The Influence of Economic Community of West African States and Economic Integration of West African Countries

0 5 15 minutes read

The Influence of Economic Community of West African States and Economic Integration of West African Countries

Abstract

The study investigated Economic Community of West African States (ECOWAS) and economic integration of West African countries. Two research questions and one hypothesis was guide to the study. The research adopted a survey research design. Survey is a research approach specifically designed to systematically collect data about a group of individual who have same characteristics through the use of written or oral data collection instruments. The population of the students under the study was made up of all the ECOWAS states in Africa.

The study was conducted in Nigeria being a member state of the ECOWAS. Ten people were randomly selected from each of the states, thus three hundred and sixty (360) respondents came under the study. Random sampling was used for convenience in the selection of respondents using table of random number. Questionnaire was the instrument used to elicit relevant information on variables of the study. The data collected were analyzed using percentage, mean and standard deviation andone-way ANOVA.

The findings of the study showed thatThis implies thatECOWAS influence the Economic integration of West African States as ECOWAS help inroad construction between big cities, the relations between the Anglophone and Francophone stabilization, Telephone network for the member states, lack of strict borders for nations and trades and peace and security throughout the sub-region and this promotes the economic integration of West African states; also thatlack of women’s rights in the region, poor health care, corruption at border crossings which hinders the free flow of humanitarian aid, Human trafficking, especially of women and children, and lack of infrastructure sufficient to handle natural disasters in the regioncontribute in hindering the smooth integration process of Africans States by ECOWAS. Based on the findings, it is recommended that ECOWAS should ensure that member-states pay their dues promptly and that members-states should remove roadblocks and other physical barriers in the trans-national highways.�

The Influence of Economic Community of West African States and Economic Integration of West African Countries

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDIES

Economic integration is an ideology that brings people together to form communities due to the need for security and self-preservation. This need for security and self preservation makes communities to integrate and nations to emerge (Thomas, 2010). The current global trend is for groups of contiguous nations to pull their resources together under a regional cooperation for the well being of their citizens. This is what is generally referred to as integration.

Charmely (1977) is of the opinion that integration relates to any process leading to the formation of a political and economic whole or organized unit. Political and economic integration involves the process whereby states agree to forgo the ability to formulate policies independently on matters concerning trade, custom tariffs, immigration and international trade among others, seeking instead to delegate the decision making process to a new central organ.

The aim of political and economic integration is to promote economic advancement of member-states and the overall development of the region or sub-region. Regional bodies such as Southern African Development Coordination Conference (SADCC) now called Southern African Development Community (SADC) was created in 1980. It was borne out of the determination of the oppressed people of Southern Africa to liberate themselves totally from British and Portuguese colonialism and from apartheid regimes in Southern Africa (Mwale, 1997).

The Northern America Free Trade Area (NEFTA) emerged as a result of the need for economic pact among countries such as Canada, Mexico and the United State of America. The European Coal and Steel Company (ECSC) was similarly established in a treaty signed in Paris on 18 April, 1951 by Belgium, France, Germany, Italy, Luxemburg and Netherlands to pull their coal steel productions together for economic gain. It was seen as a first step towards a united Europe. In the same vein, European Economic Community (EEC) now called European Union (EU) was established on 25 March, 1957 to create a common market and harmonized economic policies. It has 25 members and has become a model for other attempts at regional integration throughout the world (Europe World Year Book, 2000).

The Influence of Economic Community of West African States and Economic Integration of West African Countries

In West African sub-region, the Economic Community of West African States (ECOWAS) was established on 28 May, 1975. The 15 West African States that constitute ECOWAS are the Republic of Benin, Burkina Faso, the Republic of Cabo Verde, the Republic of Cote D’ Ivoire, the Republic of Gambia, the Republic of Ghana, the Republic of Guinea, the Republic of Guinea Bissau, the Republic Liberia, the Republic of Mali, the Republic of Niger, the Federal Republic of Nigeria, the Republic of Senegal, the Republic of Sierra Leone and Togolese Republic. The objectives of ECOWAS include promoting cooperation in economic, social and cultural activities.

The ECOWAS is made up of four institutions, namely: the Commission, the Community parliament, the Community Court of Justice and ECOWAS Bank for Investment and Development (EBID). The ECOWAS Commission and the ECOWAS Bank for Investment and Development more often called “the Fund” are the two main institutions designated to implement policies, pursue a number of programmes and convey development projects in member-states. Impact as a concept used in this paper implies the impression or the implication of ECOWAS protocols on political and economic development of West African sub-region, which can be negative or positive.

Heads of State and Governments appear to be optimistic at one hand; the technocrats on the other hand are pessimistic insisting that the primary criteria must be met by all the countries for integration to take place. Can the political consideration be ignored? After over 40 years of the creation of ECOWAS, the road towards a monetary union remains bumpy. The objective of this paper is to re-examine the issues and possible challenges facing the West African sub-region as it ‘progresses’ towards economic integration. The easing of cold war tensions was accompanied by a dramatic spike in violent internal power struggles that threatened state implosion across Africa. It did not take long for ECOWAS to realise the changing nature of threats to stability.

It became obvious that a nexus existed between internal conflicts, sparked largely by bad governance, identity crises and poor resource management on the one hand, and collective developmental efforts on the other. Barely a decade after the creation of ECOWAS, violent civil wars erupted in Liberia (1989) and Sierra Leone (1991) as a new phenomenon not confined to the borders of individual nation states, but with serious regional implications, both in their causes and effects. Starting off as internal struggles for power and control over resources, these conflicts soon took on a regionalized nature, fuelled by the illegal exploitation of natural resources for the acquisition of small arms and light weapons and characterized by the proliferation of private armies composed of mercenaries, dispossessed youths and bandits.

It quickly became clear that the mechanisms that were put in place to safeguard national sovereignty and ward off external aggression were grossly inadequate to meet the challenges of an increasingly interdependent region in which the ripples of internal dynamics were instantly felt far beyond national borders, in the form of refugee flows, disrupted infrastructure, the proliferation of weapons and the export of violence.

Jooji and Oguchi (2017) analyzed the total benefits of international economic integration in Nigerian perspective. The study pointed out that economic integration is occasioned to remove artificial barriers and unifications of common economies. The paper checked the history and evolution of global economic growth and traces back the circumstance behind the development and establishment of ECOWAS and the benefits member states have derived from the body. One of the findings in the study is that West Africa Countries such as Nigeria have immensely gained from the formation of ECOWAS. Gao (2005) reported that economic integration granger spurs foreign direct investment, research and development (R&D), increase industries activities and thus enhance the general performance of the economy.

The study stated directly that the causal link between foreign direct investment (FDI) inflows and growth level does not necessitate any causal link between them but they respond independently due to economic integration. Mwaba (2000) investigated the effect of trade liberalisation on economic growth of East African countries using panel analysis. The finding shows that removal or relaxation of quantitative import and export restrictions and lowering of tariffs stimulated export and economic growth in the region. Rodrik (1992) found that foreign trade spur price level, brings about balance of payment problems and may reduce domestic investment cumulating into very low economic growth and development.

Economic integration has been pursued in practice are largely political. Political instability and bad governance has caused slow economic growth in West African countries. Government does not meet the needs of the people by not making use of all the resources available. Infrastructure is destroyed during wars leaving economic activities to come to a halt. International transactions and foreign companies, which can increase growth in the economy, also cease due to insecurity. It takes a gradual process to get the growth of the economy back on pace. Liberia is an example of such a situation.

The Influence of Economic Community of West African States and Economic Integration of West African Countries

Political stability and war-free zones attract more investors from abroad, and citizens have peace to go on with everyday economic activities to boost economic growth. Statistically, the estimation regression model on GDP Per Capita has a negative coefficient. The test of hypothesis is political instability has a negative effect on the growth of the economy by the regression estimate of the GDP Per Capita. If the government is corrupt, mishandles the finances, and goes on wasteful spending the taxes collected becomes insufficient to support the programs that would elevate the nation from poverty. Government investment on education, infrastructure, health, transportation and military defense requires a large budget and in this case, if the allocation is not enough the leaders would most probably resort to borrowing in lending institutions such as the World Bank endangering the economy further. For instance, in Nigeria, oil accounts for 80 percent of the total government revenue. However, due to civil conflict and corruption within the regime the result is low GDP per capita and slow economic growth.

Regional integration has being an evolving process over many decades now and different regions have embraced it. Its evolution was very much in the form of integrating actors concern with economic and security issues to the inclusion of other concerns such as social, cultural, environmental, other developmental needs. It is however, the commitment and the achievement of set goals by the member states in the various regional integrating bodies that have determined how far they have gone with the process, and have distinguished very successful regional integration organisations from others. As with many phenomena, regional integration has been given different meanings and definitions. Ernst Haas defined it as “the process whereby political actors in several distinct national settings are persuaded to shift their loyalties, expectations and political activities towards a new centre, where institutions possess jurisdictions over the preexisting national states” (Haas, 1958).

Onwuka (1985) is of the opinion that economic integration is a complex phenomenon that results from integration and mutual strengthening of transnational trade and finance of intergovernmental and non-governmental international organizations and of trans-national values and international law. The concept of economic integration adopted in this paper is where member-states share commonality and harmonized laws and regulations in free trade area, custom union, common market, economic policies and union, which could further include political union.

According to Wikipedia, Economic integration is the unification of economic policies between different states, through the partial or full abolition of tariff and non-tariff restrictions on trade. The trade-stimulation effects intended by means of economic integration are part of the contemporary economic Theory of the Second Best: where, in theory, the best option is free trade, with free competition and no trade barriers whatsoever. Free trade is treated as an idealistic option, and although realized within certain developed states, economic integration has been thought of as the “second best” option for global trade where barriers to full free trade exist. Economic integration is meant in turn to lead to lower prices for distributors and consumers with the goal of increasing the level of welfare, while leading to an increase of economic productivity of the states.

Onyekwena and Oloko (2016) used descriptive technique to examine the implications of regional trade on the exclusive development of West African region. They found that despite the rising level of economic growth in the region, poverty and unemployment remain unabated due to non-inclusive growth. Okoro, Ujunwa, Umar, and Ukemenam (2020) investigated how regional and non-regional trade affect economic growth in ECOWAS sub region over the period 2007 – 2017 using the system GMM method. They found that regional trade spurred economic growth significantly while non-regional trade retarded economic growth in the region.

Findings from the study further show that exchange rate, unemployment level, population growth and gross capital formation have mixed implications on economic growth in ECOWAS. Specifically, the study reveals that population growth, unemployment level and exchange rate retarded economic growth while gross capital formation promoted growth in the ECOWAS sub region over the period of the study. Onafowora & Owoye (1998) studied the impact of export trade on economic growth of selected 12 Sub-Saharan African countries using panel analysis and found a direct and significant impact of exports on economic growth in the countries. In a similar study, Fosu (1990) examined the impact of export trade on the economies of 28 less developed African countries and reported a positive relationship between export trade and economic growth.

The results from findings of studies reviewed indicate mixed results. Most of these empirical works consulted in this study centred on the impact of regional integration on the economy of the region. They are scanty on the contributions of regional economic integration on the economy of specific member country. Given the increasing quest for common currency and the removal of trade barriers from member countries as a result of regional economic integration, it is pertinent, we analyse how the integration of Nigeria’s economy into the regional economy of West Africa has affected the growth of the economy. To this end, this research seeks to investigate Economic Community of West African States (ECOWAS) and economic integration Of West African Countries

The Influence of Economic Community of West African States and Economic Integration of West African Countries

1.2 STATEMENT OF THE PROBLEM

Economic instability diminishes the productive, as well as the transactional capacities of the economy even with the effort of ECOWAS toward the integration of all African nations. This has adverse consequences for investment and thus future economic growth, a situation which in turn creates a fragile socio-political environment. This instability influences has been felt through a number of channels including the tax system, government spending and fiscal deficit, and inflation, all of which affect the level of investment, and thus influence future economic growth rates. This then becomes worrisome for the ECOWAS body as the outcome of these instabilities has negative influence towards the achievement of the Economic integration objective. This then triggered the present research to investigate into Economic Community of West African states (ECOWAS) and economic integration of West African countries.

1.3 Objectives of the Study

The major objective of the study is to examine economic community of West African states (ECOWAS) and economic integration of West African countries.

Specifically, the study sought to;

a. To examine the impact of ECOWAS on economic integration in West Africa
b. To evaluate the challenges militating against economic integration process in the West African Sub-region.

1.4 SIGNIFICANT OF THE STUDY

This study is significant in the following ways;

it will help to harmonize African countries
it will help other researchers who will undergo study in the related study
the study will also help to investigate the impact of ECOWAS toward economic integration
the study will also help policy makers to make policies that will boast the economy of their nation through the help of ECOWAS.

1.5 Research Question

The following research questions were formulated to guide the study:

To what extent does ECOWAS influence economic integration of West African states?
What are the challenges that hinder smooth integration process of Africans states by ECOWAS?

1.6 Research Hypotheses

The study was guided by the following research hypotheses:

There is no significant influence of ECOWAS on Economic integration of west African states
- Scope Of The Study

The paper covers only the Economic Community of West African States (ECOWAS) and Economic Integration of West African Countries. The study was delimited to report from the desk of the ECOWAS. This research was limited to the analysis of Economic Community of West African States (ECOWAS) And Economic Integration Of West African Countries from November 2018 to June 2021. The presenter reviewed literatures (e.g. textbooks, journals, ECOWAS special reports and seminar papers) that are relevant to the paper.

limitation of the study

The study was faced with numerous challenges some which are lack of available data for literature review and unwillingness of the ECOWAS representative to provide the information needed for the study.

Operational Definition Of Terms

Economic integration:Economic integration is an arrangement among nations that typically includes the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies.

West African:Western Africa, region of the western African continent comprising the countries of Benin, Burkina Faso, Cameroon, Cabo Verde, Chad, Côte d’Ivoire, Equatorial Guinea, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, and Togo

Economic Community of West African States (ECOWAS): itis a regional political and economic union of fifteen countries located in West Africa.

The Influence of Economic Community of West African States and Economic Integration of West African Countries

CHAPTER FIVE

SUMMARY CONCLUSION AND RECOMMENDATIONS

Summary and findings

In answering research question one and testing of the hypothesis one, the study found out that ECOWAS to a very high extent influence economic integration of West African States. This is because ECOWAS contributes in road construction between big cities, stabilization of the relations between the Anglophone and Francophone countries, the development of telephone network for the member states, elimination of strict borders for nations and trades and maintenance of peace and security throughout the sub-region.

The findings of this study is in line with Onyekwena and Oloko (2016) who asserted that despite the rising level of economic growth in the region, poverty and unemployment remain unabated due to non-inclusive growth. Okoro, Ujunwa, Umar, and Ukemenam (2020) investigated how regional and non-regional trade affect economic growth in ECOWAS sub region over the period 2007 – 2017 using the system GMM method. They found that regional trade spurred economic growth significantly while non-regional trade retarded economic growth in the region.

The analysis of research question two showed that the extent to which lack of women’s rights in the region, poor health care, corruption at border crossings which hinders the free flow of humanitarian aid, Human trafficking, especially of women and children, and lack of infrastructure sufficient to handle natural disasters in the region contribute in hindering the smooth integration process of Africans States by ECOWAS is very high and this have hindered the economic integration of the African States.

This findings is in line with Charmely (1977) who is of the opinion that integration relates to any process leading to the formation of a political and economic whole or organized unit. Political and economic integration involves the process whereby states agree to forgo the ability to formulate policies independently on matters concerning trade, custom tariffs, immigration and international trade among others, seeking instead to delegate the decision making process to a new central organ.

5.2 Conclusions

In conclusion, the endowed resources in the West African sub-region can be developed through the cooperation and integration of the states involved. The issues that can lead to the underdevelopment of the region are traced to bad governance, corrupt practices by the leadership in government, negligence of the masses needs, placing of personal interest first above national interest especially those in leadership at any level, these are the problems that are truly facing the states.

The study assessed the implementation of the ECOWAS on economic integration. It is anticipated that the implementation of the ECOWAS protocols and programmes will lead to the development of West Africa and consequently improve the standard of living of its citizens although some of the protocols and programmes have negative impact on some member-states. Some of the major problems facing ECOWAS include poor funding occasioned by the poor state of the economy of some the member-states as well as the crises within the region. These and some other constraints have continued to militate against the attainment of the ECOWAS goals. Based on the findings, it is recommended that:

ECOWAS should ensure that member-states pay their dues promptly.
Members-states should remove roadblocks and other physical barriers in the trans-national highways.
ECOWAS leaders should develop capacity for enduring democracy, good and transparent governance and sustainable rule of law.
ECOWAS should accelerate the implementation of a common currency.

5.3 Recommendations for Further Research

Further studies should be conducted in other West African States. Also, the scope of the study should be broaden so as to enable more coverage of the topic.