On 23rd June, Britain went to the polls to decide whether they wanted to stay in the European Union (EU) or not. They voted to leave. Within this came a torrent of media stories world over that told the tale of shock and disbelief that had engulfed many global investors at the results of the British referendum, dubbed ‘Brexit,’ despite polls giving the indication that it would be a tight vote. Many called it a blow to globalisation, a rebellion of Britain against the world elite.
This decision sent shock waves around the world as major stock exchanges nosedived into the red as many investors dumped risky assets for safe havens like gold, dollar, yen and Treasuries of stable economies. Big names on the Forbes rich list were hit hard with billions of dollars being wiped off the markets in blink of an eye. A Bloomberg report claimed that Europe’s rich man, Ortega had lost $6 billion dollars. Indeed it was a bad day for capitalism and globalisation.
With one of the biggest economic stories since the economic crisis of 2008, the media went to press doing what they do best: make the most of a bad situation. Think tanks, pundits and all manner of experts looked into their crystal balls to see into what the future held for world economies now that Great Britain had decided to exit the EU. A cloud of uncertainity hang over global markets and it’s effects were known to none.
As the ripples spread out across the inter-connected world, many economies that felt vulnerable embarked on a self assessment of the specific effects the referendum results would be. Financial commentators, economists, professors and all manner of ‘experts’ began brainstorming on the implications of Britain leaving the EU.
The case for Uganda
On the African continent home to most of the frontier markets a cohort to which Uganda finds itself, the implications of the vote began to become more and more clearer as the rest of the continent. Central banks made statements to allay anxiety of their weary investors. It worked some what as most business went on as usual.
Uganda is forging an alliance with it’s neighbours in the East African Community – a regional trade and political bloc that seeks to unite East African states following the model of the EU. This should offer afew lessons. Uganda is only begining to embrace the winds of globalisation as it seeks to position itself in the global village of interconnected states that it finds itself in. A landlocked country that has made commendable efforts in becoming landlinked, a gate way so to speak to the heart of central Africa. This has largely been due to the massive infrastucture developments being undertaken across the country and will boost it’s competitiveness as a viable investment destination.
But the country is largely dependant on a small agricultural export base of coffee, tea, cotton, etc that struggles to counter the ever rising imports that are in high demand. The sitaution isn’t helped by the subsistence nature of the country’s agriculture, a practice the leadership is trying to address but with little significant progress attained. The economy is yet to be significantly integrated into the global financial network. The gross domestic product (GDP) figures are largely the effort of the services sector with almost no major manufacturing industry to speak of when compare to regional neighbour Kenya. Uganda faces numerous bottlenecks to overcome if it’s to be full global member.
Most Ugandans engage in small retail trade, the kind that you see in kikubo, a major trading area in down-town Kampala city, Uganda’s capital.
Uganda has always been challenged with unstable economic outlooks from an unstable foreign exchange market, hight unemployment, high political risk as civil unrest steadily rises, inflationary tendencies the repeat themselves in quick successions, low scores at major social indicators and high energy costs. It tells of a country at the periphery of globalisation.
The strong gripe of culturally inefficient means of production and social life, low uptake of financial services, the rudimentally nature of the country’s agriculture has made most Ugandans inward looking and thus poor candidates for the open, fluid and flexible nature of the world in the 21st century. Thus crippling their full comprehensive integration. And it is this outsideness that will keep Uganda largely insulated from major events that have a financial implications.
With little exposure to the chaotic international environment for most Ugandans leaving such shocks to felt by only the exposed, little will be experienced by most of the citizenry. However, it won’t be for long as the rate of inclusion is accelerating at good speed. Until that happens not much will be made of woes from a far, atleast not YET.