In recent days, I have received a number of inquiries about the situation in Mali and in West Africa as a whole. There is great concern for the stability of the country and what this means for stability in the West African region. Following the successful NATO-backed rebellion in Libya, security and stability in surrounding states has deteriorated. Heavy weapons, and trained fighters have been moving about the desert regions between Libya, Algeria, Niger, Mali, Mauritania and Chad looking for refuge and a new home and perhaps new costumers for their heavy weapons. For the time being many of the ex-Libyan military Tuareg fighters have settled on Mali as their preferred destination. At the present they have secured much of the north of Mali, aided by heavy weapons taken out of Libya to do battle in Mali.
The roughly 7000 man Mali army has not been able to quell the well armed fighters pouring out of Libya into the north of the country. The fighting has caused an estimated 200,000 people to flee into neighboring countries, primarily Niger and Mauritania. Both these countries as a result of the fighting in Mali face a growing security threat that they did not have previously. It is not clear if this threat will spread to other countries before it is contained. In part, due to the security threat, the military in Mali overthrew the civilian government and has taken power. Their primary grievance was the inability of the civilian administration to handle the rebellion in the north. Since the military junta seized power, the rebellion spread further and now reaches further into Mali than ever before.
The West African regional body, ECOWAS at the time of the military takeover was taking steps to provide military assistance to Mali to fend off the rebellion. Regional leaders have already agreed to provide 3000 troops to assist Mali in reestablishing sovereignty over its vast desert territory. However, the regional body has no intention of providing this assistance to the military junta that took power. Regional leaders have repeatedly demanded that the junta relinquish power and reverse their overthrow of the civilian government. They have implemented a series of sanctions including shutting the borders to the landlocked country and freezing assets and declaring travel bans on junta members.
What Next?
Given the response of ECOWAS the junta is likely in its final days. The civilian government will likely return as soon as junta leaders are able to ensure they will not face prosecution for their actions. Once back in power the civilian administration, aided by regional forces will begin to address the rebellion in the north. They will likely take a dualistic approach of both negotiations and an increasing military presence in northern Mali. While the security risk for the region will remain, the regional framework in West Africa will move to contain it and take steps to reduce the security risk gradually. The process through which this will occur is outlined in my upcoming book The Power of Interdependence: Lessons from Africa.
What Does This Mean For Investors?
There have been reports and statements that mining investors in Mali have put much of their activity on hold, pending the conclusion of sanctions and when stability returns. In the long term stability will return to Mali and the civilian government will come back to power before elections are held. As this happens investors should be encouraged to continue to invest in the country and the region. While investing in Mali and in the region as a whole, investors, particularly in the commodity extraction industries should be mindful the the lingering political risks that could impact their fiscal returns. Recently I had a speaking engagement at the Murdock Capital Investment Opportunities Symposium on Friday March 2, 2012 in New York. In my talk I highlighted a case that parallels the residual political risks that remain in Mali and throughout much of West and Central Africa in the commodity industries. See Video: http://webcast.murdockcapital.com/InvestOp010NovaCapital.htm
Investors in Mali and in the West African region will need to enhance their capacity to manage political risks in order to protect their investments and ensure sustained returns.
Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
http://kurangaandassociates.wordpress.com/
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga
great piece on Mali.
986107 737232Your writing is fine and gives food for thought. I hope that I’ll have a lot more time to read your articles . Regards. I wish you which you often publish new texts and invite you to greet me 488329