West Africa Observer SWAC/OECD, N°2, April - June 2009 >
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West Africa Observer SWAC/OECD, N°2, April - June 2009 > www.westafricaclub.org • Impact of the crisis: a mixed picture • The free movement of persons, 30 years later • Challenges for food security and the cotton sector • The army - a key political player, The Constitution under pressure West Africa Observer - SWAC/OECD, N°2 – April - june 2009 The Sahel and West Africa Club The OECD has considerably deepened its relationship with Africa. The Its specificity lies in its approach, which combines direct field-involvement OECD’s policy dialogue is also developing at a regional level, in particular with analyses of West African realities. Together with regional institutions, through the work of the Sahel and West Africa Club (SWAC) which plays governments, business and civil society organisations, the SWAC a bridging role as an interface between West African actors and OECD promotes the regional dimension of development, supports the formulation member countries. Administratively attached to the OECD, the SWAC is and implementation of joint or intergovernmental policies and thereby led by a Secretariat based in Paris, which is supported by a network of contributes to mobilising and strengthening West African capacities. partners and experts from West Africa and OECD countries. 2 West Africa Observer - SWAC/OECD, N°2 – April - june 2009 Contents Summary 4 Impact of the crisis: a mixed picture 5 • Economic outlook 5 • Regional policy reponses 6 • International policy reponses 6 The free movement of persons, 30 years later 8 • The 1979 Protocol and its application 8 • Obstacles and administrative harassment 9 • Regional infrastructure projects 10 Challenges for food security and the cotton sector 11 • High food prices 11 • A Charter for food crises prevention and management 12 • No relief for the West African cotton sector 13 The army - a key political player ; the Constitution under pressure 14 • Speedy election in Mauritania 14 • Political violence and elections in Guinea-Bissau 14 • A difficult transition in Guinea 15 • Niger’s Constitution under pressure 15 3 About the West Africa Observer Summary The West Africa Observer espite the crisis, the economic outlook for West Africa is better his quarterly review analyses West African news on major than expected. Not surprisingly, the oil exporting countries are the political, economic and social trends from a regional point Dhardest hit. The Economic Community of West African States (ECOWAS) Tof view. It summarizes and puts into perspective important presents a highly contrasted assessment as to West Africa’s capacity to events and developments. Topics are chosen according co-ordinate its monetary policies and the Central Banks actions while the to the concerns of those with whom the SWAC team works: private West African banking system is rapidly integrating. However, the leaders of West African regional or government organisations, West African Economic and Monetary Union (UEMOA) was able to react development partners, NGOs, local actors and researchers, relatively successfully within its zone. The G20 pledged more resources civil society, etc. Our work draws on many existing information to the main financial institutions such as the African Development Bank sources. We believe: “The more information is available, the (AfDB), the International Monetary Fund (IMF), and the World Bank Group. more it needs to be synthesised”. The West Africa Observer is The Gleneagles commitments were also reconfirmed. An interim Economic intended to become a tool that provides easy and quick access Partnership Agreement (EPA) between West Africa and the European to key information on the region. Union will likely be signed in October 2009. Only addressing areas of Please send your comments to: [email protected] consensus, it will focus on trade in goods and equitable development in order to compensate for the imbalances linked to the opening up of the market. As it is the 30th anniversary of the freedom of movement within the ECOWAS zone, the West Africa Observer is focusing on the application of this founding principle. All ECOWAS member states have eliminated visas and entry permits for community citizens, and many of the countries now provide a travel certificate or a community passport. Yet there is still much to be done to reduce administrative harassment, and the number of control posts along cross-border corridors. The food situation is still worrying throughout the region. Despite record production (17% increase compared with 2007/2008 for the entire region; 30% in Sahel countries), food prices remain high. Price pressures are exacerbated by poor rainfall previsions; national public security stocks are not at optimal level. With regard to cotton, the global economic crisis combined with another fall in the dollar versus the euro (thus the CFA F) raises the bar. Some countries are taking short-term measures to save their “white gold” (subsidising inputs, State settlement of debts, sale price guarantees) and plan to undertake structural reforms over the long-term. Finally, the political and social scene continues to be instable. The political transition processes in Mauritania, Guinea-Bissau and Guinea progressed at a different pace. Political dialogue and mediation accelerated preparations for elections in Mauritania at lightning speed. Guinea-Bissau was finally able to hold elections without incident, after a series of political assassinations. In Guinea, as electoral preparations seem to be off track, tensions are rising between the military junta and the “Forces vives”. The army in these three countries is a key political player. In Niger, despite the Constitutional Court’s decision, President Mamadou Tandja will hold a referendum on 4 August 2009 which could pave the way to a third presidential term. ECOWAS played an important role by dispatching a mission of five Army Chiefs-of-Staff to Guinea-Bissau and a high-level delegation to Niger, led by the former Nigerian President Abusalami Abubakar. Normand Lauzon, SWAC Director 4 Impact of the crisis: a mixed picture Economic outlook he African Development Bank (AfDB) Annual meetings, held in Dakar on 13 and 14 May 2009, released new growth prospects for the TAfrican continent. According to the “African Economic Outlook (2009)”, economic growth in Sub-Saharan Africa is expected to be 2.4% in 2009 and 4.7% in 2010. In West Africa, real GDP growth is expected to slow to 4.2% in 2009, from 5.4% in 2008, before partially rebounding to 4.6% in 2010. However, it is a mixed picture with some countries maintaining, or even increasing their growth rate. Among the hardest hit African economies are oil exporting countries which have felt the effects of the crisis quicker and more acutely. In 2009, Nigeria is set to lose two growth points and its Federal State budget as well as its current account balance will be in deficit. Foreign exchange reserves dropped from US$ 53 to 43 billion between December 2008 and July 2009. The Central Bank of Nigeria declared a relaxing of its monetary policy (again cutting its federal funds rate from 8% to 6%) to provide increased liquidity while securing stability of the exchange rate. Volatile oil prices hinder the planning and implementation of economic policies over the medium-term. Ghana is faring well due to the good performance of the cocoa sector and, more generally, increases in agricultural production. In 2009, private consumption should support growth which will be able to rely on first oil exports as of 2010. After good performances in 2007 and 2008, the economy of Cape Verde is expected to significantly slow in 2009 as a result of a potential decrease in remittances and a drop in tourism. Post- conflict recovery in Liberia and Sierra Leone is likely to continue. The situation also varies in UEMOA countries. Burkina Faso and Mali are benefitting from good harvests, and Mali from the high price of gold in particular, while Niger is profiting from the high price of uranium. Senegal has suffered a poor agricultural campaign and a fall in phosphate and fertilizer production. The suspension of the Falémé mine project (ArcelorMittal of US$ 2.2 billion) is casting a shadow over Senegal’s medium- and long-term growth prospects. The improved political situation in Côte d’Ivoire, the biggest economy in UEMOA, has helped maintain growth prospects of 3.8% in 2009. This contributes also to the economic performance of other UEMOA member countries, tightly linked to the Côte d’Ivoire. Learn more • African Economic Outlook (2009): http://www.africaneconomicoutlook.org • Measuring the Pulse of Africa in Times of Crisis, OECD Policy Brief, May 2009 • Regional Economic Outlook: Sub-Saharan Africa, IMF, April 2009, http://www.imf.org 5 Impact of the crisis: a mixed picture Regional policy responses At the same time, the 9th Summit of the Heads of State of the West African Monetary Zone (WAMZ) announced the postponement of the creation of the common West African Central Bank from January 2010 to June 2014. uring a regional seminar held in Cotonou on 11 and According to Nigerian President Umaru Musa Yar’Adua who chaired the 12 June 2009, the ECOWAS Commission and its Consultative session, “the global economic and financial crisis has put constraints on DCommittee presented a highly contrasted assessment of the regional member states’ ability to meet the convergence criteria individually and responses to the crisis: no co-ordinated response by central banks collectively.” A new Action Plan was adopted in order to assist preparation and a lack of co-ordination regarding monetary policies, while in the countries concerned (the Gambia, Ghana, Guinea, Nigeria and the private West African banking system is rapidly integrating. A Sierra Leone) to agree on common convergence criteria and establish regional strategic monitoring committee will be responsible for the legal instruments of the WAMZ. analysing the sectoral implications of the financial crisis and report to the next Conference of ECOWAS Heads of State.