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A space facing many challenges.

Summary: While the Economic Community of West African States is attracting new countries, it is having to tend to a number of urgent matters -- economic and monetary integration, terrorism, political crises, etc.

The President of its Commission, Marcel de Souza, explains. Interview with Hichem Ben YaAaAaAeA c


You are dealing with a multitude of challenges in the region and yet there are high expectations resting on the Economic Community of West African States (ECOWAS).

That may be true, but in spite of our shortcomings and our weaknesses, we are making progress. The first example of this is the free movement of persons, freedom of residence and establishment within an integrated space where we seek to improve the living conditions of the people. You can go from Dakar to Nigeria without an ID card or visa, and you are free to start a business anywhere in the economic community. In terms of goods, we also have a trade liberalisation scheme between the countries, although there is still too little trade between them.

ECOWAS's common tariff system makes it a cus- toms union. Our aim is to move towards a common market. Let us not forget the free movement of ser- vices -- if you are a doctor in Nigeria, you can practise in both Cotonou and Dakar. We now have a unified labour market, even though it is not called such. In addition, we have free movement of capital. We have set up a regional payment system while awaiting the establishment of a single currency. We hope to be able to meet this goal, which will boost trade, in 2020. But we must not rush this process [to get it right].

There is still one major shortcoming -- transport. We must improve both rail and air transport facilities in order to resolve transport issues that still exist in West Africa. We also have to tackle the issue of mari- time routes, which will involve setting up a cabotage company.

Cape Verde, which lies 500km from its closest neighbour, Senegal, does not feel entirely included in the common area. As such, we are going to set up a company with a capital base of $100m -- with private capital -- that will have cabotage and docking priority, so as to serve a number of destinations. Our goal is to be able to carry out regional projects and programmes to allow for better integration. After 42 years, regional trade within Ecowas sits at just 15%.

Lastly, in the face of terrorism, which is the chal- lenges you may have alluded to, we have adopted pro- tocols to prevent, manage and resolve conflicts. In each case, we try to take action according to the forces at our disposal.

But in order to successfully carry out this massive integration project, a huge amount has to be done -- there is no room for inertia... What stage are you currently at with this?

We are waiting for funds to be committed within ECOWAS. In Monrovia, at the last ECOWAS Summit, we presented the institutional reform that involves reducing operating expenses, bringing them down to 35% of the budget, in order to dedicate 65% of our resources to programmes and projects that have an impact on the lives of our citizens, without sacrificing the quality of these programmes.

As such, the Commission will go from having 15 commissioners to having nine. Next, we have to im- prove the efficiency of our institutions, of which there are many. Some of these are concerned with combating money laundering as part of the fight against terror- ism, others focused on specific issues such as combat- ing ebola. And from an economic point of view, how can we diversify and process products, and organise commercialisation through exports? This is what will enable jobs for young people to be created.

In concrete terms, how are you putting all of this into operation?

Firstly, we have given priority to security. Without se- curity, there can be neither development nor trust. No investor is going to invest in a region where a minimum degree of security is not ensured.

But this diverts considerable funds that could be dedi- cated to the development of Africa.

We have no other choice but to make this investment. It's true that this constraint prevents the States from dedicating more revenue to education and health. Edu- cation is poorly directed in our region. Our economies need individuals who are trained for specific jobs, who have done technical training courses, and who, most importantly, are entrepreneurial. Businesses, especially SMEs, SMIs, and to an even greater extent, VSBs, are drivers of wealth creation. It is these companies can diversify production, process agricultural production and market their products in accordance with quality standards. All of these things are our responsibility. But this requires adequate resources. That is why we are working to improve financial management.

As such, we have launched a charter and a system to promote SMEs. Eighty percent of these compa- nies, who receive little assistance from the banks, are no longer in existence after five years. The aim is to provide funding for the remaining 20% of them in order to create "medium-sized companies" capable of driving the economy. The second problem is that of the regional stock exchanges. We need to create greater synergies, such as between and Abidjan and Accra. It is happening and certain instruments can be transacted between these two stock exchanges but this is just the beginning.

How can ECOWAS stand out and show that it is an institution that offers solutions for Africa?

We can present sectoral policies, for example in the field of agriculture, to heads of state and governments, to give priority to agribusiness, to try to achieve food and nutritional sovereignty. And we have a lot of po- tential in this respect. In ECOWAS, 80% of the land is cultivable but we use only 20% of it. We need better irrigation. We can no longer carry on with small family businesses, which are only able to operate at the cost of great hardship. We need better access to inputs, funds to finance agriculture and ways to process products before they are exported.

This whole policy must be focused on youth em- ployment. We're facing a ticking time bomb. In the countries of ECOWAS, two thirds of the population is under 25. We are faced with population growth of 3.5%, one of the highest rates in the world. When population growth does not coincide with economic growth, this means that poverty is increasing each year.

Africa doesn't seem to be preparing itself for this major and devastating challenge.

No, population growth is not devastating... It represents just as much an opportunity as it does a disaster risk. In West Africa, the average fertility rate is 5.6 children per woman. Elsewhere in the world, this rate is between one and two children... There is no question of reducing this rate in Africa administratively. It is a long process that involves educating women and creating income- generating activities that enable them to achieve self- sufficiency and free themselves from male authority. Moreover, we must also work on educating men, who sometimes have an irresponsible attitude to sex, as they have no other distractions in terms of culture or leisure. Only through patiently working on educating women and men will we be able to monitor and control this population growth a little. On the other hand, Africa is not a densely populated continent. This space and potential must be integrated into development plans that primarily take into account adapted resources.

What degree of decision-making autonomy do you have? You are of course answerable to the heads of state, but beyond this are you able, given your exper- tise and technical knowledge, to influence decision- making?

We are gradually getting there gradually, but not as quickly as we would like. If we want to move towards inclusive development and satisfactory growth, we must move quickly and well. But we must also take into account where we come from. That is why we are trying to get the heads of state to adopt a regional policy, sector by sector. At national level, we are asking each country to align its sectoral techniques across the region.

And finally, we must move towards convergence and stability in terms of budgetary, monetary and debt issues. Not to mention the issue of taxation. The tax burden should be 20% in 2020, but we are not sure whether this will be achieved. Today, we are hovering at around 14% or 15%. We must mobilise the endogenous resources we have at our disposal ourselves, without waiting for external partners. By 2016, regional pro- grammes projected that we needed $400m. However, we were only able to raise $10m. We must therefore reassure private investors using modern techniques. In order to do so, we must clean up the business environ- ment, have a justice system that guarantees the rule of law, and above all, land reform that reassures banks when they invest funds. Secondly, we must create value chains so as to stop exporting cotton, less than 5% of which we process currently. ECOWAS accounts for 70% of the global cocoa market -- 40% for CAaAaAeA te d'Ivoire, 20% for Gha and 10% for Nigeria -- which is indeed a strong point. However, less than 30% of this cocoa is processed, while this sector has significant potential for added value, a source of employment.

ECOWAS is exerting increasing attraction. Morocco and Tunisia, among other countries, have been asked to become members of this space.

We have never asked anyone to join. If certain coun- tries want to join ECOWAS, in spite of its weaknesses, it is because they are aware that something good is being developed. And the list is long. The King of Mo- rocco has expressed the country's desire to become a member, and an agreement in principle has been given.

But how will you consider these requests in relation to the objectives of this space? Is ECOWAS in a position to expand and open up to new members?

That's a very relevant question. The Community space must first be reinforced before it can be opened up to new members. But if the heads of state have given their agreement in principle, it is because there are advantag- es to welcoming new member states. Of course, there are also disadvantages, and we are working on these. We are solicited directly but we are accountable to the heads of state who then have to decide unanimously. Not only Morocco has requested to become a member -- let's not forget Mauritania, a founding country that has decided to come back. We have already signed an association agreement, which will enable Mauritania to return to the Customs Union in January 2019. Tu- nisia has requested observer status, and our objective is to integrate it.

The West African Economic and Monetary Union (WAEMU) and ECOWAS are organisations that do more or less the same thing. Does this benefit Africa?

Yes, it is manageable -- WAEMU is defined by the single currency owing to which eight West African countries are able to keep inflation under 2% and sustain growth. CAaAaAeA te d'Ivoire has thus been able to enjoy grow of 9% for four years. This is definitely a strong point. Debt policy is also monitored. All of this falls under a stability and convergence pact. As for ECOWAS, it is made up of 15 countries. In 1987, it was planned that the other countries would join forces in the WAMZ (West African Monetary Zone), particularly the other English-speaking countries and Guinea. Furthermore, a merger with WAEMU is planned, which will finally create a single monetary zone with a single currency.

It is true that we are struggling to achieve this. The WAMZ was supposed to be set up in 2015, but it has still not seen the light of day... And you can understand why -- a drop in the cost of raw materials, recession of the Nigerian economy caused by 18% inflation and a plummeting currency... As for Ghana, it suffers from inflation of almost 15%. The issues faced by these two important countries prevent us from achieving the single currency by 2020. But it will be up to the heads of state to decide.

In any case, we must keep the CFA franc. Secondly, we must commit to working towards the single curren- cy over a period of approximately ten years, which will allow us to establish the free movement of investments and to drive strong inclusive growth within our space.

Isn't the CFA franc a currency of servitude?

What hasn't been said about the CFA franc? That it's currency of accepted servitude, of slavery, etc. Abso- lutely not. Those who think like this are monetarists in training. You have to look at the balance sheet. Ad- mittedly, the 50% that we keep in the French Treasury represents the price to be paid to benefit from free convertibility. But what does this 50% represent for France in terms of the money supply? Barely 0.2%... And yet some say that we finance the French economy. We need to look at the figures and speak the truth. The CFA franc is our currency. And while it is con- venient for us to be able to control a certain number of basics in favour of our economy, this must also be done by working on diversifying our production, and processing what we produce. That is the objective we must pursue.

Nonetheless, the CFA franc is a source of fantasies nowadays.

But we're talking about symbols here, not the results. The real benefit of the CFA franc is that it improves the financing of credit to the economy. We are around 20%--23% financed by bank loans, while emerging countries have a rate of 75% or 80%. But there's a story behind this. We should not grant credit that turns into impaired loans -- outstanding or bad debts or litigious claims that play tricks on the currency.... The banking profession basically boils down to walking along the precipice without ever falling in. But if you fall into it all the time, the banks and the currency collapse.

The intensification of terrorism is the major problem that Africa faces today. How do you plan to halt this serious threat to Africa's development?

We have a strategy. Without peace or security, there can be no development. In response to terrorism, we have adopted protocols to prevent, manage and resolve these conflicts. In response to each terrorism-related problem, we try to take action according to the forces at our disposal. Not to mention the other types of conflict that we face -- we currently have troops in Guinea-Bissau and in Gambia. We are also suffering from the effects of unrest in Nigeria and Togo. For all of these problems, we have a system of mediation -- a council of elders, which allows us to gradually put out these fires. Like all regions, we are exposed to terrorism, but we must reassure our citizens.

ECOWAS cannot be indifferent to the growing number of political crises.

First of all, we implement preven- tive diplomacy through dialogue and mediation. As soon as we feel that a conflict is on the horizon, we appoint mediators who look into how to approach the parties. All conflicts in the world always end by negotiating around a table. If we can avoid physical fighting, violence and bloodshed by meeting around a table and promoting dialogue, that is what we do. When this mediation phase does not work, we call in our "Standby Force". In Gambia, we mobilised forces to impose democracy, as the people's choice was clear. It is a problem that we have solved.

How do you see the future?

Regional integration is a prerequisite for develop- ment. The 15 economies we bring together account for about 200m consumers. But they are small markets. Can economies of scale exist under these conditions? Can we determine areas that will serve as drivers on the basis of comparative advantages? We cannot achieve development without regional integration. It's a prerequisite. We are working on it, and we are slowly seeing results. Between the texts, protocols and implementation, there is still a big distance that we are trying to reduce little by little.

I think we are making progress, though. For ex- ample, in terms of the free movement of persons, our region is way ahead -- on a scale of 1, we are at 0.8. Moreover, with regard to the free movement of goods, the common external tariff was adopted on 1st January 2015. There are still two countries that are not there yet but we hope that they will adopt this tariff by the end of the year, which will enable us to create the Customs Union. This is the first step towards the common mar- ket. We will then have to work on payment methods. What can be done to standardise payment methods when we have eight central banks? We are working on this. What can be done to unify the financial space, especially with the stock exchanges? We are working on this too. I think the future is bright.

If people are queuing up to come to ECOWAS, it must mean that something positive is happening here. Finally, with regard to the fight against ter- rorism and the conflicts we face, in addition to the development policies that we must implement, primarily through solidarity management, we have a tool that we call Early Warn- ings, the philosophy of which can be summed up as "early warning, rapid response".

Such a mechanism would have enabled us to contain the ebola epidemic quickly and avoid such a large number of deaths. We are training White Helmets that will allow us to respond quickly if an epidemic breaks out elsewhere. It is a question of leaving nobody behind, and doing the best we can to show solidarity. And above all, jobs must be created. n

We are faced with population growth of 3.5%, one of the highest rates in the world.

If people are queuing up to come to ECOWAS, it must mean that something positive is happening here.

We are around 20%-- 23% financed by bank loans, while emerging countries have a rate of 75% or 80%.

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Publication:African Business (Al Bawaba (Middle East) Ltd.)
Date:Nov 20, 2017
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