AfCFTA: What ECOWAS Has for Nigerian Manufacturers



As Africa gears toward the full implementation of the AfCFTA agreement, Dike Onwuamaeze examines ECOWAS has to offer Nigerian businesses
What has the Economic Community of West African State (ECOWAS) got to offer the Nigerian businesses, especially its manufacturing arm, as Africa gears toward the full implementation of the African Continental Free Trade Area (AfCFTA) agreement that would bring Africa under one continental market?

This was the question participants that were brought together virtually by the Lagos Chamber of Commerce and Industry (LCCI) to commemorate the 46th anniversary of the Economic Community of West African State (ECOWAS) with the theme “Optimising Sustainable Trade, Investment and Regional Economic Integration through Effective Partnership between ECOWAS Institutions and the Organised Private Sector” proffered answers to last week.

The first hint came from the Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, who charged the Nigerian manufacturing sector to seize the export opportunities offered by the ECOWAS to enhance employment opportunities in the country.

Adebayo identified the ECOWAS Trade Liberaliation Scheme (ETLS) as important mechanism Nigerian manufacturers would lash on to deepen trade integration in the sub-region and a cornerstone of effective economic integration of the region.

He said: “It has provided a key regulatory tool for the free trade area, which has helped enhance competition and consumer choice within the region. It has also helped create export opportunities for Nigerian manufactures, thereby increasing employment in the economy through the expansion of market access for our products.”

The minister also remarked that the international webinar would provide a unique opportunity for the stakeholders to initiate discussions on how member states, especially the Nigerian business community, could leverage on the ECOWAS platform to benefit from the African Continental Free Trade Area (AFCFTA).

Good Partnership

He harped on the need for member states to strengthen the fundamentals of good partnership that would bring together diverse resources in the region in “ways that we can together achieve more impact, greater sustainability and increased value for all.

“Hence, the theme “Optimising Sustainable Trade, Investment and Regional Economic Integration through Effective Partnership between ECOWAS Institutions and the Organized Private Sector” is apt and timely. This is so because, it emphasises the need to work together as a bloc to leverage and take advantage of the opportunities offered by the AfCFTA.”

Adebayo set the stage with these opening remarks for the President of the ECOWAS Commission, Mr. Jean-Claude Brou, to shed more light on what the ECOWAS Commission has in stock for the Nigerian business community

Brou said that ECOWAS goal under the current dispensation is to spur the region’s private sector to fully seize the opportunity on greater market access that not only regionally but also under the AfCFTA in order to accelerate industrialisation and increased foreign direct investments into the West African sub-region, which would Increase the creation of resilient regional value chains to self-sustaining and competitive regional community.

He stated that the ECOWAS Strategic Framework was crafted to leverage the various protocols o the community to forge a borderless, peaceful and cohesive West Africa.

Focusing on ECOWAS as region of people, the strategic framework guided efforts that would deepen regional collaboration and cooperation to aid member states in their developmental agendas.

He said: “The ECOWAS recognises the private sector as engine of economic development, wealth creation, job creation and poverty alleviation. Indeed, with a population of almost 400 million person of which less than sixty percent are less than 40 years old, the ECOWAS can only achieve its development goals if government and private sector work together.

“As we proceed to launch ECOWAS VISSION 2050, which seeks to create a fully integrated ECOWAS community of people and peaceful prosperous people with strong institutions and respect for fundamental freedom and work toward inclusive and sustainable development. We should be mindful that our strength is in our unity.”

In furtherance of this vision, the ECOWAS’s commission has developed a number of instruments and measures toward the strengthening of the private sector through its directorate of private sector promotion with the official regional private sector bodies to identify areas for collaboration.
The partnership with the private sector, according to him, has yielded some success stories like the creation of Ecobank, the Pan African Bank, through the agency of The ECOWAS Investment and Development Bank (EIDB) that provided funds to enable the bank to commence its operations.

Later the shares of the EIDB were sold to the private sector when Ecobank started making profit.

Secondly, ECOWAS was deeply involved in in the creation of airline that covered 24 destinations in 22 countries of West and Central Africa and greatly contributed to connectivity in the region and African continent.

Creation of Sea Link

Lastly, ECOWAS has largely funded the creation of Sealink, a project that was driven by the Nigeria Export and Import Bank (NEXIM) that enjoyed the status of a community enterprise.

The ECOWAS also provided for a detailed guideline for the development of the Micro, Small and Medium Enterprises (MSMEs) in the region in its vision for 2015 to 2020, which is now under amendment to run from 2021 to 2030.

The ECOWAS commission is also on the forefront of the efforts to attract investments into the sub-region by designing and adopting of common community rules on investments modalities for enhanced investment climate in the region.

The president of the ECOWAS Commission added that the most outstanding achievement in the history of the ECOWAS community has been a politically stable region supporting the tenets of democracy and opposing unconstitutional political practices.

This has enabled an atmosphere of peace and security to prevail across the length and breadth of the region for economic actors to operate and take their goods and services to any country in the region without let and hindrance.

Brou said: “On the economic front, ECOWAS is working to guarantee sustainable trade environment in West Africa. In this regard, ECOWAS is harmonising instruments to ensure improved productivity in economic activities. These instruments include the ETLS, the ECOWAS Common External Tariff (ECET), the West African Common Industrial Policy (WACIP), the ECOWAS Trade Information System and the ECOWAS Common Investment Policy” amongst others.

The ETLS was introduced in 1979 to accommodate only agricultural and artisanal products but was later expanded in 1990 to include industrial products that complied with the Rule of Origin (RoO).
The ECET that entered into force in 2015 is currently being implemented by all our member states except for Cape Verde because of extreme nature of its economy as an island nation.

He said: “Concerning the WACIP, its whole objective is to accelerate the industrialisation and private sector development in West Africa. Specifically by 2030 it will raise the local raw material processing rate from the level of 15 per cent to an average of 30 per cent. The WACIP is to increase the manufacturing sector contribution to regional GDP that is currently at average of seven per cent and to raise it to an average of 20 per cent.”

Four sectors being targeted by the WACIP’s investment plan included the food and agro industry, pharmaceutical, construction materials and automated and machinery assembly.

In recent years, effort has been carried out in regional infrastructure with the adoption of ECOWAS procedures for harmonisation of standards, technical regulations and conformity assessment system. These actions were aimed at assuring the international competitiveness of the region’s products for protecting consumers and ensuring sustainable trade between ECOWAS member states.
Regional Standards

He also disclosed that more than 100 regional standards have been adopted and more than 70 others are being developed in the context of harmonising regional standards, as part of the current implementation of the regional component of the West African regional value chains.

“Furthermore, the regional certification mark has also been adopted by the ECOWAS council of ministers. This mark may be affixed to products deemed to have complied for regional standards as adopted to enable the SMEs in the region to develop their exports in the community. Procedures for the harmonisation of national technical regulations at the regional level were also adopted by the ECOWAS council of ministers. The objective being to remove unnecessary technical barriers for trade in particular in the context of implementation of measures relating to free movement of people as adopted within the ECOWAS.”

Yet, the ECOWAS commission is also mindful that much cannot be achieved in economic integration and intra-regional trade without products to trade on.

In these regard, the EBID has committed to the private sector an amount of $1.3 billion for a total project of 130, which represented 50.6 per cent of the total commitment of the bank. The bank has also envisioned $1.6 billion credit for the private sector between 2021 and 2025.

The President of the EBID, Dr. George Agyekum Nana Donkor, said at the webinar that “as we look to the future toward a restored and resilient development of ECOWAS position the private sector will be the first to benefit from the bank interventions. Thus 60.5 per cent of the banks projected approvals for the period 2021 to 2025 are dedicated to the private sector of a total $1.6 billion.”

Donkor said that the credit facilities were important because of low private sector access to bank credit in West Africa. “In 2020, apart from Cape Verde where domestic credit to the private sector reached 73.8 per cent of the GDP, domestic credit to the private sector in the rest of ECOWAS countries was below 30 per cent of their respective GDPs.

It is therefore important to note that increasing credit to the private sector will have a positive impact on the production capacity of the SMEs and improve the levels of intra-regional trade and ECOWAS trade with the rest of the world,” he said.

Similarly, the Acting Director for Trade, ECOWAS Commission, Mr. Kolawale Sofola, said that the commission is moving to harmonise the procedures of the West African customs authorities. “We know that that many of the challenges faced at the borders are majorly related to customs administrative procedures than tariffs. We are working with our customs to see how we can improve their efficiency to accelerate the movement of goods across borders,” Sofola said.

He also stated that the commission’s trade development mechanism would provide traders the opportunity to report challenges they faced when they come to borders.

“We currently have them in some countries but will be extended it to all the member states so that businesses will report their challenges at the borders to a central administrator who is able to communicate the issue to a relevant authority.

“We will like to encourage the private sector to use this to enable neighbouring countries to improve their deliverable services.

We continue to work on rehabilitation of existing routes but also developing new roads in particular the Lagos – Abidjan Highway that will be extended all the way to Dakar as well. It is very important that goods can leave the place of production and arrive quickly and affordably at the place of consumption,” he said.

Sofola noted that trade meant that the region must produce and the key factor of production is energy. In this regard, the commission has been evolving a sub-regional power poll initiative on renewable energy as part of its drive to make sure that electricity is available for all not just at the urban centre but at the rural areas to ensure that everybody has access to electricity.

Emerging AfCFTA Environment

He also said that the aim of the commission is to make the region competitive in the emerging AfCFTA environment, which he described as “an initiative that builds on regional achievements like ours. We believe that if we position ourselves correctly we will be able to take advantage of the continental market and provide more employment to our youths. We are working in collaboration with the AfCFTA secretariat.

“It has become quite clear that there are different levels of implementations as we go into the AfCFTA that. There are issues that have to be resolved at the continental level through the AfCFTA secretariat. There are issues to be resolved by regional economic communities like the ECOWAS and there are issues to be dealt at the national levels.

“For this ECOWAS is currently developing implementation strategies with the AfCFTA to complement strategies that have been developed at the national levels by member states to make sure that this agreement provides benefits and opportunities for the West African private sector.”

An Economist and former Director General of the LCCI, Dr. Muda Yusuf, told THISDAY that the ECOWAS has impacted the Nigeria manufacturing sector in two major ways: opportunities of bigger market size and supply chain enhancement.

Yusuf said: “The ECOWAS offers a market size of an estimated 400million population and an estimated GDP of $700 billion. This offers unique opportunity for manufacturing companies in Nigeria take advantage of economies of scale to bring down their cost and enhance their competitiveness. A number of manufacturing companies, especially those in the fast moving consumer goods sector have taken advantage of the market size.

“There is the supply chain effect. Some manufacturers have taken advantage of the ECOWAS protocol to make their supply chain more efficient. Raw materials are sourced from ECOWAS countries at competitive prices which impacts positively on returns on investment. A good example is manufacturers in the cocoa processing sector and others in the food and beverage industry. The ECOWAS protocol on trade liberalisation makes these benefits possible.

“But there are reports about the risk posed to the protocols by non-tariff barriers across the West African sub region. To optimise the benefits of ECOWAS to the manufacturing sector, the issues of non-tariff barriers need to be urgently and effectively addressed.”

Similarly, the Chief Executive Officer of BIC Consultancy Nigeria Limited, Dr. Boniface Chizea, agreed that ECOWAS has given Nigerian entrepreneurs the advantage of wider market with their goods and services.

“I remember those days when I was with United Bank for Africa in 1980s and 90s that we find Nigerian products, especially household goods being displayed in Gambia, Togo and Senegal among other countries whenever we traveled. Now, these big companies will now take charge of the sale of their products in a more formal and beneficial setting that will be created with the implementation of the AfCFTA,” Chizea said.

He also predicted that the multinationals seeking to take advantage of the trade agreement would find in Nigeria a favourable investment destination by setting up their factories where the market is and where they could produce at full capacity and export instead of multiplying factories that runs under low capacity utilisation in several African countries.