This contribution is from University of Bradford Economic PhD Researcher and Graduate Teaching Assistant Essa Bah. He is currently investigating relationship between institutions, trade, regionalism and development.
The Economic Community of West African States (ECOWAS) was formed on the 28th of May 1975 with the aim of fostering greater regional cooperation, integration and development through trade and investment initiatives. The 1993 revised treaty also included areas relating to democracy, governance and security. ECOWAS is composed of 15 member states, 5 of which are English speaking, 2 are Portuguese and the remaining 8 are French speaking countries. This difference in colonial history is reflected by the structure of ECOWAS which is divided into two monetary zones. The West African Economic and Monetary Union (WAEMU or UEMOA) comprises of the 7 French speaking countries and Guinea Bissau which is Porguguese. WAEMU was revived in 1994 with the Dakar treaty and they have a common currency ‘CFA’ and a central bank. The CFA is pegged to the Euro and these countries are required to pay part of their external assets into the French Treasury (these figures ranges from 2% to 50% of their revenue depending on which paper you read). Dr. Sene of Anta Diop University believe that WAEMU should break away from the French Treasury in order to gain economic independence and to work more closely with the second monetary zone of ECOWAS.
The second monetary zone (West African Monetary Zone- WAMZ) was created in 2000 with the aim of introducing a single currency’ ECO’ and central bank. The intention is to merge WAMZ with WAEMU in order to have ECOWAS single currency and central bank in the future. WAMZ is composed of the five English speaking countries and Guinea Conakry which is a French speaking. The challenge for WAMZ is how individual countries meet the convergence criteria as this has been problematic since 2000.
To mark the 40th anniversary of ECOWAS, a panel discussion was held in the African Research Institute in London on the 20th of May 2015. The panellists were Arnold Ekpe, Véronique Tadjo and Patrick Smith. The panellists focused on 3 areas: success and future challenges of ECOWAS with particular emphasis on economic, cultural and political matters. It was established that ECOWAS had more success on the political sphere with ECOMOG intervening in conflicts in the subregion. Regarding cultural integration, there is cross border sharing of music mainly due to the interconnectedness of citizens beyond the artificial borders created by colonial history.
Perhaps the greatest challenge facing ECOWAS is how to increase intra-regional trade and investment as well as greater cooperation on other economic and monetary matters. UNCTAD estimated intra-ECOWAS trade at 10.46% in 2013 while Meagher (1997); Golub et al (2009) and Senghor (2009) argued that unofficial trade can be as high as between 30 to 50%. Hence, ECOWAS need to bring this informal trade into the formal economy by building institutions that protects the rights of traders and investors as well as give them necessary support. ECOWAS also need to accelerate merging WAEMU and WAMZ in order to eliminate conflicting policy directions. WAEMU must be ready to break away from the French treasury since it would be difficult to see how WAMZ members would be ready to pay 2% of their national resources to France as a means to protect the CFA.