Retreat of ECOWAS Ministers of Finance and Regional Integration

Statement by Mr. Abdoulie Janneh, UN Under-Secretary-General and Executive Secretary of ECA

Ouagadougou, Burkina Faso
1- 4 June 2007

Mr. Chairman,

Your Excellency, Mr. Blaise Compaore, President of Burkina Faso and Chairman of ECOWAS;

Your Excellency, Dr. Mohamed Ibn Chambas, President of the ECOWAS Commission;

Your Excellency, Mrs. Obiageli Ezekwesili, Vice President, Africa Region, the World Bank;

Your Excellencies, ECOWAS Ministers responsible for Finance and Regional Integration;

Distinguished Guests;

Ladies and Gentlemen;

I would like to start by thanking His Excellency, Mr. Blaise Compaore, President of Burkina Faso and Chairman of the ECOWAS for hosting this retreat.
Mr. President you have in many ways, through your exemplary leadership, demonstrated your strong commitment to deeper integration of this sub-region as well as the maintenance of peace and security. I commend you for your tireless efforts in brokering peace in Cote d'Ivoire.

I would also like to take this opportunity to pay tribute to my brother and friend Dr. Mohamed Ibn Chambas who since 2002 has marvelously spearheaded the affairs of the Commission including the transformation from a secretariat to a Commission.

Mr. Chairman;

We have gathered in Ouagadougou today to take a critical reflection of the performance of ECOWAS so as to chart the future path of this great regional economic community. In order to have a meaningful outcome, the ECOWAS Commission has invited not only the Ministers of Regional Integration but also the Ministers of Finance who decide on how the monies of member States should be disbursed. The decision of bringing the two groups of Ministers together for consultations is very commendable because it provides an avenue for both groups to consult and have a common understanding on the use of regional integration as a strategy for the sustainable development of the sub-region.

In order to have a meaningful outcome, the Commission has invited us to focus the discussions at this forum on three main issues: the vision of ECOWAS, ECOWAS medium-term strategic plan for poverty reduction, and policy harmonization.

Mr. Chairman;

ECOWAS is one of the successful Regional Economic Communities (RECs) on the continent. Unlike the other RECs which cut across sub-regions and therefore difficult to manage, ECOWAS covers only the West African sub-region. This puts it in an enviable and unique position to develop and pursue an integration agenda that would drive the African Union's continental integration agenda. Despite the successes you have chalked and being seen as the most advanced REC on the continent, I strongly believe you can achieve more. This retreat is therefore appropriate and timely as it offers an opportunity to reflect on the challenges we face and in the end chart a roadmap, which would lead us to the full integration of the sub-region as well as strengthen our continental integration agenda.

Against this background, we are being called upon to reflect on the vision of the community. It is my desire that a new vision for this sub-region should ensure that the fifteen economies in t he sub-region become one strong, robust, diversified and resilient economy, supported by a first-class trans-boundary infrastructure; highly educated, flexible and mobile workforce; financial capital that is highly mobile; sound health facilities and peace and security. All of this must be underpinned by the spirit of ownership and self-belief of national development policies, which gives sufficient policy space to member States to design strategies that address their specific needs with a view of ending aid dependency over time.

The imperative for regional integration in the West Africa is particularly strong due to the size, structure and low level of development of the economies of the sub-region. With the exception of Nigeria, most are small and non-diversified, with very little trading relations between the countries. The fragmentation of the markets is therefore impeding industrial development in the sub-region. That is why the markets in the sub-region need to be integrated so that the member States of ECOWAS can overcome constraints arising from their small domestic markets and reap the benefits of economies of scale, stronger competition and increased domestic and foreign investment.

Mr. Chairman;

Regional integration is also crucial for West Africa because the countries of the sub-region face numerous common challenges that can best be dealt with collectively. These problems include the marginalization of the region in the global economy, weak infrastructure, weak performance in macroeconomic policies as well as regional commons such as the environment and natural resources utilisation. In addition fourteen of the fifteen countries of the sub-region are classified among the low-income countries in the world. Water resources from important rivers such as the Niger, the Senegal and the Gambia are common resources to many countries and therefore needs to be managed in a collective and concerted manner so to assure their sustainability. Additionally, three countries, Burkina Faso, Mali and Niger are landlocked and therefore face high transport costs and difficulties that are unique to the fifteen landlocked countries in Africa, which can be resolved through improved regional cooperation or integration.

Against this background, there is the need for us to have a continuous dialogue and debate, at the regional, sub-regional and national levels, on how we place regional integration as the centre piece of our economic and social development. A forum such as this retreat, which allows for effective exchange of ideas on regional integration between key policymakers, should be replicated at all levels of our society and should be broaden to include all the key stakeholders, particularly the private sector and civil society organizations.

Mr. Chairman;

There is commendable progress made by ECOWAS over the years. For instance, since 1990, it has established a vibrant free trade zone which is supported by programmes of trade facilitation including a uniform and simplified customs declaration form and a common statistical nomenclature, which is in line with the World Customs Organization (WCO) harmonized system. It has also introduced programmes that seek to strengthen and develop the infrastructure in the sub-region, particularly the areas of telecommunication, roads and energy.

Despite the progress made, there are a number of challenges, which include the low level of intra-ECOWAS trade, poverty, monetary integration and the movement of people. I ntra-regional trade in West Africa is still low, representing on average around 10 percent of total exports. There are many factors assigned for the low intra-community trade, including the economic structure of the member States which constrains the supply of diversified products; poor institutional policies; weak infrastructure; weak financial and capital markets and failure to implement trade protocols.

Although the trade performance of ECOWAS matches that of other African RECs, it is extremely low compared to other trading bloc outside our continent. For example, trade within the Association of South East Asian Nations (ASEAN) accounts for about 60 percent of their total export. The same is true for the countries of the Latin American Free Trade Agreement (ALENA) area, whose intra-regional trade accounted for 56 percent of total exports. It is no wonder that the economies of ASEAN and ALENA are doing remarkably well.

In order to promote and address the challenges impeding the flow of goods and services within the sub-region, we need to take appropriate policy prescriptions. Member States would have to commit to the effective structural diversification of production and exports. The production of non-traditional export commodities with comparative advantage on regional and global markets must be encouraged. Government might consider shifting their industrial development policies and strategies towards diversified production lines, which are driven by approaches based on the processing of local raw material and on local innovation.

Trade between ECOWAS member States would not be improved with the current quality of our infrastructure. Transport infrastructure and services should be improved through maintaining and rehabilitating existing roads, expanding the road network to isolated areas, improving railways network, replacing obsolete and inappropriate equipment at ports, developing more dry ports to serve both landlocked countries and interior areas of coastal countries, and increasing air transport connectivity in the sub-region.

To increase the free movement of the citizenry of the sub-region, ECOWAS has introduced a common passport. In addition, citizens of member States do not have to have in their procession entry permit and visa to move across the borders within the community . However, although ECOWAS has a protocol on the right of residence, member States are reluctant to fully implement it. It is about time that all state-signatories to the protocol fully operational it. This would also help promote trade and investment within the sub-region.

Mr. Chairman;

Let me now turn to the issue of poverty reduction strategy. I highly commend ECOWAS for its medium term strategic plan for poverty reduction. Till now poverty reduction strategies have been country specific. ECOWAS is the first to take an innovative approach to tackle the issue from a trans-boundary perspective.

Compared to other regions of the developing world, most of the African countries, including those in the ECOWAS region have made limited progress in reducing poverty and achieving the Millennium Development Goals (MDGs). Although Africa's growth rate has improved in the last few years, it has been volatile and insufficient to achieve the MDGs. Moreover, the benefits of the growth achieved have not, for the most part, been shared broadly across society largely because growth has been concentrated in the extractive sectors and the capital intensive sectors.

Stimulating faster, quality and sustainable economic growth in the sub-region is essential for poverty reduction. To do this, policymakers must vigorously pursue coherent and consistent policies that ensure sustained prudent public expenditure policies, particularly the scaling up of infrastructure development; reasonable macroeconomic stability; stronger international efforts aimed at coping with external shocks; productive public-private partnership and above all peace and security.

Financing the implementation of poverty reduction strategies will require both domestic and external resources. Members States would have to aggressively mobilise domestic resources to finance pro-poor growth polices. Part of the domestic mobilization could include the efficient collection of taxes and the use of capital markets to issue financing instruments such as bonds and Treasury bills.

Domestic resources alone would not be sufficient for the financing of PRS activities. That is why the UN Millennium Project (UNMP), the Commission for Africa (CfA), the G8 and the UN General Assembly have called for a “Big Push,” in other words the doubling of aid plus an acceleration in domestic investment, to spur growth and achieve the MDGs. Implementing the “Big Push” strategy will, however, require that adequate absorptive capacity and fiscal space be created within the macro-economic framework to accommodate the increased revenues and expenditures associated with additional ODA inflows. Many of us are coming from Accra where we had a good meeting on the “Financing for Development” with a focus on energy. The outcome of the meeting provides new insights on how to finance the development on the continent, including this sub-region.

Mr. Chairman;

Scientific evidence clearly shows that as a result of greenhouse emissions, the global climate is changing. Poor developing countries, including those in the West African sub-region, are at most risk because they are more dependent on agriculture; more vulnerable to coastal and water resource changes; and have less financial, technical and institutional capacity for adaptation. Furthermore, half of the countries of the sub-region are in the Sahel Zone and are threatened by desertification, which continues to gain ground and is pushing its way southward. It is therefore important for ECOWAS to come up with a comprehensive Action Plan on how to mitigate and adapt to climate change.

Mr. Chairman;

Let me now make a few remarks on why there is the need for harmonization and coordination of policies of regional integration blocs in the sub-region. The assessment of the Economic Commission for Africa (ECA) is that, the current system of integration in Africa is too complex. Almost all of our countries belong to more than one of these RECs. The existence of these RECs and the failure to harmonize their initiatives has resulted in unnecessary duplication of effort. There is therefore an urgent need to align these RECs to ensure coherence.

In West Africa there is the presence of ECOWAS and l'Union économique et monétaire ouest africaine (UEMOA). Both institutions recognise that each has to compliment the efforts of the other and are engaged in removing duplications and overlap of programmes and activities. That is why a framework of consultations between the two integration bodies has been created as means to strengthen their relationship.

Despite this commendable framework of cooperation, ECOWAS and UEMOA need to do more. The bodies should harmonize their protocols and align their institutional settings so to ensure efficiency and the effective use of resources .

Mr. Chairman;

Before I conclude let me briefly touch on what we are doing at the ECA to strengthen our collaboration with ECOWAS.

At the margins of the Shanghai meeting of the African Development Bank (ADB), I held bilateral discussions with the President of the ECOWAS Commission, Dr. Ibn Chambas, on how to strengthen collaboration between ECA and the ECOWAS Commission. I informed him that, our sub-regional office in Niamey has been strengthened and would very soon have a multi-year agreement with the Commission. The Agreement will specify areas for cooperation, incorporating regional integration, trade, infrastructure, capacity building and human resources development, as well as resource mobilization for regional multi-sectoral projects and programmes. In addition, ECA will be posting a senior officer to Abuja, who would liaise on a day-today basis between the Commission and ECA.

Mr. Chairman;

Let me end by assuring you that ECA will continue to work to assist ECOWAS and its member States to develop sound development policies. In addition, ECA will continue to strengthen its partnership arrangements with the African Union Commission and the African Development Bank so as to advance the developmental agenda of our beloved continent.

On behalf of ECA, I thank you all for inviting us to participate in this important retreat. We wish you a fruitful and successful meeting.