CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND INFORMATION
Economic Community of West Africa states (ECOWAS) was founded on 28th of May,1975. It is a regional organization of fifteen countries which include; Benin, Burkina Faso, Coted‟ivoire, Gambia. Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Cape Verde, Niger, Nigeria,Senegal, Sierra Leone and Togo. The ECOWAS treaty was signed on 28th of May, 1975, whenthe fifteen countries met inLagos, Nigeria tosign the treaty. ECOWAShas governing bodiesthat has changed along thecourse of the community‟s existence and these bodies include; theHeadofStateandGovernment,theCouncilofMinisters,theCommunityParliament,theEconomic and Social Council, the Community of Social Justice, the Executive Secretariat, theFund and Cooperation, Compensation, Development and Specialized Technical Commission.ECOWAS is considered one of the pillars of the African Economic Community; it was foundedin order to achieve „collective self-sufficiency‟ for its member states by creating a single largetradingbloc through an economicandtradingunion.(DR A.BAkinyemiet al (1984))
Itsmissionhasbeentofosterpromotioncooperationandeconomicintegrationinallfieldsofeconomicactivity,particularlyindustry,transport,telecommunications,energy,agriculture, natural resources, commerce, monetary and financial matters, social and culturalissuesamongthe member states.(ibid )
The Nigerian economy has had a truncated history. In the period 1960-1970, the GrossDomestic product recorded 3.1 per cent growth annually (A.H.EKPO and O.J.UMOH: OnlineNigeria Community Portal of Nigeria). During the oil boom era, roughly 1970-1978, GDP grewpositivelyby6.2percentannually,intheperiod1988-1997whichconstitutetheperiodof
structural adjustment and economic liberalization, the GDP responded to economic adjustmentpolicies and grew at a positive rate of 4.0 per cent (ibid). In years after independence, the period1980-1988whereindustrymanufacturinggrewnegatively3.2percentand2.9percentrespectively,GrossDomesticInvestmentasapercentageofGDPwhichwas16.3percentand
22.8 per cent in the periods 1965-1973 and 1973-1980 respectively, decreased to almost 14 percent in 1980-1988 and increased to 18.2 per cent in 1991-1998 account balance before officialtransfersarenegativefor1965-1975,1980-1988and1991-1998(ibid).Theeconomyneverexperienced double digit inflation during the 1960s. By 1976, the inflation rate stood at 23 percent,itdecreasedto11.8percentin1979andmovedto41percentand72.8percentin1989and 1995 respectively, by 1998, the inflation rate had however reduced to 9.5 per cent from 29.0percent in1996 (A.H.EKPOand O.J.UMOH:Online NigeriaCommunityPortal ofNigeria).
Today, as part of moving with the trend of globalization and trade liberalization in theglobal economic system, Nigeria is a member of signatory to the trade agreements such as IMF(International Monetary Fund), World Trade Organization, ECOWAS just to mention but a few.The policy response to economic partnership on trade has been to remove trade barriers, reducetariffs and embark on outward oriented trade policies. Despite all her effort to meet up with thedemands to these economic partnership in term of opening up her border, according to the 2007assessment of trade policy review, Nigeria‟s trade freedom was rated 56 per cent making her theworld131stfreesteconomywhilein2009,itwasranked117thfreesteconomy,thecountry‟sGDP was also ranked 161st in the world in February, 2009. In fact, it seems like as the countryput greater effort to boost her economic growth by opening up to trade with the global economythe more she becomesworse off relating to her trading partners in term of country outputgrowth(A.H.EKPO andO.J.UMOH: OnlineNigeriaCommunityPortalofNigeria).
However, in the 1980s the economy was in a recession. The on-going economic reformprogramme is an attempt to put the economy on a recovery path with minimal market. Based onsome basic indicators, it appears that the economy performed well inflation. Unemployment ratesaveraged almost 5 per cent for the period 1976-1998. However, the statistics especially onunemploymentmustbeinterpretedwithcaution.Mostjobseekersdonotusethelabourexchanges,apartfromtheinherentdistortionsinthecountry‟slabourduringtheyearsimmediatelyafterindependenceandintotheoilboomyears(Dr.Mohamed(2007)www.Wilsoncenter.org/…/the-role-of-ecowas-in-achieving-the-economic-integration).
1.2 STATEMENT OF THE PROBLEM
From its very beginning, ECOWAS hasn‟t been effective. The organization did not haveestablishedfoundationstodealwithlogistics,infrastructure,humanresources,orstrongeconomy that were needed to realistically promote a regional body. Nigeria is the linchpin of theEconomicCommunityofWestAfricanStates(ECOWAS).Over50%oftheECOWASpopulation lives in Nigeria. Nigeria‟s GDP is larger than that of the combined GDP of all theother ECOWAS states put together. Nigeria accounts for the lion share of the annual ECOWASbudget (31%; relative to only 12.6% by the second highest contributor- coted‟ivoire), as well asoftheECOWASFund(32%relativetoonly13%bycoted‟iviore)(Aribisala(2000)www.nigeriadevelopmentandfinanceforum.org).Thepre-eminenceoftheNigerianeconomy
vis-à-vistheotherECOWASstates,anditscorrespondinglylargefinancialresponsibilities(among others), inevitably raises the question of the value of ECOWAS for Nigeria. Manyregional integration schemes have been established in Africa in the bid to attain a market numbermorethanhalfthesizeofNigeria.Moreover,Nigeria‟sdomesticindustrialproductionisstill
insufficient to accommodate the vast demand of its internal market, how much more to provideforsignificantexportstoneighboringECOWASstates.Theeffectivenessofthisregionalorganizationhasnotreally beenfelt,Nigeria isstill having economic problem.The researchwork looked at the factors that are preventing West African countries including Nigeria fromachievingthe ECOWAS objectives.
1.3 OBJECTIVES OF THE STUDY
ThebroadobjectivethatisconsideredinthisresearchworkistostudytheroleofECOWASintheEconomicDevelopment ofWest Africa. Theseobjectivesare:
ü Toexaminethecontributions of ECOWASin theeconomicsector ofthe sub-region.
ü ToexaminethegapbetweenthestatedobjectivesofECOWASandtherealityoftheirfulfillmentin Nigeria.
ü ToidentifythechallengestothefulfillmentofECOWAS objectivesinNigeria.
ü TosuggestandrecommendthesolutionstothesechallengesintheWestAfricasubregionsas wholein Nigeriain particular.
1.4 RESEARCH QUESTIONS
Theresearchquestionsthatarebeingconsideredinthisresearchworkincludethefollowing;
ü WhatinyouropinionarethecontributionsofECOWASintotheeconomicdevelopmentof Nigeria?
ü TowhatextenthasECOWASbeenabletofulfillitsmissionsintheWestAfricasubregionand especiallyinNigeria?
ü Whatarethechallenges totherealizationofECOWASobjectivesinAfrica?
ü HowdoyouthinkECOWASobjectivescanberealized?
1.5 SIGNIFICANCE OF THE STUDY.
In this research work, the role of international tradein the development of economy ofany country cannot be over emphasized, especially with the current trend of globalization inNigeria. Nigeria being part of the global village is not left out of the development world. Thisresearch work will be carried out to study the role of ECOWAS in the Economic Development ofNigeria. The findings of this research will transcend beyond mere academic brainstorming, butwill be of immense benefit to Federal Agencies, policy makers; intellectual researchers thatoccasionally prescribe and suggest policy options to the government on economic issues. Thisresearch work will also serve as a guide and provide insight for further research on this topic andrelated field.It will educate the public on various government policies related toeconomicissues.
1.6 SCOPE OF THE STUDY
This research work looks at Nigeria within the framework of ECOWAS in the last twentyfiveyears.
1.7 LIMITATION OF THE STUDY
This research work will be limited to access to original source and documentation inNigeria due to the past wars. Furthermore, financial resources are limited, and there was tielimitation. In the use of written materials, contemporary textbooks, the use of Journals and paperpresented at various seminars/workshop are being considered; the use of primary method of thatcollection such as questionnaire was also put in place. Also some of these materials would beexploredfrom theinternet.
1.8 ORGANISATION OF THE STUDY
This research work is divided into five chapters. Chapter one is the introduction whichcontains: Background of the study, Statement of the problem, Objectives of the study, researchquestions, significance of the study, scope of thestudy, limitation to the study, organization ofthe study and the definition of major terms. While chapter two is the Literature review and thetheoretical framework. Chapter three reviews research methodology which includes researchdesign, research population, sample and sampling techniques, research instrument, the validityandthereliabilityofinstrument,datacollectiontechniques,anddataanalysistechniques.Chapter four spelt out the data presentation and data analysis. Chapter five is the conclusion andrecommendations.
1.9 DEFINITION OF TERMS
- ECOWAS: According to Wright (1998:31-33), ECOWAS seems to be an instrument toenforce the dominance of Nigeria in the region, Nigeria is neither able to assume thecentricpositioninsideasuccessfulECOWASnorabletoenforceitsdominanceeffectively.
Masson and Pattillo (2001:31), ECOWAS is supposed to be an economic community. Ithas its own bureaucracy in pursuit of developing thecommunity intoa full-fledgedintegratedregion.
Base on this study, ECOWAS is a regional organization that brings all West Africancountiestogether to promotetheireconomy.
- ECONOMICINTEGRATION:accordingtoJohn(2012)hegaveanin-depthinformationoneconomicintegrationstressingthat,economicintegrationisaboutmember States adopting and implementing measures that would make doing businesswithinthegroupingcheaperbyremovingallconstraintstointra-regionaltradeandinvestmentandadoptingmeasureswhichareconducivetotradeandinvestment.However, Onah and Ifedayo are customs union, common market, economy union andtotal integration is referred to asregional economic integration. They also stressed thatthe objective or purpose of economy integration in developed economy is different fromthose of the developing economy. Whereas inthe former, it serves to maintain andenhance an already existing sustained growth through trade expansion and increasedcompetition, in the latter, it is seen primarily as a means of contributing to economicdevelopment.
Baseonthisstudy,economicintegrationisanationalandregionaldevelopmentstrategy.
- G.D.P:According to investor word, G.D.P is an acronym for Gross Domestic Product. Itis define as an aggregate measure of production equal to the sum of the gross valuesadded of allresident institution units engaged inproduction plusany taxes, and minusanysubsidies, on products not included in thevalue oftheiroutputs.
Baseonthisstudy,G.D.Pisthemeasurementofacountry‟stotaloutput.
- G.D.I:Accordingtotheinvestorword,G.D.IisanacronymforGrossDomesticInvestment. It is the addition of capital sock in a country that does not include deductionsfordepreciations of capital that mayhavebeenproduced previously.
Base on this study, G.D.I is the total number of investment spending by business andfirmslocated in the country.
- I.M.F:ItisanacronymforInternationalMonetaryFunds,itisaninternationalorganization that was initiated in 1994 at the Bretton Woods Conference and formallycreated in 1945 by 29 member countries,their goal was to assist in the reconstruction oftheoftheworld‟s internationalpaymentsystempost WorldWarii.
Base on this study, I.M.F is an organization set up to be of financial assistance to countriesespeciallythedeveloping countries.
- INFLATION: According to the business dictionary, inflation is a sustained increase inthe general price level of goods and services in an economy over a period of time. Whenthegeneral pricelevel rises,each unitofcurrencybuys fewer goods andservices.
Baseonthisstudy,Inflationistheabnormalincreaseinprice.
- TRADE LIBERALIZATION: according to business dictionary, is the removal of orreduction in the trade practices that thwart free flow of goods and services from onenation to another. It includes dismantling of tariff such as duties, surcharges and exportsubsidies as well as nontariff barriers such as licensing regulations, quotas and arbitrarystandard.
Base on this study, trade liberalization is the lessening of governmentregulations andrestrictionis inan economyinexchangeforgreaterparticipation byprivate entities.
