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No African winners in Niger’s implosion

The brewing humanitarian crisis around the Sahel is a major storm ECOWAS must necessarily weather to restore peace
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In any warfare, there are both losers and gainers. But if the protracted political crisis in the Republic of Niger degenerates into a full-blown regional war, the only winners will be private arms dealers, most of whom operate from the West. The interventionists – members of the Economic Community of West African States (ECOWAS) – who have been beating drums of war will lose as much as their opponents, including the unrelenting coup leaders.

The winners are arms dealers 

From the days of the Cold War, the superpowers have consolidated their control of the arms market, with the United States and Russia alone holding 56 per cent of the market share in the past five years, according to statistics, while the marginal players are China, Germany, Italy, the United Kingdom, Spain, South Korea and Israel.

These are the major beneficiaries of the recent arms conflicts and conventional wars around the world. And as warmongering from the fold of ECOWAS continues, with tacit support from Western leaders, a critical part of Africa may be opening its doors to the traditional arms suppliers and, ultimately, economic pillage once again.

The opportunity cost of the Niger war 

The opportunity costs of the unrest, if it is not tamed, are the scarce foreign exchange (FX) that will be spent in procuring weapons and paying for logistics, the lean ECOWAS budgets that will be diverted to military hardware purchase as well as payment of allowances and, more importantly, the ongoing insurgency in the region that may be allowed to continue to fester.

Already, ECOWAS runs on an insufficient budget when weighed against its huge economic challenges, shared population size and other common issues such as conflicts. Its approved $30.5 million budget estimate for this year is a far cry from its infrastructural needs and other expenditure items needed to build its economy and support intra-trade expansion.

To build a competitive economy, a survey by PwC said the annual infrastructure spending gap would hit $45 billion in 2025. The amount, a rough estimation from the total $180 billion hole in the entire sub-Saharan Africa, is 129 times the regional bloc’s yearly budget.

With ECOWAS member countries already faced with tattered public finances and the increasing odds of meeting community contributions, a war in Niger may further stretch the economic survival of the region too thin.

A hole in the chief financier’s purse

Nigeria is the pillar of ECOWAS economy, accounting for 62.7 per cent of the combined gross domestic product (GDP) as per last year’s data, according to the ECOWAS Bank for Investment and Development (EBID). The country’s economic size also reflects its historical role in the affairs of ECOWAS. For instance, the Giant of Africa was responsible for 50 per cent of ECOWAS funding in 2022.

In the 16 years running till 2020, Nigeria made a community contribution of $1.17 billion to the bloc. The figure translates to 40.42 per cent of the total funding by members.

In wartime, Nigeria plays the same principal role. It shouldered the cost of the Economic Community of West African States Monitoring Group (ECOMOG) at the peak of the Liberian war, reportedly spending $8 billion and losing hundreds of soldiers to the crisis in the seven years it lasted. It similarly incurred $4 billion in the Sierra Leone Civil War, bringing the yearly combined average yearly spending on the two wars to $1 billion.

With the head-turning inflation seen in the intervening years, the Centre for Promotion of Private Enterprise (CPPE), a Nigerian economic think tank, warned that military intervention in the Sahel could cost the country (which bore about 80 per cent of ECOMOG’s previous financial burden) $2 billion yearly in allowances, military hardware and other logistics.

Unfortunately, Nigeria’s big brotherly role might have been worn out by its poor fiscal position. In the first 11 months of last year, it spent 99.2 per cent of its revenue to service debt.

Whereas CPPE also warned that FX spending component in the war could take 70 per cent or $1.4 billion, Nigeria is currently neck-deep in payment of balance crisis with J.P. Morgan estimating that the country’s net external reserves had fallen to $3.7 billion at the end of 2022 raising questions on the $33 billion currently being reported by the Central Bank of Nigeria (CBN).

Can other countries step into Nigeria’s shoes?

If the purse of the major financier of ECOWAS has tanked, other countries have not shown that they have sufficiently grown their war chests to step into its shoes. Ghana, the second biggest economy in the bloc, is in financial turmoil and currently battling its worst economic crisis in decades.

There are questions on whether the $3 billion bailout from the International Monetary Fund (IMF) can truly bail it out of its debt trap. With the cost of living crisis trending upward and obligations to domestic and external creditors mounting, the first challenge to keep the Ghanaian government awake is certainly how to quell the uprising in Niger.

Like Ghana like Côte d’Ivoire, a country that accounts for one-third of the West African and Monetary Union (WAEMU) and substantial contributor to ECOWAS community funding. Indeed, all the eight countries forming the WAEMU blocs, including Niger itself, are currently battling budget shortfalls and finding it extremely difficult to raise funds from the domestic markets. With investors demanding higher interest rates on bonds, some have gone to the IMF for emergency funding.

Humanitarian crisis stars  

If intervention funding is a challenge, the brewing humanitarian crisis around the Sahel is a major storm ECOWAS must necessarily weather to restore peace. As sanctions against Niger bite,  reports  of impeding humanitarian crisis claim that about 6,000 tonnes of goods from the United Nations’ World Food Programme, including cereals for malnourished children, are stuck outside the country.

“A line of thousands of trucks stretches back 25 km (15 miles) from the muddy shores of the Niger River that marks the frontier. Drivers stranded for weeks hang their clothes between trucks. Away from border guards, small traders pile goods onto wooden boats to cross the rain-lashed river,” Reuters reported.

Cross-border trade is another early casualty  

There is a strong social tie among the people of Sokoto, Kebbi, Katsina, Zamfara, Jigawa, Yobe as well as Borno and Nigeriens, justifying the warning against military intervention by the immediate governor of Kaduna state in Nigeria, Nasir el-RufaiReports citing data by United Nations Conference on Trade and Development, said Nigeria’s trade through Niger in 2020 was $1.3 billion. Trucks from Nigeria are said to account for 40 per cent of the total daily traffic of 104,179 trucks along the trans-Saharan road corridor. Traffic on this route has been grounded for weeks with the accruable trade benefits for the period already forfeited. This is an irrevocable loss from the brewing crisis, notwithstanding how it is resolved.

It is clear as day that no one in the region stands to benefit from a potential war between member states of the ECOWAS bloc.

 

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