Freer trade in ECOWAS would lead to more business, more jobs - and more revenues to states

Thursday, September 8 2011

Joe Lamport
The ECOWAS Trade Liberalization Scheme has many companies – and countries – playing a game of “What if?” What if businesses could move goods more quickly – at lower cost – in West Africa?
Delays at borders discourage business investment.
Delays at borders discourage business investment.
A new USAID Trade Hub study provides some of the answers. In short, an improved business environment would transform the West African economy – creating thousands of jobs and improving the lives of millions of the region’s citizens.
“Since ECOWAS was created in 1975, the major obstacle to its efforts has been the very real concern among Member States that harmonizing the trade rules would mean loss of revenue to the state,” explained Peter White, who conducted the study. “But our study shows more trade means more revenue even if customs duties are truly removed. 
“Implementation of the ECOWAS Trade Liberalization Scheme will mean significantly more business – and increased revenue to the state, higher incomes for people and more economic activity.”
The study White led – to be published in October – involved interviews with dozens of companies across the region. Almost all said that the patchy implementation of rules and non-harmonized regulations and tariffs across the region have effectively stopped them from doing more business.
Consider the case of fruit juice.
Making fruit juice is competitively advantageous in West Africa – the tropical fruits to make high-quality product is readily available, the cost of labor is reasonable and consumer demand is only increasing. Yet in many countries, the juice is imported from outside of the region.
Uniform implementation of ECOWAS trade rules would lead to more business.
Uniform implementation of ECOWAS trade rules would lead to more business.
“We employ 400 people in Ghana making fruit juice,” explained a company manager that makes a variety of juices. “We could easily expand and we would. But we pay at least 30% duties and taxes carrying our product across the borders to Benin, Burkina Faso, Niger, Nigeria and Togo.
“The end result is the imports are cheaper. We cannot compete.”
That company’s story is hardly unique. In interview after interview, managers from companies as wide ranging as manufacturers of paint to makers of food staples told a similar tale.
“We sized our plant for an ECOWAS-wide market,” said a manager of a company that makes paint. “That didn’t happen and now we’re operating at 20 percent capacity.”
“If we could cross borders faster, we could make 12 trips to Accra instead of the current three each month,” said a manager of a company that manufactures furniture. “That would reduce our costs significantly.”
“Every trip there’s a new cost,” said an agricultural commodities trader. “We hire trucks for a three-day trip and it ends up taking two weeks. That increases our costs and ultimately consumers pay for that.”
A pilot Border Information Center puts information into the hands of traders.
A pilot Border Information Center puts information into the hands of traders.
In effect, companies would significantly expand operations – creating thousands of jobs and generating significant tax revenue to states – if the business environment were improved. Those improvements have even more urgency given the increasing demand for food across the region.
“There is no sector for which rapid transport is more important than food, given its chronic need and perishability,” the study said. “More rapid and efficient transport of food is imperative. Whether food is sourced nationally, regionally or internationally, the need for faster and cheaper transport of food is urgent.”
Regional growth patterns make the argument clear: West Africa’s population is expected to double – to 600 million people – within 25 years. Food requirements, however, will grow at a faster rate, doubling in about 15 years.
“What people might not realize in that statement is the growing needs of the population means there are important opportunities for business,” said USAID Trade Hub Director Vanessa Adams. “That scenario should not scare people – it should inspire us to act. Decreasing delays at borders by streamlining procedures has real meaning and significance for preferred traders.”
One answer is express lanes at borders for those trucks carrying goods that should be traded freely in the region, said Dr. Sola Afolabi, the USAID Trade Hub Business Environment Director. 
“Increased trade in West Africa must be everyone’s common goal,” Dr. Afolabi said. “Eliminating trade barriers will reduce the costs of doing business – and everyone will benefit. Member States will see increased revenues as business expands, consumers will see better prices at the market, and we will see more jobs, which will reduce poverty.” 

No comments available.

Add your comment

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Each email address will be obfuscated in a human readable fashion or (if JavaScript is enabled) replaced with a spamproof clickable link.
  • You may use [swf file="song.mp3"] to display Flash files and media.
  • Image links with 'rel="lightbox"' in the <a> tag will appear in a Lightbox when clicked on.

More information about formatting options

By submitting this form, you accept the Mollom privacy policy.

Get Tradewinds delivered to you!


Read Tradewinds via RSS

Transport Infrastructure Publications

West Africa Road Governance Reports
23rd USAID/UEMOA Report (1st quarter 2013)
22nd USAID/UEMOA Report (4th quarter 2012)
21st USAID/UEMOA Report (3rd quarter 2012)
20th USAID/UEMOA Report (2nd quarter 2012)
19th USAID/UEMOA Report (1st quarter 2012)
18th USAID/UEMOA Report (4th quarter 2011)
17th USAID/UEMOA Report (3rd quarter 2011)
16th USAID/UEMOA Report (2nd quarter 2011)
15th USAID/UEMOA Report (1st quarter 2011)
14th USAID/UEMOA Report (4th quarter 2010)
13th USAID/UEMOA Report (3rd quarter 2010)
12th USAID/UEMOA Report (2nd quarter 2010)
11th USAID/UEMOA Report (1st quarter 2010)
10th USAID/UEMOA Report (4th quarter 2009)
9th USAID/UEMOA Report (3rd quarter 2009)
8th USAID/UEMOA Report (2nd quarter 2009)
7th USAID/UEMOA Report (1st quarter 2009)
6th USAID/UEMOA Report (4th quarter 2008)
5th USAID/UEMOA Report (3rd quarter 2008)
4th USAID/UEMOA Report (1st half 2008)
3rd USAID/UEMOA Report (4th quarter 2007)
2nd USAID/UEMOA Report (2nd- 3rd quarter 2007)
1st USAID/UEMOA Report (1st quarter 2007)


Joint Regional Reports on Road Governance
2nd Trade Hub / ATP / ALCO Joint Regional Report on Road Governance (Sep. 2010)
1st Trade Hub / ATP / ALCO Joint Regional Report on Road Governance (Mar. 2010)
Transport Studies
Trends in Transport and Logistics on the Tema-Ouaga-Bamako Corridor (May 2013)
Trucking to West Africa’s Landlocked Countries (Sep. 2010) - Market Structure and Conduct
Implementation of Axle Weight Rules in UEMOA Member States (Jul. 2010) - Lessons learned from Transit Traffic in Ghana
Transport & Logistics Costs on the Tema-Ouagadougou Corridor (Apr. 2010)
Transport & Logistics Costs on the Lomé-Ouagadougou Corridor (Jan. 2012)
Other Publications
The Truck Driver’s Guide to Ghana (Aug. 2010)
Required Interstate Documents for Ghanaian Truck Drivers

Filter all content by…