2. WEST AFRICA: REGIONAL CONTEXT AND SUSCEPTIBILITY TO CRIMINAL ECONOMIES – 31 Chapter 2. West Africa: Regional context and susceptibility to criminal economies This chapter reviews the key characteristics of the West African region that are relevant both to understanding the growth of criminal economies, and their interactions with citizens and the state. These issues include the development and demographic status of West African countries, and the dynamics of the region’s economy and trade. The chapter provides an overview of the region’s governance and democracy, and highlights salient features of its peace and security, or instability. Taken together, these characteristics impact on the way criminality develops in the region. Consequently, they are relevant for developing responses to criminality and illicit financial flows, and working to mitigate the impact of these factors on development. ILLICIT FINANCIAL FLOWS: THE ECONOMY OF ILLICIT TRADE IN WEST AFRICA © OECD 2018 32 – 2. WEST AFRICA: REGIONAL CONTEXT AND SUSCEPTIBILITY TO CRIMINAL ECONOMIES Introduction This report focuses on West Africa and the 15 countries covered by the Economic Community of West African States (ECOWAS): Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo. ECOWAS brings these countries together around the shared commitment to build a “borderless, peaceful, prosperous and cohesive region, built on good governance” (ECOWAS, 2011). This commitment recognises that owing to a range of systemic factors, West African nations and peoples are uniquely bound together, with highly homogenous societies and interwoven, complementary economies. As borders between these states are highly porous, freedom of movement and trade sits at the cornerstone of a shared understanding of resilience, economic growth and development. This section identifies some of the factors that make West African countries more susceptible to the impacts of illicit financial flows (IFFs) and criminal economies. While analysing the region as a whole, it recognises that West African countries are not uniform. They present appreciable differences in their forms of political institutionalisation, governance, economic performance and statebuilding, resulting in different political arrangements, institutions and patterns of economic development. These differences have affected the extent to which criminal economies and IFFs feature in the economy and infiltrate the state (Felbab-Brown, 2010). Arguably, governments’ resilience and capacity to counter criminal economies and prevent IFFs reflect the resources available to them and their political will – thus making West African countries highly susceptible to the development of criminal economies and their resultant IFFs. Though it is not possible to isolate the specific conditions that directly lead to criminal activity, certain structural factors appear to contribute to a country’s vulnerability. These include “high unemployment, high income inequality, prior exposure to violence, democratic collapse, low gross domestic product and weak institutional capacity” (Cockayne, 2011), as well as the size of the informal economy compared to the formal economy. Combined with global dynamics, these factors highlight vulnerabilities to criminal activity and serve as bulwarks against effective responses. This chapter reviews key characteristics of the region, relevant for understanding both the growth of criminal economies, and their interactions with citizens and the state. These will have consequences on the responses to criminality and IFFs arising in this context, as well as for those working to mitigate their impact on development. Development and demographics Compared with the high growth rates achieved between 2000 and 2010, the rate of human progress in African countries has declined in recent years. This decline is a reflection of the slowdown of increases in per-capita income relative to improvements in education and health outcomes. This slowdown is a concern, as most African countries still remain in the low human-development category. West Africa faces significant challenges in this area (African Development Bank [AfDB]/OECD/United Nations Development Programme [UNDP], 2016): 11 out of the 15 ECOWAS countries are Least developed countries (United Nations, 2016) and all of them – save two (Ghana and Cabo Verde) – remain in the bottom quartile of the United Nations Human Development Index (HDI) (Table 2.1). ILLICIT FINANCIAL FLOWS: THE ECONOMY OF ILLICIT TRADE IN WEST AFRICA © OECD 2018 2. WEST AFRICA: REGIONAL CONTEXT AND SUSCEPTIBILITY TO CRIMINAL ECONOMIES – 33 Table 2.1. Human development index ranking in 2016 (out of 187) ECOWAS state HDI value Benin 167 Burkina Faso 185 Cabo Verde 122 Côte d’Ivoire 171 Gambia 173 Ghana 139 Guinea 183 Guinea-Bissau 178 Liberia 177 Mali 175 Niger 187 Nigeria 152 Senegal 162 Sierra Leone 179 Togo 166 Source: UNDP (2016). Owing to the topological conditions of the Sahara and Sahel, resilience systems in West Africa are unique. These systems have required a degree of mobility and inter-dependence among communities that belies the region’s geographical distances and topography. Agricultural lands are scarce and thinly distributed. Whereas agro-pastoral production drives the economy in most of sub-Saharan Africa, in West Africa – and particularly in the Sahel – trade is the economic cornerstone, and seasonal exchange or travel are often the only options available (Krätli, Swift and Powell, 2014; OECD/Sahel and West Africa Club Secretariat [SWAC], 2014). Many analysts believe the populations of West Africa are better understood as a network that spans the Sahara, rather than as nation-states and borders (Meagher, 2005; Scheele, 2012; OECD/SWAC, 2014). With low levels of agricultural production in rural areas, West Africa’s development has been characterised by rapid urbanisation. In 1950, the region comprised 152 cities and major towns; today, it has nearly 2 000 – more than 12 times that number. In 1950, no urban area had a population of more than 1 million; now 22 such areas exist (OECD/SWAC, 2015). Urbanisation has profoundly shaped the region’s economic, political and social environment (OECD/SWAC, 2014). State institutions are struggling to manage urban development effectively, leading to growing informal economies and settlements, and chronically poor living conditions for large portions of the population (AfDB, 2012). Another defining feature of West Africa is its demographic profile. Where the population of continental Africa as a whole is young and growing at twice the pace of other continents’, growth in West Africa is even more marked. Between 1950 and 2007, the region’s population increased fourfold, from approximately 70 million to more than 300 million; 60% of the population is under 25 years of age, and one third is aged 15-24 years (Figure 2.1). This youth bulge is expected to plateau around 2050, at which point the region’s population may have doubled, reaching 700 million people (Fortune et al., 2015). This exponential population growth is a challenge for the effective delivery of services and realisation of development, even when growth is positive. For example, positive economic growth, regional integration and coherence have meant that ECOWAS ILLICIT FINANCIAL FLOWS: THE ECONOMY OF ILLICIT TRADE IN WEST AFRICA © OECD 2018 34 – 2. WEST AFRICA: REGIONAL CONTEXT AND SUSCEPTIBILITY TO CRIMINAL ECONOMIES has increased per-capita food production by more than 40% since the 1980s. Ensuring food security and creating productive livelihoods, however, remains a serious challenge: an estimated 36 million West Africans are still undernourished, and several million face food emergencies every year (FAOSTAT, 2015). Development in the health and education sector is challenged to provide the desired returns to meet the needs of growing populations. Unemployment rates are high, particularly for youth. Improvements in technology and communication, and investments in education, have transformed young people’s expectations with regard to employment and the future, yet these are out of step with opportunities in the formal sector, particularly for those completing higher education (Fortune et al., 2015; Marc et al., 2015; WA-IOM-130515). Economies have remained caught in predominantly informal, subsistence and basic trading activities. Limited high value-added work (AfDB, 2012) fails to offer most citizens any hope of social advancement or return on educational investment. Informal enterprise accounts for anywhere between 40% and 75% of gross domestic product (GDP) and employs anywhere between 50% and 80% of the available workforce in different West African countries. By one estimate, the informal sector currently accounts for around 60% of all urban employment and provided 90% of all new employment created in the 1990s (Fortune et al., 2015). Consequently, economic growth has translated into increasing inequalities, and a highly visible gap between the “haves” and the “have nots”. This, in turn, has caused young people to become disillusioned with their governments and has entrenched intergenerational differences (Reitman and Shaw, 2014; Marc et al., 2015). Arguably, these schisms have exacerbated social fractures and weakened the rule of law, with implications for the recruitment of youth into criminal industries. Figure 2.1.Evolution of ECOWAS countries’ populations in millions, 1960-2030 (projected) Note: