In a joint announcement on Sunday, the military-led governments of Niger, Mali, and Burkina Faso have declared their decision to withdraw from the Economic Community of West African States (ECOWAS), a regional economic bloc that has played a crucial role in fostering cooperation and integration among member nations.

The move, while not entirely unexpected given the threats made by these countries last year to resist ECOWAS by all means, raises questions about the future of regional stability and the impact of the military juntas’ departure on the broader West African community.

The three nations, all currently under some level of sanctions due to military takeovers that ousted democratic governments, cited the perceived failure of ECOWAS to support them in their fight against terrorism and insecurity as a primary reason for their exit. The military leaders argue that their focus is on restoring security within their borders before returning to constitutional rule, emphasizing the need to address insurgencies linked to groups such as al Qaeda and the Islamic State.

Colonel Amadou Abdramane, the spokesperson for the Niger junta, expressed the disappointment of the three nations in a statement, stating, “After 49 years, the valiant peoples of Burkina Faso, Mali, and Niger regretfully and with great disappointment observe that the (ECOWAS) organization has drifted from the ideals of its founding fathers and the spirit of Pan-Africanism.”

“The organization notably failed to assist these states in their existential fight against terrorism and insecurity,” the statement added.

The implications bear weighty impacts

The decision to withdraw from ECOWAS underpins a significant setback for the regional bloc’s efforts towards integration and collective security. ECOWAS had suspended the three countries following the military coups, attempting to use sanctions and diplomatic pressure to push for a return to constitutional rule. However, despite negotiations and threats of military intervention, the military leaders have remained defiant, accusing ECOWAS of being influenced by external powers.

One of the critical consequences of this withdrawal is the uncertainty surrounding the impact on the free movement of goods and citizens within the 15-member regional bloc. ECOWAS has long been a proponent of economic integration, allowing for the unrestricted flow of goods and people across member states. The departure of Niger, Mali, and Burkina Faso could disrupt this established system and potentially lead to economic challenges for the remaining member nations.

Although according to ECOWAS’s treaty, member states seeking to withdraw must provide a written one-year notice, the three nations said their exit from the bloc takes immediate effect. The treaty stipulates that withdrawing states must continue to abide by its provisions during the one-year notice period, further complicating the immediate implications of the exit.

In a statement on Sunday, ECOWAS said it is yet to be informed by the three countries of their decision to quit the bloc, and that it is “working assiduously with these countries for the restoration of constitutional order.” The bloc added that “Burkina Faso, Niger, and Mali remain important members of the Community and the Authority remains committed to finding a negotiated solution to the political impasse”.

“The ECOWAS Commission remains seized with the development and shall make further pronouncements as the situation evolves,” the statement added.

The situation is further complicated by the fact that the three departing nations are also members of the West African Monetary Union (UEMOA), consisting of eight countries that use the West African CFA franc currency pegged to the Euro. The monetary union, responding to the coups in Mali and Niger, had initially severed their access to the regional financial market and the regional central bank. Although Mali’s access has been restored, Niger remains suspended, grappling with the resulting economic consequences.

The decision by Niger, Mali, and Burkina Faso to sever ties with ECOWAS also extends beyond regional politics. The nations have cut military and cooperation ties with their former colonial master, France, and have turned to Russia for security support. This geopolitical shift could have broader implications for the balance of power in the region and may lead to new alliances and partnerships.

As the situation unravels, Nigeria and other ECOWAS member states are expected to respond swiftly to contain further escalation. Under the leadership of Nigerian President Bola Tinubu, ECOWAS was on the brink of military intervention in Niger, but public outcry, particularly from Nigeriens holding large rallies in support of the junta, stymied the move. Nigerians also strongly opposed military intervention in neighboring Niger, citing concerns about exacerbating the already precarious security situation in northern Nigeria, among other reasons.

The implications of the decision by Niger, Mali, and Burkina Faso to exit ECOWAS, marks a pivotal moment in the region’s politics, as they extend beyond diplomatic relations, affecting economic integration, security cooperation, and the geopolitical alignment of West African nations.

Sanctions, threats of military action, and dialogue – strategies deployed earlier by ECOWAS, failed to compel the coupists to reconsider their decisions. It is now unclear what further step the bloc will take to salvage the regional unity and stability that it has sought to foster for nearly five decades.

Ghana, which is currently grappling with a multifaceted economic crisis, has enacted a series of unprecedented economic measures, including a surprising move by the Monetary Policy Committee of the Bank of Ghana to cut the country’s benchmark interest rate by 100 basis points, reducing it from 30% to 29%.

This rate cut is a historic decision, marking the first instance of such an action in Ghana since 2021 and standing as the first occurrence of a rate cut by an African Central Bank in the current year. The move brings an end to the pause on the benchmark rate, which had been in effect since September 2023.

Ghana’s decision to cut rates follows a significant softening in inflation, which dropped to 23.2% in December 2023 from 26.2% in November 2023 – the lowest rate recorded since April 2022.

The central bank governor Ernest Addison, who spoke to the media in Accra, said the cut was initiated in anticipation of a decline in inflation.

“The latest forecast suggests that the disinflation process will continue, and headline inflation is expected to ease to around 13% to 17% by the end of 2024, before gradually trending back to within the medium-term target range of 6% to 10% by 2025,” he said.

While expressing optimism about the disinflation process, Addison acknowledged potential risks to the inflation outlook. He stressed the need for strict implementation of the 2024 budget and a tight monetary policy stance to sustain the progress made, emphasizing the committee’s commitment to maintaining a strong policy stance to consolidate the disinflation gains in the face of an emerging economic recovery.

“These forecasts notwithstanding, there are upside risks to the inflation outlook and there is the need for strict implementation of the 2024 budget and a tight monetary policy stance to sustain the disinflation process,” he said.

“The committee noted the emerging recovery but sees the need to maintain a strong policy stance to consolidate the disinflation gains.”

The decision to cut rates coincided with other significant financial developments. Ghana recently received a $600 million disbursement from the International Monetary Fund (IMF), representing the second tranche of its $3 billion bailout program with the lender. This injection of funds is intended to support Ghana’s efforts to stabilize its economy and implement crucial reforms.

Additionally, the World Bank approved a $300 million Development Policy Financing last week, aimed at assisting Ghana in restoring fiscal sustainability and enhancing financial sector stability. These financial lifelines are essential as Ghana grapples with economic challenges on multiple fronts.

One of the critical issues faced by Ghana is its escalating debt burden. The country’s borrowing has increased substantially, leading to concerns about its ability to meet repayment obligations. To address this, Ghana has decided to restructure its debt, acknowledging the need for a comprehensive approach to managing its fiscal responsibilities.

In light of these challenges, the decision to cut interest rates has not gone out without criticism. Some argue that a rate cut may exacerbate inflationary pressures and hamper efforts to address the country’s fiscal imbalances. However, the central bank contends that this move is a strategic response to the evolving economic landscape and is aligned with the goal of fostering sustainable economic growth.

Looking beyond Ghana’s borders, attention now turns to Nigeria, where the Monetary Policy Committee of the Central Bank is set to meet on February 26 and 27 to determine benchmark rates. Nigeria’s benchmark rates have been on hold at 18.75% since July 2023.

In stark contrast to Ghana’s rate cut, analysts are anticipating further rate hikes in Nigeria, driven by the country’s inflation rates reaching a generation-high figure of 28.92% in December 2023. Some analysts even project a substantial 500-basis points hike.

While the contrasting measures of the two West African powerhouses underline the complexity of addressing economic issues in the region, the outcomes are likely going to have a heavy bearing on the economic growth of the two countries.