Enter the Chad Dragon in the ECOWAS-CENSAD region!

Back in October 2011, my piece “Hot Issues on the AU needing popular advocacy (I) – or Travelling Cheaply in Africa, & Southern Sudan” touched briefly on CENSAD. I started off with a history of CENSAD, going on to ask the way forward.

The Community of Sahel-Saharan States was established in 1998 by the late Colonel Qaddafi. After the rationalization of the regional economic communities in 2006, it became an AU-REC – that is one of the eight RECs mandated and recognized by the African Union. It has twenty-eight members, and Ghana is a member.

Despite many meetings that had taken place and a then-fully-functioning website on http://www.censad.org, the uprising that started in Libya in March threw a huge spanner in the works of the organisation, effectively throwing the regional grouping out of sync with the other RECs at its base in Tripoli. Regrettably, the conspicuous absence of the African Union itself on the future of CENSAD has not helped dispel the notion that the AU is nothing more than a “toothless” bulldog.

The passing of Qaddafi, I intoned, has effectively taken the wind out of the sails of CENSAD, probably throwing all the good work – including the Great Green Wall being built along the sub-region to protect the region from climate change; as well as the establishment of a free-trade area of ECOWAS-UEMOA-CENSAD/ECOWAS-CENSAD/ECCAS along the likes of the SADC-COMESA-EAC tripartite free trade area, which was mooted in 2008.

Going forward, I would expect to see the AU taking serious the need to engage the National Transitional Council in Libya on their commitments to the African Union. This would include discussions on Libya and where it stands on the establishment of the AU-mandated and Tripoli-hosted African Investment Bank, as well as the state of play of CEN-SAD, and how it can be factored into discussions of Africa’s ongoing discussions over Africa’s integration.

In January 2013, an organisation by the name of Centre 4S, which is based in Morocco, and which researches defence and security in the Sahelo-Saharian band /strip; armed violence and terrorism, among other subjects, released a paper in French entitled “Revitaliser le CENSAD”, or reinvigorating CENSAD.

The main idea of the paper is to look at the critical role CENSAD can play in the Sahel; ways in which cooperation and synergy can be created around the zone, and ways in which there can be strengthened cross-border cooperation.

Truth be told, the uniqueness of CENSAD is in its ability to merge ECOWAS; Arab Maghreb Union and ECCASS countries together. The article maintains that the contribution that CENSAD offers its member states ought to be re-examined. Furthermore, the crisis in Mali has set an important precedent for the member states to really get serious on what can be done to use the body as a tool for securing the region politically and diplomatically.

The paper states that “CENSAD should present itself as an institutional and diplomatic framework, of unity and action, capable of formulating a pertinent response, inclusive and varied, to current security challenges.” Even more important for a reinvigorated and re-launched CENSAD should be the aspiration to complement ECOWAS and the Arab Maghreb Union, especially as they are two RECs most-familiar with the security deficits of the Sahel region. These efforts will “equally allow for a better coherence and coordination of different initiatives on the Sahel”, such as Algeria’s Joint Military Command with Mali; Niger; and Mauritania.

Chad rising, Chad in ECOWAS?

Chad is a Central African country and a member of the Economic Community of Central African States (ECCAS). Some wonder why it should not also become a member of the Economic Community of West African States (ECOWAS) According to one Elvis Kodjo, writing in fratmat.info, 'although the idea has not been officially announced, the spokesman of the Ministry of Foreign Affairs Moussa Mahamat Dago indicated on 19 January 2012 in Abidjan during a celebration of Chad's 50th anniversary that the issue was currently being considered.”

The idea for joining rests with the fact that Chad has emerged from several decades of unrest, and understands “more than any other African country that “African integration is necessary for its development”.

The fact is that since the start of oil production in 2005, “Chad has become the ninth largest African oil producer and has improved its network of roads, which has expanded from 200 to more than 3 000 km. Plans for a new, ultramodern airport are underway, and a railroad linking the country to Cameroon will soon be constructed”. Kodjo maintains that “while being a veritable construction site, Chad also has forty million hectors of arable land”.

In order to encourage the effective use of this land, the Ministry Of Foreign Affairs spokesman Mahamat has said that the country “has equipped itself with a particularly attractive investment code” and is looking to secure the best opportunities for itself by diversifying its economic partners in both Central and West Africa.

In March 2011, Chad was, in fact, granted observer status of ECOWAS and my monitoring of Chad's wooing suggests that Chadian President Idris Deby is still keen on sweet-talking Jonathon—in his capacity as leader of the regional hegemon, Nigeria—to accept Chad as a full member of ECOWAS. In April 2012, I was quick to speculate that it is unlikely to happen soon, given the instability in the Sahel region and the headaches of Mali and Guinea-Bissau. All that can be said for now is for observers to keep a keen eye on Chad making “incursions” into ECOWAS sooner than later.

Then Mali happens. And suddenly, we are confronted with a Chad that is offering support to the Africa-led support mission in Mali (AFISMA) to the tune of around 3000 troops, which is around a third of what all ECOWAS troops have offered.

One of the reasons why Chad is an important country to look out for is for what happened on Saturday 16 February when Chad’s president Idris Deby hosted some eleven leaders of the CENSAD regional economic community that was established in 1998. The capital N’djamena played host to what should have been 20 members of the populous grouping. Even if a little over a third of the Heads of State showed up, it was encouraging to see that the 17 other member states dispatched representatives. Furthermore, it has shown that the raison d’être for the establishment of the grouping might still be relevant.

Some of the major outcomes include a revision of the Charter, to reflect the fact that the organisation is interested in two major things: peace and security; and sustainable development. Two permanent organs will be established to this end, and Egypt is likely to host the peace and security organ.

As this is a developing story, with much of the material in French, watch this space over the next couple of weeks when the implications of a rising Chad will begin to unfold. For what it is worth, CENSAD’s next meeting will be in Morocco, which is itself making overtures to re-join the African Union.

In April 2012, I wrote of how there is talk of an ECCAS-ECOWAS-CENSAD free trade area along the likes of the Tripartite FTA (T-FTA) of SADC-COMESA-EAC that was mooted in 2008. With Central Africa only last week meeting and seeking concretely to rationalise its programmes for ECCAS and CEMAC to harmonise and merge, it is really exciting times for African integration!

ENDs

In 2009, in his capacity as a “Do More Talk Less Ambassador” of the 42^nd Generation—an NGO that promotes and discusses Pan-Africanism--Emmanuel gave a series of lectures on the role of ECOWAS and the AU in facilitating a Pan-African identity. Emmanuel owns "Critiquing Regionalism" (http://www.critiquing-regionalism.org). Established in 2004 as an initiative to respond to the dearth of knowledge on global regional integration initiatives worldwide, this non-profit blog features regional integration initiatives on MERCOSUR/EU/Africa/Asia and many others. You can reach him on ekbensah@ekbensah.net / Mobile: +233.268.687.653.

Deconstructing ECOWAS’s war chest of $US252million, or a Brief Tale on Financing African Integration (2)

“The Accidental Ecowas & AU Citizen”:

Deconstructing ECOWAS’s war chest of $US252million, or a Brief Tale on Financing African Integration (2)

By E.K.Bensah Jr

January is always a great month to review and refresh everything – including money. It is no surprise, therefore, I have chosen to focus on an aspect of resource-mobilization in fulfillment of the African Integration narrative which ought to see continental union—as per the Abuja Treaty of 1991—by 2034. True, it seems quite a long way away, but whoever thought the Millennium Development Goals (as prescribed in 2000) would now only be two years away? There’s no gainsaying that the road to economic emancipation for Africa is very long and hard, so it remains paramount to get more serious now, more than ever, on management of finances of the eight regional economic communities populating the African integration landscape.

Last week, I touched on innovative financing and offered an insight into how it is an old battle that needs a little warming up by both African integration watchers and the African populace alike. It needs must go beyond being a discussion rendered to abstraction by cognoscenti of African policy-makers to a place where media across the continent can begin to discuss and engage. Never mind that the idea of financing African integration seems to be a preserve of “specialists”, it needs moving to a place where all can freely discuss and debate it.

Proposals for innovative financing paths

The original study by the Commission of the African Union proposed no less than eight scenarios of innovative financing sources. These sources are to be structured around: (a) tax on imports; (b)tax on revenue from hydrocarbon exports; (c)tax on insurance premiums; (d)levy on airline tickets; (e) involvement of the private sector through sponsorship and other forms of support; (f) the sale of items and other products carrying the African Union symbol. However, as a consequence of a series of expert meetings and ministerial conferences, the Commission’s choice was limited to the following main components or instruments: (i) levy on imports from the rest of the world; (ii)levy on airline tickets; and (iii)levy on insurance policies.

In order to obtain a greater insight into how these three instruments are used in levying taxes for some of the AU’s regional economic communities, we shall look at the cases of the Economic Community of Central African States(ECCAS); UEMOA/CEMAC; and ECOWAS.

Truth be told, ECOWAS, UEMOA, ECCAS and CEMAC are the only RECs that have been implementing the levy on imports from non-member countries with some degree of success

The case of ECCAS and its Levy on Imports

For an organisation that barely makes the news in this part of the world [for example, they just concluded the 15^th session of their summit on Monday, which major outcome was to call for the application of the convention on free movement of good and people, including the fixing of the date of 1 July, 2012 for the launching of an free-trade area to be fully realized by 2014], one might find it hard to believe that it has a fully-functioning financing mechanism.

In ECCAS, the levy is called the *community contribution for integration (CCI)*. Consumer goods, originating from third countries, imported by member states are subject to the CCI. Products that are excluded from the field of taxation are products originating from the Community and imported goods under “suspensive customs regimes”.

In this grouping, the taxable value is the customs value of goods. In other words, the CIF(cost insurance freight) or the transaction value. The rate of the CCI is calculated as 0.4%. In other words, if the customs value is 2,000,000CFA, the CCI is 2,000,000 X 0.4% = 8000CFA. This is collected by national authorities – or customs or the Treasury.

These amounts collected under the CCI are deposited into an account opened on behalf of ECCAS at the Central Bank of each of the 15 member countries of ECCAS. In addition, a central account for ECCAS is also opened at the Central Bank of the country, which hosts the headquarters – as in the case of the cash account in Libreville, Gabon.

On the plus side, if the CCI is well-implemented and all countries have a surplus in t he ECCAS account opened in their central bank, it is the entire region that is strengthened.

The case of UEMOA/CEMAC

According to the AU’s “Bulletin on Fridays”, these two organizations implement fully the Community levy system. One of the major reasons for this is because they are both customs unions, which facilitates the implementation of this measure.

The levy rate in UEMOA is 1%. As a consequence, the levy rate in the member countries of UEMOA is 1.5%, broken down as follows: (i)1% for UEMOA; (ii)0.5% for ECOWAS countries.

The case of ECOWAS

In ECOWAS, as in ECCAS, the community levy is placed on taxable value of goods imported into the Community from third countries and marketed for consumption. The following are exempt from the community levy: (i)aid, grants and non-repayable subsidies for a state, public corporations and state-approved charities; (ii)goods imported from third countries through financing provided by foreign partners, subject to a provision exempting such products from all tax levies; (iii) good imported by firms under the existing tax system at the date of entry into force of this Protocol; (iv) the goods having been charged the community levy under any previous tax regime.

ECOWAS Community levies are predicated on: (i) CIF (cost insurance freight) value at the port of landing for imports by sea; (ii) the CIF value of imports by land at the point of entry into the customs territory  of the Community; (iii)the customs value at the port of landing (APOD) for imports by air; (iv)the market price list of the respective goods.

The actual rate, as in the case of ECCAS being at 0.4%, is set at 0.5% of the value of goods imported from third countries. This rate, however, can, if necessary, be changed every three years by the Authority of Heads of State and Government on the recommendation of the Council and the collection is done by heads of competent customs offices. To this end, an additional line is opened in their accounting books in which daily collections of the Community levy are recorded.  In turn, the Commission of ECOWAS, on its own behalf, opens an account in the books of the Central Bank of each member state (for countries having their own Central Bank) and with a branch of the UEMOA-based BCEAO.

Based on the import value of imported goods, the customs requires the importer (who is also from the private sector) to issue two cheques: one in favour of UEMOA(1%) and the second in favour of ECOWAS(0.5%). The Customs Services in turn deposit the cheques received from importers to the accounts of UEMOA and ECOWAS, which have been opened at the Central Bank of each state.

Finally, in ECOWAS, what will be most useful to the reader is how these funds are used. First, the funds go to the regular budget of the Community and its institutions’, such as the West African Monetary Institute (located around the Tetteh-Quarshie interchange) and the Spintex Road-based ECOWAS Regulatory Electricity Authority (ERERA). The funds exclude the budget of the Cooperation, Compensation and Development Fund; (ii)the budget to compensate revenue losses suffered due to trade liberalization; (iii) the financing of development activities; and (iv)any other allocation decided by the Authority or the Council including the capital increase of the ECOWAS Fund.

In the interests of space, I will conclude next week’s third part by providing greater insight into that so-called “war chest” I have alluded to in the two parts. It goes without saying that without an explanation of how ECOWAS innovatively-finances its funds for regional integration, it would be veritrably difficult understanding how one arrived with a “war chest” of that considerable sum!

In 2009, in his capacity as a “Do More Talk Less Ambassador” of the 42^nd Generation—an NGO that promotes and discusses Pan-Africanism--Emmanuel gave a series of lectures on the role of ECOWAS and the AU in facilitating a Pan-African identity. Emmanuel owns "Critiquing Regionalism" (http://regionswatch.blogspot.com ). Established in 2004 as an initiative to respond to the dearth of knowledge on global regional integration initiatives worldwide, this non-profit blog features regional integration initiatives on MERCOSUR/EU/Africa/Asia and many others. You can reach him on ekbensah@ekbensah.net / Mobile: +233-268.687.653.