Moody's said the U.K.'s vote to leave the EU will have alimited impact on sub-Saharan African countries to increased volatility in theglobal financial markets and a potential weakening in their trade, investment,tourism and aid flows.
In the short term, the principal challenges some SSAcountries face following Brexit are financial flows and financial marketvolatility amid shifting investors' risk perceptions. Over the medium term, thechallenges are expected to be felt through trade, investment, tourism andofficial aid.
Among the SSA countries, South Africa is the most exposed tothe immediate financial sector fallout from Brexit because of its integrationinto the global financial markets and its financial ties with the U.K. Kenya isalso susceptible to capital flight because of its developed financial markets,whereas Nigeria faces increased risks to its portfolio inflows, according toMoody's.
Smaller nations like the Seychelles and Mauritius are themost exposed SSA countries to a negative shock through exports of goods andservices, particularly tourism.
The rating agency also expects the U.K. to continue its aidprogram for Africa. However, if the U.K. were to cut back aid, Sierra Leone,Ethiopia, Nigeria, the Democratic Republic of the Congo and Tanzania are thecountries in the region that would be most affected.