Results of a referendum in the United Kingdom on Thursday to leave the European Union shocked markets across the globe, with over $2 trillion wipe out in a single day. African economies were not spared the volatility that the Brexit vote caused on different asset classes. Currencies, stocks and bonds plunged across the continent after the UK’s vote to leave.
Africa’s largest economies – that have been struggling with commodity prices rout – were the most affected as investors anticipated a slowdown in inflows as a rush to safe havens like the US markets and precious metals like gold ensured.
Brexit has also caused uncertainty over the future of trade relations between the UK and Africa.
Here is how some African markets reacted after the Brexit referendum:
South Africa was the most affected market in Africa by the Brexit outcome due to its strong ties with the European economy. In 2015, South Africa sent 23 percent of its manufactured exports to Europe including the UK and 36 percent of its agricultural exports.
The rand tumbled nearly 8 percent against the dollar in trade on Friday after Britain voted to leave the European Union. It touched a record low against the Japanese Yen.
At the Johannesburg Stocks Exchange the benchmark share index fell the most since May 2010 to a third weekly decline, led by stocks with listings in London and by diversified mining companies, Bloomberg reported.
South Africa’s minister of finance, Pravin Gordhan, moved on Friday to reassure the country that its financial institutions could withstand the effects of Brexit, iol.co.za reported.
Last week was eventful for the Nigerian market with a new exchange rate policy being introduced and the UK exit from EU affecting commodity prices, particularly causing a slide in oil prices, which is the leading export from the West African nation.
These two events affect Nigerian markets differently. The decision to withdraw UK for the EU ended a three day rally on the Nigerian Stock Exchange, while on the foreign exchange market, the naira gained against the dollar and British pound, but depreciated against the euro, Venture Africa reported.
Egypt was the hardest hit market in North Africa by the Brexit vote, as investors became concerned that fund inflows into the country could shrink as the global market turmoil would make it harder for the country to attract funds. The country’s stock market dropped sharply by and closed 5.5 percent lower at 6,852 points near its intraday low, Reuters reported.
There was little impact on the Kenyan stocks and foreign exchange markets from Brexit after the country’s central bank governor, Patrick Njoroge, assured markets that the regulators was ready and capable to intervene in case of any jitters, Reuters reported.
There was concern that the shock decision by British voters to exit the European Union would affect the amount of tea the UK imports from Kenya, due to anticipated decline of its re-export market to other nations. The UK is a major re-exporter of Kenyan tea and in 2014 it exported 17 percent of the beverage it imported, Daily Nation reported. Tea is one of the largest hard currency earner for the East Africa’s largest economy.
According to The East African, transactions in pound sterling stalled across Rwanda as dealers anticipated the withdrawal of Britain from the European Union. Rwandan remittance startup Mergims suspended buying the pound sterling for eight hours, following similar moves by international money transfer agencies Transferwise and Azimo, which suspended pound sterling transactions for 24 hours during the referendum vote.
