Johannesburg - After Britain voted to leave the European Union, Wesgro said the referendum result that shook the world on Friday morning introduced significant uncertainty for those Western Cape businesses that export to the UK, or service British clients in the tourism sector.
Wesgro, the tourism, trade and investment promotion agency for Cape Town and the Western Cape, pledged to work to mitigate any negative effects on trade and investment relationships between Western Cape businesses and Britain and Europe.
The UK is ranked in the top two markets for the Western Cape across trade, investment and tourism.
British voters on Friday opted to walk out on the European Union (EU), dealing a big blow to the EU project and forcing the resignation of Prime Minister David Cameron.
Wesgro’s chief executive, Tim Harris, said the UK was the second most important export market for the Western Cape last year, with exports valued at R9 billion and a positive trade surplus of R877 million.
“Overall exports to the European Union were valued at R33 billion in 2015, with the United Kingdom accounting for 36 percent of these purchases,” Harris said.
“In particular, the UK is a major market for Western Cape agribusiness products buying R1.5 billion worth of wine, R1.2 billion worth of apples and pears, and R4.8 billion of citrus in 2015.”
Harris said their exports to Europe were currently covered by European treaties like the Trade, Development and Co-operation Agreement, and the recently signed Southern African Development Community-EU Economic Partnership Agreement (EPA).
“Once Brexit comes into play, however, South Africa would need to sign a Free Trade Agreement or similar trading arrangement with the UK, or risk the ‘Most Favoured Nation’ principle becoming applicable, putting our exporters at a significant disadvantage.”
Harris also said the UK was the largest investor in the Western Cape, responsible for a quarter of all investment into the province.
“Over the past twelve years, UK companies invested in 62 greenfield projects worth over R15 billion. In recent years Wesgro has facilitated six UK investments worth over R330 million, creating 143 jobs.”
Harris said many UK investors into the Cape chose to operate out of Britain “because of how open and connected that market was to the world”.
Brexit, according to Harris, had now called that into question, which had led to an increase in economic uncertainty.
Meanwhile, South Africa’s government said the country’s financial system was resilient and would be able to deal with any shocks arising from Britain’s exit from the European Union.
But principal and senior economist at Barclays Africa, Peter Worthington, told the African News Agency that Britain’s exit of the EU was negative for South Africa though “quantifying exactly how much is very difficult”.
African News Agency