Niger: Sanctions imposed after coup pose a risk to liquidity

Event

On 25 July, members of Niger’s presidential guard detained President Mohamed Bazoum. The following day, the country’s army command declared its support for a coup. Abdourahmane Tchiani, head of the presidential guard since 2015, declared himself the head of the junta. He claimed that the coup took place because of deteriorating security, economic hardship and corruption.

On 30 July, the Economic Community of West African States (ECOWAS) met and issued a seven-day ultimatum to the military junta to restore the ousted president to office, warning they did not rule out the use of force if their ultimatum was not met. In the meantime, ECOWAS has imposed sanctions, which include, among others, the closure of borders between Niger and all ECOWAS member states, the suspension of all commercial transactions between Niger and ECOWAS members and the freezing of Niger’s assets in ECOWAS central banks. ECOWAS members have also affirmed that they would only recognise official acts from President Bazoum or his duly mandated officials, and they have imposed a wide range of sanctions. Moreover, Niger's main international partners (France, the EU and the United States) have suspended their aid.

Impact

President Bazoum, who was elected in 2021, has been an important Western ally in the fight against groups linked to ISIS and al-Qaeda. The president has strengthened Niger’s cooperation with Western countries, allowing their militaries to operate inside the country. France has 1,500 soldiers in the country, conducting joint operations with the Nigeriens. Other European nations and the United States have helped train the nation’s troops.

There are concerns that Niger could follow Mali’s example and turn to the Russian private military group Wagner to provide security. It has been reported that the group already set its sights on Niger a while ago, in part because of its role as an important uranium producer.

Following ECOWAS’ far-reaching sanctions, ultimatum and threat of use of force, the Burkinabe and Malian governments have jointly stated that they would consider any military intervention against Niger to be a declaration of war against them. The two countries’ militaries have also refused to apply the announced sanctions, even though both are ECOWAS members.

The freezing of assets in ECOWAs central banks, the closure of borders with the landlocked country, the suspension of all commercial and financial transactions between ECOWAS members and Niger and the suspension of international financial supports could lead to serious liquidity shortage in Niger and raises the risk for non-payment in international transactions. In this context, the outlook for the business environment risk, short-term political risk and political violence risk is negative.

Analyst: Jonathan Schotte – j.schotte@credendo.com