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Apr 8, 2014

REUTERS SUMMIT-West African economies need integration -Ghana president


West Africa needs to lower tariffs, enable freer movement of goods and services, and deepen integration of its 15 countries to promote growth, Ghana's President John Mahama said at the Reuters Africa summit.

Mahama, who last month took over as chairman of the Economic Community of West African States (ECOWAS), said colonial legacies and the structure of the region's economies make liberalization difficult, while some states were also afraid of exposing themselves to greater competition.

"Countries are unwilling to take a step into the unknown. They are familiar with the taxes they collect in goods and services," Mahama said. "The belief in some countries is that if borders are opened up and free trade is allowed in the West African sub-region, then they probably might lose out, so that is the reason for the hesitation."

Mahama's comments reflect tension in a giant region divided between Francophone and Anglophone states and dominated by Nigeria, which on Sunday officially became Africa's biggest economy when it rebased its GDP.

The region, which is also divided between Sahel and coastal countries, has a population of some 300 million people and a gross domestic product of around $316 billion, according to ECOWAS figures in 2012.

Ghana is one of Africa's strongest economies, but many of the region's smaller countries fear open borders could lead them to be swamped by either Nigeria or Ivory Coast, historically the region's leading French-speaking economy.

The question of how to accelerate regional integration has been cast in stark relief by the progress made in Africa's two other main blocs, the South African Development Community and the East African Community.

Progress has been slow despite a series of mechanisms and agreements, including the West African Monetary Union that aims eventually to provide a common currency for the region, most of whose francophone states use the CFA franc.

SALT TRADE

Mahama said his immediate goal as chairman was to make sure all countries allow duty-free goods under the ECOWAS Trade Liberalization Scheme (ETLS), which is designed to promote the region as a free-trade area.

The goal is in keeping with an aim of Mahama's government to transform Ghana's economy from an exporter of cocoa, gold and oil and an importer of finished goods to a country with a strong manufacturing base that sells value-added products abroad.

Last October's summit in Senegal, at which the issue of external tariffs was addressed, made him more optimistic for regional integration, he said.

"It is my hope that during my tenure I will be able to push it as far as I can to be able to allow people, goods and services to move freely across the sub-region to service a larger market than our individual countries have," he said.

At the same time, it is important to continue to diversify trade beyond the usual partners in Europe and the United States to include emerging markets in Asia and Latin America, Mahama said.

Even that is no replacement for promoting intra-regional trade and raising domestic production, he said, citing salt as an example of a product where regional trade could benefit economies all round. Ghana potentially could produce 1 million tonnes of salt, but Nigeria imports more than 1 million tonnes of salt from Brazil, he said.

"It just doesn't make sense when even freight charges alone would be a big saving. And so there is a lot that we must do to improve trade," he said. – Reuters