July 2023

Quick Bite

With the latest events in Niger Republic, exactly one-third of ECOWAS member countries are currently under military dictatorship

Stocktaking: A review of West Africa’s geopolitical challenges and Investor Options

Stocktaking: A review of West Africa’s geopolitical challenges and Investor Options 

Niger’s coup is the latest in a string of successful coups across West Africa. With the latest events in Niger Republic, exactly one-third of ECOWAS member countries are currently under military dictatorship. However, beyond the violent takeovers, the region faces a multiplicity of challenges originating locally, regionally, and internationally. This note gives an overview of key challenges and provides suggestions for investors on navigating the increasingly fractious landscape. 

The Challenges 

West Africa, like the rest of Africa, has endured a series of shocks since the Covid-19 pandemic in 2020. While the virulence of the pandemic, and its real-time economic impact (in the form of supply chain crisis) have gradually dissipated, the medium-term economic impacts remain. Locally, countries in the region racked up debt to provide palliatives and fix their healthcare sectors; a portion of these debts were denominated in foreign currencies and tied to variable rates. The central banks of creditor countries, in a bid to rein in domestic inflation caused by the pandemic and Russia’s war, embarked on significant rate hikes that forced West African countries to the brink of default while simultaneously attracting capital away from developing countries. 

Source: US Fed Bank of St. Louis 

Beyond the fiscal challenges spurred by the twin events of the pandemic and war, African countries have indirectly borne the brunt of Russia’s ongoing war in Ukraine. Prior to the war, Russia and Ukraine together accounted for over 25% of the world’s wheat supply and contributed significantly to the supply of other staple grains. More than a year since the war began, both countries remain critical to global supplies and few substitutes remain. A full-blown crisis was averted by creating a UN-brokered deal that ensured relatively safe passage for grains from the black sea region; a deal that Russia has recently withdrawn from, followed by significant deployment of mines that threaten any ship movement in the region. The long-feared weaponization of food could be fast approaching notwithstanding Putin’s recent promises of special grain supplies to African countries. Increased food and energy prices (combined with a decrease and/or elimination of subsidies) could further worsen the region’s stability and provide further excuses for coup plotters and insurgent recruiters alike. 

However, Russia’s war and the pandemic are hardly to blame for all of the region’s woes. The past two years saw the brazen rise of coups and countercoups across countries in the region. These coups have been followed by relatively weak responses from regional, continental, and international bodies. In the absence of significant consequences and/or opposition, and with the alleged backing of certain state and/or state-sponsored entities, the region is fast succumbing to a new wave of violent military takeovers which add an extra layer of uncertainty and risk to the region and its attractiveness to investors. Of increasing concern is the nexus between the infamous Wagner Group and military dictators in the region. As the group faces increased isolation in Russia and a firm posture from Poland’s border with Belarus, Africa could well become its key fishing ground, with deleterious consequences for the region, especially in the face of a weak ECOWAS. 

Source: DW

Finally, the region has faced a series of internal political crises among member countries. Beyond countries currently under military rulership, other countries have witnessed major controversies with regard to concluded elections. These include Nigeria and Sierra Leone (whose elections were marred by high levels of violence) as well as Senegal (where protests rocked the president’s attempt at a third term). Ghana’s upcoming election is also a test case for the region’s stability. Thus, at a regional level, West Africa has witnessed significant retrogression in democracy and institutional stability, with potential consequences for the region’s risk profile and investor attractiveness. 

Options for Investors 

The preceding section detail the region’s key challenges, both domestic and international. However, while the risks have gradually inched higher, the opportunities remain. The challenge for investors is to navigate the fractious landscape unscathed and/or with adequate protection. It is worth noting that regardless of a country’s current political architecture, its government requires funding to stay in power. This necessity creates opportunities for investors willing to undertake a detailed analysis of each country to benefit from the opportunities therein. The rise of political insurance policies from both export credit institutions and large private players (insurance companies and CAT investors) provides options for investors willing to operate in some of the region’s riskiest geographies. Thus, for countries with critical minerals, deals could still be made. 

Beyond the above option, investors could limit their exposure to countries with a relatively stable polity. While no country is completely immune from the aforementioned developments, some are more vulnerable than others. Thus investors could focus on the few countries that have shown relative resilience to the aforementioned challenges and are taking clear steps toward gaining and retaining investor confidence. While countries that fit this description are few, they do exist. 


The West African region has endured the pandemic and its economic impact, Russia’s war and its impact, and a rising wave of insurgency and coups. Nonetheless, we believe that the region’s demographic and mineral wealth makes it a key target for emerging market investors. A thorough understanding of the factors at play, backed by a well-designed risk management strategy, could yield ample returns. Our team could help investors with this. Contact us today.  

Crystal Ball

Wagner’s exile from Russia remains a cause for concern. The recent predicament of the group’s founder in Russia limits the group’s choices. Expanding its footprint in Africa, where it is likely to face little to no opposition from regional bodies, could be one option. A larger footprint and collaboration with warlords and/or military junta could plunge the continent into a new wave 1970’s style instability and proxy warfare. We’re closely following the situation. 

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