2024-02-04 14:49:00
Mali, Burkina Faso and Niger are slamming the door on the Economic Community of West African States (ECOWAS), a few months after announcing a common currency project called “Sahel”.
Like a hammer blow, the carefully prepared announcement of the simultaneous departure of Mali, Burkina Faso and Niger from the Economic Community of West African States (ECOWAS) fell this Sunday. A decision that will be a landmark in the history of this regional organization.
The three countries which now make up the Alliance of Sahel States are definitively leaving Cedea. A decision which is the result of tensions between the three countries and the supranational organization since the coming to power of military juntas at the head of these States, Assimi Goïta for Mali, Ibrahim Traoré for Burkina Faso and Abdourahamane Tiani in Niger .
The threat of military intervention from ECOWAS to reinstate Mohamed Bazoum, the former president of Niger, deposed following a military putsch in 2023, was brandished against the new power of Niger.
This difficult context contributed to accentuating internal dissensions within ECOWAS, leading to this immediate rupture.
A schism with serious consequences
Founded in 1975 following independence, ECOWAS included fifteen countries until this Sunday, January 28, 2024. The economy of this immense free trade area was already weakened by the sanctions against Niger and Mali. But with this schism, the situation risks seriously deteriorating.
Today, ECOWAS is a GDP of 722,588 billion euros. The three starters combined represented 50 billion euros of this economy. The bloc is largely dominated by Nigeria, which alone accounts for 450 billion euros of this GDP.
Nigeria, which borders Niger, is suffering from the closure of borders and the suspension of financial transactions between the two countries. The prices of foodstuffs imported from Sahel countries have exploded, creating inflationary effects on the purchasing power of households in countries in the economic zone.
According to the ECOWAS statutes, a period of one year is provided for negotiating the divorce. The sub-regional organization said it was open to discussion. This will take time and depending on the outcome, the effect on the economy will be more or less negative.
New alliance, new currency
Long discussed, but perilous to implement, projects for a new currency in Africa have rarely come to fruition. In 2023 and despite the multiple contraindications from ECOWAS and organizations of the same geographical area such as the Central African Economic and Monetary Community (Cemac) and the West African Economic and Monetary Union (UEMOA), Mali, Niger and Burkina Faso have publicly announced their common currency project called “Sahel”.
By leaving the West African Economic and Monetary Union, the neo-coalition would renounce the CFA franc, the currency of the eight other WAEMU member countries. This new common currency seems to be the next step in the solo approach undertaken by Mali, Burkina Faso and Niger.
A “risky” decision, according to Bénaouda Abderaïm, economic specialist at BFM Business. An opinion shared by several observers.
“Currency is political, it is an act of sovereignty”
“Currency is political, it is an act of sovereignty” explains Denis Cogneau, specialist in African economics, professor at the Paris School of Economics and research director at the Research Institute for development (IRD) before detailing his remarks “The establishment of a new currency can be a good intention in a global project where we seek to recover more autonomy and sovereignty”
However, for the moment, the lack of information on the constitution and management of this currency is puzzling.
“When we set up a currency, there are concrete and simple things to take into account. How are they going to fight against fraud? Where are they going to produce this new currency? Et cetera… For the moment, we have very little information,” asks Denis Cogneau.
The success of a currency depends on a multitude of economic, monetary, technical, geopolitical factors and also on the confidence that market agents place in the currency.
According to Professor Cogneau, there are political and security conditions for a currency to inspire confidence. Things which have not yet been met in the case of the creation of the Sahel.
African economic alliances are not their first split
Remember that this is not the first departure of an ECOWAS member country. In 2000, Mauritania also left the alliance, without much consequence for the bloc.
And in 1962, to break the colonial link with France, Mali left the CFA franc zone to create the Malian franc. Very quickly, the currency depreciated enormously and lost half of its value. In 1984, Malians returned to the CFA franc zone.
Cyprien-Junior KOUAKAM-DUBOIS
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