• Friday, December 08, 2023
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The slow pace of ECOWAS Trade Liberalisation Scheme



The ECOWAS Trade Liberalisation Scheme (ELTS), though launched since 1990, is still impeded by competitive nationalism

In recent times stronger moves have been made by private sector operators towards ensuring the actualisation of the ECOWAS Trade Liberalisation Scheme (ETLS) which was launched in 1990. The objective of the ECOWAS Trade Lberalisation Scheme is to ensure free movement of goods which satisfy the rules of origin of the Community. The multiplier effect of this scheme is if fully implemented is that there will be a market for exports in the sub-region, there will be more jobs created, poverty reduced and foreign exchange earnings improved. However, almost all the governments in the region have not made concrete moves to ensure the actualisation of the scheme in spite of the obvious advantages of this scheme.

Various reports have shown that trade between ECOWAS member states is still about 10 percent of the total volume of trade that goes on in the region. These reports reveal that the member states of ECOWAS trade more with European countries and the United States than between themselves. But in recent years, Ghana has started opening up its economy to encourage Foreign Direct Investments (FDI). Michael Ajayi, a Ghana-based Nigerian businessman says, “Ghana depends mainly on FDI, so they are very eager to receive foreign investors. They have tried to be very efficient. The Registrar General’s department in Ghana which is synonymous with the Corporate Affairs Commission in Nigeria is virtually computerised and in a couple of days, one can get a company registered as long as all the documents are complete.”

Taking advantage of this, many Nigerian businesspeople and companies are establishing new businesses or expanding their business operations to Ghana. Some Nigerian businesses particularly manufacturers who have developed business interests in Ghana stress that the main reason is because of the infrastructural challenges particularly the cost of generating power as a result of the Nigerian comatose energy sector. Seyi Jones, a Nigerian Couturier based in Ghana says, “The cost of doing business in Ghana is far less than Nigeria. Here in Ghana, we do not have to incur huge overhead which comes from buying fuel and servicing generator as the case is in Nigeria.”

As a result of these factors, the business relationship between Ghana and Nigeria has been on the increase since the turn of the century. Between Nigeria and Ghana lies Benin Republic and Togo and businesspeople soon discovered that boosting trade between Nigeria and Ghana cannot be fully effective without courting these two countries. Hence, Togo and Benin Republic were included in the third annual business summit between Nigeria and Ghana which took place recently.

The Organised Private Sector (OPS) which includes the Manufacturers Association of Nigeria(MAN), the Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMA); the Nigerian Economic Summit Group (NESG) etc has also stressed the need for government to eliminate tariff irregularities and ambiguous import prohibition lists. They said it was important to harmonise the draft trade and industrial policy made by the federal government with the ETLS protocol which is meant to fast track implementation of the policy. This has already been signed into law by ECOWAS member countries but is not fully operational especially in Nigeria in spite of its advantage to the region. They stated that the draft needs to emphasise on the need to increase private sector participation in Nigeria and ECOWAS’ policy making processes. They pointed out that since policies would affect stakeholders, then it was important to carry them along in the formulation process.

Nigeria’s import prohibition which does not clearly exclude ECOWAS countries has stirred friction in Ghana and other member countries. Businesspeople in these other countries are particularly interested in Nigeria’s huge market –about 140 million people. Analysts believe that Nigeria’s import prohibition may be responsible for some of the prohibitive business policies implemented by the Ghanaian government. However, more and more private sector players in Nigeria have been relentless in urging the leaders to honour the ETLS, realising that the frictions they encounter doing business within the ECOWAS sub-region are related to their own government policies.

Solomon Onafowokan, LCCI immediate past president recently noted that it was regrettable that not much progress has been made in the realisation of the economic integration of the West African sub-region. He said, “The movement of goods and products across the various borders in the sub-region is still a nightmare. Over the years, we are supposed to have progressed from a Free Trade Area to a Customs Union and eventually to a Monetary Union. But we are yet to even successfully establish a Free Trade Area in the region which is the first level of integration process.” He noted that the reasons for these were multiple check points and imposition of tariffs in spite of ETLS at many of the borders of the countries in the region. He stressed, “Our concern is that economic integration is being embraced all over the world. It gives access to bigger markets; it promotes economies of scale, enhances efficiency and ultimately improves the welfare of citizens.”

One of the factors impeding the effective implementation of ETLS includes the fear that countries outside the region could seize the opportunity of bringing their goods into a country like Nigeria through another ECOWAS country. There are also fears of domination by the citizens of another ECOWAS country. For example, there are growing concerns by Ghanaians that Nigerians are dominating the Ghanaian markets. Nigerian businesspeople are aggressive and apparently more determined than the average Ghanaian. But some Ghanaians are insisting that opening up to competition would boost the entrepreneurial initiatives of Ghanaians and the citizens of other ECOWAS countries.

Ghana’s trade minister, Hanna Tetteh noted that opening up their economies to businesses by ECOWAS citizens would be more beneficial. She asked at a forum recently, “Would it be better for governments to get more revenues from duties at the expense of additional revenues from perhaps indirect taxes such as VAT. This could contribute even more than what you are currently collecting and which would come as a result of the increased trade and commercial activities among the various countries.”

She therefore called on the Organised Private Sector in ECOWAS countries particularly Ghana, Togo, Benin and Nigeria to form a pressure group to influence policies of governments of the four countries, Ghana, Togo, Benin and Nigeria to ensure that private sector interests are in accordance with public sector benefits.