A common market will ensure free movement of goods and services within 15 member countries. It also allows for the abolition of taxes, tariffs and custom duties levied on imports and exports within the region in order to create a free trade area.
On the demand side what this does is increase the potential pool of customers for investors and companies as well as increase revenue to government.
A telecom investor in Ghana for instance will have access to a potential market of 250 million people instead of being limited to 23 million people which is the Ghana’s potential market size. The sub region has advantages on the consumer side because higher commodity prices as the global economy rebounds will put countries and individuals in a favorable financial position.
As of 2008, apart from Ghana all countries in the region have a debt servicing to GDP ratio below 5%, this indicates very low debt and means that the region is positioned to rebound faster as the global recession ends. It is also important to note that West African consumers have very low debt and live in a region were GDP is projected to increase significantly in the future.
On the supply side producers who are more efficient in supplying certain goods and services will enjoy greater market share, and the populace will enjoy higher living standards because manufacturer(s) with a competitive advantage is able to supply low cost goods.
Opportunities
It also means better opportunities and living standards for workers through job creation and improved wages. Liberia for instance has a less developed telecom sector when compared to Nigeria. What a common market will achieve through competition is move resources inform of labor and capital from the telecom sector in Nigeria into Liberia. Labor and consumers will win due to higher wages and lower prices improving living standards in the process. Expect this sort of shifts and changes in agriculture, service and industrial sectors of all 15 countries in the union as the common market evolves.
Indeed this scenario played out in the Ghanaian banking sector about 3 years ago when the influx of Nigerian banks caused intense competition and a rapid improvement in service delivery.
A cocoa producer in Cote d’Ivore for instance will have access to a larger West African market. What a common market will do is expand the company, through more jobs, revenue and investment in addition to increasing entrepreneurship in this sector because of opportunities due to a larger market.
As the market grows this producer can expand and open branches in other African countries creating more jobs and revenue in other countries. It will also encourage cross border agreements – if the producer decides to buy diesel from Ghana for instance to fuel her machines, obtain loans from banks in Nigeria, engage producers in Burkina Faso or Senegal to supply materials for chocolate packaging amongst others.
Multiple entry points
Harmonization of sectoral policies will remove entry restrictions for foreign and local investors in the West African sub region. Assume every country in the region were to deregulate their power sectors and create similar laws around it, this would create multiple entry points, which could multiply investment in the West Africa’s power sector. Instead of Burkina Faso feeding off benefits accruing to Cote d’Ivore due to power sector liberalization both countries could liberalize at the same time creating a multiplied effect for economic growth. Recent agricultural investments across Africa is very good example. Also the west African gas pipeline, west African highways and railways projects will be very good examples of how coordinated policies multiply growth when these projects are completed.
Another benefit of the common market is increased access to capital via cross listing of companies in stock markets across the region. A mining company in Guinea for instance might be limited as to the amount of capital it can raise from the stock market due to inadequate liquidity. Cross listing of companies across stock markets will allow it access funds from stock markets in other countries within the region as well as enable individuals participate in growth opportunities in the region.
The common market will boost liquidity in stock markets across the region through the creation of regional stock exchanges with access to savings and investments from people in multiple countries instead of just one country. A good example is the regional stock exchange in Abidjan serving eight French speaking West African countries.
