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Burkina Faso, Niger and Mali Standing out From ECOWAS: What Consequences on your Business in Africa
DECRYPTION - In 1975, 15 West African states, among which Niger, Ivory Coast, Mali, Nigeria, and Senegal, signed the founding treaty of the Economic Community of West African States (ECOWAS). The original project aimed for the free movement of goods and people through the harmonization of national policies. These agreements reduce administrative costs, encourage professional mobility, and facilitate trade.
However, the community faces significant internal tensions, particularly concerning terrorism and insecurity issues. In January 2024, Burkina Faso, Niger, and Mali announced their departure from the community, and on July 7, 2024, this decision appeared quite definitive. Indeed, the declaration of the formation of a Confederation of Sahel States shows that the rupture is almost complete.
Such a situation will undoubtedly impact the management of your activities. While official treaties provide for a one-year period in the event of withdrawal, Malian, Burkinabe, and Nigerien leaders speak of an immediately effective decision. What about their nationals? The companies working with them? Those with interregional partnerships?
To help you ensure the stability of your business despite these developments, let’s analyse the consequences of this decision on your mobility strategies in the West African sub-region.
ECOWAS Weakened: What Consequences for the Mobility of Your Employees in West Africa
End of Free Movement
ECOWAS implemented agreements allowing the free movement of people and goods between its member countries. Consequently, citizens of member countries could travel, work, and live in any other member country without needing visas or, in some states, work permits. The withdrawals of Burkina Faso, Niger, and Mali question the validity of these agreements. Citizens of these three countries now must regularize their status with the immigration services of ECOWAS member countries.
For example, citizens of these countries working in Ivory Coast would need to pay about 300,000 FCFA for a residence permit. In addition, they would also have to pay work permit fees, which are determined by the type of employment contract (fixed-term or indefinite), and a work card fee of 5,000 FCFA. It's worth noting that work permit fees range between 1/2 and 3/4 of the gross salary for African workers.
Change in Tax Status of Employees
Beyond mobility conditions, these withdrawals also raise questions about the tax status of employees. Since 2022, member states have adopted community rules to eliminate double taxation on income, capital, and inheritance taxes. Those rules also permits to prevent fraud and tax evasion among ECOWAS member states. Although Mali, Burkina Faso, and Niger have not announced their exit from the WAEMU (West African Economic and Monetary Union), these regional tensions create a climate of uncertainty, particularly concerning exchange regulations and customs duties.
Internal Business Management
The uncertainties generated by the recent decision directly impact your internal management strategies. Depending on the announcements made, some of the processes or operations you have undertaken in partnership with the departing countries could be rendered obsolete. Notably, if the exiting states remain integrated into the monetary community, you must ensure that your employee remains exempt from the risk of double taxation.
Before Withdrawal |
After Withdrawal |
What consequences? |
---|---|---|
Implementation of free movement treaties among member countries. |
Status regularization required for Malians, Burkinabe, and Nigeriens with host country immigration services. |
Additional immigration and residence costs. |
Harmonization of tax statuses. |
Uncertainty about the maintaining of tax benefits for non-nationals. |
Le risque de double-imposition. |
No work authorization requirements in some ECOWAS member countries. |
Obligation to request work authorization. |
Need to regularize your employee's situation ensure employability. |
Rethinking Regional Mobility Strategies and Facing Uncertainties
In this new context, it is imperative to ensure the stability of your activities to anticipate risks and maintain control over your operations. Several points need consideration.
A Renewed Context: How to Secure Your Short-Term Procedures?
In the short term, you need to anticipate the necessary steps to reduce risks to your activity. This involves considering visa applications based on the country of origin of your non-national expatriate or seconded employees and verifying their ability to work if work permits are required.
These steps represent significant costs, around 300,000 FCFA in Ivory Coast for a residence permit, excluding entry visa and work permit fees. This represents a substantial investment that could directly affect your activities by reducing your capacity to develop new projects. Ensuring your administrative compliance is thus essential to minimize risks.
Tax Compliance: Risks Management
It is also essential to review tax compliance strategies. The withdrawal of certain countries from ECOWAS could indeed lead to double taxation situations. Preventing this possibility while ensuring your tax compliance is necessary to avoid the risk of tax adjustments in case of inspections by competent authorities.
Monitoring Regional Developments
Given the sudden announcement of ECOWAS's withdrawal, clarifications are expected, introducing new challenges to be integrated into your strategies. Therefore, informational monitoring of regional legislative developments is essential to identify risks. Depending on the country, procedures may differ, and the measures you take in one case may not apply in another. Keeping your teams informed of all relevant provisions is crucial to reduce uncertainty.
Following Local Developments: Why Consult an Expert in Africa?
The current political and economic situation directly impacts the planning of your activities in the region. Consulting an expert offers more guarantees to ensure the stability of your activities.
Using Specialized Services for Expert Analysis
In a context of uncertainty, in-depth knowledge of specific regulations and administrative procedures in each country is a real asset which an expert can provide. This expertise gives more visibility in your procedures, thus reducing the risks of non-compliance and administrative errors. Additionally, experts have networks and relationships allowing them to follow professional mobility dynamics. This way, you can better anticipate and respond to the risks you may face.
Reducing Costs
Administrative procedures for expatriates can be costly and time-consuming. Experts can assist you in your processes to help control your costs in compliance with the law. Besides more efficient and economical management of immigration and integration processes, they can guide you in adapting your internal tax policies to minimize associated risks.
Ensuring Internal Cohesion
Changes in status and legislative developments not only affect your non-national employees, but also their productivity. Tobest supporting your teams, experts can offer guidance to your employees in their procedures. They will thus be better able to maintain their ability to work smoothly and in compliance with the regulations.
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