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ECOWAS and WAEMU sanctions against Mali (2022)

Economic and financial sanctions imposed on Mali in Accra on January 9, 2022, including border closures and a freeze on the state at the BCEAO, lifted on July 3, 2022.

Definition

The 2022 sanctions against Mali were the economic and financial sanctions imposed by ECOWAS (Economic Community of West African States) and WAEMU (West African Economic and Monetary Union), with border closures and a freeze on the Malian state's assets at the BCEAO (Central Bank of West African States). On January 9, 2022, in Accra, ECOWAS and WAEMU answered the Malian junta's plan to extend the transition by several years with a sanctions package unprecedented in the region. Land and air borders with Mali were closed. Financial transactions between Mali and the other states were suspended, except for food products, pharmaceutical and medical supplies, petroleum products and electricity, and the Malian state's assets at the BCEAO were frozen. The state remained a member of the monetary union and its currency remained the CFA franc, but it could no longer use it. The consequences came fast. The Malian Treasury missed payments on its securities issued on the regional market, for lack of access to its accounts: a payment default caused by an external measure, while the issuer had the means to pay. Importers saw their payments blocked, and the receivables of Senegalese or Ivorian suppliers on Malian buyers froze. On July 3, 2022, again in Accra, the heads of state lifted the economic and financial sanctions after agreement on a transition timetable, while keeping individual measures and Mali's suspension from ECOWAS bodies. For an underwriter, the episode raises concrete wording questions. A CPRI (credit and political risk insurance) policy covers the act of a host government; here, the measure came from regional organizations of which Mali was a member. Depending on the wording, a blocked exporter falls under embargo, non-transfer or neither. In credit insurance, a public buyer's default generally falls under political risk, while a private buyer hampered by the sanctions calls for case-by-case review. The markets took away that a monetary union can become the instrument of a sanction.

Its 10 cross-references, woven across the glossary's 18 categories
ECOWAS and WAEMU sanctions against Mali (2022): Special risks glossary illustration, AlgoPolis
Example

A Dakar building-materials supplier delivers to a construction site in Bamako in December 2021; in January, its Malian customer's payment is stuck because of the suspended transactions. Its credit insurer has to decide whether the loss is political risk, although the buyer is solvent.

Read next
Special risksCoup d'état and investment coverAn overthrow of power by force. On its own it triggers no political risk claim; it often sets off the covered acts: expropriation, license withdrawal, transfer restriction.Read the entry →Special risksEmbargo riskThe risk that a general trade ban, decided by the exporter's state or the buyer's, prevents performance of a contract; it is covered as political risk, with one reservation: the private market is wary of an embargo decided by the insured's own state, which public agencies take on more readily.Read the entry →Special risksTrapped fundsLocal currency amounts a foreign company lawfully holds in a country but can neither convert nor take out, because of a hard currency shortage or a decision by the authorities.Read the entry →
Put it to work
SimulatorPlay this case from the underwriter's seatEight quarters, one book, cyber and political risk files. You set the price and the war clause, then the market answers back.Take the seat →
Sources
  • ECOWAS, final communiqué of the extraordinary summit in Accra, 9 January 2022
Related terms
Also known as

ecowas sanctions mali, ecowas sanctions on mali, waemu sanctions mali, mali sanctions 2022, mali embargo 2022

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