Niger’s supply chain is one of the many casualties of an unexpected coup. Unfortunately, like many other coups, it harms the country and the rest of Africa, especially the Economic Countries Of West Africa States (ECOWAS).
Why is Niger’s Supply Chain in Crisis?
On July 26th, 2023, President Mohammed Bazoum was deposed in a military takeover led by his presidential guard. The coup is the 4th in Ecowas since 2020, behind Mali, Guinea, and Burkina Faso.
It seems like there is one coup every year, and in the Sahel, which is plagued by terrorism, this coup has untold political consequences.
Niger is a country reliant on internal aid, receiving over 1.86 billion USD in 2021 alone. The country is also a net importer of goods, and its economy relies on trade with its neighbours. I.e. fellow ECOWAS nations.
In light of the recent coup, ECOWAS has levied sanctions and almost completely shut out Niger’s economy and, by extension, its supply chain, leaving the country in complete chaos.
What are the sanctions on Niger that directly impacts its supply chain?
ECOWS initially gave Niger an ultimatum of seven days from August 4th to 10th which yielded no results. In response, the bloc has slammed a barrage of sanctions on Niger, including
- Cutting off electricity
- Closure of Borders (land and air)
- Suspension of all commercial transactions
- Frozen Niger’s state assets in the region, including those in commercial banks across the bloc
- Suspension of all imports and exports of goods
Niger’s coup is the latest and 4th in four years in ECOWAS, leaving the 15-state bloc in a very unhealthy situation. It also presents a serious dilemma for the bloc.
Do they continue to ignore the wake of these coups and jeopardise democracy in the region or do they take action against Niger and threaten a collapse in relations with some member blocs, such as Burkina Faso and Mali which have declared their support for Niger’s military?
What are the impacts of the coup and sanctions on NIger’s supply chain?
Like coups before it, the current political unrest in Niger comes with untold repercussions on the supply chain and economy of the nation and surrounding regions.
Some of these include
- Break down of security
- Lack of access to raw materials
- Limited funding
- High cost of production
Break Down of Security
As you know, a political crisis usually ushers in security issues which can be very dangerous for businesses and their supply chains. Lack of security leads to vandalism, theft, and damage to goods and services.
All these make it difficult for businesses and supply chains to fulfil their obligation to their customers. It causes poor supply chain planning, making demand forecasts challenging.
Lack of Access to Raw Materials
When there are no raw materials, it is difficult for the supply chain to have any impact. In the wake of the coup, trade relations with Niger’s primary partners have collapsed. Being a net importer, it is difficult for businesses within the country to access necessary raw materials such as food and crops for their supply chain.
The lack of access to raw materials has led to supply chain disruptions and high operations costs for the supply chains that can manage to find them.
Limited Funding
To function properly, most businesses and supply chains rely on third-party financing, such as loans or investments. With ECOWAS shutting out Niger financially, these businesses will struggle to leverage or access this funding, jeopardising their supply chain operations.
High Cost of Production
Electricity is a non-negotiable for any modern economy and supply chain. With ECOWAS and, by extension, Nigeria cutting off electricity to Niger which is about 70% of the country’s supply, businesses are forced to rely on other forms of power, including generators and solar energy sources.
This move means a higher cost of production for supply chains across the nation and, for those who cannot afford it, downtime in the supply chain. Higher cost of supply chains, especially in a crisis, means less revenue and potentially a lack of demand, impacting the business’s survival.
How Can Supply Chains in Niger Make the Most of this Situation?
If Niger’s supply chain has failed to invest in supply chain resilience before now, it would be significantly more challenging to find solutions now. However, there are always options.
1. Localizing the supply chain: Niger is a country rich in mineral resources and a lot of raw materials. There is an opportunity for many supply chains in the country to find local suppliers to simplify their supply chain operations.
2. Lean Supply Chains: Supply chains can be complicated, but that is detrimental in times of crisis. Businesses can slim down their supply chain by retaining strictly necessary procedures and resources to meet their goals.
3. Supply chain visibility: The bedrock of any supply chain is communication, which promotes visibility, making it easier to identify and tackle bottlenecks. This ensures seamless operations throughout the supply chain.
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
