business people. It would become very difficult for business individuals to move from one country to another, and that is likely to add up to the cost of doing business, he said.
Britains exit would also mean that the British Pound would most likely depreciate, which would influence the general level of pricing in the UK.
A depreciating Pound would mean importing goods from the UK would be cheaper.
Local independent economic analyst Elias Sipunga said last week external investors sold British Pound (BP) 2.1 billion (about N.dollars 46 billion) of UK Stocks, fundamentally selling the Pound as well.
Any major exporter to the UK will clearly gain income as investors expect the Pound to drop to BP 1.05 (about N. dollars 23), he explained.
At the time of writing, BP 1 traded at N. dollars 22.
Withdrawal of the UK is a right of EU member states under the Treaty on European Unions Article 50 that states, Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.