While Burkina Faso, Mali, and Niger remain legally members of the WAMU, an analysis of public debt holdings on the sub-regional market at the end of the third quarter of 2025 points to a more complex picture. In a shift that has largely gone unnoticed, sovereign debt investors have begun to reallocate their portfolios.

Data compiled by S&P Global Ratings on holdings of public securities issued on the West African Monetary Union (WAMU) market point to a structural shift. Financial institutions, particularly banks, appear to have priced in the prospect of financial segmentation between the Alliance of Sahel States (AES) and the rest of the monetary union in their risk and liquidity management.

The first sign of this realignment is a marked reduction in exposure to debt issued by Sahelian states among investors based outside the AES. These investors are mainly located in Benin, Côte d’Ivoire, Guinea-Bissau, Senegal, and Togo. Between the fourth quarter of 2024 and the third quarter of 2025, their holdings of AES sovereign debt declined by 373 billion CFA francs (about 569 million euros), with outstanding amounts falling from 3,174 billion CFA francs to 2,801 billion CFA francs (4.27 billion euros).

This nearly 11.7% contraction should not be read as a political signal. Rather, it reflects a prudential reallocation. Heightened uncertainty over the institutional future of the bloc has prompted risk committees at banks in Dakar, Cotonou, Lomé, and Abidjan to scale back cross-border exposure to the Sahel.

Intra-AES financial ties weaken despite political alignment

The most notable finding of the quarterly data lies in internal AES dynamics. Contrary to expectations of deeper financial integration between Ouagadougou, Bamako, and Niamey, cross-holdings of securities within the alliance have fallen sharply. Intra-AES debt, consisting of securities issued by one AES member and held by another, declined by 622 billion CFA francs (around 948 million euros), from 3,782 billion CFA francs at end-2024 to 3,160 billion CFA francs (4.82 billion euros) in the third quarter of 2025.

This 16.4% drop highlights a structural constraint linked to the strong alignment of the three economies. Their treasuries and banking systems face similar liquidity pressures while simultaneously grappling with comparable security and fiscal challenges. This synchronisation limits their capacity to act as liquidity buffers for one another and forces investors to unwind positions rather than roll them over. One partial exception is Burkina Faso, which has the most developed financial system within the AES. In June 2025, authorities there introduced a tax on dividends from external investments, although its full impact on portfolio allocations has yet to be assessed.

By contrast, AES investors have broadly maintained their exposure to securities issued by other WAMU members. Their claims on non-AES countries fell by just 32 billion CFA francs (about 49 million euros), to 1,367 billion CFA francs (2.08 billion euros). This relative stability suggests that Sahel-based financial actors continue to view the sovereign credit profiles of coastal economies such as Côte d’Ivoire and Senegal as effective diversification assets within the franc zone. It also reflects the regional footprint of Coris Holding, one of Burkina Faso’s largest banking groups, which operates across several WAMU countries, unlike banks in Mali and Niger, which lack comparable regional scale.

Beyond quarterly movements, the data indicate a growing concentration of public debt holdings within national banking systems across the WAMU market. Côte d’Ivoire continues to consolidate its position as the sub-region’s financial hub. However, the decline in cross-border flows suggests that banks are increasingly absorbing their own governments’ issuances.

If this trend persists, it could strengthen the link between sovereign risk and domestic banking risk and erode one of the core advantages of monetary integration, namely risk sharing through a deep and diversified regional capital market.

Idriss Linge