China and ECOWAS trade partnership,performance and factors of economic growth

China and ECOWAS trade partnership,performance and factors of

economic growth

【Abstract】In a climate of economic globalization, recent years have seen the

establishment of commercial agreements between regional blocs and emerging

countries with high rates of industrialization like China. For years, ECOWAS states

had therefore established trade and economic partnership with China. Their business

partnerships generally contribute to the increase of trade and strengthening diplomatic

ties. Based on a win-win concept, trade and economic performance of the partnership

is subject to the stability of ECOWAS region.

【Key words】Ｔrade；Ecowas；Ｇrowth

0.Introduction

Years after the Independences days in 1960, African countries have seen the

necessity to form regional blocs to better defend their political and economic interests.

The development model they chosen based on the export of their energy and mineral

resources to meet their budgetary needs. This business model, constituted for many

African countries, a source of enrichment. Among many others, the Economic

Community of West African States (ECOWAS) created in 1975 by the Treaty of

Lagos, Nigeria, is one of the oldest regional blocs of the African continent. ECOWAS

comprises one third of the African population (Ecowas, press release 2012).

The Chinese influence has grown rapidly across Africa. China has made great

political progress on the back of high-level visits. In collaboration with its expanding

trade commitments, China’s trade with Africa has grown much faster than any other

African partners. Interestingly, the speed at which the Chinese engagement has

accelerated in recent years has occurred at a time when interest in more traditional

development partners has stagnated.

The paper examines China-ECOWAS partnership in terms of trade. The paper

tries to answer the question; what are the benefits of the China-ECOWAS partnership

and what are the challenges encountered?

1.ECOWAS background

The ECOWAS consists of two groups of monetary instances namely：

（1）West African Economic and Monetary Union (WAEMU) consisting of

countries like, Benin, Burkina Faso, C?te d’Ivoire, Mali, Niger, Senegal, Guinea

Bissau and Togo. It shares a common currency CFA franc.

（2）West African Monetary zone (WAMZ) consisting of, the Gambia,

Ghana,Guinea,Liberia,Nigeria and Sierra Leone. It has proposed to launch a new

common currency, the Eco.

The Cape Verde,member of the ECOWAS belongs to none of the monetary

institutions of the community.The ECOWAS mission is to promote regional

integration, economic growth development,with an ultimate goal of creating a single

monetary zone for the entire Community.The union has contributed to the steady

improvement of the standard of living for the countries member.

2.ECOWAS economy

The World Bank statistics reported in 2001,the combined gross domestic product

(GDP) for the ECOWAS region was $ 132.05 billion, reaching $ 341 billion in

2011,an increase of $ 208.95 billion over 10 years of economic activities with an

average real GDP growth rate of 4.9 percent;the intra-regional exports, and the total

regional exports,were $ 68.4 billion in 2005,with a $ 17.5 billion trade surplus within

the ECOWAS region the same year.

The major export commodities of ECOWAS countries are minerals (diamonds,

gold,and bauxite),energy products (refined petroleum products and crude oil),and

agricultural products (groundnuts,cocoa,coffee,and cotton). On the other side the

import commodities are cars,chemicals and other manufactured products from China.

The graph (figure 2) shows that ECOWAS witnessed its best GDP growth

performance in 2004 to the present as well as in past years due to the unlocking of

Africa trade potential, and five years later to tumble down below zero,in response of

the 2008 crisis in US.ECOWAS exports commodities have been hindered by the

industrial developed countries policies such as the tariff escalation, the tariff peaks

and the agricultural protectionism.

Figure 2 ECOWAS GDP GROWTH

Source:Author.

3.ECOWAS comparative advantage

ECOWAS Members are abundantly endowed with resources and are in fact,very

rich in both mineral and human resources.Most its countries, located on the

coast;therefore the cost of freight through sea is relatively cheap for companies and

also due to the agreement between member states on the free movement of persons

and goods within the limits of the regional borders.