If Britain votes to leave the European Union today, Kenya will certainly feel the shock waves, especially the tourism and horticultural sectors, analysts warn.
Mark Bohlund, the Africa and Middle East Economist for Bloomberg Intelligence, says the exit, commonly referred to as Brexit, would cause investors to cut back on spending. Bohlund said a Brexit will be followed by a period of uncertainty about what the UK’s relations will be commercially and otherwise with the EU.
“A heightened degree of uncertainty makes planning more difficult and the normal reaction is to cut back spending until it is easier to predict what future demand and business conditions will be,” he said.
Britons will today vote in a referendum poll to decide whether to leave the European Union.
Central Bank governor Patrick Njoroge said Kenya will certainly feel the ripple effects of Britain exiting the EU. Njoroge told Reuters that if Britain leaves the EU, it could hurt the global economy and Kenya would “feel the shock wave”.
Analyst Aly Khan Satchu said Kenya should brace itself for possible job losses in the tourism and horticultural sectors since the exit will weaken the pound.
This is the second such vote by the British citizens. In 1975, the country held a referendum on whether it should stay in the European Economic Community, two years after it had joined.
“In terms of investors to Kenya, when you think about Vodafone which owns 40 per cent of Safaricom, Diageo owns more than 50 per cent in EABL, while Barclays Plc has already announced plans to exit Africa. Such investor decisions are likely to be seen in the future, should the UK vote to leave the EU,” Satchu said.
Invest analyst Maurice Oduor from fund manager Cytonn Investments said the government needs to quickly conclude all outstanding trade agreements with the EU. “Kenya may also have to renegotiate trade deals with the UK alone, if it votes to leave the EU,” he said. Satchu and Oduor agree investors from the UK are likely to hold back on investments incase a Brexit is endorsed today.
Source: The Star

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