According to Wikipedia the Southern African Customs Union (SACU) is a customs union among five countries of southern Africa: Botswana, Lesotho, Namibia, South Africa and Swaziland.
Its headquarters are in the capital of Namibia; Windhoek and it was established in 1910. How does Britain exit from the European union influence Namibia? Brexit will have a negative impact on the Namibian economy. It will affect various sectors of the economy such as the trade sector, gross domestic product, investments and the tourism sector.According to Kalili (2016) the Brexit implications will in all likelihood trickle down to the export sector and most notably the beef and grape exports marketed through the UK. Beef exports account for 2.1% of our total exports and the lower global growth will reduce EU demand for our beef and deliver softer prices. The same applies for grapes which account for an estimated 1.
8%. “whether it will be a good or negative impact only time will tell” said Frans Uusiku. He further stated that Namibian beef export to the EU would be affected should Britain leave the regional bloc. Namibian exports beef to the EU and the UK is one the entry points for meat distribution (Nampa, 2016). This effects will lead to reduction in the GDP of the economy.
Schlettwein (2016) explained the trade channel, given that about 2% of Namibians exports mainly beef and fish valued at 800 million are destined for the UK market. External demand weakens as well as indirect impact through UK trade with south Africa are expected to weigh in Namibia in the medium term. He further continued by stating that the immediate results of the fallout from brexit has impacted on investors sentiments especially in the bond market, with shifts to safer and higher yielding investments grade assets, given the current low rate environment. According to prices declined with the brexit announcements. Many large Namibian companies are dual listed on the stock exchange and London stock exchange. The share prices of most Namibian companies with dual listings as well as banks will in the foreseeable future continue to be exposed to the relative exchange rate and market volatility. The Namibian economy will not be spared as british investors are likely to sell their shares in a bid to survive the economic uncertainty said Kakujaha-Matundu.
He further explained that South Africa which is Namibia’s biggest trade partner will see massive job cuts and hard-hit British companies close down. According to Kallili (2016) brexit leads to slower global growth additionally would decrease investment growth in the domestic economy of Namibia. Therefore, investments are expected to revise downwards by 0.9% from 2018 to 2020 in the form of lower FDI growth he states. In bound tourist arrivals from the EU source market would also fall due to negative wealth effects (Kalili, 2016).
He continues that Namibia will notice a reduction in the tourist numbers from the following years as 37% of our tourist are of the European and UK origins. Although the negative implications are noticeable at sector level, they are not seen on overall GDP performance at decimal point at the macro level. According to president Geingob (2017) while many have viewed brexit with regret and trepidation, we would like to view brexit as an opportunity for the United Kingdom and Africa to reshape a longstanding and historic relationship. Namibia has joined agreement with the EU, but brexit offers trade opportunities. According to Beukes (2016) the south African rand to which the Namibian dollar is pegged is among emerging market currencies most vulnerable to the upheaval following Britain’s EU exit. This may to lead to Namibia or south Africa not to be able to import, due to the weaker pound because both currencies are falling at the same time.
The impact is felt through exchange rate volatility as a result of the currency peg with south Africa rand which depreciated against the US dollar by 5.4 % and 2.4% against the euro states Schlettwein.