KARABO MOKGONYANA: Economic impact of coups d'état in West and Central Africa

• Published date: 01 September 2023
• Author: Karabo Mokgonyana
• Publication title: Business Day: Web Edition Articles (Johannesburg, South Africa)

A common feature of coups in West and Central Africa is that transport and internet services have become disrupted. The participation of port workers, truck drivers and officers from various government agencies in these countries has and will have a crippling effect on international trade. The military governments in this region impose periodic shutdowns and limits on internet connections to try to stifle political opposition, which has led to operational difficulties for businesses

Internet shutdowns are extremely disruptive to economic activity because they halt ecommerce, generate losses in timesensitive transactions, increase unemployment, interrupt businesscustomer communications, and create financial and reputational risks for companies. For example, in 2020 Chad lost $23.1m by closing down the internet and Burkina Faso lost about $35.9m in 2021 due to an eightday internet shutdown.

Another economic effect is many international businesses reconsider their investments in these countries, and the region as a whole. The countries in West and Central Africa benefit a lot economically from having international investors and businesses operate within their countries, especially from a job creation, production and taxation perspective. This in turn will affect development and infrastructure project funding from international businesses, development donor countries and other financial institutions. Economic development requires adequate infrastructure investments.

Economic sanctions may be imposed by the international community to push for an end to the coups and to accomplish foreign policy ends. These economic sanctions may include arms embargoes, foreign assistance reductions and cutoffs, export and import limitations, asset freezes, tariff increases, revocation of most favoured nation trade status, negative votes in international financial institutions, withdrawal of diplomatic relations, visa denials, cancellation of air links and prohibitions on credit, financing and investment.

This has a pronounced negative effect on economic growth and prevents the countries concerned from engaging in trade, investment, lending money and participating in economic activities. In some cases countries go as far as asking foreign investors not to pay tax to the military regime until democracy is restored, thus affecting the regime's revenue streams and ability to economically develop the country.

Bank closures lead to transactional interference and most households and...