Liquidity Shortage Hinders Financial System in Mali and Burkina Faso, Says BOA Director

Abderrazzak Zebdani, the Director-General of the Bank of Africa (BOA), has stated that a liquidity shortage is hindering the financial system in Mali and Burkina Faso. Despite being the 3rd and 6th individual clients, Mali and Burkina Faso collectively achieved Côte d'Ivoire's most significant commercial gain in 2023, purchasing CFA1,444.6 billion worth of Ivorian lead, trade products.

Why this matters: The liquidity shortage in Mali and Burkina Faso has far-reaching implications for the regional economy, potentially affecting trade relationships and economic growth in West Africa. If left unaddressed, this shortage could lead to a decline in economic stability and expansion in the region.

Unlike major clients like the Netherlands and Switzerland, Mali and Burkina Faso engage in a broader range of trade with Côte d'Ivoire, contributing to a substantial CFA1,429.51 billion surplus for the country in 2023. This trade dynamic highlights the resilience of historical trade routes connecting Abidjan to Bamako in Mali and Bobo-Dioulasso/Ouagadougou in Burkina Faso, despite regional differences.

While Mali and Burkina Faso hold a privileged client status, this relationship has minimal impact on Côte d'Ivoire's balance of payments due to the common use of the FCFA in these countries. The FCFA, inherited from colonization, is now being reconsidered by the leaders of Burkina Faso and Mali, with a section of public opinion denouncing the currency.

The stakes are high for Côte d'Ivoire, which could see its economic expansion slow down if it loses these two brand-name customers. In 2019, sales between Côte d'Ivoire and its Malian and Burkinabe partners were valued at CFA705.5 billion, demonstrating the significance of these trade relationships.

As the liquidity shortage persists and the future of the FCFA remains uncertain, the economic landscape in West Africa faces potential challenges. The substantial trade between Côte d'Ivoire, Mali, and Burkina Faso underscores the importance of addressing these issues to maintain regional economic stability and growth.

Key Takeaways

• Liquidity shortage hinders financial systems in Mali and Burkina Faso.
• Mali and Burkina Faso are Côte d'Ivoire's 3rd and 6th largest clients.
• Trade between Côte d'Ivoire, Mali, and Burkina Faso totals CFA1,429.51 billion.
• FCFA currency's future is uncertain, potentially impacting trade relationships.
• Liquidity shortage and FCFA uncertainty threaten West African economic stability.