(Ecofin Agency) - Landlocked countries Mali, Niger, and Burkina Faso face potential surges in the costs of international transactions following their withdrawal from the West African regional bloc.
Yesterday, the International Monetary Fund (IMF) expressed concerns about the negative impact on these three militarily-led countries, emphasizing the potential escalation in transaction costs.
Abebe Aemro Selassie, Director of the IMF's African Department, highlighted these concerns during a press conference, stressing that the “negative effects will mainly be felt through the three countries should they exit ECOWAS, the trading bloc”. “From a trade perspective, leaving the bloc would see a lot more trade friction. And of course, these countries are already landlocked, already facing quite a bit of transaction costs in terms of their trade with the rest of the world now, risk facing even higher transaction costs, which would be detrimental to those countries,” he added.
The announcement of withdrawal from the Economic Community of West African States (ECOWAS) came on January 28, with Burkina Faso, Mali, and Niger citing strained relations with the sub-regional organization since military takeovers. ECOWAS responded by suspending the three countries from its bodies, imposing heavy sanctions on Mali and Niger, and even threatening the use of force in the latter.
Founded in 1975 post-independence, ECOWAS had fifteen member countries until January 28, 2024, with a combined GDP of $702 billion.