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Mauritius exporters see Brexit crimping textile export earnings to UK by 10%

Comments (0) Africa, Business, Latest Updates from Reuters

PORT LOUIS (Reuters) – Revenues generated by Mauritius from textile exports to Britain will decline by about 10 percent this year as a result of the British vote to leave the European Union, the country’s export association said on Monday.

The EU is Mauritius’ largest trading partner. The Indian Ocean island nation earns an annual average of 25.55 billion rupees ($722.77 million) from goods shipments to the bloc.

Britain remains the largest buyer of Mauritian goods within the EU, accounting for 18 percent of total exports to the bloc. Textiles are Mauritius’ top export to the UK, followed by seafood and sugar.

“Quantity wise, there will be a drop of 10 percent in our exports to the UK as a consequence of the fall in consumerism level in UK coupled with the depreciation of the pound,” the export group said in a report.

The Mauritius Exports Association (MEXA) report said 90 percent of all revenues from exports of textile and apparels to the UK comes in pounds while imports are in U.S. dollars.

MEXA said exporters’ profitability is expected to be “squeezed both in terms of exports and imports; exports revenue being depleted with the depreciation of the pound…and costs being inflated with the appreciation of the U.S. dollar.

“Companies are thereby faced with a double whammy.”

In 2015, textile and apparel exports to Britain amounted to 6.57 billion rupees, according to MEXA data.

($1 = 35.3500 Mauritius rupees)


(Reporting by Jean Paul Arouff; editing by Elias Biryabarema and Mark Heinrich)

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Brexit: Challenges ahead for Africa

Comments (0) Africa, Business, Featured

British Prime Minister David Cameron visits South Africa

The United Kingdom’s departure from the European Union could slow trade and investment in the continent.

Brexit could not be happening at a worse time for Africa.

The economy of the continent is already struggling with falling commodity prices and the economic slowdown in China. The decision by British voters to withdraw from the European Union could trigger decreases in trade with Africa as well as aid and direct investment from the United Kingdom.

The vote, which followed a bitter campaign that centered on immigration, may signal that Britain will increasingly turn away from its support for world development, according to the Brookings Institution.

“Perhaps the biggest impact of the Brexit on Africa would be the end of British ‘outwardness’ – the country’s concern with and responsiveness to global development issues,” Amadou Sy, a senior fellow and director of the Africa Growth Initiative at Brookings, said.

Britain contributes significant aid

The United Kingdom is one of the largest contributors to the European Union’s development assistance fund for low-income economies. The nation contributes $585 million, nearly 15 percent of the total fund, second only to Germany (20 percent) and France (18 percent).

While the U.K. might provide aid directly, new mechanisms and policies would first have to be put in place, a potentially complicated and lengthy process.

Sy said Brexit also is expected to weaken trade ties between the U.K. and Africa.

Britain is one of Africa’s largest trading partners within the EU, accounting for more than 12 percent of all European Union trade with the continent (down from a peak of nearly 18 percent in 2012).

Dozens of trade pacts must be negotiated

According to General Robert Azevedo, director-general of the World Trade Organization, Brexit would require the United Kingdom to renegotiate trade agreements with the organization’s 161 member nations, a complex and time-consuming effort that could slow down trade with African and other nations. With Britain’s exit, the European Union also would have to renegotiate dozens of bilateral trade agreements, Sy said.

For example, a recent agreement between the EU and the Southern Africa Development Community allows free access to the EU market for Botswana, Lesotho, Mozambique, Swaziland and Namibia. However, with Brexit, the value of that access would be significantly diminished as it would not include the U.K. market and a separate agreement might have to be negotiated.

African agriculture may also be affected. According to Sy, the United Kingdom has been a strong opponent against agricultural subsidies the EU provides within the Eurozone because they put African agricultural imports at a disadvantage. With Britain’s departure, Africa would lose a strong voice in the EU for its farmers.

Nigeria, South Africa will feel impact

money nigeriaAfrica’s largest economies may be hard hit.

The U.K. is the fourth largest destination for exports from South Africa. That nation’s battered economy took a further hit as the rand fell by 7 percent the day after the British vote.

Economists at South Africa’s North-West University estimated that Brexit could shave 0.1 percent off South Africa’s annual economic growth, which already declined by more than 1 percent in the first quarter of 2016.

“With current growth in South Africa in 2016 expected to be close to zero, [Brexit threatens] a loss in growth South Africa can ill-afford,” Raymond Parsons and Wilma Viviers, professors at North-West, said.

Nigeria’s market reforms may be delayed

Trade between Nigeria and the United Kingdom is estimated at more than $8 billion and had been expected to more than triple by 2020. However, those advances also are likely to be interrupted as new trade deals are negotiated.

Nigeria, on the brink of recession, has been liberalizing market controls in order to spur the economy. But fallout from Brexit may also slow that effort.

Razia Khan, chief economist for Standard Chartered Bank said risk aversion world wide as well as soft oil prices could slow investment and delay normal operations on the newly liberalized market.

Africa is not alone in feeling the impact of Brexit, and stabilizing markets is the first step to blunting the economic impact, Kahn said.

As emerging markets come under pressure globally, “much will depend on how quickly financial market stability can be restored.”

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South Africa’s slowing growth to be hit by Brexit: Reserve Bank governor

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – The governor of the South African Reserve Bank said on Tuesday that although the decision by Britain to exit the European Union would not cause a recession, already slowing economic growth would be hit.

Speaking to Bloomberg TV in Portugal Lesetja Kganyago said: “We would not venture into a recession at this stage, but there is no doubt that it will slow the South African economy from the weak growth that we already have.”

Finance Minister Pravin Gordhan said on Sunday financial market volatility caused by Britain’s decision to quit the EU, which sent the rand tumbling, could hurt investment flows into South Africa.

Britain voted last week in a referendum to leave the EU, wiping billions of dollars off world equity markets.

“It has affected sentiment and investors were looking for safe assets. We are not seen as one of the safe assets,” Kganyago said.

South Africa’s economy is barely growing, hobbled by power cuts last year, low commodity prices, drought and political ructions that have unnerved investors.

Africa’s most advanced economy contracted in the first quarter, putting it on track for its first recession in seven years.


(Reporting by Zandi Shabalala)

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European stocks, oil slide as growth fears add to Brexit pressure

Comments (0) Business, Europe, Latest Updates from Reuters

LONDON (Reuters) – European shares hit a four-month low on Thursday as banks dropped sharply, while oil prices headed for a sixth session of losses after the Bank of Japan refrained from further stimulus and the U.S. central bank struck a cautious note.

U.S. stock index futures were down around 0.4 percent, indicating a lower Wall Street open.

Sterling hit a two-month low against the euro, underscoring worries that Britain, the world’s fifth-largest economy, will vote to quit the European Union on June 23.

According to an Ipsos MORI survey, British support for Brexit hit 53 percent, the highest for the “Leave” campaign recorded by the pollster in more than three years.

A vote to end Britain’s 43-year-old EU membership would spook investors, undermining decades of European integration and placing a question mark over the future of the United Kingdom and its $2.9 trillion economy.

Concerns over Brexit, in combination with dimmed expectations on global growth, have driven investors towards safe-haven assets such as German bunds and gold, and out of oil and stocks.

Euro zone banking stocks dipped to near four-year lows, with Deutsche Bank, down 2.8 percent, and Credit Suisse touching record lows.

“The global economic and political outlook is dark,” said Chirantan Barua, an analyst with Bernstein. “Brexit is fuelling uncertainty and will have ripple effects across Europe. With so much uncertainty, why would you buy a bank stock now?”

Brent crude prices, which last week hit their highest this year, have fallen every day since June 8, dropping more than 8 percent in all.

Germany’s 10-year bond yield fell to a record low as fading expectations of U.S. rate hikes this year provided further fuel to a global bond market rally.

Spot gold climbed 1.4 percent, close to a two-year high.

Earlier in the day Asian markets were firmly in “risk-off” mode, with the yen surging to a 20-month high against the dollar and the Nikkei down more than 3 percent. Hong Kong’s Hang Seng index fell 2 percent.

Benchmark equity indices across Europe followed suit with Italy’s FTSE MIB down 1.6 percent. The pan-European FTSEurofirst 300 fell 0.7 percent.

Shares of UBS and Credit Suisse fell 1.3 percent and 2.8 percent respectively after the Swiss National bank said both banks were likely to need to raise an extra 10 billion Swiss francs to meet new leverage requirements.



(By Vikram Subhedar Additional reporting by Atul Prakash in London and Aaron Sheldrick in Tokyo; Editing by Keith Weir and John Stonestreet)


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