African Press Association

Brexit affecting supply chains between Africa, UK

JOHANNESBURG, (CAJ News) – SUB-Saharan Africa is feeling the impact of Britain’s exit from the European Union (Brexit) with almost a third of companies in the region with suppliers in the United Kingdom reporting the prospect of the exit had already made their supply chains more expensive because of currency fluctuations.
Negotiations to leave EU began last week, a year after a majority voted in favour during a referendum.
According to the Chartered Institute of Procurement and Supply Africa (CIPS Africa), most supply chain managers using UK suppliers have also begun preparing for the potential impact of Brexit on their business with the UK.
A survey by CIPS established 55 percent of these supply chain managers have not yet felt the impact of Brexit, but they were expecting it to affect them in due course.
Only 21 percent expect Brexit to have no impact on their supply chains in the UK at all.
André Coetzee, Managing Director of CIPS Africa, said most South African companies who did business with the UK had not yet been effected by Brexit but had already begun analysing the risks it could pose.
“Despite their concerns, most companies feel they have the skills necessary to minimise the disruption Brexit could have on their supply chains,” said Coetzee.
The survey found that 47 percent of these managers are preparing for Brexit through performing a risk analysis exercise, while 29 percent have started to map the potential costs of new tariffs. At the same time 29% say they have not yet done any work to prepare.
By comparison, businesses situated in the UK and Europe are already preparing Brexit contingency plans which could sever supply chains between the UK and the continent.
The same survey found 32 percent of UK businesses who work with suppliers in the European Union (EU) are actively looking for alternative suppliers based in the UK. Businesses within the EU are even more advanced in their preparations.
Almost half (46 percent of EU businesses who work with UK suppliers are in the process of finding local replacements.
Duncan Brock, CIPS Director of Director of Customer Relationships, said fluctuations in exchange rates or the introduction of new tariffs could dramatically change where British companies did business.
“The separation of the UK from Europe is already well underway even before formal negotiations have begun,” said Brock.
– CAJ News 

64 Responses

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