•• ECOWAS REGIONAL INTEGRATION:ECOWAS REGIONAL INTEGRATION:Position of Common Investment MarketPosition of Common Investment Market

Prof BambaProf BambaCommissioner Macroeconomic PoliciesCommissioner Macroeconomic PoliciesCommissioner Macroeconomic PoliciesCommissioner Macroeconomic PoliciesECOWAS CommissionECOWAS Commission

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AAAAWhat is Regional /Economic Integration?What is Regional /Economic Integration?

•• The concept ofThe concept of regional integrationregional integration takestakes•• The concept of The concept of regional integration regional integration takes takes on a predominantly economic slant in the on a predominantly economic slant in the literature to the point of confusion with thatliterature to the point of confusion with thatliterature, to the point of confusion with that literature, to the point of confusion with that of of economic integrationeconomic integration

•• However, economic integration concept can However, economic integration concept can be used generically in reference to growing be used generically in reference to growing

h hh heconomic ties among countries which may or economic ties among countries which may or may not be geographically contiguous.may not be geographically contiguous. AA

What is Regional/Economic IntegrationWhat is Regional/Economic Integration?(cont…)?(cont…)

•• Regional integration can cover the full rangeRegional integration can cover the full range•• Regional integration can cover the full range Regional integration can cover the full range of public sector activity, including not only of public sector activity, including not only the coordination of economic policies butthe coordination of economic policies butthe coordination of economic policies, but the coordination of economic policies, but also regional security, human rights, also regional security, human rights, education, health, research and technology, education, health, research and technology, , , gy,, , gy,and natural resource management.and natural resource management.

•• Regional in this sense is here understood as Regional in this sense is here understood as gg‘‘macromacro--regional’ regional’ that is at the suprathat is at the supra--national level as opposed to micronational level as opposed to micro--regional, regional, h ih i bb i l l li l l lthat is at that is at subsub--national levelnational level..

What is Regional/Economic IntegrationWhat is Regional/Economic Integration?(cont…)?(cont…)

•• Thus, regional integration refers to the Thus, regional integration refers to the emergence of a governance level betweenemergence of a governance level betweenemergence of a governance level between emergence of a governance level between the national and global levels within the the national and global levels within the system of world governance based onsystem of world governance based onsystem of world governance based on system of world governance based on cooperative behavior and the designs of cooperative behavior and the designs of common policies and institutions by actorscommon policies and institutions by actorscommon policies and institutions by actors common policies and institutions by actors that traditionally belong(that traditionally belong(eded) to the ) to the

ti l l lti l l lnational governance level.national governance level.

BBBBDimensions of Economic IntegrationDimensions of Economic Integration

11 Preferential Trade ArrangementPreferential Trade Arrangement

•• Provision of merely lower barriers among Provision of merely lower barriers among participating nationsparticipating nationsp p gp p g

•• Non members faces higher levels of barriers Non members faces higher levels of barriers to trade.to trade.to trade.to trade.

•• It is the loosest form of economic It is the loosest form of economic integrationintegrationintegration.integration.

•• Example British Common Preference Scheme Example British Common Preference Scheme t bli h d i 1932t bli h d i 1932

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established in 1932established in 1932

2.2. Free Trade AreaFree Trade Area

•• All barriers to trade are removed among All barriers to trade are removed among bbmembers.members.

•• Each member retains its own barriers to Each member retains its own barriers to trade with non members.trade with non members.

•• There is need forThere is need for rule of originrule of origin totoThere is need for There is need for rule of originrule of origin to to protect deflection possibilities from nonprotect deflection possibilities from non--membersmembersmembers.members.

•• European Free Trade Area (EFTA) is an European Free Trade Area (EFTA) is an example; NAFTA another exampleexample; NAFTA another exampleexample; NAFTA another example.example; NAFTA another example.

•• ECOWASECOWAS

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3.3. Customs UnionCustoms Union

•• No tariff or other barriers on contracting No tariff or other barriers on contracting bbmembersmembers

•• Common external tariff (CET) on the rest of the Common external tariff (CET) on the rest of the world by custom membersworld by custom members

•• CET accepted is usually the lowest preCET accepted is usually the lowest pre--union union p y pp y praterate

•• Harmonizing nonHarmonizing non--tariff barriers under customstariff barriers under customs•• Harmonizing nonHarmonizing non tariff barriers under customs tariff barriers under customs union is a difficult task union is a difficult task

•• European Union formed in 1957European Union formed in 1957•• European Union formed in 1957.European Union formed in 1957.•• Expected of ECOWAS post EPAs.Expected of ECOWAS post EPAs.

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44 Common MarketCommon Market44 Common Market Common Market

H ll Ch t i ti C t U iH ll Ch t i ti C t U i•• Have all Characteristics Customs UnionHave all Characteristics Customs Union•• Has no invisible trade restrictions/ Has no invisible trade restrictions/ //

harmonization of trading standards and harmonization of trading standards and practicespracticespracticespractices

•• Harmonizes monetary and fiscal policies of Harmonizes monetary and fiscal policies of member states.member states.

•• Free factor mobility and competition policyFree factor mobility and competition policyFree factor mobility and competition policyFree factor mobility and competition policy•• EU achieved this status in 1993EU achieved this status in 1993

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55 Economic UnionEconomic Union

•• Most advanced type of economic integration Most advanced type of economic integration yp gyp g•• Has all attributes of a common marketHas all attributes of a common market•• Coordination of macroeconomic and budgetaryCoordination of macroeconomic and budgetary•• Coordination of macroeconomic and budgetary Coordination of macroeconomic and budgetary

policiespoliciesB t l i th U it d St t f A iB t l i th U it d St t f A i•• Best example is the United States of America.Best example is the United States of America.

•• Common currencyCommon currency

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Table Table Th Di i f E i I iTh Di i f E i I iThe Dimensions of Economic IntegrationThe Dimensions of Economic Integration

CharacteristicCharacteristic

TT

Free TradeFree TradeBetweenBetweenMember State Member State

CommonCommonExternalExternalTariff Tariff

Free Free Movement Movement of Factors of Factors ofof

HarmonizatioHarmonization of n of Economic Economic PolicyPolicy

Centralization ofCentralization ofEconomic &Economic &MonetaryMonetary

TypesTypes of of ProductionProduction

Policy Policy

Free Trade AreaFree Trade Area YesYes NoNo NoNo NoNo

Policy Policy

NoNo

Customs UnionCustoms Union YesYes YesYes NoNo NoNo NoNo

Common Market Common Market YesYes YesYes YesYes YesYes

E i &E i & YY YY YY YY

NoNo

Economic &Economic &MonetaryMonetaryUnion Union

YesYes YesYes YesYes YesYesYesYes

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C C ECOWAS Regional Integration ModelECOWAS Regional Integration ModelECOWAS Regional Integration ModelECOWAS Regional Integration Model

CO S bli h d h 28 h 9 dCO S bli h d h 28 h 9 dECOWAS was established on the 28th May 1975 and ECOWAS was established on the 28th May 1975 and its Treaty provisions was mandated to:its Treaty provisions was mandated to:

(a)(a) eliminate between member states customs duties andeliminate between member states customs duties and(a)(a) eliminate between member states customs duties and eliminate between member states customs duties and other charges of equivalent effect on imports and other charges of equivalent effect on imports and exports; exports;

(b)(b) eliminate quantitative and administrative restrictionseliminate quantitative and administrative restrictions(b)(b) eliminate quantitative and administrative restrictions eliminate quantitative and administrative restrictions on trade among members; on trade among members;

(c)(c) establish a common external tariff structure and establish a common external tariff structure and i l li t di l li t d b t ib t icommercial policy towards noncommercial policy towards non--member countriesmember countries;;

(d)(d) eliminate obstacles restricting the free movement of eliminate obstacles restricting the free movement of persons, services and capital between member states;persons, services and capital between member states;persons, services and capital between member states; persons, services and capital between member states;

(e)(e) harmonize agricultural policies and promote common harmonize agricultural policies and promote common projects in the member states notably in the field of projects in the member states notably in the field of marketing research and agromarketing research and agro--industrial enterprises;industrial enterprises;

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marketing, research and agromarketing, research and agro--industrial enterprises; industrial enterprises;

CCECOWAS Regional Integration Model(cont..)ECOWAS Regional Integration Model(cont..)g g ( )g g ( )

(f)(f) implement schemes for the joint development implement schemes for the joint development of transport communication energy and otherof transport communication energy and otherof transport, communication, energy and other of transport, communication, energy and other infrastructural facilities as well as the evolution infrastructural facilities as well as the evolution of a common policy in these fields;of a common policy in these fields;p y ;p y ;

(g)(g)harmonize economic and industrial policies of harmonize economic and industrial policies of member states and eliminate disparities in the member states and eliminate disparities in the l l f d l t f b t tl l f d l t f b t tlevel of development of member states;level of development of member states;

(h)(h)harmonize monetary policies of member harmonize monetary policies of member states;states;states;states;

(i)(i) establish a fund for cooperation, compensation establish a fund for cooperation, compensation and development; andand development; andand development; andand development; and

(j)(j) (j) embark on other activities in the interest of (j) embark on other activities in the interest of the member states within the community.the member states within the community.

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yy

D D Phases of ECOWAS Type of RegionalPhases of ECOWAS Type of RegionalPhases of ECOWAS Type of Regional Phases of ECOWAS Type of Regional

IntegrationIntegration

U d h h i l f k fU d h h i l f k fUnder the theoretical framework of Under the theoretical framework of economic integration described above, economic integration described above,

hhECOWAS Treaty is among the most ECOWAS Treaty is among the most ambitious ones as it already envisaged a ambitious ones as it already envisaged a phased implementation of:phased implementation of:

•• (a) and (b) is known as a(a) and (b) is known as a free tradefree trade(a) and (b) is known as a (a) and (b) is known as a free trade free trade area;area;

•• (c) is nothing but a(c) is nothing but a customs unioncustoms union;;•• (c) is nothing but a (c) is nothing but a customs unioncustoms union;;•• (d) (d) -- (g) is an (g) is an common marketcommon market; while; while

1313•• (h) (h) -- (j) is (j) is economic unioneconomic union//monetary monetary

integrationintegration

EEE E Revival of Interest in ECOWAS Regional Revival of Interest in ECOWAS Regional

IntegrationIntegrationIntegrationIntegration

•• The revival of interest in regional integration in The revival of interest in regional integration in recent times and cooperation in a world widerecent times and cooperation in a world widerecent times and cooperation in a world wide recent times and cooperation in a world wide phenomenon is inspired by the success of the phenomenon is inspired by the success of the European experienceEuropean experienceEuropean experience.European experience.

•• It also reflects a growing appreciation of the It also reflects a growing appreciation of the b fit t b d i d fb fit t b d i d f ‘ i l it ’‘ i l it ’benefits to be derived from benefits to be derived from ‘regional unity’ ‘regional unity’ and cooperation in meeting the challenges and cooperation in meeting the challenges

d b i i l titi ld k td b i i l titi ld k tposed by increasingly competitive world markets posed by increasingly competitive world markets brought about by globalizationbrought about by globalization

EEE E Revival of Interest in Regional Integration Revival of Interest in Regional Integration

(cont…)(cont…)( )( )

•• In ECOWAS countries, the regional aspirations In ECOWAS countries, the regional aspirations as shared by the community statesmen, as shared by the community statesmen, i t ll t l d iti lik fl t li t ll t l d iti lik fl t lintellectuals, and citizens alike reflect a general intellectuals, and citizens alike reflect a general desire to break the confines of individual desire to break the confines of individual nationsnations state and a denial of all the thingsstate and a denial of all the thingsnationsnations--state, and a denial of all the things state, and a denial of all the things that divides the region, including the multiple that divides the region, including the multiple barriers to the free movement of goods andbarriers to the free movement of goods andbarriers to the free movement of goods and barriers to the free movement of goods and service, people, and capital among the service, people, and capital among the countries in the region.countries in the region.gg

E E Revival of Interest in Regional Revival of Interest in Regional

Integration(cont…)Integration(cont…)

•• These regional aspirations constitute a These regional aspirations constitute a t th if t i it ft th if t i it fresponse to the manifest incapacity of response to the manifest incapacity of

individual member nations of the individual member nations of the community to generate the required community to generate the required development.development.development.development.

•• They thus indicate a search for solution They thus indicate a search for solution t di b d h t i ti tit di b d h t i ti tiextending beyond what existing nationsextending beyond what existing nations--

states appear capable of providingstates appear capable of providing

E E Revival of Interest in Regional Revival of Interest in Regional

Integration(cont…)Integration(cont…)

•• However, since no regional integration can However, since no regional integration can d ith t f b l i td ith t f b l i tsucceed without a sense of belonging to succeed without a sense of belonging to

such community by member states, any such community by member states, any harmonization process must embrace the harmonization process must embrace the opinion of all.opinion of all.opinion of all.opinion of all.

•• This is why we are gathered here with This is why we are gathered here with th i l t k h ld t d lib tth i l t k h ld t d lib tthe regional stakeholders to deliberate on the regional stakeholders to deliberate on how to move the region to the next level how to move the region to the next level in its integration aspirationsin its integration aspirations

E E Revival of Interest in Regional Integration Revival of Interest in Regional Integration

(cont…)(cont…)

•• Most of the ECOWAS countries are very small, Most of the ECOWAS countries are very small, not only in population but also in terms ofnot only in population but also in terms ofnot only in population, but also in terms of not only in population, but also in terms of economic output.economic output.O l thO l th l d l d t i i thl d l d t i i th•• Only three nonOnly three non--less developed countries in the less developed countries in the region (Nigeria, Ghana and Cote d’ region (Nigeria, Ghana and Cote d’ IvorieIvorie) have ) have

l ti f 10 illil ti f 10 illipopulation of over 10 million.population of over 10 million.•• Despite this, development requires the Despite this, development requires the

organization of social and economic activities on organization of social and economic activities on a much larger scale than as they currently exists a much larger scale than as they currently exists in each of the ECOWAS countriesin each of the ECOWAS countries

E E Revival of Interest in RegionalRevival of Interest in RegionalRevival of Interest in Regional Revival of Interest in Regional

Integration (cont…)Integration (cont…)

•• Such larger scale type of economic activities Such larger scale type of economic activities guarantee a range of benefits associated withguarantee a range of benefits associated withguarantee a range of benefits associated with guarantee a range of benefits associated with lower unit costs of production, increased lower unit costs of production, increased specialization and competition access tospecialization and competition access tospecialization and competition, access to specialization and competition, access to technology, and greater sharing of ideas and technology, and greater sharing of ideas and experiences in all areas of economic endeavorexperiences in all areas of economic endeavorexperiences in all areas of economic endeavor.experiences in all areas of economic endeavor.

•• ECOWAS countries today are weakly integrated ECOWAS countries today are weakly integrated ti ll i ll d i t ti llti ll i ll d i t ti llnationally, regionally and internationally, nationally, regionally and internationally,

35years after it was established (1975).35years after it was established (1975).

E E Revival of Interest in Regional Revival of Interest in Regional

Integration (cont…)Integration (cont…)

•• Although the size of a country or region is Although the size of a country or region is not a sufficient condition to achieve thenot a sufficient condition to achieve thenot a sufficient condition to achieve the not a sufficient condition to achieve the above economies of scale benefits; above economies of scale benefits;

l / i h i kll / i h i kl•• a large country / region that is weakly a large country / region that is weakly integrated internally due to poor integrated internally due to poor infrastructure, ethnic rivalries, or socioinfrastructure, ethnic rivalries, or socio--political factors may provide fewer political factors may provide fewer opportunities for development than a opportunities for development than a smaller country that is well integrated.smaller country that is well integrated.

E E Revival of Interest in Regional Revival of Interest in Regional

Integration(cont…)Integration(cont…)

•• Ethnic and socioEthnic and socio--political divisions are political divisions are ti l l i ifi t i Lib i Siti l l i ifi t i Lib i Siparticularly significant in Liberia, Sierra particularly significant in Liberia, Sierra

Leone, and Nigeria.Leone, and Nigeria.•• All the countries in the region suffer from All the countries in the region suffer from

weak transport and communicationweak transport and communicationweak transport and communication weak transport and communication infrastructure as well as other infrastructure as well as other i di t t ii di t t i iiimpediments to socioimpediments to socio--economic economic integration at the integration at the national levelsnational levels

E E Revival of Interest in Regional Revival of Interest in Regional

Integration(cont…)Integration(cont…)

•• RegionallyRegionally, , ECOWAS countries are still ECOWAS countries are still di id d b id f i tit ti ldi id d b id f i tit ti ldivided by a wide range of institutional, divided by a wide range of institutional, historical, legal, and infrastructural historical, legal, and infrastructural barriers.barriers.

•• At theAt the internationalinternational level the region islevel the region is•• At the At the internationalinternational level, the region is level, the region is marginalized along with other developing marginalized along with other developing

t i f j i th b fit ft i f j i th b fit fcountries from enjoying the benefits of countries from enjoying the benefits of globalization.globalization.

FFF F Basis For ECOWAS Common Investment MarketBasis For ECOWAS Common Investment Market

•• The expansion of internal community market of The expansion of internal community market of ECOWAS is one of the necessary conditions forECOWAS is one of the necessary conditions forECOWAS is one of the necessary conditions for ECOWAS is one of the necessary conditions for the promotion of the region to investors.the promotion of the region to investors.Th b fit hi h fTh b fit hi h f•• The benefits which may accrue from The benefits which may accrue from harmonisation of regional investment policies harmonisation of regional investment policies t d C it C d i l d i dt d C it C d i l d i dtowards a Community Code include: increased towards a Community Code include: increased investment inflows into the region, enhanced investment inflows into the region, enhanced

d ti it l t ti lld ti it l t ti llproductivity, employment generation, as well as productivity, employment generation, as well as reduced incidences of corruptionreduced incidences of corruption

FFF F Basis For ECOWAS Common Investment MarketBasis For ECOWAS Common Investment Market

•• It is expected that the harmonization of regional It is expected that the harmonization of regional investment policies into a singular code will removeinvestment policies into a singular code will removeinvestment policies into a singular code will remove investment policies into a singular code will remove obstacles to “doing business” and provide efficient and obstacles to “doing business” and provide efficient and effective legal, as well as regulatory frameworks that effective legal, as well as regulatory frameworks that would promote a healthy competition and growth of the would promote a healthy competition and growth of the regional private sector. regional private sector.

•• In addition, the process of the investment simplification In addition, the process of the investment simplification into a singular into a singular CodeCode will not only end up reducing will not only end up reducing or eliminating complexities in the regional investmentor eliminating complexities in the regional investmentor eliminating complexities in the regional investment or eliminating complexities in the regional investment policies but will equally limit the potential of any future policies but will equally limit the potential of any future reintroduction of cumbersome or unnecessary reintroduction of cumbersome or unnecessary yyrequirements from prospective investors coming into the requirements from prospective investors coming into the region. region.

GGGGConclusionConclusion

•• Investment climate reforms in West Africa, as indeed in Investment climate reforms in West Africa, as indeed in other parts of the world are now widely acknowledgedother parts of the world are now widely acknowledgedother parts of the world, are now widely acknowledged other parts of the world, are now widely acknowledged to cover a very wide agenda with a need for judicious to cover a very wide agenda with a need for judicious prioritization and sequencing.prioritization and sequencing.

•• In the past, choices were based on a standard list of In the past, choices were based on a standard list of reforms known as the “Washington Consensus” ( such as reforms known as the “Washington Consensus” ( such as macroeconomic stabilization, privatization, trade macroeconomic stabilization, privatization, trade liberalization, protection of property rights ,etc)liberalization, protection of property rights ,etc)Eff ti f ill t i ll b f d ith t h i lEff ti f ill t i ll b f d ith t h i l•• Effective reforms will typically be faced with technical Effective reforms will typically be faced with technical and administrative constraints at all levels of and administrative constraints at all levels of government but especially at state and local levelsgovernment but especially at state and local levelsgovernment, but especially at state and local levels, government, but especially at state and local levels, which carry the burden of implementation.which carry the burden of implementation.

••

GGG G Conclusion(cont..)Conclusion(cont..)

•• This is why consultation is particularly important for This is why consultation is particularly important for policies that will have wide distributional consequencespolicies that will have wide distributional consequencespolicies that will have wide distributional consequences policies that will have wide distributional consequences and are likely to impact multiple stakeholder groups. and are likely to impact multiple stakeholder groups.

•• There is also a clear need to create oversight There is also a clear need to create oversight a o a a d o a o ga o a a d o a o gmechanisms to sustain mechanisms to sustain such reforms .These such reforms .These will require :will require :

--Credible mandates and objectives backed by Credible mandates and objectives backed by j yj ylegislation to signal government commitmentlegislation to signal government commitment--Participation of a wide range of stakeholders to Participation of a wide range of stakeholders to contribute knowledge, experience, and ideas, and to contribute knowledge, experience, and ideas, and to ensure transparencyensure transparency

Thi i h ll h f t dThi i h ll h f t d•• This is why we are all here for two daysThis is why we are all here for two days

THANK YOU FOR LISTENINGTHANK YOU FOR LISTENINGTHANK YOU FOR LISTENINGTHANK YOU FOR LISTENING

ProfProf BambaBamba2727

Prof Prof BambaBamba