Extremist activities and violence in the centres of conflict in the Sahel (i.e. Burkina Faso, Mali and Niger) are moving south towards the four countries of interest of this paper (Côte d’Ivoire, Ghana, Senegal and Togo). At the time of writing, all except Ghana have experienced direct jihadist attacks, and all have reported extremist encroachment and recent increases in refugees, especially from Burkina Faso.
In this report we investigate how the the Sahel conflict affects economic performance through economic spillover effects. We argue that though the epicentre of extremist attacks and humanitarian disaster is in Mali, Niger and Burkina Faso, impacts on focus countries may be transmitted through economic links (e.g. trade, investment, remittances) with conflict-affected countries, and their policy response (e.g. refugee management, security defence, trading partner substitution). These effects are already happening. Losses through lower exports and FDI flows could be equivalent to between 1.3% (Ghana) and nearly 5% (Senegal) of GDP.
We also explore the ‘conflict spillovers’, whereby conflict and violence from the centre of the Sahel are transmitted to the focus countries. We argue that this may lead to adverse effects on lives and economic activities and may result in an 8% reduction in GDP in the focus countries at the onset of an intense conflict.
We suggest how economic spillover effects of the conflict may be mitigated by ensuring that trade, FDI and financial channels in the Sahel region are open, safe and facilitated. We argue that it is critical to continue combatting the spread of extremism, while simultaneously addressing the structural roots of extremism.
