Trade among ECOWAS countries low

Many years after the establishment of Economic of West African States (ECOWAS), intra-regional is still low despite the existence of several mechanisms relating to the free movement of persons and goods, elimination of customs duties and the institutionalization of regional trade fairs.

At the 5th Annual West Africa Trade and Commodity Finance conference in Accra, Kweku Ricketts-Hagan, Deputy Minister of Finance, disclosed that the current level of intra-regional trade among ECOWAS countries was limited to about 15 percent.

He therefore called for multi-stakeholder approach to overcome barriers to the growth of trade.

The Deputy Minister said governments, policy-makers, regulators, financial service providers and trade facilitation organizations should be engaged in order to achieve a successful regional trade and commodity finance.

Many opportunities abound and could be exploited to increase wealth. The current context of globalization and multilateral negotiations requires appropriate treatment of the issue to enable the region to conquer its own internal market, Ricketts-Hagan indicated.

He said an increase in intra-regional trade would speed up the process, better manage relations between the region and the rest of the world and manage external shocks and the multilateral negotiations.

Ricketts-Hagan said an impact study by the ECOWAS Commission on West African States in relation to the Economic Partnership Agreement revealed that deterioration in the trade balance was the main cause of decline in Gross Domestic Product (GDP) growth rates within the sub-region.

He stressed the need to improve the trade balance through enriched competitiveness in the sub-region.

The deputy minister said a recent survey of global banks by African Development Bank (AFDB) also showed the extent of the international gap in trade finance.

He said the report indicated that $1.6 trillion of demand for trade finance had not been met.

The survey found banks to be often hesitant to support trade in developing countries, particularly in time of tightened liquidity due to perceived risk, he emphasized.

He said, “Low country ratings and relatively weak banking system in our region meant that global commercial banks struggled to justify deploying commodity finance instrument to support imports and exports.”

To this end, Ricketts-Hagan said emphasis must be placed on the management and mitigation of risk to enable banks fill this gap of trade finance.

He said improved trade and commodity finance would help to enhance the living standard of millions of people, creation of jobs and alleviation of poverty among the population.