TRADING ILLUSIONS IN WEST AFRICA
My experience of international trade in West Africa began as a European Commission Economic Advisor in Togo in 1976.
I worked on STABEX, to stabilize Togolese export earnings. Brussels was stabilizing prices for more cocoa exports than Togo could produce! So this included cocoa from Ghana ! West Africa has since maintained its edge on informal trade!
More recently I was Team Leader of the West African Food Markets programme (WAFM), managed by the Palladium Group, funded by the Department for International Development (DFID). We promoted ECOWAS regional trade for processed cereals like maize, cassava and sorghum.
We backed Small-Holder Farmer supply networks to SME food processors in Ghana, Burkina Faso, Nigeria and Niger, and thence to domestic and regional markets.
We helped reduce road blocks on trade routes. With help from Ghana Customs, illegal fixers were removed from border crossings. We studied, with Borderless Alliance, trade on crossings between Ghana and Burkina Faso, and Nigeria and Niger.
This showed trade was fastest between Nigeria and Niger. Nothing was documented well and everybody paid extra. The Ghana-Burkina border was slower. Everything was documented and nobody paid extra.
I compared this with trade along the main ECOWAS trade route from Abidjan in Ivory Coast to Lagos in Nigeria, passing through Ghana, Togo and Benin. At that time 65% of all recorded ECOWAS regional Cross Border Trade was on this one road. Attention focused on this while NGOs like Borderless Alliance tried to promote nine neglected ECOWAS trade routes, going North-South as well as East-West.
Moreover 65% of the entire Gross Domestic Product of Nigeria was on one road from Lagos to Kano via Ibadan, Abuja and Kaduna. In turn Nigeria represented about half of the GDP of ECOWAS. Regional trade and production were very concentrated.
The Abidjan-Lagos trade route has been modernized with World Bank help. Despite this I saw a video where a truck driver presented his papers to a border official and said, “ECOWAS.” The official replied on camera, “ Not today.Where’s the money? ”.
Now we have the African Free Trade Agreement. ECOWAS is a step towards AFTA. But Nigeria closed its land borders since August 2019 because efforts to cut rice imports and import substitution were stymied by illegal low-cost imports via Benin. Total land border closure is contrary to ECOWAS rules and not sustainable.
The big barrier to trade between West African Francophone and Anglophone countries, apart from language, is their different financial and monetary systems. Francophone countries have less fiscal independence, but share an economic and monetary union with the CFA Franc, indexed to the Euro, backed by France.
An agri-business or farmer in Ghana must pay twice the price to borrow money than in Burkina Faso. Nigeria is competing on this. But Chana central bank measures to emulate Nigerian reforms are delayed. West Africa needs an ECOWAS common currency and regional financial market. The UK could work with ECOWAS and France to help build this and to boost UK investment and trade.
WAFM promoted practical measures, with Borderless Alliance, like the ECOWAS Trade Liberalization Scheme. This can help West African SMEs do regional trade.
The latest good news in September 2020 is that the National Trade Facilitation Committee of Ghana, the contact point for trade facilitation for ECOWAS, AFTA and WTO, has resumed face-to-face meetings after 6 months of COVID lock-down.
The new UK Foreign and Commonwealth Development Office (FCDO) needs an integrated political and trade strategy to help tackle these challenges.