Economic Community of West African States (ECOWAS) (Encyclopedia of Business)
The Economic Community of West African States (ECOWAS) was established May 28, 1975, with the signing of the Treaty of Lagos in that Nigerian city. The community, headquartered in Lagos, has 16 members: Benin, Burkina Faso, Cape Verde Islands, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, and Togo. Cape Verde was not an original signer but joined ECOWAS in 1977. The goal of ECOWAS is to promote trade, cooperation, and self-reliance in West Africa. In 1993 a revised ECOWAS treaty was signed that was meant to spur economic integration and political cooperation.
The highest governing authority of ECOWAS is the Conference of Heads of State and Government. The conference meets annually and a chairman is elected in turn from a member state. The Council of Ministers is responsible for community operations and meets twice a year. The Community Tribunal settles intracommunity disputes and when necessary renders opinions on treaty language. ECOWAS also has an elected executive secretariat who serves a four-year term as well as six specialized commissions: Trade, Customs, Immigration, Monetary, and Payments; Industry, Agriculture, and Natural Resources; Transport, Communications, and Energy; Social and Cultural Affairs; Administration and Finance; and Information. There is also the ECOWAS Fund for Cooperation, Compensation, and Development, which has authorized capital of $500 million.
At its founding ECOWAS had numerous short-term objectives including elimination of customs duties, abolishment of trade restrictions, establishment of a common customs tariff, and coordination of economic, industrial, and monetary policies. There were also plans for allowing the free movement of labor, goods, and capital on an intracommunity level; common infrastructure development projects; and broad plans for economic, political, and monetary integration. The long-range ECOWAS calendar called for the removal of intracommunity import duties by 1986. Planners also envisioned a full customs union and a common external tariff by 1991.
ECOWAS has been plagued by divisions based on history. Some members are former French colonies while others are former British colonies. The resulting differences in culture, heritage, demographics, and fiscal orientation has had a destabilizing influence on ECOWAS.
In 1989 a group of dissidents fomented a devastating civil war in Liberia when they raged across the countryside and within seven months threatened the city of Monrovia. The United States, the Organization of African Unity, and the United Nations resisted appeals to intervene. In August 1990 ECOWAS established the ECOWAS Monitoring Group and an 8,000soldier peacekeeping force whose purpose was to restore order, organize an interim government, and supervise national elections. Only five ECOWAS nations backed this peacekeeping force. Other ECOWAS nations remained neutral or vigorously protested against what they regarded as ECOWAS's involvement in the internal affairs of a sovereign nation. By 1993 a tenuous peace was achieved largely because of this military intervention. The signing of the peace accord brought about some healing of the rift among ECOWAS members, who were largely divided along francophone anglophone lines. The achievement of peace also resulted in a revitalized community and the signing of the Treaty of Cotonou that revised the original Lagos treaty. The revised treaty called for an enhanced decision making process and a special tax designed to ensure funding for ECOWAS programs and operations.
ECOWAS continues to be plagued with problems, intrinsic and otherwise, that have yet to be resolved. For example, those countries that were former French colonies are part of a single monetary zone and use the Paris-backed CFA franc as their single currency. The rest of ECOWAS is dominated by Nigeria. This English-speaking nation, with a population of 100 million, alone accounts for two-thirds of the ECOWAS population and three-quarters of the ECOWAS gross domestic product. Nigerian Finance Minister Anthony Ani suggested in 1997 that the Nigerian nairi could possibly become the community's means of exchange. Regional analysts believe that such a move would be divisive and strongly opposed by the CFA members.
Upon achieving independence most of these countries also had a colonial economy based on the production and export of primary commodities. Subsequently, they lacked the impetus for intraregional trade. A persistent destabilization of commodity prices and disparities in the economic development of ECOWAS countries are other problems left over from colonial rule.
Other problems facing ECOWAS are persistent tariffs which are proving difficult to remove. The resultant tax revenue is used to help alleviate balance-of-payment problems. ECOWAS also suffers from internal financial problems. In 1997 Lansana Kouyate told a journalist for the Pan African News Agency that member states are in arrears to ECOWAS for $30 million, a staggering sum considering the community has an annual operating budget of $10 million.
ECOWAS also faces ongoing military issues and antidemocratic leaders. At the 1997 summit ECOWAS chairman Sani Abacha failed to muster support for an armed intervention against the "gang of soldiers" that overthrew the democratically elected government of Sierre Leone. Abacha himself, however, came to power as the result of a coup (as had 12 of the 16 ECOWAS leaders at the time) and refuses to allow elections.
Another division in ECOWAS exists between those countries with agricultural and labor-intensive economies and those countries with more advanced stages of economic development. The ECOWAS accord calls for the eventual free movement of labor within the community. If implemented, however, this policy could prove to be a boon to poor countries with pools of cheap labor, such as Ghana and Burkina Faso, while harming relatively richer countries, such as Nigeria and Ivory Coast. This dynamic was evident in 1982 when Nigeria expelled Ghanian workers believing they were undercutting the wage structure of Nigerian citizens.
An integral part of ECOWAS operations is the Fund for Co-operation, Compensation and Development. It was set up to provide compensation to member states that have suffered economic losses as a direct result of ECOWAS policy. It obtains compensation funds from a variety of sources including contributions from member states based on their economic resources, income from ECOWAS enterprises, and funds from bilateral and multilateral sources.
The community has plans for an ECOWAS traveler's check which would be issued by the West African Monetary Fund. ECOWAS members also hope to create a single monetary zone by 2000.
SEE ALSO: African Management Methods; East African Community (EAC)
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