Ecowas trading bloc.

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Ecowas trading bloc.

Ecowas or the economic community for West African states is a trade agreement that was established under the Lagos treaty and has fifteen countries as signatories. The pact which was formulated in May 1975, had a limited scope that initially focused on economic factors affecting member states, but political upheavals that have bedeviled African states in recent years created the need for an extension of the treaty’s mandate to include governance.

Nigeria and Ghana have a shared border but trade between the two states is largely frustrated by corrupt border officials who are out to extort traders trying to make a living. Such practices are a big obstacle to trade and economic growth. The slow implementation of regional integration agreements has made commerce between Ecowas states very challenging. There’s a sharp contrast between what’s on the ground and on paper in regards to this trading bloc. Such obstacles have made it difficult for most African states to shed the old age tradition of their colonizers constituting the largest share of bilateral trade. Gambia’s largest trading partner, for example, has always been the UK despite being in this trade treaty. Therefore, currency transfers between Benin and Gambia, for example, is limited due to these factors.

The low tariff imposed on African goods entering European or American markets is another impediment to intra-Africa trade. A case in point may be cote d’ Ivoire, whose cocoa finds its way to European warehouses before being redirected to African states that share a trade pact with it. In effect what this means is that money movement is skewed towards Europe. A UN Economic Commission for Africa report stated that intra-Africa trade accounted for a paltry 10% of its total international trade, which is quite low as compared to other trading blocs. Recent lobbying for increased African integration is slowly changing the tide, though trade experts hope that such activities will help to fight the obstacles that have long been associated with African trade.

Countries within the bloc have for long recorded low trade levels amongst themselves largely due to an undiversified product market. Since most African countries export unfinished products and raw materials, there is really little on offer between countries. Cote d’ Ivoire and Ghana are largely agricultural backed economies with mostly similar produce. Petroleum accounts for almost 30% of intra-Africa trade with the rest left to crops, animals, and fisheries. A huge unskilled and illiterate population makes it difficult and expensive for the establishment and running of industries since a huge workforce will have to be foreign. The need for advanced equipment, therefore, means currency movements will be affected towards developed economies and not within African states. The high African tariffs imposed on raw materials like sisal that is a key component for clothing and textiles goes against the spirit of intra-Africa trade.

In closing.
In as much as trading blocs are necessary for economic growth within regions, proper measures should be put in place to reduce tariffs and other restrictions is to trade that will encourage free movement of people, goods, and currency.

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