REPORT BY: KWEKU BOLTON
The Economic Community of West African States (ECOWAS) has been a pivotal force in promoting economic integration, financial stability, and sustainable development in West Africa since its establishment in 1975. Its headquarters is in Abuja, Nigeria. With a mandate to foster economic cooperation among its 15 member states, ECOWAS has implemented various initiatives and programs aimed at enhancing economic growth, reducing poverty, and improving the overall well-being of the region’s population. This comprehensive report critically analyses ECOWAS’s economic and financial support for country sub region, supported by data and statistics.
Historical Context
West Africa has faced numerous economic challenges, including low levels of industrialization, high poverty rates, and limited access to financial services. These challenges have been exacerbated by political instability, conflicts, and external economic shocks. In response, ECOWAS has developed a range of policies and programs to address these issues and promote regional economic integration.
Important Economic and Financial Initiatives
ECOWAS Common External Tariff (CET): The CET, implemented in 2015, aims to harmonize tariff rates across member states, facilitating intra-regional trade and reducing trade barriers. The CET has four tariff bands: 0% for essential social goods, 5% for raw materials and capital goods, 10% for intermediate goods, and 20% for final consumer goods. This initiative has helped to streamline trade processes and promote economic integration within the region.
ECOWAS Trade Liberalization Scheme (ETLS): The ETLS, established in 1979, is a flagship program designed to promote free trade among member states by eliminating tariffs and non-tariff barriers on goods originating from the region. The ETLS has contributed to increased intra-regional trade and economic cooperation, fostering a more integrated and competitive regional market.
ECOWAS Bank for Investment and Development (EBID): EBID, established in 1999, serves as the financial arm of ECOWAS, providing funding for development projects in member states. The bank focuses on key sectors such as infrastructure, agriculture, energy, and social services. EBID has played a crucial role in mobilising resources for development projects and promoting economic growth in the region.
Investment: ECOWAS member states have attracted significant foreign direct investment (FDI), with FDI inflows increasing by 50% between 2010 and 2020, according to UNCTAD. ECOWAS has implemented measures to promote regional investment, such as the ECOWAS Investment Guarantee Scheme, which has guaranteed over 1 billion US dollars in investments since its implementation in 2013. Measures to promote private sector development, including the ECOWAS Private Sector Development Strategy, have supported the growth of over 10,000 small and medium-sized enterprises (SMEs) between 2010 and 2020.
ECOWAS Agricultural Policy (ECOWAP): ECOWAP, adopted in 2005, aims to promote agricultural development and food security in West Africa. The policy focuses on increasing agricultural productivity, improving access to markets, and enhancing the resilience of agricultural systems to climate change. ECOWAP has contributed to significant improvements in agricultural production and food security in the region.
ECOWAS Regional Infrastructure Development Program (RIDP): The RIDP aims to develop and improve regional infrastructure, including transportation, energy, and telecommunications networks. The program seeks to enhance connectivity within the region, reduce transportation costs, and promote economic integration. Key projects under the RIDP include the West African Power Pool (WAPP) and the Abidjan-Lagos Corridor Highway.
Energy: The ECOWAS Bank for Investment and Development (EBID) has entered into a strategic partnership with the European Investment Bank (EIB) to mobilise €300 million for clean energy projects across the Economic Community of West African States (ECOWAS) region. The collaboration, supported by the European Union (EU), aims to accelerate the transition to renewable energy, drive climate action, and enhance economic development in the sub-region. A statement signed by Anita Somda-Dala, Head of Communications at EBID, highlighted that the partnership demonstrates the commitment of both institutions to fostering sustainable investments in West Africa.
ECOWAS Monetary Cooperation Program (EMCP): The EMCP aims to achieve monetary integration and the establishment of a single currency for the region, known as the Eco. The program seeks to enhance macroeconomic stability, reduce transaction costs, and promote economic integration. The Eco is expected to be launched by 2027, following the fulfilment of convergence criteria by member states.
Data and Statistics
To provide a more in-depth analysis, let’s examine some data and statistics related to ECOWAS’s economic and financial support for West Africa:
- Intra-Regional Trade: According to the ECOWAS Trade Information System, intra-regional trade within ECOWAS has increased significantly since the implementation of the CET and ETLS. According to the ECOWAS Trade Information System (ECOTIS), intra-regional trade accounted for approximately 15% of total trade in the region in 2022, up from 10% in 2010. Intra-regional trade among ECOWAS member states increased from 10.2% in 2010 to 15.3% in 2020, according to the ECOWAS Commission. Several trade facilitation measures have been implemented, including the ECOWAS Trade Liberalization Scheme (ETLS), which increased trade volumes by 30% since its implementation in 2013, with Nigeria, Ghana, and Côte d’Ivoire being the largest beneficiaries. The World Bank notes that ECOWAS business environment reforms have resulted in an average improvement of 20% in the World Bank’s Ease of Doing Business rankings for ECOWAS member states between 2010 and 2020.
- Economic Growth: Online Public-Private Partnership Platform (PPP) ECOWAS, the region has experienced steady economic growth over the past decade, with an average annual GDP growth rate of 4.5% between 2010 and 2020. This growth has been driven by increased trade, investment, and infrastructure development.
- Poverty Reduction: ECOWAS’s efforts to promote economic growth and development have contributed to a reduction in poverty rates in the region. According to the World Bank, the poverty rate in West Africa decreased from 46% in 2010 to 40% in 2020.
- Agricultural Production: ECOWAP has led to significant improvements in agricultural production in the region. For example, cereal production increased by 30% between 2010 and 2020, while livestock production grew by 25% over the same period. ECOWAS has implemented programs that have increased agricultural productivity by 15% and reduced food insecurity by 20%. Countries such as Burkina Faso, Mali, and Senegal have benefitted significantly from these initiatives. The ECOWAS Commission, as part of its Regional Strategy for Youth Employment in Agricultural Value Chains donated 2,238,000 US dollars to ten (10) agricultural research centres across the region. The donation was made in Porto Novo, Republic of Benin, and aims to train 3,850 young people, 40% of whom are women. Mrs. Massandjé Touré-Litsé, Commissioner for Economic Affairs and Agriculture at the ECOWAS Commission presented the cheques during the opening ceremony of a workshop designed to sensitize and mobilize the beneficiary centres of the 2024/2025 Grant.
- Infrastructure Development: The RIDP has facilitated the development of key infrastructure projects in the region. The West African Power Pool (WAPP) has increased electricity access in the region, with the electrification rate rising from 35% in 2010 to 50% in 2020. The Abidjan-Lagos Corridor Highway has improved transportation connectivity, reducing travel time and transportation costs.
- Financial Support: In partnership with the ECOWAS Bank for Investment and Development (EBID), the EBID has provided significant financial support for development projects in the region. Between 2010 and 2020, the bank approved over $2 billion in loans and grants for various projects, including infrastructure, agriculture, and social services.
- Transportation: ECOWAS has invested in the development of a regional road network, constructing or rehabilitating over 10,000 km of roads between 2010 and 2020, as reported by the ECOWAS Commission. Transport facilitation measures, including the ECOWAS Brown Card Scheme, have reduced transit times by 30% since its implementation in 2013. Port efficiency measures have resulted in an average reduction of 25% in port clearance times in member states during the same period.
- Manufacturing: ECOWAS has implemented measures to promote industrialization, including the ECOWAS Industrialization Strategy, which aims to increase the share of manufacturing in GDP from 10% in 2010 to 20% by 2030, according to the ECOWAS Commission. Manufacturing exports have increased by 30% between 2010 and 2020. Measures to promote regional value chains, such as the ECOWAS Regional Value Chain Development Strategy, aim to increase the share of regional value chains in member states’ trade by 50% by 2030. Countries such as Ghana, Nigeria, and Côte d’Ivoire have benefitted from these initiatives.
- Education: According to UNESCO, primary school enrolment in ECOWAS member states increased from 70% in 2010 to 85% in 2020. ECOWAS has implemented measures to improve education quality, including the ECOWAS Education Quality Improvement Strategy, which aims to increase the share of students achieving minimum proficiency levels in reading and mathematics by 50% by 2030. The ECOWAS Commission emphasises that the regional scholarship program, including the ECOWAS Scholarship Scheme, has provided scholarships to over 10,000 students from member states between 2010 and 2020.
Critical Analysis
Successes: ECOWAS’s economic and financial initiatives have yielded several successes, including increased intra-regional trade, steady economic growth, poverty reduction, and improvements in agricultural production and infrastructure development. These achievements have contributed to enhanced economic integration and cooperation among member states, fostering a more competitive and resilient regional economy.
Challenges: Despite these successes, ECOWAS faces several challenges in promoting economic and financial support for West Africa. These challenges include:
Political Instability: Political instability and conflicts in some member states have hindered the implementation of ECOWAS’s initiatives and disrupted economic activities. For example, the political crises in Mali, Burkina Faso, and Guinea have posed significant challenges to regional stability and economic growth.
Limited Financial Resources: ECOWAS’s ability to finance development projects is constrained by limited financial resources. While EBID has played a crucial role in mobilising resources, the bank’s funding capacity is insufficient to meet the region’s development needs. This limitation has necessitated increased reliance on external funding from international donors and development partners.
Infrastructure Deficits: Despite progress in infrastructure development, the region still faces significant infrastructure deficits, particularly in transportation, energy, and telecommunications. These deficits hinder economic growth and limit the region’s competitiveness in the global market.
Trade Barriers: Non-tariff barriers, such as customs procedures, border delays, and regulatory differences, continue to impede intra-regional trade. Addressing these barriers is essential to fully realise the benefits of the CET and ETLS.
Economic Diversification: The region’s economies remain heavily reliant on primary commodities, making them vulnerable to external economic shocks. Promoting economic diversification and value addition is crucial to enhancing the region’s resilience and long-term growth prospects.
Recommendations:
To address these challenges and enhance ECOWAS’s economic and financial support for West Africa, the following recommendations are proposed:
Strengthen Political Stability: ECOWAS should continue to prioritise political stability and conflict resolution in the region. This includes supporting democratic governance, promoting dialogue among conflicting parties, and enhancing the capacity of member states to address security challenges.
Mobilise Financial Resources: ECOWAS should explore innovative financing mechanisms to mobilise additional resources for development projects. This includes leveraging public-private partnerships (PPPs), attracting foreign direct investment (FDI), and enhancing collaboration with international donors and development partners.
Invest in Infrastructure Development: ECOWAS should prioritise infrastructure development, particularly in transportation, energy, and telecommunications. This includes accelerating the implementation of key projects under the RIDP and promoting regional infrastructure connectivity.
Address Trade Barriers: ECOWAS should work to eliminate non-tariff barriers and streamline customs procedures to facilitate intra-regional trade. This includes enhancing the capacity of customs authorities, harmonising regulatory frameworks, and promoting the use of digital technologies in trade facilitation.
Promote Economic Diversification: ECOWAS should support member states in diversifying their economies and promoting value addition. This includes investing in key sectors such as manufacturing, agriculture, and services, as well as enhancing the capacity of small and medium-sized enterprises (SMEs).
Enhance Regional Integration: ECOWAS should continue to promote regional integration through initiatives such as the EMCP and the establishment of the Eco currency. This includes ensuring the fulfilment of convergence criteria by member states and enhancing macroeconomic stability in the region.
In conclusion, ECOWAS has made significant strides in promoting economic and financial support for West Africa, contributing to increased trade, economic growth, poverty reduction, and infrastructural development. However, the region still faces several challenges that need to be addressed to fully realise its economic potential. By strengthening political stability, mobilising financial resources, investing in infrastructural development, addressing trade barriers, promoting economic diversification, and enhancing regional integration, ECOWAS can continue to play a pivotal role in fostering sustainable development and improving the well-being of the people of West Africa.
Reference: ECOWAS Trade Information System: PPP—ECOWAS: World Bank: ECOWAS Agricultural Policy: ECOWAS Commission
