The Economic Community of West African States (ECOWAS) was established on May 28, 1975 as a regional trade organization comprising countries in the West African sub-region.
The aim of setting up the Community was manifested in its original treaty. According to provisions set out in the Treaty of Lagos, and later, the revised treaty in 1993, the objectives were to promote co-operation in economic, social and cultural activities towards a desirable establishment of an economic and monetary union through the total integration of the national economies of member-states. Inherent in the letter and spirit of the Treaty were the ideals to raise the living standards of the ‘ECO-citizen,’ maintain and enhance economic stability, foster relations among member-states and contribute to the progress and development of the African continent in line with the principal provisions of the African Economic Community (AEC) Treaty under the African Union.
Within four years of the operationalization of the treaty, it became clear that as laudable as it sounded, the goal of achieving total integration of national economies of the constituent countries would require more concerted effort and commitment. Hence, the 1979 Protocol relating to free movement of persons, goods, services and right of establishment was conceived as an instrument to enable free movement of ECOWAS citizens within the sub-region. Loaded into the protocol were the goals of institutionalising a single regional socioeconomic space, providing ECO citizens with opportunities in member-states, including the utilisation of arable land by indigenous agriculturists, access to coastal areas by landlocked member states, employment of English and French language experts and, most significantly, unfettered access to natural resources by member-states. In a nutshell, the Protocol was intended to create a ‘Borderless West Africa.’
Leveraging Nigeria’s Commitment
No other economy within the sub-region has been weighed down more than Nigeria from a disconnected West African market. Given the huge size of its population and GDP, the various Administrations in Nigeria had demonstrated ample political will to ensure the Community thrives. Indeed, the country has been the galvaniser of the ‘ECOWAS dream’ and has doggedly deployed human and material resources to keep the trade bloc together in the face of recurring political, economic, socio-cultural upheavals since the days of ECOMOG till the current intervention of its military in the Malian crisis.
What is lacking, according to international relations experts, is for Nigeria to lead the process towards realistically breaking down the trade walls under the Free Movement Protocol and unleashing the potential of free exchanges of goods and services as have been witnessed in similar trade regime under Association of South East Asian Nations (ASEAN) or the trilateral North American Free Trade Agreement (NAFTA). Understandably, the implementation of most of these agreements is being spearheaded by the various export credit agencies of the constituent countries.
Hence, it behoved Nigerian Export-Import Bank, (NEXIM Bank) – the trade policy bank of the Federal Government of Nigeria – to facilitate the process for the establishment of a dedicated sea link within the ECOWAS region. This is borne out of concerns by the current executive team of NEXIM Bank led by the MD/CEO, Mr. Roberts Orya on the partial realization of ECOWAS’ intra-regional trade facilitation and operational objectives, high intra-regional freight costs and shipment delays, which make cargo delivery within the sub-region to take an average of 45 – 60 days.
At the recent sensitization and pre-investors’ forum on the Sealink project on Wednesday March 27th, 2013 in Lagos, for the entire council and executive of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, (NACCIMA), Mr. Orya provided an update on the initiative and invited its membership to invest and partner with the Bank and other stakeholders in the SPV and Regional Maritime Company. He stated the Bank is facilitating the establishment of a dedicated Regional Sealink project as a means of overcoming the challenge of road infrastructure as well as absence of rail links within the region which has perpetually bedeviled intra-regional trade. The appeal for a sea link is further strengthened by the comparative low budgetary cost and short implementation timeline for a sea link-project vis-à-vis either a regional road or rail project.
According to Mr. Orya, the availability of a maritime vessel will significantly reduce the high transportation costs and excessive transit time which make intra-regional trade non-competitive, with West and Central African transport and logistics costs identified as one of the highest in the World. According to available statistics, these have resulted in low level intra-regional trade at less than 12 per cent and 10 per cent for African and ECOWAS trade respectively, compared to other regional blocs such as European Union (EU) and ASEAN whose intra-regional trade flows are respectively at 50 per cent, 40 per cent and 25 per cent.
Why Embrace the Sealink Project?
Inviting the NACCIMA to invest in the project, Orya stated that the funding requirement for the regional sealink project is $60 million out of which $36 million will be required to purchase vessels, equipment, office space and other infrastructure and $24 million for working capital to cover general and administrative costs to be raised through equity and debt financing respectively.
Beyond making business sense, the project has some inherent accruable national benefits that further justify its implementation. These include unlocking opportunities in the maritime sector through effective indigenous participation, thereby stimulating maritime-related employment as well as localizing some of the maritime freight payments of an average of $5 billion annually from import / export tonnages.
It will also facilitate the realization of the various Maritime-related laws like the Cabotage and MIMASA Acts and the implementation of the National Shipping Policy; stimulate and attract private sector funding for the development of key maritime infrastructure with the national benefit of improving the level of intra-regional formal trade, thereby enhancing contribution of trade/exports to GDP.
Also, it will assist in palliating the disastrous effects of road/rail infrastructural deficit challenges that affect regional integration and a major cause of the muted growth witnessed over the years in intra-African and ECOWAS trade levels.
Most importantly, it will enhance competitiveness of Nigerian exports, thereby improving the contribution of manufactured exports from the current level of under 6 per cent, and enhancing local industrial capacity utilisation and attracting new investments.
Additionally, the project will enhance Nigeria’s status as a maritime hub for West and Central Africa with attendant benefits of facilitating Atlantic short-sea trade and development of pool of talent / manpower for the industry.
Furthermore, it has the immense potential to stimulate multimodal transport development to cater for non-littoral regional member countries; hence it will facilitate growth of hinterland haulage business as the market segment is not yet targeted by major shipping lines, thereby offering a huge opportunity to the proposed Sealink Project.
The Transformation Agenda
The Sealink project is in line with the Transformation Agenda of the Government which projects investments in roads, railways, inland waterways, ports and airports development in collaboration with various stakeholders to evolve a multimodal, integrated and sustainable transport system, with emphasis on rail and waterways, through an effective Public-Private Partnership arrangement. This aims to create synergy and ensure an even and nation-wide distribution of gains from the Administration’s investments in the key sectors, termed ‘main growth drivers’ such as the manufacturing, agriculture, solid minerals, manufacturing, services, trade and commerce, etc. Affirmatively, the Sealink Project will take the gains of the Transformation Agenda beyond the shores of the country. It will immediately open up our shores and immensely contribute to Nigeria’s march to become the premier economy in Africa through creating a seamless export platform for movement of Nigeria’s manufactured/semi-processed goods, services, and personnel with a certainty to boost competitiveness and productivity across these sectors. Specifically, it will spur more private sector initiative and innovation, enhance the development of the key sectors’ value chain, create/sustain more Nigerian jobs as the ECOWAS Markets become one and Nigeria’s products and services are brought to the world.
The project has been endorsed by the Government of Nigeria. It has also been adopted and is being sponsored by the Federation of West African Chambers of Commerce and Industry (FEWACCI) with other endorsements/collaborations by the ECOWAS Commission, the ECOWAS Parliament, various multi/bilateral institutions including the Maritime Organization of West and Central Africa (MOWCA), strong private sector support through various trade associations and heightened expression of interest by potential investors (locally and internationally).
In his remarks, the National President of NACCIMA, Dr. H.A.B. Ajayi lauded Mr. Orya for the patriotic zeal which moved NEXIM Bank to come up with the Regional Sealink Project and the vigour with which he is pursuing its realisation.
He also concurred that the ECOWAS market is huge and has not been fully tapped as a result of logistical challenges being faced in movement of goods and persons, especially due to the absence of a direct shipping line for the West and Central African corridor. In this regard, NACCIMA, as a member of the FEWACCI, will like to join forces with NEXIM Bank and other progressive entities in actualising the project. According to him, “…as the apex business association in Nigeria, NACCIMA is supporting the setting up of the shipping company as we did during the establishment of ECOBANK Transnational which has become a household name in all the West African States and beyond. We would like to also stress the need for chieftains of industry here present to take ample opportunity by participating in the raising of the $36 million that would form the equity capital for the setting up of the transnational shipping company.”
Moghalu is Head, Corporate Communications, Nigerian Export – Import Bank, Abuja