June 29, 2018

Untapped Economic Potentials in West Africa Region

Economic or trade unions all have something in common; to form a sizable market that can position its member states in a vantage standpoint needed to influence trade negotiations or expand the economic prosperity of its people through joint policy.  Economic unions or blocs are not necessarily formed to increase population size, promote consumerism or extend geographical space. They aim at enhancing market efficiency, promoting healthy competition, attracting foreign direct investment, expanding trade, promoting the economic interest of member states.

Instituted through the Lagos Treaty on the 28th of May 1975, the Economic Community of West African States (ECOWAS) now has 15 members, occupies a geographical area of about 5,114,162 km2 and market size of over 350 million people. With a combined GDP of approximately US$716.7 billion, ECOWAS possesses the required tools to improve West Africa economy. Forty-three (43) years down the line, some successes have been recorded, but yet the pace of influence and development have been slow. But we strongly believe that ECOWAS could be a catalytic entity for the emancipation of West Africa countries in the committee of Nations.

Custom, Manufacturing Capacity and Trade

Although within a trade bloc, the joint promotion of the regional welfare is emphasized, yet the member states with strong producing capacity tend to recoup most benefit.  While this is so, it could promote intense competition among member states thereby ensuring surplus output, varieties of good and services, and reduced prices for consumers. The ultimate result of these chains of actions will be expanded exports and foreign exchange inflow for member states. In 2016, the combined export value of ECOWAS was about US$101.4 billion, far below the export value of individual countries such as Turkey ($157.3 billion), Malaysia ($188.2billion) and some hosts.

ECOWAS, 2016

While, it would have been expected that the member states trade more with each other, but the intra-trade trend shows that ECOWAS members trade less with each other, recording a yearly average of US$ 12.9 billion worth of goods and services from 2011 to 2016. There still exist some levels of barriers in trading with each other, an indication that the Economic/Trade Union did not result to Customs Union.  In addition to these, ECOWAS export to the outside world has been unstable and tumbling downward at a geometric pace, losing an average of US $10.5 billion every year and about the US $ 55.4 billion every two years. Examining the bloc’ s trade partners shows that about 83.7 percent of ECOWAS exports are to Europe and the Americas, about 16 percent en route to Asia and Oceania, with only 0.3% to the Middle East. The export composition still reflects the dominance of primary goods with little or no value addition.  All these are signals that the manufacturing capacity of the ECOWAS states are still lagging behind and the bloc needs a workable export strategy to create the needed prosperity and jobs among its member.

The Prosperity Joystick

ECOWAS states are not yet fully integrated economically. The bloc needs to focus more on economic integration through the following:

  • Capital and Talent mobility: Despite the attainment of the ECOWAS passport, the inability to implement a vibrant custom and immigration union has been hampering free mobility among member states. The borders of member states are heavily armed with tank and armoury such that people and goods spending hours for documentation and It should be noted that without joint policing across the border, the free flow may not be fully achieved. This can be improved upon.
  • Monetary integration: The existence of money brings in liquidity and easy flow of trade. With the US dollar as a third party currency, the full actualization of stress-free trade among members may not be completely achieved. But, the introduction of ECOWAS currency will necessitate joint monetary coordination and harmonization of macroeconomic policy among members.
  • Friendly Investment Policy and Joint Trade Strategy: ECOWAS could facilitate FDI into West Africa and can support member states with research-based trade strategy, for instance, on the need to expand trade to the Middle-East region. This should also be considered for quick implementation

Morocco could be the Game Changer

The willingness of Morroco to join the union despite its geographical located in the North shows the presence of a pull “incentive-like” factor in ECOWAS not fully explored by the old members; the large market, massive labour or trade advantage. The country formally belongs to the Arab Maghreb Union (UAM) but has disagreements with the bloc, especially Algeria. In the past decade, Morocco trade with ECOWAS member states had grown up to US$ 1 billion in 2016. Nigeria, Côte d’Ivoire, Senegal, and Mauritania happen to be the biggest importers of Morocco goods such as foodstuffs, machinery and chemical goods. With a strong domestic manufacturing base, Morocco stands the chance of replacing some part of ECOWAS importations from Europe and Americas, while addressing its wider current account and trade deficit, in addition to improving its unstable economic growth. As the Manufacturers Association of Nigeria (MAN) continues to oppose the admission of Morocco into ECOWAS, such moves will not add to Nigeria’s productive capacity. Even as Morocco’s admittance will promote competitiveness, Nigeria will, therefore, need to reform its productive base to able to enjoy the benefit of the membership of any trade bloc it belongs to now or in the future.

In conclusion, as the economic pie grows big, everyone stands will have a bigger share. As the productive capacity of member states increases and trade activities with each other expands, more business opportunities will spring up, jobs and income in the region will increase. With the growing population in West Africa, this is partly what the ECOWAS needs to tame the Africa-Europe migration/refugee challenges and as well as achieve the sustainable development goals (SDGs).




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