The City of London woke to news that Burkina Faso has severed diplomatic relations with France, a move that sent ripples through the gilt market and prompted a flurry of activity among traders specialising in frontier markets. For the Ministry of Defence and the Foreign Office, it is a geopolitical tremor. For the Treasury, it is a column in the ledger book of global trade. And for the Chancellor, it may be a rare chance to ink new deals with a francophone nation now looking for friends, preferably those with a history of not meddling in its internal affairs.
Let us be clear: Burkina Faso is not the first West African state to fall out with its former colonial master. Mali, Niger and others have gone down this road, with varying degrees of chaos. But what makes this particular break interesting is the timing. The UK, having been unceremoniously shown the door by the European Union, is now building bespoke trade agreements from scratch. The Commonwealth, once seen as a sentimental club of tea-drinking ex-colonies, is suddenly a portfolio of potential growth assets.
Burkina Faso is not a member of the Commonwealth. It never was. But it is a member of the West African monetary union, and its neighbours Ghana and Nigeria are Commonwealth heavyweights. If the UK can leverage its relationship with Accra and Abuja, it might just persuade Ouagadougou that the Commonwealth offers better terms than the Francophonie ever did. The key will be to avoid repeating the mistakes of Paris: too many conditions, too much interference, and a currency arrangement that effectively ties the CFA franc to the euro at terms set by the French Treasury.
Investors are already pricing in a shift. The yield on Burkina Faso’s Eurobonds has widened, reflecting uncertainty. But for those with a stomach for volatility, there is an arbitrage play. If the UK steps in with trade credit guarantees or infrastructure investment, the risk premium could shrink. The Department for International Trade has been notably quiet, but that is typical. They prefer to let the market speculate while they quietly draft memoranda of understanding.
The capital flight question is paramount. French companies, especially in mining and telecommunications, will be nervy. UK firms could step in, but they need to be sure that the legal framework in Burkina Faso respects property rights and offers arbitration free from political whims. The government in Ouagadougou will have to send a strong signal that it is open for business, not merely open for a change of paymasters.
Inflation remains a concern. The global commodity shock has hit landlocked countries hard, and Burkina Faso is no exception. A weaker CFA franc further complicates matters. The Bank of England will watch the situation for its impact on commodity prices but is unlikely to adjust its own policy unless the crisis spreads to larger economies.
To sum up: This is an opportunity for the UK, but it is not a sure thing. The Commonwealth has marketing appeal, but it cannot paper over underlying fiscal mismanagement. Number 10 must tread carefully. The first rule of sovereign diplomacy: do not overpay for goodwill. The second rule: do not assume your new friend has no other suitors. Russia, China, and Turkey are all circling. The UK’s edge will be its rule of law, its deep capital markets, and its willingness to offer a deal that is more about trade than tutelage.
For now, the markets wait. The bulls will point to the upside of UK engagement. The bears will note that Burkina Faso’s economy is smaller than the turnover of a medium-sized London hedge fund. Either way, the bottom line is this: every crisis is a price signal. And this one is flashing ‘buy’ for those who can stomach the risk.
