THE INFLUENCE OF ECOWAS ON ECONOMIC INTEGRATION OF WEST AFRICAN COUNTRIES

THE INFLUENCE OF ECOWAS ON ECONOMIC INTEGRATION OF WEST AFRICAN COUNTRIES

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Abstract

The study investigated the influence of ECOWAS on economic integration of West African countries. Two research questions and one hypothesis was guide to the study. The research adopted a survey research design.

 

Survey is a research approach specifically designed to systematically collect data about a group of individual who have same characteristics through the use of written or oral data collection instruments. The population of the students under the study was made up of all the ECOWAS states in Africa. The study was conducted in Nigeria being a member state of the ECOWAS. Ten people were randomly selected from each of the states, thus three hundred and sixty (360) respondents came under the study. Random sampling was used for convenience in the selection of respondents using table of random number. Questionnaire was the instrument used to elicit relevant information on variables of the study. The data collected were analyzed using percentage, mean and standard deviation and one-way ANOVA.

The findings of the study showed that This implies that ECOWAS influence the Economic integration of West African States as ECOWAS help in road construction between big cities, the relations between the Anglophone and Francophone stabilization, Telephone network for the member states, lack of strict borders for nations and trades and peace and security throughout the sub-region and this promotes the economic integration of West African states; also that lack of women’s rights in the region.

Poor health care, corruption at border crossings which hinders the free flow of humanitarian aid, Human trafficking, especially of women and children, and lack of infrastructure sufficient to handle natural disasters in the region contribute in hindering the smooth integration process of Africans States by ECOWAS.

 

 

CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDIES

Economic integration is an ideology that brings people together to form communities due to the need for security and self-preservation. This need for security and self preservation makes communities to integrate and nations to emerge (Thomas, 2010). The current global trend is for groups of contiguous nations to pull their resources together. Thus, under a regional cooperation for the well being of their citizens. This is what is generally referred to as integration. Charmely (1977) is of the opinion that integration relates to any process leading to the formation of a political and economic whole or organized unit.

 

Political and economic integration involves the process. Whereby, states agree to forgo the ability to formulate policies independently on matters concerning trade. Also, custom tariffs, immigration and international trade among others. Seeking instead to delegate the decision making process to a new central organ. The aim of political and economic integration is to promote economic advancement of member-states. As well as the overall development of the region or sub-region.

 

Regional bodies such as Southern African Development Coordination Conference (SADCC) now called Southern African Development Community (SADC) was created in 1980. It was borne out of the determination of the oppressed people of Southern Africa to liberate themselves totally from British and Portuguese colonialism and from apartheid regimes in Southern Africa (Mwale, 1997).

The Northern America Free Trade Area (NEFTA) emerged as a result of the need for economic pact among countries such as Canada, Mexico and the United State of America. It has 25 members and has become a model for other attempts at regional integration throughout the world (Europe World Year Book, 2000).

In West African sub-region, the Economic Community of West African States (ECOWAS) was established on 28 May, 1975. The 15 West African States that constitute ECOWAS are the Republic of Benin, Burkina Faso, the Republic of Cabo Verde, the Republic of Cote D’ Ivoire, the Republic of Gambia, the Republic of Ghana, the Republic of Guinea, the Republic of Guinea Bissau, the Republic Liberia, the Republic of Mali, the Republic of Niger, the Federal Republic of Nigeria, the Republic of Senegal, the Republic of Sierra Leone and Togolese Republic. The objectives of ECOWAS include promoting cooperation in economic, social and cultural activities.

 

Impact as a concept used in this paper implies the impression or the implication of ECOWAS protocols on political and economic development of West African sub-region, which can be negative or positive.

 

THE INFLUENCE OF ECOWAS ON ECONOMIC INTEGRATION OF WEST AFRICAN COUNTRIES

The objective of this paper is to re-examine the issues and possible challenges facing the West African sub-region. As it ‘progresses’ towards economic integration. The easing of cold war tensions was accompanied. By a dramatic spike in violent internal power struggles that threatened state implosion across Africa. It did not take long for ECOWAS to realise the changing nature of threats to stability. It became obvious that a nexus existed between internal conflicts. Sparked largely by bad governance, identity crises and poor resource management. On the one hand, and collective developmental efforts on the other.

 

Barely a decade after the creation of ECOWAS, violent civil wars erupted in Liberia (1989) and Sierra Leone (1991). As a new phenomenon not confined to the borders of individual nation states. But with serious regional implications, both in their causes and effects. Starting off as internal struggles for power and control over resources. These conflicts soon took on a regionalized nature. Thus, fuelled by the illegal exploitation of natural resources for the acquisition of small arms and light weapons and characterized by the proliferation of private armies composed of mercenaries, dispossessed youths and bandits.

The paper checked the history and evolution of global economic growth and traces back the circumstance behind the development and establishment of ECOWAS and the benefits member states have derived from the body.

 

One of the findings in the study is that West Africa Countries such as Nigeria have immensely gained from the formation of ECOWAS. Gao (2005) reported that economic integration granger spurs foreign direct investment, research and development (R&D), increase industries activities and thus enhance the general performance of the economy. The study stated directly that the causal link between foreign direct investment (FDI) inflows and growth level does not necessitate any causal link between them but they respond independently due to economic integration.

 

Mwaba (2000) investigated the effect of trade liberalisation on economic growth of East African countries using panel analysis. The finding shows that removal or relaxation of quantitative import and export restrictions and lowering of tariffs stimulated export and economic growth in the region. Rodrik (1992) found that foreign trade spur price level, brings about balance of payment problems and may reduce domestic investment cumulating into very low economic growth and development.

Economic integration has been pursued in practice are largely political. Political instability and bad governance has caused slow economic growth in West African countries. Government does not meet the needs of the people by not making use of all the resources available. Infrastructure is destroyed during wars leaving economic activities to come to a halt. International transactions and foreign companies, which can increase growth in the economy, also cease due to insecurity. It takes a gradual process to get the growth of the economy back on pace. Liberia is an example of such a situation.

 

Political stability and war-free zones attract more investors from abroad, and citizens have peace to go on with everyday economic activities to boost economic growth. Statistically, the estimation regression model on GDP Per Capita has a negative coefficient. The test of hypothesis is political instability has a negative effect on the growth of the economy by the regression estimate of the GDP Per Capita. If the government is corrupt, mishandles the finances, and goes on wasteful spending the taxes collected becomes insufficient to support the programs that would elevate the nation from poverty.

 

Government investment on education, infrastructure, health, transportation and military defense requires a large budget and in this case, if the allocation is not enough the leaders would most probably resort to borrowing in lending institutions such as the World Bank endangering the economy further. For instance, in Nigeria, oil accounts for 80 percent of the total government revenue. However, due to civil conflict and corruption within the regime the result is low GDP per capita and slow economic growth.

Regional integration has being an evolving process over many decades now and different regions have embraced it. Its evolution was very much in the form of integrating actors concern with economic and security issues. To the inclusion of other concerns such as social, cultural, environmental, other developmental needs. It is however, the commitment and the achievement of set goals. By the member states in the various regional integrating bodies that have determined how far they have gone. With the process, and have distinguished very successful regional integration organisations from others.

 

Onwuka (1985) is of the opinion that economic integration is a complex phenomenon. Which results from integration and mutual strengthening of transnational trade and finance of intergovernmental and non-governmental international organizations and of trans-national values and international law. The concept of economic integration adopted in this study is where member-states share commonality and harmonized laws and regulations in free trade area. Custom union, common market, economic policies and union, which could further include political union.

According to Wikipedia, Economic integration is the unification of economic policies between different states, through the partial or full abolition of tariff and non-tariff restrictions on trade. The trade-stimulation effects intended. By means of economic integration are part of the contemporary economic Theory of the Second Best: where, in theory, the best option is free trade, with free competition and no trade barriers whatsoever.

 

Onyekwena and Oloko (2016) used descriptive technique to examine the implications of regional trade on the exclusive development of West African region. They found that despite the rising level of economic growth in the region. Poverty and unemployment remain unabated due to non-inclusive growth.

 

Okoro, Ujunwa, Umar, and Ukemenam (2020) investigated. How regional and non-regional trade affect economic growth in ECOWAS sub region over the period 2007 – 2017. Using the system GMM method. They found that regional trade spurred economic growth significantly while non-regional trade retarded economic growth in the region.

 

Findings from the study further show that exchange rate, unemployment level, population growth and gross capital formation. Have mixed implications on economic growth in ECOWAS. Specifically, the study reveals that population growth. Unemployment level and exchange rate retarded economic growth while gross capital formation promoted growth in the ECOWAS sub region over the period of the study. Onafowora & Owoye (1998) studied the impact of export trade on economic growth of selected 12 Sub-Saharan African countries. Using panel analysis and found a direct and significant impact of exports on economic growth in the countries.

In a similar study, Fosu (1990) examined the impact of export trade on the economies of 28 less developed African countries. He reported a positive relationship between export trade and economic growth. The results from findings of studies reviewed indicate mixed results.

 

Most of these empirical works consulted in this study centred on the impact of regional integration on the economy of the region. They are scanty on the contributions of regional economic integration on the economy of specific member country.

Given the increasing quest for common currency and the removal of trade barriers from member countries as a result of regional economic integration, it is pertinent, we analyse how the integration of Nigeria’s economy into the regional economy of West Africa has affected the growth of the economy. To this end, this research seeks to investigate Economic Community of West African States (ECOWAS) and economic integration Of West African Countries

 

STATEMENT OF THE PROBLEM

Economic instability diminishes the productive, as well as the transactional capacities of the economy even with the effort of ECOWAS toward the integration of all African nations. This has adverse consequences for investment and thus future economic growth. A situation which in turn creates a fragile socio-political environment.

This then becomes worrisome for the ECOWAS body as the outcome of these instabilities has negative influence. Towards the achievement of the Economic integration objective. This then triggered the present research to investigate into. Economic Community of West African states (ECOWAS) and economic integration of West African countries.

 

1.3 Objectives of the Study

The major objective of the study is to examine the influence of ECOWAS on economic integration of West African countries.

Specifically, the study sought to;

  1. To examine the impact of ECOWAS on economic integration in West Africa
  2. To evaluate the challenges militating against economic integration process in the West African Sub-region.

 

1.4 SIGNIFICANT OF THE STUDY

This study is significant in the following ways;

  1. it will help to harmonize African countries
  2. it will help other researchers who will undergo study in the related study
  3. the study will also help to investigate the impact of ECOWAS toward economic integration
  4. the study will also help policy makers to make policies that will boast the economy of their nation through the help of ECOWAS.

 

1.5       Research Question

  1. To what extent does ECOWAS influence economic integration of West African states?
  2. What are the challenges that hinder smooth integration process of Africans states by ECOWAS?

 

1.6       Research Hypotheses

  1. There is no significant influence of ECOWAS on Economic integration of west African states

 

Scope Of The Study

The paper covers only the Economic Community of West African States (ECOWAS) and Economic Integration of West African Countries.

The presenter reviewed literatures (e.g. textbooks, journals, ECOWAS special reports and seminar papers) that are relevant to the paper.

 

Operational Definition Of Terms

Economic integration: Economic integration is an arrangement among nations. This typically includes the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies.

West African: Western Africa, region of the western African continent comprising the countries of Benin, Burkina Faso. Cameroon, Cabo Verde, Chad, Côte d’Ivoire, Equatorial Guinea, The Gambia. Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, and Togo

 Economic Community of West African States (ECOWAS): it is a regional political and economic union of fifteen countries located in West Africa.

 

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 CONCEPTUAL FRAME WORK 

Certainly, Economic integration involves agreements between countries that usually include the elimination of trade barriers and aligning monetary and fiscal policies, leading to a more inter-connected global economy. Moreover, economic integration is consistent with the economic theory, which argues that the global economy is better off when markets can function in unison with minimal government intervention.

However, economic integration, like the name implies, involves the integration of countries’ economies. Another term to describe it is globalization, which simply refers to the inter-connectedness of businesses and trading among countries.

 

In the modern economy, all economies feature a form of a market system. A market-based economy utilizes the economic forces of demand and supply in order to distribute these limited resources. However, globalization allows the movement of goods, services, capital between countries and blurred the distinctions between economies.

 

However, Integration has a multi-dimensional perspective. Two representative perceptions are presented. Ojo et al (1985) perceived integration as the situation whereby two or more individuals or groups come in contact with each other to relate primarily for cooperation, supportive of other positive reasons.

 

El-Agraa (1998) defines the term economic integration as the discriminatory removal of all trade impediments between at least two participating countries and the establishment of certain element of co-ordination and cooperation between them. This definition implies elements of both free trade and protection. The last decade has seen a dramatic increase in the number of preferential trade agreements (PTA), due in part from the frustration arising from the delayed completion of the Uruguay Round of multilateral trade negotiations.

Today, there is no economy that functions completely isolated from other economies. There is a simple reason for such an occurrence – trade benefits all economies in most cases. It allows for specializations of economies with comparative advantages and can trade with other economies that possess alternative comparative advantages.

Economic integration has been one of the main economic developments affecting international trade in the last years. Countries have wanted to engage in economic cooperation to use their respective resources more effectively and to provide large markets for member-countries of the resulting integrated areas. There are mainly four levels of economic integration:

Free Trade Area: is the least restrictive and loosest form of economic integration among nations. Each member country maintains its own trade barriers vis-à-vis con-member countries. the influence of ECOWAS on economic integration of West African countries.

 

Customs Union: is one step further in the economic integration process. As in the free trade area, goods and services are freely traded among members. In addition, however, the customs union establishes a common trade policy with respect to non-members. Typically this takes the form of a common external tariff, whereby imports from non-member are subject to the same tariff when sold to any member country.

Common Market: The common market has the same features as a customs union, but, in addition, factors of production (labour, capital and technology) are mobile among members. Restrictions on immigration and cross-border investment are abolished.

Economic Union: it is the last step in an economic integration process. In addition to free movement of goods, services and production factors, it also requires integration of economic policies, both monetary and fiscal. Under economic union members harmonize monetary policies, taxation and government spending.

 

2.2 THE IMPACT OF ECOWAS ON ECONOMIC INTEGRATION IN WEST AFRICA

The Institution has set several deadlines for eventual integration, but each deadline has not been met. Recently, the Heads of state and Governments have insisted on the year 2020 for eventual monetary union.

The technocrats and policymakers seem to be working hard to meet the new deadline of 2020. The WAMZ consists of The Gambia, Ghana, Liberia, Nigeria and Sierra Leone.

However, whether the proposed year of 2020 for the establishment of the monetary union is feasible is a matter of debate.  After over 40 years of the creation of ECOWAS, the road towards a monetary union remains bumpy. The influence of ECOWAS on economic integration of West African countries.

 

In order to ease the movement of its citizens, ECOWAS introduced a common sub-regional passport in May 2000. Member-states have been very slow in the implementation of the ECOWAS passport as only the Republic of Benin, Senegal and recently Nigeria have introduced the programme.

 

Many member-states still retain roadblocks along trans-national highways. There is therefore undue harassment of ECOWAS citizens by security agents at the various check points. The influence of ECOWAS on economic integration of West African countries.

The free movement of ECOWAS citizens across national borders and the right of residence has encouraged trans-border crime within the region. This negative impact of the protocol is becoming much worrisome in the sub-region in recent time. ECOWAS has impacted positively in the following ways:

Transportation

The two trans-West African highway networks proposed in the 1970s have been completed. However, physical barriers such as road blocks must be completely removed to ensure free flow of traffic and elimination of harassment. The other transportation aspects of ECOWAS are as follows:

ECOWAS Railways: ECOWAS Secretariat has obtained a grant of US 3.31 million dollars from the African Development bank to conduct engineering and feasibility studies (ECOWAS, 1993a).

Maritime Transport: This sub-sector is to formulate programmes for the improvement of coastal shipping services. Such as the harmonization of maritime policies and the promotion of private sector participation. Particularly, joint ventures in the area of transport and communications. In this regard ECOMARINE, which is a private shipping company has effectively started operation (ECOWAS, 2003).

Air Transport: Implementation of the Action Plan adopted in Lome on 28 February, 2003 has started. The plan seeks to address capacity building needs and the institutional restructuring of the aviation sector. So far, Virgin Nigeria and Arik airline is already operating regular flights. Thus, from Lagos to Freetown, Dakar, Accra and Banjul. ECOWAS has made a great progress in this aspect.

 

Telecommunications

This has made it possible to connect all the capital towns in member-states by automatic telephone, telex and telefax links. This sub-regional telecommunication infrastructure is based in Lome, Togo (ECOWAS, 1993a) Citizens within the sub-region do not need to route their telephone calls through Europe to get other West African countries anymore, as was the case before. In addition ECOWAS is currently exploring solutions to issue of a single GSM SIM card within the region.

 

Trade Liberalization

Article 35 of the Treaty of ECOWAS spelt out in broad terms. The aims and objectives of the Community on Trade Liberalization Scheme (TLS). The scheme provides for the abolition of taxes on unprocessed goods. Also traditional handicrafts as far back as 1981 (ECOWAS, 1993).

 

ECOWAS established a fund to compensate member-states for revenue loss. As a result of the removal of custom duties but most member states including Nigeria are not implementing the scheme.

 

Monetary Cooperation

The Community therefore set a programme to achieve cooperation. The short term idea was to build a clearing-house to facilitate payment. And in the long run create a monetary union with coordinated exchange rate system. This will permit intra-ECOWAS convertibility and finally achieve a single ECOWAS currency. However, the distressful state of some economy of the member-states prevented the attainment of a single currency.

The introduction of a common currency on the other hand may have some negative effects. It could lead to money laundering and also weak the economy of some member-states. As shown on Table 2 some member-states are yet to eliminate a no-tariff barrier of monetary nature in the money cooperation programmes. Lack of cooperation is drawing the Community back from attaining its objective of economic union.

 

If this dream comes true the member states will start to have a better feeling of economic integration. On Community level, 53% of the member states were as far back as in 2000 yet to insert the levy in their appropriation bill.

 

Protocol on Conflict Prevention and Management

The objectives of the protocol on conflict prevention among others include prevention. Management and resolution of intra and inter-states conflicts and implementation of relevant provisions of the Protocols on non-aggression and Manual Assistance in Defence (PMAD) (Ajomale, 2000).

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