President Muhammadu Buhari was on Tuesday elected the new Chairman of the Authority of Heads of State and Government of the Economic Community of West African States. The President’s election was announced at the 53rd Session of the Authority of Heads of State and Government of ECOWAS, which held in Lome, Togo. His election follows the past elections of Presidents of the Nation, with Goodluck Jonathan (18 February 2010 – 17 February 2012), and Umar Musa Yar’Adua (19 December 2008 – 18 February 2010) before him. Surely this is not a peculiar situation, as Nigeria has been deeply rooted in the formation and ongoing discussions with the ECOWAS, as it is headquartered in the country.
The timing of the appointment, however, is interesting as it comes with peculiar circumstances. Seme, which is between Nigeria and Benin, now boasts an upgraded $4.5 billion border facility to be handed over to Nigeria in September, increasing prospects for trade across the West African region. The new facility aims to be a gateway for legitimate goods, with the trade liberalization agreement between the states also improving trade without the corresponding high costs of duties and taxes. These recent developments are likely factored in in the decision to elect the President, as Nigeria is the largest economy in the bloc, and boasts of the largest demand per head (198 million) in terms of purchase of consumer goods, which is the predominant commodity type in the bloc.
Total trade of the region averages $208 billion and Exports are projected at approximately $137.3 billion and imports totalling $80.4 billion. The main active countries in trade are Nigeria, which alone accounts for approximately 76 percent of total trade followed by Ghana (9.2 percent) and Côte d’Ivoire (8.64 percent). The trade surplus of the region estimated at about $47.3 billion is attributable to Nigeria ($58.4 billion) and Côte d’Ivoire ($3.4 billion) when all other Countries have a deficit in the trade balance. This clearly shows the dominance of the nation in the affairs of the bloc, and the need to strategically center it at the helm due to its significance in driving demand and total growth for the region.
This free flow of trade would foster partnerships and improve regional interlinkages through a shared system of information, goods, factor mobility and services denominated in the domestic currency, increasing trade links and reducing the demand for foreign currency in a bid for currency appreciation. It would also encourage the improvement of the finished goods sector in the country, leveraging on a transfer of demand from other West African countries to Nigeria and vice versa, as African nations are net importers of finished goods from abroad.
In fact, the improvement of trade is predicated on Nigeria, being the largest potential trade hub in the zone, to accept these trade inflows. This viewpoint would seem as a convenient argument for the election of Buhari, as the current goals and values of the bloc would be championed from the top man in the biggest market in its region.
An obvious argument to this proposed development is the dumping of goods and lack of competitive pricing which cheaper goods would have in effect with existing goods in the domestic market. While it would have a downward effect on pricing, it defies the sole aim of trade liberalization in terms of equitable growth, with improvements in some countries to the detriment of others.
The overall net effect, however, is positive, and given the proposed decisions and plans already initiated by ECOWAS, the President, acting in the best interest of the nation, would drive the right policies to improve the Nigerian SME sector and productivity systems, while still maintaining autonomy with an aim towards overall diversification and self-sustenance.