Argentina Brexit
In the wake of the Brexit vote, equity funds in Europe experienced outflows of 19.2 billion euros while some $21.7 billion flowed out of actively managed U.S. equity funds. The uncertainty caused by Brexit is pushing investors to move their money into emerging markets worldwide. Argentina is one of them.

Since taking office in December, President Mauricio Macri has overhauled the protectionist and populist policies of his predecessor, kept Argentina’s peso currency competitive and encouraged more foreign investment. Nevertheless, despite Macri’s clear rules that will potentially guarantee stability and build confidence among Argentines, poverty levels in Argentina have risen.

According to a recent report published in May by the U.N.’s Children’s Emergency Fund (UNICEF), in Argentina between 25 and 32 percent of all children live in multidimensional poverty, among whom 8.4 percent of girls and boys up to the age of 17 live in extreme poverty.

In the first six months in office, Macri’s administration oversaw more than 179,000 layoffs, over 66,000 in the public sector alone. Workers have also suffered under the economic pressures of record inflation and skyrocketing prices of utilities.

Contrary to the popular pessimism, President Macri is hopeful. “The country has already received investment pledges worth $16 billion…The U.K.’s decision to leave the European Union may make countries like Argentina more attractive to investors,” Macri said at the annual Allen & Company Sun Valley Conference in Idaho in June.

Marci envisioned Argentina to be part of a global scenario, that anyone could come in with their money and go out with their money whenever they like.

The Sun Valley conference is known as a gold mine for deals in the world’s communication and technology industries. With huge outflows of funds in the U.K., Macri is hoping that the new business-friendly atmosphere will attract enough new investment to boost domestic production and create new jobs.

“The number-one priority is reducing poverty,” said Macri. “We are launching the most important infrastructure program in our history–ports, energy, trains, waterways…and agribusiness.”

Long-term aftermath effects of the Brexit vote are still unclear, but President Obama’s historic visit to Argentina this year is expected to kickstart another wave of U.S. international investment.

A study in 2010 found that U.S. companies with international investment create the domestic jobs and pay higher wages than companies focused solely on the domestic market. Indeed, multinational corporations added 289,000 domestic jobs in 2007-2009 even as the recession pillaged more than eight million jobs from Americans overall.

Yvie Yao

Photo: Flickr

People across all nations are asking about the impact of Brexit on the world, but only a few are asking the very important question of, “What will be Brexit’s impact on Africa?” As powerful countries such as the U.S. and Germany wait anxiously for the final vote count, anticipating possible financial fallout, the third world has much larger concerns, especially Africa.

Brexit Implications on Africa: Humanitarian, Political and Economic

Whether or not there will be a recession in Britain following the country’s exit from the EU is unclear, but what is certain is that if an economic crisis does occur, Africa will be hit hard.

Great Britain has long been a strong trading ally for Africa, and according to The Chicago Tribune, the European Union has preferential trade agreements with every African country except for Libya and South Sudan.

Due to the Brexit, British officials will now have to rewrite many of their trade agreements with African nations, which will take extensive time and manpower. However, this could prove to be fruitful for Africa, as strict regulations such as the Common Agricultural Policy — set in place by the EU will no longer apply to trade legislation.

According to the European Commission, the Common Agricultural Policy is an EU initiative aimed at invigorating “agricultural productivity, so that consumers have a stable supply of healthy food”. Part of this policy grants subsidies to European farmers to promote sustainable agriculture and the growth of healthy food.

BBC reports that African farmers feel as though the subsidies attached to the Common Agricultural Policy “undermine the concept of a level playing field”. The U.K. agrees with their African allies and adamantly fought for policy reformation before their exit. Brexit’s impact on Africa will not only be economic, for it will also influence the political and humanitarian realm.

The U.K. and Aid to Africa

Prior to the U.K.’s decision to leave the European Union, it had incredible authority over the EU’s political and humanitarian initiatives in Africa.

The European Development Fund, according to the Chicago Tribune, is “the European Union’s main vehicle for providing development aid to Africa”. Britain was a leading voice in dictating the mission of the fund, as the third biggest contributor at 14 percent.

Even more impressive was the U.K.’s power over the African Peace Facility and its backing of the African Union Mission in Somalia. Britain made sure that the EU paid for 90 percent of the program, a 22,000-strong multinational force that protects the Somali Federal Government from the extremist militant group al-Shabab.

Before the Brexit, Britain was already beginning to lose their battle over policy in Somalia as the rest of the EU voted to pull some funding, hinting at a divided opinion about African aid.

The future of European policy in Africa is ambiguous, as one of the continent’s most passionate advocates is no longer a member of the EU. While this may seem like troubling news for Africa, the Brexit could turn out to be a blessing for the entire region.

The U.K. will no longer be held back by the EU’s restrictive guidelines as it applies to foreign policy and unless recession strikes Britain’s economy, it is likely that they will stay true to their promise of providing 0.7 percent of their gross national income to African aid.

Liam Travers

Photo: Public Domain Images