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TRADING
WITHIN ECOWAS
TRADING WITHIN THE ECOWAS
REGION: STRENGTHS AND WEAKNESSES
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Set
in 1975, the Economic Community of West African
States (ECOWAS) is increasingly becoming one
of the most realistic processes of regional
integration within the African continent.
While it is said to share only 20.5% and 0.4%,
respectively, of the African and world trade
transactions in 2002, the economic zone represented
by ECOWAS is nonetheless a regional market
in full expansion. Apart from the improvement
of the region’s global trade balance,
this economic entity recorded an increase
in the volume and value of its intra-community
trading. In fact, despite countless
constraints which are glaringly inhibiting
its expansion, the regional trade enjoys important
potentials heralding sure development in the
nearest and distant future.
Trade Exchanges In Full Expansion...
The Community’s
market experienced a tremendous boom during
the last twenty years. In fact, the
value of trade exchanges of the Community’s
zone jumped from about 33 billion US Dollars
in 1986 to about 65 billion in 2002, an increase
of 965 %. This achievement is mainly
due to the substantial growth in the volume
of primary products exports: agricultural
cash crops and petroleum oil products.
The value of exports multiplied by 2.1%.
Whereas, on the other hand, imports which
are essentially made up of finished consumer
products, 19% of which consist of agro-allied
foodstuffs, increased only by 1.9% during
the same period.
However, intra community transactions did
not increase at the same substantial rate.
They only fluctuate between 14 and 12% of
the overall formal trade exchanges realized
within the economic zone, i.e. about 23 US
Dollars per inhabitant in intra community
trade transactions in 2002.
However, these data are far from the realities1;
a sizeable volume of regional trade transactions
are not covered by the official statistical
data owing to three main reasons: |
- The permeability of the borders, fostering
informal neighborhood trading transactions
which the public authorities are unable
to adequately control,
- The free movement of raw products which
are increasingly neglected by the
official bodies in charge of statistical
data, since no customs duties are collected
on these raw products,
- The impact of the structuring of the
trade networks, leading to the segment-based
organization of the regional trade zone
into three Sub-regions:
- The Western Sub-Region led by Senegal
and Characterized by rice trading
- The Central Sub-Region
animated by Cote-d’Ivoire and Ghana,
where substantial transactions in livestock
are taking place in full swing thanks
to the important seasonal migratory movements.
- The Eastern Sub-Region,
bordered by Nigeria, is characterized
by the omnipresence of informal trading
activities based on opportunities.
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But
Handicapped By Countless Obstacles:
As can be
clearly observed, the present level of intra-community
trade exchanges is far below existing potentials
within the ECOWAS region. The development
of regional trading activities in West Africa
is inhibited by several obstacles that are
linked to structural and conjuncture factors.
Prominent among these obstacles are:
- The difficulties inherent in the non-existence
of a formal framework for transactions
which, in turn, is due to the absence
of a monetary union within the ECOWAS
Region. Inspite of the setting-up of mechanisms
and instruments designed to facilitate
financial transactions, snamely: Clearing
House, Ecotrade of the Ecobank Group,
payment for commercial transactions is
still severely hindered owing to the impossibility
to exchange one currency against another
outside the central banks’ channels.
- The persistence of different trade policies
between the Sub-groups made up of the
WAEMU Common Market Member-states and
the seven other ECOWAS Member-Countries.
|
Rice |
Wheat |
Wheat
Flour |
Meat |
Milk |
Oil |
WAEMU |
10 |
5 |
20 |
10 |
10 |
10 |
Nigeria |
110 |
15 |
banned |
banned |
5 |
banned |
Ghana |
20 |
10 |
10 |
20 |
20 |
20 |
Gambia |
0 |
10-18 |
10-18 |
18 |
10-18 |
10-18 |
Mauritania |
Maximum
20% |
- Added to these two distorting factors
which form the first and foremost source
of disharmony intra community trade exchanges
are various others. Just to name
a few:
- The sectoral orientation
and structure of the States’ economies:Similarity
of products meantmainly for the world
market.
- The inadequacy of transport
and communication services and infrastructure
- Lack of complementarity’s
of the market, prevailing corruption and
administrative harassments.
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Prospects
For The Development Of Intra-Community Trade
Exchanges
Four major
assets sounding promising prospects for regional
trade within the ECOWAS Region:
The Region’s
production potential which can be evaluated
in two different ways: the ecologic complementarity
existing between the Sahelo-Saharan fringes
of the North and the forestry areas of the
South. This complementarity is the basis
for diversified production activities on the
one had, and the dominant position occupied
by the region in the world market with regard
to three products, on the other hand.
Actually, West Africa is the first world producer
of yam, cassava and beans.
The development
of the regional market jumping from 260 million
consumers in 2002 to 400 million consumers
in 2004. To this population growth will be
added a far-reaching change in Urban Centres/Rural
Areas ratio, moving from the present 37/63%
in 2020. This urban explosion will no doubt
constitute an important asset for intra-community
trade exchanges.
An improved
structuring of the actors. Apart from the
former traditional trade channels which contributed
to the emergence of a trans-State regionalism,
five new networks have now come into play,
made up of various sorts of actors, namely:
- The Network of Agro-Allied
food Industries Operators
- The Network Enterprises
- And the Network of Chambers
of Commerce and Industries.
These new actors will certainly contribute
in strengthening the development of regional
trade.
Instilling
impetus to the institutional framework through
the adoption of a range of laws and regulations
towards ensuring the fluidity of the intra-community
trade exchanges:
- Creation of a free trade
zone
- Preparation of the Community’s
Common External Tariff.
In conclusion, it can be said that intra
regional trading within the ECOWAS Region
still needs to be more structured and to
be made more visible. This is due to the
persisting range of obstacles having to
do with institutional and technical factors.
It is however hoped that, with the advent
of the Community’s common and sole
currency, (the ECO), the creation of a Common
Market and the implementation of reforms
underway in each member-country of the Community,
intra-community trade transactions will
receive the needed booster.
Source:
DR. Bio Goura Solute’ - Head of the
Research Institute LARES |
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