The Future of Ecowas: Critical Perspectives: Issues and Controversies in West Africa in the Age of the Click

By Mansourou El-Moumin A. Radji

The book delves into the regional organization in both form and content and pinpoints why, since 1975 political dysfunction and self-help undermine the economic arrangement within the sub region. It highlights the most systematic analysis of how policies are half implemented and laws enacted to move the region forward failed to make any difference. From China’s imperialistic ambitions on West Africa, the economic integration to Morocco’s attempt and the single currency, Mansourou takes readers deep into political criminality and relies on impressive quantitative analysis to reach compelling and unusual outcomes. He argues against the tide of unnecessary Chinese Killer loans that is spreading across West Africa.

• Language: English
• Publisher: Xlibris UK
• Release date: Dec 18, 2020
• ISBN: 9781664113701

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Copyright © 2020 by Mansourou El-Moumin A. Radji.

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Rev. date: 12/17/2020

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812958

For my dad Mansourou Ayinla Radji

in honour of your life

CONTENTS

Preface

Abbreviations

Part 1 ECOWAS, A Regional Economic Community Like No Other

1.1   The Rationale behind the Creation of ECOWAS

1.2   ECOWAS Economic Arrangements

1.3   The Dynamics of the ECOWAS Political Economic Arrangement

1.4   The Political Economy of Nigeria and its Impacts on the Subregion

1.5   The Built-In Contradictions within the ECOWAS Political Economic Arrangement

Part 2 The Sources of ECOWAS’ Political Dysfunction

2.1   Good Governance in ECOWAS: The Two Faces of the Subregion

2.2   ECOWAS and the Political and Institutional Crisis in Guinea Bissau

2.3   The Resolution of the Togolese Political Crisis

2.4   The Endless Political and Security Issues in Mali

2.5   The Benin Legislative Elections of April 2019: A Missed Opportunity for ECOWAS

2.6   Evaluation of Benin’s Economic Policy

2.7   Taking Good Governance Seriously

Part 3 ECOWAS Decaying Societies and Economies

3.1   Political Rhetoric and Responsibilities in ECOWAS

3.2   ECOWAS Economic Integration: The Assessment

3.3   The CFA’s Rotten Legacy: A Brief Retrospective

3.4   A Single Currency for West Africa: Thirty Years of Dreams

3.5   The Future Regional Financial Integration in West Africa

Part 4 The Future Looks Bleak

4.1   Addressing Current Challenges Facing the Region

4.2   Morocco’s Request to Join ECOWAS

4.3   Morocco’s Aggressive Behaviour in Africa

4.4   ECOWAS and Tech Companies

4.5   The Continental Free Trade Agreement

4.6   West African Sovereign Borrowers and the Chinese Domination

4.7   Saving ECOWAS from Irrelevance

4.8   The Wise Men of Ecowas (Former West African Presidents)

Part 5 Turning the Tide

5.1   The Level of Analysis in West Africa

5.2   Hope and Prospects for West Africa

WORKS CITED

ADDITIONAL MATERIALS

NOTES

PREFACE

West Africa is now in uncharted territory and the turmoil in the region revolves around politically motivated violence, economic security, inequality, electoral transparency, constitutional crisis and the ‘politics of internal enemies’.

The repression of the opposition and civil society is the norm in West Africa. As became evident in the debate over the constitutional third term and crackdown on protests, defiance on the part of certain political and social actors toward West African autocrats disguised as democrats became a broader-based phenomenon among West Africans who rightly fear that democracy is in full-scale collapse. The anger and frustration with the leaders of Ivory Coast, Guinea, Togo and Nigeria is especially strong and widespread in the entire West African societies, expressed by mothers, students, professionals, intellectuals and businessmen alike. The Rule of Law, equal opportunities and anti-corruption measures are applied selectively or not at all when it comes to ordinary west Africans. In my opinion, West Africa has substantial deficits and is facing the mother of all battle in terms of development and democracy. From the single currency debacle to the failed regional integration and unemployment as well as poverty and securities, West Africa and Ecowas face an uphill battle simply because bad leadership is dragging the region to the bottom of the abyss. I have written this book (a decade long research on ECOWAS), for the vast majority of West African people as well as other Africans and non-Africans whose lives and communities are inextricably interwoven. ECOWAS is first and foremost a region of shared history, values and interests and collectively we should build ECOWAS’ common future. That is why I challenge West Africans to move beyond historic differences (French/English divide) and come together to fulfil ECOWAS’ forefathers’ ambition: economic security for the region. West Africans from every walk of life started asking hard questions about the regional organisation’s role and ambitions. Currently in West Africa, trepidation has replaced hope and this book is an attempt to find solutions, urging ordinary West African to take action because it is not too late to turn the tide in Ivory Coast, Guinea, Togo and anywhere in the sub region where autocrats have established their own version of heaven on earth in total disregard for human life. This book advises ECOWAS leaders and the various governments making the organisation to review their socio-economic policies as injustice, inequality and poverty have taken deep root in the region.

This book has been difficult to write because of the various issues that precipitated it and I am indebted to remarkable people, Fatoumata Diallo whose knowledge and critical views on public policies in West Africa made my work easier. This book is in every sense of the words your book as much as mine.

Nnamdi Peter Ben-Igwenyi played an important role with this book and enlightened me on socio economic issues in Nigeria, especially with the #EndSARS movement.

I am also indebted to Emma Bradshaw, Francisca Dickson and Joel Quartey. Aminou Youssouf, Specialist of West Africa came at a critical point and through various debates provided much needed quick and relevant insights.

This book will not have come through without your valuable assistance.

ABBREVIATIONS

PART 1

ECOWAS, A Regional Economic

Community Like No Other

In his statement opening the Fifty-Fourth Ordinary Session of the Authority of Heads of State and Government of the ECOWAS in Abuja, President Muhammadu Buhari raised prominent issues which are serious impediments to the development of the regional organisation. In his address, he declared that despite these successes, ECOWAS is still confronted by several challenges. The subregion continues to face difficulties in the economic, governance, peace, security and humanitarian fields.¹

This is prima facie evidence that the subregion has not taken off, despite numerous successes. The Economic Community of West African States (ECOWAS) is a regional organisation created in 1975 whose primary objective is to promote cooperation and integration, fostering the establishment of an economic and monetary union in West Africa in order to raise the living standards of the people and contribute to the progress and development of the African continent.

Over four decades after its launch, the regional organisation is at pains to produce any meaningful results. Economic development obstacles, social welfare, financing as well as capital accumulation are all causes of the underdevelopment of the region. Most ECOWAS countries rely on imports, and there is a regional dependence on primary commodities. It follows that West Africa has an adverse trade balance. This unfavourable regional term of trade is caused by minnows like the Republic of Benin, Guinea-Bissau, and Burkina Faso, who constantly drag down ECOWAS’ terms of trade index, whereas elephants like Nigeria, Ivory Coast, and Ghana endeavour to push it up. The result is that higher import prices lead to production cost increases, which, in turn, are reflected in increased consumer prices.

The majority of ECOWAS countries depend on importation, especially for factors of production. In economics, a rise in import prices implies higher production costs, and this ultimately explains the higher prices consumers pay for imported goods. In West Africa, budget deficits are on the rise because of expansionary fiscal policy, and this increases inflation. However, because the WAEMU’s fiscal policy led to disinflation in some member states, the average regional inflation is higher elsewhere than in Francophone West Africa.

In addition, political crises and contentious elections are major problems hampering the already shaken achievements of ECOWAS. As a community, ECOWAS seeks to create a safer, interconnected, prosperous, and borderless region, where good governance triumphs and where West Africans can access and harness their resources. This implies that ECOWAS has the capacity to influence the economic and political landscape of each member state through policy implementation, the creation of opportunities for sustainable development, job creation, and environmental preservation. Instead, though, the political landscape of each member state influences the activities of ECOWAS, rendering it inefficient in many regards. Indeed, the region’s current economic arrangement needs to be reviewed and addressed. This fact has been hitherto overlooked by the organisation’s policy machine, and this book, critical in essence, will assess ECOWAS’ difficulties in juxtaposition with the EU and other world organisations, using rigorous methods and deep analysis.

It is widely established that profoundly unequal societies rarely function efficiently. This is the case with West Africa, and the region’s different economies are making ECOWAS unstable and unsustainable. West Africa has turned its back on good policies, and we are witnessing a tiny minority holding too much power and establishing policies that benefit itself rather than policies that benefit the entire society. That is why the subregion is shrivelling into pitiful, self-absorbed, embittered, and impoverished insignificance. In West Africa, multilateralism is a lure, a sell-out deal, and states refuse to relinquish any part of their sovereignty for ECOWAS to further its goals. Relations between ECOWAS member states remain a zero-sum game, where self-help is predominantly the norm. This book also contends that since its creation, the discourse and statements from ECOWAS have been ideological, politically motivated, and shockingly out of touch with political and economic realities on the ground.

1.1   The Rationale behind the Creation of ECOWAS

ECOWAS was created in the hope of bringing economic well-being to all West African people. The idea was (and still is) great and simple, as an economic community could help the subregion, and each member state would reap the dividends of integration. The creation of the subregional organisation was seen by many as a significant move towards deeper economic integration, peace, and security within this large swathe of Africa.

The rationale is twofold: to realise maximum profit from collective self-reliance for the benefit of the West African population, and to achieve an effective economic union between Anglophone and Francophone countries. The launch of ECOWAS was a euphoric moment for the region and brought about hopes of better living conditions for the people of West Africa. However, since 1975, these legitimate expectations have run into the reality of politics, insecurity, and other challenges which demonstrate the limits of the organisation and raise awareness of the deeper division between Francophone and Anglophone ECOWAS countries.

1.2   ECOWAS Economic Arrangements

Econometric evidence from ECOWAS countries highlights the region’s poor performance in trade and economy. The economic arrangements within ECOWAS revolve around developing Infrastructure, Policy harmonization (to facilitate trade) and Good Corporate Governance. These arrangements are consistent with the original vision of ECOWAS’s founders. Intraregional trade and cooperation have always been part of Africa’s economic system. It could be argued that the founders of ECOWAS were not just ambitious; they were visionary, because they were way ahead of globalisation, strongly believing that trade, if properly managed, could be a catalyst for growth.

Society defines political economy as the study of processes that lead to economic outcomes. In other words, it is the study of trade and factors of production and the way these issues relate to governmental policies and the distribution of national income and wealth. It follows that economic growth is a fundamentally endogenous process. West Africa’s economic arrangements contain a firm commitment by each ECOWAS member to speed growth and increase exports.

In principle, intraregional trade is liberalised under the ECOWAS Trade Liberalisation Scheme (ETLS). Agricultural products as well as livestock and handmade products all receive duty-free treatment, without needing a certificate of origin. However, industrial products do require such certification, and the procedure to obtain this documentation can be complicated, especially for smaller firms. As the various economies that make up ECOWAS are small, it is important for these countries to deepen their integration. Within ECOWAS, productivity is very low because some countries are dragging collective efforts down, and barriers to trade are also in place. West African states must overcome certain barriers if they are to achieve their export potential. ECOWAS is progressively moving towards enhancing domestic production and competition in a bid to compete in world markets. For example, the WAEMU² countries have made significant efforts to eliminate trade barriers among themselves. These countries also made good progress in relation to liberalisation. However, ECOWAS is behind schedule to an extent, and the subregional organisation has made little progress.

For example, ECOWAS has some stringent requirements in regard to the rules of origin; products have to be registered through a complex two-stage (national and regional) method. The issue in West Africa is that ECOWAS and the WAEMU are two parallel bodies. Intraregional trade arrangements are more dynamic within the WAEMU than they are within the wider ECOWAS. Despite the adoption of the common external tariff (CET) for the subregion, non-tariff barriers still disturb the smooth running of intraregional trade.³ These barriers include quantitative restrictions, import bans, delays at ports, and cumbersome customs formalities.

The common external tariff is a mechanism that applies import tariffs equally by each country participating in a customs union. For example, the EU might impose a common tariff on whisky imported from Japan.

In practice, the common external tariff sets the same customs duties, import quotas, preferences, and other non-tariff barriers to trade for all goods entering the ECOWAS area, regardless of the first port of entry within the zone. The benefits associated with the CET are immense. First, intraregional trade is expected to increase as more goods from the region become available. This means that the CET has a particular focus on trade with the ECOWAS region. For example, market access conditions for Ivorian firms exporting to Nigeria would be positively affected by the preference they enjoy over competitors from non-ECOWAS countries. In addition, the following advantages are also linked to the CET:

1. An increase in turnover, which is a direct consequence of a bigger and large domestic market, meaning that the whole of West Africa would become a single market for imported products.

2. An increase in economies of scale, leading to the expansion of domestic industries.

3. An increase in production and output, as there will be a large market to satisfy.

These advantages suggest that exporting to the regional market can be an important stepping-stone beyond the home market for regional firms that are not yet competitive in the global market.

The CET also ensures certainty and stability in trade. This means regional importing companies can plan for long terms, as the tariff will not change overnight. Certainty and stability in trade will give confidence to foreign investors who may want to explore new opportunities, spurring foreign direct investment.

Moreover, the CET circumvents smuggling, and this is key to integration benefits. It has been established that smuggling is prompted to some degree by the disparity in tariffs. The application of common tariffs across the region would remove the incentive to smuggle products into higher tariff countries.

This is still not the case in ECOWAS, even though the CET has been in force since 2013. Instead of reinforcing integration efforts, the CET is opening the regional market to certain risks. For example, rice in Nigeria has a 100 per cent import duty, while in the Benin Republic, it is 10 per cent. This is due to geographical disparities; there could be room for adjustment assistance targeted to states with a disproportionate amount of negatively affected firms. In August 2019, tensions rose between Benin and Nigeria. While in principle, intracommunity trade is already free of tariff duties, market access conditions for ECOWAS partners could still be affected. In Nigeria, there are high levels of protection for products such as tobacco, recreational products, apparel, and furniture. Nigeria has a trade policy that is consistent with the five duty bands under the ECOWAS common external tariff, with duty rates ranging from 0 to 35 per cent. Duties are high on food items, which constitute the bulk of total imports. Additional measures reinforce Nigeria’s strong forms of protection. These include levies, miscellaneous surcharges, and outright import bans. Levies range from 5 to 100 per cent and are applied mainly to rice, wheat flour, sugar, alcohol, tobacco, textiles, iron, and steel. Benin Republic does not produce these goods; however, it imports most of them.

The Nigerian government bans certain products from importation, with twenty-four categories ranging from foods, textiles, and footwear to furniture, medicine, and used vehicles. This list changes regularly, and bans are sometimes lifted by special import licenses granted to a small number of importers. These bans are applied against all trading partners, including ECOWAS member states.

On August 28, 2019, Nigeria unilaterally closed part of its western border with the Republic of Benin. Nigeria has always expressed great concerns over the smuggling of rice and other banned products from Benin. It is worth pointing out that 20 per cent of Benin’s economic activity is geared toward the informal sector. The majority of Benin’s informal economic activities are very attractive to Nigerian consumers. Nigeria’s trade policy of banning certain products becomes another profitable venture for Benin, Niger, and Cameroon. That is why smuggling is so rampant at Nigeria’s borders because it has no control over its neighbours.

Since taking office in 2015, President Muhammadu Buhari has introduced policies that are aimed at curbing imports to boost local production and conserve foreign exchange reserves. He argued that rice smuggling across the western border threatened his country’s self-sufficiency. The essence of the CET is partially to encourage the increase of production and productivity. That is why Nigeria resorted to the unilateral safeguard measures of Regulation C/REG.4/06/13⁴, which restricts the quantity of goods to be imported and imposes additional duties. This safeguard, unfortunately, came in the form of physically closing the border.

Semè Border is Nigeria and Benin’s busiest border crossing and more essential to Benin than Nigeria. This measure is applied with the aim of protecting the specific industry of Nigerian rice in the community. According to the Nigerian government, smuggling threatens the self-sufficiency already attained by the administration’s agricultural policies. That is why the Nigerian president declared, Now that our people in the rural areas are going back to their farms, and the country has saved huge sums of money which would otherwise have been expended on importing rice using our scarce foreign reserves, we cannot allow smuggling of the product at such alarming proportions to continue. The Nigerian president argued that the partial closure of the country’s western border would allow Nigeria’s security forces to develop a comprehensive strategy on how to stem the dangerous trend and its wider implications.

The Nigerian government under President Buhari has long considered exporting agricultural goods to earn more safe-haven currencies (US dollar, euro, pound sterling) and to generate more revenue from outside its major oil industry. In 2015, the Nigerian Central Bank listed forty-two items, from cement to rice, which would not qualify for discounted foreign exchange. In his first term, Buhari had muddled success and is expected to sharpen his focus on diversifying Nigeria’s oil-dependent economy by boosting the agriculture sector. It could be argued that his efforts to stimulate local rice production via special loan schemes and a heavy ban on importing rice succeeded to an extent: In 2018, domestic production rose to a record 4.78 million⁵ tons. This is an increase of 60 per cent since almost a decade. In addition, Buhari suggested to the Nigeria central bank to stop providing foreign exchange for imported food.

The actual tension between Benin and Nigeria is very delicate for both countries, as double-digit inflation is driving up food prices in Benin’s giant neighbour. In justifying the partial closure of the border, the Nigerian government claimed that the combined costs of imported of rice and wheat cost were almost $4 billion a year; however, Nigeria’s 190 million people rely heavily on imports for most of what they consume due to the country’s limited manufacturing capacity. Nigerian rice farmers cannot keep up with huge demand and lack appropriate infrastructure and mechanical assistance.

Benin’s informal sector has always fed the Nigerian’s people consumption habit. There is a booming business of supplying Nigeria with products imported through Benin. As a result, Nigerian authorities applied high and cumbersome trade barriers which, instead of deterring smugglers actually offers a strong incentive for smuggling across its border with Benin. It is estimated that large imports⁶ by Benin Republic are quietly smuggled onwards to Nigeria. Benin’s successive governments failed to take full advantage of its proximity with Nigeria, and this is an aberration. This country exports just 4.9 per cent of its commodities to Nigeria, when it could do much better. Benin should design robust bilateral agreements with its giant neighbor rather than encourage perpetual smuggling.

In practice, various studies reveal that import bans and prohibitively high duties do not prevent goods from being smuggled into Nigeria. On the contrary, smuggling is intensified in the most restricted categories of goods that are affected by import bans and levies. Such is the case of imported rice from Cotonou, which is cheaper than Nigerian rice. The tiny Republic of Benin has seen its rice import from abroad soar since 2015. Benin has become one of the largest importers of rice in Africa; however, everybody knows exactly where that rice ends up, as Benin is just 11 million, the majority of them living under the breadline. In reality, Nigeria’s markets are full of foreign rice, which usually sells at a steep discount to its Nigerian counterpart. More than 1 million tonnes of rice—20 million 50kg sacks—entered Nigeria through its porous border with Benin in the first three months of this year, according to the Rice Processors Association of Nigeria.⁷ The Nigerian government’s smuggling losses are huge, leading policymakers, politicians, and business and trade professionals to believe that President Buhari’s policy of closing the border is not working, as by forcing the trade underground, the Nigerian government loses substantial customs revenue. There are additional routes for informal trade and smuggling with Niger and Cameroon, Nigeria’s other neighbouring countries. These smuggling activities are largely unreported at Nigeria’s borders and entry ports. Economic political arrangements within ECOWAS is characterised by unity without union: a self-inflicted economic sanction which allows each country to use ill-designed protectionist policies to drag the region’s economy further down the abyss.

President Talon of Benin Republic called on the Nigerian president for dialogue and secure the way forward, following the closure of Semè Border. It is well-known that when Nigeria closes its border, the whole of West Africa shivers. The closure of the Nigerian border always has a severe impact on Benin, which relies heavily on Nigerian customers. Responding to the concerns raised by President Talon on the magnitude of suffering caused by the closure, President Buhari promised to consider reopening its borders after thorough consultation in the near future. Furthermore, President Buhari disclosed that a meeting with his counterparts from Benin and Niger Republics would soon be called to determine strict and comprehensive measures to curtail the level of smuggling across their borders.

The current economic model has not led to incentives for productivity growth or the creation of high-quality wage employment. There is no indication that import bans have led to higher job growth in domestic firms producing Nigerian goods. Overall, West Africa’s economic arrangements is cumbersome and leads to significant inefficiencies at various borders. Aspects of ECOWAS economic arrangements make it difficult for regional companies to capitalise on the gains of integration, as they seriously undermine the competitiveness of West African exporters. The subregion of West Africa is plagued with inefficiency, and several international indicators confirm this fact. According to the World Bank 2019 Doing Business, West African countries (except Togo and Ivory Coast) are still sliding downward on all rankings.

It is difficult to do business in West Africa. The gap is wide between the performance of West Africa and OECD high-income economies. West African economies score significantly lower than other economies in all areas. The gap in the score is remarkably greater in the areas of trading across borders. ECOWAS Importers face long delays and complex documentation requirements. A five-minute stroll at Semè Border between Benin and Nigeria reveals the extent of the inefficiency and complexity of ECOWAS’s economic arrangements. Long queues of trucks line up at Semè customs checkpoints for days, without being processed.

This led Hoppe (2013) to believe that several government bodies unnecessarily crowded the borders, mainly to collect fees rather than to enforce trade regulations. Customs clearance processes within West Africa is often negotiated on individual merits, scale of operation, and type of product. Conversely, West Africa fares better with the 2018 Logistics Performance Index (LPI). The highest-ranking country, according to the LPI, is Ivory Coast.⁸ Despite comprehensive evidence that is hard to ignore, reforms do not necessarily follow. According to Jim Yong Kim the former World Bank Group, "Governments have the enormous task of fostering an enabling environment for entrepreneurs and small and medium-size enterprises. Sound and efficient business regulation is critical for entrepreneurship and a thriving private sector.