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Africa’s Free-Trade Zone Under Threat As ECOWAS Shrinks

The African Continental Free Trade Area (AfCFTA), which aims at accelerating intra-African trade and boosting the continent’s trading position in the global market, has a new challenge to contend with: the exit of three countries from the Economic Community of West African States (ECOWAS).

The agreement establishing the area was signed in March 2019, and trading under the AfCFTA regime commenced on January 1, 2021.

Economic analysts have said the exit of Niger, Mali, and Burkina Faso from ECOWAS, a regional economic bloc, would have negative implications for the countries and Africa as a whole.

ECOWAS, also known as CEDEAO in French and Portuguese, is a regional political and economic union of 15 countries located in West Africa.

It is considered one of the four pillar regional blocs of the continent-wide African Economic Community. The goal of ECOWAS is to achieve “collective self-sufficiency” for its member states by creating a single large trade bloc by building a full economic and trading union.

“The development is bad for our economic integration aspirations both at the regional and continental levels. The regional economic blocs are supposed to be the pillars of the African Continental Free Trade Area (AfCFTA). Therefore, the weakening of ECOWAS is in a sense the weakening of the pillars of AfCFTA,” Muda Yusuf, chief operating officer of the Centre for the Promotion of Private Enterprise, said.

He said the pulling out by these countries will further worsen the problem of economic fragmentation.

“It also could negatively impact current efforts to collectively tackle issues of terrorism, insurgency, banditry, and kidnapping in the subregion and the continent,” he added.

The AfCFTA aims to create a single market for goods and services and a liberalised market for goods and services to enhance the movement of capital and natural persons. It is also to aid the movement of goods and services across the African continent without restrictions.

According to data from the International Trade Centre, the value of Nigeria’s imports to Niger rose to $33.4 million in 2022 from $25.7 million in 2021; to Mali, it declined to $166,000 from $180,000; and to Burkina Faso, increased to $40,000 from $6,000.

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In 2022, the value of Niger’s exports to Nigeria was $192.9 million, down from $197.3 million; Mali’s exports to Nigeria rose to $17.4 million from $5.03 million; and Burkina Faso’s exports to Nigeria were $13.6 million, down from $40.2 million.

“Both parties will suffer losses from the withdrawal of the three countries. Market size is an essential determinant of economic growth. Moreover, it will create a setback in the movement of human and non-human resources in the subregion,” Adeola Adenikinju, a professor of economics and president of the Nigerian Economic Society, said.

He added that there will be some losses in other social cooperation like sports, cultural exchanges, and informal trade, and that the withdrawal is not going to last for a long time as current regimes in those countries change as there are democratic leaders.

He said, “However, I believe that the three countries would have more to lose. They are net dependent on ECOWAS and Nigeria. The decision taken by Nigeria was based on principles and provisions of the ECOWAS treaty. As the region’s current president, we must lead from the front and demonstrate leadership. That is precisely what Nigeria did.

“We don’t have to regret that decision at all. Nigeria’s losses are much lesser than what those countries would suffer.”

The decision by Mali, Niger, and Burkina Faso was announced in a joint statement read out on Niger national television on Sunday.

The three military leaders in the three countries have argued that they want to restore security before organising elections as the three Sahel nations struggle to contain insurgencies linked to al Qaeda and the Islamic State.

“After 49 years, the valiant peoples of Burkina Faso, Mali, and Niger regretfully and with great disappointment observe that the (ECOWAS) organisation has drifted from the ideals of its founding fathers and the spirit of Pan-Africanism,” Colonel Amadou Abdramane, Niger junta spokesman, said in the statement

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“The organisation notably failed to assist these states in their existential fight against terrorism and insecurity,” Abdramane added.

Tolu Ogunlesi, former special assistant on digital and new media to ex-president Muhammadu Buhari, said on social media platform X that the three countries would lose access to the ECOWAS Passport regime, which guarantees visa-free travel within the bloc.

“These three countries are all landlocked, which means even further isolation,” he said.

The past three years have been a roller coaster ride for Mali, Niger, and Burkina Faso, the three Saharan nations bound by geography, struggle, and now, a quest for unity.

The three countries are also members of the eight-nation West African Monetary Union, that uses the West Africa CFA franc currency pegged to the Euro.

The monetary union, following decisions by ECOWAS leaders after the coups in Mali and Niger, had cut off their access to the regional financial market, and the regional central bank. It later restored Mali’s access, but Niger remains suspended.

Ikemesit Effiong, partner and head of research at SBM Intelligence, said the exit of the countries is not a very surprising move.

“In the last few months, especially in Niamey, there has been a souring of attitudes towards ECOWAS and particularly its biggest member, Nigeria as Abuja has been considered the main obstacle towards the lifting of the sanctions,” he said.

He added that, when combined with the regional backlash to the border closure two years ago, both actions symbolise Nigeria’s decreasing political and economic influence.

“While it might not stop the migrant flow of cheap, unskilled labour from these countries to Nigeria (a lot of security men in Lagos and the South West are Burkinabe, Malian, or Nigerien), it may affect migrant numbers and backward remittance flows,” he said.

Source: businessday

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