West African economic bloc faces bleak outlook in 2007

FE Team | Published: July 09, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

DAKAR, July 8 (AFP): Lacklustre growth, ballooning petroleum imports, cotton sales hit by Western subsidies and a lingering political crisis in the region's former star economy have crippled a west African economic bloc.
The eight-nation West African Economic and Monetary Union (UEMOA), home to some 80 million inhabitants, is set to record a relatively poor growth rate this year, the head of the region's central bank said Tuesday.
"The year 2007 could also be marked by a relatively feeble growth of four per cent," said Damo Justin Barro, the acting governor of the Central Bank of West African States (BCEAO).
The growth rate last year was a mere 3.2 per cent-two percentage points lower than the average for sub-Saharan Africa - - and clearly insufficient to pull out the area from endemic poverty.
The UEMOA is a customs and monetary union between some of the members of the larger Economic Community of West African States regional grouping.
It comprises Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Togo and Senegal.
The poor growth rate was blamed to a large degree on falling agricultural revenues, especially for cotton, which is a major cash crop in the region.
Western states provide huge subsidies for their cotton producers, thereby affecting exports from West Africa. Some of the bloc's members argue that the effect of international debt waivers are offset by such subsidies.
The bank chief however said inflation across the region had been contained at an average of 2.3 per cent last year against 4.3 per cent in 2005.
The grouping has also felt the backlash of a long-drawn political crisis in Ivory Coast, which is still the region's economic powerhouse and the world's top cocoa producer despite having been split in half since a failed uprising in September 2002.
The country's main port Abidjan, which was a regional hub and serviced many of the landlocked countries, has experienced a sharp fall in traffic. But it is still far ahead in terms of volumes than its nearest rival Dakar.
This has driven up costs of goods in the hinterland as they now have to be transported along longer distances over land.
The BCEAO in a new report warned that the current oil shock had also driven up the prices of oil exports except for the region's sole producer Ivory Coast.
The oil import bill comprised 32 per cent of the sum of total imports last year against 19 per cent in 2002, it said.
It said the sagging performance of the region's key sectors "showed up the fragility of the economic structures and their vulnerability to external shocks."
Last year, only two nations in the grouping registered an improved growth rate. Benin's economy grew 3.6 per cent against 2.9 per cent the previous year while Togo's performance rose to 1.5 per cent from 0.8 per cent.
Growth in Ivory Coast stagnated at 1.8 per cent and fell in other countries, notably to 3.1 per cent in Senegal from 5.5 per cent in the previous year and Niger, where the growth rate halved year-on-year to 3.5 per cent.
Meanwhile, Western subsidies for cotton growers and chemical producers hit local exports badly. Cotton is among the main revenue earners for Benin, Burkina Faso, Mali and Togo.
The bank forecast that the major driver of the region's economies this year would be the agriculture sector and underlined the importance of "revamping the sectors currently in crisis."
It said reforms were equally necessary to improve some key sectors such as Senegal's chemicals industry. Senegal is a major producer of nitrogen and fertilisers.
Chemical Industries of Senegal, one of country's major employers, accumulated a debt of 200 billion CFA francs (304 million euros, 413 million dollars) at the end of 2006.