ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS) - FINANCIAL INSTITUTION


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.

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