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Trade amongst ECOWAS Countries

Aug 23, 2019
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Trade amongst ECOWAS Countries

The Economic Community of West Africa States (ECOWAS) Trade Liberalization Scheme (ETLS) is the operational tool for promoting the West Africa region as a Free Trade Area. This corresponds with a portion of the objectives of the community, which is the formation of a common market through the liberalization of trade by eradicating custom duty levies and trade tariffs. This is in agreement with Article 3 of the ECOWAS Treaty.

 

What is essential about a free trade area?

- Increased intra-regional trade and boost economic activities in the region.
- Increased West Africa competitiveness on the global market.
- Entrepreneurial development amongst member States.
- Increased GDP of the member States and better welfare for its citizens.


The ECOWAS trade policy is established to boost exports to member states and other countries of the world. Imports into the region are therefore seen as complementary to the exports of goods and services. Its external trade is dominated by many products that generate value and income for member states.

Nigeria does about 75% of the regions products exports outside the region. The products are mostly cocoa and cocoa food preparations making up 5% of exports, precious stones (3%), cotton, edible fruit, rubber, plastics, wood, wood products, fish and shellfish about 1% each and fuel being the primary export product of the West African Economic Community.


Nigeria and Ivory Coast dominates these exports and carries between them 87% of these transactions. For their part, Ghana and Senegal are placed third and fourth with 4% and 2% respectively. Mali follows with 1.7% of regional exports. Five Countries (Benin, Burkina Faso, Guinea, Niger, and Togo) have each 1% of regional exports.

Nigeria also dominates exports within the region with about 41% of transactions against 18% by Ghana, 10% each for Senegal and Côte d’Ivoire. Nigeria and Ghana jointly perform 59% of the Community imports against 36% by the eight countries of the West African region. The other five countries of the ECOWAS Member States realize only 5 % of the Community imports. Nigeria is the most populous country in the community, and its population has been attributed to be the reason it dominates other countries in exports and imports.


Europe imports about 28% of ECOWAS exports with 23% for the European Union. The Americas account for 40%, 34% for the Free Trade Association of North America (NAFTA), 24% involving the United States, Canada, and Mexico. Trade openness propagated by trade shows caused the breakthrough to Asian countries and those of Oceania, thus motivating them to take in 16% of African exports, with 0.3% for the Near and Middle East.


Ten products lead imports by ECOWAS countries with fuel as the dominant product. In the second category are motor vehicles, tractors, cycles, machinery, mechanical appliances, and boilers. The third category contains machinery and electrical appliances (4th), cereals (5th), plastics (6th), iron and steelworks (7th), iron, cast iron, steel (8th), pharmaceuticals (9th), and fish and seafood (10th).


It has been alleged that trade in services which ought to promote growth in West Africa is hindered by institutional, regulatory, and infrastructural constraints. Apart from unavailability of data for the potential service sector at the regional level, various other factors like fiscal pressure, underdevelopment of the informal sector, difficulty of access to credit, inadequacy of the financing mechanisms for the export of services, energy deficit, lack of transparency and good governance undermines competitiveness in the free trade zone.

 

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