Written by the Editorial board of The Guardian Newspaper
After the people of Britain in a very polarised referendum voted 52% to 48% to leave the European Union (EU), the immediate political fallout of the Brexit referendum has been that the political leaderships of the two major parties in the United Kingdom (UK) are in disarray. The Brexit vote led to the resignation of the British Prime Minister, David Cameron and that of several shadow cabinet members.
The Prime Minister should be praised for allowing his words to be his bond by fulfilling a primary campaign promise during the earlier parliamentary election that gave him a second term in office and for demonstrating courage in accepting the will of the people. He, however, took a miscalculated gamble in calling for a referendum and hoping that the Remain Campaign which he led would carry the day.
In calling for the referendum, Prime Minister Cameron and his team obviously did not fully reckon with the deep divisions along age, geography, and economic class within the UK on this matter. The relatively older voters wrapped in the garment of nationalism and nostalgia voted in favour of leaving the EU, while the more outward-oriented younger millennials voted in favour of UK remaining in the EU and against the Brexit. Geographically, while the English hinterland voted in favour, the cosmopolitan London, Scotland and Northern Island voted against the Brexit. There is speculation now that Prime Minister Cameron may have not only split the EU, he may end up splitting the UK as well. In Scotland, where the overwhelming majority voted to remain in the EU, there is a resurgent call for a new referendum on the independence of Scotland. There is also a strident call for merging Northern Ireland with Ireland, where there is strong affiliation for staying within the EU.
On the economic front, the working class English voters, who seem to fear being left behind by the wave of globalisation and job losses from anti-immigration rhetoric, voted in favour of leaving the EU. But it appears they did not fully bargain for the economic fallout of the Brexit decision. The British pound sterling fell to its lowest level against the US dollar in three decades. The capital market seesaw as investors face economic uncertainty over the decision. Although Article 50 of the EU treaty needs to be invoked by the UK, there are no clear straightforward paths for leaving the EU in practice. Indeed, signatures are already being gathered for a second referendum that could overturn the outcome of this referendum. There is also speculation of a parliamentary vote to stop the non-legally binding referendum.
The Brexit fallout is also reverberating beyond the shores of the UK. Within the EU, there is fear that the outcome of the Brexit referendum may encourage nationalist movements in other countries to vote with their feet to leave the EU. To forestall this outcome, the leaders of remaining core EU countries, Germany, France and Italy appear to maintain a strong pro-EU stand on access to market, trade, capital and people across the bloc. In essence, the English figure of speech of “you can’t have your cake and eat it too” would be applied to the UK when it comes to negotiations with the EU. The transition will thus involve complex trade, security, visa and immigration negotiations.
What are the lessons and implications of the Brexit fallout for Nigeria? On the political front, leaders in a democracy must strive to carefully weigh their words as they need to fulfil their electoral promises, while also paying close attention to the wishes of various constituents and foster a broad-based government with a sense of belongings by all. Within Nigeria, the clarion call to address the national and resource control questions via a referendum will get louder especially as Federal Government appointments, in particular, in the security sector is perceived to be overwhelmingly lopsided. Government can still engender shared prosperity and development through the majesty of democracy and equitable distribution of resources without recourse to referendum. After all, most Nigerians still prefer a strong and united nation, but with fair and equitable prosperity across age, ethnic groups, class, and regions. This can be achieved through more devolution of power,
The Brexit will impact the Nigerian economy through several channels: possible decline in oil prices, trade and aid with the UK and EU, slow return of portfolio capital and Diaspora remittances. It is envisaged that the economic uncertainties of the Brexit would have a knock-on effect on world trade and global economy, which will lead to reduction in demand for commodities, especially oil. As a result, the recent rapid recovery in oil prices witnessed in the first half of 2016 would at best be tepid. While the new foreign exchange regime in Nigeria may bolster government revenue in Naira, the country cannot afford another precipitous decline in oil prices at the same time that oil production is being negatively impacted by the activities of the Niger Delta Avengers. It is estimated that the UK accounts for about 5% of Nigeria’s trade, and aid from the UK to Nigeria is relatively low. However, the UK accounts for about 45% of total foreign portfolio inflows into Nigeria. The UK and the United States account for a significantly high proportion of the over $20 billion of Nigeria’s Diaspora remittances.
The British voters overturning of a four-decade relationship with the EU should also provide pointers to Nigeria’s efforts at regional economic integration within West Africa. The Economic Community of West African States (ECOWAS) is in trade negotiations with the EU. Nigeria still has a major role to play in these trade negotiations to ensure what is best for her nationals. With the Brexit, the Anglo-phone West African countries would lose the UK as a key ally within the European Union. On the other hand, the Francophone countries would continue to enjoy the critical support of France and their single currency alignment with the Euro within the EU.
Another key lesson is that when people feel marginalised as a result of globalisation, inequitable prosperity and unfair distribution of political and national resources, emotions sometimes overtake rational decisions. Nigeria should endeavour to draw appropriate lessons from this for a still maturing democracy and for Nigeria’s integration into the regional and global economy.