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Ecowas Is Dead - Long Live Ecowas

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Ecowas Is Dead - Long Live Ecowas ECOWAS IS DEAD - LONG LIVE ECOWAS A study of Ghana and regional integration Association of Ghana Industries and DI International Consultancy September 2000 The outlined section shows the members countries of ECOWAS. 2 TABLE OF CONTENTS 1 INTRODUCTION 6 1.1 Executive summary 6 1.2 5 barriers to trade and 11 ways of removing them 9 1.3 Research objectives 10 1.4 Limitations 10 1.5 Methodology 10 1.6 Structure of the paper 11 2 TRADE IN WEST AFRICA 12 2.1 Background 12 2.2 Comparative economic study 13 2.3 West African trade patterns 14 2.4 Ghanaian trade patterns 16 2.5 Ghana’s export to Nigeria and Côte d’Ivoire 17 2.6 Conclusion 18 3 ECOWAS 20 3.1 Background 20 3.2 Structure of ECOWAS 21 3.3 Payment of contributions 21 3.4 Free movement of goods 22 3.5 Status on TLS 25 3.6 Status on cross border payments 26 3.7 Infrastructure 28 3.8 Private sector initiatives 29 3.9 UEMOA 30 3.10 Comparison of ECOWAS and UEMOA selected areas 33 3.11 Conclusion 34 4 THE GHANA-NIGERIA FAST TRACK 36 4.1 Background 36 4.2 The fast track 37 4.3 Policies on regional integration 38 4.4 Monetary integration 40 4.5 Creation of a free trade area 42 4.6 The fast track negotiations for free trade 43 4.7 Private sector initiatives 45 4.8 Investments 45 3 4.9 Donor support to regional integration 47 4.10 Conclusion 49 5 PRIVATE SECTORS VIEWS ON REGIONAL INTEGRATION 50 5.1 Background 50 5.2 Direction of regional integration 50 5.3 Potential benefits to industry 51 5.4 Private sector priorities, Côte d’Ivoire and Nigeria 51 5.5 Ghana’s competitive advantages 54 5.6 Conclusion 56 6 PROPOSALS FOR SUPPORT 57 6.1 Introduction 57 6.2 1. Red tape concerning export/import procedures 59 6.3 2. Lack of an intra-regional payment and clearing system 62 6.4 3. Road blocks and obstructive attitude of officials 63 6.5 4. Mistrust between operators in the sub-region 65 6.6 5. Lack of an enabling environment for Ghanaian exports 67 0 69 7 ANNEXES 70 7.1 Annex 1: Status on contributions 70 7.2 Annex 2: Recommendations 71 7.3 Annex 3: Company Interviews - Ghana 72 7.4 Annex 4: Contacts 83 7.5 Annex 5: Bibliography 85 7.6 Annex 6: Plan of Action for establishing a free trade area, January - December 2000 88 4 ABBREVIATIONS ADB African Development Bank AGI Association of Ghana Industries APEC Asian Pacific Economic Co-operation ASYCUDA Automated System of Customs Data BCEAO Banque Centrale des États de l’Afrique de l’Ouest BOAD Banque Ouest-Africaine de Développement CEPS Customs Excise Preventive Service DANIDA Danish International Development Assistance DI Confederation of Danish Industries EAC East African Community ECOWAS Economic Community of West African States EPZ Export Processing Zone (E)TLS (ECOWAS) Trade Liberalisation Scheme EU European Union FDB Food and Drugs Board FEWAMA Federation of West African Manufacturers’ Associations FNISCI Fédération Nationale des Industries et Services de Côte d’Ivoire FWACC Federation of West African Chambers of Commerce GIPC Ghana Investment Promotion Centre GNCCI Ghana National Chamber of Commerce and Industry GSB Ghana Standards Board GSE Ghana Stock Exchange IPA Investment Promotion Agency MAN Manufacturers Association of Nigeria NACCIMA Nigerian Association of Chambers of Commerce and Industry NAFTA North American Free Trade Area NSB National Standard Board NSE Nigerian Stock Exchange NIPC Nigeria Investment Promotion Commission PEF Private Enterprise Foundation SADC Southern African Development Co-operation SMZ Second Monetary Zone SON General Standards Organisation of Nigeria UEMOA Union Économique et Monétaire Ouest-Africaine UMOA Union Monétaire Ouest-Africaine UNIDO United Nations Industrial Development Organisation USAID United States Agency for International Development WAEN West African Enterprise Network WACH West African Clearing House WAIPA West African Investment Promotion Association WAIPS West African Interbank Clearance System WAMA West African Monetary Agency WTO World Trade Organisation 5 1 Introduction 1.1 Executive summary Intra-regional trade in Africa has for many years been dismally low compared to trading blocks in the industrialised countries. Trade in the ECOWAS sub-region is no exception. Exports to the sub-region still hover at around 10% of total exports - the same level as in 1980. Ghana’s trade patterns in many ways resemble the pat- terns for the rest of the sub-region, with the bulk of trade taking place with the EU. From the West African sub-region imports to Ghana mainly consist of products such as oil and electricity, while exports are more diversified. Togo and Burkina Faso, the tenth and seventh largest markets in the sub-region, are the main export destina- tions of Ghana. The potentially largest markets Côte d’Ivoire and Nigeria are only the sixth and seventh largest export destinations. It is in these countries that the largest unexplored potential lies. Hopes were high when the ECOWAS treaty was signed 25 years ago in Lomé, Togo. The Heads of State and Government envisioned a West Africa with strong trade re- lations, strengthened political co-operation and free of colonial ties. However, in the ensuing decades progress was slow; so slow that ECOWAS was considered a failure by many observers. This finally led to a new ECOWAS treaty. In 1993 The Heads of State and Government decided to revitalise the community by signing a treaty with even more ambitious goals. This time the co-operation was to be extended into an in- ternal market, a common currency and a West African parliament. Unfortunately the new treaty was no more successful than the old one. Only few of the basic goals of the treaty have been achieved and the ECOWAS countries are as unified now as they were 25 years ago. Nevertheless, ECOWAS has achieved something. The institution has an impressive secretariat in Abuja, Nigeria. 700 goods have been approved under the ECOWAS Trade Liberalisation Scheme. Infrastructure development has progressed through the telecommunication project Intelcom 1, which established communication links between the ECOWAS capitals. The Trans-coastal and Trans-sahelian highways have improved road transport conditions in the sub-region. Financial services in the sub-region have also been improved through ECOBANK. But high profile ECOWAS institutions such as the ECOWAS FUND and the West African Monetary Agency have never had the desired impact on economic development. Cross border trade is still so cumbersome that many companies have given up exporting directly to the sub-region. Where should the responsibility for ECOWAS’s failure to integrate the economies be placed? The main fault must lie with the member states. It is the member states that have failed to implement the treaties that they themselves have signed. Further- more, they have never given the ECOWAS institution sufficient power to pursue the goals of the treaties and penalise member states that failed to implement them. If the ECOWAS institution is to become a success in the future, the authority of the se- cretariat must be enhanced and member states must become truly committed to the ECOWAS project. Otherwise there is a real risk that progress in the next 25 years will be as slow as the progress to date. 6 Recently, ECOWAS has been given new hope through the Ghana-Nigeria fast track initiative. The fast track is an offspring of the lack of progress within ECOWAS. However, the rapid and successful integration between the UEMOA countries is also an important factor. UEMOA has managed to unite 8 francophone countries in West Africa – all of them also members of ECOWAS. With a common currency, a customs union established on January 1, 2000 and plenty of external support, the UEMOA countries are preparing for further integration. Ghana and Nigeria had to come up with a new initiative in order to stay at the centre of political developments in West Africa. The fast track initiative is open to all ECOWAS members. It is, however, more likely that the fast track countries and UEMOA will merge later. Conse- quently, ECOWAS has been revived albeit in a new and fragmented shape. It was President Obasanjo of Nigeria that initiated the Ghana-Nigeria fast track in Lomé in December 1999. He urged the ECOWAS leaders to adopt a two-track ap- proach to regional integration. If two or more member states were ready to imple- ment a particular ECOWAS programme, they should be allowed to do so. These countries would then be the fast track to which the slower track could join later. The idea was formally endorsed by the ECOWAS Heads of State and Government in Ba- mako, Mali in January 2000. The aim of the fast track initiative is to establish a second monetary zone by 2003 and a free trade area beginning from year 2000. Furthermore, the chief executives of UEMOA and ECOWAS have been given the task of finding strategies for merging the fast track countries and UEMOA. Both Ghana and Nigeria have shown ample proof of their commitment to the fast track negotiations. At the very top the Presi- dents of the two countries have consistently advocated for an accelerated integration process and have personally attended a number of high-level summits to show their support. This commitment has also been reflected at the lower levels of administration from ministers to civil servants. Relevant ministers attend meetings along with the key government institutions and large delegations are sent for the negotiations. In- volvement of the private sector is seen as very important to the whole process and some of the leading organisations have been invited to participate.
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