How UK exit from EU would benefit Uganda

UK Independence Party (UKIP) leader Nigel Farage poses for a photo as he leaves a polling station south of London yesterday. AFP PHOTO

One of the main causes of yesterday’s referendum in the United Kingdom is the amount of sovereignty the country has lost to the regional bloc. Immigration and its impact on jobs, the burden on healthcare and the automatic right to other welfare benefits were other issues of concern.

A plethora of these factors caused increasing hostility to the EU not only in the UK but also in France, the Netherlands and Germany, giving fuel to the far right parties in most northern European countries. But what does Britain’s exit from the EU mean for Africa and, indeed, Uganda?

Currently, Britain is seen by many as the only force that can counter German influence in Europe. Britain’s exit will cement Germany’s leadership, a fact that few Europeans openly discuss but many quietly worry about given Germany’s contemporary history. The other powers like France, Spain and Italy are weakened by economic woes to offer any power balancing.

When Britain joined the EU in 1973, it brought along its former colonies (including Uganda) to receive aid under an arrangement that was already benefiting former French colonies.

This arrangement of former colonial master and former colonies later came to be known as Africa, Caribbean and Pacific states (ACP). African aid and trade were negotiated under this framework. Before Africa joined this platform in 1975, its exports to the EU were 6 per cent of all EU imports. By the end of 2000, Africa’s exports to the EU had shrunk to 1 per cent.

One may argue that the EU stifled Africa’s capacity to export. The EU gave large sums of aid to Africa whilst simultaneously enforcing punishing and prohibitive trade practices which stifled growth and innovation.

Africa’s efforts to add value to raw materials continue to be frustrated by EU trade policies. One example is coffee. In 2014, Africa earned $2.4 billion (Shs8t) from the cash crop while Germany, a processor of the same coffee, earned $3.8 billion (Shs12.7t) from coffee re-exports.

The issue is not how much coffee processors such as Germany should earn, but that Africa is punished by EU tariff barriers for value addition. Non-decaffeinated green coffee is exempt from the charges. However, a 7.5 per cent charge is imposed on roasted coffee. As a result, the bulk of Africa’s exports to the EU is unroasted green coffee.

The charge on cocoa is even more debilitating. The EU charges a hidden tax of 30 per cent for processed cocoa products like chocolate bars or cocoa powder, and 60 per cent for some other refined products containing cocoa.

The EU has only one free trade agreement on the African continent which is with South Africa. Leaving the EU would allow Britain to rekindle and re-engage with independent Commonwealth countries, and strike fairer trade deals which would better reflect Britain’s role as a leader of free market enterprise.

Britain’s current immigration policy discriminates against Commonwealth citizens in favour of eastern Europeans, many of whom have no links to Britain.

Yet the Commonwealth and Britain have a shared history, cultural links, common legal systems, and common business practices.

Britain’s exit from the EU would allow it to negotiate a possible Commonwealth visa where countries like Uganda have a priority or at least an application based on equal opportunity for all applicants.

Today, many countries in the EU are experiencing negative growth yet Commonwealth countries have some of the highest growth rates in the world. For instance, Uganda grew at an all-time high of 16.2 per cent in the first quarter of 2009 and grew at an average rate of 6.2% in 2014.

The EU economy in contrast was growing at -4.3 per cent in 2008 and averaged at a paltry 1.5 per cent in 2014. In the same year, Europe’s largest economy, Germany grew at 1.6 per cent while Greece - 7 per cent and Portugal at -1.7% (richer nations create more wealth, even with marginal growth, than poorer countries with higher growth–Editor).

Although Germany’s economy is strong, the population demographics paint a gloomy picture for the years ahead. To keep a stable population, a country needs to have 2.1 live births per woman of reproductive age, but Germany is stuck at 1.47. The consequence of this is that companies will experience acute labour shortages further leading to a pension crisis - where there won’t be enough young workers to pay the pensions of the retired. Importing workers comes with cultural and language problems as well as skills gaps.