The African Union (AU):

Principles, objectives, institutions and its

role in the global context.
Africas present and future role in a
globalized world:
ECOWAS role in shaping Africas role in the
globalized economy
by
Ernesto Gonzales
Instructor:
Dr. Claas Dieter Knoop
1 Introduction
Africa tasked to play a bigger role on world stage is a piece of news title that appeared
in the South African Government News Agency in December, 2010.
1
Back then, the South
African International Relations Minister, Maite Nkoana-Mashabane, stated that African
countries, in order to be active global players, should amplify their foreign policies.
It is indeed well known that one of the reasons why Africa is marginalized in this globalized
world is because several barriers in trade and ow of people are still up. Nonetheless, the
African states have had, and are having, dierent ways to deal with this challenge of
nowadays. One of way was by creating the so-called Regional Economic Communities
(RECs), as a way of integration among regions in order to foster economic growth and
their incorporation in the global economy.
Africa has evolved with several strengths and weaknesses. The latter we know a lot about
due to general perception the media has been shaping for the foreign point of view. On the
other hand, one strength that came with this African evolution is the constitution of the
African Union (AU) in 2002. Inspired by the strength and importance of the European
Union (EU), the constitution of AU marked the rst stepping stone towards a unied
African continent. The AU contains several institutions that resemble those of the EU
and functions as the African representative in global forums and similar international
conferences.
Among the objectives of the AU, economic integration, as in, cooperation between states,
is regarded as one of the main ways for Africa to not only grow economically, but also be
competitive and be able to incorporate itself into the global economy.
2
One of the main
building blocks for this purpose and others, are the Regional Economic Communinities
(RECs).
Currently, there are more than 20 dierent RECs in Africa. The most important of
which the East African Community (EAC), the Economic Community of West African
States (ECOWAS) and the Southern African Development Community (SADC). However,
there are several member countries who are part of more than 1 REC, hence, the cross-
membership complicates the integration process the RECs were intended to achieve.
In short, the focus of this paper will be on analyzing the role played by ECOWAS on the
economic integration, specially among its member states. The REC role has been shaping
the economic role played by its member states in the world economy. As expected, each
1
Africa tasked to play bigger role on world stage. South African Government
News Agency. Retrieved Feb 6, 2013. http://www.sanews.gov.za/south-africa/
africa-tasked-play-bigger-role-world-stage
2
C. Harvey, The Role Of Africa In The Global Economy: The Contribution Of Regional Coop-
eration, with particular reference to Southern Africa. Introduction. Bostwana Institute of Develop-
ment Policy Analysis. http://dspace.cigilibrary.org/jspui/bitstream/123456789/31793/1/BIDPA%
20Working%20Paper%2011.pdf?1
2
individual African state, while belonging to the same REC, will diverge from one another in
several areas of development.
3
Hence, particular examples will be discussed and compared.
2 ECOWAS
2.1 Background Information
Founded in 1975, ECOWAS is a REC formed by 15 member countries
4
. Its objective is
to promote economic integration in all elds of economic activity, particularly industry,
transport, telecommunications, energy, agriculture, natural resources, commerce, mone-
tary and nancial questions, social and cultural matters
5
This REC has been one of the
most active ones in Africa and has been providing signicant contributions and several
measures towards economic integration. It also cooperates on various issues from peace
and security to trade, industry, customs, and free movement of people. Hence, this part
of the paper will be keen on analyzing the measures exercised and contributions given by
this REC and its impact in its member countries, focusing on its economic role shaped by
these measures.
2.1.1 The denition of Integration
Several writers have addressed the denition of Economic Integration. In general, integra-
tion can be dened as a process leading to a condition in which a group of people attain
within a territory a sense of community.
6
Furthermore, it is also important to point out that integration is, generally, constituted by
a free trade area, followed by a customs union, a common market, and then the integration
of monetary and scal matters to establish an economic union
7
.
While there are several approaches towards integration
8
, it is clear that the AU fosters, at
least in the economic and nancial side of its constitution, a Federalist approach in order to
achieve economic integration among the African States. As a matter of fact, The African
Economic Community (AEC) aims at possessing a common currency, a customs union
3
T.M. Shawn and M.J. Grieve, The Political Economy of Resources: Africas Future in the Global
Environment.The Journal of Modern African Studies, Volume 16, N 1, p.3. (1978)
4
Member countries: Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory
Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo
5
ECOWAS in Brief. ECOWAS. http://www.comm.ecowas.int/sec/index.php?id=about_a&laxng=en
6
M. Mubarik, Challenges and Prospects for Regional Integration: A case of the Economic Community of
West African States (ECOWAS).http://www.academia.edu/3058362/Challenges_and_Prospects_for_
Regional_Integration_A_case_of_the_Economic_Community_of_West_African_States_ECOWAS
7
ibidem
8
ibidem
3
and a common African market. All of which would produce a sense of supranationalism,
9
since such an African institution, as an eventual African Central Bank, would entail that
member states give part of their sovereignty, a Federalist approach towards integration is
being exercised.
While such degree of economic integration is still far from achievable as of today, there
has been some progress made on the same track by ECOWAS
10
.
2.2 Challenges and Measures
ECOWAS faces several challenges and problems in order to foster integration. Though
some issues have been partially addressed, there is still room for improvement.
One of the main issues of ECOWAS has a rather institutional nature and, hence, has a
chain eect on other areas in which the REC is involved in. In the publication Get to
know ECOWAS, it is stated that, for instance, in order to develop Security Sector Reform
(SSR) tools, ECOWAS could start by forcing the binding status of established standards
on the member states.
11
This means that in the past several members states have not put
into practice the standards passed by the REC.
Another issue has been the trade barriers. A measure taken by the REC is of monetary
nature. In 1992, the ECOWAS council of ministers decided that all member states of the
REC should remove all non-tari barriers which are monetary, leaving non-tari barriers
as the only type of resistance to trade. Although, in theory, the measure should lead to
a more continuous ow of trade among the regions, this has not really been the case.
12
According to Seck, other measures could be taken to reduce trade costs, such as better
roads and faster customs clearance.
13
Another relevant issue was the free ow of people among member countries. The ECOWAS
state members recognized that, in order to achieve economic integration, the free ow
of people, goods and services needed to be part of their agreements as a REC. Hence,
the Protocol on Movement of Persons, and the right of residence and establishment was
signed by the member states of ECOWAS in 1979.
14
The protocol was intended to be
implemented in 3 phases. The rst phase of the protocol, ratied in 1980 by all members
9
A.E. Oneya, The Challenges and Prospects of the future of Integration in the African
Union(Comparisons with the EU). The Robert Gordon University Aberdeen, Aberdeen Business School,
Department of Law, Economics and Public Policy.p. 15, 2007
10
p. 16, ibidem
11
Get to know the ECOWAS. Friedrich Ebert Stiftung. Abuja. 2011.
12
A. Seck, L. Cissokho, K. Makpayo and J. Haughton, How Important Are Non-Tari Barriers to
Agricultural Trade within ECOWAS?, Department of Economics, Suolk University, Boston. 2010.
13
ibid
14
J. Agyei and E. Clottey, Operationalizing ECOWAS Protocol on Free Movement of Peo-
ple among the Member States: Issues of Convergence, Divergence and Prospects for Sub-
Regional Integration. Oxford. 2007 http://www.imi.ox.ac.uk/pdfs/research-projects-pdfs/
african-migrations-workshops-pdfs/ghana-workshop-2007/CLOTTEY%20and%20AGYEI.pdf
4
of ECOWAS, assured the free entry of citizens from member countries without Visa for 90
days. The second phase, which has been eective since July 1986 and was ratied again
by all members, allowed the right of residence. Nonetheless, not the second nor the third
phase have been fully implemented as of 2012.
15
While not fully complete, the protocol
reects an important step towards the cooperation among the member states.
The diculties on establishing new businesses is also to be noted. According to the
2013 edition of the Doing Business publication, only Liberia positions itself rst in the
ease of starting a business rank among the surveyed African States (refer to appendix A).
Unfortunately, several ECOWAS members are positioned worse than the European Union.
This means that certain measures must be taken in order to achieve foreign investment
among ECOWAS state members.
Last but not least, a major issue that has a direct relation with the economic progress
of the REC is security. The roots of this problem are deeper, nonetheless. At Third
ECOWAS Investment Forum in Lagos, former Nigerian President Olusegun Obasanjo
declared that youth unemployment forms part of vicious circle that must be addressed.
He states further that Poverty breeds insecurity and insecurity drives away potential
investor
16
. The direct relation with the economic progress is self-evident.
3 Physical Contributions towards integration
In the construction and engineering area, there are several projects, including from the
ECOWAS energy master plan, in order to enhance the quality of life of citizens in the REC
and strengthen the links among its member states. The ECOWAS energy master plan
intends to construct Hydro-Electric dam sites in 6 countries of the REC, the construction
of thermal plants in Ivory Coast and Ghana, the interconnectivity of local electricity grids
in order to produce the regions energy requirements by 2015.
17
Also, the West Africa Gas
pipeline project, which is now repaired after some problems,
18
has resumed operations as
of July 18, 2013.
19
Last but not least, in the telecommunications sector projects are ongoing in order to
increase communications trac linking the capital cities of the members of ECOWAS.
20
15
K. Touzenis. Free Movement of persons in the European Union and Economic Community of West
African States: A comparison of law and practice, p. 15. Unesco. Paris. 2012
16
Third ECOWAS Investment Forum opens in Lagos. African Manager. Retrieved Feb 6, 2013, http:
//www.africanmanager.com/site_eng/detail_article.php?art_id=20322
17
H.E. Dr. Mohamed Ibn Chambas, President, ECOWAS Commission. The Role of the Economic
Community of West African States in Achieving the Economic Integration of West Africa. p.9, Woodrow
Wilson International Center for Scholars. Washington, D.C. , 2007
18
Africa Energy Intelligence. http://www.gasol.co.uk/media/16771/gasol_has_a_powerful_ally.
pdf
19
West African Gas Pipeline Company. http://www.wagpco.com/
20
H.E. Dr. Ibn Chambas, p.9
5
4 Paths of Economic Development and Role in the world
Although it is true to say that Africa as a whole (hence including the ECOWAS members)
still remains relatively underdeveloped as it continues to rely external exchange, capital,
technology and skills while most of its population lives o subsistence activities in the
rural areas,
21
Africas decisions still does have inuence in the global economy regarding
investment. For instance, according to what Chief Obasanjo stated in the 3rd ECOWAS
Investment Forum, the REC possesses (. . . ) high deposits of strategic minerals such as
uranium, gold and lime stones. It also has one of the highest returns on investments in
Africa. (. . . )
22
. Moreover, the availability of oil, uranium, copper and other metals in
the continent and their potential contributes to the argument that African does have some
signicance in the world economy.
23
In general, the role performed so far by the ECOWAS has certainly served, among other
important things, to not only strengthen its members economies, but also to lure foreign
investors. While this is a form of economic growth and a infallible way of incorporating
themselves in the economic world by providing minerals, for, say, the development of tech-
nology in developed and industrialized countries, the amount of rich raw materials have
made ECOWAS to think that the industrialization of their member states is indeed possi-
ble. This led ECOWAS to release the West African Common Industrial Policy (WACIP).
The vision of this policy is to maintain a solid industrial structure which is globally com-
petitive, environment-friendly and capable of signicantly improving the living standards
of the people by 2030.
24
This naturally creates a quandary; on one side, ECOWAS can attain economic growth
relatively easy by capitalizing their resources by means of foreign investors and compa-
nies, whereas on the other side, the REC could make a greater eort and work on the
local industrialization of its member states. Certainly, even the United Nations Economic
Commission for Africa states that there is a need for the governments to understand the
natural capital importance in wealth creation.
25
While it is true that the latter is more
desirable for the self-sustain of the REC, and it even has a signed plan with the WACIP, it
is, to a certain extent, unrealistic that this will be attainable by the year 2030, as proposed
in the policy. Hence, in order to really meet this deadline, ECOWAS must not only work
on this industrialization process, but also, simultaneously, on passing laws that protect its
market and eciently takes share from the revenues of the foreign companies that come
21
T.M. Shawn and M.J. Grieve, The Political Economy of Resources: Africas Future in the Global
Environment.The Journal of Modern African Studies, Volume 16, N 1, p.2. (1978)
22
Third ECOWAS Investment Forum opens in Lagos. African Manager. Retrieved Feb 6, 2013, http:
//www.africanmanager.com/site_eng/detail_article.php?art_id=20322
23
T.M. Shawn and M.J. Grieve, p. 3
24
West African Common Industrial Policy - WACIP, Economic Community of West African States.
http://www.ecowas.int/publications/en/wacip/wacip_final_20100622.pdf
25
Economic Report on Africa 2011: Governing development in Africa - the role of the state in economic
transformation, p.64, Economic Commission for Africa and the African Union, 2011
6
to exploit their natural resources.
Unfortunately, constant ineciency in the completion of the AU objectives, set by the
very AU, favors a prediction of a very slow industrialization of Africa. As an example,
the Doha Round was supposed to be completed by December 2005. Nonetheless, by 2010,
negotiations have barely progressed.
26
Another example is completion the Millennium
Development Goals (MDGs). As explained by Dr. Knoop, it is quite unrealistic that
high goals such as halting the spread of HIV/AIDS are going to achieved by 2015. In his
opinion, this deadline will be simply shifted.
The taxation on revenues might be a good short-run source of income that could provide
funds for the industrialization of ECOWAS. The corporate tax rate in Senegal, for example,
is 25% of the corporate net prots,
27
while the Nigerian taxation on corporations is 30%.
28
Nonetheless, this could be increased in an step-by-step manner by negotiating the terms
of the contract signed with the extracting company, for instance. From a more socialist
point of view, the country should put reasonable tax barriers on its own raw materials in
order for the very state to be able to capitalize on them eventually.
5 Conclusion
This paper has demonstrated that RECs, such as ECOWAS, play a key role in economic
integration since they clearly put the idea of to globalize, Africa must regionalize into
actions. As the former Secretary General of the Organization for African Unity (OAU)
stated: Regional approach must therefore replace national approach in planning economic
and industrial policies as well as the designing of development projects and the pointer for
African initiatives intended for development of our continent.
29
In a nutshell, several feats and achievements accomplished by the ECOWAS were presented
and analyzed with its implications. As stated before, there two main paths of economic
growth for ECOWAS which will dene the kind of role the RECs member states will be
playing in the future economic world. As of now, the role they have playing is rather
passive. Some states are enriching themselves by letting foreign companies exploit their
natural resources. If the WACIP fails to be implemented by 2030, then the role the
ECOWAS member countries will be playing will be rather passive.
If an active role shall be played by these countries, then it is imperative that sectors such
as the educational and specialized industrial ones are developed well enough within the
ECOWAS. This would allow the African continent to open its market to a further extent
26
Economic Commission for Africa and the African Union, p.53
27
Senegal Tax Rates, Retrieved Feb 7, 2014. TaxRates.cc, http://www.taxrates.cc/html/
senegal-tax-rates.html
28
TaxRates.cc, http://www.taxrates.cc/html/nigeria-tax-rates.html
29
A.E Oneya, p.75
7
and safely compete with foreign producers from outside the region.
If not done this way, harmful eects could increase the diculty for the economic growth
of the African States, if, for instance, a free trade agreement (FTA) would be sign with
an economically developed country. As an example, in Latin America, Peru has a great
advantage in the region as it produces and exports great quality garments. Nonetheless,
after signing a FTA with China, the local textile market not only has seen itself in danger
because of the amount of low cost garments that come from China, but also has been
forced to cut down on personnel, which in turn increases the unemployment rate in the
country.
30
30
Cheap Chinese textiles slam Perus garment industry. The Daily
Star. Retrieved February 8, 2014.http://archive.thedailystar.net/beta2/news/
cheap-chinese-textiles-slam-perus-garment-industry/
8
References
[1] South African Government News Agency. http://www.sanews.gov.za
[2] C. Harvey, The Role Of Africa In The Global Economy: The Contribution Of
Regional Cooperation, with particular reference to Southern Africa. Bostwana In-
stitute of Development Policy Analysis. http://dspace.cigilibrary.org/jspui/
bitstream/123456789/31793/1/BIDPA%20Working%20Paper%2011.pdf?1
[3] T.M. Shawn and M.J. Grieve, The Political Economy of Resources: Africas Future
in the Global Environment.The Journal of Modern African Studies, Volume 16, Num.
1, 1978
[4] The Economic Community of West Africa States. http://www.comm.ecowas.int/
sec/index.php?id=about_a&laxng=en
[5] M. Mubarik, Challenges and Prospects for Regional Integration: A case of the
Economic Community of West African States (ECOWAS). http://www.academia.
edu/3058362/Challenges_and_Prospects_for_Regional_Integration_A_case_
of_the_Economic_Community_of_West_African_States_ECOWAS
[6] A.E. Oneya, The Challenges and Prospects of the future of Integration in the African
Union(Comparisons with the EU). The Robert Gordon University Aberdeen, Aberdeen
Business School, Department of Law, Economics and Public Policy., 2007.
[7] Get to know the ECOWAS. Friedrich Ebert Stiftung. Abuja. 2011.
[8] A. Seck, L. Cissokho, K. Makpayo and J. Haughton, How Important Are Non-Tari
Barriers to Agricultural Trade within ECOWAS?, Department of Economics, Suolk
University, Boston. 2010.
[9] J. Agyei and E. Clottey, Operationalizing ECOWAS Protocol on Free Move-
ment of People among the Member States: Issues of Convergence, Divergence
and Prospects for Sub-Regional Integration. Oxford. 2007 http://www.imi.ox.
ac.uk/pdfs/research-projects-pdfs/african-migrations-workshops-pdfs/
ghana-workshop-2007/CLOTTEY%20and%20AGYEI.pdf
[10] K. Touzenis. Free Movement of persons in the European Union and Economic Com-
munity of West African States: A comparison of law and practice, Unesco, Paris.
2012
[11] H.E. Dr. Mohamed Ibn Chambas, President, ECOWAS Commission. The Role of the
Economic Community of West African States in Achieving the Economic Integration
of West Africa. Woodrow Wilson International Center for Scholars. Washington, D.C.
, 2007
9
[12] African Manager. http://www.africanmanager.com/site_eng/detail_article.
php?art_id=20322
[13] Africa Energy Intelligence. http://www.gasol.co.uk/media/16771/gasol_has_a_
powerful_ally.pdf
10
Appendices
A Ease of Doing Business
The rank of Ease of Doing Business 2013.
31
31
Regional Prole: Economic Community of West African States (ECOWAS), Doing Business
2013, Retrieved Feb 7, http://krefeld.ihk.de/media/upload/ihk/imap/20130131/doing_business_
2013_westafricanstates.pdf
11