By IVAN R MUGISHA
In Summary
Transactions in pound sterling stalled across Rwanda as dealers anticipated the withdrawal of Britain from the European Union.
Rwandan remittance startup Mergims suspended buying the pound
sterling for eight hours, following similar moves by international money
transfer agencies Transferwise and Azimo, which suspended pound
sterling transactions for 24 hours during the referendum vote.
The pound sterling fell to $1.34 dollars, its lowest level since September 1985, following Britian’s vote to leave the EU.
“We were advised to stop taking pounds during the voting
process,” said Louis-Antoine Muhire, founder and CEO of Mergims
Solutions, adding, “Indeed, the pound was very volatile and it was not
wise to buy it at the time. We, however, have resumed trading because we
don’t expect it to fall any further against the dollar.”
Mr Muhire said the volatility in the financial market will be short-lived because it “will adjust itself” in the long run.
“The referendum was mostly emotional. The EU and UK need each
other and they will definitely still find ways to co-operate
economically. Most of the people who voted to leave also wanted David
Cameron to resign, and now they have got what they wanted. Economically,
nothing much will change,” said Mr Muhire.
Regional effect
Economic experts argue that the UK breakaway is likely to affect prices of raw material exports from the East African region.
“The dollar is going to be a bit more expensive. Prices for
materials like minerals are likely to get worse because the dollar will
be unfavourable in the short run,” said Manaseh Nshuti, an economist and
former politician.
“Aid from the UK and the EU is likely to face a few problems
because they have now to adjust some of their policies. However, the EAC
region could gain heavily from the fact that now the UK will focus more
on strengthening its commonwealth programmes,” said Mr Nshuti.
Mr Nshuti said Britain’s withdrawal from the EU should signal to
EAC politicians that integration efforts can collapse if not all
countries are satisfied with the process.
“It is better for regional integration to be driven by people-centred needs rather than political agendas,” he said.
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