How should Africa investors think about the sanctions landscape?

Geopolitical competition is increasingly evident and increasingly complex globally. Economic sanctions are a feature of this new landscape, and bear consequences for Africa-investment stakeholders.

1.     A new order

The frequency, breadth and depth of economic sanctions employed by the United States (and its allies) against state and non-state adversaries has increased steadily in recent years. Now Russia’s invasion of the Ukraine has precipitated another evolutionary leap in its usage. While African states are not party to the current conflict in Europe, sanction toolkits are conceived by government and then implemented by private sector actors, particularly international financial institutions, that are already particularly risk averse when it comes to the region. Witness the squeezing of correspondent banking relationships in the 2010s. African companies and/or African banks without (a) strong compliance capabilities, and (b) strong relationships are likely to see access to the international financial system strained even further in the coming weeks and months.

2.     Independent dynamics

For good reasons (see above), there is considerable focus on the implications of the Russia-Ukraine conflict. However, where they exist US sanctions against African principals are being driven by separate political and security dynamics. For example, since the new year U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued sanctions against six individuals in the region – two in Guinea, four in South Africa – all in connection with terrorist financing. Hizballah in the case of Guinea, ISIS and ISIS Mozambique in the case of South Africa. In addition, there are the below eight country-related sanction programmes.

3.     Africa-related sanction programmes

Of the 37 active US sanction programmes, eight are based in/related to specific African countries. They include: Central African Republic, DRC, Ethiopia, Mali, Somalia, Sudan and Darfur, South Sudan, and Zimbabwe

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Photo credit: Ehimetalor Akhere Unuabona

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