Asia Eyes Burkina Faso
Image Credit: Damien Halleux Radermecker

Asia Eyes Burkina Faso

 
 

While the United States and Europe remain transfixed on developments in the Middle East and North Africa, diplomats and corporate scions across Asia are growing increasingly concerned about another region of unrest—West Africa. Just as the tumultuous standoff in Cote d’Ivoire appeared to be resolved, the region suffered additional setbacks in Nigeria and Burkina Faso. And, while the fallout from the elections in Nigeria may ultimately have a more profound geopolitical impact in the long run, the deteriorating situation in Burkina Faso has the potential to inflict pain on the Asian economy now.

Burkina Faso is an economy predominantly dependent on two sources: revenues from cotton trade and foreign development assistance. Last year, Burkina exported nearly 350,000 metric tonnes of cotton to global markets—most of it to Asia. Cotton farmers in the country recently declared their intent to double and eventually triple cotton production to increase revenue. But political instability and lower cotton prices have thrown the country into a tailspin.

The regime of embattled Burkinabe President Blaise Compaoré faces its most serious leadership challenge since its inception over two decades ago. On April 14, a mutiny in the Burkinabe army reportedly forced Compaoré from his presidential palace in the capital, Ouagadougou. The insubordination of the military establishment triggered riots and looting that spread beyond the capital. The majority of the Burkinabe Army, however, remains loyal to Compaoré and is engaged in talks with senior officers that may have been involved in planning the uprising.

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Compaoré is clearly feeling the heat and undeniably is suffering from the seemingly ubiquitous regime-fatigue spreading across the region. In addition to holding talks with the rebel commanders, the Compaoré administration appears to be offering a carrot to dissenters with the appointment of a new moderate Prime Minister, Luc Adolphe-Tiao. Formerly serving as Burkinabe ambassador to France, Tiao has promised a more ‘inclusive’ government that nurtures democracy, development and increased stability. However, neither Tiao or Compaoré has said anything to appease the nation’s influential cotton producers.

Asian governments continue to watch the fluid situation in Burkina Faso with unease and frustration. There aren’t many noteworthy buildings in Ouagadougou, but one that stands out is the Embassy of Taiwan. Despite its incredible distance from the West African capital, Taiwan continues to invest heavily in its trading relationship with the troubled nation. Taiwan is the world’s 10th largest importer of cotton and complements its importing relationship with Burkina by providing millions in foreign aid.

Taiwan isn’t the only Asian stakeholder in Burkina Faso’s cotton export regime. China, despite severing diplomatic ties with Burkina Faso in 2004 after it recognized Taiwan, remains a dominant figure in the Burkinabe export market, accounting for nearly a third of the country’s outgoing cotton. But, unlike its ties with oil-driven African economies such as Nigeria, Sudan and Equatorial Guinea, China is fixated on Burkina Faso for a different reason—cotton. China remains the world’s largest cotton importer, with more than 2 million metric tonnes arriving annually at its ports of entry. Other Asian countries such as Singapore and Bangladesh have also invested in a cotton partnership with Ouagadougou. Singapore accounts for nearly 10 percent of Burkina’s foreign trade.

In 2009, cotton prices dipped below 60 cents (USD) per pound amid international market chaos. Prices have since recovered modestly and remain over $1 per pound. Burkina Faso’s real GDP growth was 5.2 percent last year, largely fuelled by a recovery of cotton sector after the financial crisis. However, Burkina’s economic growth remains fragile as it depends both on its internal stability as well as the financial standing of its international markets. Moreover, as a landlocked country, Burkina Faso’s security and prosperity is inextricably linked to the security of its regional neighbours. Compaoré remains an active stakeholder in the political future of Cote d’Ivoire and Nigeria. The former, its southern neighbor, is especially important to Burkina as it controls transportation and trade linkages to Upper Volta. Burkina’s ability to trade with international partners in Asia and elsewhere in the world would be severely inhibited by a resumption of a bloody civil war in Cote d’Ivoire.    

What do these recent events portend for Asia? While it’s true that Asian countries have built a solid trading relationship with Burkina, they have also acted as responsible financial stewards and hedged their investments to other cotton markets with cheap labour such as Mali and Uzbekistan. Moreover, China recently announced that it plans to cap its level of cotton imports from foreign markets and further develop its own considerable domestic industry. Additionally, while it’s clear that Burkina Faso’s government is politically fragile, there has been no definitive indication that the Burkinabe opposition has mobilized an effective campaign to oust Compaoré.

Future unrest in the country would surely cause diversion in the supply chain to Asia, but it likely would also result in increased production from a variety of other cotton merchants. As a result, Asian economies will continue to watch the situation in Burkina with interest, but not overt fear.     

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