ecowas is dead - long live ecowas

ECOWAS IS DEAD - LONG LIVE ECOWAS

A study of Ghana and

regional integration

Association of Ghana Industries and DI International Consultancy

September 2000

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The outlined section shows the members countries of ECOWAS.

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TABLE OF CONTENTS

1 INTRODUCTION 6 1.1 Executive summary 6 1.2 5 barriers to trade and 11 ways of removing them 9 1.3 Research objectives 10 1.4 Limitations 10 1.5 Methodology 10 1.6 Structure of the paper 11

2 TRADE IN WEST AFRICA 12 2.1 Background 12 2.2 Comparative economic study 13 2.3 West African trade patterns 14 2.4 Ghanaian trade patterns 16 2.5 Ghana’s export to Nigeria and Côte d’Ivoire 17 2.6 Conclusion 18

3 ECOWAS 20 3.1 Background 20 3.2 Structure of ECOWAS 21 3.3 Payment of contributions 21 3.4 Free movement of goods 22 3.5 Status on TLS 25 3.6 Status on cross border payments 26 3.7 Infrastructure 28 3.8 Private sector initiatives 29 3.9 UEMOA 30 3.10 Comparison of ECOWAS and UEMOA selected areas 33 3.11 Conclusion 34

4 THE GHANA-NIGERIA FAST TRACK 36 4.1 Background 36 4.2 The fast track 37 4.3 Policies on regional integration 38 4.4 Monetary integration 40 4.5 Creation of a free trade area 42 4.6 The fast track negotiations for free trade 43 4.7 Private sector initiatives 45 4.8 Investments 45

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4.9 Donor support to regional integration 47 4.10 Conclusion 49

5 PRIVATE SECTORS VIEWS ON REGIONAL INTEGRATION 50 5.1 Background 50 5.2 Direction of regional integration 50 5.3 Potential benefits to industry 51 5.4 Private sector priorities, Côte d’Ivoire and Nigeria 51 5.5 Ghana’s competitive advantages 54 5.6 Conclusion 56

6 PROPOSALS FOR SUPPORT 57 6.1 Introduction 57 6.2 1. Red tape concerning export/import procedures 59 6.3 2. Lack of an intra-regional payment and clearing system 62 6.4 3. Road blocks and obstructive attitude of officials 63 6.5 4. Mistrust between operators in the sub-region 65 6.6 5. Lack of an enabling environment for Ghanaian exports 67

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7 ANNEXES 70 7.1 Annex 1: Status on contributions 70 7.2 Annex 2: Recommendations 71 7.3 Annex 3: Company Interviews - Ghana 72 7.4 Annex 4: Contacts 83 7.5 Annex 5: Bibliography 85 7.6 Annex 6: Plan of Action for establishing a free trade area, January - December 2000 88

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ABBREVIATIONS ADB African Development Bank AGI Association of Ghana Industries APEC Asian Pacific Economic Co-operation ASYCUDA Automated System of Customs Data BCEAO Banque Centrale des États de l’Afrique de l’Ouest BOAD Banque Ouest-Africaine de Développement CEPS Customs Excise Preventive Service DANIDA Danish International Development Assistance DI Confederation of Danish Industries EAC East African Community ECOWAS Economic Community of West African States EPZ Export Processing Zone (E)TLS (ECOWAS) Trade Liberalisation Scheme EU European Union FDB Food and Drugs Board FEWAMA Federation of West African Manufacturers’ Associations FNISCI Fédération Nationale des Industries et Services de Côte d’Ivoire FWACC Federation of West African Chambers of Commerce GIPC Ghana Investment Promotion Centre GNCCI Ghana National Chamber of Commerce and Industry GSB Ghana Standards Board GSE Ghana Stock Exchange IPA Investment Promotion Agency MAN Manufacturers Association of Nigeria NACCIMA Nigerian Association of Chambers of Commerce and Industry NAFTA North American Free Trade Area NSB National Standard Board NSE Nigerian Stock Exchange NIPC Nigeria Investment Promotion Commission PEF Private Enterprise Foundation SADC Southern African Development Co-operation SMZ Second Monetary Zone SON General Standards Organisation of Nigeria UEMOA Union Économique et Monétaire Ouest-Africaine UMOA Union Monétaire Ouest-Africaine UNIDO United Nations Industrial Development Organisation USAID United States Agency for International Development WAEN West African Enterprise Network WACH West African Clearing House WAIPA West African Investment Promotion Association WAIPS West African Interbank Clearance System WAMA West African Monetary Agency WTO World Trade Organisation

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1 Introduction

1.1 Executive summary Intra-regional trade in Africa has for many years been dismally low compared to trading blocks in the industrialised countries. Trade in the ECOWAS sub-region is no exception. Exports to the sub-region still hover at around 10% of total exports - the same level as in 1980. Ghana’s trade patterns in many ways resemble the pat-terns for the rest of the sub-region, with the bulk of trade taking place with the EU. From the West African sub-region imports to Ghana mainly consist of products such as oil and electricity, while exports are more diversified. Togo and Burkina Faso, the tenth and seventh largest markets in the sub-region, are the main export destina-tions of Ghana. The potentially largest markets Côte d’Ivoire and Nigeria are only the sixth and seventh largest export destinations. It is in these countries that the largest unexplored potential lies. Hopes were high when the ECOWAS treaty was signed 25 years ago in Lomé, Togo. The Heads of State and Government envisioned a West Africa with strong trade re-lations, strengthened political co-operation and free of colonial ties. However, in the ensuing decades progress was slow; so slow that ECOWAS was considered a failure by many observers. This finally led to a new ECOWAS treaty. In 1993 The Heads of State and Government decided to revitalise the community by signing a treaty with even more ambitious goals. This time the co-operation was to be extended into an in-ternal market, a common currency and a West African parliament. Unfortunately the new treaty was no more successful than the old one. Only few of the basic goals of the treaty have been achieved and the ECOWAS countries are as unified now as they were 25 years ago. Nevertheless, ECOWAS has achieved something. The institution has an impressive secretariat in Abuja, Nigeria. 700 goods have been approved under the ECOWAS Trade Liberalisation Scheme. Infrastructure development has progressed through the telecommunication project Intelcom 1, which established communication links between the ECOWAS capitals. The Trans-coastal and Trans-sahelian highways have improved road transport conditions in the sub-region. Financial services in the sub-region have also been improved through ECOBANK. But high profile ECOWAS institutions such as the ECOWAS FUND and the West African Monetary Agency have never had the desired impact on economic development. Cross border trade is still so cumbersome that many companies have given up exporting directly to the sub-region. Where should the responsibility for ECOWAS’s failure to integrate the economies be placed? The main fault must lie with the member states. It is the member states that have failed to implement the treaties that they themselves have signed. Further-more, they have never given the ECOWAS institution sufficient power to pursue the goals of the treaties and penalise member states that failed to implement them. If the ECOWAS institution is to become a success in the future, the authority of the se-cretariat must be enhanced and member states must become truly committed to the ECOWAS project. Otherwise there is a real risk that progress in the next 25 years will be as slow as the progress to date.

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Recently, ECOWAS has been given new hope through the Ghana-Nigeria fast track initiative. The fast track is an offspring of the lack of progress within ECOWAS. However, the rapid and successful integration between the UEMOA countries is also an important factor. UEMOA has managed to unite 8 francophone countries in West Africa – all of them also members of ECOWAS. With a common currency, a customs union established on January 1, 2000 and plenty of external support, the UEMOA countries are preparing for further integration. Ghana and Nigeria had to come up with a new initiative in order to stay at the centre of political developments in West Africa. The fast track initiative is open to all ECOWAS members. It is, however, more likely that the fast track countries and UEMOA will merge later. Conse-quently, ECOWAS has been revived albeit in a new and fragmented shape. It was President Obasanjo of Nigeria that initiated the Ghana-Nigeria fast track in Lomé in December 1999. He urged the ECOWAS leaders to adopt a two-track ap-proach to regional integration. If two or more member states were ready to imple-ment a particular ECOWAS programme, they should be allowed to do so. These countries would then be the fast track to which the slower track could join later. The idea was formally endorsed by the ECOWAS Heads of State and Government in Ba-mako, Mali in January 2000. The aim of the fast track initiative is to establish a second monetary zone by 2003 and a free trade area beginning from year 2000. Furthermore, the chief executives of UEMOA and ECOWAS have been given the task of finding strategies for merging the fast track countries and UEMOA. Both Ghana and Nigeria have shown ample proof of their commitment to the fast track negotiations. At the very top the Presi-dents of the two countries have consistently advocated for an accelerated integration process and have personally attended a number of high-level summits to show their support. This commitment has also been reflected at the lower levels of administration from ministers to civil servants. Relevant ministers attend meetings along with the key government institutions and large delegations are sent for the negotiations. In-volvement of the private sector is seen as very important to the whole process and some of the leading organisations have been invited to participate. Altogether, the negotiations reflect a commitment and pace that has never before been seen in the ECOWAS context. Concrete initiatives are also being implemented by the government of Ghana. ECOWAS travellers’ cheques were sent into circulation in 1999 and banks report an increasing interest in their use. On April 15, 2000 a new regulation on a 0,5% duty on imports from non-ECOWAS countries was implemented. The revenue from the duty is to be used for paying arrears and contributions to the ECOWAS secretariat and funding for a compensation mechanism. Ghana has also recently created a fast track committee, chaired by Vice-President Mills. At the fortnightly meetings, Minis-ters and chief executives from the involved government institutions are asked to ac-count for their progress in achieving the goals of the fast track. A recently created ministry of regional integration is also likely to play an increasingly important role in regional affairs.

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Despite all the positive signs there are still elements lacking in the negotiations. The results of the fast track have not yet trickled down to the operators that ultimately stand to benefit from the initiatives. The private sector has not been fully briefed on the essential issues and the feeling is that the process is moving along without much attention to the reality on the ground. Though the principles and political statements of the negotiations have easily made the headlines, precise information on the impli-cations for traders are lacking. Even more pressing is the establishment of a proper consultation and sensitisation process. Everyday experiences with the harassment and hassles of cross border trading have to be highlighted and dealt with. The companies that have participated in this study ask one basic question: “Are we ready to integrate?” The general feeling is that the necessary enabling business envi-ronment for cross border trade has not yet been put in place. A number of barriers to trade exist and the fast track does not include the necessary measures for dealing with them. The following example highlights the problem. On August 7, 2000 the Minister of Trade and Industry urged Ghanaian companies to apply for the reduced ECOWAS Trade Liberalisation Scheme (ETLS) tariff. However, the Minister did not mention that the approval of goods for the scheme takes at least 2 years. Many com-panies simply give up applying for the scheme because they never receive an answer from the approval committee. Examples such as this abound. The companies state that Nigeria is the market with the strongest potential in West Africa. However, exporting to Nigeria is currently so cumbersome that many compa-nies prefer indirect exports through traders. Many companies also wonder why Côte d’Ivoire has not been included in the fast track. The Ivorian market is the second largest in the region, Ghana and Côte d’Ivoire are contiguous and the language bar-rier is not regarded as a problem. Integration with Nigeria is important, but integra-tion with other countries in the sub-region is considered equally important. Basically, the companies agree with the strategy chosen by the government for the fast track negotiations. However, they feel that the fast track negotiations should be extended to include central players such as Benin, Togo and Côte d’Ivoire. Ghana should not apply for membership of UEMOA. Instead UEMOA should be absorbed into ECOWAS. There is a need for harmonising activities and regulations so that the same conditions and privileges will be applied to all countries in the sub-region; re-gardless of whether they are members of UEMOA or not. The companies have experienced numerous problems related to high and discrimina-tory tariffs and the only solution to this problem is to ensure that the same regula-tions are used in the entire ECOWAS area. Increased competition from other com-panies in the sub-region is not seen as a threat to Ghanaian industry. The view is that Ghana has the competitive advantages necessary to survive in an open sub-regional market. This study identifies 5 main barriers to trade in the sub-region: 1. Red tape concerning export/import procedures 2. Lack of an intra-regional payment and clearing system 3. Road blocks and obstructive attitude of officials 4. Mistrust between economic operators in the sub-region 5. Lack of an enabling business environment for Ghanaian exports

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This is not to say that these are the only barriers. Infrastructure and education re-main barriers to development. But if trade is to increase under the fast track initia-tive these barriers will certainly have to be removed as a first step. The study also identifies a number of proposals for how the barriers can be removed. These propos-als and their connection to the barriers are illustrated graphically below.

1.2 5 barriers to trade and 11 ways of removing them Suggestions are also made for how government or donors can support the removal of the barriers. Both are strongly urged to review them favourably.

1. Red tape concerning export/import proce-

dures

2. Lack of intra-regional payment and clearing system

3. Road blocks and ob-structive attitude of officials

4. Mistrust between economic operators in the sub-region

5. Lack of enabling environment for Gha-naian exports

5.2 Establishment of warehouses for Ghanaian goods

5.3 Export promotion in ECOWAS countries

5.1 Export financing

1.1 Harmonisation of certification and testing pro-cedures

1.2 Simplification of export / import procedure

1.3 Fast track application procedure for TLS tariff

2.1 Introduction of WAIPS (West African Inter-bank Clearance System)

3.1 . Establishment of an institution for surveil-lance of irregular trade practices and a sealing sys-tem

3.2 Privatisation of CEPS, payment reform

4.1 Revival of the Federation of West African Manufacturers Association (FEWAMA)

4.2 Networking between regional trade arbitration centres

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1.3 Research objectives The main objective of the study is to investigate Ghana’s potential for further eco-nomic integration with the neighbouring countries. The political implications of re-gional integration have been analysed in previous studies. This study is intended to move the discussion from the political sphere to the level of the economic operators. The main objectives of the study have been to: - provide a background report on regional integration - analyse the fast track negotiations between Ghana and Nigeria - clarify the Ghanaian private sector’s view on regional integration - prepare a list of proposals for how regional integration can be accelerated - prepare a final proposal for implementation by Danida Danida has requested that the preparation of the final proposal be postponed until the necessary internal consultations have been finalised. The final proposal will be included in a separate report at a later stage.

1.4 Limitations The study primarily focuses on the relation between Ghana and Nigeria. Côte d’Ivoire has been included as it plays an important role in regional integration through its status as the leading UEMOA country. It has been assumed that the three main industrialised countries in West Africa; Ghana, Nigeria and Côte d’Ivoire also have the largest potential for cross-border trade. The other countries in the sub-region are also important for the Ghanaian economy, but for limitation purposes, it has been necessary to restrict the fact find-ing mission to these three countries. Furthermore, it has not been possible to visit all the institutions that are mentioned in the study, as they are situated in many different countries in West Africa. There-fore, part of the information on the institutions comes from secondary sources. A list of interviewed institutions is provided in annex 7.3. This study primarily focuses on the economic aspects of regional integration. There-fore, ECOWAS initiatives such as the ECOMOG interventions in West Africa and other regional initiatives that are unrelated to economic integration have been omit-ted.

1.5 Methodology This study has been prepared jointly by consultants from the Association of Ghana Industries (AGI) and the Confederation of Danish Industries (DI) in the period June – August, 2000. The study has been sponsored by the Danish International Devel-opment Assistance (DANIDA).

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The diagram below shows the flow in the report writing. The study has been prepared partly through desk research and partly through inter-views with government institutions, private sector organisations, companies and do-nor agencies. The interviews have been carried out in Ghana, Nigeria and Côte d’Ivoire. The interviews in Nigeria and Côte d’Ivoire were carried out with the assistance of the Manufacturers Association of Nigeria (MAN) in Lagos and the Fédération Na-tionale des Industries et Services de Côte d’Ivoire (FNISCI) in Abidjan.

1.6 Structure of the paper The study is arranged in five main chapters: • Chapter 1 is a general introduction to the report. • Chapter 2 gives a general economic description of the ECOWAS countries, the

different sub-regional groupings and intra-regional trade flows. • Chapter 3 gives an overview of the background, progress and achievements of

ECOWAS. A brief overview of UEMOA is also given for comparison. • Chapter 4 is a description of the Ghana-Nigeria fast track negotiations. The pro-

gress and achievements are described especially concerning the private sector. • Chapter 5 gives an overview of the Ghanaian private sectors’ view on regional in-

tegration, based on interviews with companies and institutions. • Chapter 6 is the final list of proposal for support by the Ghanaian government

and donors agencies.

Desk research First interview round (Ghana, Nigeria, Côte d’Ivoire)

Second interview round (Ghana)

Danida reaction to proposals

Final proposal for implementation by Danida

Final report and list of proposals for Danida

Preliminary report writing

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2 Trade in West Africa

2.1 Background Globalisation has become one of the main driving forces behind the development of the world’s economies. The world no longer consists of autonomous areas only mar-ginally connected by trade. Modern communication and especially the Internet has allowed people to access information across the globe at the push of a button. Global-isation has also implied a surge in international trade. Trade in goods and services has grown twice as fast as global GDP in the 1990s. Through international trade, both developed and developing countries have experienced new opportunities for growth. Countries on all continents seek to reap the benefits of globalisation and many see regional integration as a useful platform for attaining global competitiveness. The establishment of communities such as the EU, NAFTA, Mercosur and APEC has contributed to the world’s strong growth in trade and clearly shown the benefits from increased competitiveness through economies of scale along with regional consolida-tion of companies’ operations. There are other benefits associated with regional integration. Macroeconomic con-vergence and stability can be achieved through joint commitments acting as “lock-in” mechanisms and “agencies of restraint” against unsound and inconsistent domestic policies. Enhanced regional co-operation may provide governments as well as private operators with an important networking tool. A tool that can enhance the capacity to deal with common issues – security, health – and increase bargaining power vis-à-vis EU and WTO. This development is also reflected on the African continent. Post-independence Af-rica has seen the emergence of more than 200 regional co-operation organisations. Many African leaders have recognised the constraints posed by fragmented markets and the economic prospects that arise from trade with neighbouring countries and the rest of the world. Ultimately, the rationale for economic integration in Africa is to achieve faster growth, development and higher standards of living for the citizens. This has lead to the establishment of communities such as the Southern African De-velopment Co-operation (SADC), the East African Community (EAC) and in West Africa ECOWAS and UEMOA. Despite the obvious benefits from integration these organisations have only made little progress compared to economic communities in the developed world. Lack of political commitment, colonial ties and competing agri-culturally based products have been pointed to as the main reasons for the standstill. Recent developments in West Africa have raised the hope that true economic inte-gration can take place. Although ECOWAS has been able to show very little pro-gress, regional initiatives such as UEMOA and recently the Ghana-Nigeria fast track have increased the likelihood of a wider West African community coming into exis-tence. This chapter gives a general economic description of the ECOWAS countries, the different sub-regional groupings and intra-regional trade flows, with a focus on Ghana.

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2.2 Comparative economic study Table 1 below provides the basic economic and social data of all ECOWAS countries. It illustrates a region of low-income countries with an average life expectancy of 50 years. Although the population is of 224 million people, the absolute market and trade size is less than half the size of Denmark’s. Nigeria is by far the largest economy in the area with more than half the population and production. The second largest countries are Côte d’Ivoire and Ghana. Ghana has the biggest population of the two neighbouring countries, but the economy of Côte d’Ivoire is 40% bigger than Ghana’s, resulting in a GDP/cap. of US$ 700 com-pared to Ghana’s 390. Senegal and Guinea follow in terms of size of the economy. Table 1. Basic indicators for West Africa (1998) Country Land

area t sq. km

Pop. million

GNP/cap. US$

GNP US$ mill.

Merchan. export US$ mill.

Merchan. Imports US$ mill.

Life exp. at birth, 1997

Benin *# 111 6 380 2,280 415 613 53 Burkina Faso *# 274 11 240 2,640 307 735 44 Cape Verde 4 0 1,060 0 16 - 68 Cote d’Ivoire * 318 14 700 9,800 4,282 2,817 47 The Gambia 10 1 340 340 132 - 53 Ghana # 228 18 390 7,020 1,830 1,680 60 Guinea 246 7 540 3,780 689 1,000 46 Guinea-Bissau * 28 1 160 160 27 - 44 Liberia 96 3 - - - - 47 Mali *# 1,220 11 250 2,750 556 811 50 Mauritania 1,025 3 410 1,230 369 380 53 Niger *# 1,267 10 190 1,900 298 424 47 Nigeria # 911 121 300 36,300 9,727 9,900 54 Senegal * 193 9 530 4,770 956 1,189 52 Sierra Leone 72 5 140 700 101 91 37 Togo *# 54 4 330 1,320 415 373 49 UEMOA 3,465 66 388 25,620 7,256 6,962 48 Ghana+Nigeria 1,139 139 312 43,320 11,557 11,580 55 Free Trade Grp. 4,065 181 300 54,210 13,548 14,536 53 ECOWAS ¤ 6,057 224 336 74,340 19,320 20,013 50 Denmark 44 5 33,040 175,200 47,047 45,795 76 Notes: Countries marked with * are members of UEMOA. Countries marked with # participate in free trade ne-gotiations with Ghana and Nigeria (Free Trade Group). ¤ The ECOWAS group is considered to be all 16 coun-tries although Mauritania withdrew from ECOWAS in June, 2000. Source: African Development Indicators 2000 and World Development Indicators 1999. The UEMOA group is summarised in table 1. So is Ghana and Nigeria as well as the “Free Trade Group” consisting of Ghana, Nigeria and the countries they have been discussing free trade with at a recent meeting in Abuja1. The comparison shows that UEMOA covers only 34% of the region’s economy, while Ghana and Nigeria jointly covers 58% and the free trade group 73%. Trade-wise, Ghana and Nigeria lead by more than 50%, and counting the whole Free Trade Group, the trade is more than double of the UEMOA group. This illustrates the key role that Nigeria has in the re-gion as an economic driver and as a market. It also emphasises the importance to the

1 See section 4.1 for more information on the “Free Trade Group”.

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whole region of the outcome of the Ghana-Nigeria fast track negotiations and the free trade negotiations with a wider group of countries. Table 2. Value added as a percentage of GDP in selected ECOWAS countries Agriculture Industry Manufacturing Services Country 1990 1998 1990 1998 1990 1998 1990 1998 Nigeria 21 32 46 41 8 5 34 27Côte d’Ivoire 26 25 20 23 13 19 54 52Ghana 58 37 12 25 8 9 30 38Burkina Faso 33 33 22 27 16 21 45 39Benin 35 39 12 14 8 8 52 48Togo 27 42 25 21 8 9 48 37Source: World Development Report 1999/2000. Table 2 illustrates that the manufacturing sector is relatively strongest in Côte d’Ivoire, which poses a challenge to Ghana when trade is liberalised further. Burkina Faso’s manufacturing sector is also relatively strong, but not so in absolute terms. Nigeria’s manufacturing sector is relatively weak, but big in absolute terms, which is also a challenge to Ghana’s manufacturing sector. All the countries, except for Nige-ria, have a bigger agricultural than industrial output.

2.3 West African trade patterns Intra-regional trade volumes in Africa have always been disproportionately low. His-torically, colonial ties and demand for primary commodities have directed trade. While the developed countries have been able to export processed goods, capital goods and services to Africa, the African countries have had to rely on their mineral and agricultural resources for access to developed markets. This pattern has been remarkably stable. 30 years after oil was first discovered in the Niger delta, Nigeria still relies on the about 2 million barrels of oil pumped out every day for its export earnings and tax revenue. Along the same lines Ghana still generates most of its in-come from traditional exports such as cocoa and gold. In 1997 only 9.7% of exports were intra-community in ECOWAS and 11.0% in UEMOA. When compared to exports within the more developed trading blocks such as the European Union and Asia Pacific Economic Co-operation (APEC), intra-regional trade in West Africa is small. But it is at the same level as the Southern Af-rica Development Co-operation (SADC), as illustrated in table 3 below. Table 3. Intra-regional export for selected regions (1997) Region Intra-regional exports, % of total exports ECOWAS 9,7 UEMOA 11,0 SADC 11,4 Mercosur 25,4 NAFTA 49,1 EU 55,4 APEC 71,9 Source: Ghana Statistical Services. The conclusion is that ECOWAS is just as successful as other trading blocks in Af-rica, but much remains to be done if the level of integration known from more devel-oped trading blocks is to be achieved. Of course integration of markets through a free

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trade area and a common currency is important, but they are both means to the end of higher economic growth. The much-heralded West African market is less than 1/2 of the size of the Danish market (GDP in 1998) and the per capita purchasing power is much lower. This is also a significant reason for the dismally low intra-regional trade flows and the large volumes of trade with the developed countries. Table 4 shows the development in ECOWAS trade. Imports have been depressed and recovered over the period but with an increasing share of it being from other ECOWAS countries. Exports have shown the same U-shape but with no clear trend in the regional share. Overall the intra-regional trade has been around 11% with a tendency to a slight increase in recent years. Table 4. Structure of ECOWAS trade (US$ mill.)

Imports Exports Total trade Total IR % Total IR % Total IR % 1992 18,501 1,808 9.9 19,188 2,180 11.4 37,689 3,988 10.71993 17,428 1,572 9.0 15,249 1,600 10.5 32,676 3,172 9.71994 13,518 1,301 9.6 12,036 1,424 11.8 25,554 2,725 10.71995 13,838 1,552 11.2 16,121 1,715 10.6 29,959 3,267 10.91996 15,631 1,882 12.0 20,345 2,316 11.4 35,976 4,198 11.71997 16,430 1,813 11.0 20,100 2,539 12.6 36,530 4,352 11.9Source: ECOWAS statistics page 12. IR = Intra Regional (within ECOWAS). Table 5 below highlights the small size of trade between the ECOWAS countries. In 1997 trade with EU amounted to 3-4 times intra-ECOWAS trade. The sizeable trade with EU is to some extent explained by colonial ties. A more important reason is, however, that Europe’s rich consumer markets provide a much higher purchasing power for West African products than the relatively poor ECOWAS countries. Also importantly a large part of intra-ECOWAS trade consists of oil exports from Nigeria. Furthermore, many of the imported products – often capital goods – are not produced in the region. Table 5. Ecowas trade by region (1997) Imports Exports Region US$ Mill. % of total US$ Mill. % of total Central Africa 67 0.4 125 0.6East Africa 21 0.1 36 0.2Southern Africa 126 0.8 128 0.6North Africa 187 1.1 165 0.8ECOWAS 1,813 11.0 2,539 12.6Europe 7,525 45.8 8,114 40.4- hereof EEC 6,772 41.2 7,377 36.7USA and Canada 2,862 17.4 5,133 25.5Latin America 544 3.3 415 2.1Japan 599 3.6 640 3.2China 792 4.8 84 0.4Other Asia 1,451 8.8 1,687 8.4Total 16,430 20,100 Source: ECOWAS Handbook of International Trade 1998.

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2.4 Ghanaian trade patterns Table 5 is a reflection of each ECOWAS country’s trade patterns. However, small dif-ferences do exist as it can be seen from table 6, which describes Ghana’s trade pat-tern. Table 6. Ghana trade with other regions (1999) Imports (cif) Exports (fob) Region US$ Mill. % of total US$ Mill. % of total ECOWAS 359 11.5 181 12.6Africa (excl. ECOWAS) 138 4.4 63 4.4The Americas 399 12.8 110 7.6Asia incl. Middle East 593 19.0 111 7.7EU 1,583 50.8 972 67.5Total 3,115 1,439 Source: Ghana Statistical Service. Data converted from cedi to US$ using average 1999 exchange rate of 2,659.23 as estimated by Economist Intelligence Unit in Country Report Ghana 1st Quarter 2000. Note: The table does not include all trading partners. For Ghana, the largest trading partner is also Europe, which accounted for 50.8% of imports and 67.5% of export in 1999. By contrast, ECOWAS merely accounted for 11.5% of imports and 12.6% of exports. The rising influence of imported Asian prod-ucts can also be seen. Imports from low-cost, efficient Asian manufacturers will pose a significant challenge for industry in Ghana. On the trade balance this is somewhat compensated for by exports of primary commodities. Table 7. Ghana’s trade with ECOWAS partners (1999) Imports (CIF) Exports (FOB) Country US$ 1,000 % of total US$ 1,000 % of total Export rank Benin 225 0.1 13,398 7.4 5Burkina Faso 30 0.0 62,033 34.3 1Côte d’Ivoire 76,805 21.4 11,279 6.2 6Cape Verde 12 0.0 - - The Gambia 297 0.1 18,240 10.1 3Guinea 167 0.0 575 0.3 11Guinea-Bissau 2 0.0 - - Liberia 792 0.2 1,425 0.8 10Mali 30 0.0 1,753 1.0 9Mauritania 3,965 1.1 1 0.0 13Niger 46 0.0 18,030 10.0 4Nigeria 239,428 66.6 6,762 3.7 7Senegal 1,577 0.4 2,134 1.2 8Sierra Leone 226 0.1 421 0.2 12Togo 35,796 10.0 44,700 24.7 2Total 359,398 180,751 Source: Ghana Statistical Services. Note: Data converted from cedi to US$ using an average 1999 exchange rate of 2,659.23 as esti-mated by Economist Intelligence Unit in Country Report Ghana 1st Quarter 2000. Ghana only has three significant countries from which it imports in the region, namely Nigeria and Côte d’Ivoire. As shown in table 8, the main imported item is pe-troleum products chiefly from Nigeria, which accounts for about 70% of all imports

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from ECOWAS. Then follows electrical energy, cement clinkers and fish. The re-maining 8% consist of a broad variety of products. Table 8. Ghanaian traded products, 1999

Imports Exports Product % of total Main partner Product % of total Main partner Petroleum products 70 Nigeria

Côte d’Ivoire Wood and wood products 25 Burkina Faso

Niger, Benin Electricity 15 Côte d’Ivoire Iron and steel 20 Burkina Faso Cement clinkers 5 Togo Aluminium and alu. prod. 14 Gambia Fish 2 Mauritania Electricity 10 Togo Petroleum products 5 Togo Machinery 3 Burkina Faso Insecticides 2 Togo Plastics and pl. prod. 2 Togo Salt etc. 2 Niger Oil 2 Côte d’Ivoire Textiles 2 Côte d’Ivoire Source: Ghana Statistical Services. Ghana’s export destinations in the region are more diverse. Burkina Faso is the main export destination. Then follow Togo, Gambia, Niger and Benin. Only then come Côte d’Ivoire (6) and Nigeria (7) – both with a very large trade surplus towards Ghana. The products exported by Ghana are diverse: Wood and articles thereof, iron and steel, aluminium and articles thereof, electricity, petroleum products, machin-ery, insecticides, plastics and articles thereof, oil, and textiles. These products are mainly based on Ghana’s natural resources but with an added value. They reflect the strengths of the Ghanaian economy. There is no doubt that a further opening up of the neighbouring markets would benefit the export. Ghana’s exports to the region are only half the imports, which in 1999 yielded a trade deficit with the region of US$ 179 million.

2.5 Ghana’s export to Nigeria and Côte d’Ivoire Oil is the main traded product between Ghana and the two other relatively large in-dustrialised countries in West Africa: Nigeria and Côte d’Ivoire. However, for Ghana’s regional exports to take off, it is paramount that it enters the big nearby markets of Nigeria and Côte d’Ivoire. An analysis of Ghana’s exports to Côte d’Ivoire and Nigeria shows that the total value of exports in 1999 was only US$ 11,3 and US$ 6,8 million, respectively. This is equivalent to 9,9% of Ghana’s export to ECOWAS countries or 1,3% of Ghana’s total exports. The exports to Côte d’Ivoire in 1999 were dominated by essential oils (US$ 2,7 mil-lion), worn clothing (US$1,3 million), vehicles and parts (US$ 1,1 million), sugar and confectioneries (US$ 0,7 million), agricultural machines (US$ 0,6 million), fish (US$ 0,6 million), fibres (US$ 0,5 million), hydraulic lime (US$ 0,4 million), cotton (US$ 0,3 million). The remainder of the exports is spread out on many products. It shows a very low but rather diverse export pattern with high annual fluctuations.

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The exports to Nigeria were dominated by aluminium plates (US$ 2,6 million) and jet fuel (US$ 1,5 million). The remainder of the exports is spread out on many prod-ucts. Exports to Nigeria are very small and concentrated on a few items with signifi-cant annual fluctuations. Imports from Côte d’Ivoire concentrate almost exclusively (99%) on mineral fuels, which also accounted for over 95% of imports from Nigeria. For Nigeria, the imports from Ghana accounted for only 0.2% of all imports in 1999, while imports from the ECOWAS area accounted for only 2%. For Côte d’Ivoire the imports from Ghana in 1997 amounted to 0.04% of total imports, while imports from the ECOWAS area accounted for 17% (or only 1.8% if excluding imports from Nigeria of mainly petroleum products). Ghana’s exports to Nigeria and Côte d’Ivoire are far more diversified than vice versa. Furthermore, excluding oil, Ghana has a trade surplus with Côte d’Ivoire but still a deficit with Nigeria. In connection with the Ghana-Nigeria fast track, it is important to note that exports to Côte d’Ivoire are of approximately the same magnitude as Ni-geria and that they are more diversified.

2.6 Conclusion The main conclusion from an analysis of the trade statistics is that official trade is small and concentrated around a few products. It is shown that Ghana has a small export to the region, but that it is diversified in terms of countries and products. Im-ports to Ghana are concentrated mainly on petroleum products and on three coun-tries only. However, the official trade statistics often give a wrong impression of intra-community trade flows. Many companies simply do not have any official exports. Products are often sold to traders directly at the factories and subsequently the com-panies stop keeping track. Goods are then either transported across the borders in quantities too small to be registered or they are smuggled. According to the Manufacturers Association of Nigeria (MAN), informal trade out of Nigeria could be as high as 90% of all exports, excluding oil. The figures for Ghana could easily be as high. Companies in both Ghana and Nigeria are aware that trad-ers are exporting their products to other countries, but under the present trading re-gime, most companies have no plans for direct exports. Another statistical problem is related to Benin and Togo’s roles as transit countries for Ghanaian exports. Many Ghanaian companies export to Benin and Togo, know-ing that their products will ultimately be sold in Nigeria. Gilles Moisan, managing director of the Ghanaian textile company GTP, which exports 90% of its output to Benin and Togo, estimates that 80% of these exports end up on the Nigerian market. He emphasises that this will not change as long as his company pays 30% tax on ex-port to Benin and Togo and 60% on products exported directly to Nigeria. These facts make statistics on intra-regional trade in West Africa highly uncertain. If the highest of these estimates are correct, Ghanaian exports to Nigeria and Côte d’Ivoire could be almost double the official figure - a significant improvement by any

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standards. Such estimates need to be taken into account when considering the bene-fits of regional integration. Official trade statistics show that trade with for instance the EU is much more important to Ghana than trade with ECOWAS. If, however, a free trade area is created and all trade is registered, it may be revealed that intra-regional trade in West Africa is much more important than what is currently be-lieved. Even with the statistical deficiencies it is concluded that regional trade is far too low compared to the potential as illustrated in free trade areas around the world. For Ghana the main targets for improved exports should be Nigeria and Côte d’Ivoire. This is suggested by the fact that they are the two biggest economies in the region and that they are presently not among the five main export destinations of Ghana.

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3 ECOWAS

3.1 Background ECOWAS was established through the treaty of Lagos signed in May 1975 by 15 West African states. The objective was to promote trade, co-operation and self-reliance in West Africa. ECOWAS includes some of the richest countries in the world in terms of mineral wealth and agricultural potential, but also some of the poorest countries in Africa. Unification of West Africa through ECOWAS has always been a daunting task given the diversity of the countries in the sub-region. To add new momentum to the development of ECOWAS, a revised treaty for the ECOWAS community was signed in 1993. The treaty, which was to extend economic and political co-operation between the member states, designates the achievement of a common market and a single currency as economic objectives. In the political sphere it envisages establishment of a West African parliament, an economic and so-cial council and a court of justice. At the end of 1995 the new treaty was reported to have entered into effect after being ratified by a sufficient number of member states (9). ECOWAS has achieved some of its objectives concerning regional economic integra-tion. 700 goods have been approved under the ECOWAS Trade Liberalisation Scheme. Infrastructure development has progressed through the telecommunication project Intelcom 1, which established communication links between the ECOWAS capitals. The Trans-coastal and Trans-sahelian highways have improved road trans-port conditions in the sub-region. Financial services have also been improved through ECOBANK. Another notable success is the abolition of visas and entry per-mits. All ECOWAS citizens may enter without a visa or reside in any member state in a period of 90 days. The only requirement is a valid travel document and an inter-national vaccination certificate. However, high profile ECOWAS institutions as the ECOWAS FUND and the West African Monetary Agency have never had the desired impact on economic develop-ment. Cross border trade is still so cumbersome that many companies have given up exporting directly to the sub-region. Despite all the good intentions in the treaties, the overall assessment is that they have had a very limited effect on regional inte-gration. Why has this been the case? Many reasons for ECOWAS’s lack of success can be found, but the main one is sim-ply that member states have been unwilling to implement the ECOWAS protocols and decisions into national law. Another reason has been a lack of emphasis on pri-vate sector involvement. Although the private sector has been identified as the main “vehicle of growth” for the sub-region, very few ECOWAS initiatives have been taken for creation of an enabling business environment. The ECOWAS commission has been heavily criticised for being inefficient and lack-ing real links with national governments. On the other hand only few ECOWAS member states have established ministries of regional integration and competent bodies for implementation of ECOWAS treaties into national legislation. Thus, “the fault is not in the Stars, dear Brutus, but in us”. The ECOWAS secretariat cannot

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really be blamed for any lack of progress. The fault lies with the member states. They alone have the authority to empower the secretariat and implement the initia-tives that they themselves advocate for and sign during the meetings of the Heads of State and Government. This chapter gives an overview of the background, progress and achievements of ECOWAS. A description of UEMOA is also given for comparison.

3.2 Structure of ECOWAS At the apex of the ECOWAS structure is the Authority of the Heads of State and Government. The Authority meets twice a year. Below the Authority is the Council of Ministers, which also meets twice a year. The ECOWAS Executive Secretariat is the implementing body of the Community. The secretariat and office of the commis-sion has recently relocated from Lagos to Abuja, Nigeria where it is housed in an im-pressive newly constructed building. The secretariat is split into the following tech-nical commissions:

• Food and Agriculture; • Industry, Science and Technology and Energy; • Environment and Natural Resources; • Transport, Communications and Tourism; • Trade, Customs, Taxation, Statistics, Money and Payments • Political, Judicial and Legal Affairs, Regional Security and Immigration; • Human Resources, Information, Social and Cultural Affairs; and • Administration and Finance Commission.

Furthermore a new private sector commission is scheduled for establishment in year 2000. The secretariat is headed by Mr. Lansana Kouyaté of Guinea. The table below shows the membership of ECOWAS. ECOWAS member states Cape Verde Liberia Benin Mali The Gambia Mauritania* Burkina Faso Niger Ghana Nigeria Côte d’Ivoire Senegal Guinea Sierra Leone Guinea-Bissau Togo *Mauritania withdrew from ECOWAS in June 2000.

3.3 Payment of contributions Financial contributions by member states have always presented a large problem for the ECOWAS budget and institutions. Proper functioning of the ECOWAS institu-tion has been seriously hampered by a lack of funds and the resulting lack of re-sources to pursue and implement community programmes. Most of the member states owe huge arrears to the various funds and community institutions. Payments to the secretariat are a good gauge of members’ interest in the ECOWAS project. Nevertheless, special circumstances apply in West Africa. Countries like Si-erra Leone and Liberia have been engaged in civil war and other countries are so poor that they have problems with paying even small contributions. However, some member states do have the necessary resources for payment. If these countries are unwilling to pay, then it will be very difficult for the ECOWAS community to func-tion properly.

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In July 1996, the Heads of State and Government adopted the idea for a new scheme for contributions to the secretariat. Under the scheme each member state has to open a special ECOWAS account in the central bank, where a 0.5% levy of imports from non-ECOWAS countries must be placed. This should imply that payments to ECOWAS become more or less automatic. And importantly, contributions are made independently of the often erratic annual budget allocations of some member states. To date Burkina Faso, Côte d’Ivoire, Ghana, Guinea, Mali, Niger, Togo, Senegal and Nigeria have deposited their instruments of ratification with the secretariat and in-cluded the community levy in their financial acts. CEPS in Ghana started operation of the scheme on April 15, 2000. Despite problems with initial implementation, it is expected that the scheme will start functioning smoothly during year 2000. The total contributions outstanding for the member states amounts to US$ 70 mil-lion2. Almost 7 times the annual ECOWAS secretariat budget of US$ 10 million. Given the current financial status of many member states it is highly doubtful whether these arrears will ever be settled. The general feeling among key regional players is that timely payment of contributions is one of the main prerequisites for proper functioning of the ECOWAS institution. ECOWAS is an ambitious project, but if the member states are unwilling to contribute, it is certain that the ambitions will never be fulfilled. However, if the new community levy is properly implemented the ECOWAS secretariat may be able to start afresh.

3.4 Free movement of goods The objective of the ECOWAS Trade Liberalisation Scheme (TLS) was to establish a customs union among the member states over a transitional period of 15 years, start-ing in January 1990. The customs union was supposed to involve total elimination of customs, duties and taxes having equivalent effect, non-tariff barriers and estab-lishment of a common external tariff. Unprocessed goods and handicraft products were to circulate freely within ECOWAS if they satisfied the three following conditions: Necessary conditions for goods to be eligible for the TLS scheme 1 (i) originated in member states (ii) appeared on a list of products annexed to the decision liberalising trade in such products (iii) were accompanied by a certificate of origin and ECOWAS export declaration form Tariffs on goods made by specified community enterprises were also to be abolished. From January 1990 tariffs were lifted from 25 listed items manufactured in ECOWAS member states, by mid-1990 the number had increased to 90. By 2000 more than 700 goods had been approved to benefit from the scheme3. Currently, a more liberal set of rules of origin applies. Goods must:

2 See annex 7.1 for a status on contributions to the ECOWAS FUND 3 In December 1999, 64 Ghanaian products had been approved for the scheme.

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Necessary conditions for goods to be eligible for the TLS scheme • be produced from materials of community origin whose value is equal to or higher than 40%

of the total costs of the raw materials employed in their production or whose quantity is equal to or higher than 60% of the total cost of all raw material employed;

• be produced from materials of foreign or indeterminate origin whose CIF value does not ex-ceed 60% of the total cost of materials employed or whose quantity is equal to or more than 40% of all raw materials employed in its manufacture;

• have received in the process of production a value added of at least 35% of the ex-factory price before tax;

• be manufactured by an enterprise in which community nationals hold an equity share of at least 25%.

According to the original TLS tariffs were to be abolished for a number of industrial goods and for unprocessed goods. Table 9 below shows the original time frame for to-tal abolition of tariffs on priority and non-priority industrial goods. Table 9: 1990 plan for implementation of TLS Abolition of tariffs on

priority products Abolition of tariffs on non-priority products

Ghana, Nigeria, Côte d’Ivoire, Senegal 4 years 6 years Benin, Guinea, Liberia, Sierra Leone, Togo 6 years 8 years Burkina Faso, Cape Verde, The Gambia, Guinea-Bissau, Mali, Mauritania, Niger

8 years 10 years

As it can be seen from table 10 below, only Benin has eliminated tariffs on industrial goods. More progress has been made for elimination of tariffs on unprocessed goods. 12 member states have eliminated these tariffs. Consequently, the time schedule for implementation of the TLS has broken down completely. ECOWAS members were also scheduled to implement a common external tariff by 2002. With the current rate of implementation it is unlikely that this will happen. Table 10: Status on implementation of the TLS Unprocessed goods Industrial products Countries that have abolished tariffs ac-cording to the TLS

Benin, Burkina Faso, Côte d’Ivoire, Ghana, The Gambia, Guinea, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo

Benin

ECOWAS FUND for Co-operation, Compensation and Development The ECOWAS FUND was created to provide compensation and other forms of assis-tance to member states suffering a loss of government revenue as a result of the TLS or establishment of community enterprises. It also has a development function through financial contributions to projects in member states or as a guarantor of for-eign investments. The authorised capital of the FUND is US$ 500 million while the paid-up capital is US$ 84 million (1999). A ceiling of US$ 10,4 million has been fixed for the loans, which the FUND may grant to multinational projects. Since the commencement of its activities, the bulk of the FUND’s loans have gone towards the financing of projects in the telecommunica-tions and transport sector. The loans granted by the FUND as of December 31, 1999 amounted to US$ 106 million, of which 31% was allocated to telecommunications

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projects, 29% to transport related project, 26% to rural development and industrial projects. The FUND is authorised to accept and manage trust funds. To this end, the FUND manages the resources of the Special Fund for the Improvement and Development of Telecommunications in the ECOWAS Member States and those of the Compensation Fund within the scope of trade liberalisation. These resources amount to US$ 17 mil-lion and US$ 7,5 million respectively. The table below shows the status on application for compensation and contributions to the Compensation Fund within the scope of trade liberalisation. Ghana’s arrears total US$ 220.000, to be paid-up when the community levy is implemented. Only Be-nin has submitted an application for compensation4. Table 11: Status on compensation budget for loss of revenue Application for compens. Contrib. fully paid up Contrib. partly paid up Benin Burkina Faso, The Gambia, Mali Benin, Nigeria In order to enhance its financial resources and enable it to mobilise capital on the in-ternational markets, the FUND plans to open up its capital to regional and non-regional partners. The FUND will be transformed into an ECOWAS Investment and Development Bank, a holding company with two subsidiaries, namely: 1. The ECOWAS Regional Investment Bank – for the private sector; 2. The ECOWAS Regional Development Fund – for the public sector. Support measures As a part of the TLS support measures, uniform customs documents and statistical instruments have been produced. These include certificates of origin, a customs and statistical nomenclature based on the harmonised system (HS) and a customs decla-ration. Furthermore, a protocol on Inter-State Road Transit (ISRT) and a transit guarantee mechanism have been adopted. A draft single customs document has been prepared in collaboration with UEMOA and recommended for adoption. The docu-ment will replace the many different customs documents that are currently in use in the member states and should speed up customs clearance procedures. The docu-ment is yet to come into use. Table 12: Status on implementation of support measures Certificate of origin printed and put into use

Benin, Burkina Faso, Ghana, The Gambia, Guinea, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo

Adoption of HS and customs declara-tion form


Implementation of ISRT Benin, Côte d’Ivoire, Mali, Niger and Togo Designation of national organisation to guarantee transit operations


4 See annex 7.1 for a status on contributions to the ECOWAS FUND

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3.5 Status on TLS Despite the long list of initiatives, the TLS is not working. Only one country (Benin) has eliminated tariffs on industrial goods and though elimination of tariffs on handi-crafts and unprocessed goods is a valuable first step, it will not facilitate intra-community trade on any significant scale. The documents that were intended to streamline customs procedures have been adopted by a substantial number of mem-ber states. But documents do not help when they are not used and economic opera-tors still constantly report about the existence of roadblocks and harassment by gov-ernment officials5. One of the problems with the TLS is the application procedure for companies that wish to enter into the scheme for a reduced tariff. Even the ECOWAS secretariat admits that the process is so cumbersome that many companies simply give up. To be approved a company has to submit an application to the national ministry in charge of ECOWAS affairs in two copies - one in French and one in English. The ministry then has to submit the application to the ECOWAS secretariat for further approval. This has to be done before February 28 every year. Applications that are received after this date will not be processed until next year. If the applications are approved by the secretariat they are submitted to an approval committee that meets twice a year. Finally, the applications must be approved by the council of ministers that meets once or twice a year. Lucky companies can expect to get their products approved after two years of processing time. The ECOWAS secretariat is fully aware of the cumbersome process and would like to see the entire approval procedure delegated to the national ministries. Information on customs bottlenecks and harassment of exports is not new to the secretariat - which even conducts spot checks at border crossings and roadblocks. This is however, of little use as the secretariat has no power to penalise member states that are not complying with the rules. Information from the spot checks can only be used to high-light the current dismal status of the TLS. Because of the many problems related to community rules, ECOWAS is taking steps towards establishing a community court. This court will, according to Deputy Execu-tive Secretary Frank Ofei of ECOWAS, be established in year 2000. ECOWAS is presently in the process of making appointments. When the court is established, companies encountering problems with the TLS are urged to use the court and sue member states that refuse to fulfil their obligations. At the March 2000 ECOWAS summit, the Heads of State and Government recog-nised that the procedure for approval of industrial products was a serious impedi-ment to trade. Consequently, the ECOWAS secretariat was directed to study the matter and identify ways of simplifying the procedure. At the same meeting Ghana

5 A Ghanaian company, Domod Ltd, recounted a situation where they participated in a trade fair in Togo. The goods that Domod were selling were clearly duty free, but because the custom offi-cials suddenly realised that Domod were making good sales, the company was asked to pay duty. What is worse, after the duty was paid, the receipt that was issued indicated a much lower figure than the actual amount paid.

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and Nigeria were commended for the fast track initiative and a new plan of action for ECOWAS was adopted. The main themes of the plan of action comprise: • free movement of persons • a free trade zone • compensation for loss of revenue • regional infrastructural development. The main recommendation regarding a free trade zone were: • Directives to be given by the ministries of finance to customs services to apply

the 0% rate of duty on industrial products • Ministries of finance to issue directives by April 15 to the customs services to ap-

ply the community levy of 0.5% and to remit the proceeds to the ECOWAS secre-tariat accounts with the central banks

• ECOWAS common external tariff to be adopted for entry into effect on January 1, 2001

The table below shows the countries participating in the Abuja meeting “the free trade group”. “ Free trade group” countries Ghana Nigeria Togo Niger Mali Benin Burkina Faso If these measures are implemented serious preliminary steps will be taken towards establishing an ECOWAS free trade area. However, it still remains to be seen whether the proposals from the meeting will materialise into concrete actions.

3.6 Status on cross border payments One of the main challenges for accelerating regional integration in West Africa is es-tablishment of an efficient system for cross border payments. Currently, most of the transactions between larger companies take place via overseas accounts. Smaller companies simply have to show up at the door and pay up front. Originally, a num-ber of schemes were established for easing cross border payments, but currently no properly functioning institutionalised system for cross border transactions is in place. WAMA The West African Monetary Agency (WAMA) was established in 1975 as the West African Clearing House (WACH). WACH was a multilateral payments arrangement between all the central banks in the ECOWAS sub-region. Its principal objectives were to encourage use of national currencies of countries of member banks for sub-regional trade; bring about economies in the use of foreign reserves of its members; encourage trade liberalisation among member states; and promote monetary co-operation and consultation in the sub-region. However, the system never received the desired level of patronage from the business and banking sectors. The most important constraint to the proper functioning of the arrangement was the delay in settlement of net balances and a lack of awareness on

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the part of the business and banking community on its existence, operating proce-dures and advantages. In 1992 the WACH was transformed into the West African Monetary Agency (WAMA). In 1999, seven years after the foundation of WAMA Guinea-Bissau and Liberia still owe WACH US$ 10 million and US$ 3,5 million re-spectively. Ghana was the only ECOWAS member state, which was actively using WACH until its transformation into WAMA. Table 13 shows the transactions taking place through WACH between September 1996 and August 1997. Ghana is well ahead of all the other ECOWAS countries put together. Table 13: WACH transactions from September 1996 to August 1997 Country/Group Amount (US$) BCEAO 379,900Gambia 104,800Guinea 314,400Mauritania 445,400Nigeria 222,700Ghana 4,427,800 WAMA was established as a part of the efforts to enhance monetary co-operation and financial harmonisation in the region. As a specialised agency of ECOWAS, WAMA was to be responsible for managing an ECOWAS exchange rate system and for es-tablishing a single monetary zone. Furthermore, WAMA was to be in charge of a commercial credit facility that could be used by local companies. Though some pro-gress has been achieved, the ECOWAS secretariat still complains that the system is not functioning smoothly. Ghana is currently reluctant to use the system because of unfavorable exchange rates for the Cedi and a permanent trade deficit with the sub-region. WAMA is also in charge of a newly circulated ECOWAS travellers’ check that should facilitate the use of ECOWAS currencies in intra-regional trade. The travellers’ check was originally launched at the 1998 ECOWAS summit in Abuja. A move that was described as modest, even by officials. The traveller’s check is sponsored by the committee of governors of central banks and is initially to be managed by WAMA. In 1999 workshops and awareness programmes were conducted for banks, bureaux de change and economic operators. Ghana put the ECOWAS travellers’ check in circula-tion in September 1999. According to the Bank of Ghana and ECOBANK, the travel-lers’ cheque is being used in steadily increasing numbers. ECOBANK ECOBANK is one of the most notable successes of ECOWAS. The creation of ECOBANK stemmed from an initiative by the Federation of West African Chambers of Commerce (FWACC) to realise the potential of the private sector to make a more positive contribution to the development of the economies of ECOWAS. It was subse-quently determined that an international class financial institution with a regional focus was needed to ensure stable long-term growth. ECOBANK was to become West Africa’s first international offshore bank and make modern financial services avail-able to the sub-region through establishment of subsidiaries in all ECOWAS coun-tries.

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In November 1984, the Heads of State and Government resolved to give ECOBANK their full support and to participate in its equity funding through the medium of the ECOWAS FUND. ECOBANK was established with the broad strategic purpose of contributing to the financial, economic, and social development of the member states of ECOWAS as a privately sponsored, organised, and financed institution. It was en-visaged that the bank could promote intra-regional trade, provide economic and business support for industry and mobilise financial resources for investment within the sub-region.

Today, ECOBANK is present in 11 ECOWAS countries. The Group employs over 1100 professional staff, has over US$ 500 million in total assets and does over US$ 1 billion in foreign exchange transactions annually. The bank recorded a tidy profit of US$ 28 million in 1998. The ECOWAS FUND has an equity participation of US$ 6 million in ECOBANK, representing 11.62% of the capital. Table 14: ECOBANK group financial highlights US$ ‘000 1998* 1997 % change At year end Total Assets 655,019 558,736 17.2 Total Loans & Advances 251,852 209,647 20.1 Total Deposits 427,637 396,951 7.7 For the year Profit Before Tax 28,160 21,628 30.2 Profit After Tax 18,792 15,201 23.6 Return On Average Equity 27.2% 33.7% Source: ECOBANK Transnational Incorporated, *Present in 7 countries in 1998 ECOBANK is frequently described as one of the most successful private sector initia-tives in West Africa. Both the ECOWAS secretariat and the World Bank place great emphasis on its achievements when describing the future role of the private sector. ECOBANK offers a wide range of accounts to its customers, but despite its presence in 11 ECOWAS countries there is still one facility that is lacking – an efficient sys-tem for cross border payments. Companies do have the possibility of conducting cross border transactions via ECOBANK. But both Ghanaian and Nigerian companies complain that the system is so slow that it is of little practical use. ECOBANK and 50 other banks in the sub-region have developed a system for interbank payment (WAIPS). The system was to have been introduced in August 2000. However, the launch was postponed indefi-nitely because the central banks were unable to support the scheme6.

3.7 Infrastructure Some measure of infrastructural development has also been achieved by ECOWAS. This is important as integration of markets necessitates efficient communication and transport facilities. However, interviews with private sector operators reveal that in-frastructure remains one of the main barriers to economic integration. Sometimes

6 See chapter 6 (2.1) for more information.

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Ghanaian companies actually have to transport products to Côte d’Ivoire in order to use the railway line linking Abidjan with Ouagadougou. West African Gas pipeline project In 1995 Nigeria, Ghana, Togo and Benin signed an agreement for the construction of a 400-km gas pipeline to connect Nigerian gas supplies to the other countries. It is envisaged that the pipeline will provide secure low cost energy supplies to the region. In mid-1998 ECOWAS announced that construction of the US$ 693 million pipeline project was to commence later in the year, but the project is still in a development phase. Recently, the steering committee for the project has decided to (i) create a four mem-ber implementation committee and allocate funds for its operation; (ii) involve the private sector in the project by associating the commercial group composed of Chev-ron, Shell, NNPC, GNPC, SOBEGAZ and SOTOGAS; (iii) to conduct a study on the feasibility of the project. In the study it was concluded that the project was techni-cally feasible and could be implemented using a fast track approach. The first gas delivery should become possible by January 1, 2004. Roads and transport ECOWAS has achieved some measure of success in infrastructural development. Concerning road transport ECOWAS has completed 83% (or 3800 km out of 4566 km) of the Trans-coastal highway and 88% (or 3924 out of 4460 km) of the Trans-Sahelian highway. ECOWAS has also facilitated a brown card scheme that provides third party liability insurance throughout the region. Furthermore, ECOWAS is planning to establish a regional airline (ECOAIR) and a coastal shipping company. Discussions have also been held on the preparation of a regional railway master plan. During a meeting in Abuja in February 2000, 7 ECOWAS member states ex-pressed their interests in establishing a regional railway. A feasibility study is under way for construction of an Accra-Lagos railway line passing through Cotounou and Lomé. Telecommunications In 1996 the initial phase of a programme to improve regional telecommunications (Intelcom I) was completed. Intelcom 1 represents a significant achievement for in-frastructure in ECOWAS, as it has inter-linked all the sixteen ECOWAS capitals through a system of telephone, telex and telefax facilities. Intelcom II is an ECOWAS priority programme under which the present analogue microwave system will be replaced with a digital radio system. Implementation of the Intelcom II programme has been delayed due to changes within the technical sponsor.

3.8 Private sector initiatives The 1975 treaty of Lagos mentions promotion of the private sector as the key to growth in the sub-region. According to Frank Ofei, much has already been done, but new initiatives are readily welcomed. The ECOWAS secretariat is gearing its own private sector efforts through establishment of a new commission that will take care

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of all matters related to the private sector. The existing industrial unit will be incor-porated into this new unit. On a sub-regional scale the secretariat is working with the national investment pro-motion agencies to promote the West African Investment Promotion Agency (WAIPA). The statutes for this agency have already been drafted. A databank is be-ing established, which will chart business opportunities in the sub-region and specify the needs of the private sector. This system will be used to facilitate contacts at the ECOWAS trade fairs of which two have already been held – one in Senegal in 1995 and another in Ghana in 1999. Other initiatives for investment and trade promotion include interaction with the European Union through a biannual industrial forum. Along the same lines, investment and trade contacts are being established with the United States. The secretariat was active in the establishment of the presently moribund Federa-tion of West African Manufacturers Association (FEWAMA). According to Frank Ofei, the association had a basic problem related to the fact that many ECOWAS countries were too small to harbour industrial associations. To facilitate further in-tegration of industry in the sub-region they have instead supported the West African Enterprise Network (WAEN). FEWAMA and other institutions have only been granted observer status at the relevant community meetings. If they are revived, the secretariat welcomes initiatives from these institutions and foresees that they will play an enhanced role in community affairs. Access to cheaper credit is also high on the agenda for the secretariat, as this strikes right at the heart of the main obstacle for industrial development in the sub-region. Accordingly, the ECOWAS FUND is being restructured so that it can facilitate loans to the private sector through multilateral agencies such as the African Development Bank and the World Bank. Credit can be given at a lower interest rate as the FUND can cover some of the risks through concessional loans from donors. One of the main projects that ECOWAS has undertaken for private sector promotion is the preparation of an Industrial Master Plan. The master plan - a 250 page docu-ment based on industrial censuses from most of the member countries - identifies constraints and obstacles to industrial development in the sub-region, assesses the assets and resources and proposes an action programme to be taken to promote in-dustrial development in West Africa. However, despite all the good intentions of the master plan it has never been implemented. The head of the industrial unit at ECOWAS, Mr. Limane Barage, laments the total lack of action, but hopes that the plan can be used to promote industry in the future. Other initiatives that have an effect on the private sector are related to the free movement of goods and people, payments, infrastructure development and a common currency.

3.9 UEMOA The establishment of UEMOA was a major development in the institutional ar-rangements for economic integration in West Africa. The initial decision was taken in 1991 in the form of a directive to BCEAO to study the possibility of extending the UEMOA beyond a monetary union. Subsequently, in January 1994 a new treaty was

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drafted, signed and later ratified by the then seven member states (Guinea-Bissau joined in May 1997). Reasons for the creation of UEMOA abound, but it was mainly a response to mem-bers’ wishes to make their markets more attractive to foreign investors. The chal-lenge was to create a unified market within ECOWAS with 67 millions citizens. UEMOA comprises 34% of the ECOWAS market. Moreover, there was a feeling that the potential of the already existing CFA franc monetary union was not being fully exploited. Growth and economic stability could be achieved through increased trade between the members of the monetary union and increased harmonisation of public finance, external payments and debt. The objective of UEMOA is to strengthen the common monetary policy of the BCEAO by means of economic integration. According to article 4 of the UEMOA treaty the main objectives are: • strengthening the economic and financial competitiveness of the members states

within an open and competitive environment • harmonising macroeconomic policies through a process of surveillance • establishing a common market characterised by the free movement of persons,

goods, services, capital and a common external tariff • co-ordinating sectoral policies through joint activities • harmonising legislative and regulatory policies The treaty also allows for a large degree of supra-nationality. Already, the monetary policy is controlled by BCEAO. UEMOA acts are directly enforceable in the legisla-tion of member countries, irrespective of any contrary national legislation. The ex-ecutive branch of UEMOA - the commission - is responsible for multilateral surveil-lance of economic policies and harmonisation of legislative and regulatory polices. All regulations, directives, and decisions of the commission are binding on all members eliminating the issue of ratification by member states. A process that has seriously hampered the harmonisation of policies within ECOWAS. The table below shows the membership of UEMOA UEMOA member states Benin Mali Burkina Faso Niger Côte d’Ivoire Senegal Guinea-Bissau Togo The private sector has been given a significant voice in the development of UMEOA. By establishing the Regional Consultative Chamber, UEMOA has created a body where private sector associations are consulted on development within the union. This body acts as a channel of communication between the commission and the pri-vate sector. Altogether the UEMOA treaty and institutional framework provides a solid founda-tion for accelerated economic integration. Member states have deposited many previ-ously exclusive national decision rights with the commission and UEMOA legislation takes precedence over national legislation. Monetary policy is already in the hands of the BCEAO.

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Achievements of UEMOA UEMOA has effectively only existed for half a decade. Despite the relatively short time span the achievements are substantial. Apart from the already existing com-mon currency, a customs union has been established and internal tariffs are being reduced. The Abidjan stock exchange has been extended to include all the UEMOA countries and new regional initiatives are constantly being prepared and imple-mented. The UEMOA commission headquarters in Ouagadougou, Burkina Faso is described as a dynamic institution with qualified and determined staff. A stable and convertible common currency has provided considerable benefits to the members of UEMOA. The general perception is that the CFA franc scheme is heavily dependent on the French treasury and central bank and would not exist without their interventions. However, according to the BCEAO this is not true. The main reason for the success of the CFA franc is the discipline that the member states have imposed on themselves. Nevertheless, CFA francs are freely convertible into French franc, at a fixed rate, through an operations account established by agreements con-cluded between the French treasury and the BCEAO. It is fully backed by the French treasury, which also provided the BCEAO with overdraft facilities. The BCEAO is authorised to hold 35% of its foreign exchange holdings in other currencies than French franc and exchange is effected on the Paris market. UEMOA has also made significant progress within implementation of a free trade regime. Already from June, 1996 there was a 30% reduction of tariffs on eligible in-dustrial product (5% on non-eligible products). In January 2000 a customs union was created with a five-band system of tariffs ranging from 0% to 20% along with a com-mon external tariff. These tariffs will be reduced until trade becomes completely free within UEMOA in 2003. To strengthen UEMOA’s capacity to promote economic inte-gration a community solidarity tax of 0.5% was imposed on all goods from third countries sold within the community. This tax will provide a means of financing ini-tiatives that can smoothen the process of economic integration. With the extension of the Abidjan stock exchange to encompass all the UEMOA countries steps have been taken towards integration of capital markets. Though relatively insignificant in size (market capitalisation US$1,8 billion in 1998), it will still provide an important step towards mobilising portfolio investments in the UEMOA sub-region, as most of the UEMOA countries are too small to host inde-pendent stock markets. The Abidjan stock exchange still mainly comprises Ivorian enterprises - there is only one non-Ivorian company listed on the stock exchange. But trading can be done at the stock exchange through local offices that have been estab-lished in all the UEMOA countries. According to Mr. Tidiane Bah, Head of the Abid-jan stock exchange, integration with the stock exchanges in Ghana and Nigeria is easy from a technical point of view. It is also necessary if foreign investments are to start flowing into the region. The UEMOA commission has formulated programmes on food security, increased ag-ricultural productivity, and enhanced functioning of agricultural produce markets. Six sub-programmes are at the implementation stage. A common agricultural policy is being prepared along with policies for organisation of competition within the un-ion, establishment of support systems for enterprises and co-ordination of industrial and other sectoral policies.

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France, the World Bank and the European Union have supported UEMOA heavily. The World Bank has worked closely with the UEMOA commission on a common ex-ternal tariff and sub-regional policy issues such as an investment code, competition policy and macroeconomic convergence criteria. Credit lines have been established to BOAD along with a technical assistance credit to the BCEAO.

3.10 Comparison of ECOWAS and UEMOA selected areas Area ECOWAS UEMOA Headquarters Secretariat, Abuja, Nigeria Commission, Ouagadougou, Burkina

Faso Budget

Approx. US$ 10 mill., 1998 Approx. US$ 15 mill., 1999

Common currency Plans from 1993 never implemented Since 1945, BCEAO common central bank

Common external Tariff

To be established in January 2002 From January 1, 2000

Common indus-trial policy

Agreed, but never implemented Agreed

Free trade ETLS, generally not working Free trade in 2003. Tariffs currently being reduced

Financing of Secretariat

Allocation through budgets of mem-bers states

0.5% of imports from third countries

Compensation Mechanism

0.5% of imports from third countries (recently implemented by Ghana)

0.5% of imports from third countries

Private sector Observer status Permanent communication through consultative chamber

Common legisla-tion

Generally not integrated into na-tional law

Efficient integration into national law

Stock exchanges Contacts established between Ghana, Nigeria and Côte d’Ivoire

Full integration from 1998

When comparing the two regimes it would appear that UEMOA has succeeded in all the areas where ECOWAS has failed. UEMOA has succeeded in funding the secre-tariat, establishing a free trade area with a common external tariff and members willingly implement the UEMOA treaties. UEMOA has also succeeded in creating a common industrial policy and industry has been successfully consulted during the formulation stage. Many of the rules that regulate ECOWAS and UEMOA are the same. Hardly a sur-prise given that the UEMOA countries have participated in the formulation of the objectives and programmes of both communities. UEMOA has been able to learn from the mistakes of ECOWAS and correct them when formulating the UEMOA treaties. Because of the similarities between the two communities, the ECOWAS se-cretariat has had large misgivings about UEMOA. In 1994 the ECOWAS secretariat prepared a memorandum entitled an “Analysis of the UEMOA Treaty”. The conclu-sion of the analysis was that, given the similarities between the two communities, the creation of UEMOA became something of a mystery. It is important to note that the UEMOA countries have implemented the ECOWAS treaties at the same rate as the non-UEMOA countries. The blame for lack of imple-mentation cannot solely be placed on them. The UEMOA countries may have placed

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more emphasis on implementing their own treaties, but regarding ECOWAS they are no worse than the rest. Why has UEMOA succeeded where ECOWAS has failed? There appears to be three main reasons. Firstly, the UEMOA countries have had a common currency since 1945. The BCEAO has proven that it is a well-organised institution and co-ordination of economic policies within the CFA franc zone has been successful. Sec-ondly, the leaders of the UEMOA countries have shown the political commitment that is vital for successful implementation of the UEMOA treaties. This factor has been augmented by political pressure from France. Thirdly, external donors, includ-ing France, have been very supportive of the UEMOA project. There are of course also other reasons for the successful integration of UEMOA, but the ones mentioned here have certainly added momentum to the integration effort. The lessons from integration between the UEMOA countries cannot be transferred directly to ECOWAS. Nevertheless, ECOWAS can learn a lot from the rapid devel-opment of UEMOA. Regional integration in West Africa is not unattainable. With adequate political commitment, understanding for the reality on the ground and ex-ternal assistance, it is possible to create an economic and monetary community in West Africa.

3.11 Conclusion 25 years after the signing of the ECOWAS treaty, it can be concluded that the ECOWAS community has only made small contributions to regional economic inte-gration. Intra-regional trade is still low compared to standards in the industrialised countries and the TLS is not working. The ECOWAS FUND is under restructuring and the countries in the region seldom use WAMA. The ECOWAS secretariat is desperately trying to revive community programmes and initiate new ones. But they do not receive much support from the member states. ECOWAS has had to struggle with many problems; Lack of commitment from the Heads of State and Government, a permanent lack of funds and a general unwilling-ness to implement the ECOWAS treaties into national law. Even though the main part of the 1975 and 1993 treaties have never been imple-mented at the national level, progress has been made in selected areas. Basic com-munity infrastructure has been developed and ECOBANK provides banking services to economic operators in the sub-region. ECOWAS citizens are also allowed a 90 day stay in other countries in the community without a visa. Although these achieve-ments have contributed to economic development in the sub-region, they are only small steps towards an integrated community. Despite the limited economic size of the West African market, two major trading blocks currently exist in the region – ECOWAS and UMEOA. The main reasons for establishment of UEMOA can be found in the glaring lack of progress within the ECOWAS structure. The ECOWAS secretariat has had large misgivings about the UEMOA block, as the objectives and programmes of the two communities are essen-tially the same. Nevertheless, ECOWAS can learn many important lessons from the UEMOA integration process that has succeeded in many of the areas where ECOWAS has failed.

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The current hope of the Heads of State and Government is that UEMOA and the Ghana-Nigeria fast track will be united within the ECOWAS structure by 2004. This may be ambitious, but there is little doubt, that UEMOA has added substantial im-petus to the process of regional integration in West Africa.

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4 The Ghana-Nigeria fast track

4.1 Background The main rationale for the Ghana-Nigeria fast track can be found in the failure of ECOWAS and the establishment and success of the UEMOA block. The establish-ment of UMEOA meant that Ghana and Nigeria were de facto left out of regional economic integration. It has never been publicly stated that Nigeria was unwelcome as a UEMOA country. However, the conditions of the UEMOA treaty and especially the surrendering of sovereignty to French dominated institutions left little room for Nigeria. Nigeria’s ambition to become a regional superpower is difficult to unite with the French dominance in UEMOA. Ghana, on the other hand, had a possibility of joining UEMOA either as a full mem-ber, including adoption of the CFA franc, or as an associated member. Why has Ghana never opted to join UEMOA? One reason for this can be found in the colonial spilt between former French and British colonies in West Africa and the resulting split between anglophone and francophone countries. Furthermore, Ghana has pledged allegiance to both Nigeria and overall ECOWAS integration. If Ghana was to join UEMOA, Nigeria would risk regional marginalisation, which could have detri-mental effects on the Obasanjo governments’ efforts to keep the country stable. Moreover, there is a cost factor involved in joining UEMOA. Apart from the loss of economic sovereignty, there are substantial financial cost associated with member-ship and adoption of the CFA franc. There would be a contribution through a mem-bership fee to the BCEAO, which in the case of Ghana would amount to US$ 168 mil-lion. Furthermore, a contribution of US$ 22,3 million would have to be made to BOAD, the UEMOA development bank. There would be yet another contribution to the solidarity fund. Altogether, Ghana would have to contribute approximately US$ 200 million for membership. According to the World Bank, the subscription for Nige-ria would amount to approximately US$ 1 billion. Given the current budget deficits it is unlikely that the two countries would be willing to make such a significant con-tribution. It is important to emphasise that the Ghana-Nigeria fast track is an ECOWAS ini-tiative. The ECOWAS secretariat fully supports the negotiations and other ECOWAS countries are encouraged to join. Presently, Guinea, Liberia, Sierra Leone and The Gambia have joined the negotiations for a second monetary zone (SMZ). Be-nin, Togo, Mali, Burkina Faso and Niger are involved in the establishment of a free trade area. A vital inclusion given that Benin and Togo separate Ghana and Nigeria and the other countries constitute Ghana’s largest export markets in the sub-region. Should they choose to do so, all the UEMOA members are welcome to join, but it is more likely that UEMOA and the fast track countries will merge later, within the ECOWAS framework. As shown in the table below, the fast track negotiations have provided the basis for a plethora of regional groupings.

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Different groupings in ECOWAS ECOWAS Ghana, Nigeria, Mali, Burkina Faso, Niger, Benin, Togo, Liberia, Si-

erra Leone, the Gambia, Guinea, Cape Verde, Guinea-Bissau, Côte d’Ivoire, Senegal

Negotiations for SMZ Ghana, Nigeria, Liberia, Sierra Leone, the Gambia and Guinea Fast track for free trade Ghana, Nigeria Free trade group Ghana, Nigeria, Mali, Burkina Faso, Niger, Benin and Togo UEMOA Mali, Burkina Faso, Niger, Benin, Togo, Guinea-Bissau, Côte d’Ivoire,

Senegal

4.2 The fast track The Ghana-Nigeria fast track approach was initiated in Lomé, Togo in December 1999 through a speech by President Obasanjo of Nigeria. In the speech West African leaders were urged to adopt a two-track approach in the implementation of all agreed sub-regional programmes of integration. Basically, the idea was that when two or more member states were ready to implement a particular ECOWAS pro-gramme they should be encouraged to do so. This would then be regarded as the fast track to which the slower track could join later. As co-signatories of the Bamako declaration of January 28-29, 2000, the UEMOA countries have endorsed the principle of variable geometry and agreed to the ulti-mate goal of monetary integration with the fast track countries by 2004. UEMOA member states have also been urged to continue implementation of the TLS. To speed up trade integration between the two regional trade blocks, the executive sec-retary of ECOWAS and President of UEMOA have been asked to “take all necessary measures to finalise the on-going consultations on the harmonisation of their in-struments for trade liberalisation”. Thus, there is no real conflict between the two organisations. They are rather re-garded as separate pillars that should be joined as soon as possible. At the Bamako meeting, the Heads of State and Government also approved of the initiative taken by Ghana and Nigeria within free trade, implementation of a regional infrastructure development programme and support for the private sector. The declaration urged Ghana and Nigeria to move on with fast track negotiations and also urged other countries in the sub-region to join. Both Ghana and Nigeria have shown ample proof of their commitment to the fast- track negotiations. At the very top the Presidents have consistently advocated for an accelerated integration process and have personally attended a number of high-level summits to show their support. This commitment has also been reflected at the lower levels of administration from ministers to civil servants. Relevant ministers attend meetings along with the key government institutions and large delegations are sent for the negotiations. Involvement of the private sector is seen as very impor-tant to the whole process and some of the leading organisations have been invited to participate. Altogether, the negotiations reflect a commitment and pace that has never before been seen in the ECOWAS context. At the first fast track economic co-operation meeting in Accra on December 20-21, 1999 – only 10 days after President Obasanjo’s Lomé speech – it was decided to set up two technical committees to work out the strategies for establishing a SMZ and a

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free trade area. These technical committees form the basis for negotiations at the practical level. The fast track approach will primarily deal with five areas: • Monetary Union • Free Trade Area • Free Movement of Persons • A Regional Investment Infrastructure Programme • Regional Private Sector Investment Promotion. In the following sections an overview of the fast track is given. The political com-mitment of Ghana and Nigeria is analysed and the initiatives and discussions of the working committees are reviewed. Furthermore, an overview of donor policies and initiatives is given.

4.3 Policies on regional integration Ghana’s policy on regional integration Historically, Ghana has been leading Pan-Africanism. Especially Kwame Nkrumah, the first president of Ghana, was powerful advocate of African unity until he was overthrown in 1966. His legacy has to a certain extent guided Ghana’s policies on re-gional integration. Consequently, Ghana has always been a leading country in ECOWAS and stands as one of the critical players for further regional integration in West Africa. According to the government of Ghana the ECOWAS community re-mains the only viable framework for economic integration and progress in the West African sub-region. This is reflected in article 40 of the 1992 Ghana constitution, which adheres to the principles of the treaty establishing ECOWAS. Ghana was among the first ECOWAS countries to liberalise trade in industrial products in 1996. Apart from Ghana, only a few states are applying the reduced tar-iffs as the cardinal principle of reciprocity, which is crucial for successful implemen-tation of the scheme. Ghana’s two-year chairmanship of ECOWAS in 1995-1996 demonstrated the country’s commitment to West African integration. President Jerry Rawlings constantly advocated for the advantages of ECOWAS, but also high-lighted the obstacles, which had prevented the community from reaching its objec-tives. At a summit of Heads of State and Government of The Gambia, Ghana, Guinea, Li-beria, Mali, Nigeria and Sierra Leone held in Accra in April 2000, President Rawlings reconfirmed Ghana’s commitment to the fast track. He also gave Ghana’s rationale for entering the negotiations. “What is required is innovative and practical strategies for attaining the goals of integration. It is in furtherance of this objective that Ghana and Nigeria initiated the fast track approach shortly after the Lomé summit”. In the speech President Rawlings also re-confirmed Ghana’s commitment to the fast track approach as a means of attaining monetary integration in the sub-region. At the government level the co-ordination and progress in the integration effort is discussed at bi-weekly meetings, chaired by Vice-President Mills. The involved min-isters have to attend personally and account for the progress made. Ghana has re-cently created a ministry of regional integration in accordance with ECOWAS direc-

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tives. Minister of local government Kwamena Ahwoi was appointed to a new non-cabinet position as a minister of planning and regional economic co-operation. This new position was, according to some observers, best described as “a glorified liaison officer with ECOWAS” and the ministry is not adequately staffed for its tasks. But along with the increasing importance of fast track negotiations, it is believed that the ministry will be able to gather an increasing amount of clout. There is little doubt about Ghana’s political commitment to economic integration and the fast track negotiations with Nigeria. But, Ghana is confronting tough negotia-tions. Nigeria is the economic powerhouse of the sub-region and is renowned for its red tape and corruption. Ghana will have to strike a deal with Nigeria that ensures insulation from the maladies of the Nigerian system. Nigeria’s policy on regional integration As the co-initiator of ECOWAS along with Togo, Nigeria has historically proven its commitment to regional integration. Right from its inauguration Nigeria has taken a leading role in ECOWAS matters. Nigeria perceives the West African community as a useful vehicle for advancing the long-term aim of diversifying from an increasing dependence on oil exports. Despite the largest home market in West Africa, Nigeria still needs the West African market for oil- and non-traditional exports. Over the years changing Nigerian leaders have demonstrated commitment to the ECOWAS agenda. ECOWAS is mentioned as a top priority for government in Nige-ria’s vision 2010. However, the military rule and perpetual instability of the country have kept many ECOWAS members away from further integration. As the managing director of a Ghanaian company stated “Nigeria is chaotic and Ghana is vulnerable”. Nigeria’s main contribution to ECOWAS has been through military interventions in Liberia and Sierra Leone, where Nigerian armed forces constituted the bulk of the ECOMOG forces. The death of military ruler Sani Abacha in 1998 opened the way for a shift in re-gional politics. His successor, General Abdulsalami Abubakar, favoured a lower pro-file in the region and a less dominant role in ECOWAS. At the Abuja summit in 1998 he gave up the chairmanship of ECOWAS to General Gnassingbé Eyadéma of Togo. Later it was agreed to hand over the chairmanship to the present ECOWAS chair-man Mali’s President Alpha Oumar Konaré. Recently, the democratically elected President Obasanjo demonstrated Nigeria’s re-newed commitment to the ECOWAS agenda by exclaiming his frustration with the lack of progress with implementation of the ECOWAS treaty. It was his Lomé speech in December 1999 that originally charted out a new strategy for acceleration of re-gional integration. He stated that Nigeria intended to join the fast track in several different areas, namely: free movement of people through removal of border formali-ties, supporting the ECOWAS free trade zone and creating a SMZ outside the CFA franc zone in order to join the two currencies later. President Obasanjo has repeatedly demonstrated his commitment to the integration effort. He has personally attended high-level talks with Ghana and the other coun-tries participating in the fast track negotiations. Recently, Nigeria has created a “Ministry of African Integration” that will take care of matters related to ECOWAS

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in co-operation with the other relevant ministries. This will ensure that regional po-lices are incorporated into all aspects of national policies and that they are imple-mented according to plan. To summarise, the facts strongly suggest that Nigeria is committed to the Ghana-Nigeria fast track. However, the sheer size of Nigeria compared to the other West Af-rica countries will still pose a challenge for integration. Nigeria will have to give up a disproportional amount of influence on the development of a common market. Oth-erwise the other countries in the region will be reluctant to join. It still remains to be seen if Nigeria is willing to make such sacrifices. UEMOA participation As mentioned in section 2.2 several UEMOA countries participated in a meeting on establishment of a free trade area with Ghana and Nigeria in March 2000. This free trade group does not participate directly in the fast track negotiations, but their in-clusion in the negotiations is very important for Ghana, as they comprise the largest export markets for Ghanaian goods. Unfortunately, the main industrialised coun-tries in UEMOA – Côte d’Ivoire and Senegal did not participate in the free trade ne-gotiations. The free trade group’s interest in the free trade zone promises well for the future negotiations on a merger between the fast track countries and UEMOA. How-ever, there seem to be several inconsistencies in the negotiations. Firstly, all the UEMOA members already charge a 0.5% levy on imports from third countries for payment of contributions to the UEMOA commission. At the March meeting these countries were also urged to implement another levy of 0.5% for pay-ment to the ECOWAS secretariat. Does this mean that UEMOA members have to charge two levies, one for the UEMOA Commission and one for the ECOWAS secre-tariat? Secondly the members states were urged to implement the common ECOWAS exter-nal tariff by January 2001. The UEMOA countries have already established a com-mon external tariff from January 2000. Does this mean that the participating coun-tries are to have two external tariffs? It remains to be clarified how the free trade group intends to overcome this overlap. Why has this change come about? A few years ago the francophone countries would have been much more reluctant to enter into direct negotiations with Ghana and Ni-geria. Firstly, the democratisation of Nigeria has been a significant factor. Nigeria is altogether less scary now than under the previous military rule. Furthermore, Presi-dent Obasanjo is actively encouraging the UEMOA countries to join. During a recent visit to Paris, President Obasanjo stressed the need for francophone co-operation in uniting ECOWAS. Secondly, the joint visit of the foreign ministers of Britain and France to Accra and Abidjan has played a role. The two former colonial powers are now trying to foster unity between the countries in Western Africa.

4.4 Monetary integration Why does West Africa need a Second Monetary Zone (SMZ)? In fact there is a long list of reasons. Intra-regional trade is at an extremely low level, cross border pay-ments are close to impossible and currencies of ECOWAS members are not accepted as legal tender in other countries in the sub-region (except for the CFA franc). A

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common currency can become a significant factor in the alleviation of such problems. Fiscal austerity is of equal importance. Entering into a stable monetary arrangement will entail a fundamental change in government spending policies. Ghana has con-sistently run an increasingly large budget deficit since 1996 and Nigeria since 1997 (see table 15). Both countries will have to strengthen financial discipline and develop new sources of revenue if they wish to establish a viable monetary zone. Six countries are participating in the negotiations for a SMZ namely, Ghana, Nige-ria, Guinea, Liberia, Sierra Leone and The Gambia. All six countries are members of ECOWAS, but not of UEMOA. Given the size of the economies and the political sta-bility of the participating countries it is only natural that Ghana and Nigeria should constitute the driving force of the fast track negotiations. Only Guinea with a GDP of US$ 3780 million in 1998 (roughly half of Ghana) has an economy of a size that can have a potential impact on the development of the SMZ. Therefore, Ghana and Nige-ria will set the agenda for the current and future negotiations and will ultimately decide on the design of the SMZ. The countries participating in the SMZ have agreed on a set of convergence criteria7 that have to be fulfilled if closer monetary co-operation is to be possible. The six countries participating in SMZ have agreed to undertake concerted action into the following quantitative primary convergence criteria: Primary convergence criteria for SMZ 1. Single digit inflation rate by the year 2000 and 5% by 2003 2. Gross external reserves to cover at least three months imports by 2000 and 6 months by 2003 3. Central bank financing of budget deficit to be limited to 10% of previous year’s tax revenue 4. Budget deficit (excluding grants) to GDP ratio of not more than 5% by 2000 and 4% by 2002 If a SMZ can provide a viable alternative to the CFA franc zone then the ultimate result could be a unification of the two main currencies in the region. A move that would fulfil the vision of the 1975 ECOWAS treaty, which mentions the establish-ment of a West African monetary zone. It will be much easier for the CFA franc countries to unite with a SMZ where all participating countries obey the necessary fiscal discipline instead of six individual countries. In the Bamako declaration it is envisaged that the two monetary systems will unite in 2004. What only few people in Ghana have realised is that compliance with the conver-gence criteria will have a very significant impact on economic policy. Effectively gov-ernments will hand over monetary policy to a regional central bank and fiscal policy will have to conform to a series of exogenous targets. Both income and expenditure will have to be reined in. Compliance with the convergence criteria will have to constitute the guiding princi-ples in both Ghana and Nigeria’s economic policy. However, it still remains to be seen if the two countries are able to restructure their economic policies in an appro-

7 Convergence criteria are a set of macroeconomic indicators that countries entering into a com-mon economic and monetary arrangement are required to satisfy to reduce the negative external-ities that may arise from asymmetry in economic policies.

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priate way. None of the countries are known for financial austerity and Ghana has a record of heavy spending in election years. Nigeria on the other hand has consis-tently squandered its large earning from oil exports. However, both countries have shown a genuine willingness to engage themselves in regional integration. Table 15 shows the development in the four main convergence criteria for Ghana and Nigeria. Table 15: Convergence indicators for Ghana and Nigeria 1994-1999 1994 1995 1996 1997 1998 1999 Target Target Inflation rate 2000 2003 Ghana 34.2 70.8 32.7 20.8 15.7 est. 13,8 1. digit 5%Nigeria 57.0 72.8 29.3 8.5 10.0 8.0 1. digit 5%Reserves/Imports ratio (Months) Ghana 4.1 4.5 3.4 2.6 1.9 1.6 3 6Nigeria 3.0 2.1 7.6 9.6 7.9 est. 6.4 3 6Central Bank financing (% of previous years tax revenue) Ghana 107 17.5 -34.6 13 56.7 147.7 10% 10%Nigeria 16.0 0.0 0.0 8.1 10% 10%Budget deficit (excluding grants) to GDP ratio 2002 Ghana 2.2 0.9 -3.0 -2.1 (-8.3) -2.0 (-6.3) -3.1 (-6.5) 5% 4% Nigeria -7.7 0.1 1.3 -0.2 -4.7 -7.6 5% %Source: Report from Technical Committee on SMZ, Bank of Ghana and Central Bank of Nigeria. Number in brackets denotes budget deficit excluding grants. Currently, Ghana does not qualify for the SMZ on any of the convergence criteria. Under the present economic conditions, even the Bank of Ghana doubts the possibili-ties for meeting the targets on time. It will probably only be possible to fulfil them if the prices for Ghana’s main export items, cocoa and gold, increase significantly. The figures are better for Nigeria. Inflation has been brought down to single digits in 1999. And though foreign reserves have deteriorated since 1997 they are still within the target for 2000. On the other hand the budget position has been deteriorating from a 1.3% surplus in 1996 to a 7.6% deficit in 1999. Though revenue policies in Ni-geria are becoming more focused, though introduction of VAT and an increase in pet-rol prices there is still a long way to go.

4.5 Creation of a free trade area All countries in the sub-region stand to benefit from a free trade area. Given the lim-ited size of most West African countries, local industry only has a limited potential for growth without trade. Access to the entire West African market and especially Nigeria can, to a certain extent, solve this problem. Currently, products are often imported from outside the sub-region - even if a company in another ECOWAS coun-try produces the same product. This can be changed through free trade. Products are not necessarily imported from third countries because locally manufac-tured products are fundamentally un-competitive. Often the reason is simply that cost of freight, insurance and red tape prolong delivery times to an extent where it becomes faster and cheaper to import from Europe or Asia. In the process of inter-viewing companies the consultants noted that talking about intra-community compe-tition does not make much sense. In reality there is very little duplication of effort in Ghana and Nigeria and none of the interviewed companies feared increased competi-tion from companies in the other ECOWAS countries.

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Industry in the West African sub-region is still weak and the main part of industrial growth is concentrated in a few sectors such as mining or oil production. In 1998 in-dustry in Ghana accounted for 25% of value added as a percentage of GDP, but manufacturing only accounted for 9%. Nigeria relies heavily on oil production mak-ing industry account for 41% of value added as a percentage of GDP, but again manufacturing only accounts for 5%. Industry and manufacturing are envisaged to provide sub-regional growth, but competition from European enterprises and low-cost Asian producers is putting local industry under pressure. Especially Europe, which accounted for 46% of imports in 1997, presents a threat. Asian producers often produce in direct competition with West African manufactur-ers and account for 14% of imports to the region. If West African industry is to enter into long-term growth it will need some measure of infant industry protection and improved local market access. Here the lesson from the tigers of East Asia can pro-vide valuable experiences. ECOWAS and the Ghana-Nigeria fast track promises in-tegrated markets and a common external tariff. Both measures which are vital for growth of industry in the region. Recently, there have been several developments in the implementation of the proto-cols for a free trade area in Ghana. As mentioned in section 3.3, Ghana has started charging the 0.5% levy on imports from non-ECOWAS countries. The government has also promised that all road blocks will be removed by September 1, 2000. Cus-toms officials are being educated on good customs practises and CEPS conducts spot checks in order to remove the road blocks. Companies are also being urged to apply for the reduced TLS tariff for industrial goods8.

4.6 The fast track negotiations for free trade The strategy for harmonisation of rules and regulations in order to create a free trade area is to establish a number of negotiating committees and let them develop ideas for harmonisation and recommendations for accelerating economic integration. The committee on ECOWAS Trading systems met at Abuja on January 17-18, 2000 as a follow-up on the inaugural Accra meeting on December 20-21, 1999. The objec-tive of the meeting was to work out modalities for establishment of a free trade area between the two countries by April 30, 2000. The work of the committee on the ECOWAS trading system was divided into three sub-committees, namely • Free trade (customs) area • Standards organisation • Food and drugs agencies Sub-committee on free trade area At the first meeting of the sub-committee on free trade there were two main conclu-sions. Firstly, countries involved in the fast track should start implementing the TLS. Secondly, Benin and Togo should be invited to join the negotiations, as any transit operation by road would involve the two countries. Benin and Togo actually participated in the Mini Summit of Heads of State and Government on the creation of an ECOWAS borderless zone in March 2000.

8 See annex 7.6 for the “Plan of action for establishing a free trade area”.

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The recommended strategy for implementing the TLS was for the two governments to incorporate the TLS in their budget statements for year 2000. Directives should be given to the Ministries of Finance to implement the scheme from March 2000. Rec-ommendations were also made concerning the application of the protocol on a com-munity levy. Both these steps were to be taken immediately. Importantly recom-mendations were also made pertaining to a common external tariff. A technical sub-committee consisting of the Ministries of Finance, trade and customs should study this issue and come up with proposals for accelerating its implementation. Another important aspect of establishing a free trade area is co-operation in customs matters. It was recommended that both countries should create customs websites by February 2000 and implement the Automated System for Customs Data (ASYCUDA)9 fully by the end of March 2000. It was also agreed that to ensure effec-tive implementation and follow-up there was a need to establish a national monitor-ing body. Sub-committee on standards Product standards have been a frequently used non-tariff barrier. A harmonisation of standards is an important step in the creation of a borderless zone. This would es-sentially mean that if a product is approved in either Ghana or Nigeria, it could be exported to the other country without further ado. Such a step would be important for streamlining the current procedure with certification in both countries. The terms of reference for the sub-committee on standards was to study the stan-dards of the Ghana Standards Board (GSB) and General Standards Organisations of Nigeria (SON) and harmonise them. Furthermore, the regulations that govern ex-port and import procedures should be studied. Discussions were held on issues such as manpower development, laboratory facilities, a mutual recognition agreement and packaging requirements. In the future, conformity assessment arrangements and test reports will be standardised and importantly pre-shipment inspection in Ghana will mean automatic approval in Nigeria and vice-versa. It was recommended that the testing laboratories and product/quality system certification bodies should make every effort to operate in accordance with the relevant ISO/IEC guides (25,62,65). Since the inaugural meeting a lot of progress has been achieved. SON has visited Ghana twice and a Ghanaian delegation has recently returned from Nigeria after having discussions on issues such as quality, packaging and recycling. The time-frame for the talks is 2002 - well within the fast track schedule. Sub-committee on food and drugs Another non-tariff barrier for free trade is related to procedures for export and im-ports of food and drugs. In order to deal with the obstacle of different regulations the sub-committee on food and drugs reviewed three areas of operation: • Regulatory measures for trade of regulated products into Ghana and Nigeria • A list of products whose import are currently restricted or banned • Practical procedures for registration of regulated products

9 ASYCUDA is a system for custom reform and computerisation

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Generally, the two countries have similar procedures within these three areas, but a few differences were noted. For instance in Nigeria certificates of manufacture and free sale must be endorsed by the Nigerian embassy in the country of origin. In Ghana drug importation is only allowed through Kotoka Airport and Tema Seaport and Ghana poultry and meat product importation is restricted by fat content. No ma-jor differences on export procedures currently exist. Other differences are that the registration license of a regulated product is valid for five years in Nigeria and three years in Ghana; the period of listing of products is 1 year in Nigeria and 3 years in Ghana and a Certificate of Environmental Impact Assessment (CEIA) is required in Ghana when licensing manufacturing premises. Recommendations were made for policy reviews so that the procedures in the two countries could be harmonised. It was emphasised that the private sector should be informed of the common procedures adopted by the sub-committee. Three meetings were scheduled in order to follow up on the preliminary work.

4.7 Private sector initiatives All the key players in the Ghana-Nigeria fast track emphasise the pivotal role of the private sector in regional integration, as it is the private sector that ultimately stands to gain from economic integration. However, if serious consultation and sensi-tisation at the company level is not undertaken, critical areas may be forgotten - ar-eas that only the operators with daily experiences of cross border trade can high-light. The overall assessment of the work undertaken so far is that it is promising. The Chambers of Commerce were selected as the main representatives of the private sector in Ghana and Nigeria for private sector consultations. As there are inherent differences between the priorities of traders and manufacturers, this move has been criticised by both AGI and MAN. The first meeting between the private sectors of Ghana and Nigeria was held in February 2000. The main participants from Ghana were GNCCI, AGI and PEF while delegates from different chambers of commerce represented Nigeria. The participants were divided into 6 discussion groups namely investment, trade liberalisation, infrastructure, protocol, monetary issues and im-plementation and monitoring. For a list of recommendations from the sub-committees see annex 7.2. The proposals deal with many of the relevant areas for private sector integration. In July, 2000 the chambers of commerce from all the ECOWAS members countries were to meet and discuss revitalisation of FWACC. However the meeting was cancelled due to lack of attendance and NACCIMA cancelled for no apparent reason. PEF has also made critical remarks about the negotiations. They place serious doubt on Ghana’s readiness to integrate.

4.8 Investments An important rationale for establishing a free trade area within ECOWAS is increas-ing the size of the market. Most of the countries in West Africa are too small to at-tract large-scale foreign investments. However, the possibility of gaining access to the about 250 million citizens through investment in one country makes the West African market much more attractive. If a borderless zone is created between Ghana, Nigeria and some of the smaller countries, Ghana’s chances of attracting invest-ments will increase. Ghana is regarded as having a conducive investment climate

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and could become an important gateway for foreign direct investments flowing into West Africa. Integration of the markets will also increase investments from other West African counties. According to GIPC, Nigeria is the only significant sub-regional investor in Ghana, with 30 investments in the period from September 1994 -June 2000. Scarcity of capital is one of the main problems facing the private sector in West Af-rica. The Nigerian Investment Promotion Commission (NIPC), Ghana Investment Promotion Centre (GIPC) and other key private sector players met in February 2000 to discuss this issue in the context of the Ghana-Nigeria fast track. Two overall themes were discussed: (i) Investment environment and funding and (ii) co-operation and institutional building. A team was appointed to make recommendations for harmonisation by the end of April 2000. For the main recommendations of the sub-committee see annex 7.2. Discussions were also held on establishment of a Ghana Nigeria Public / Private sec-tor dialogue forum. Such a forum is to be used for discussing issues pertinent to business development in ECOWAS. Suggestions were also made for a West African Arbitration Centre for handling of disputes related to investment or commercial mat-ters. This centre should be established by ECOWAS at the latest in December 2000. Revival of FEWAMA and FWACC were also discussed. The deadline for the next step in the establishment of these associations was set to April 2000. It was proposed that Ghana and Nigeria should form the nucleus of a West African Investment Promotion Association (WAIPA). Basically, this association should serve as a catalyst for joint investment promotion in line with the vision of attracting more investments to a borderless West African market. At a prior ministerial meeting it was decided that ECOWAS was to host and fund such an association. A step that, according to Frank Ofei from the ECOWAS secretariat, is being implemented. Stock Exchanges With a market capitalisation of US$ 2,9 billion (1998), Nigeria has by far the largest stock exchange in West Africa. Though the Ghana Stock Exchange (GSE) has per-formed quite well since it began operating in 1990, the market capitalisation of US$ 1,4 billion in 1998 was less than half the size of Lagos. Therefore, Ghana has much to gain from co-operating and ultimately merging with the Nigerian Stock Exchange (NSE). With a combined value of more than US$ 4 billion a merged stock exchange will become much more attractive for foreign and local portfolio investors. According to the managing director of GSE Mr. Yeboa Amoa, this is an interesting prospect as portfolio investments from Nigeria are virtually non-existent. He reckons that there might have been a few Nigerian investments when the shares of Ashanti Goldfields were floated, but otherwise investments from Nigeria have been minute. A memorandum of understanding between the two stock exchanges was signed in September 1998. The main areas of co-operation comprise communication and ex-change of information, training of staff, surveillance and self-regulation. It is envis-aged that the stock exchanges in the region will merge by 2004. A common stock ex-change for Ghana and Nigeria will be the first step and then hopefully, it will be pos-sible to first co-operate and then merge with the UEMOA stock exchange in Côte

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d’Ivoire. At the end of the day this will probably be the best way to involve more for-eign investors in the sub-regional market.

4.9 Donor support to regional integration In this section, the policies of the two major multilateral donors supporting regional integration, the World Bank and EU, are reviewed along with selected donor activi-ties. It is likely that donors will play an important role in providing financial support to the integration efforts. Their policies on regional integration can have a significant impact on the ultimate goal of establishing a SMZ and a free trade area. World Bank policy on regional integration in West Africa The World Banks policy on regional integration in West Africa is essentially laid out in a speech delivered at the Anniversary Forum on Acceleration of Regional Integra-tion held in May 2000 in Abuja. The overall policy is very supportive of the initiative taken by the governments of Ghana and Nigeria. However, according to the World Bank country director for Ghana, Mr. Peter Harrold, the World Bank only recently started developing a policy on integration in the sub-region. It is a new area that the bank is investigating and the policy is still under preparation. Despite the diversity that is found in the West African sub-region and a lack of a comprehensive World Bank strategy several themes or pillars have emerged from discussions with sub-regional players. These pillars and others yet to be developed will form the focus of World Bank support. They are: • Integrating markets • Harmonising macroeconomic policies • Key infrastructure investments • Strengthening human resources and capacity • Sub-regional peace and security The World Bank is very supportive of further integration between Ghana and Nige-ria. The strategy outlines a number of political and economic preconditions that should be satisfied. A list of principles that could accelerate regional integration is also given namely, open regionalism; subsidiarity; pragmatism and gradualism; and private sector leadership. The Bank does not see any conflict between the Ghana-Nigeria fast track and the UEMOA block, but sees it as a variable geometry approach towards the ultimate goal - integration of all the countries in the sub-region. An extra bonus for Ghana will be the fiscal “lock in” that will be imposed on economic policy. The Bank hopes that adherence to the convergence criteria will restrain the government from un-sound economic policies. EU policy on regional integration The European Union policy framework for West Africa supports all integration ef-forts - also the Ghana-Nigeria fast track. However, the bulk of EU support has gone to the UEMOA countries through technical assistance to individual countries, finan-cial support for an integration framework and direct support to budgets of UEMOA institutions. UEMOA has invested heavily in its secretariat. Consequently, it has be-come more efficient and much more dynamic than its ECOWAS counterpart.

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EU does not see that there is any potential for conflict between ECOWAS and UEMOA. However, because UEMOA has been dynamic and achieved significant progress, EU has been interesting in giving support. The EU does not have an offi-cial position on the Ghana-Nigeria fast track, but sees a potential for a two pillar ap-proach within the ECOWAS framework. Maybe the existence of two strong regional blocks will strengthen the potential for a future merger. Since the Ghana-Nigeria fast track is well within the overall policy of strengthening regional integration, EU is also willing to support this initiative. Recently, EU has financed a study of the potential and consequences of closer integration between Ghana and UEMOA. Before the initiation of the Ghana-Nigeria fast track there was a widespread feeling that Ghana was being left out of very important regional devel-opments. However, the study concluded that it would be politically unwise to join UEMOA and actually recommended that Ghana should align itself with Nigeria for both historical and economic reasons. The EU has expressed great willingness to support Ghanaian initiatives in relation to the fast track. It is felt that the developments are so important that any sensible initiative that can accelerate the process can receive support from the EU. Access to the Nigerian market should increase the likelihood of economic growth in the region. A vital factor in EU support to Ghana. Other donors Generally all the donor agencies support the regional integration effort in West Af-rica. Interviews with selected donor agencies reveal that the main activities are con-centrated around support for infrastructure development. Most of the agencies are in the process of developing strategies for support to regional integration in the future. As an example ADB mentions regional integration in its vision statement. The bank is involved in regional infrastructure development, especially within road develop-ment. USAID’s main regional activity is connected to the West African gas pipeline through support to capacity building at the government level. This should enable the involved ministries to handle negotiations with the private operators. Table 16: Activities of selected donor agencies Donor agency Selected activities ADB • Infrastructure development (roads)

• Study of potential in agricultural trade between countries in West Africa USAID • Are not involved in any activities with specific relation to Ghana

• Funding of WAEN study of intra-regional transport conditions • Are supporting capacity building connected to the West Africa Gas Pipeline

UNIDO • Has never had a co-ordinated approach to ECOWAS • Has sponsored the preparation of the ECOWAS industrial master plan • Are planning a project called “An industrial policy framework for accelerat-

ing integration” in co-operation with the ECOWAS secretariat Swiss Embassy • Has detected many problems concerning trade and are willing to support

proposals that deal directly with the problems CIDA • Does not have any activities directly related to regional integration

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The donor agencies are generally very interested in increasing their activities within regional integration. Integration is seen as an important step in the development of the countries in the region. Since most donor agencies also emphasise the role of the private sector in economic growth, well-prepared initiatives from the private sector organisations are likely to be eligible for support.

4.10 Conclusion The Ghana-Nigeria fast track is an initiative with far reaching consequences for in-tegration in West Africa. It has presented the anglophone countries with a powerful alternative to UEMOA and bred new life into the ECOWAS institution. Ambitious goals have been set for a SMZ and a free trade area. The initiative reaches beyond Ghana and Nigeria and several countries have shown interest in joining the SMZ and the free trade area. Ghana has mainly opted to join Nigeria for political reasons. As it has been shown in chapter 2, economic integration is presently much higher with other countries in the sub-region. However, the fast track has heightened the UEMOA countries’ interest in Ghana and Nigeria. If everything progresses according to the Bamako declaration the two communities will join in 2004. One of the main obstacles to regional integration has been a lack of real political commitment to the ECOWAS agenda. This commitment appears to be present in the Ghana-Nigeria fast track negotiations. The Presidents of Ghana and Nigeria have on numerous occasions demonstrated their commitment through speeches and active participation in the integration negotiations. Interviews with officials have also re-vealed the same kind of commitment. Meetings are held, information is exchanged and new proposals are beginning to be implemented. However, there are still a number of measures that need to be taken if the fast track is to materialise into a functioning monetary union and trade co-operation. Ghana is far away from reaching the criteria for the SMZ. Strong measures will have to be taken if the targets are to be achieved. Nigeria is closer to reaching the targets, but Nigeria’s main challenge will be to maintain the current relative political stability. The negotiations for establishment of a free trade area have progressed a great deal. Benin, Togo and other important trading partners within UEMOA have been in-cluded in the negotiations. There are a number of inconsistencies in the negotiation with UEMOA, but they should not pose a problem if the necessary political commit-ment is present. If the fast track negotiations succeed they will bring considerable benefits to the involved countries through increased trade and investment. However, an increase in trade and investment can only become a reality if the pri-vate sector is involved in every stage of the process. The private sector organisations have been involved and many important areas have been addressed. However, as the following chapters will reveal, the question still remains: “Is Ghana ready to inte-grate?”

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5 Private sectors views on regional integration

5.1 Background The involvement of the private sector in the programme and strategies for regional integration has been very limited from the time of the formation of ECOWAS. In re-cent times, however, the role of the private sector is being recognised by the govern-ments. The initiation of the fast track approach has witnessed greater efforts by the governments of Ghana and Nigeria to involve their respective private sectors in the discussions and negotiations for integrating the two economies. By and large, the Ghana and Nigeria private sectors are in favour of the Ghana-Nigeria fast track approach to the extent that this has the potential of accelerating the ECOWAS integration process. In their view, the two countries have a lot in common that could facilitate economic integration – common colonial heritage, and resultant characteristic of the economies, culture and language. In addition, being two of the four dominant economies in the sub-region, their integration would serve to exert the needed pressures to get the other ECOWAS economies to move towards the implementation of the ECOWAS agenda. This notwithstanding, a substantial section of the Ghanaian private sector surveyed had reservations about the practical consequences of this fast track approach on their operations, taking into consideration the geographical location of Ghana vis-à-vis its immediate neighbours who are all members of UEMOA. The current volume and spread of trade between Ghana and these countries is quite significant compared to that between Ghana and Nigeria which is dominated mainly by oil imports from the latter. One aspect of the Ghana-Nigeria fast tack approach is the effort to get the interven-ing countries, Togo and Benin, to subscribe to the free trade area that has been en-dorsed by Ghana and Nigeria. The view of Ghanaian companies interviewed is one of scepticism about Togo and Benin’s commitment in view of their membership of UEMOA. Yet by the fact of their geographical location, they could pose a threat to or positively advance the fortunes of a Ghana-Nigeria free trade area. The Ghana government’s approach to the fast track and the level of consultation with the private sector did not commend itself much to the companies surveyed. In their opinions, with adequate consultations and appreciation of the realities con-fronting operations on the ground, the government’s approach could have been more guided by practical experiences. Government seems to have taken a position based primarily on political considerations, which, in the view of the companies, could un-dermine the advantages that Ghana could benefit from a more comprehensive ap-proach to UEMOA vis-à-vis Nigeria.

5.2 Direction of regional integration Notwithstanding the fact of Ghana and Nigeria being anglophone countries and showing a common economic legacy, the view of many of the Ghanaian companies is that Ghana’s immediate neighbour, Côte d’Ivoire, should not be excluded entirely from the integration process. Approaches to involving Togo and Benin in the Ghana-Nigeria fast track should be extended to Côte d’Ivoire. Being a key player in

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UEMOA, the Ghanaian companies hold the view that if Côte d’Ivoire co-operates in the process, it will drive other UEMOA members along. As to whether Ghana should join UEMOA as an alternative to the Ghana-Nigeria fast track, the companies surveyed were overwhelmingly opposed to it. They do ap-preciate the goal of the fast track approach, which is accelerating ECOWAS integra-tion. However, they would prefer that the fast track would be inclusive of critical players such as Togo, Benin and particularly Côte d’Ivoire. The general view is that UEMOA should be absorbed into ECOWAS. There is a need for harmonising activities and regulations so that the same conditions and privileges will be applied to all countries within the sub-region regardless of whether they are members of UEMOA or not. This is the only approach that will sustain Ghana’s trade relations within the sub-region without at the same time sacrificing the ulti-mate goal of ECOWAS.

5.3 Potential benefits to industry The objective of ECOWAS as set up in 1975 is to promote co-operation in all fields of economic activity including agriculture, industry, transport, telecommunications, trade, customs, immigration, monetary and financial matters, as well as social and cultural affairs – in order to achieve rapid economic development and integration of the economies of West African countries. The vision of a larger regional market has been a major objective since the estab-lishment of ECOWAS. Consequently, the strategy of market integration has been adopted with supporting measures for facilitating increased intra-regional trade. The companies covered by the survey in the three countries (Ghana, Nigeria, Côte d’Ivoire) – all recognise the vital role that the integration of the West African econo-mies could play in the socio-economic transformation. Given the global trends to-wards regionalisation, the industries were unanimous that the sub-region should not be left out, if it is to become an active player in the global market and ensure sus-tained economic growth and development in member countries. Specifically, potential benefits of integration perceived by the private sector include: • the growth of new industries and the strengthening of existing ones • economies of scale resulting from the large market created by integration • real product and income creation • employment generation • integrated development of infrastructure • promotion of healthy competition in terms of efficiency, quality and productivity

5.4 Private sector priorities, Côte d’Ivoire and Nigeria Views from Côte d’Ivoire There is no doubt that the private sector in Côte d’Ivoire recognises the importance of regional integration as a means of economic transformation, not only for the UEMOA countries, but also for the entire ECOWAS sub-region.

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They recognise that their home market is relatively small and therefore would not attract the required investment if not integrated with other countries. For this rea-son, the private sector has strongly supported their government’s efforts with inte-grating the francophone countries into UEMOA. Côte d’Ivoire’s private sector has been very active in the establishment of UEMOA and is determined to ensure its success. It can be said that the greatest priority of the private sector on regional in-tegration is to first ensure the success of UEMOA. There are several reasons for Côte d’Ivoire’s interest in UEMOA. Côte d’Ivoire is the most industrialised country in UEMOA accounting for 75% of industrial production together with Senegal. According to the Chambre de Commerce et d’Industrie de Côte d’Ivoire, Ivorian products comprise 90% of the products listed for reduced tariffs within UEMOA. The private sector therefore stands to gain should UEMOA succeed. Furthermore, it has been much easier to integrate UEMOA because of the use of a common language, common currency and the member countries’ strong affiliation with France. The private sector considers the establishment of UEMOA as a first step towards eventual proper integration of ECOWAS. Therefore the success of UEMOA will, to a large extent, determine the success of ECOWAS. Ghana is considered an important trading partner to Côte d’Ivoire and therefore, a potential member of UEMOA. The private sector in Côte d’Ivoire would like Ghana to join UEMOA for various reasons. Côte d’Ivoire has a lot in common with Ghana – border, culture and history – and therefore it would be easier and cheaper to inte-grate with Ghana. Furthermore, there is already a large volume of informal trade between Ghana and Côte d’Ivoire. It is estimated that the informal trade could amount to 90% of formal trade. Integration will therefore formalise and enhance trading activities. Côte d’Ivoire is the most dominant country in UEMOA as a result of unbalanced in-dustrial development among member states. There are therefore different degrees of losses and gains arising from integration. Such inequitable distribution of gains has the tendency to make some member states reluctant to co-operate fully in the inte-gration process. Especially when very few countries are seen to be dominant. Ghana’s membership should result in a more equitable distribution of gains. Although the private sector in Côte d’Ivoire recognises Nigeria as constituting the single largest market in the sub-region, it is not their immediate objective to inte-grate with Nigeria. There is the problem of language, currency and the general lack of confidence in Nigerian businessmen. The fact that Nigeria could dominate the market was not considered a potent issue, but the honesty of the Nigerian business-men is a great concern. The Ghana-Nigeria fast track is generally considered a good initiative for accelerat-ing the integration of ECOWAS. If Ghana and Nigeria could establish another trad-ing block, it would become easier to merge with UEMOA. But the question commonly asked was “why should Ghana integrate with Nigeria instead of Côte d’Ivoire”? In the opinion of the Ivorian private sector, integration with Côte d’Ivoire would have been an easier option for Ghana.

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Views from Nigeria The Nigerian companies, no doubt, recognise the vital role of regional integration in the socio-economic transformation of the countries of the sub-region and express the need for commitment and concerted efforts from all countries in the sub-region to-wards the goals of ECOWAS. All the companies surveyed admit that in spite of Nigeria’s vast market, the country still stands to benefit more from integration. Diversification of the production base resulting from regional integration of industrial processes, economies of scale and integrated infrastructure development are some of the key advantages to be derived from integration. Even though some companies were of the view that the Nigerian market was large enough to support optimal production levels of their operations, the opportunities of-fered through an expanded market and a more competitive environment within the framework of regional integration would be welcome developments. One of the few Nigerian companies that has developed an ECOWAS wide strategy is Nigerian Foundries. Nigerian Foundries operates with the same service concept in the entire ECOWAS region. The company is very interested in increasing its activities in Ghana, where many of the potential customers are situated. However, the company still experiences numerous trade barri-ers and despite a very active efforts outside Nigeria, the company is only able to export approxi-mately 2% of its production to the regional market. Nigerian companies basically face the same problems as Ghanaian companies when exporting to the ECOWAS region. Therefore, it is felt that a link between Ghana and Nigeria will be important for advocating for reduced tariffs, removal of red tape and establishment of a system for cross border payments. Just like the Cedi, the Naira cannot be used for cross-border transactions. This means that the Nigerian compa-nies are very supportive of any efforts to establish a second monetary zone. The Nigerian private sector consequently is supportive of the Ghana-Nigeria fast track approach as a means to accelerating the ECOWAS agenda. In their view, this approach constitutes a potent and positive response to UEMOA and would exert the required pressure for immediate convergence between the two blocks. FEWAMA Companies and business associations surveyed in the three countries (Ghana, Nige-ria and Côte d’Ivoire) are unanimous that the private sector should spearhead the integration process. Revitalising the Federation of West African Manufacturers As-sociation (FEWAMA) is therefore considered a step in the right direction. This will however, require a thorough co-ordination and an arrangement of common strategies and actions among private sector associations. FEWAMA was established by the manufacturers’ associations of West Africa in or-der to: • promote the establishment of national manufacturers’ associations in member

countries of ECOWAS where they do not exist • promote and sustain a permanent link between associations of manufacturers

and related sectoral organisations in the sub-region

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• provide a forum for disseminating information and formulating general policy with regards to industrial, labour, social, legal, training, and technical matters for industrialists within the sub-region

• promote intra-regional trade in locally manufactured goods within the context of the ETLS

• identify and harness local sources of raw materials for processing and for indus-trial utilisation

• promote industrialisation in member states by means of exhibitions, seminars etc. and the encouragement of bilateral co-operation among member states

The following countries were members of FEWAMA: Benin, Burkina Faso, Côte d’Ivoire, Ghana, Guinea, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo. The FEWAMA secretariat was situated in Lagos, Nigeria and a permanent secretary was responsible for the daily operations of the association. MAN made the main part of the contributions to the secretariat. In 1995 FEWAMA could not conduct its annual general meeting because of lack of attendance. Conse-quently, it was decided that the activities of the association should be discontinued. FEWAMA failed for a number of reasons. Members were reluctant to contribute to the secretariat and attendance at FEWAMA meetings was low. Furthermore, many of the manufacturers’ associations in West Africa were not financially capable of pay-ing contributions to an association such as FEWAMA. However, the largest manufacturers associations in West Africa, AGI, FNISCI and MAN are now determined to revive FEWAMA. They have all expressed commitment to the FEWAMA agenda and agree that the recent developments towards accelerated regional integration are sufficiently important to justify increased co-operation be-tween the associations in the sub-region. The view is that if the three strongest asso-ciations in the sub-region can form the nucleus of the federation, it will be possible to revive it. The private sector needs a strong voice in the negotiations for further integration. AGI and MAN need to place their priorities on the fast track agenda and FNISCI would like to establish closer ties with its sister organisations in order to convince the Ivorian government of strengthening the relations with non-UEMOA countries, especially Ghana. Companies in the three countries face many of the same problems. Furthermore, the difficulties with the ECOWAS regulations and cross border trade apply to all countries in the sub-region. Therefore, there are many common goals that can be pursued through FEWAMA.

5.5 Ghana’s competitive advantages This section of the study reviews the nature and performance of Ghana’s products in the ECOWAS sub-regional market. The conclusions are primarily based on available statistics and company interviews. Table 17 gives details of Ghana’s major exports to ECOWAS (in % of total exports to ECOWAS) for the past five years.

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Table 17: Ghana’s major exports to ECOWAS Product 1995 1996 1997 1998 19991. Wood and wood products 0.12 5.1 1.6 3.0 24.92. Iron and steel 0.2 9.6 3.7 1.4 19.73. Minerals, fuel oil and products 10.8 31.2 26.9 34.5 16.04. Aluminium and Alu. Products 87.3 5.1 16.3 9.8 14.15. Mechanical appliances and parts 0.003 3.12 5.1 2.0 2.86. Plastic and plastic articles 0.01 1.13 2.3 2.6 2.17. Oils & resin oils, perfumes, cosmetics 0.01 0.7 0.4 0.8 2.08. Chemical products 0.2 0.3 0.06 0.8 2.59. Salt, Sulphur, Stone etc. 0.02 6.0 3.6 12.6 1.710. Textiles 0.001 0.0001 1.4 0.07 1.511. Vehicle parts and accessories 0.03 2.19 1.9 1.6 1.512. Furniture and bedding Mt. 0.04 1.7 1.5 6.7 1.413. Provisions 0.04 0.007 0.02 0.1 0.914. Electrical equipment & Parts 0.1 1.2 5.1 0.4 0.915. Cereals 0.03 5.9 0.3 5.4 0.216. Fruits & Nuts 0.3 1.9 0.10 0.1 0.317. Tobacco 0.2 1.4 0.8 0.6 0.118. Malt/Starches etc. 0.03 1.4 0.8 3.7 0.119. Paper, Pulp etc. 0.005 1.0 9.0 0.4 0.420. Animal/ Vegetable fats & oils 0.004 1.8 1.1 0.4 0.221. Iron and steel articles 0.2 0.5 0.5 4.6 0.422. Cotton 0.001 1.66 13.4 0.7 0.823. Fish & Aquatic Invertebrates 0.01 2.51 0.9 1.6 0.8Source: Ghana Statistical Service The 23 products mentioned in table 17 feature prominently in the ECOWAS market. Each of the products has, between 1995 and 1999, contributed to at least 1% of total export revenue from ECOWAS for at least one year. Products such as aluminium, wood and wood products, iron & steel, salt and textile have over the years main-tained their relatively high level percentages of more than 1% of each year’s export revenue from the sub-region. It may be relevant to state that Ghana’s non-traditional exports to ECOWAS have diversified since 199810. However, the total export revenue from ECOWAS accounts for only 12.6% of Ghana’s total export earnings, which is still small. About 90% of the companies interviewed export to the sub-regional market. Exports of their products range from 15% to as much as 75% (in the case of salt) of their annual sales volume. It is the view of the companies that Ghana has a competitive advantage in the pro-duction of the following goods: salt, aluminium products, packaging materials, soaps & detergents, furniture, textile, electrical cables, canned tuna, hair products, cocoa processing products, iron & steel products, processed fruit, and plastics. 90% of the products mentioned by the companies are among the 23 major products of Ghana’s export to the sub-region, which confirms the importance of these products to Ghana as far as the sub-regional market is concerned.

10 CTA for ministry of trade report 1998.

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In assessing Ghana’s competitive advantage in the sub-region one should bear in mind that West African economies are basically the same, i.e. they produce similar products because of similar climatic conditions and similar levels of technology. Ghana’s competitive advantage in the production of the above products stems from the relatively large number of manufacturing plants in Ghana as compared to most other countries such as Niger, Togo, Benin & Burkina Faso, and Mali. Furthermore, Ghana has natural resource endowments for the production of products such as salt and wood products. Salt is an example of how increased access to the sub-regional market can provide benefits to more countries than the one with the competitive advantage. Ghana and Senegal are the only salt producing countries in West Africa. Ghana’s annual production is 350 Mt. (71%) and Senegal’s is 100Mt. (29%). Ghana’s salt is generally considered to be of a superior quality to that of Senegal. It is estimated that the current total salt production by the two countries constitute less than 50% of Nigeria’s annual salt requirement. The implication is that, the market potential is sufficiently large to sustain production in both salt-producing countries.

5.6 Conclusion The Ghanaian private sector is very positive towards the overall aims of regional in-tegration. Companies feel that the access to regional markets can result in substan-tial benefits. Nigeria is generally seen as the most important market, and the com-panies are generally not in favour of Ghana applying for membership of UEMOA. However, given Ghana’s geographical position, the fast track should be extended to include more countries. Gaining access to the Nigerian market is generally regarded as being very difficult. Furthermore, free trade with Nigeria will not be possible un-less Benin and Togo are committed to participating in the negotiations. Therefore, every possible effort should be made to ensure that these two countries are commit-ted to the negotiations for a borderless zone. Another important country that should be included in the fast track is Côte d’Ivoire. Ghana and Côte d’Ivoire are both relatively industrialised and are of approximately the same size. Language is not regarded as a problem on either side of the border. For these reasons the interviewed companies generally feel that Côte d’Ivoire should be included in the fast track negotiations. It is generally believed that Ghanaian industry is sufficiently developed to cope with increased competition with the neighbouring countries. None of the companies inter-viewed were scared about the prospects for increased competition through estab-lishment of a free trade area. They were looking forward to the prospect of increased access to the sub-regional market.

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6 Proposals for support

6.1 Introduction Regional integration is regarded as instrumental to the development of Ghana’s economy. Increased trade with the neighbouring countries is envisaged to result in accelerated development and growth. Consequently, Ghana has been an active par-ticipant in ECOWAS and recently the fast track initiative with Nigeria. However, the feeling among economic operators is that integration remains a politi-cal project. Companies complain that the necessary framework for free trade has not yet been put in place. Furthermore, the private sector has not been properly con-sulted on its priorities for integration. Ghana’s aspiration to become the gateway to West Africa does not make much sense when the existing trade barriers prevent large-scale exports to the sub-region. As a part of this study 13 companies in Ghana, and several companies in Nigeria and Côte d’Ivoire have been interviewed concerning their experiences with cross border trade. The companies have identified a number of barriers that need to be removed if free trade in West Africa is to become a reality. It was interesting to note that most companies did not raise the issue of language as a major barrier to trade. Apparently many Ghanaian companies have employed per-sonnel with a French background to handle trade issues with francophone countries. It was also interesting to note that a good number of business people in Côte d’Ivoire were able to communicate in English. The view of the private sector is that although language could pose a problem for intra-regional trade, this can be overcome without much difficulty, if other barriers are removed. Another major barrier to proper integration is poor infrastructure linking countries in the sub-region. In order to promote free and fast movement of people, goods, and services, regional infrastructure should be developed to a more sophisticated level. Whereas roads between Ghana and its immediate neighbours are sufficiently devel-oped to transport goods and persons, the numerous security checks and cumbersome procedures adopted by security agencies makes road transport very expensive and highly inconvenient. Generally, road networks linking ECOWAS countries are noth-ing to write home about. Sea transport also entails a number of problems including lack of direct shipping links within the sub-region, poor port facilities and a general lack of commitment of port officials in ensuring fast clearance of goods at the ports. Although roads in the sub-region have improved in the recent past there are still a number of problems re-lated to transport. Firstly, a railway line linking countries in the sub-region is essen-tial for proper integration. Secondly, air transport among sub-regional countries is not well developed, it is poorly patronised and very expensive. Thirdly, the telecom-munication network in the sub-region is also not well developed and it is easier to communicate with Europe and USA than with West African countries. To summarise, infrastructure is a major barrier to regional integration. However, the development of adequate infrastructure is a long-term project, requiring very

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heavy investments. In the short term, the biggest problem is related to road blocks and other forms of administrative harassment. In addition to the long-term problem of underdeveloped infrastructure, the compa-nies identify 5 main short-term barriers to regional integration. If intra-regional trade is to increase, it will be necessary to remove these barriers. In the following section these barriers are discussed along with 11 proposals for their removal. The proposals contain a recommended action for AGI and a suggestion for donor support. 5 barriers to trade 11 proposals for removing them

1. Red tape concerning export/import proce-

dures

2. Lack of intra-regional payment and clearing system

3. Road blocks and ob-structive attitude of officials

4. Mistrust between the economic operators in the sub-region

5. Lack of enabling environment for Gha-naian exports

5.2 Establishment of dedicated warehouses for Ghanaian goods


5.1. Export financing

1.1 Harmonisation of certification and testing pro-cedures

1.2. Simplification of export / import procedure

1.3 Fast track application procedure for TLS tariff

2.1. Introduction of WAIPS (West African Inter-bank Payment System)

3.1. Establishment of an institution for surveil-lance of irregular trade practices and a sealing sys-tem

3.2. Privatisation of CEPS, payment reform

4.1. Revival of Federation of West African Manu-facturers Association (FEWAMA)

4.2. Networking between regional trade arbitra-tion centres

1. Red tape concerning export / import proce-dures

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6.2 1. Red tape concerning export/import procedures 1.1 Harmonisation of certification and testing procedures Background Certification of products is a frequently used trade barrier in the West African sub-region. Agencies such as the national food and drugs administration, standards board and customs often use procedures that effectively exclude imports of certain products. Support to harmonisation of certification procedures is important for accel-erating regional trade integration. The ultimate goal should be that a product, certi-fied in Ghana, receives automatic approval in Nigeria and vice versa. The relevant bodies have already started work on harmonisation under the fast track initiative. With reference to a lack of correct documentation, companies can be prevented from exporting to the other countries. For instance, Panbros Salt has experienced numer-ous problems with the NAFDAG Board - the Nigerian version of Ghana Food and Drugs Board. NAFDAG is extremely strict in issuing license for food exports. In Panbros’ opinion clearly a ploy for support of local industries. Action The relevant bodies, i.e. Ghana Standards Board (GSB), Environmental Protection Agency (EPA) and the Food and Drugs Board (FDB) in Ghana and their counterparts in Nigeria have already met and identified the main obstacles for harmonisation. The organisations still need to meet and elaborate more on the proposals before they are submitted to the government for implementation. Method of support • Support for meetings of officials • Support for preparation and implementation of harmonisation proposal 1.2 Simplification of export / import procedures Background One of the main complaints of traders concerns the complicated procedures associ-ated with transport and clearing of goods. The problems exist regardless of whether the goods are transported by sea or by road. Some manufacturers stated that the documentation and the appropriate tariffs are not made clear and left to the discre-tion of the custom officials who take the opportunity to cheat traders. At the ports in Tema and Lagos, most companies describe clearing of goods as ex-tremely bureaucratic. A company reported that it had to deal with thirteen different

1.1 Harmonisation of certifi-cation and testing proce-dures

1.1.1 Support for meetings of officials

1. Red tape concerning export/import procedures

1.1.2 Support for harmonisation pro-posal

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institutions when clearing goods at Lagos port. The normal clearing time for goods is one month, but it can easily take up to two months. Similarly, it can easily take two weeks to get a truckload of goods by road from Abid-jan to Accra. An example is import of PVC from Côte d’Ivoire. When a truck arrives at the border the importing company has to call the EPA in Accra and ask them to take a product sample back to Accra for testing. This normally takes three days. Then the sample is sent to GSB for certification. This takes at least one day. Finally, the sample is sent to the Customs Excise Preventive Service (CEPS) for final ap-proval. This normally takes 3 days. Altogether, getting the PVC across the border takes at least one week and often more. In addition to this there are numerous road blocks on the road to Accra. If trade in the sub-region is to increase, it will be necessary to streamline the compli-cated export and import procedures. Action AGI will initiate discussions with the port authorities and government institutions on how clearing time can be reduced. Furthermore, a comparative study between the ports in Abidjan, Lagos and Tema should be commissioned. The study should iden-tify the main obstacles to efficient clearance, benchmark the three ports against an efficient port in Africa and generate a list of proposals for reform. AGI has collected sufficient material to highlight the problems and engage govern-ment in a discussion on a streamlining of export/import procedures. Discussions with the relevant organisations such as GSB, FDB and CEPS will also be initiated. AGI will generate a list of concrete proposal for streamlining of the procedures. Method of support • Support for a study of clearing in the ports of Abidjan, Lagos, Tema and another

port that is known to function smoothly (eg. Mozambique). The report should come up with suggestion for how clearing time can be reduced.

• No external support is needed before the proposals for streamlining the im-port/export procedures are ready for implementation.

1.3 Fast track application procedures for ETLS tariff Background High and discriminatory tariffs imposed on goods by ECOWAS members are a major barrier to trade. Companies in both Ghana and Nigeria complained that whereas goods from an UEMOA member country to other member countries are of often duty free, goods from anglophone countries are subject to high tariffs. The interviewed companies state that UEMOA tariffs have had serious negative effects on their ex-ports to the sub-region.

1.2 Simplification of ex-port/import procedures

1.2.1 Study of clearing procedures at regional ports


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The company Poly Products gives the following example. Poly Products’ products are regarded as being highly competitive in the sub-regional market. However, the com-pany loses many orders in spite of a large number of inquiries from interested buyers within UEMOA. Despite the fact that their products have been approved under the ETLS, resulting in a 15% import duty, the UEMOA countries still charge 25%. This means that it is very difficult to export anything to UEMOA. Panbros Salt has ex-perienced the same type of problems. The UEMOA countries impose a 21% import duty on Ghana’s salt whilst it is zero on salt from Senegal. This means that Ghana-ian salt is effectively excluded from UEMOA. Another example of the difficulties that companies face because of the different trad-ing regimes in the sub-region, is given by the Managing Director of Tema Steel. He owns a brick factory in Togo with an annual production of 1,2 million tons. The products from the factory are registered under the ELTS scheme, but this has turned out to be a problem. Because the products are ETLS registered they cannot be in-cluded in the UEMOA scheme for reduced tariffs which, in the case of exports to the other UEMOA countries, is much lower than the ECOWAS tariff. Another problem is related to application for the ETLS tariff for industrial products. The procedure is reported to be so cumbersome that many companies see no point in applying for the scheme. For a description of the application procedure see section 3.5. Action It can be concluded that there is pressing need to harmonise and reduce tariffs in the sub-region. Companies are prevented from entering the sub-regional markets by high and discriminatory tariff. Introduction of a new approval procedure for the ETLS tariff, involving for instance only the fast track countries, could shorten the processing time for applications. The new procedure should result in an approval time of less than two months. The ECOWAS secretariat should continue with processing the applications for the tariff, but the final approval should be delegated to only one committee. AGI will initiate discussions with government on both a harmonisation of tariffs and implementation of a new and less cumbersome application procedure. Whereas har-monisation of tariffs with the UEMOA countries may take some time, a streamlining of the application procedure is very relevant to the fast track. Both areas will also be important for a revived FEWAMA, as manufacturers in all countries in the sub-region experience problems related to discrimination and the ETLS. Method of support • No external support needed

1.3 Fast track application procedures for ETLS tariff

1.3.1 No external support needed


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6.3 2. Lack of an intra-regional payment and clearing system 2.1 Introduction of WAIPS (West African Interbank Payment System) Background A major obstacle being encountered by companies trading in the sub-region is pay-ment difficulties. Payment for goods in the different currencies of the region with dif-ferent rates of convertibility and payment restrictions has discouraged several com-panies from exploring market opportunities in the sub-region. Companies saw the establishment of ECOBANK as a step in the direction of resolv-ing payment difficulties among traders. However, the bank’s operations have not made the expected impact and traders still take the risk and inconvenience of carry-ing large sums of money to other countries to purchase goods. Regional banks are expected to develop strategies and products to finance intra-regional trade. There is a need to harmonise regional monetary systems to achieve currency con-vertibility in order to facilitate trade. Exchange rates could be fixed and allowed to fluctuate only within defined margins. An individual country’s currency should have fixed parity to one major foreign currency, for example the US dollar. In the long term, companies are advocating for the introduction of a common currency like the Euro. Introduction of a single currency was considered the ultimate and permanent solution to the payment problem. The general view among the companies surveyed is a first step towards a solution to the payment problem is introduction of a system for cross border payments and effi-cient clearing procedures. Although the establishment of Forex bureaux in some countries has improved the situation a little, the problem remains unresolved, as most the sub-regional currencies are not traded at the bureaux. It is impossible to use local currencies (except CFA franc) as payment for products purchased in other countries in the sub-region. Previously, the West African Monetary Agency (WAMA) has facilitated a clearing mechanism, but Ghana does not currently use the system due to unfavorable exchange rates for the Cedi and a permanent trade deficit with the sub-region. ECOBANK and 50 other banks in the sub-region have developed a system for inter-bank payment (WAIPS). WAIPS works in the following way. An importer situated in Ghana would pay for the goods in Cedi to a bank situated in Ghana. The Ghanaian bank would then transfer the order to another bank in the recipient country, say Côte d’Ivoire. The Ivorian bank would then transfer the payment to the exporting company in CFA Francs. At the end of the month the net position between all the banks in the system would be settled in hard currency by the central bank. The system was to have been introduced in August 2000. However, due to the per-manent lack of foreign exchange in the sub-region, the introduction was postponed indefinitely. Especially the Bank of Ghana does not have sufficient foreign exchange reserves to support the scheme.

63

Action AGI will initiate discussions with regional banks and financial institutions with the aim of establishing a cross border payment mechanism. If WAIPS proves to be a so-lution to the problems the Bank of Ghana should be encouraged to sponsor it. A fo-rum for discussion will be established where banks and the government are informed about the needs of the private sector, encouraged to set up a system and sensitized on the possibilities for generating a profit from the transactions. Donors provide large amounts of foreign exchange to Ghana through support to the capital account. In the future some of the foreign exchange could be allocated to the banks that operate WAIPS. This would enable them to clear the net deficits every month. A pooling of resources between the donors could be considered. Method of support • The World Bank and other multilateral institutions should be encouraged to

support the Bank of Ghana’s participation in WAIPS • Direct foreign exchange support can be given to the banks that operate the sys-

tem through the annual donor transfers.

6.4 3. Road blocks and obstructive attitude of officials 3.1 Establishment of an institution for surveillance of trade irregularities and a seal-ing system Background Traders constantly complain about harassment by officials from the military, police or customs that establish road blocks and demand illegal levies. Furthermore, since transports waiting for clearance are often unprotected, theft is frequent. Difficulties with establishing secure and reliable transports are damaging to regional trade. In 1997 the West African Enterprise Network (WAEN) initiated a survey of trade ir-regularities based on previous studies and observations by members. The survey re-vealed that transport costs as a percentage of the total value of imports for the UEMOA countries add up to 18%. The costs for Ghana would be of the same magni-tude. For comparison this figure is around 6% for the rest of the world. There are also substantial problems with road blocks. From Ouagadougou, Burkina Faso to Accra, Ghana there is an average of 20 roadblocks for every transport. This means that there is a roadblock for every 40 kilometres of road. The control of the transports takes at least 20 minutes at each roadblock. This can amount to delays of as much as 30 hours, depending on the mood of the controllers. Apart from delays the road blocks add substantially to the cost of transport. In 1997, the average costs

2.1. Introduction of WAIPS

2.1.1 Multilateral support for scheme

2. Lack of intra-regional payment and clearing system 2.1.2 Direct foreign

exchange support to operators of WAIPS

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of illegal levies charged at the road blocks amounted to Cedi 100,000 and the legal levies amounted to Cedi 64,000. The WAEN study includes a number of recommendations for how it would be possi-ble to remove the irregularities. Action Establishment of an institution for surveillance of irregular trade practices both on a regional and national level has been suggested by WAEN. A co-operation between these observatories is envisaged. Based on information on anomalies, a new Intra-State transport system has been discussed suggesting, among other issues, the implementation of a special sealing system to protect goods. The system already exists, but is only used to a limited ex-tent. If illegal controls of sealed vehicles and unauthorised unsealing will be liable to punishment then mandatory use of the system could reduce the number of road-blocks. The government of Ghana has promised that all roadblocks will be removed by Sep-tember 1, 2000. It will be necessary to wait until then before deciding on the estab-lishment of the system. Method of support • Support for establishment of institution for surveillance of trade irregularities • Support for implementation of a sealing system for goods 3.2 Education programme for customs officials, privatisation of CEPS Background Harassment by customs officials is one of the biggest problems related to trade in the ECOWAS area. Education and sensitisation of customs officials on ECOWAS rules and trade facilitation will be an important step in eliminating this problem. There are several initiatives under way to educate customs officials. CEPS in Ghana is already conducting an education programme for customs officials and there are similar initiatives taking place in Nigeria. This has already had some effect and eco-nomic operators have started reporting a reduction in the number of roadblocks in Ghana. Furthermore, a number of initiatives are under way in connection with the World Bank sponsored Ghana Investment and Trade Gateway Programme (GHATIG). However, the feeling is that the institutional set-up of CEPS still needs to be changed. Perhaps CEPS should be privatised. Furthermore, the performance of offi-

3.1 Establishment of an in-stitution for surveillance of trade irregularities and a sealing system

3.1.1 Support for es-tablishment of sur-veillance institution3. Road blocks and ob-

structive attitude of offi-cials

3.1.2 Support for im-plementation of seal-ing system.

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cials should not only be evaluated by the amount of duty that they collect, but also on the volume of trade that they facilitate. Another reason for the road blocks is the salaries of staff employed by CEPS. The salaries of civil servants are generally very low and the road blocks are seen as a possibility for making a “little extra on the side”. Action AGI will advocate for a change in procedure within CEPS and will initiate discus-sions with government on privatisation. Targets for removal of road blocks should be set. CEPS and the other institutions that establish roadblocks should constantly be evaluated on the progress with achieving the targets. Method of support • Support for privatisation of CEPS • Support for salary reform for customs officials

6.5 4. Mistrust between operators in the sub-region 4.1 Revival of FEWAMA Background There appears to be a lot of mistrust between the countries in the sub-region. Espe-cially the Nigerians have been stereotyped as unreliable. This negative perception was strongly expressed by both Ghanaian and Ivorian companies. Although they do acknowledge that there are a good number of genuine business people in Nigeria they will be very cautious in dealing with them. Whilst some companies have vowed not to transact any business with a Nigerian, others will not be prepared to sell on credit. On the other hand, some companies consider Ghana too “vulnerable” to sur-vive Nigerian crooks. The situation has serious negative implication on integration. Business thrives on trust, and therefore it is important that this negative perception is erased. It is im-portant to add, however, that companies will be more comfortable dealing with members of MAN, who will be easier to trace in case of default. Many of the inter-viewed companies also emphasise the importance of revitalising FEWAMA in order to strengthen relations between economic operators in the sub-region. The general feeling among economic operators is that the private sector has been given very little voice in the negotiations for integration. Many of the leading private sector associations have not even been invited to participate in the negotiations. At the company level, managers complain that they hardly receive any information about the fast track initiatives and many of them are unaware of the implications for their companies. This has meant that the negotiations have proceeded without input from the operators that ultimately stand to benefit from further regional integration.

3.2 Privatisation of CEPS, Payment reform

3.2.1 Support for study of privatisa-tion 3. Road blocks and ob-

structive attitude of offi-cials

3.2.2 Support for payment reform

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Action FEWAMA should be revived so that industry has the power to advocate for transna-tional issues towards governments in the sub-region. It is envisaged that the four main industrialized countries in ECOWAS, Côte d’Ivoire, Ghana, Nigeria and Sene-gal should form the nucleus of the organization. It is envisaged that closer co-operation between the associations will be an important step in building trust. Furthermore, government must be made aware of the private sector’s priorities. This can be done through seminars where the priorities are presented to key government officials. Similarly, the private sector must be made aware of the implications of the fast track negotiations so that they can adjust their business strategies accordingly. Method of support • Support for meetings between the manufacturers associations of Côte d’Ivoire,

Ghana, Nigeria and Senegal (and others) • Support for the arrangement of seminars with key government officials • Support for private sector sensitization seminars 4.2 Networking between regional trade arbitration centres Background Several companies have raised the issue of lack of trust as a barrier to trade in the sub-region. Previous bad experiences with missing payments for goods delivered have discouraged companies from cross border trading. Establishment of a neutral body that can settle disputes between companies would be an important step in strengthening the relations between traders. Ghana has recently established a Danida supported trade arbitration centre that deals with trade disputes within Ghana. This is a great advantage for the companies, as it is now possible to settle trade disputes outside the normally slow judicial sys-tem. In principle the centre is open to trade arbitration between companies from all countries. However, companies are not yet aware of the scheme and contacts have not been established to the trade arbitration centres in Nigeria and Côte d’Ivoire. Action A regional trade arbitration centre will be an important step in eliminating the lack of trust. The centre should have the authority to handle trade disputes and penalise companies that are unwilling to fulfil their obligations. Basically, there are two ap-proaches that can be pursued. Trade arbitration can be co-ordinated between already existing centres in the sub-region or a new centre can be established. The first step

4.1 Revival of FEWAMA

4.1.1 Support for meetings and secre-tariat

4. Mistrust between op-erators in the sub-region 4.1.2 Support for

seminars with gov-ernment

4.1.3 Support for PS sensitisation seminars

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would be to strengthen the networking activities between the existing arbitration centres. Method of support • Support for networking activities between the already existing trade arbitration

centres in the sub-region. • Support for sensitisation of companies on the importance of using the centre for

settling commercial disputes

6.6 5. Lack of an enabling environment for Ghanaian exports 5.1 Export financing Background An export financing institutions, which lends at “reasonable” interest rates, could be an important step in increasing Ghanaian exports. Such an institution can evaluate buyers, provide working capital and take some of the risks associated with cross bor-der trade. It is currently close to impossible for Ghanaian companies to gain access to export financing. The institution should be run as a profit organisation, but donors could take some of the risk associated with lending. ECOBANK is facilitating a USAID sponsored export-financing scheme for the Minis-try of Trade and Industry. The system has been operational for three years and pro-vides short-term (max 360 days) capital with an interest rate of 15%. The scheme is mainly targeted at small and medium scale enterprises that wish to export to the sub-region. The maximum amount that can be provided is US$ 150.000 with a limit of 70% of the order. Companies must be able to show a confirmed order and a letter of credit in order to access the scheme. The Export Financing Company Ltd. (EFC) provides the same services, but does not receive donor support. EFC has 10 years of experience with export financing. Due to now abandoned bad lending practices, the company is struggling with old debt. Ne-gotiations with the Bank of Ghana have started on rescheduling or cancellation of the debt. The company has established a database of exporters in Ghana and claims to possess the knowledge necessary for assisting exporters with developing new markets. Action Contacts have been made to both ECOBANK and EFC. AGI will initiate discussions with companies and institutions that are interested in investing in EFC.

4.2 Networking between re-gional arbitration centres

4.2.1 Support for networking activi-ties 4. Strengthening rela-

tions between operators in the sub-region

4.2.2 Support for sensitisation of companies

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Method of support • Further study of the conditions for investment in ECOBANK or EFC • Equity support to ECOBANK or EFC • Capacity building at ECOBANK or EFC 5.2 Establishment of dedicated warehouses for Ghanaian good Background Problems related to clearing of goods at Lagos port adds considerably to the cost of exporting to the largest consumer market in West Africa. Ghanaian companies do generally not have the resources to establish and run warehouses with dedicated personnel. Obtaining professional warehousing individually for every company ex-porting to Nigeria would represent a high and repetitive cost. A pooling of resources between Ghanaian exporters could be an important step in es-tablishing a warehouse for Ghanaian goods in Lagos port. Dedicated personnel could manage and control the goods and ensure that they fulfil the clearance procedures. Furthermore, the goods would be kept under constant surveillance, which would re-duce the risk of theft. Action A suitable warehouse has been identified with the following estimated annual costs: Rental: US$ 12,000, Security: US$ 12,000, Insurance: US$ 10,000, Management: US$ 15,000. Total US$ 49,000. AGI will contact relevant companies that could be in-terested in such a facility. Method of support • Financial assistance for setting up the warehouse with management etc. • Co-financing of costs of warehousing together with interested exporters. 5.3 Export promotion in ECOWAS countries Background Although most of the manufacturers seem to have considerable knowledge of the op-eration of ECOWAS and some of the basic protocols, there is the general lack of

5.1 Support for an export fi-nancing institution

5.1.1 Study of con-ditions for invest-ment

5. Lack of an enabling environment for Ghana-ian exports

5.1.2 Equity sup-port

5.1.3 Support for capacity building

5.2 Establishment of ware-house for Ghanaian goods

5.2.1 Assistance with establishment of warehouse5. Lack of an enabling

environment for Ghana-ian exports

5.2.2 Co-financing of costs; staff, rent etc.

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knowledge on the part of manufacturers and exporters of the market opportunities in ECOWAS countries. A good number of manufacturers were sure that there is a large market potential in the sub-region, but most of them could not give specific data on market size, target group etc. to support their expectations. Companies normally sell to traders that transport the goods across the borders and sell them to the end-users. In order to in-crease their knowledge of the regional markets, Ghanaian companies need to par-ticipate in sub-regional trade fairs and meet potential customers. Official informa-tion on trade and investment opportunities and market surveys are also not well de-veloped. Local companies that wish to export to the ECOWAS region also struggle with an-other problem. Potential customers often regard products manufactured in the sub-region with scepticism. If the choice were between a European product and a product from West Africa, many companies would prefer to buy from Europe. This is mainly because products from sub-region are regarded as being of an inferior quality. This problem can be alleviated if Ghanaian companies have the possibility of marketing their products at regional trade fairs. Action AGI will identify interesting trade fairs in the sub-region and publish information on the trade fairs to members. If the interest is sufficiently high, a number of trade delegations will be arranged. Furthermore, an exporters handbook for selected coun-tries in the sub-region should be prepared with information on topics such as rele-vant contacts, companies, regulations, procedures, etc. Method of support • Support for preparatory costs associated with arranging the delegations • Part financing of participation and travelling expenses for companies • Financing of an exporters handbook 0


5.3.1 Preparatory costs associated with delegations

5. Lack of an enabling environment for Ghana-ian exports

5.3.2 Support for travelling expenses

5.3.3 Financing of exporters handbook

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7 Annexes

7.1 Annex 1: Status on contributions Executive secretary budget Member states Status Benin, Burkina Faso, Côte d’Ivoire, Mali and Nigeria Fully paid up Ghana Arrears of US$ 1,973,020 (1989 and 1992

contributions) Biggest arrears: Liberia Mauritania Sierra Leone and The Gambia Cape Verde and Guinea-Bissau Niger

20 years of accumulated arrears 15 years of accumulated arrears 11 years of accumulated arrears 10 years of accumulated arrears 8 years of accumulated arrears

Total arrears for secretariat US$ 38,4 ECOWAS FUND capital First tranche Status All member states except Liberia and Maurita-nia

Fully paid up

Liberia Arrears US$ 858,300 Mauritania Arrears US$ 1,6 million Second tranche Benin, Burkina Faso, Guinea, Mali and Nigeria Fully paid up Remaining 11 member states Total arrears of US$ 18,9 million Total arrears for FUND capital US$ 21,4 million Special fund for telecommunications Member states Status All ECOWAS member states Fully paid up Mauritania Arrears of US$ 144,830 Total arrears US$ 144,830 Loan payments to the ECOWAS FUND Member states Status Guinea-Bissau US$ 1,6 million Liberia US$ 2,3 million Niger US$ 1,1 million Nigeria US$ 0,4 million Total loan payments outstanding US�$ 5,5 million Construction of ECOWAS headquarters Member states Status Benin, Burkina Faso, Côte d’Ivoire, Guinea, Mali, Nigeria and Togo

Fully paid up

Remaining 9 member states Total arrears of US$ 4,6 million Contributions outstanding US$ 4,6 million

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7.2 Annex 2: Recommendations Box 2.1: Recommendations of private sector associations Investment

• Governments should provide funds for the mod-ernisation of stock exchanges

• Rejuvenation of ECOWAS FUND

• Support for development banking and funds for industrial development

• FWACC should be resuscitated

• Harmonisation of investment laws

• Ventures equal to ECOBANK should be pur-sued within airlines, shipping and pipelines

Monetary issues

• WAMA was judged as an efficient payment sys-tem, which will be needed for accelerating re-gional integration.

• WAIPS, which is to be introduced by the West African Bankers Association in year 2000 was noted as a viable private sector initiative.

• Governments encouraged to work towards at-tainment of convergence criteria for 2003 and to create enabling conditions for the private sector

Infrastructure The main issues discussed related to:

• Establishment of an independent African com-munications system

• Intelcom II should be a back-up for a modern satellite communications system

• Removal of all road blocks

• Revival of West African Road Transporters Un-ion

• Government is encouraged to start on a rail pro-ject

• Government should facilitate the setting up of a regional air transport system

• Intensification of construction of the West Afri-can Gas Pipeline

Trade liberalisation

• Removal of all barriers to free trade

• Enabling legislation for TLS in Nigeria

• Harmonisation of VAT in Ghana (10%) and Ni-geria (5%) by April 2000

• Intensification of awareness plan for ECOWAS travellers check

• Disallowance of Pre-shipment inspection (phased out in Ghana, still used in Nigeria)

• Goods below a threshold value of US$ 500 should be traded without documentation

• Nigeria should resume application of TLS

• NACCIMA should sign certificates of origin in Nigeria

• Products licensed by the authorities in Ghana, Nigeria should be included in TLS

• Development of mutual certification schemes for NSB’s and FDA’s

• Standards should be emphasised and participa-tion in CODEX and ISO improved

Protocol

• The group mainly discussed a streamlining of bureaucratic procedures, but also emphasised the need for an early invitation to Benin and Togo to join the fast track.

• A proposal for an investment and arbitration centre for dispute settlement was also discussed

Implementation and monitoring

• It was emphasised that a major problem for the economies of Ghana and Nigeria has been a lack of implementation, monitoring and follow-up.

• The private sector should be represented in fu-ture committees that are to deal with such is-sues.

Box 2.2: Recommendations from investment promotion councils • Greater autonomy for IPA’s

• Harmonisation of investment procedures

• Bilateral investment protection agreements

• Deregulation of the farming and mining sectors

• Joint projects such as ECOBANK

• Dual listing on stock exchanges

• Governments should encourage and enhance development of EPZ’s

• Government should promote cross border in-vestment

• Revision of ECOWAS Industrial Master Plan

• Privatisation of public utilities

• Increased competition in the privatisation proc-ess

• Restructuring and re-capitalisation of ECOWAS FUND

• Development of policies that will ensure adap-tation, assimilation and innovation of technolo-gies

• Establishment of an ECOWAS Technology Fo-rum/Exhibition.

• NACCIMA and GNCC should revive FWACC

• MAN and AGI should revive FEWAMA

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7.3 Annex 3: Company Interviews - Ghana • Company: Ghana Textiles Printing Company Ltd. (GTP) • Person interviewed: Gilles Moisan, Managing Director • Product: Textiles According to GTP, the Ghanaian market is not sufficiently large to justify invest-ment. Companies should start by investing in Ghana and then move on to the rest of the sub-region. In terms of integration, GTP prefers to begin with the Ghana-Nigeria fast track. Hereafter Ghana should integrate with UEMOA and finally with the rest of West Af-rica. 90% of the company’s production is exported to Benin, Togo and Niger out of which 80% is re-exported to Nigeria, which has proven to be the cheapest way to export. The tax system is structured so that they only pay 30% duty if they export to Benin and Togo, but 60% if they export directly to Nigeria. Therefore, harmonisation of the tax system is very important to GTP. GTP can compete with Nigerian products because their products are of higher qual-ity. The 8 Nigerian textile producers cannot compete with the quality of Ghanaian producers. All the company’s transactions are conducted in either CFA francs or US$ since the Cedi is “redundant”. Therefore a common currency is very important and would make trade more efficient. The company has used the duty-drawback scheme, but the amount of bureaucracy associated with using it makes the effort to reclaim the money ridiculous. GTP emphasises the importance to work with education and to speed up the West African Gas Pipeline to Nigeria for better power supply. • Company: Alcatel Ghana • Persons interviewed: Nii A. Ayite, Managing Director and Henry D.

Aboagye, Export Manager • Product: Cables Alcatel exports to Benin, Togo and Burkina Faso. Since the company has a sister company in Nigeria, the export is very limited. However, Alcatel has experienced the cumbersome process of exporting goods to Nigeria: Since transport by road and sea was too slow, they once had to charter a plane in order to send the goods. Alcatel spends an enormous amount of time on transport and customs procedures. An example is import of PVC from Côte d’Ivoire: When a truck arrives at the border the company has to call the environmental protection agency (EPA) in Accra and ask them to take a sample back to Accra for testing. Then the sample is sent to the Stan-dards Board for certification. Finally, the sample is sent to the Customs Board for

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final approval. The EPA takes three days, Standards Board 1 day and customs 2-3 days. In addition, the approvals have to be sent back to the border. This means that they normally spend at least a week getting a shipment through customs. In addition to this there are several customs roadblocks on the road to Accra. Since Alcatel still has to clear customs in Benin and Togo, free trade with Nigeria does not make much sense. Therefore they feel that integration with Nigeria is not the first priority for Ghana, but rather with the neighbouring countries or with the UEMOA block. There are other problems related to intra-regional trade. One of them is the tremen-dous problem connected to payment for goods. The regional banks are unwilling to clear payments and often the payments have to be delivered directly at the factory. Furthermore, the companies do not trust each other with payments. In order to smoothen payment procedures Ecobank could play an important role, as they have subsidiaries in most of the ECOWAS countries. The bank is, however, not currently capable of making the guarantees. Alcatel already conducts all their foreign transac-tions in either CFA francs or US$. The Cedi is of no use to them. The main priority for Alcatel is to establish faster customs and approval procedures at the border. This should result in all the relevant documents being stamped in one place, preferably at the border. • Company: Pioneer Food Cannery Ltd. • Person interviewed: Dr. Osei Boeh-Ocansey, Managing Director • Product: Canned tuna Nigeria is an insecure and rather dangerous country. Therefore, Ghana should be careful when integrating with Nigeria. Pioneer would prefer to start by integrating with Côte d’Ivoire. Ghanaians and Ivorians are essentially the same people and lan-guage is not an argument for preferring Nigeria. But Ghana has never really made an effort to integrate with Côte d’Ivoire, and even if the French and English foreign ministers went on a joint visit to Côte d’Ivoire to accelerate integration, not much has come of it. Pioneer emphasises the need to build relations between the institutions in the differ-ent countries starting with the chambers of commerce and the industrial associa-tions. Most of the company production (85%) goes to Europe, because the ACP Treaty gives them a competitive advantage. In addition, most of the products they sell in neigh-bouring countries are re-exported from Europe, which increases the price to a level that only few people can afford. However, their future market is in West Africa and they are very keen to start selling to the other markets in the sub-region. They have sent a broker to Nigeria to investigate the possibilities for direct exports. Fur-thermore, they are acquiring a canning factory in Abidjan where they have three di-rect competitors. Pioneer believes that Ghanaian companies have suffered for the common external tariff that the UEMOA countries have implemented.

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• Company: Carsons Products West Africa Limited • Person interviewed: John E. Totoe, Managing Director • Product: Beauty care products Previously importing their products from the US, Carsons are now producing in Ghana and are mainly targeting the West African market. Their products are sold in about 20 countries in Africa. Their biggest market outside Ghana is Nigeria, but are also selling to Côte d’Ivoire and Senegal among others. They have also established offices in Lagos and in Abidjan and the office in Abidjan manages the French-speaking countries. Transports to Nigeria are cumbersome and it sometimes takes them 4-6 weeks to get a shipment from the factory to the distributor in Nigeria. It takes 1 week for a ship-ment to the port of Lagos, 2 weeks for clearing etc. In total there are 13 different au-thorities that have to be consulted at the Nigerian ports. They always calculated costs of imperfection in transports into their budgets. The company considers UEMOA the most efficient block and believes that Ghana is not ready for a joint agreement with Nigeria and feels insecure about the success of the fast track initiative. Ghana generally has products of higher quality compared to other producers in the sub-region although Africans in general have been convinced about the advantages of quality products. In order to increase Ghanaian exports, the bureaucracy at the borders should be dealt with and Ghanaians should be taught how to market their products. Further-more, AGI should undertake an export opportunity study in the sub-region. • Company: Cocoa Processing Company Ltd. (CPC) • Interviewed persons: Paul. K. Awua, Managing Director and Peter Ape-

aning, Sales Manager • Products: cocoa products; mainly chocolate, drinking cocoa, etc. CPC feels that the Ghana-Nigeria fast track is a step in the right direction for ECOWAS and a natural result since the UEMOA countries have a tendency to ex-clude other countries from their integration process. One example is the UEMOA tariffs that are very unfair to Ghanaian companies. If companies want to export to Nigeria they can ship the products and avoid the has-sles of road travel. CPC sells most of its products directly from the factory and do not experience problems at the ports. Furthermore, they do not have any competition in Nigeria and welcome an open market. CPC uses US$ for most of their transactions outside Ghana. All imports are made from Europe where the main imported products are sugar, milk and machinery. Cus-tomers pay in cash when they come to collect chocolate from the factory.

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• Company: TEMA Steel Co. Ltd. • Interviewed person: M. J. Patel, Managing Director • Products: Steel billets, recycled metal TEMA Steel exports 25% of their production to Togo, but do not export to Nigeria due to the very high freight costs. The first priority in regional integration should be to strengthen infrastructure. Roads are in a bad condition and have to be improved before it will be possible to ex-port to other countries in the sub-region. They have faced competition from products that are smuggled into Ghana from Côte d’Ivoire, but the falling Cedi has eliminated the problem. TEMA believes Ghana should become a member of UEMOA, where they stand a very good chance of gaining market shares. In addition, there are no smelters in the neighbouring countries. TEMA’s Managing Director also owns a brick factory in Togo with an annual produc-tion of 1,2 million tons. The factory is located 5 km from the Benin border, but since they are registered under the ECOWAS tariff scheme, they cannot use the UEMOA tariff rate, which is lower than the ECOWAS tariff. The company suggests that AGI should insist on practical solutions for transport of goods. One of their main problems is the cost of freight. They can import billets from Ukraine at US$ 40 per ton but it costs US$ 50 per ton to export them to Nigeria, making their products non-competitive in Nigeria. Currently the Cedi is only for internal use in Ghana. TEMA Steels transactions take place in either US$ or CFA franc, but a common currency would make transactions much easier. The granting of ECOWAS tariffs is random. The company production of billets gets the ECOWAS tariff whereas their production of iron rods does not qualify for the ECOWAS scheme. They use an export promotion scheme where all income derived from export gets a 20% tax rebate. • Company: Astek Fruit Processing Ltd. • Persons interviewed: Stella Owusu Aouad, Executive Director, and staff • Product: Juice, etc. In terms of speeding up integration, Astek feels that it is a good idea to start with the Ghana-Nigeria fast track. Today, the company exports to Benin, Togo, Burkina Faso and Mali. In terms of transport, Astek claims that it is better to ship goods to Benin instead of using road transport as this involves less harassment. In addition, the paperwork at the border is enormous and the roads are in poor condition. Therefore, it is better to transport by sea.

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They are thinking about starting exports to the Nigerian market. Currently, exports to West Africa only account for 5% of their total production. Ghana has allocated a special warehouse to Nigerian products in Tema port. The Ni-gerian goods are treated very well in Ghana and a similar warehouse should be cre-ated in Nigeria. People from Burkina Faso buy directly at the factory. In general, cross border pay-ments are a problem and access to foreign exchange is limited. Ecobank can be used for transactions, but is not very efficient. Money posted at Ecobank in Benin are de-livered in CFA franc in Ghana. To facilitate cross-border payments, the countries in the sub-region need a common currency. • Company: Poly Products Ltd. • Interviewed person: Anil Mohinani, Director • Product: Plastics Poly Products prefer to invest in Ghana and then continuing with exports to Nigeria. However, the barriers to trade have to be removed first. But at present there is a greater potential within other countries in the sub-region and the company is focus-ing on Mali, Burkina Faso, Benin and Togo. One should however keep in mind that Nigeria is sufficiently interesting to attract investments on its own and this market is opening very fast. Therefore plants will be opened in Nigeria only for serving the Nigerian market. The external UEMOA tariff has posed significant problems for the company. They actually lose orders in spite of many inquiries from interested buyers in UEMOA countries. The ECOWAS tariff should be 15%, but in reality it is 25%. In addition to this one also has to calculate the cost of waiting time at the border and other indirect costs, which often renders their products non-competitive. They suggest that a good policy for AGI would be to forward proposals for speeding up clearing time at customs and to reduce the tariff rates in the sub-region. Duty drawback is reasonably easy, but it is necessary to keep a close check on all transactions and do a good deal of paperwork. Any reasonably organised company should be able to do this. They import cartons worth US$ 250.000 per month but it is difficult to get the for-eign exchange for such transactions. • Name of company: Panbros Salt Industries Ltd. • Person interviewed: Oheneba Gyemera-Amoako, Marketing Manager • Product: Salt Panbros exports indirectly (i.e. through wholesalers) about 70-75% of its products to ECOWAS countries, namely Niger, Burkina Faso, Benin, Togo, Côte d’Ivoire and to a lesser extent Nigeria.

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Ghana and Senegal are the only salt producing countries in the West African sub-region. The total annual salt production from these two countries amounts to 350 Mt., out of which Ghana produces 250 Mt. and Senegal 100 Mt. Nigeria alone con-sumes about 950 Mt. annually, and over 96% of this is satisfied by imports. Nigeria imports mainly from South Western Australia and Brazil. South Western Australia used to subsidise their salt exports to Nigeria, but recently, the subsidy has been removed and Nigeria now plans to import from Ghana. Re-cently Shell Nigeria Ltd. ordered 400 Mt. from Panbros, but the company lacks the capacity to produce that quantity, (note that the two countries together produce only 350Mt.). The implication is that there is a big market potential for salt in the sub-region and therefore proper economic integration will help transform the salt industry tremen-dously. There are however so many trade barriers in the sub-region. Currently, UEMOA countries impose 21% import duty on salt from Ghana, whereas salt from Senegal is duty free. Despite the high duty rate, demand for Ghana’s salt is very high because of its superior quality. The formation of UEMOA has adversely affected the exports of the company to ECOWAS countries, especially the UEMOA countries. The company will not recommend Ghana to join UEMOA but efforts should rather be made to harmonise ECOWAS and UEMOA so that the same conditions for intra-regional trade will apply to all countries within the sub-region. The company fully supports the Ghana-Nigeria fast track and trading with Nigeria should be encouraged, however, the following should be addressed: - Tariff should be harmonised between the two countries - Physical barriers should be removed - Custom procedures should be streamlined to ensure fast movement of goods be-

tween the two countries The company has observed that transporting goods to Nigeria takes unreasonably long time due to several physical barriers and sea transport is also very expensive due to high costs of freight. Clearing procedure at the ports, especially the Nigerian port, should be improved to curtail undue delays in clearing goods. The NAFDAG Board - the Nigerian version of Ghana Food and Drugs Board - is ex-tremely strict in issuing license for food exports, a ploy to support their local indus-tries. The various institutions should be harmonised such that certificates issued by one institution will be recognised by all others. The free zone system should be encouraged in both Ghana and Nigeria to facilitate the integration process since there will be no differential trade tariffs. The financial institutions should be involved in the process and ensure that they play their expected roles in facilitating trade. A common clearinghouse should be es-tablished either in Ghana or Nigeria to facilitate payment for goods.

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The insurance market for example is harmonised with the issuance of ECOWAS green card. In the event of motor accident in any part of the ECOWAS sub-region, the green card secretariat is able to handle the situation. In the same vein financial institutions could be harmonised to operate in a similar fashion. The company suggests that AGI’s role should include: - Stronger collaboration with their Nigerian counterpart, MAN - Create and strengthen sub-sector associations - Create a joint web-site for the associations to disseminate information The company does not enjoy any export incentive from the government, neither bene-fit from the duty draw back scheme because it does not export directly (individual wholesalers from the various countries are responsible for the exports.) Donor agencies could assist in the establishment of a Central Reference Laboratory for salt, which will be patronised by all countries in the sub-region, this will prevent the use of product certification as a ploy to reject salt coming from other countries. The donors could also assist two major banks, for instance, Barclays Nigeria, and Barcalys Ghana to establish a proper clearinghouse. Such a move will help eliminate possible conflict over which country the clearinghouse should be cited. • Company: UNILEVER • Person interviewed: Mr. Micheal S. Charamba, Technical Director • Product: Salt Currently UNILEVER has made important investments in plant and machinery. Raw materials have to be sourced from the sub-region for production. Likewise the company plan exporting to ECOWAS countries, especially Nigeria, thus it is there-fore necessary that the trading blocks are removed to enhance intra-regional trading. It is a fact that tariff and non-tariff barriers imposed on goods from African countries usually tend to be higher than those on similar goods from the western world. The company supports the Ghana-Nigeria fast track and suggests that Côte d’Ivoire, being the key player in UEMOA, should be involved in the fast track process, which will encourage other UEMOA countries to join in. In addition, Côte d’Ivoire, being next door, would be much easier to trade with than Nigeria. Today, clearing goods at Nigerian ports is highly cumbersome. Therefore it is nec-essary to review the clearing procedures to reduce delays. To facilitate payment of goods, the clearing system should be improved, which is an opportunity for the bank-ing sector; the banks should develop strategies to finance intra-regional trading ac-tivities. The regulatory systems have to be properly streamlined requiring proper under-standing amongst the regulatory bodies so that goods certified by Ghana Standards Board for instance will be accepted in Nigeria without undue harassment.

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• Company: Poly Products Ltd. • Person interviewed: Ebboe E. Botwe, Customer Service Manager • Products: Packaging materials, Water tanks etc. Poly Products manufacturing division constitute four companies: - Poly Products: L.P. rolls, shopping bags, biscuit wrappers - Poly Sacks: rice, sugar and maize sacks - Poly Tanks: overhead water tank, plastic bottles for drugs, gallons etc. - Poly Kraft: corrugated boxes The main export products are corrugated cottons of which 15-20% is exported. The company has plans to set up a plant in Takoradi to service the Western part of Ghana. There is a big market potential for the company’s products in the sub-region, largely because there are no plants in most West African countries producing similar prod-ucts. In terms of number and size of manufacturing companies, Ghana is way ahead of most countries in the sub-region. Smuggling is not a big issue; it is a problem for producers of consumer products. However, smuggling affects the company indirectly, since their clients are forced to reduce their production level, which in turn reduces their purchase volume of packaging materials. Currently, Poly Products export to Togo, Burkina Faso, and Mali and plan to export to Nigeria as well. The first trial export has been made and the company is awaiting the results from the importer. There are also plans to set up a plant in Lagos, Nige-ria for the production of multi-layer foam. Even though the company has not con-ducted any thorough market study to assess the Nigerian market it believes it con-stitutes an important potential regarding the size of the population. However these positive signals, there are two main barriers to trade confronting the company the in sub-regional market; namely cumbersome custom procedure and high cross-border tariffs imposed by UEMOA members. At present, UEMOA coun-tries impose 25% on products coming from Anglophone countries. Also the laid down standards and procedure are not clear, and regulations are delib-erately changed to frustrate exports from non-UEMOA member countries. On this background, Poly Products are not in favour of Ghana joining UEMOA and are also concerned of the language and currency barriers. The company used to ac-cept CFA for the payment of its products but had to stop because Ghanaian banks no longer accept the currency. Regional banks should be established to facilitate trade and such banks should accept currencies of all member countries. Ecobank, which was established to play this role, has not lived up to expectation. In order to facilitate trade, ECOWAS should introduce a common a currency. As it is today, there are far too many physical barriers between ECOWAS countries, which should be reduced if not removed completely The Ghana-Nigeria fast track is feasible and should be supported by all. Currently Ghana’s investment climate is more attractive to direct foreign investment than Ni-

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geria and as such most investors would prefer to invest in Ghana rather than Nige-ria. Ghana therefore stands to gain from the integration. In spite of the barriers imposed by Togo and Benin, it is still better to trade with Ni-geria than the immediate neighbours. Nigeria has a big market, which could be har-nessed to the company’s advantage. However, effort should be made to negotiate with Togo and Benin to allow safe and smooth transportation of goods across their countries to Nigeria. The company does not enjoy any tax incentive from the government. However, as the company has a direct export of 15% as well as large indirect exports of packaging material they should be entitled to some governmental tax incentives. AGI should play a stronger advocacy role rather than an administrative role, and be able to influence major government policy decisions. AGI’s role in the integration process should be to collaborate more effectively with sister business associations to encourage trading amongst the countries in general and members of the associations in particular. • Company: DOMOD • Person interviewed: Paul-Victor Avudzivi, Sales Promotion Manager • Products: Aluminium products DOMOD exports about 38% of its products to West African countries such as Togo, Benin, Burkina Faso, Senegal, and to a lesser extent Nigeria. The company also has plans to export to Liberia and has already made a trial export to Liberia. The company does not export to Côte d’Ivoire because of trade barriers. There is a market potential in the sub-region for cooking utensils and the company has the capacity to increase production if the demand should increase in the sub-region. There is not any real competition from neighbouring states, as there are no silver producing companies in most of these countries. Togo and Benin import virtually all their silver products from Ghana. Ghanaian companies are competing for the sub-regional market. Trade barriers are a big problem and require immediate attention if intra-regional trade is to succeed. Traders from neighbouring countries benefit from the depreciat-ing Cedi; they are also VAT exempt and are therefore encouraged to buy from Ghana. The company does not benefit directly from the exports. Another barrier is the high duty rate. Although the ECOWAS Treaty encourages member states to allow registered companies operating in the sub-region to export duty free, most of these countries impose high duty rates. One example is a company that paid a duty of 51% on goods it exported to Togo. The UEMOA countries seriously discriminate against goods from non-UEMOA member countries. This is in areas of cumbersome custom procedure, associated with delays and high tariffs. Togo for instance, does not seem to have a transparent and clear-cut procedure in evaluating goods for payment of duty. For example DOMOD

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participated in a fair in Togo. According to regulations the items brought in to Togo were duty free and allowed entering as such. However, when it was realised that the company was making good sales at the fair, the custom officials suddenly imposed a high duty on all the products brought to the fair. In addition, the duty receipt issued after payment was much lower than the actual amount paid. DOMOD is of the opinion that Ghana should not join UEMOA because of language and currency barriers. However, UEMOA and ECOWAS should be harmonised. They encourage the fast track initiative. Since Ghana and Nigeria are two of the largest English-speaking countries in the sub-region, stronger trade relation between the two countries must be encouraged through conscious efforts by the authorities to remove trade barriers and foster proper trade relations among others. One example is to harmonise exchange rates to ensure smooth trade. The company foresees a major problem in the Ghana-Nigeria fast track regarding the difficulties that may pose Togo and Benin, who both are members of UEMOA. Their commitment to the fast track process could be doubtful because of their stronger commitment to UEMOA. AGI should be seen as a strong force in the building of the economy of Ghana. AGI should be able to put pressure on government to implement policies that will favour the growth of the private sector, which has been widely acclaimed as the engine of growth. As far as the AGI’s role in the integration process is concerned, the Associa-tion should be able to strengthen its relations with sister business association in the countries involved. Donor agencies can play an important role in the integration process. The donor community can help set up an export finance bank purposely for ECOWAS member countries. The idea is that such a bank could charge reasonable interest rates that will be affordable to member countries and at the same time be financially sustain-able. A major factor that has to be taken into consideration when trading with Nigeria is the attitude of the Nigerian businessmen. Most Ghanaians do not trust or have con-fidence in transacting business with Nigerian businessmen. If indeed this perception is wrong then it must be discarded and corrected through education and proper re-orientation. For now, the company will only trade with Nigeria on condition that all goods pur-chased are paid with cash. The company will prefer setting up its own distribution centre in Nigeria than to supply goods on credit to any Nigerian company. In this connection, it is important to establish an arbitration centre to resolve disputes that may crop up.

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• Company: Scanstyle Furniture • Person interviewed: M.A Pepera, Vice Chairman/Managing Director • Products: Furniture Scantyle exports mainly to Europe but not to West Africa. The bulk of the company’s raw material is also sourced locally with occasional imports from Gabon and Camer-oon. Some species of wood are not available in Ghana and are therefore imported from Cameroon. There is however a problem with high transport costs, making it uneco-nomical to continue the importation. There is no doubt that integration of West African countries is essential for economic development of the sub-region. The physical/economic barriers to trade such as cum-bersome custom procedures, numerous checkpoints and harassment at the borders are obvious, and well known to the authorities concerned. But integration should be looked at in a broader perspective. The concentration has always been on economic factors, ignoring the social aspect, which is equally important for proper integration. There is a general lack of confidence and respect between neighbouring countries. Most ECOWAS countries are guilty of this. Even intolerance within countries exists. In Ghana for instance, people of different tribes are discriminated. Even at the offi-cial level non-nationals are maltreated especially at borders of various countries by security personnel. This attitude does not arguer well for promotion of business among West African countries. There is a need for complete change in psychological and behavioural attitudes, not only among security officials but also for people of all countries in the sub-region in general. This can be achieved through proper educa-tion, exchange programmes and conscious efforts to make life pleasant for non-nationals in various countries. Concerning the Ghana-Nigeria fast track, the social aspect of integration should be looked at critically; there is a general distrust between Ghanaians and Nigerians. The private sector requires funding to be able to improve its capacities on a more sustainable basis and stay competitive in the global market.

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7.4 Annex 4: Contacts COMPANY/ASSOCIATION CONTACT PERSON CÔTE D’IVOIRE: • African Development Bank Jones Kadono Nyasulu, Transport Economist

• African Development Bank Taisto Huimasalo, Executive Director

• African Development Bank Touba Bedinger, Agro-Économiste Supérieur

• African Development Bank E. G. Taylor-Lewis, Director

• African Development Bank Diko Jacob Mukete, Principal Country Economist

• Bourse Regional des Valeurs Mobilières (BRVM) Bah Amadou Tidiane, Responsable l'Antenne Nation-ale de Côte d'Ivoire

• CEPICI-Côte d'Ivoire Investment Promotion Cen-tre

Raymond Y. Sibailly, Technical Advisor

• Chambre de Commerce et d'Industrie de Côte d'Ivoire

Dr. Oguié Sain, Economiste/Directeur Général Adjoint

• CODINORM Jean-Joseph Kouassi Aka, Directeur Général

• CODINORM Jean Marcel Amoakon, Chef du Département

• CODINORM Jean-Joseph N'Goye, Ingénieur des T.P.

• DAFEXI Mr. Fofana

• Diréction Générale des Douanes

Lucien Kaké, Administrateur des Services Financiers, Directeur

• Fédération Nationale des Industries et Services de Côte d'Ivoire (FNISCI)

Joseph-Désiré Biley, Président

• Fédération Nationale des Industries et Services de Côte d'Ivoire (FNISCI)

Lakoun Ouattara, Chargé de mission

• Ministère de l'Industrie Mme Doukouré

• Nestlé Côte d'Ivoire Aboudramane Ouattara, Chef Service Import-Export

• OMNIFINANCE Jacob Amematekpo, Président & CEO

• SIFCA - Groupe Sifcom

Nazaire Gounongbe, Directeur des Relations Ex-térieures

• SIPRA-Société Ivoirienne de Productions Ani-males

Jean-Marie Ackah, Directeur Général

GHANA: • AGI Andrew E. Quayson, Executive Director

• Alcatel Henry D. Aboagye, Admin./Export Manager

• Alcatel Nii A. Ayite, Managing Director

• Astek Fruit Processing Ltd. Stella Owusu Aouad, Executive Director

• Astek Fruit Processing Ltd. Dr. A. A. Owusu, Chairman

• Bank of Ghana Dr. Mahamudu Bawumia, Research dpmt

• Carson Products West Africa Limited John E. Totoe

• CEPS Evans Klutse, Chief Collector

• Council for Scientific & Industrial Research Prof. W.S. Alhassan, Director-General

• Databank R. Yofi Grant, Executive Director

• DOMOD Paul-Victor Avudzivi, Sales Promotion Manager

• ECOBANK Fitzgerald Odonkor, Group Trade Co-odinator

• European Union Alessandro Mariani, Economic Adviser

• Export Finance Co. Ltd. Emmanuel Asiedu-Appiah, General Manager

• Export Finance Co. Ltd. Kwasi Owusu Adjei Jnr., Managing Director

• Ghana Arbitration Centre Nana Dr. S.K.B. Asante

84

• Ghana National Chamber of Commerce and In-dustry

Godfried Funkor, Research & Training Specialist

• Ghana Standards Board N. L. Hesse, Chief Scientific Officer

• Ghana Standards Board Anthony E. Owusu, Asst. Director Fin. & Admin.

• Ghana Standards Board Dr. J. M. Odonkor, Assistant Director

• Ghana Stock Exchange Yeboa Amoa, Managing Director

• Golden Tree Paul K. Awua, Managing Director

• Golden Tree Peter Apeaning, Sales Officer

• Panbros Salt Industries Ltd. Oheneba Gyemera-Amoako, marketing manager

• Pioneer Food Cannery Ltd. Osei Boeh-Ocansey, Managing Director

• Poly Products Ebboe E. Botwe, Customer services Manager

• Private Enterprise Foundation Harry Owusu, Aministrative Manager

• Private Enterprise Foundation Moses K. Agyemang, Senior Economist

• Royal Danish Embassy Ole Blicher-Olsen, Ambassador

• Royal Danish Embassy Jørgen Carlsen, Programme Coordinator

• Royal Danish Embassy Quame Adjei Kokroh, Programme Coordinator

• Scanstyle Furniture M.A. Pepera, Managing Director

• Tema Steel Co. Ltd. M. J. Patel, Director

• The Poly Group Anil Mohinani, Director

• The West African Enterprise Network Joyce Acheampong, Trade Information Coordinator

• The West African Enterprise Network Tina Ababio, Administrative Director

• The World Bank Peter Harrold, Country Director

• Unilever Michael S. Charamba, Technical Director

• USAID Fenton B. Sands,

• Vlisco Ghana Group (GTP) Gilles Moisan, Managing Director NIGERIA: • Apex Mill/Thomas Wyatt Nigeria Plc L. A. O. Osayemi, Managing Director

• ECOWAS Frank Ofei, Deputy Executive Secretary

• ECOWAS Akou Adjogou, Statisticien Economiste

• ECOWAS Limane Barage, Head of Industrial Dptmt

• ECOWAS Abdou Ali, Senior Customs Officer

• Emzor Pharmaceutical Industries Nkechinyee Ukoh, Chief Accountant

• Faskol Chemical Company Limited Dr. A. K. Fasina, President/Chief Executive

• Federal Office of Statistics - The Presidency Mr. Leo U. O. Sanni

• Manufacturers Association of Nigeria Jide A. Mike, Ag. Director General

• Manufacturers Association of Nigeria Rasheed Adegbenro, Head, Corporate Affairs Dptmt

• Manufacturers Association of Nigeria John Egwuonwu, Sectoral Secretary

• Manufacturers Association of Nigeria Agatha Oduoza, Sectoral Secretary

• MZOR Paracetamol Mr. Obijuru Sonie

• MZOR Paracetamol Nkechinyee Ukoh, Chief Accountant

• MZOR Paracetamol David Darku, Sales Executive

• MZOR Paracetamol Tony C. Okonkwo, Personnel/Admin. Manager

• Nigerian Foundries Ltd. Vassily Barberopoulos, General Manager

• S. A. Bolt Manufacturers Rodney Wooldridge, Managing Director

• The Nigerian Association of Chambers of Com-merce, Industry and Agriculture

L. O. A. Awodapo, Deputy Director General

• United Nations Industrial Development Organisa-tion (UNIDO)

Anton Sarbu, UNIDO (Representative in Nigeria and Niger, and ECOWAS)

• Winco Foam Industries Ltd. G. I. Okafor, Chairman/Managing Director

85

7.5 Annex 5: Bibliography WEST AFRICA: • 8th meeting of the Executive Council and 6th session of the General Assembly, FEWAMA, October 1993 • Accelerating Regional Integration in West Africa, Callisto Madavo. Vice President, Africa Region - The

World Bank, May 2000 • Accra Declaration on Creation of West African Second Monetary Zone, ECOWAS mini summit, April

2000 • ADF-VIII Guidelines on the financing of multinatioanl operations, ADB, May 2000 • Africa South of the Sahara 2000, Regional surveys of the world, 29th Edition, 1999 • Economic cooperation and regional integration policy paper, African Development Bank, May 2000 • ECOWAS at 25, ECOWAS, 2000 • ECOWAS handbook of International Trade 1998, ECOWAS Executive Secretary • ECOWAS Industrial Master Plan: Orientations and action programme, ECOWAS, February 1994 • ECOWAS Trade Regime, ECOWAS executive Secretariat, 1990 • Entering the 21st Century-World Development Report 1999/2000, The World Bank, 2000 • Establishment of a second monetary zone in West Africa, The Technical Committee on Monetary Issues,

2000 • Final Communiqué – Mini summit of Heads of State and Government on the creation of a borderless

ECOWAS, ECOWAS Executive Secretariat, March 2000 • Final Communiqué, BCEAO Committee of Governors, May 2000 • Final Report, Ministerial meeting on free trade area, ECOWAS secretariat, March 2000 • Final Report on the Second Monetary Zone, ECOWAS, April 2000 • First West African Conference/Workshop on ECOWAS TLS scheme, IBCA and ECOWAS Secretariat, June

1998 • Ghana/Nigeria strategic cooperation initiative, UEMOA and ECOWAS, January 2000 • Good policies, bad environment, the Courier, issue 180, April/May 2000 • National Accounts of ECOWAS 1998, ECOWAS Executive Secretary • Official Journal of ECOWAS, Vol. 3, June 1981 • Official Journal of ECOWAS, Vol. 6, December 1984 • Problems and prospects of trade finance in the West-African sub-region, Femi Ekundayo, Nigerian Finan-

cial Review, 1999 • Protocols annexed to the treaty of ECOWAS, ECOWAS, 1975 • Regional harmonization and integration of national policies for sustainable industrialization, with empha-

sis on SMEs, the environment, investment and technology promotion, draft 2, ECOWAS/UNIDO, 2000 • Report of the Nigeria-Ghana private sectors meeting on regional integration, Kola Daisi and Kwesi Ahwoi,

February 2000 • Report on FEWAMA seminar, AGI, April 2000 • The ECOWAS agenda – the way forward, Dr. Rufus F. Giwa, President - MAN, November 1999 • The ECOWAS agenda successes and challenges: an overview, Irene Maamah – Ministry of Finance, 2000 • The ECOWAS Trade Liberalisation Scheme, CTA Economic & Export Analysts Ltd., November 1992 • The Networker, The newsletter of the West African Enterprise Network, September 1999, vol. 7 no. 3 • The Networker, The newsletter of the West African Enterprise Network, March 2000, vol. 8 no. 1 • The role of business associations in moving forward the ECOWAS agenda, Andrew E. Quayson, Executive

Director – AGI, November 1999 • The vision of the African Development Bank, ADB, 1999 • Trade Liberalization, WAEMU Regional Integration, dakarcom.com, 2000 • Various Statistics on ECOWAS imports/exports Côte d’Ivoire/Ghana/Nigeria 1997/1998 • World Development Indicators 1999, The World Bank, 1999 • Yearly statistics ECOWAS 1998 – Total exports (comparative period 1999), Eurotrace, August 2000

86

CÔTE D’IVOIRE: • Annual Report 1998, SIFCOM Group • Bulletin officiel de la cote, Côte d’Ivoire Stock Exchange, August 2000 • Côte d’Ivoire/Mali Country Profile, EIU Country Profile, 2000- • Invest in Côte d’Ivoire – the best of the new markets, CEPICI, 1999 • Investissons pour l’avenir, Côte d’Ivoire Stock Exchange • Repertoire des normes ivoriennes 2000, CODINORM (CI Standards Board), January 2000 • Revue Trimestrielle 3 avril 2000 – 30 juin 2000, Côte d’Ivoire Stock Exchange • The old enemies, The Economist, July 29th 2000 • Yearly statistics Côte d’Ivoire 1996 – Imports/Exports (comparative period 1997), Eurotrace, June 2000 • Yearly statistics Côte d’Ivoire 1998 – Imports/Exports (comparative period 1999), Eurotrace, June 2000 • Côte d’Ivoire/Mali Country Report, EIU Country Report, 2000 GHANA: • A Study of the impact of the West African Economic and Monetary Union (UEMOA) on Ghana, Professor

S.K.B. Asante and Ambassador Alex Ntim Abankwa, October 1999 • Bank of Ghana Annual Report 1998, Report for the financial year ended 31st December 1998 • Bank of Ghana Quarterly Economic Bulletin, October-December 1999 • Ghana – Major macroeconomic indicators 1994-1999, Bank of Ghana • Ghana Arbitration Centre, Ghana Arbitration Centre, June 1997 • Ghana Country Profile, EIU Country Profile, 1999-2000 • Ghana Country report, EIU Country Report, 1st quarter 2000 • Ghana Macroeconomic review and outlook, CEPA, 2000 • Ghana Physical and Social Geography, E. A. Boateng • Implications of Regional Integration for Corporate Ghana, Kwamena Ahwoi – Minister of Planning, Re-

gional Economic Cooperation and Integration, May 2000 • Imposition of ECOWAS Community Levy on imports originating from third countries, CEPS, 2000

Modalities and Strategies for co-operation towards ECOWAS integration, Ghana Stock Exchange, May 2000

• Various statistics 1995-2000 (inflation, import/export taxes, budget deficit), Ministry of Finance NIGERIA: • A survey of Nigeria, The Economist, January 15th 2000 • Development of the Nigerian Market, John Totoe – Carson Products, April 2000 • Foreign Trade Statistics: January – December, 1999, Statistical News, May 4 2000 • MAN half-yearly Economic Review – January-June 1998, R. No. 23, MAN • MAN half-yearly Economic Review – January-June 1999, R. No. 25, MAN • MAN half-yearly Economic Review – July-December 1998, R. No. 24, MAN • Memorandum of understanding between the NSE and the GSE, 1998 • Nigeria Country report, EIU Country Report, 4th quarter 1999 • On the members’ side, FIBV, Focus no. 87, April 2000 • Problems of the industrial sector, Dr. R. F. Giwa, President – MAN, February 2000 • Review of the Nigeria Economy 1998, Federal Office of Statistics, July 1999 • Strategies of MAN in moving forward the ECOWAS agenda, Uzor E. Okeke, Director General - MAN, No-

vember 1999 • The implication of the Uruguay Round for Nigeria’s export trade in manufacturing, Uzor R. Okeke, Direc-

tor General - MAN, 1995 • The organised private sector year 2000- Pre-budget memorandum to the Federal Government of Nigeria,

NACCIMA/MAN/NECA, October 1999 • Total Exports Nigeria 1996/ 1997/1998, Eurotrace, 1996, 1997, 1998 • Total Imports Nigeria 1996/1997/1998, Eurotrace, 1996, 1997, 1998 • UNIDO Director-General’s visit to Nigeria – Official visit marked a new phase in development co-

87

operation between the federal republic of Nigeria and the UNIDO, 2-5 April 2000 • Various trade statistics 1993-1997 (imports of selected commodities, imports/exports of petroleum products

etc.), Table 349-355, Federal Office of Statistics • Various trade statistics 1993-1997 (value of foreign trade, exports/imports by commodity section, im-

port/exports by country of destination etc.), Table 343-346, Federal Office of Statistics • Various trade statistics 1998-1999, Federal Office of Statistics

88

7.6 Annex 6: Plan of Action for establishing a free trade area, January - December 2000

Title of

Action

Activity Period of Execution

New Re-vised Pe-

riod of Execution

Institution Responsi-ble for Execution

NIGERIA GHANA Action to be taken

1. Imple-mentation of ECOWAS Liberalisa-tion Scheme (TLS)

1. Appropriate direc-tives to be given to Customs in year 2000.

2. Authorised signa-

tures for Certifi-cate of origin to be exchanged be-tween two coun-tries.

3. Use of harmo-

nised System Sin-gle Customs Dec-laration forms.

4. Compilation,

Submission of Ad-ditional list of un-processed goods; live animals, per-ishable agricul-tural produce – vegetables, fruit etc. to be ex-empted from cer-tificate of origin requirements

5. Exemption of

Feb-March Jan-Feb January February March

7th July by Nigeria 15th August by Ghana 31st July, on-going Nil

Ministry of Fi-nance/Private sector

Ministry of Integra-tion/Ghana Chamber of Commerce, NEPC and NACCIMA Customs /Ministry of Finance/Trade Ministries of Integra-tion/Finance/Private Sector/ECOWAS Secre-tariat Customs/Trade Minis-

Directives have been given and it is incorpo-rated in year 2000 NEPC had handed over the issuance of certificate of origin to NACCIMA Nigeria has complied with the harmonised customs nomenclatures and single customs declaration forms Additional list has not been done Implementation has not

Directives have been given and it is incorporated in year 2000 Ghana has submitted list of specimen signatures to Nige-rian authorities Ghana using the harmonised customs nomenclature but has not started using the single customs declaration forms Additional list has not been done Implementation has not been

Private Sector to monitor full implementation and report difficulty to Minis-try of Trade/Commerce The authorised signature from NACCIMA to be submitted to MPRECI Ghana to ensure single Customs declaration form is in use The two countries have agreed to submit addi-tional list if any with the involvement of the private sector. Report of the ini-tial review should be ready by 15th July The experts had difficulty

89

goods valued $500 or less from documentation requirements – certificate of ori-gin etc.

6. Sensitisation,

provision of in-formation and education of cus-toms officials, economic opera-tors and borders communities na-tionwide publicity campaigns.

7. Full implementa-

tion of ASYCUDA System

8. Joint meeting on

ASYCUDA/Customs management system of Ghana

Feb-Dec End March To be de-termined

March-Dec Nil

try/Finance ECOWAS Secre-tariat/Ministry of Fi-nance National Cham-ber of Commerce Customs/Finance Customs/Central Bank

been carried out Action Commenced Action started and Lagos port is fully connected New activity

carried out Action commenced A new system that fully in-terfaces with ASYCUDA is being implemented.

in the interpretation of the decision of the Mini-summit and the Ministers directed that the matter should be referred to the ECOWAS Secretariat for clarification On-going but need to be monitored by the Cham-ber of Commerce of the two countries Both countries have agreed to take immediate action to harmonise. The two Min. of integra-tion to facilitate meeting.

2. Imple-mentation of Com-munity Levy

1. Directives to be given to customs for collection of 0.5% levy

2. Opening of bank

account and send-ing account num-ber to Cus-toms/Finance

3. Lodging of pro-

ceeds in Central

Jan-Feb Jan Jan-Dec (within one

15th April By 15th April April-Dec

Ministry of Fi-nance/Customs ECOWAS Secretariat Customs/Trade finance, Ministry of Integra-tion/Customs Customs/Central Bank

The Ministry of Finance has given directives to Customs. Collection has commenced Account has not been opened but action is at the final stage Action pending

Provision made in 2000 Budget for collection await-ing approval by parliament Fully complied Fully complied

Collection has already commenced Nigeria urged to expedi-ate action on the opening of account - do –

90

4. Claim for Revenue

less

month of collection -

-

ECOWAS Secretariat

-

-

ECOWAS Secretariat is to develop a standard form for claim of compen-sation for revenue loss

3. Estab-lishment of Com-mon Ex-ternal Tar-iff

1. Study of national tariff rates appli-cable imports

2. Submission of

study to Secre-tariat

3. Organisation of

meeting to har-monise the rates

4. Adoption of Com-

mon External Tariff

Jan-Feb 15th Feb 1st week of March

Oct 1st Jan 2001

Customs/Trade Finance, Ministry of Integration/ECOWAS Secretariat Ministry of Integration Ministry of Integration

Study has not been un-dertaken Study has not been un-dertaken - do – - do –

Study has not been under-taken Study has not been under-taken - do – - do -

ECOWAS Secretariat has provided information on rates applied by UEMOA to Ghana. Both countries have agreed to recruit consult-ant to study the implica-tion of the CET

4. Applica-tion of In-ter-State Road Transit Conven-tion (ISRT)

1. Study of the two Conventions at national level re-lating to

a) Functioning of the mechanism

b) Conditions to be

met by vehicles involved

2. Organisation of

Jan-Feb 6 1st week of

Customs, Transport-ers/Economic opera-tors/National executors Ministry of Integration

Mechanisms system de-veloped but not launched It will be expensive to comply with axle re-quirement Meeting has been con-

Guarantee system in opera-tion. No customs escorts. Need to harmonise type of vehicles used for transit op-erators (containers or tarpau-lin). Meeting has been convened

Nigeria to assist Ghana produce her own log book Both countries have agreed to use the existing harmonised standard for vehicles while the impor-tation of new vehicles are to meet the harmonised standard as from 2001. The Guarantee mecha-

91

meeting between Ghana, Togo, Benin and Nigeria to agree on implementation

March

in collaboration with ECOWAS

vened nism is yet to be fully concluded.

5. Applica-tion of the Conven-tion on Mutual Assistance in Cus-toms mat-ters

1. Regular exchange of information

2. Installation of

web-site to facili-tate exchange of information

3. Holding regular

consultative meet-ings.

From Jan-Dec (periodi-cally) Feb end Jan-Dec

April-Dec

Customs Customs/Ministry of Finance/Ministry of In-tegration Customs/Ministry of Finance/Ministry of In-tegration

Commenced The web-site is tied to the completion ASYCUDA system is yet to be com-pleted Commenced

Commenced Fully complied Commenced

The two countries are to share and exchange in-formation on drug traf-ficking and smuggling of vehicles. Nigeria urged to expedite action on the implementa-tion On-going

6. Estab-lishment of Na-tional Fol-low-up Structures

1. Establishment of national commit-tees and sub-committees to monitor follow-up of implementa-tion.

2. Submission of

composition of National Commit-tees to Secre-tariat.

Feb Feb

1st week of May 1st week of May

Ministries of Integra-tion Ministries of Integra-tion

The process has started. National committees and sub-committees have been established.

-

National committee struc-tures have been established

-

Ghana should examine Nigeria structure with the aim of adopting it. Both countries are yet to inform ECOWAS Secre-tariat

7. Free movement of Persons

1. Use of ECOWAS Travel Certificate

On-going

Continuous

Immigration

Fully complied

Fully complied

Both countries have agreed to review down-ward the cost of the travel certificate. Action be taken to implement the ECOWAS common pass-

92

2. According 90-days stay to community citizens at entry points 3. Removal of road

blocks 4. Sanitisation of

borders and streamlining of procedures

5. Residence card

requirement. 6. Joint border patrols 7. Meeting of Immi-gration officials

15th April 15th April 15th April 15th April 30th April 15th April

By 5th July 2000

Do Do Do Security Agencies Security Agencies Ministry of Integra-tion/ECOWAS Sec.

Fully complied Fully complied Fully complied Yet to commence Yet to commence Yet to commence

Fully complied Fully complied Fully complied Yet to commence Yet to commence Yet to commence

port and visa without de-lay. Both countries are to give appropriate directives and sensitise operatives regularly. On-going Not possible between Ghana and Nigeria The meeting is recom-mending abolition in the spirit of equal treatment of community citizens. Immigration services of both countries are to put in place a simplified reg-istration system. Not possible between Ni-geria and Ghana. To be convened and re-port of meeting submitted to the Ministry of Trade/Commerce

8. Food and drug Admini-stration

Standardisation of Food and Drug

Food and Drug Board/Administration of both Ghana and Nige-ria.

- - The meeting of both or-ganisations would be held on 20th and 21st June 2000 in Accra and report sub-mitted to Ministry of Trade/Commerce.

ecowas is dead - long live ecowas

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