As the UK gets used to the idea of leaving the European Union and having to look for new trade partners, experts are putting Africa forward as one region that could stand to benefit from the vote.

June 24’s Brexit result has sent shockwaves around the world, and its short-term impact on Africa will be largely negative, particularly in terms of currency volatility. Research published today (July 1) by Ecobank reveals that as the volatility of the British pound is expected to persist, so will that of emerging and frontier market currencies. In particular, countries with currencies pegged to the euro will be hit by its 3% devaluation against the US dollar following the referendum.

Additionally, the UK’s economic slowdown could lead to a reduction in the amount of remittances going to Africa, affecting the continent’s liquidity. “The World Bank’s Migration and remittances factbook 2016 ranked the UK as the world’s 10th-largest remittance sender, and Nigeria as the UK’s second-largest recipient of remittances after India. As a result, any slowdown in remittances from the UK and the EU could aggravate Nigeria’s liquidity challenges,” writes Ecobank’s head of research, Edward George.

An economic downturn in the UK would also mean lower purchasing power, affecting the consumption of African goods and UK citizens’ ability to take holidays in Africa. It would also have an effect on investment and aid funding flows coming from the UK.

But in the longer term, Africa could feel the positive impact of the UK’s exit from the EU. In fact, 18 African countries are part of the Commonwealth, the organisation that has been pegged as the UK’s alternative to the European single market. If the country were indeed to focus its trade and investment efforts on Commonwealth countries, Africa would be one of the main beneficiaries.

But even non-Commonwealth African countries could see renewed interest from British corporates. “Following an exit from the EU, when developing new trade relationships will be crucial, UK firms will need to reassess their trade and investment strategies and exploit more opportunities in Middle Africa’s largely untapped markets. Growth could be particularly strong in sectors such as fintech, pharmaceuticals, machinery and engineering,” George adds.

Lingering structural issues

As many other regions, Africa has suffered greatly from the downturn in the commodity price cycle; yet it is still seen as presenting bright investment prospects in the medium to long term. Coface predicts growth of 2.6% in 2016 – the weakest for the continent since the 2008 crisis – but explains: “The growth trajectory of Sub-Saharan Africa could be curbed by economic crises and political or governance issues, but these factors do not jeopardise the positive medium-term outlook.”

At the Hogan Lovells Africa Forum held in London on June 30, speakers stressed the tremendous opportunities presented by the continent, but pointed to lingering issues still hampering investment. For example, audience polls revealed that 76% of delegates have encountered issues of corruption when dealing with Africa, and 53% would even choose not to enter the continent because of high bribery and corruption issues.

Structural and infrastructural impediments were also named, with Afreximbank executive vice-president Denys Denya talking about the bank’s shift of focus from pure trade finance to infrastructure projects that can support trade and add values to the commodities exported from Africa.

Speakers on a power panel explained that while there is no shortage of private and development capital available, only 23 power projects reached financial close in Africa in 2015, 16 of which in South Africa. They explained this disconnect through the need to improve the quality and speed of project developments in the region.

Finally, an idea that transpired throughout the day is that the ambition to find perfect, large-scale solution in sectors as varied as electricity or even financial inclusion is one of the reasons things are not moving fast enough in Africa. Instead, speakers recommended a network of decentralised small-scale project with immediate positive impacts on the population.