K-Frontiers Solutions on West Africa’s economic outlook

The Economic Community of West African States has suspended Mali over the ousting of its President Boubacar Keita on Tuesday, leading to a tense political climate in the region. Soldiers who staged Keita's removal have expressed intentions to form a civilian transitional government that will organize new elections. Additionally, protests have continued in neighboring Cote d'Ivoire against President Alassane Ouattara's third term bid. In light of these developments, Nonyane Gaimin, a Macro Adviser and Strategist at K-Frontiers Solutions, joins CNBC Africa to discuss the implications on the economic outlook for West Africa. Gaimin highlights the challenges faced by the region, particularly amidst the COVID-19 pandemic. The political tensions and demonstrations in Cote d'Ivoire are creating further instability, which could adversely impact an already fragile economy. Despite some efforts to contain the spread of the virus, there is a concern that the demonstrations may lead to a spike in infection rates, further complicating the economic situation. Initially, there were expectations of a positive GDP growth for the year, but if the current unrest escalates, a contraction in the economy could be imminent. Furthermore, the uncertainty stemming from the political climate in Cote d'Ivoire poses a significant risk to investors. Although there have been some positive signals in the investment terrain, such as revenue projections from companies like MTN and optimistic cocoa outlook, the prevailing uncertainty could deter investors and affect investment flows into the country. It is crucial for the government to handle the situation effectively to prevent a significant economic slowdown and capital outflows. Turning to Mali, Gaimin emphasizes that the country has been facing ongoing challenges, including issues related to jihadism, climate change, and food security. The recent military coup in Mali has added to the existing problems, raising concerns about further economic instability. With the current power vacuum and economic reliance on sectors like agriculture and gold mining, the situation in Mali presents a bleak outlook. The country's economic recovery from COVID-19 could be hindered by the political turmoil. In a broader context, the protests and political uncertainties in both Mali and Cote d'Ivoire have implications for investors across the West African block. The region is already facing heightened risk sentiments, and the ongoing unrest is likely to increase these risks, discouraging much-needed investment flows. The sectors in these countries, including manufacturing, agriculture, ports, and tourism, have already been severely impacted by the pandemic. Effective engagement with international partners and multilateral donors is crucial to navigate through the crisis and emerge stronger. In conclusion, the challenges and uncertainties in West Africa paint a concerning picture for the economic prospects of the region. The need for stability, effective governance, and international cooperation has never been more critical to mitigate the adverse effects of the current political turmoil on the economies of Mali and Cote d'Ivoire.