Monetary integration was envisaged in the economic
community of West African state (ECOWAS) when the organization was formed in
1975. It was realized by member states that limited success had been achieved
as far as the objectives of the organization were concerned. As a result, the
ECOWAS treaty was revised and significant decision were made in 1993, and the
call for a monetary union was reiterated. The African monetary integration is
the proposed creation of an economic and monetary union for the countries of
the African union, administered by the African central bank. Such a union would
call for the creation of a new unified currency similar to the euro the
hypothetical currency is sometimes referred to as the afro.
Economic integration captures a
process by which a group of counties unite in determining the type of economic
relation(s) to maintain with the aim of promoting economic growth. Such a
combination usually results into a free movement of men and materials together
with a dismantling of trade restrictions among the combing economics.
Integration can take the form of ordinary preferential arrangement, free trade
area, custom union, common market and or economic union.
Preferential Arrangement: This is the lowest level of integration among
nations. At this level, countries wishing to work together for their mutual
benefit merely agree to lower trade barriers among themselves. This level of
integration is often ignored by many authors, perhaps because it is sort of ‘a
gentleman agreement. That is hwy majority simple begin with the next level
which is legally, or at least, formally binding on the members.
Free Trade Area: Conventionally, a free trade area represents the
second level of economic integration. But in a more concrete term, it could be
seen as the first stage where terms of agreement between the member countries
are legally binding on them. In a free trade area the countries concerned agree
to abolish import duties on goods produced within them but provide for
differential duties on goods flowing from non-member countries. The commonest
examples of free trade areas are the European Free Trade Area (EFFTAA) and the
Latin American Free trade Area (LAFTA).
Custom Union: This is the third level at which a common external
tariffs on goods entering the zone from non member nations is established. In
other words, the combing countries not only agree to abolish import duties on
goods produced within them but also agree on common external tariffs on good
flowing into the region from non-member countries. An example of a custom union
in West Africa is the one comprising French –speaking West African Countries
called CEAO.
Common market: This level of integration goes beyond custom union
in the degree of integration. Thus, in a common market, the combing countries
remove trade restrictions (i.e. abolish import duties) among themselves, allow
free movements of goods and factors, and also maintain uniform external tariffs
against non-member countries. A notable example of this type of integration is
the European Common Market.
Economic Union: An economic union is the most advanced form of
economic integration. It is the level at which integration involves monetary
and fiscal unification and the virtual-transformation of separate national
economies entity. Thus, in addition to all the features of a common market, an
economic union harmonizers and coordinates the socio-economic polices of the
combing countries. An outstanding example is the European Union.
THE MEANING OF ECOWAS THEIR SET GOALS
AND OBJECTIVES IN THE DEVELOPMENT AND UNITING OF THE MEMBER STATES OR NATIONS
Economic
community of West African States (ECOWAS), organization to encourage economic,
social, and cultural development in West Africa. It was founded in 1975 by the
Treaty of Lagos and came into operation in 1977.
The ECOWAS was created mainly to
promote cooperation among member countries in all matters relating to economic
and socio-cultural development. The ultimate aim was to move the level of
community cooperation systematically from a stage of free trade area, through
those of custom union and common market, to a full fledged economic union.
ECOWAS has moved to liberalized
trade and gradually reduced restrictions on the movement of goods, services,
and people between members states. In January 2001 the West African Monetary
Institute (WAMI) was established in Accra, Ghana, as a transitional step
towards a West African central bank ECOWAS has also improved intra region
communications and transport. Some member governments, however, have been slow
to implement agreed polices at a national level and to pay their contribution
to Community funds. ECOWAS military role, however, has been extremely
significant.
ECOWAS PROVIDES A REVIEW OF REGIONAL
INTEGRATION IN WEST AFRICA
ECOWAS have helped in measures to facilitate the free
flow of people, through the introduction of visa-free travel for citizens of
West African countries throughout the region, and recognition of people’s right
to reside and settle in any country of the region ECOWAS has also adopted
agricultural and industrial cooperation programs designed to expand the
regional production based and foster greater complementarily among the various
national production systems. ECOWAS has encouraged the formation of a number of
associations to involve the citizens of West African in the integration.
Factors which could have worked against the formation
of a monetary union prior to 1993 changed infavour of monetary cooperation. The
democratic transaction of Nigeria and the accession to power of a new leader
who has shown commitment to regional integration, improved cooperation
arrangements among ECOWAS states in working towards the formalization of a
monetary union. The formation from the organization of African unity (OAU) to
the African union (AU) and its strategy of crating a common African currency as
well as the emergence of the new partnership for Africa’s development (ACPAD)
provided extra motivations for African states to show more commitment towards
integration.
Factors impeding regional integration in West African
are identified these include:-
1.
The absence of an
integration culture and indeed a development culture generally in the countries
of the region.
2.
The priority
accorded to nation building in the years following independence.
3.
Differences in
ideology and approach
4.
The fear of
domination by Nigeria’s
5.
The burden of
certain institutional and economic structures inherited from the colonial era.
6.
The economic
consist that has plagued the regional since the early 1980s.
THE INTEGRATION PROCESS
1.
The absence of a development and integration culture: For economic integration in West Africa to succeed
in its role as an instrument for fostering the development of the partner
states requires that these countries have a clear sense of their own
development objectives and strategies and be fully committed to the pursuit of
these goals. A development culture must be fostered, both within government and
among the people so that concern for a better replaces preoccupation with the
satisfaction of immediate needs. With development objectives placed high on the
national agenda, well thought-out development strategies would not be easily
replaced with ad-hoc economic management decision, and regional integration
would more easily come to the force as a necessary component of such
strategies.
2. The
political dimension: It was the rise
of nationalism that inspired the peoples of the colonies to seek political
independence. subsequently, the creation of a national identify and the
exercise of national sovereignty have been prominent features of the
post-independence political agenda. Today, the legacy of national sovereignty
and the jealousy with which it is guarded have become obstacles to progress on
the road to regional integration, which requires a certain sharing of
sovereignty among member of the community. Exacerbating this tendency are other
aspects of the colonial heritage that continue to influence national
institutions and attitudes in the political as in other fields, including
differences in legal and educational systems or administrative structures or
the North-South orientation of national economic structures.
3. The
economic Dimension: The poor economic
health of member states since the early 1980s has been a major impediment to
integration efforts. Severe economic recession has obliged member states to
abandon all plans for long-term economic development including regional
integration in the pursuit of short-term stabilization.
4. Regional
Peace and Security: No provision was
made in the ECOWAS treaty for regional cooperation in political and defence
matters. However, the need to create an atmosphere of confidence and trust
throughout the region as a precondition for regional integration was felt soon
after the community became operational. The climax of these developments was
the outbreak of civil war in Liberia and the establishment of an ECOWAS
mediation mechanism for regional disputes. the usefulness of concerted action
by member states in the Liberian conflict can be gauged by the contribution
that the ECOWAS peace initiative has made: arrest of the carnage, restoration
of peace, and imitation of the electoral process in Liberia. However the ECOWAS
peace imitative is only an ad-hoc arrangement designed to address a specific
problem. It was not meant as a recipe to meet the future needs of the
community.
5. Institutional
arrangement at the national level:
Public administration in West Africa was a creation of the colonial powers and
as instrument for taxation, coercion, and general administration. Developmental
functions were added when Africans took over the reins of government of the
time were more inclined to keep tight rein on the economy than to foster a
congenial economic environment for the private sector.
6. External
supports: Since the adoption of the second united nations development
decade in the 1970s, African countries have repeatedly reaffirmed that the main
responsibility for the development of their economics rests with them. However
considerable support from the rest of the world remains necessary, especially
in the area of regional cooperation where the lack of an independent tax base
reduces access to financial resources.
7. Need for renewed leadership: It has been said that Africa’s current
political instability economic decline, and social discontent reflect a
leadership crisis on the continent. If this is true of individual countries, it
is equally valid for the regional integration process. The emergence of
stronger leadership could supply the vision and necessary direction and
demonstrate the sacrifice and commitment that are essential in any cooperative
endeavour.
Their
prospect or positive steps which have been taken toward the formalization of a
monetary union in the community. The West African monetary zone (WAMZ) was
realized in 2000 and more importantly, the west African monetary institute
(WAMI) was created and started operating in the same year. The institute was
created to prepare the ground work for the creation of the west African central
bank (The above mentioned factors increased the prospects of forming a monetary
union in the community but several challenges still remain.
Prospects
for monetary integration into west African or into world markets under better
respects due to the weakness of world markets for traditional west African
experts and the underdeveloped industrial base of these countries. Regional
integration and cooperation afford an intermediate solution. Although regional
integration is sometimes advocated even today, as a substitute for links with
the rest of the world, increased openness to world markets and regional
integration are increasingly being seen as complementary aspects of a
multipionged development strategy of reduced isolation.
The
goal of a monetary union or integration in ECOWAS has long been an objectives
of the organization, going back to its formation in 1975 and is intended to
accompany a boarder integration process that would include enhanced regional
trade and common institutions. In the colonial period, currency boards linked
sets of countries in the region. On independence, however, these currency
boards were dissolved, with the exception of the CFA franc zone, which included
the francophone countries of the region. Although there have been attempts to
advance the agenda of ECOWAS monetary cooperation political. Problems and other
economic priorities in several of the region’s countries have to date inhibited
progress. Although some problems remain, the recent initiative has been
bolstered by the election in 1999 of a democratic government and a leader who
is committed to regional integration in Nigeria, the largest economy of the
1500 region, raising hopes that the long-delayed project can be revived.
This
research project is centered on treaties, statistical analysis, theories and concepts
and literature from economical financial institutions. We conclude by stating
that the analysis here reflects the situation on the ground and provide lesson
to member states of the community prospects for monetary integration would be
further improved if member states work coherently to overcome such
challenges.