AU suspends Mali, threatens further sanctions

The African Union has taken a firm stance against Mali in response to the recent military coup, suspending the nation's membership and threatening sanctions. This move follows the suspension of Mali from the ECOWAS bloc just days before, signaling a united front from the African regional bodies. The implications of these actions on investors and businesses with interests in Mali are significant, with uncertainty and risks looming large. Kwadwo Sarkodie, Partner at Mayer Brown, discussed these implications in an interview with CNBC Africa. Sarkodie highlighted the challenges investors and businesses face in Mali due to the ongoing political turmoil and instability. He pointed out that many risks might already be factored into business operations in Mali, given the history of coups and insurgency in the country. Sarkodie emphasized the importance of clear dispute resolution mechanisms in contracts to address potential conflicts arising from the current situation. He also advised businesses to stockpile resources and consider political risk insurance to mitigate potential losses. Additionally, having robust dispute resolution provisions that include international arbitration can help protect the interests of organizations with business contracts in Mali. The looming threat of sanctions from the African Union raises concerns for investors and businesses operating in Mali. Sarkodie drew parallels to the sanctions imposed after the 2020 coup in Mali, emphasizing the potential impact on trade and banking functions. He highlighted the dependence of Mali on its neighbors for trade and warned that sanctions could disrupt cross-border commerce and financial transactions. The key factor determining the likelihood of sanctions, according to Sarkodie, is the upcoming elections scheduled for February next year. If these elections are held without interference, he believes sanctions may be postponed. However, any indication of election disruption could swiftly lead to the imposition of sanctions, similar to those seen in 2020. Sarkodie urged stakeholders to keep a close watch on the election process to gauge the potential for sanctions and the impact on the business environment in Mali. Reflecting on past scenarios in the African region, Sarkodie pointed to the effectiveness of sanctions in driving parties to engage in dialogue and reach agreements, as seen in Mali following the 2020 coup. He cautioned that progress in Mali has been inconsistent, underscoring the importance of monitoring the upcoming elections to assess the stability of the country. In terms of legal options for investors, Sarkodie recommended measures such as structuring investments to benefit from bilateral investment treaties and ensuring access to international arbitration for dispute resolution. These safeguards can help protect investors' rights and interests in Mali amid political uncertainty. As the situation in Mali continues to evolve, stakeholders are advised to stay vigilant and adapt their strategies to navigate the challenging business landscape in the country.