Part 2 of 4 – Ripple Effects of Regional Disintegration: Preserving West Africa's Mining Supply Chains Resilience amid Changes

As the foundational pillars of ECOWAS and WAEMU show signs of strain, the mining sectors in West Africa, especially in landlocked countries, are at a crossroads. This post sheds light on the impacts of potential regional shifts on both landlocked and coastal countries and explores the merits of potential bilateral trade agreements versus regional integration.

We’re examining and would like to create a healthy debate on the specific effects of disintegration on the mining supply chains, focusing on strategies to preserve both resilience and competitiveness.

Overview of Current State of Integration

According to the Africa Regional Integration Index (ARII), “ECOWAS achieves moderate success in regional integration overall, yet it falls short in the productive dimension, indicating significant potential for improvement if investments were targeted towards enhancing productive capacities.

The strongest aspect of ECOWAS's integration is in facilitating the free movement of people, reflecting both its aspirations and achievements toward creating a seamless region, underscored by liberal visa policies across its member states. However, only Burkina Faso, Mali, and Togo have fully committed to the Free Movement of People (Kigali) Protocol.

The overall integration score for ECOWAS is negatively impacted by the poor productive integration of seven out of its fifteen member states. Mali, the best among them, only reaches about 10% of its potential, whereas Niger doesn't register at all. Even the more integrated members cannot offset this deficiency; Côte d’Ivoire leads with a score of 0.718, followed by Nigeria and Senegal, which score around the midpoint and 0.388, respectively. A potential strategy to boost integration could involve increasing the trade of intermediate goods, a sector where Côte d’Ivoire and Nigeria excel, unlike The Gambia and Sierra Leone, who are among the lower performers.”

Key Regional Interdependencies:

• Intra-regional Trade (2021-2023): countries like Côte d'Ivoire and Ghana are critical, managing a large chunk of the region's Import and exports.
• Dependencies of Landlocked Countries: nations such as Mali and Burkina Faso significantly depend on ports like Abidjan and Tema, highlighting vital economic links.
• Port Contributions to National Economies: transactions from facilities in Tema, Lome, and Dakar are non-negligeable to the respective national economies. The interruption of these port’s activities poses a major blow to those countries as witnessed recently in Benin with the closure of the Niger border.

Challenges of Disintegration, and Potential Outcomes:

• Risk of Economic Isolation: rising costs and logistical delays could severely impact landlocked economies.
• Investment Uncertainties: the looming instability might scare away essential investments.
• Labor Mobility Hurdles: restrictive borders could disrupt operations that rely on a regional workforce.

Trade Strategy Considerations for Member States:

• Bilateral Agreements: these could cater to specific needs but risk creating a fragmented policy environment in the region.
• Regional Integration: offers a uniform approach to trade and economic relations but demands significant coordination and alignment which are clearly lacking right now.

Strategies to Mitigate Risks by Mining Companies:

1. Develop Alternative Trade Routes: explore and establish alternative logistics routes and port access to diversify transportation options.
2. Strengthen Local Infrastructure: invest in enhancing local infrastructure, such as railways and roads, to decrease dependency on external transit routes.
3. Engage in Regional Diplomacy: participate actively in regional negotiations to influence policies favorably and protect mining interests.
4. Implement Technological Innovations: utilize advanced technologies like blockchain for logistics to increase efficiency, reduce paperwork, and enhance transparency in cross-border operations. 

The current shifting sands of ECOWAS and WAEMU present both challenges and opportunities. Proactive and strategic adaptations can help safeguard and boost the competitiveness of the mining industry across West Africa.

Let’s Discuss:

1. what adaptive strategies can West African mining sectors employ to navigate these turbulent times?
2. Do you think possible bilateral trade agreements will offer a viable alternative to regional integration?