In a meeting with reporters during his visit to the United States in May, Edoh Kossi Amenounve, CEO of the Bourse Régionale des Valeurs Mobilières (BRVM), Africa’s top performing securities exchange, said Britain’s exit from the European Union should be no cause for concern in terms of impact on the currency of francophone Africa.
“I don’t think that there can be any impact on the relationship between the CFA and the euro because the relation between the CFA and the euro is managed by the Bank of France. It is not linked to the European Central Bank or to the bank of Britain,” Amenounve said. He was responding to a reporter’s question as to whether he was concerned that the possible exit of Britain from the euro zone could result in a currency risk for the CFA.
Headquartered in Abidjan, Cote d’Ivoire, the BRVM serves the members of the West African Economic and Monetary Union (Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo), whose currency, the CFA franc, is pegged to the euro. Amenounve stressed that the CFA “is just a relationship managed by the Bank of France in terms of currency, in terms of obligation of foreign currency that you have to have on account with the Central Bank of France. So I don’t think that will have a negative impact.”
In an outcome that startled much of the world, 52 percent of British citizens voted on Thursday to leave the EU, citing burdensome EU-imposed regulations. The vote forced British Prime Minister David Cameron to resign, a move that sent many Africans to social media platforms to demand that the continent’s decades-long-serving leaders follow suit.
Stock markets in Europe, Asia and the United States initially fell 2 percent to 8 percent on the vote. In Africa, the Johannesburg Stock Exchange fell the hardest, dropping by 4 percent on opening, while the South African currency, the rand, fell by more than 7 percent. The rand is Africa’s most internationally traded currency.
The EU is South Africa’s largest trading partner and Britain is its fourth-largest single-country export destination, with some 20 percent of its Europe-bound trade going to that country. This has led some research analysts to predict that Britain’s exit from the EU would shave about 0.1 percentage points off the South African economy.
In the rest of the continent, especially in Anglophone Africa where trade with the EU, and with Britain in particular, is robust, central banks indicated on Friday that they were bracing for disruptions. Any slowdown in Britain’s economy in the wake of Brexit could hurt African countries dependent on British trade, investment and development aid.
But with Britain’s actual departure from the EU protracted over two years, some analysts are being quoted as saying it’s possible the British economy may not take as bad a hit as some economists predict.
Uncertainty about stock markets, trade relations and investment involving the EU, Britain and Africa most likely will continue in the short term in the wake of Brexit.
