REGIONAL ECONOMIC INTEGRATION AND CHALLENGES OF FREE TRADE IN ECONOMIC COMMUNITY OF WEST AFRICA STATE 2010-2018

TABLE OF CONTENT

Title page

Certification page

Approval page

Abstract

CHAPTER ONE

INTRODUCTION

Background of the study

Statement of problem

Research questions

Objective of the study

Significance of the study

Scope of the study

Limitation of the study

Operationalisation of the study

CHAPTER TWO

Gap in iterature(quaote authors)

Theoretical framework

Research hypothesis

Research methodology

CHAPTER THREE

Testing of hypothesis

CHAPTER FOUR

Testing of hypothesis

CHAPTER FIVE

Summary of findings

Conclusion

Recommendations

Reference

 

Abstract

Africa has witnessed various efforts of economic integration at the continental and regional levels. While the idea of regional integration is as old as the Organization of African Unity now renamed as African Union, recent summits have reaffirmed Africa’s commitment toward boosting intra-Africa trade and integration. With the grand aim of forming a continental economic community (African Economic Community) in the future, African countries aspire to use the various regional economic communities as building blocks. Despite such endeavors, however, the continent’s economy has remained fragmented, inter alia, due to low level of infrastructure development and the state-centric nature of the integration efforts. The overlapping multiple memberships of countries to the regional groupings has complicated the integration effort. The absence of clear rule on the relationship between the existing regional economic communities and the ‘to-be-formed’ African Economic community has also contributed to the uncertainty in the integration process. In view of these challenges, I argue that the focus on speeding up the formation of the continental wide free trade area (FTA) does not seem timely; and the focus should rather be redirected at strengthening the regional economic communities

 

 

 

CHAPTER ONE

INTRODUCTION

• Background of the study

Economic integration (EI), which is an embodiment of custom unions, trade blocs, and free trade area, has the ultimate aim of promoting trade participation of Members and in the long-run enhancing economic performance and welfare of their citizenry. EI cannot operate in a vacuum, it requires some sort of components such as transport and communication facilities, critical mass of capital, institutions, and so on to meaningfully realize its objectives (Essien, 2009). It is on this axiom that regional economic communities (RECs) are established across the world, which Economic Community for West African States (ECOWAS) is good example. Countries wish to join their economies for various reasons, some of which include attraction of foreign investment, enhancing cooperation, fostering security and generally attaining economic development. With these aims in mind, governments sign and become members of multiple regional integration schemes. However, some of these integration schemes simply reflect the desire but not always the political will to capture the economic gains and international negotiating strength that regionalization can bring.8 Africa is not peculiar in this respect. A number of initiatives have been launched in the continent to bring economic and political integration. These integration efforts have been undertaken concurrently at continental and regional levels. On the continental level, the effort of integration started with the adoption of the OAU Charter in 1963 which envisions initiatives to integrate the Africa region for the promotion of economic and social development. The integration effort in Africa was taken a step further, at least on paper, through the adoption of the Lagos Plan of Action (LPA) in 1980. The failure of African countries to implement the LPA did not stop the governments from wishing to have a continent wide economic and political integration. That is why, in 1991, the Heads of States decided to give another try for the talk of integration and revived the 1980 LPA through the adoption of the Treaty Establishing the African Economic Community (Abuja Treaty). The Abuja treaty, which entered into force in 1994, aims at forming an African Economic Community composed of all African states over a period of 34 years and using six stages of integration. The preexisting Regional Economic Communities (RECs) are to be used as a building block for the establishment of the AEC. Parallel to the continental wide movement, there are various RECs in the different corners of the continent. In the Eastern and Southern parts of the continent, the Common Market for Eastern and Southern Africa (COMESA) replaced a Preferential Trade Agreement (PTA) and the Southern African Development Coordination Conference changed into the Southern African Development Community (SADC) whereas the Mahgreb and Mashraq groups have renewed their integration efforts in the Northern Part of Africa.9 We have also the Economic Community of West African States (ECOWAS), Economic Community of Sahelo-Saharian States (CENSAD), the Intergovernmental Authority on Development (IGAD) and the East African Community (EAC). Despite all these efforts at integration, the continent still remains to be fragmented as a market, and its aspirations toward political unity is far from being real. A cursory observation at some indicators of EI indicate that the share of ECOWAS’ import ranges from 11.67% to 17.04% between 2000 and 2010; while that of export share was between 8.40% and 14.18% within the same period. This means that ECOWAS sub-region has greater share in world import than export denoting that it is net importer. It has also been noted that the ECOWAS sub-region meets about 80% of the regional population’s food need, which implies that the net food import is about 20% (ECOWAS Commission, 2010). This is crucial given understanding that food is fundamental to human existence and agricultural sector is expected to provide food, among other things. One of the cardinal objectives of RECs is to promote trade within the region (intra-regional trade) as trade barriers are significantly reduced. The values in Figures 1a and 1b show that the level of ECOWAS’ total export and import increased markedly between 1999 and 2009. Export increased from USD 20 billion in 1999 to USD 100 billion in 2009 while import increased from USD 18 billion to USD 60 billion. However, as shown in Figure 1b (see the Appendix), intra-regional trade (both import and export) declined within the same period. For instance, intra-regional export fluctuated between 8.4% and 14.2% from 2000 to 2010, while that of import was between 11.5% and 19.9%. Thus, both intra-regional export and import were less than 20%, which implies that more than 80% of trade in ECOWAS sub-region is with other countries in other regions. The export of ECOWAS Members within the region was very low. It was as low as 0.1% in 1999 and 0.4% in 2005 for Cape Verde just like Guinea Bissau that was 0.1% in 2001, 2007 and 2011. For the import of ECOWAS Members from the region, it was also very low, where it was only 0.5% and 2.3% respectively in 1999 and 2007 in Nigeria (ECOWAS Trade Data, 2010). Others have similar pattern with the exception of few. Trade facilitation (TF) examines how procedures associated with cross border trade can be improved through the reduction of transaction costs. TF is believed to enhance competitiveness in world market (ICTSD, 2011). Some other indicators of TF, namely: number of documents required for both import and exports as well as number of days required to process goods for import and export show that it requires about 8 and 9 documents for export and import in ECOWAS sub-region compared to about 7 and 8 of same for the world average (World Bank, 2010). Furthermore, it requires about 30 and 36 days to finish the process of export and import documentation in ECOWAS sub-region unlike 26 to 29 days for the world average (World Bank, 2010). It is equally noted that the average teledensity rate in ECOWAS sub-region in 2010 was 17.98 per 100 inhabitants compared to the averages for sub Saharan Africa (SSA) and world that were 23.35 and 83.09, respectively (Olayiwola and Osabuohien, 2012)

• STATEMENT OF THE PROBLEM

In West Africa, there are many regional bodies. Three of them can be identified as explicitly concerned with the promotion of intra-regional trade glows: The Economic Community of West African States (ECOWAS), Communicate Economique de l’Afrique del’ Ouest (CEAO) and MANO River Union (MARIUN). During the last few decades, there has been a great deal of momentum towards regional integration, inspired by the growing awareness of globalization, increasing homogeneity in issues relating to fiscal, financial and technical barriers to trade. These as well as the rapid growth in scientific and technological innovations are all among factors that underlay the importance and need for the various regional cooperation schemes that have come into existence since World War. It is in view of the above that the researcher intend to investigate the challenges of free trade and regional integration among west African state.

• RESEARCH QUESTION

The following research questions were formulated by the researcher to aid the successful completion of the study;

1. Are they effect of economic integration on trade facilitation in ECOWAS?
2. Is there any significant relationship between regional economic integration and free trade (exports and import) in ECOWAS?

• Does ECOWAS play any role ECOWAS in economic integration and trade facilitation among member state?

1. Are there challenges encountered by ECOWAS in attaining regional economic integration among member state?

1.4 OBJECTIVE OF THE STUDY

The main objective of this study is to examine the challenges of free trade in economic community of west Africa state and regional economic integration, but to enhanced the successful completion of the study, the researcher intends to achieve the following specific objective;

1. To examine the effect of integration on trade facilitation in ECOWA
2. To examine the relationship between regional economic integration and free trade (exports and import) in ECOWAS

• To ascertain the role of ECOWAS in economic integration and trade facilitation among member state

1. To examine the challenges of ECOWAS in attaining regional economic integration among member state.
   • SIGNIFICANCE OF THE STUDY

It is believed that at the completion of the study, the findings will be of great importance to member state of the economic community of west Africa state as the study seek to explore and investigate the challenges that hampered the organization from implementing the free trade agreement among member state, the study will also be of importance to researchers who intend to embark on a study in similar topic as the study will serve as a reference point to further research, the study will also be of importance to students, teachers, lecturers, academia’s and the general public as the study will contribute to the pool of existing literature on the subject matter and also add to knowledge.

• SCOPE OF THE STUDY

The scope of the study covers regional economic integration and the challenges of free trade in economic community of west Africa state (ECOWAS). The study covers a specific time frame between (2010-2018)

• LIMITATION OF THE STUDY

In the course of the study, there are certain factors that limited the scope of the study which are beyond the researchers control;

1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
3. c) Organizational privacy: Limited Access to the management of the organization (ECOWAS) makes it difficult to get all the necessary and required information concerning the activities.

1.8 OPERATIONAL DEFINITION OF TERMS

ECOWAS

The Economic Community of West African States, also known as ECOWAS, is a regional economic union of fifteen countries located in West Africa. Collectively, these countries comprise an area of 5,114,162 km², and in 2015 had an estimated population of over 349 million.

ECONOMIC INTEGRATION

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 taking place among them prior to their integration

FREE TRADE

Free trade is a trade policy that does not restrict imports or exports; it is the idea of the free market as applied to international trade. In government, free trade is predominately advocated by political parties that hold liberal economic positions, while economically left-wing and nationalist political parties generally support protectionism

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