Fears gold mining companies could be hit if Ecowas-Mali standoff drags on

Fears gold mining companies could be hit if Ecowas-Mali standoff drags on

A trade embargo placed on Mali by the majority of its neighbouring West African countries could affect its vital gold export sector in the coming months should a détente fail to be swiftly reached, analysts say.

On January 9, the Economic Community of West African States (Ecowas) imposed sweeping sanctions on Mali after the country’s military government postponed elections due to take place next month.

Tensions between the Ecowas regional bloc and Mali have been building since the military junta led by Colonel Assimi Goïta staged an initial coup in mid-2020.

A transitional government was installed following discussions between the military and Ecowas that year, but last May, Goïta’s forces overthrew the interim prime minister and president.

Ecowas suspended Mali from the economic community in response to the second coup and targeted members of the transitional government with travel bans and asset freezes.

Relations deteriorated even further this month after the military junta proposed elections should instead take place by the close of 2025, a timeline Ecowas said was “totally unacceptable”.

After an extraordinary meeting in Ghana a little over a week ago, Ecowas immediately closed land and air borders with Mali; suspended non-essential financial transactions barring those needed for vital products, such as food or medical supplies; and froze Malian state assets held in Ecowas central and commercial banks.

Robert Besseling, founder and chief executive of specialist intelligence company Pangea-Risk, which provides analysis of political, security and economic risks across Africa and the Middle East, says the trade embargo will “cause chaos at the border and lead to huge delays for imports”.

Anything apart from essential supplies such as medicines, including Covid-19 vaccines, as well as food and possibly fuel, will be blocked from entering the country.

Nevertheless, Besseling tells GTR the suspension of non-essential financial transactions is the most important sanction for trade in the near term.

“The central bank has closed off any foreign transactions, so the country will very quickly run out of cash and will not be able to pay for non-essential imports. Mali has also essentially been frozen out of its own assets, its own banking sector,” he says.He points out West Africa’s central bank blocked Mali’s attempt to raise around US$52mn in treasury bills last week.“Without that type of cash and T-bills being issued, Mali’s government won’t be able to pay their own public payroll; from a trade perspective, they won’t be able to meet receivables either anymore. So that is going […]

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