Regional Integration in Industrial Development in ECOWAS Sub-region:

Role, Issues and Theoretical Bases.

By
Bitrus Kyangmah Samaila (BSc, MSc, MBA in view)
University of Maiduguri, Nigeria.

Introduction

The terms ‘regional integration’ and ‘regional cooperation’ have in common the involvement of
neighbouring countries in collaborative ventures. However, regional cooperation implies that this
is organized on an adhoc and temporary basis through contractual arrangements of some sort,
around projects of mutual interest, while regional integration involves something more permanent
(Bourenane). Regional integration is characterized by the establishment of joint institutional
mechanisms, a degree of shared sovereignty and functions in an intergovernmental rather than
supranational mode. Most current research in the area of regional integration is being done at a
sectoral level of analysis, on the agricultural, livestock and industrial sectors (Diop and Lavergne,
2016). For Marchal (1965), integration must be based on industrialization as its driving force, and
it must be sustained by those social forces capable of supporting and organizing the
industrialization process. According to Gibb (2009), regional integration remains an integral part
of Africa's development strategy and has underpinned most pan-African development policies for
the past 50 years. In theory, regional integration provides a bigger market for agricultural and
industrial goods, and services, thus allowing economies of scale for national industries. Even
without differences in resource endowments or technology, this in turn creates incentives to
specialise and trade in differentiated products (UNCTAD, 2015). Regional integration can
therefore be seen as promoting a more competitive and productive industrial development
(Hartzenberg, 2011), contributing to economic transformation and the creation of more and better
jobs.

Industrialization was therefore an important part of the early post-independence discussions on

regional integration in Africa as a “remedy to regional fragmentation, small economies and small
markets with limited scope for economies of scale” (Hartzenberg, 2011:20). Industrialization
therefore figures in the 1975 Treaty of Lagos establishing ECOWAS that points to three identified
steps towards regional industrialization: i) information sharing on major industrial projects; ii)
harmonisation of industrial incentives and industrial development plans and; iii) personal
exchange, training and jointventures (ECOWAS, 1975). Institutionally, industrialization features
as part of the commission on Industry, Agriculture and Natural resources. However, in practice,
no real transformative changes have happened at a regional level and industrialization of the West
African region remains a significant challenge, together with the creation of decent jobs (AfDB,
2016a). At the same time, the high dependency on production and export of oil and gas, minerals
and agriculture raw materials mean that West Africa has a particularly low production base (AfDB,
OECD, UNDP, 2016; AfDB, 2016a).

It is among the regions that are least integrated into global value chains, especially concerning
processing activities. For ECOWAS Member States, competing in the regional market could
therefore provide a basis to learn and upgrade their technical, technological, managerial capacities
- which would in turn help them integrate and benefit from, global value chains (AfDB, 2013).
However, there are tensions between industrial cooperation between countries and competition -
this then defines the challenge faced by ECOWAS in promoting industrialization at the regional
level.

In order to better understand the political traction of the industrialization agenda of ECOWAS,
there is need to highlight some of the key factors and actors that influence and shape how the
regional organisation plays its role in supporting and promoting industrialization in the region. In
doing so, there is need to address the following three questions:

(i) what is the political traction of ECOWAS in driving or steering the regional
industrialization agenda;
(ii) (ii) what are the interests of member states in using ECOWAS to address their
industrialization challenges; and
(iii) (iii) which are the specific areas or sectors with most potential future traction for
ECOWAS to focus in continuing to address food insecurity at a regional level.
ECOWAS Industrialization Strategy/Origins

Despite the mention of industrialization in the 1975 Treaty of Lagos, there was no comprehensive
and well-coordinated industrial development policy for the region until the West African Common
Industrial Policy (WACIP) was agreed in 2010. Previous policies included the 1983 “Cooperation
Policy” - which was never implemented, followed by the “Five-year Industrial Development Plan”
(1987 – 1991), which led to initiatives such as the investment promotion agreements with the
European Union and other regional parties, and efforts led by Member States to promote product
standardization and quality assurance activities (ECOWAS, 2010).

In 2007, along with the restructuring of ECOWAS from Secretariat to a more powerful
Commission, the ECOWAS Commission established a Private Sector Department to facilitate the
creation of professional associations and businesses at a regional level, encourage cross border
investments, business partnerships and SME/SMIs, and create an enabling environment both for
endogenous investments and foreign direct investments (WACIP, 2010). The reform was further
accompanied by the reestablishment of several business initiatives, including the Federation of
West African Manufacturers Association (FEWAMA), the Federation of West African Chambers
of Commerce and Industry (FEWACCI) and the Federation of Women and Women Entrepreneurs
(FEBWWE).

Following the mandate given in 2002 to ECOWAS by the African Union to lead the integration
process in West Africa, thus “effectively subordinating WAEMU[UEMOA] to ECOWAS” (e.g.
Idrissa, 2013:12), the WACIP built on the UEMOA Common Industrial Policy and was adopted
in 2010. Its stated aim is to “accelerate the industrialization of West Africa through the promotion
of endogenous industrial transformation of local raw materials; development and diversification
of industrial productive capacity and strengthen regional integration and export of manufactured
goods” (ECOWAS, 2010, p. 38).

This ambition was translated into ten programmes and four objectives to be reached by 2030:

1. Raise the local raw material processing rate from 15-20% to an average of 30% by 2030;
2. Increase the manufacturing industry’s contribution to the regional GDP from 6-7% to over 20%
in 2030; 3. Increase intra-Community trade in West Africa from less than 12% to 40% by 2030,
with a 50% share of the region’s trade in manufactured goods, particularly in the area of energy
(equipment, electricity, petroleum products, etc.);

4. Increase the volume of exports of goods manufactured in West Africa to the global market from
the current 0.1% to 1% by 2030 (ECOWAS, 2010).

The WACIP was revised and updated in 2015, with a set of four key areas of actions to focus on:

1. Reinforcement of national industry policies, harmonisation and regional cooperation

2. Promotion of Regional and international Market Opportunities

3. Support to Industry Quality and Competitiveness

4. Mobilisation of Resources.

These were to be accompanied by four priority industry sectors: Food and Agro industry;
Pharmaceutical industry; Construction materials industry, and Automotive and machinery
assembling industry (ECOWAS, 2016). Of these sectors, only the pharmaceutical industry
benefited from an earlier policy framework, the ECOWAS Regional Pharmaceutical Plan 2014-
2020. The latter was approved “to provide a strategic framework within which the pharmaceutical
sector in the region will be managed and regulated to provide self-sufficiency in the production,
access to and rational use of affordable essential medicines and other medical products of proven
quality safety and efficacy” (ECOWAS, 2014). Among the eight specific objectives, the plan aims
to improve and strengthen the governance of the pharmaceutical systems to ensure transparency,
accountability as well as patronage of medicines produced in the ECOWAS region by the year
2020 (ECOWAS, 2014).

Other identified measures include participation at ECOWAS Industry meetings to address the
status of industrial development in West Africa and to evaluate the implementation of WACIP
(ECOWAS, 2015). In terms of future reforms, the ministers also urged the ECOWAS Commission
to establish an “Eminent Persons Group” to help facilitate the implementation of WACIP and its
strategy.3 An ECOWAS Industrial Forum, starting in 2016, would also serve as a consultation
framework. Therefore, the first ECOWAS Industrial Forum took place in Ghana under the theme
“Promoting investment to accelerate the industrialization of the West African sub-region”, and
was organized by the Ghanaian government as the ECOWAS was unable to co-organize the
Summit due to some internal challenge from its re-organization activities.

As such, the 2010 WACIP gave figures for rising regional average value added with a view to
underpinning intra and extra-regional trade, raising question marks about how the increased rate
of processing and manufacturing share of GDP the regional might be distributed among countries.
In contrast, the 2015 WACIP focuses more on regional means to support national industrial
policies.

The Major Roles of ECOWAS on Industrial Development in West Africa.

According to Mrs. Finda Koroma, the Vice President of ECOWAS at the Strategic Planning
Coordinating Committee (SPCC) meeting held in May 2018 in Abuja, Nigeria, “in order to realize
the vision of an empowered, economically liberated community of people, there must now be a
renewed focus on industrialization and the creation of jobs for the citizens of the West African
region”. This assertion highlights the importance of industrialization and the critical role that
ECOWAS can play in driving industrial development for the benefits of West African countries.
Below are some of those roles:

• Coordinate implementation of the West African Common Industrial Policy (WACIP

2010-2030) and its strategy framework: The development of a long-term vision document
is an important initiative that must be undertaken by ECOWAS in order to respond
appropriately to our sub-regional developmental challenges and to ensure that our people
realize fully the political, economic and social benefits of the regional integration agenda
of ECOWAS

• Promote and strengthen Quality, Standardization, Metrology, Certification and

Accreditation structures at both national and regional levels within the framework of
 ECOWAS Quality Policy (ECOQUAL) and Standards Harmonization Model
(ECOSHAM): ECOWAS should put in place institutions and procedures that promote the
standardization of key public service goods and service across the subregion
• Build and maintain strong relationships with industry stakeholders and development
partners to enhance industrialization in the region: ECOWAS could promote public-
private partnerships across the West African region to boost and fast-track industrialization
of the subregion.
• Improvement in Resource Utilization and Raw Material Development: Promote local raw
materials development and utilization by the industries and thereby encourage the
development of resource-based industries in ECOWAS. This helps to enhance and
strengthen the production and resource base of subregion.
• Human Capital Development: In its entirety, human capital represents "the knowledge
and skills individuals possess that enable them to create value." By improving education
and skills, mobility, and social engagement, youth can obtain the means for bold collective
actions.
• Promoting regional coordination: Liberalization is not a panacea. Good infrastructure,
modern logistics, and better customs are also needed. A deepening of commercial
relations within the MENA region, and with Europe and Sub-Saharan Africa, can be a
stepping-stone toward a co-development approach. It is about rethinking trade
agreements as instruments of policy dialogue.
• Strengthening environmental resilience: West Africa is one of the most environmentally
vulnerable regions, with water shortages, droughts, food production deficits, and rising sea-
levels. Yet, it has some of the best resources for decarbonizing the energy sector and,
potentially, carbonless energy resources to meet its needs and those of its neighbors.
Regional market integration and cooperation are key to unlocking this potential.
• Improving the business environment: The emergence, financing, and growth of a diversity
of enterprises must be facilitated and business communities need to be mobilized. A better
investment climate is key to attract FDI. Insecurity, insufficient access to finance,
inadequate competitiveness frameworks, and informality are key levers on which countries
need to act. And in the labor market, several inequalities must be removed, including with
regard to gender, insertion of the highly educated, mobility within the region, and
restrictions to entrepreneurship.
• Promote technology transfer, digitalization and commercialization of industrial research
and development programmes, establishment of technical support centres for SMIs,
incubation centres, Special Economic Zones (SEZs), and Industrial Parks: Regional
integration efforts should be stepped-up to offer viable solutions to the youth
unemployment crisis and to harness the great and untapped potential of Africa’s youth.
Providing comprehensive formal and vocational training to Africa’s youth rooted in
 business management and entrepreneurship, empowers them to translate their ideas into
practical products and services that could bolster the economic and social development of
the region. This is particularly true, during this COVID-19 era where African youths have
yet again proven their ingenuity when it comes to finding creative responses to the
challenges of the pandemic with various inventions. Fortunately, innovative broadband
PPP initiatives are addressing the concern of economic viability. They deserve more
attention as they could be replicated globally by government initiatives to encourage
impact investor participation. Additionally, digital legislation should be reformed so that
small service providers are given opportunities to compete against entrenched interests that
are not incentivized to serve certain communities.
• Protection of Intellectual Property and Patent Rights: Collaborate with relevant national,
regional and continental and global institutions in the development of intellectual property
rights (IPRs) and access to knowledge;
• Promotion of Industrial Regional Competiveness: Encourage industrial competitiveness
and monitoring of industrial performance through the establishment of an ECOWAS
Industrial Database. Collaborate with development partners to promote industrial
restructuring and upgrading programme in ECOWAS.

Hence, the theory that would best explain the trade relationship in the West African subregion is
the Jacob Viner’s Theory on Customs Union. The theory argues that discriminatory tariff reduction
can have a trade creation and/or diversion effect. For Viner, ambiguities in the welfare impact of
customs unions are related to the capacity and limitations of members to define their own external
trade policy. The net static effect of regional integration is positive if the formation of the
integration scheme has a net trade creation effect. However, static welfare analysis assumes that
the respective Member States of the integration scheme are complementary.

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