Mali's exit from ECOWAS: update on the economic and human consequences
Mali announced on Sunday February 4 its exit from the Economic Community of West African States (ECOWAS), jointly with Niger and Burkina Faso. What do we know and what questions remain?
The empty seats of Mali and Niger during an ECOWAS meeting in Accra, August 17, 2023. © Gérard Nartey / AFP
By: David Baché
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The nationals of these three countries, ordinary citizens or economic operators, express their fears about the consequences of such a withdrawal. The national authorities have therefore provided initial elements to try to reassure them. With in particular the confirmation, by the Malian Minister of Foreign Affairs Abdoulaye Diop, of remaining in the UEMOA.
The withdrawal of Mali, Niger and Burkina, although announced as immediate, must take a year, according to community texts. A period during which the three countries must respect their obligations vis-à-vis ECOWAS, but which will also allow them to prepare for the future.
Mali's main wealth is gold, which represents a quarter of its fiscal resources and more than 75% of its exports. To South Africa, Australia and Switzerland. No impact to be expected for the finances of the Malian state in this regard.
Remaining in UEMOA limits the damage
Then, Mali left ECOWAS but not the West African Economic and Monetary Union (UEMOA). However, this organization offers its eight members the same facilities as ECOWAS for the free movement of people and their goods, but also for that of goods, exempt from customs duties. No change therefore for relations with Ivory Coast or Senegal for example, the main destinations for Malian goods in West Africa, and whose ports are used by Malian entrepreneurs.
Malians living in WAEMU member countries should not see their residence conditions changed either, as long as Mali remains a member of the monetary area - the same goes for Niger and Burkina Faso.
Although Mali exports little to the sub-region, it imports much more. But here again, its main partners are Senegal and Ivory Coast, members of UEMOA. Products imported from these countries will therefore not be taxed more. Mali also relies on the UEMOA financial market to raise funds, with in this specific case the possibility of an increase in interest rates, which have already exploded since the start of the transition period.
If the exit from ECOWAS should therefore have an overall negative impact on the economies of Mali, Niger and Burkina, this impact will also be very limited by their remaining in the UEMOA. The latter which has not officially reacted to the announcement of the ECOWAS withdrawal. A political retaliatory measure from other WAEMU member countries seems unlikely, according to internal sources contacted by RFI.
The exit of the CFA franc much more risky
Mali, Niger and Burkina Faso, however, make no secret of their desire to cut all ties with France. The exit of the CFA franc therefore appears to be a likely next step, but one which would also be much riskier. Because for that, they would have to leave UEMOA, and therefore abandon the commercial and human guarantees that this space provides them today.
Also read Cédéao, the big losers of the breakup
Economists who have worked on the subject also highlight the need for these three countries, if they wanted to carry out such a project, to have sufficient foreign exchange reserves and solid institutional credibility, in order to guarantee value and stability. , in the long term, of a possible new currency. As a reminder, ECOWAS is currently working on the planned exit from the franc zone and the establishment of a single common currency called Eco.
ECOWAS also has seven non-UEMOA member countries, such as Ghana, Gambia, Nigeria and Guinea, with which trade is not negligible. Mali, like Niger and Burkina Faso, may however try to establish new bilateral agreements with these countries to, for example, avoid the reestablishment of border taxes.
Dissuasive for investors
Another consequence, difficult to measure: the impact of this decision on investors. The economic players contacted by RFI doubt that the withdrawal of ECOWAS and the unpredictability of future decisions will contribute to strengthening confidence and making anyone decide to place their funds in Mali, as in Niger or Burkina. Which would have a direct and long-term negative impact on local businesses.
The National Employers' Council of Mali indicated on Wednesday that its members were beginning to raise their "
concerns and suggestions
", which will then be analyzed and shared with the transitional authorities.
Read also Announced departure of Mali, Niger and Burkina Faso from ECOWAS: human rights weakened?
In Burkina Faso, the country's withdrawal from ECOWAS animates debates
In an interview given to the Burkina Faso information agency, the official press agency, the Minister of Economy and Finance ensures that his country remains in the West African Monetary Union (UEMOA). “
We remain a member of UEMOA
,” stressed Aboubakar Nacanabo to journalists from the Burkina Faso information agency. The Minister of Economy and Finance emphasizes that for the moment, his country has not observed at the UEMOA level the same facts as those accused of ECOWAS. Burkina therefore remains for the moment within the monetary union, with the CFA franc as the common currency.
He also believes that the exit from ECOWAS will not have a significant impact on the commercial level, because the common external tariff of the UEMOA will help to minimize the consequences of the divorce. However, in an interview on January 30, the president of the transition, Captain Ibrahim Traoré, stressed that the withdrawal from ECOWAS was only the beginning and that new ruptures with “
the colonial chains
” would occur, not excluding an exit from the CFA zone. “
It’s not just money. We are going to break all the bonds that keep us in slavery,
” he said. The day after this declaration, Burkina Faso had to postpone the launch of a loan of 35 billion FCFA on the common money market.
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