Industrialising The West African Region
By Oghogho Obayuwana
The assertion, that the systematic confinement of the West African sub-region to a primary commodities production zone for the developed economies of the world is gaining ascendancy by the day.
Also gaining much influence is the doggedness in the new time, by the Economic Community of West African States (ECOWAS) negotiators of the Economic Partnership Agreement (EPA) with the European Union (EU) to stay resolute on the issue of protecting the West African market from dumping.
Thus today, there exists cross roads as to how the west coast of Africa populated by some 275.7 million citizens who are domiciled in 15 countries can get industrialized. It is in the recognition (even as taught by the most basic economics textbooks), that rapid economic transformation will continue to elude societies, which do not industrialize.
The whole talk of free trade, borderless region, tax harmonization, job creation and achievement of the desired Gross Domestic Product (GDP) fades into insignificance without being backed up by a viable industrial base. The critical essence of setting up ECOWAS by visionary leaders would have been defeated, and continuously so unless the present leaders think industry! For decades, people who live in West Africa have looked up to WACIP to grow the regional economy by promoting industrial-sector contribution through coherent and harmonized policy. Now, integration experts are calling on the various governments in the sub-region to fashion out a common industrial policy which implementation strategy will include but not be limited to increase in manufacturing activities in the area.
Latest research findings and United Nations (UN) indicators have shown that despite dominating the economic activity in the region, there is very little is happening in terms of agro processing in the west African sub-region.
According to the ECOWAS statistical bulletin, 2008, of the 15 member states making up ECOWAS, only Cape Verde had up to 25 percent of its working population employed in the industrial sector. Worse still for the industrial sector, its share of the labour force which increased marginally from 9 percent in 1999 to 9.5 percent in 2005, has been plagued by fluctuations declining to 8.6 percent in 2006 only to rise slightly again to 9.3 percent in 2007.
Still, agricultural production remains the dominant economic activity in the region with very little emphasis on agro-processing. Eight member states had more than 58 percent of their working population engaged in agriculture in 2007 (Guinea Bissau-77.4 percent, Niger- 78.5, Mali-68.9, Guinea70.0, Togo-69.2, Sierra Leone-63.8, Burkina Faso-62.1 and Liberia-62.7. The percentage labour force had also declined from 61 percent in 1999 to 59.1 percent in 2006 and further down to 58.3 percent in 2007.
And while the service sector increased its share of the labour force from about 29.6 percent to 32.4 percent between 1999 and 2007, the other sectors declined even as the increase in the service sector was attributed to emerging developments in the telecommunications industry.
But the ECOWAS experts, drawn from member states, attempted providing a leeway to the worrisome scenario recently at their meeting in Abidjan under the aegis of the West African Common Industrial Policy (WACIP). These regional experts were drawn from mostly the real sector including representatives of manufacturers associations of the 15 Member States of ECOWAS.
All eyes were on their work, even body language, because their deliberations on the revalidation of the draft WACIP policy is expected to be adopted by the Heads of state and government the next summit, being the conclusion of their mid-summit for the year 2009.
ECOWAS commissioner for Trade, Custom, Industry, Mines and Free Movement Mohammed Daramy stressed at a meeting on the West African Common Industrial Policy (WACIP) that "confining West African countries to the production of primary commodities amount to condemning them to remain locked in the commodity trap" This may eventually force the sub-regional group to look the way of India, China and Brazil in the quest for an industrialization inducing special trade partnership.
Noting that west Africa needs to create a competitive advantage in the production of manufactured goods, Darami said further "The region's export performance demands a break from earlier policies based largely on trade liberalization in favour of concentrating on building capacity both in agriculture and manufacturing sectors. Effective policies are therefore required for agriculture and industrial sectors to remove constraints to production and achieve higher exports for the region"
Commissioner Darami, who came in after an Economic Partnership Agreement (EPA) meeting with the European Union negotiating team in Brussels declared yesterday that ECOWAS is currently weighing other options should the EU refuse to accede to the demand embodying the protection of the west African markets in the aftermath of signing the EPA.
He said: "I want to disclose here that we are currently weighing other options to the EPA. We are look at South, South trade with trade with India, Brazil and China...From our own stand point, having reviewed all the facts on the ground, we do not care, whether we negotiate for the next twenty years, once these conditions are not met, I don't see us signing any EPA agreement. We have asked EU to make a commitment to support us to industrialize, add some value to our products... We want them to support the EPA development programme. I cannot foresee us signing any EPA except those conditions are met. West Africa is not negotiating for time. We are insisting on making sure that all the demands that will make our region industrialize are meant. We cannot remain eternal primary producers"
The conditions put forward by ECOWAS negotiators has to do with a 3.1 per cent market opening. ECOWAS is insisting that it cannot go above 70 percent in the liberalization scheme. That it will protect 30 percent of its market. But this has not gone down well with the EU partners who want more. The EPA development programme has a provision for 9 billion euros.
But it is the WACIP programme that provides an overview of the regional economy and the policy thrust while highlighting its vision, objectives, strategies, and guiding principles for an industrialized West Africa. It was developed as part of the overall strategy of the ECOWAS Commission to realize the industrial components for the establishment of an economic community of West Africa.
The revised ECOWAS treaty (Articles 3.1, 3.2 and 26) emphasizes the role of industry in the implementation of the policy of cooperation and integration of member states. Member states are enjoined to harmonize and coordinate national policies and promote integration programmes in industry as well as joint industrial development projects including the creation of multinational enterprises in priority industrial sectors.
As citizens of West Africa prepare for the next heads of state mid-year summit, what is currently being looked at, as an offshoot of the Abidjan convergence include the economic, security interplay in the integration process, the structure of the secondary sector, the situational analyses of agro processing in West Africa, the main limitations to industrial development in West Africa, the international context of regional industrialization, globalization, the World Trade Organisation as well as EPA agreements.
Before now, interest had also been quietly building up on development initiatives that have to do with the outside world and particularly the development partners. These included the African Productive Capacity Initiative (APCI), New Partnership for African Development (NEPAD), African Growth and Opportunity Act (AGOA), Every But Arms (EBA), Millennium Development Goals (MDGs) and the One Village, One Project (OVOP).
Same interest however continues to be generated as the year runs out while awaiting a policy decision by West African leaders. The experts for instance have since decried the fact that many West African states do not (as at the end of August this year) have an industrial code thereby creating gaps in the integration process using industry as a pivot. Action, they maintained is needed badly on issues such as this.
On AGOA, the submission was that West Africa has not reaped the full benefits of that trade window. While only Ghana appears to have taken some advantage. In comparison with Eastern and southern Africa (Botswana) including the northern region (Morocco and Tunisia), there has been no success story to tell in West Africa.
A research fellow and consultant on development, who was drafted in from the International consultancy Bureau for the job at hand, Dr. Nmase Kpadoo averred that much as the leaders of the countries in west Africa are failing the citizens, the conspiracy of the western European trade and economic organizations through a rebarbative trade engagement policy with West Africa has not helped matters.
He raised some critical questions: "How can the region make progress when all our activities are controlled by foreigners and international partners? The issue today is not much about re-inventing the wheel but using whatever development models exists to carry on a people related and people affected industrialization. Now, where does West Africa stand in this? The One village one project (OVOP) is a success story, success story as we have seen in Japan. How can we make it work here? Yet, it has been widely acclaimed as another strategy of creating employment"
Continuing, he said "UNIDO has been carrying out studies on this. It is a donor funded project and this may have affected how it is faring because the initiative was not indigenous; its conceptualization was from the outside. We are not driving it. Once there is a little funds drying up, it is abandoned. Why can't we develop our ideas? There is a new economic world order in place. We have to believe in ourselves instead of continuously resisting that others are trying to impose something on us. That is why on the OVOP component, we can take into account on intellectual properties, what we call geographic indicators. The geographical indicators can be taken into consideration in the case of Japan.
Japan has put about $7 billion in the coffers of the UNDP. So, a project is available, funds were available but nothing was done. We have our blame on this issue"
It has been said that the place of industrial policy for West African economic advancement will remain paramount in the years ahead and the idea is that a real integration for the region would start when there is a real integrated industrial layout for the area. Now a draft industrial protocol is still expected to be evolved and should come on stream by June 2010. Besides, no one really knows how many projects have been funded by the Integration Bank for Industrial Development (IBID) or West African Monetary Union (UEMOA) banks that are charged with West African industrial financing and growth.
On a country-by-country analysis, the ECOWAS commission bulletin disclosed lately that Nigeria is considered the most industrialized nation in the sub-region. But statistics show that whiles the country value added $37.2million to the regional Gross Domestic Product (GDP) in 2007; industry had only $20.2 million. The value added structure by the kinds of economic activities for most of the other member states in terms of ratio for industry were pretty much the same, while the industrial sector continues to employ less and less of the population.
The UMOA conference representative to the WACIP brainstorming session Bala John noted that the monetary union was happy with the ECOWAS industrial initiative but called for action on the trade policy that is being regularized. He said in this vein "We at UEMOA are calling for member states to have a common vision since UMOA is also working for the realization of a common policy that will bring about industrialization for the entire sub-region..."
The minister of trade and industry Cote d' Ivoire had through his representative also emphasized the need to implement the productive elements in the existing industrial architecture stating "...Yes, all of us run the risk of becoming industrial consumers and that will lead to the disappearance of our industries that we are struggling to maintain. Now, there is also a concern about the competitiveness of our industries in the first instance, whether caused by factors of production and others. There is also the matter of processing. We all like to note for instance that. Cote d I'voire produces 1 .3 million tons o cocoa for a year, that is. 42 percent of world production. But the 42 percent does not represent much when you look at the overall revenue of the cocoa industry worldwide. Today, we have an interest coming to agreement within ECOWAS.
"We need to have an internal market that is strong and democratized. Impact of the global financial crisis has turned into a challenge. French parliamentarians are supporting the nationalization of Total. So we are happy now that Ghana is looking to a state agency for the production of cocoa. It is smatter of sovereignty. We are not going to wait for countries of the north to help us industrialize. We have to do it ourselves"
When the United States Agency for International Development (USAID) study on the constraints to intra community trade on selected agricultural products in the sub-region was presented in Abuja recently, frightening statistics on trade barriers dominated.
During the presentation, experts again said that the continuous presence of barriers to trade and the movement of agricultural products despite heightening integration efforts continues to constitute a big source of worry to the ECOWAS member states as well as its development partners even as the ECOWAS commission maintained that current efforts at harmonizing ECOWAS trade policies will yield significant results in 2011.
Under the ECOWAS regional integration arrangement, the governments of the fifteen member countries committed themselves to the complete elimination of all tariff and non-tariff barriers to intra-regional trade. In the same vein, by the free trade area status declared in January 2000, none of the three Agribusiness and Trade Promotion (ATP) project focus products (maize, onion/shallot, and ruminant livestock) should be subjected to any impediments related to free movement of goods, persons and vehicles within the region.
But the experts at the meeting on agricultural trade policy priorities lamented that the implied total elimination of tariff and non-tariff barriers to intra-regional trade is "far from being a reality"
This was also the conclusion earlier reached after a field mission undertaken during the first half of May 2009 to Burkina, Ghana, Mali and Niger where it was noted that "Clear evidence exists that there are significant gaps between the rules for trading within West Africa, as laid out by ECOWAS, and the actual practices experienced by traders engaged in exporting maize, onions and livestock"
Among the gaps identified between the ECOWAS trade policy provisions and the manner in which they are implemented are the unauthorized tariff and non-tariff barriers that included Duties and taxes (Fonds de dŽveloppement de l'Žlevage - export tax) on livestock - in Burkina Faso. Exceptionally high statistical tax on exports in Niger, Transit fee charged on Malian livestock exports- in Burkina Faso and Ghana as well as Droit de douane ˆ l'importation (DDI - import duty) on onions in transit - in Burkina Faso. There was also found the Assessment of VAT on Malian livestock imports at entry point in Senegal.
Free trade and the need for agro processing are central to the industrial development of West Africa. This is the reason commissioner Darami's threat that ECOWAS might have to look beyond Europe for a sustainable trade partnership should be taken seriously. He was saying that "market opening is the difficulty that we have with EU.
"The crucial issue has to do with the 31 per cent on market opening that we have already reached. We cannot go above 70 percent. In the EPA development programme, there is a 9 billion Euros provision. We have other options and these are being weighed, the countries have been mentioned...Now, I don't care, whether we negotiate for the next twenty years, once these conditions are not met, I don't see us signing any EPA agreement"
Conclusions have since been reached on the need for a rapid promotion of private investment in West Africa. That the frequent grievances of the business community arising from the high cost of doing business and undue delays in the region has now necessitated a private sector promotional strategy to remove such hindrances
It has also been said often that investment codes is not a panacea for industrial development. The same goes for industrial governance unless there is an implementation plan. But West African states do not adopt measures that are favourable to industrialization, by re-focusing its strategies, looking at a workable time frame for its industrial policy, also using an appropriate legal frame work and so on.
And yet, for all these to come to fruition, an already existing action plan that prescribes among others the strengthening of intra-community trade, promotion of quality and standards of goods, development of micro-enterprises and SMEs, valorization of endogenous Patents and research and development must be implemented in the region.
