UNIVERSITY OF CAPE COAST
SCHOOL OF BUSINESS
DEPARTMENT OF MANAGEMENT
INTERNATIONAL BUSINESS
ADM 301
SB/ADM/17/0029
Assignment 1
Introduction ................................................................................................................................... 1
Synopsis.......................................................................................................................................... 1
Background ................................................................................................................................... 5
The European Union (EU): A Brief Historical Background .................................................... 5
The Objectives of the European Union ....................................................................................... 6
European Union. ......................................................................................................................... 6
The Economic Community of West African States (ECOWAS): A Brief Historical ............. 8
Background ................................................................................................................................. 8
ECOWAS CONTRAINTS ON MEMBER STATES .............................................................. 14
CONSTRAINTS ON FORMAL REGIONAL INTEGRATION ................................................... 14
Hindrances Fueling the Ineffectiveness of ECOWAS Member States .................................. 16
Bribery and Corruption ............................................................................................................ 16
CORRUPTION IN WEST AFRICA ........................................................................................... 16
Political Instability ...................................................................................................................... 17
Civil War...................................................................................................................................... 18
The Trade Factor and the Economy of Member states ........................................................... 19
Financial Sector disparities and Poor payment system ........................................................... 19
Inequality Crisis .......................................................................................................................... 20
Nepotism ...................................................................................................................................... 22
Infrastructure and Regulatory Regime Challenges ................................................................. 23
Terrorism ..................................................................................................................................... 23
CONCEPT OF ILLITERACY .................................................................................................... 24
Economic Consequences of Illiteracy ....................................................................................... 25
In conclusion ................................................................................................................................ 25
Bibliography ................................................................................................................................ 26
Reasons Why Countries Within ECOWAS failed to be as effective as those in the European
Union
Introduction
ECOWAS also known as Economic Community of West Africa States is a regional bloc which is
focused on the political and economic union of fifteen countries located in West Africa. These
fifteen countries are; Benin, Burkina Faso, Cape Verde, Gambia, Ghana, guinea Bissau, Ivory
Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo. The goal of ECOWAS is to
achieve “collective self-sufficiency”, for its member states by creating a single trade bloc through
the building of a full economic and trading union. Nevertheless, the member countries have their
internal governance to take care of. They are responsible for the economic, political and social
progress of their country.
European Union also known as EU is a regional bloc which is focused on the political and
economic union of twenty-eight member states that are located in Europe. These twenty countries
are; Belgium, Austria, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and United Kingdom.
Just like the ECOWAS member countries have their internal governance to take care of. They are
responsible for the economic, political and social progress of their country.
Moreover, the regional blocs by the execution of their goals and objectives enhances their member
countries ability to flourish economically, politically and socially, this write up seeks to address
ten reasons why the member countries in ECOWAS are ineffective as compared to those of the
EU.
Synopsis
Sound infrastructure is a critical determinant of growth in West Africa. Over the period 1995–
2005, infrastructure improvements have boosted West Africa’s growth by one percentage point
per capita per year. This positive growth effect has come almost entirely from the ICT revolution,
while deficient power infrastructure has held economic growth back by 0.1 percentage point per
capita per year. If West Africa’s infrastructure could be improved to the level of the strongest
performing country in Africa (Mauritius), regional growth performance would be boosted by some
5 percentage points.
Infrastructure in the 15 countries of the Economic Community of West African States (ECOWAS)
ranks consistently behind Southern Africa across a range of infrastructure indicators. However, in
some areas such as access to household services—water, sanitation, and power—the differences
between ECOWAS and the leading region, SADC, are not significant. On the other hand, the gaps
with respect to electricity generation capacity, as well as road and telephone density, are much
more substantial.
1
The difficult economic geography of the ECOWAS region makes it particularly important to take
a regional approach to infrastructure development. ECOWAS is characterized by small-scale
economies, many of which are physically cut off from key resources.
Eight member states have populations of less than 10 million people, and 11 ECOWAS member
states have a gross domestic product (GDP) of less than $5 billion. The small size of these
economies prevents the capture of scale economies in infrastructure development, making it
difficult for governments to afford the high fixed costs associated with infrastructure development.
Three of the ECOWAS member states are landlocked and rely on the infrastructure of neighbors
for access to critical markets. The region is also characterized by a number of international rivers;
perhaps most notably the Niger, the catchment of which spans seven member countries. Regional
approaches are critical to developing transport and hydraulic infrastructure that are essentially
regional public goods.
ECOWAS has a relatively well-developed regional road network based on seven main arteries,
but coastal countries are not devoting enough attention to sea corridors. Five of these regional road
arteries are sea corridors for the three landlocked countries; they provide each of these countries
with more than one route to the sea. In addition, there are two corridors—one coastal, one
Sahelian—that are important for intraregional trade. These key road corridors have already been
almost entirely paved, and the greater part of them are in good or fair condition. Interestingly, the
main quality problems found on these regional networks arise on the up-country portions of sea
corridors located in the coastal countries. Essentially, these portions of road are of limited
importance to the national economy, hence maintenance may be neglected even though they are
absolutely critical to the landlocked country in the hinterland. Ironically, these are typically the
most heavily used portions of the regional network, and yet they are in the worst condition. The
other weak point in ECOWAS ‘s regional road network is the coastal corridor between Abidjan
and Dakar. where conflict in a number of countries has led to extensive deterioration of the coastal
route.
Surface transport in West Africa is very expensive compared with the rest of Africa and the
developing world. The causes are cartelization and restrictive regulation of the trucking industry.
In West Africa, road transport tariffs are on the order of $0.08 per ton-kilometer, compared with
$0.05 per ton-kilometer in southern Africa and well below $0.04 per ton-kilometer in much of the
rest of the developing world. High freight charges do not reflect high transport costs so much as
high trucking profits that can be traced to the lack of competition in the industry. In addition, the
tour de role regulatory framework is based on market sharing and centralized allocation of freight,
which limits vehicle mileage and undermines incentives for investing to improve service quality.
Surface transport in West Africa is also very slow compared with the rest of Africa and the
developing world, because of frequent delays associated with administrative processes. The
average effective velocity of road freight movements in West Africa is around 6 miles per hour,
or about half the effective velocity of 11 miles per hour found in southern Africa. In both cases,
however, freight is moving no faster than a horse and buggy. This slow speed has little to do with
road infrastructure—which is generally of reasonable quality—and much to do with administrative
2
barriers such as border and customs clearance, as well as formal and informal checkpoints and
road blocks that keep trucks stationary for extended periods of time.
The overall times and cost of moving goods along West Africa’s key trade routes is timeconsuming and expensive—requiring on the order of 400–1,000 hours of time and costing between
$175 and $310 per ton. Port delays and administrative charges account for the lion’s share of the
time. The high costs reflect the high transport costs in the region and the inefficiency of many
ports. Random checkpoints, bribery, and police inspections add more to the time and cost of
moving freight.
There is no real regional rail network in the ECOWAS area. Existing lines are lightly used, and
the presence of three different rail gauges complicates integration. The national rail networks of
ECOWAS’s member states are mostly independent from each other, with the exception of two
relatively successful binational rail corridors. This situation is in contrast to Southern Africa, where
interconnected national railway systems form a regional railway network that spans half a dozen
countries. Further integration of West Africa’s rail systems is technically complicated by the
presence of three different gauges across the region. Given the poor performance and relatively
light use of existing rail networks, the economic case for integration is also far from clear. The
more pressing priority is to improve the performance of national systems to allow them to compete
more effectively with road transport.
In the ports sector, West Africa lacks a clear maritime hub as the center for a more effective
transshipment network and needs to improve performance across the board. The performance of
West African ports does not compare favorably with ports elsewhere in Africa and is well behind
global best practice. Services can easily cost twice global benchmarks, while productivity is around
half the global mark; delays can be several times as long. At present, West Africa lacks a clear
regional hub for transshipment. Prior to the conflict in Ivory Coast, Abidjan had begun to play this
role, but at present major shipping lines serve West Africa via North Africa or even southern Spain.
The creation of a West African hub would facilitate the consolidation of sea freight for the region.
On air transport, ECOWAS has made great strides on market liberalization, but safety remains a
concern, and the region lacks a strong hub-and-spoke structure. West Africa is more advanced than
most regions in the implementation of the Yamassoukro decision. Market liberalization has
substantially altered regional air traffic patterns (and fueled a huge expansion of domestic air
transport in Nigeria). Entrance of new carriers has helped to reverse the market collapse that
followed the demise of major flag carriers, particularly in the countries of the Banjul Accord
Group, though not so much in the West African Economic Monetary Union. However,
liberalization also seems to have contributed to a decline in air traffic safety. Numerous countries
in the region need to strengthen their civil aviation authorities, and it may be that a regional
approach would help to pool scarce human resources and enhance regulatory independence. As in
the sea ports sector, there is a marked absence of a strong regional hub for air transport, particularly
compared with eastern and southern Africa, where strong hubs have evolved— notably Addis
Ababa, Johannesburg, and Nairobi.
Power supply in the ECOWAS region is the most expensive and least reliable in Africa. With 50
percent of its population electrified, West Africa is ahead of other regions on power access. Yet
3
generation capacity is very limited, and power supply is highly unreliable, with 30 percent of
existing power demand unmet and widespread outages. Moreover, average historic costs of power
in the region have been high—on the order of $0.20 per kilowatt-hour. With power demand likely
to triple over the next decade, expanding power supply infrastructure is critical to the region’s
economic future.
West Africa already practices regional power trade. Further pursuit of such trade could bring
substantial benefits, but much depends on Guinea’s ability to become a hydropower exporter. The
principle of regional power exchange is already well-established thanks to the efforts of the West
Africa Power Pool, even if the actual volumes of power traded remain small. In the future, there
is the potential to develop trade much further, to the point that many countries in the region could
be better off by importing more than half of their power needs. Doing so would bring numerous
advantages. The region’s cost of energy would be reduced by $435 million annually (or around 3
percent). Most countries would save significantly on their national power development costs and
a number of smaller countries could substantially reduce their long-run marginal cost of power. In
addition, regional trade would allow a shift to cleaner energy that would reduce regional carbon
emissions by 5 million tons annually. Overall, the returns on investments in regional
interconnection yield an average rate of return of 33 percent. However, most of these benefits
hinge on the development of 3,700 megawatts of cost-effective hydropower in Guinea, where a
host of technical, financial, and political challenges make this a difficult prospect.
Compared with other regional economic communities in Africa, ECOWAS performs relatively
well on access to information and communication technologies (ICTs) but faces relatively high
prices for critical services. Thanks to the emergence of a number of pan-regional operators, as well
as intensive collaboration among telecommunications regulators, the region is very advanced with
respect to regional roaming arrangements. Despite the presence of submarine cables along the
coast, however, many countries remain unconnected, and many of those with access fail to benefit
fully owing to monopoly control of the international gateway. A number of new projects are
underway, with plans for several unserved countries to connect to the new cables. Creating
competition between landing stations will be critical to providing affordable service. In order for
the benefits of submarine access to spread within the region, it will be important to complete the
1,900 missing kilometers of terrestrial fiber optic network. Associated investments are small and
anticipated returns from reducing the price of broadband access relatively high, with payback
periods of less than a year.
Completing and preserving ECOWAS’s regional ICT, power and transport backbones would
require sustained spending of $1.5 billion annually over the course of a decade. This is about 10
percent of the overall infrastructure spending requirements (regional and national) for the
ECOWAS region as a whole. Of the total $1.5 billion, around a billion a year is associated with
investment in the creation of new regional infrastructure assets, while the balance of $0.5 billion
is needed to maintain the regional network in perpetuity once established, most of it associated
with road maintenance. By far the largest item in the regional spending requirement is the power
sector, with specifically regional power assets demanding $1 billion per year over the next decade.
The transport sector comes in second place with an annual spending requirement of $0.4 billion.
4
The amounts that would have to be spent to meet regional requirements across all infrastructure
sectors represent only 1 percent of regional GDP, but for some small countries the burden is
insurmountable.
The total regional spending requirement of $1.5 billion represents less than 1 percent of the
regional GDP of $176 billion. In absolute terms, by far the largest burden falls on Guinea, which
would have to spend $0.9 billion a year over the next decade to deliver the infrastructure assets
(chiefly power) needed by the region. Nigeria comes in a distant second, with a spending
requirement of $0.2 billion a year (also largely associated with power). If one looks at regional
spending requirements relative to the size of each country’s economy, the burden appears even
more uneven. Guinea’s regional spending requirement, in particular, translates to more than 25
percent of GDP, manifestly beyond what the national economy could plausibly deliver without
external assistance. Another group of countries—The Gambia, Guinea-Bissau, Liberia—would
need to spend around 5 percent of their GDP on regional spending requirements—a huge stretch,
even if the absolute sums involved (no more than $20–30 million a year) do not look so large.
Background
The European Union (EU): A Brief Historical Background
It will not be wrong to argue that the European Union (EU) represents a success story of a regional
integration effort and this success story is derived “from an ever increasing lowering of the barrier
effects of boundaries between the world oldest national states with, hitherto, a history of recurrent
and most devastating territorial and border wars.”8 Basically, the inauguration of the European
Union has been based on the theory and practice of “Europe without Frontiers.”9 An important
result of this development is that there has been an unprecedented growth of relevant institutions
and a steady expansion of regional constituencies, which have interests that transcend national
boundaries and identities.
In terms of evolution, it can be argued that pressure from the communist bloc caused European
Powers to cooperate not only militarily but also economically. Available records have shown that
the most important step towards economic cooperation and integration was taken when the Treaty
of Rome was signed on March 26, 1957 by the six countries that had earlier formed the European
Coal and Steel Community (ECSC) i.e. France, Germany, Italy, Belgium, Holland and
Luxemburg.10 All the signatories to the Treaty of Rome agreed on the establishment of European
Economic Community. In summary, the community had the aim of abolishing all trade barriers
and to establish a common external tariff amongst others. It was a long tortuous journey before the
European Economic Community metamorphosed into the European Union on the 1st November
1993 after the signing of the Treaty of Maastricht. Today, the European Union has twenty-seven
member states.11 These countries are guided by the objectives of the European Union which are
enumerated and briefly explained below.
5
The Objectives of the European Union
The European Union’s mission is to organize relations among member states and among their
peoples in a coherent manner and on the basis of solidarity. The main objectives are:
(a) To promote economic and social progress. To achieve this, a single market was established in
1993 and a single currency was launched in 1999.
(b) To assert the identity of the European Union on the international scene – through European
humanitarian and to non – EU countries, common foreign and security policy action in
international crises and common positions within the international system.
(c) To introduce European citizenship, which does not replace national citizenship, but
complement it and confers a number of civil and political rights on European citizens.
(d) To develop an area of freedom, security and justice – linked to the operation of the internal
market and more particularly the freedom of movement of persons.
(e) To maintain and build on established European Union laws; all the legislation adopted by the
European institutions, together with the founding treaties. It is not a disputable fact that to a very
large extent, member states of the European Union have struggled and succeeded to ensure that
the objectives of the organization are realizable, although they are still experiencing some hiccups
in their bid to ensure a total and smooth implementation of the afore mentioned objectives. The
next section of this work is devoted to explaining the institutions of the
European Union.
The Institutions of the European Union.
There are five institutions involved in running the European Union. These include:
I. The European Parliament (elected by the peoples of the member states).
ii. The Council – representing the government of the member states.
iii. The Commission – comprising the executive and the body having the right
to initiate legislation.
iv. The Court of Justice – ensuring compliance with the laws.
v. The Court of Auditors – responsible for auditing the accounts.
These institutions are supported by other bodies such as the economic and social committee and
the committee of the regions made-up of advisory bodies which help to ensure that the policy
positions of the European Union’s various economic and social categories and regions respectively
are taken into consideration. The European Ombudsman deals with complaints from citizens
concerning mal- administration at European level, while the European Investment Bank and the
European Central Bank are the European Union’s financial institutions responsible for monetary
6
policy matters in the Euro-area. Taking a critical look at the history of the European Union, it
would be discovered that some landmark decisions in term of evolution and membership, policy
competence, and policy style has characterized the European Union system since inception.14
Some of these policies and decisions shall now form the focus of discussion. As far back as April
18, 1951, members of the European Community (EC) which eventually metamorphosed into the
European Union signed the Treaty of Paris which established the Strategic European Coal and
Steel Community (ECSC). By January 7th 1956, the European Coal and Steel Community
confirmed the principle of free circulation of steel products imported from Third World countries
within the community. Again, in May 1952, the European Defense Community (EDC) Treaty was
signed which established a common defense policy for all the member countries. Also, in January
1959, the first steps were taken in the progressive abolition of customs duties and quotas within
the defunct European Economic Community (EEC). In July 1962, custom duties on industrial
products between member countries were reduced to 50% of their 1957 level. Again, in 1959,
regulations creating a common agricultural policy (CAP) came into force among the members of
the European Union. In January 1966, the European Economic Community entered the third and
last phase of its transition to the common market. This implies the replacement of the unanimity
vote by the majority system for most of the decision of the Council and in March 1966, the
commission laid before the council its proposal for independent revenue for the community and
wider powers for the European Parliament. Furthermore, in 1967, the EEC Council of Ministers
decided to harmonies indirect taxes in the community. They adopted the principle of the Value
Added Tax system. The Council also approved the first medium-term economic policy program
defining and fixing the aims of the economic policies of the community for the years ahead.
Furthermore, on the 4th of March 1970, the commission submitted to its Council of Ministers, a
memorandum on the preparation of a plan for the establishment of Economic and Monetary Union.
In May 1971, the Council introduced a system of monetary compensatory amounts for trade in
agricultural products between member states in order to maintain the unity of the common
agricultural market.
The European Confederation of Trade Union was established in February 1973 to harmonize trade
union activities within the European Union. While in February 2000, the Fourth Ministerial
Conference on EU-African, Caribbean, Pacific (ACP) negotiations aimed at a partnership for
development was held in Brussels, Belgium. The European Union and the African, Caribbean and
Pacific countries agreed on the plan of action that was to follow the Fourth Lome Convention.
More importantly, a special European Council meeting was held in Lisbon, Portugal to decide on
a new strategy to strengthen employment, economic reforms and social cohesion as part of
efforts aimed at ensuring the existence of a knowledge-based economy.
Last but not the least, for the purpose of this discourse, the Parliament and the Council adopted a
decision designating 2001 as the European year of languages. Hence on the 20th of June 2000, the
broad economic policy guidelines for the member-states and the community for the year 2000 were
adopted. Also, the entry of Greece into the Euro zone was approved in that year. A common
strategy on the Mediterranean region was adopted and an action plan for the Northern dimension
in external and cross border policies of the European Union was endorsed while support was given
to the European Union’s Anti-drugs Action Plan.18 today, it cannot be disputed that the European
7
Union is waxing stronger in its integration efforts, and more nations within and outside of the
region are desirous of becoming member states. Briefly discussed above are the modest feats
achieved by the European Union, our discussion shall now be shifted to examining the evolution
of the Economic Community of West African States (ECOWAS) before undertaking a
comparative analysis of the two bodies.
The Economic Community of West African States (ECOWAS): A Brief
Historical
Background
A former military president of Nigeria, General Ibrahim Badamosi Babangida, once argued that
“the existence of the Economic Community of West African States (ECOWAS) essentially
underscores the reality that regional economic integration has become a necessary complementary
strategy to national economic development policies.”19 This statement emphasizes the relevance
of the establishment of the Economic Community of West African States by some of the countries
in the sub-region. Indeed, without the Economic Community of West African States, West Africa
would have been a region largely divided into two sections, with each part aligning with either
Great Britain or France, depending on the individual country’s colonial experience. Although the
battle has not been fully won, the Economic Community of West African States has been trying to
erode the line of demarcation created by colonialism in West Africa. Without mincing words, it
can be argued that the efforts that led to the eventual formation of Economic Community of West
African States could be located in the early 1960s with the decision of the majority of the African
leaders to adopt a functional cooperation strategy beginning from the subregions.
Thus, it was not surprising when on May 28, 1975, Benin, Gambia, Guinea, Guinea Bissau, Ivory
Coast (now Cote d’Ivoire), Liberia, Mali, Mauritania, Niger, Nigeria, Sierra Leone, Senegal, Togo
and Upper Volta (now Burkina Faso) signed the treaty establishing the Economic Community of
West African States. Two years later, Cape Verde joined, bringing the number of member-states
to a total of sixteen. At its inception, the coming together of the fifteen states laid the foundation
for a market of over 124 million peoples – the largest that Africa has ever known in modern times.
It represented the beginning of the realization of a line of action that the Economic Commission
for Africa (ECA) had been promoting since 1964 when it made public its report on West African
Industrial Coordination.
At this juncture, it is only necessary for us to briefly examine the objectives and institutions of
the Economic Community of West African States.
The Objectives of the Economic Community of West African States
The aims and objectives of the Economic Community of West African States are embedded in the
Treaty. The Treaty stated amongst other things that:
8
a. The primary mission of the organization was to promote economic integration within the West
African sub-region.
b. The organization shall ensure that the free movement of persons, goods and capital across the
frontiers of member states is guaranteed.
c. The organization shall engage in the promotion of cooperation and development in all fields of
economic activities.
d. The signatories should emphasize “in particular, the need for cooperation in the field of industry,
transport, telecommunications, energy, agriculture, natural resources, commerce, monetary and
financial matters, and in social and cultural matters.” The Institutions of the Economic Community
of West African States
The institutions of the Economic Community of West African States include: The Authority,
consisting of Heads of States and Governments; the Council of Ministers; the Executive
Secretariat; the
Tribunal; and specialized commissions dealing with
(a) Trade, Customs, Immigration, Monetary and Payment Matters;
(b) Industry, Agriculture and Natural Resources;
(c) Transport, Telecommunications and Energy; and
(d) Social and Cultural Affairs.23
The Authority – consisting of the Presidents and Heads of Government – is required to meet at
least once annually. The meeting is to be chaired in rotation by each leader of the integrating
countries.
The Council of Ministers is expected to meet twice in a year and it is charged with the
responsibility of ensuring that the community functions in accordance with the Treaty of the
organization. Again, it has the task of issuing directives to subordinate institutions and making
recommendations to the Presidents and Head of Governments. The Executive Secretary serves for
a four-year term which is renewable, however he may be removed from office by the Assembly of
Presidents and Heads of Government on the recommendation of the Council of Ministers.
The Tribunal is responsible for the settlement of disputes referred to it by the Assembly of
Presidents and Heads of Government which also decides on its competence, composition and
statutes; moreover, it is to “ensure the observance of law and justice in the interpretation of the
Treaty.” revised Treaty which reflects on West Africa’s regional cooperation experience since
inception was signed by the sixteen West African Heads of State on July 24, 1993. A principal
objective of the new Treaty, which was designated to be achieved in stages is the creation of an
economic and monetary union. To this end, a regional trade liberalization scheme was adopted
which led to the creation of a Free Trade Area (FTA) by the end of 1999; with a common
external tariff regime being implemented in phrases. The three-phase program for the free
9
movement of the community’s citizens has been completed. The community has also been
pursuing the physical integration of its member-states through the development and
modernization of national highway and telecommunication networks.
The monetary policy of the community has the medium-term objective of achieving regional
convertibility of the nine national currencies and, in a long term, the objective of creating a single
monetary zone. The West African Monetary Institute (WAMI), a forerunner of the West African
Central Bank became operational in January, 2001.
Furthermore, the community has been involved in implementing sectoral programs such as the
inter-connection of national electric grids and regional pipelines for the distribution of natural gas.
Other programs include rural water supply scheme, community seed production, cattle breeding
centers, agricultural research programs, a master plan for regional industrial development,
coordination of desertification control programs, cooperation in health matters, establishment of
equivalence for degrees and diplomas to mention but a few.
The Treaty has placed particular emphasis on promoting the involvement and participation of the
private sector and the general public in the development and integration of the economies of the
region. Already, the Economic Community of West African States has encouraged the
establishment and functioning of a private regional commercial bank (ECOBANK), the Federation
of West African Manufacturers Associations (FWAMA), West African Women’s Association
(WAWA), and the West African Road Transporters Union.
More recently, it could be observed that the most visible activity of the Economic Community of
West African States has been its intervention in the war in Liberia and Sierra Leone. Starting in
December 1989, a group of Liberian dissidents swept across the country to the gates of Monrovia.
The United States, the defunct Organization of African Unity (OAU) and the United Nations
declined to intervene to restore peace and order, and in August 1990, the Economic Community
of West African States standing Mediation Committee endorsed the establishment of a Cease-Fire
Monitoring Group code named Economic Community of West African States Monitoring Group
(ECOMOG) to oversee the implementation of the Abuja Agreement for Liberia.
The Economic Community of West African States Monitoring Group gathered a force of
approximately 8,000 with contingents drawn from Nigeria, Ghana, Guinea, Mali, Burkina Faso,
and Senegal, as well as Uganda and Tanzania from outside the Economic Community of West
African States.
After many failed peace agreements, the Economic Community of West African States Monitoring
Group was able to implement the Abuja II Peace Plan because of an apparent accommodation of
the largest factional leader, Charles Taylor. The Economic Community of West African States
Monitoring Group has also succeeded in ousting a junta that seized power by force in Sierra Leone
and has re-established the authority of the legitimate government in that country.
From Theory to Reality: Comparing the EU and ECOWAS Available records have shown that
certain theoretical foundation informed the establishment of the Economic Community of West
African States. First, integration in the West African sub-region has largely been informed by the
10
integration processes in Western Europe, Latin America, Asia, and elsewhere in Africa. Generally,
in all these areas the main objectives of integration had been both economic and political. It is
economic if the immediate preoccupation was the promotion of better economic welfare or
economic development. On the other hand, it was political if the ultimate concern of members was
the political unity of the component states. At this juncture, it is important to note that the European
Union and the Economic Community of West African States have not actually attained full
political unity, though a high level of economic integration has been achieved by the European
Union which appears to be blazing the trail in this direction.
The integration objectives of the Economic Community of West African States are not entirely
different from those of other sub-regional organizations. However, in the sphere of attaining
political unity, the Economic Community of West African States tends not to have recorded any
significant achievement compared to the European Union. Rather, West African leaders are more
occupied with the promotion of economic development as the first step to ensuring political
independence. Again, little progress has been recorded on the economic front due to factors that
bother essentially on the wide economic disparity existing in the sub-region. Besides, most of the
leaders tend to value their economic sovereignty more than any program or policy aimed at
developing integration. As regard the theoretical approach to integration, the Economic
Community of West African States seems to share functionalism, neo-functionalism and the
traditionalist theory of economic integration with the European Union.
The functionalist theory assumes that integration could be done through the creation of a
transnational complex of economic and social organization. To this end, proponents of the
functionalist theory such as David Mitrany, believed that international activities could be
organized around basic functional needs such as transportation, health and welfare necessities,
cultural activities, trade and production.30 Also, the theory further assumes that the
internationalization of politics and economics would ultimately shift loyalty and sovereignty from
states to international organizations. This philosophical underpinning, which was expected to
guide the integration process in West Africa, is fraught with some difficulties and has not really
impacted on the Economic Community of West African States. Thus, the integration process in
West Africa is still very slow, and in this direction, the European Union tends to be ahead of the
Economic Community of West African States.
Similarly, the neo-functionalist approach to West African integration has not really transformed
the Economic Community of West African States into greater height because the neofunctionalist doctrine of ‘spill-over’ seems not to be relevant to developing countries especially
in the spheres of politics. It has been established that leaders from a less-developed sub-region
like West Africa will never relegate their powers and political sovereignty to the background,
while leaders of the European Union are more liberal in this regard but their problem arises from
their citizens who are not really in a hurry to integrate. The neo-functionalist school or
philosophy is especially a modified version of functionalism and Ernest Haas was the
proponent.31 The central thesis of the model was that there exists a continuum between
economic integration and political union, this is contrary to the argument put forward by
functionalist. In neo-functionalism, both economic and political factors are believed to be linked
11
together by the ‘spill-over’ effect through which the various task and powers of the central
institutions are increased while integration gradually encroaches on the political sensitive area.
As applied to the Economic Community of West African States, the neo-functionalist school of
thought has not achieved anything. Again, the European Union has gone far above the Economic
Community of West African States in this direction. The reason is essentially because, unlike
what obtains in Europe, issues which are relatively non-controversial and are solvable by
technocrats will really pose a lot of problems in Africa. This makes the intervention of political
leaders for solution inevitable. This has been the situation in Africa in general and the Economic
Community of West African States in particular.
Last but not the least, the traditionalist theory of integration, which was essentially propounded by
J. Viner maintained that the primary ingredients of economic integration are trade creation and
trade diversion. He argued that trade creation is related to the existence of a customs union while
trade diversion occurs when one of the member states which previously produced a commodity
inefficiently owing to the existence of a protective tariff wall, now captures the entire markets after
the creation of a customs union.32 However, it is sad to note that till date, the Economic
Community of West African States does not have a custom union and this renders the traditionalist
theory irrelevant to the situation of the Economic Community of West African States. It is therefore
advisable that the Economic Community of West African States should quickly move towards the
removal of political, economic, and structural impediments to integration in order to be able to
compete and compare favorably well with the European Union.
At a more analytical level, the study of comparative regional integration reveals that as salient as
some of the findings of the theories of integration might be when applied to the study of the
European Union and the Economic Community of West African States, the fact that they are
prejudiced ostensibly by the traits of a particular region imposes certain limitations on universal
applications. As long as the global regions do not share uniform characteristics, these theories are
susceptible to a tendency to focus on certain aspects of the phenomenon of integration while
neglecting others, which may be equally important for the refinement of theory.
Furthermore, theoretical approaches to the study of regional integration based on readings of the
European Union model may offer an insight into the processes of integration in the West African
subregion.
For example, in theory, member states of the Economic Community of West African States
agreed to remove tariffs on unprocessed goods in 1990, while tariffs on industrial goods were to
be phased out between 1996 and 2000. However, in practice, tariffs still persist because member
states of the Economic Community of West African States have been reluctant to risk balance of
payments difficulties and loss of tariff revenue.
Intra-ECOWAS trade accounted for a modest share of 11% valued at $3.6 billion of members total
trade in 1995.34 Most exports of member states consist of raw-materials shipped to developed
countries. Moreover, Nigeria accounts for more than half of the Economic Community of West
African States population and nearly half of the $60 billion annual Gross Domestic Product (GDP)
of the Economic Community of West African States. The next two largest members are Ghana
12
with 8% of the population and 18% of the Economic Community of West African States GDP.
The average economic growth in the Economic Community of West African States countries was
estimated at 3.9% in 1996 led by Cote d’Ivoire with 6.8% growth.35
The European Union on the other-hand appears to be an Island of relative prosperity, security and
peace. This is because shared cultures, political traditions and basic commitment to liberal
democratic practices are assumed to exit among the European Union countries. Indeed, the
European Union represents bold attempts to create a new polity, an endeavor inspired by
considerations of power politics as well as altruism.
It represents not the end of the state but an example of how geographically contiguous states have
adapted over time and sought to accommodate a shared goal to promote European unity. Thus, it
could be observed that the performances of the European Union and the Economic Community of
West African States are a mere reflection of the level of development of the member states that
constitutes the membership of the sub-regional unions. For instance, the countries in Europe that
make up the European Union have attained a high level of technological and industrial
advancement, while the countries that make up the Economic Community of West African States
are technologically backward and industrially underdeveloped. This condition has affected the
commitment and financial contributions of member states to the growth and development of the
union. This explains the differences in the success rates between the European Union and the
Economic Community of West African States.
In brief, from all indications, it is generally agreed that economic integration is necessary for the
growth and development of any sub-region in the world, but this is predicated on the fact that all
economies in the world have experienced sustainable growth and development based on the
primacy of production centered on their natural resources. In essence, market integration theories
and strategies just like free market principles, liberalization, and globalization seem to favor the
developed world. Thus, it can be unequivocally argued that the unrestricted application of the
various theories of regional integration to explain the integrative efforts of less developed countries
(LCDs) such as we have in the Economic Community of West African States may be inappropriate,
and any attempt to do otherwise can be regarded as part of the politics of knowledge by western
scholars and this clearly amounts to academic imperialism. Hence, it may not be wrong to assert
here that the Economic Community of West African States is merely promoting market integration
to improve the sales of products produced by the developed world. Instead the emphasis should be
placed on encouraging indigenous manufacturers engaged in the industrial and agricultural sectors
of the economy as this will promote the level of real growth and development of the various West
African States. Conclusively, it must be seen that the weakness of the Economic Community of
West African States vis-à-vis the strength of the European Union is symptomatic of the general
economic malaise plaguing countries that make up the Economic Community of West African
States.
13
ECOWAS CONTRAINTS ON MEMBER STATES
CONSTRAINTS ON FORMAL REGIONAL INTEGRATION
The difficulty in implementing ECOWAS treaties is the most widely cited obstacle to integration.
A study of Ghana’s trading relationship with other ECOWAS states concluded that “a wide range
of barriers makes even this low level of regional trade difficult to achieve and frequently
uncompetitive. Market knowledge is inadequate and accurate tariff and technical data is hard to
obtain. Trade finance is poorly developed and expensive. Language differences, harassment at
borders and road-blocks discourage many entrepreneurs and add to the costs. The ECOWAS
secretariat has few powers to force governments to implement trade liberalization measures. Ten
different currencies are in use, but most are not accepted in international trade, and the West
African Clearing House is unable to prevent serious delays in settling payments between some
member states” (CTA, 1992, p. 14).
More in general, constraints on intra-regional trade include the inconvertibility of member
currencies and difficulties in establishing letters of credit, inefficient and costly transport and
communication links, differences in national product or service regulations and standards and the
lack of information about the existence of potential buyers and sellers in partner countries. Despite
reforms since the early 1990s, the above litany of problems is still heard as a result of a number of
unchanged attitudes and occurrences prevalent in domestic policies and permeating into ECOWAS
structures and functions. These are reflected in the multiplicity of objectives of ECOWAS, some
of which conflict with the publicly stated foreign-policy objectives of member governments, as
well as in the overlapping membership in formal arrangements, which makes it difficult for
member states to harmonize their interests. Various characteristics of the formal structure of
ECOWAS act as constraints to its overall performance: Multiple Objectives In addition to trade
integration, ECOWAS is concerned with the harmonization of agricultural, industrial,
transportation, energy, fiscal and monetary policies. Different member countries remain at
different levels of development with regard to each of these areas and attach different degrees of
importance to each objective. This partly explains the need for them to join other formal integration
arrangements that seek to meet what they perceive to be more important goals.
Overlapping Membership, the problem with countries belonging to several formal arrangements
is that they are often forced to deal with conflicting objectives, as happens with ECOWAS and
UEMOA. The latter has a far more cohesive nature, partly reflective of its undeclared objective of
countering Nigeria’s domination of ECOWAS. Another problem is the duplication of effort. The
effectiveness of one grouping tends to be undermined by the existence of the other as the limited
financial resources of members cannot meet all requirements, and technical expertise in this poor
region gets stretched to its limit. The current two-track approach being pursued by Ghana and
Nigeria may be seen as an attempt to reduce the impact of the conflicts on the achievement of the
broader goals of ECOWAS. Absence of Strong Supra-National Institutions As indicated earlier,
the ECOWAS Secretariat has little authority to force governments to implement trade
liberalization and other integration measures. Most countries, for example, have 26 accumulated
huge arrears in the payment of dues. The resulting lack of transparency in the implementation of
the treaties leads to mutual mistrust — since there are no effective sanctions against member
14
countries whose domestic policies conflict with the articles of agreement — and provides little
incentive to abide by other protocols. Even where the penalties are spelt out (as is the case with
the revised ECOWAS treaty), they may be perceived to be lower than the benefits of abiding by
them.
The Secretariat is further weakened by its capture by vested interests. Non-Implementation of
Harmonization Provisions Very limited progress has been accomplished in harmonizing tariff
codes and classifications6. The main reason for this has been the unwillingness of countries to
subordinate their national liberalization effort to regional objectives. An example of the national
objective of import-substitution hampering the effective implementation of trade liberalization was
the operation of the Tax Unique within UDEAC. Under this system, products from the region
should be subject to the same tax rate irrespective of their source. However, because of the importsubstitution objectives of various countries, discriminatory tariffs were imposed which often
varied by product and by firm for various countries in the grouping.
Obviously, national trade policies were at odds with the requirements of regional integration. Lack
of Political Commitment An oft-mentioned reason for ECOWAS problems is the lack of political
commitment (Bundu, 1997). Shaw (1990) attributes this to the fact that countries have widelydifferent political ideologies and external alliances. He also observes that there is a basic problem
of incompatibility between established political economies and ruling classes. He suggests that
these are outward-oriented towards extra-continental integration, thus making intra-continental
connections remain undeveloped and unimportant.
The formation of CEAO at the same time that ECOWAS was being negotiated is a manifestation
of that problem, and so is the evolution of UEMOA. McCarthy (1996) suggests that this may be
due to concerns about the distribution of gains from integration. He suggests that poor willingness
to cede sovereignty on important issues cannot be divorced from concerns about material benefits.
Member countries are more likely to give up sovereignty if there are tangible benefits to be
obtained in return, but such gains will be unequally distributed — not only in terms of size but also
in respect to timing — so that countries on the losing end expect equity issues to be dealt with
effectively at the initial stages of the negotiations.
The inadequacy of distributive measures may stem from a fundamental uncertainty about whether
the expected gains will indeed materialize. Countries which perceive themselves to be losers desire
to reduce the costs of integration as much as possible and potential gainers are unwilling to concede
much in case there is not much to distribute. Inadequate Compensation Mechanisms It has been
suggested that, even if ECOWAS operated a free trade area, intra-regional trade would not increase
dramatically because of the clauses introduced to safeguard the interests of the weaker countries
and reduce the cost of integration (McCarthy, 1996). The compensation mechanisms are very
rigid9 and it is not clear how the expected revenues are to be calculated.
The methodology also assumes that the structure of revenues cannot be changed. A distortion can
be created in the exporting country if domestic taxes must be raised in order to finance these
payments. The dependence of most ECOWAS Treasuries on international trade taxes and the fear
that this source of revenue may be reduced if integration programs are implemented might explain
slow reduction in tariff barriers and the structure of the compensatory mechanism.
15
Hindrances Fueling the Ineffectiveness of ECOWAS Member States
Bribery and Corruption
To begin with, bribery and corruption is a hindrance to the effectiveness of member states.
Corruption is a virus wide spreading in countries and especially in countries in West Africa.
Corruption has many different shades as well many and diverse effects on a country. These effects
are mostly felt in the political and economic sector of a country. The reason being that it operates
within the political and economic environment. It is quite interesting that some of the causes of
corruption is attributed to professional ethics, habits, customs and demography. The member states
are faced corruption like a thorn in the flesh. It largely affects their economy. It blocks their
economic growth, it negatively affects the operations of businesses in these countries, it leads to
the employment of unskilled labor. It negatively affects investment. It also reduces tax revenue
and the effectiveness of various financial assistance programs.
At large, their communities are influenced by a high degree of corruption in terms of diminishing
trust in the law and the rule of law, education and consequently the quality of life. This
notwithstanding, bribery is also widespread virus in these countries. Bribery in the long term
impedes foreign and domestic investments. It is so alarming what bribery birth forth in these
countries.
CORRUPTION IN WEST AFRICA
Until independence, the opportunities for self-enrichment were limited; the principal
beneficiaries of colonial rule were the European elite, officials and businessmen, enjoying a
lifestyle which the Africa elite aspired to emulate but were largely prevented from reaching.
Independence unlocked the floodgate [of corruption]. Politicians used their public office to
extract ‘commissions’ at every available opportunity. The common cut on government
contracts in West Africa was 10 per cent. In numerous cases, prominent politicians simply
looted the state treasury, transferring money to their private accounts.
Writing about West Africa in 1961, Franz Fanon stated: “Scandals are numerous, ministers
grow rich, their wives doll themselves up, the members of parliament feather their nests and
there is not a soul down to the simple policemen or the customs officer who does not join in
the great procession of corruption.”43 Then, in 1965, Arthur Lewis also stated that corruption
in West Africa existed through the “vast pickings in bribes, state contracts, diversion of
public funds to private uses, and commissions of various sorts.” He added that “to be a
Minister in West Africa at the time was to have a lifetime’s chance to make fortune. In time,
bribery and corruption became a way of life, accepted as a means of getting by, earning a
living, obtaining a service or avoiding hassle.” 44
The blight of corruption spread even further and was exacerbated through the long tradition
of gift-giving in West Africa for service rendered. The ‘bigger’ the ‘man’ and the service
rendered the bigger the gift that was supposed to be given. Soon the gift had to be given
before the service was rendered.45 Thus the culture of corruption was consolidated in West
Africa immediately after independence. The practice of bribery and embezzlement spread
from top to bottom, from politicians to tax collectors, customs officers, policemen, postal
clerks and dispensary assistants. It affected everything from job application to licenses,
16
scholarships, foreign exchange and locations of factories.
A common form of public sector corruption in West Africa is the appearance of ‘ghost
names on the civil service payroll. For instance, in Ghana, the deputy Auditor-General
disclosed in March 2002 that more than US $20 million had been paid to about 2,000 ghosts
names in the previous two years.47 According to a survey Report on National Perception and
Attitude towards corruption carried out in 2000 by the National Reform Strategy of Sierra
Leone, 92.3 % of respondents considered bribery to be the most corrupt practice. In the
survey 94% of respondents considered corruption to be most rampant in government
departments.48 In Burkina Faso, a corruption survey identified the police as the most corrupt
institution. In Senegal a survey carried out by ‘Forum Civil’ identified the traffic police,
customs officials and police as the most corrupt institutions. A similar survey in Ghana
conducted by the Centre for Democratic Development-Ghana with the World Bank in 2000
revealed that most Ghanaians considered the Motor Traffic and Transport Unit (MTTU) of
the Police Services, the Customs Excise and Preventive Service (CEPS), the Regular Police
and the Immigration Service as the most corrupt public institutions. Majority of the
respondents said they have had to pay bribes to officials in these institutions on some
occasions. Most Ghanaian businesses said they felt reluctant using the law courts to
address conflict because of the prevalence of corruption in the judiciary. The survey results
blamed high level of corruption in Ghana on low salaries, culture of gift giving, absence of or
weak corruption reporting system and poor internal management practices.51 Political
corruption is also rampant. Most state officials – president, ministers, legislators, governors
etc. – see political offices as opportunity to make wealth. For instance, in September 2006, the
Economic Crimes Commission of Nigeria charged 15 of the 36 states governors of
corruption. Most of them were suspected of stealing public funds and money laundering.
Political Instability
Explaining the Nexus Between Corruption and State Instability in West Africa
Does corruption contribute to state instability? Or, is there a relationship between corruption
and state fragility, in the case of West Africa? The general notion has been that fragile states
provide the breeding ground for corruption. The missing link then is the part played by
corruption as one of the “drivers” of state fragility, and the subsequent outbreak of violent
conflict.
The onset of corruption in any state is not a sudden onslaught but begins as a gradual
challenge to institutional norms and the rule of law. If it remains unchecked it becomes
endemic in which case private interest (individual and group) compete with national interest.
Where private interest dominates the state is then weakened and is unable to perform its core
functions – the state will then be exhibiting signs of fragility, with violent conflict as one of
the possible symptoms.
A state is unstable if it is unable to address the grievances of the citizens or sections of it. The
sources of grievance could be domestic or international, political, economic, and social or a
combination of all these factors. Pherson argues that discontent alone does not generate
17
instability but the availability of individuals and mechanisms to articulate the grievances and
mobilize the aggrieved to demand redress from the government. The state’s capacity to alleviate
the problems associated with grievances and/or stifle the discontent is determined by four key
factors:
• The legitimacy of the regime and the quality of its leadership;
• Resource availability;
• The strength of civil institutions; and
• The government’s monopoly over coercive force
Civil War
Civil wars impose substantial costs on the domestic economy.1 These wars are destructive of
human lives and economic infrastructure. They also undermine the legitimacy of the state,
threatening its institutions, the security of property rights, and the rule of law. Moreover, internal
wars introduce tremendous uncertainty into the economic environment, making both public and
private investment riskier. While it might be readily apparent that war will impact economic
production, there is little understanding about the different channels through which civil war
affects the aggregate economy. How costly are these internal wars? What is the mechanism
through which civil war negatively impacts the domestic economy? Building on the emerging
literature on the economics of civil war, this paper measures the economic costs of war and
identifies the ways in which civil war strips a country of its growth potential.
Civil war affects the capital stock in two ways. First, internal conflict reduces the existing stock
of capital. Residential structures, roads, bridges, ports, and factories are targeted and destroyed
by competing militaries in wartime. The level of the capital stock is also affected over time by
changes in investment and the rate of depreciation. In order for the capital stock to grow, the
level of investment in the maintenance and expansion of the capital stock must outpace the rate of
depreciation on the existing stock. Since civil war increases the rate of depreciation and reduces
investment, growth in the capital stock is stunted. Civil war, therefore, reduces both the level of
the capital stock and its rate of growth.
Civil wars are often fought along ideological lines suggesting that the opposition is likely to have
different preferences from the government. Such a situation creates strong incentives for deficit
spending. A more complex extension would introduce further political dimensions. As the state is
weakened by an internal threat, it often turns on the civilian population, using tools of coercion to
maintain its power. Democratic practices are violated and government accountability is lessened.
In addition, as the conflict expands, the state finds itself resource- constrained and increases its
extraction of revenues from the population. Often, this cannot keep pace with the rising costs of
conflict. The result is that with limited electoral accountability and high resource demands, there
18
is an even stronger incentive to incur large deficits in a society torn by civil war. These political
economy models imply an additional testable hypothesis. Civil wars negatively affect the
government’s fiscal balance. Since fiscal balance, as part of a stable macroeconomic framework,
is a key source of growth, poor fiscal policy may be a channel through which civil war imposes
costs on the economy.
The Trade Factor and the Economy of Member states
Economic challenges are ever surfacing in the integration bid of the ECOWAS, posing one of the
greatest challenges on the way of the establishment of an integrated market, with Common
External Tariff (CET). The economy of the community has posed serious challenges to the
attainment of its purpose. Member countries are ranked within the brackets of Highly Indebted
Nations, poorest countries by wealth estimate and or within the parameters of any other
measurement indicators commensurable with underdevelopment, rural economy or otherwise. The
narrowness of the community’s market is a serious challenge in this direction. There is no gain
saying that the volume of intra West African trade is small. This is owed to the fact that states of
the community are all developing and unindustrialized, as such suppliers of raw materials. Trade
is the nucleus of successful integration and as such a potent indicator for the measurement of
performance, however, the ECOWAS has not fared well in intra-regional trade (Gbadebo 2004:
144 - 154). Trade within the community is yet to be demonopolized; imports are not streamlined
and custom procedures not transparent. There is only a slight increase in the performance of export
revenues usually from a few primary commodities or from a single product mineral commodity
(Imohe 2007). As shown in table 4.1 - the ECOWAS member countries as well as their primary
commodity of trade. Its disclosure is that the economy of all the member state of the community
is import driven. This is owed to the fact that they are all producers of close to homogenous raw
material with only exceptions in the area of export of mineral resources which as well is not a fair
economic indicator in development. The best of integration, or better put, the essence of integration
is best achieved when the economies of the integrating countries are so heterogeneously diffused
in trade commodity as to accommodate a reasonable interdependence within the region first and
secondly sustain a collective trading bloc in relation to other states outside the bloc.
Financial Sector disparities and Poor payment system
There is a wide gulf between the financial sectors of states of the Community. Countries like
Nigeria boost of banks with a strong capital base while their counterparts are nowhere close in this
regard. This is to say that the financial sector services amongst the community members are still
rudimentary (Essien and Omanukwue 2004:
49), without existence of uniform regulatory/supervisory rules and an inefficient fund transfer and
payment system characterized by delays due to interbank IT incompatibility platform as well as
varying inconsistent national payment regulatory legislations. This is particularly unbridled in
Nigeria. However, the diffusion of Nigerian banks operations in most West African states, seeks
19
to arrest this challenge but to a molecular extent; banking correspondence is virtually low, leading
to high transaction cost and low trade intensity.
The West African Monetary Agency is yet to put in place an effective regional payments system.
The payment system is still complicated; with most of the currencies of the region not convertible,
and the various exchange regulations impeding the flow of capital within the zone.
Inequality Crisis
This year marks the fourth year of implementation of the Sustainable Development Goals (SDGs),
which aim to address global challenges such as poverty, inequality, climate change and
environmental degradation, and to ensure that no one is left behind. It also marks the mid-point of
the first 10-year implementation plan of the African Union’s Agenda 2063, which seeks to promote
‘a prosperous Africa based on inclusive and sustainable development; and an Africa whose
development is people-driven, relying on the potential of African people, especially its women and
youth, and caring for children’. 1 However, African countries, especially those in West Africa, are
simply not doing enough to meet these regional and global goals.
In 2018, six of the 10 fastest-growing economies in Africa were in West Africa (Côte d’Ivoire,
Senegal, Ghana, Burkina Faso, Benin and Guinea), and Côte d’Ivoire, Ghana and Senegal were
among the 10 fastest-growing economies in the world.2 The region has seen impressive economic
growth in the past two decades, and in a few countries this has been matched by a significant
reduction in poverty levels. However, in most countries the benefits of this unprecedented
economic growth have gone to a tiny few. Inequality has reached extreme levels in the region, and
today the wealthiest 1% of West Africans own more than everyone else in the region combined.
In Nigeria, Africa’s largest economy, the richest man earns about 150,000 times more from his
wealth than the poorest 10% of Nigerians spend on average on their basic consumption in a year.
It would take 46 years for the richest Nigerian man to spend all of his wealth, even if he spent at a
rate of $1m a day.
It would cost about $24bn a year to lift all Nigerians above the extreme poverty line of $1.90 a
day. By comparison, the wealth of the five richest Nigerian men combined stands at $29.9bn –
more than the country’s entire budget in 2017. Nigeria’s stark levels of inequality are comparable
only to those in Brazil, where the richest 5% of the population have as much wealth as the
remaining 95% (the six richest men in Brazil have as much wealth as the poorest 50% of the
population – over 100 million people).
In Ghana, West Africa’s second biggest economy, one of the richest men earns more in a month
than one of the poorest women could earn in 1,000 years. In the decade ending in 2016 the country
saw 1,000 new US dollar millionaires created, but only 60 of these were women. While a few
people grew super-rich, nearly one million more, mostly from the Savannah Region of the country,
were pushed into the poverty pool, while thousands of those who were already poor sank even
deeper. The wealthiest 10% of Ghanaians now account for 32% of the country’s total consumption.
This is more than the consumption of the bottom 60% of the population combined, while the very
poorest 10% of Ghanaians consume only 2%.
20
Inequality is also rife in the provision of public services, such as education and healthcare. For
example, women from rich families in Mali are 15 times more likely to have received a secondary
education than those from poor families. In Nigeria, a woman from a poor family is 26 times more
likely never to have been to school compared with a woman from a rich family, and in Ghana a
girl from a poor family is 14 times more likely never to have been to school than one from a rich
family.4 An estimated 70% of the poorest girls in Niger have never attended primary school;
among those who have attended, school supplies and materials account for almost 75% of spending
on education for the poorest households. Niger is the least educated country in the world, with the
average length of schooling being just 18 months. 5 Only one in two girls goes to primary school,
one in 10 to secondary school and one in 50 to high school.
While some governments are doing little or nothing to tackle inequality, and some through their
actions are even making it worse, a few are taking a different route. Senegal has increased its
public spending on health services and education, making it the 13th highest-spending country in
the world in these sectors, proportionally as a percentage of GDP. Senegal also has one of the
largest safety net programs in Africa.
Inequality and poverty are not preordained: they are the products of political choices and public
policy. Tackling inequality is critical to the fight against extreme poverty. Indeed, unless countries
significantly close the gap between the richest and the rest, ending extreme poverty will remain
just a dream. Governments are not the only ones who need to work to reduce inequality, but
without them success will be impossible.
This briefing paper examines in detail how committed West African governments are to reducing
inequality. To do this, it first provides an overview of the inequality crisis that characterizes much
of the region, and explains why inequality matters not just to the poor but to the whole of society.
The Commitment to Reducing Inequality (CRI) Index, devised by Development Finance
International (DFI) and Oxfam, has analyzed data from 157 countries around the world, and ranked
them according to three major policy areas that are recognized as being key to tackling inequality.
These include progressive spending on assets such as schools, hospitals and social protection,
taxing the better-off more than the poorest people, and paying workers a living wage. For this
review, CRI data have been used to assess the performance of all 15 member countries of the
Economic Community of West African States (ECOWAS), along with Mauritania. Government
action in these areas has been rated to give countries a combined score and a CRI Index ranking
in comparison with the other 15 countries in this region and with other African countries. The
review also assesses policies relating to land and agricultural investment in West Africa.
Analysis based on the CRI Index shows that, of the five major economic blocs in Africa, West
Africa is trailing behind all the others in tackling inequality. In fact, West African citizens are
living under governments that are only half as committed to reducing inequality as their
counterparts in Eastern and Southern Africa. Oxfam’s assessment clearly indicates that
governments in West Africa are, on average, the least committed to reducing inequality across all
regions of Africa, and that most of them are choosing to ignore the inequality crisis rather than
address it.
21
The assessment does offer glimmers of hope, with some West African countries doing well on
addressing inequality in certain areas, even if they are failing in others. Burkina Faso and Senegal,
which have seen modest investments in progressive social spending policies, are notable
exceptions, and Burkina Faso is one of the 10 countries most committed to social spending in subSaharan Africa. However, no other West African government appears among the top 10, and
Nigeria, Sierra Leone and Guinea-Bissau are among the least committed to social spending on the
African continent.
There is nothing inevitable about the crisis of inequality that defines the West Africa region, but
without concerted effort by governments the crisis is likely only to get worse. In short, the key is
for West African governments to radically increase their commitment to tackling the issue. It falls
to national governments and to ECOWAS and the West African Economic and Monetary Union
(UEMOA) to reverse the trend by prioritizing a regional plan to fundamentally change the status
of West Africa as the African region least committed to the fight against inequality.
Nepotism
This refers to favoritism shown to relatives or close friends by those in power. Nepotism has
perfect positive correlation on destructing the economy. Most of the ECOWAS member states
have a very weak enforcement of their legislation. This has made them vulnerable to practice of
nepotism and its adverse effects. Nepotism slows down the economy. It also eliminates
competition in various economic activities. One of its adverse influence is the enactment of unfair
economic policies. For instance, restrictive licensing. This only makes room for the operation of
only a few firms which are firms of the very people who enacted such a policy.
Such nepotist policy prevent various factors of production such as land, labor and capital from
being extended to firms or entrepreneurs who can use them most efficiently to produce rather such
resources get to the politically businesses. Even if in the in the short run such businesses utilize
the resources effectively, in the long run they will be monopolistic and will underutilize the
resources. Once nepotism becomes very pervasive in an economy, then the economy will by a
greater percentage become in efficient and will show lower productivity level and henceforth
diminishing economic growth.
Interestingly, nepotism can cause lack of social trust. This will greatly increase business cost and
diminish economic growth. It may even distort incentives in the economy. The most
entrepreneurial enterprising people may find it more rewarding to invest money and time
befriending politicians and other people in high authority. Some may also decide to give up and
waste their talent.
How is nepotism viewed by member states of EU?
Nepotism is a global disease but it all depends on how a country handles this disease and heals
itself from it. These countries have legislations against nepotism and tirelessly enforce this
legislation. They ensure that no matter your position in society, once you are caught as a perpetrator
then the legislation will deal with you.
22
Nepotism causes a big hole within the governance of these countries. It really depletes their ability
to be effective. Simply put, these countries oversight on nepotism is really causing them problems.
How is nepotism viewed in the member states of ECOWAS member states?
Member states of ECOWAS view nepotism as very bad and unwelcomed. Nonetheless, the rate of
nepotism is very high and this is seen the manifestation of its adverse effects in these countries.
Surprisingly, in theses countries, there are legislations which are supposed to eradicate such a
habit. It is no news that such legislations are ineffective, this is simply because those who are
supposed to ensure its enforcement are also walloping in nepotism. In these countries, nepotism
has led to the appointment of unqualified personnel within vital sectors in the country, especially
the economy. These people by reason of how they got there, does things anyhow purposely to
satisfy their personnel optimal decisions.
Infrastructure and Regulatory Regime Challenges
As the case with economically weak states, infrastructure, which should be a rudimentary fuel to
development, is at its worst state in the community. Inter and intra-regional railings, road networks,
energy, telecommunication facilities as well as expedient border ancillaries is still at an
uncomfortable state. In the areas of telecommunication, ECOWAS’s proposed fused telecom
network- which will link the entire region is still an optical illusion as inter regional calls are
charged at international rate while commuters bear the rage of roam tariff/charges. A modernized
and expanded network which would have a direct bearing on business activities and trade is yet to
be achieved. ECOWAS proposed West African Gas-pipeline, between Nigeria, Ghana, Benin and
Togo has recently been completed though with less than optimal productivity. A closer study of
ECOWAS infrastructural as well as (physical) integrative development initiative reveals a
voluntarily involvement of only few members of the community who feels that their development
interest is maximized individually by such projects. Only few of the states are out to make short
term sacrifices for the long term benefit of integrated market of the region. The tenacity at which
the member states of the community guide
Terrorism
The most immediate and measurable impact of terrorism is physical destruction. Terrorists destroy
existing plants, machines, transportation systems, workers, and other economic resources. On
smaller scales, acts of terrorism may blow up cafes, churches, or roads
The impact of terrorism and war is always negative for the economy, and physical destruction is a
large reason why. Productive resources that might have generated valuable goods and services are
destroyed, while other resources are almost invariably diverted from other productive uses to
bolster the military and defense. None of this creates wealth or adds to the standard of living, even
though military spending is often erroneously cited as a stimulant; this is the " broken window
fallacy " sometimes mentioned by economists.
23
Even if you do not live anywhere near terrorist attacks, you might still be negatively impacted
indirectly. This is because all kinds of markets hate uncertainty, and terrorism creates a lot of it.
There are two obvious industries especially vulnerable to the effects of terrorism: insurance and
tourism. Not all insurance companies pay out in the event of international terrorism or foreign
wars, so the impact is likely less than you might first expect. Nevertheless, terrorism is risky
business for everyone, and insurance companies hate risk as much as anyone else.
On a broader scale, terrorism hurts international trade. This may be due to imminent threats, such
as compromised trade routes and distribution systems, or because of the psychological and
physical reactions to terrorism. This also means less foreign direct investment (FDI), especially in
unstable countries like that of Nigeria who are still battling Boko-Haram.
The estimated direct economic cost of Boko Haram terrorist attacks. Including indirect effects such
as stock market volatility, the total impact is estimated to be around 200 Billion Naira.
Governments are less effective at managing resources for productive economic activity than
private individuals, especially when those resources are co-opted to achieve a strategic military
objective. When governments militarize, the private economy suffers. As economist and historian
Robert Higgs demonstrated in his book "Crisis and Leviathan," many government controls stay in
place long after military campaigns end.
The final risk to the economy is a political risk. This is already on display in Nigeria.
Closing down borders to trade and immigrant workers reduces the size and diversity of economic
transactions and limits productive resources. Economists as early as Adam Smith contended that
the division of labor and gains from trade are limited to the size of available factors of production.
Just as a single household or town is less productive if it only relies on internal resources, so too
do national economies limit themselves to the extent that they wall off external producers and
consumers.
CONCEPT OF ILLITERACY
In 1948, the acquisition of a broad range of skills was officially recognized as a fundamental aspect
of human rights and personal fulfilment. These skills include reading, writing and numeracy
(UNESCO, 2006). Ten years later, at the UNESCO General Conference in Paris, the term
„illiterate‟ was defined as someone who is unable to read and write a simple statement about his
or her daily life. Illiteracy may be analyzed at different levels, through complementary indicators.
(a) Complete illiteracy is defined as the lack of the most basic reading and writing skills.
Completely illiterate persons can neither read nor write. A proxy indicator of this variable is not
having attended or graduated from at least the first year of primary education (zero years of
schooling). This can be estimated individually, using census and survey data. It can also be
estimated at an aggregate level, by studying different age groups on the basis of information from
the educational system, analyzing the relationship between enrolment levels, graduation rates,
failure rates and withdrawals from school and the size of the cohort of first-grade entrants for a
given year. (b) Functional Illiteracy is the lack of minimum capabilities needed to function in
society has no fixed parameters, in as much as there is no consensus regarding what those
24
capabilities are, aside from reading and writing. Complete illiteracy means a person cannot read
or write at all. Of equal relevance is the concept of functional illiteracy, which means an individual
may have basic reading, writing and numerical skills but cannot apply them to accomplish tasks
that are necessary to make informed choices and participate fully in everyday life. During the
second half of the twentieth century, as formal education became widespread and major literacy
campaigns got underway, the concept of illiteracy began to change. In the mid-1960s, the concept
of functional illiteracy began to gain acceptance, and literacy objectives became more complex,
shifting toward the acquisition and development of the communication skills needed to participate
in social life and production.
UNESCO defines functional illiteracy as “measured by assessing reading, writing and
mathematical skills in the various domains of social life which influence individual identity and
insertion into society. From this perspective, literacy involves not only reading and writing but
also the acquisition of the skills necessary for effective and productive performance within
society”.
Economic Consequences of Illiteracy
One of the most convincing arguments in favor of human resource development is the fact that
literacy and increased schooling improve productivity and drive economic growth. Over the last
few decades, knowledge has become the key ingredient of the new production paradigm, and
education has become an essential factor in the modernization of production systems and the
economic behavior of individuals. If income gaps are to be reduced, the coverage and quality of
educational systems must be improved. Education is one of the key determinants of individual
income, not only because it naturally improves or increases personal productivity, but also because
it improves the information available to individuals regarding the challenges they must face in
society (the marketplace). It also increases social mobility (Riveros, 2005).
Hence, education influences a worker’s standing in the occupational hierarchy and the ability to
find employment. Schooling and training are the variables which exert the strongest influence on
the occupational hierarchy (Schmelkes&Ahuja, 2000). Young people who fail to complete primary
school have a lower chance of obtaining jobs of sufficient quality to avoid poverty (Goicovic,
2002).
In conclusion
The member states of ECOWAS have reacted differently to the crisis. The member states have
largely accepted the implementation and enforcement of democratic rules as a common task. The
crises management as result of the long-term development of structures needed to deal with the
crisis. For instance, the logical action plan in the area of peace and security. Also, effective
sanctioning and mediation abilities. The member states’ security design reveals blind spots and
portrays loose areas in terms of individual country’s politics and this pose a threat to economic
development in the country. Member states of ECOWAS are also faced with crisis of bad attitudes
like nepotism, bribery and many others by its citizens. The member states need to a thorough study
on the attitudes of EU member states to these attitudes and the right approaches to use in order for
the country to be effective, especially its human resource.
25
Bibliography
Aryeetey, E. (January 2001). REGIONAL INTEGRATION. Working Paper No. 170, 42.
ATUOBI, S. M. (2007, December ). Corruption and State Instability in West Africa. Retrieved
from Relief Web:
http://reliefweb.int/sites/reliefweb.int/files/resources/98D8A1F729CEB5B8C125746C00
49D740-kaiptc-dec2007.pdf
Bandyopadhyay, K. (2018). What are the effects of nepotism on a country's development? Quora.
Retrieved from http://www.quora.com/What-are-the-effects-of-nepotism-on-a-countrysdevelopment
E. Chijioke OGBONNA1*, B. A. (2013 ). The ECOWAS Platform and the Persisting Challenges
of . Journal of Economics and Sustainable Development , 11.
Foster, R. R. (December 2011). ECOWAS’s Infrastructure . Policy Research Working Paper, 76.
OGBEIDI·, M. M. (2010). A BRIEF ANALYSIS OF THE EUROPEAN UNION (EU). The
Journal of International Social Research, 9.
Oxfam. (2019, July 09). The West Africa Inequality Crisis. Retrieved from Relief Web Website:
http://reliefweb.int/report/world/west-africa-inequality-crisis-how-west-africangovdernments-are-failing-reduce
ROSS, S. (2019). Top 5 Ways Terrorism Impacts the Economy. Investopedia. Retrieved from
http://www.investopedia.com/articles/markets/080216/top-5-ways-terrorism-impactseconomy.asp
Thengal, N. (2013). SOCIAL AND ECONOMIC CONSEQUENCES OF ILLITERACY.
INTERNATIONAL JOURNAL OF BEHAVIORAL SOCIAL AND MOVEMENT
SCIENCES, 9.
Weinstein, K. I. (2000, June). Measuring the Economic Impact of Civil War. Retrieved from
Harvard Education: http://imai.fas.harvard.edu/research/files/cid.pdf
26