Post by Trade Coach on Apr 6, 2012 21:44:42 GMT 1
Global markets offer important opportunities for companies in developing countries. By exporting to larger markets, the companies can increase production, growth, and employment at a faster pace than by focusing only on smaller domestic markets. But companies in developing countries must overcome severe hurdles before being able to export to global markets. In this context, regional exports can be an important testing and learning ground for these companies.
This is because barriers to accessing markets in the region are often lower than those for accessing global markets; neighboring countries' markets are often similar in taste, standards, distance, and culture. Creating regional markets can thus allow companies to expand operations and create economies of scale, making them more competitive. Gaining access to regional markets also increases incentives for more investment flows, and permits suppliers to specialize and integrate into regional supply chains that ultimately cater to both domestic and international markets.
In addition, it is often more feasible politically to reduce trade barriers within a region rather than across global markets. But addressing regional trade barriers and strengthening regional integration also helps countries to integrate into world markets. This is because barriers to regional trade are often also barriers to trade with the world.
In West Africa, both the processes, and degree of regional integration have lagged behind expectations, and many political commitments have either not been translated into policy and regulatory reforms, or reforms are not implemented. The region thus remains weakly integrated, with continuing tariff barriers (for example where restrictive rules of origin cannot be met) and substantial non-tariff barriers.
There is still no agreement at the ECOWAS level on the precise structure of the common external tariff, and the existing scheme for regional free trade faces significant challenges.
This note looks at the regional integration process in West Africa, focusing on Ghana and Nigeria. Both countries account for about 61 percent of population and 68 percent of GDP in ECOWAS.
They are already closely linked, with bilateral non-oil trade between the two countries increasing from less than US$15 million before 2000 to more than US$130 million in 2010, according to COMTRADE data. While the share of non-oil exports from Ghana to Nigeria increased from less than 0.5 percent in the late 1990s to about 1.9 percent of global exports in 2010, a recent working paper estimates the potential for Ghana’s exports to Nigeria at more than 10 times of current exports and the potential for bilateral trade at twice the observed flows.
Beyond trade, substantial migration flows between both countries have existed for a long time. Recent estimates put the number of Ghanaian emigrants in Nigeria at 125,000 (IOM 2009), which represent 13 percent of Ghanaians living outside Ghana, and the number of Nigerians living in Ghana at more than 50,000 (DRC 2007).]
This note assesses the challenges that goods exporters within the region face when trying to benefit from the ECOWAS-wide Free Trade Area. It focuses on the experience of 30 exporting companies in Ghana that we interviewed to understand the difficulties of exporting to Nigeria under the scheme. Complaints about the lack of implementation of existing commitments are consistent but often vague.
The study finds that Ghanaian manufacturers believe the key barriers to increasing trade with Nigeria include substantial informal payments and delays — regardless of whether documentation is complete — transit charges, and requirements for product registration. Despite the relatively small sample size, we conclude are confident that these findings, which support recent findings by the West Africa Trade Hub, also apply to a wider range of economic operators in Ghana.
Implementing existing commitments in Ghana and Nigeria, and facilitating trade flows between them, would be a critical move towards achieving freer trade and deeper integration within the region. Getting policies right in these two large and dynamic economies should be a priority within a policy dialogue that focuses on regional integration in West Africa because it will likely become a catalyst for deeper integration across that region.
The remainder of this note is structured as follows: First, we give an overview of current trade policies and commitments undertaken as part of the regional integration process before looking at the implementation of these commitments in West Africa. We then turn to the central part of this note, describing our findings on the specific difficulties that Ghanaian companies face when exporting to Nigeria. Last, we offer policy recommendations to address the challenges identified.
Source: www.trademarksa.org/news/removing-barriers-trade-between-ghana-and-nigeria
This is because barriers to accessing markets in the region are often lower than those for accessing global markets; neighboring countries' markets are often similar in taste, standards, distance, and culture. Creating regional markets can thus allow companies to expand operations and create economies of scale, making them more competitive. Gaining access to regional markets also increases incentives for more investment flows, and permits suppliers to specialize and integrate into regional supply chains that ultimately cater to both domestic and international markets.
In addition, it is often more feasible politically to reduce trade barriers within a region rather than across global markets. But addressing regional trade barriers and strengthening regional integration also helps countries to integrate into world markets. This is because barriers to regional trade are often also barriers to trade with the world.
In West Africa, both the processes, and degree of regional integration have lagged behind expectations, and many political commitments have either not been translated into policy and regulatory reforms, or reforms are not implemented. The region thus remains weakly integrated, with continuing tariff barriers (for example where restrictive rules of origin cannot be met) and substantial non-tariff barriers.
There is still no agreement at the ECOWAS level on the precise structure of the common external tariff, and the existing scheme for regional free trade faces significant challenges.
This note looks at the regional integration process in West Africa, focusing on Ghana and Nigeria. Both countries account for about 61 percent of population and 68 percent of GDP in ECOWAS.
They are already closely linked, with bilateral non-oil trade between the two countries increasing from less than US$15 million before 2000 to more than US$130 million in 2010, according to COMTRADE data. While the share of non-oil exports from Ghana to Nigeria increased from less than 0.5 percent in the late 1990s to about 1.9 percent of global exports in 2010, a recent working paper estimates the potential for Ghana’s exports to Nigeria at more than 10 times of current exports and the potential for bilateral trade at twice the observed flows.
Beyond trade, substantial migration flows between both countries have existed for a long time. Recent estimates put the number of Ghanaian emigrants in Nigeria at 125,000 (IOM 2009), which represent 13 percent of Ghanaians living outside Ghana, and the number of Nigerians living in Ghana at more than 50,000 (DRC 2007).]
This note assesses the challenges that goods exporters within the region face when trying to benefit from the ECOWAS-wide Free Trade Area. It focuses on the experience of 30 exporting companies in Ghana that we interviewed to understand the difficulties of exporting to Nigeria under the scheme. Complaints about the lack of implementation of existing commitments are consistent but often vague.
The study finds that Ghanaian manufacturers believe the key barriers to increasing trade with Nigeria include substantial informal payments and delays — regardless of whether documentation is complete — transit charges, and requirements for product registration. Despite the relatively small sample size, we conclude are confident that these findings, which support recent findings by the West Africa Trade Hub, also apply to a wider range of economic operators in Ghana.
Implementing existing commitments in Ghana and Nigeria, and facilitating trade flows between them, would be a critical move towards achieving freer trade and deeper integration within the region. Getting policies right in these two large and dynamic economies should be a priority within a policy dialogue that focuses on regional integration in West Africa because it will likely become a catalyst for deeper integration across that region.
The remainder of this note is structured as follows: First, we give an overview of current trade policies and commitments undertaken as part of the regional integration process before looking at the implementation of these commitments in West Africa. We then turn to the central part of this note, describing our findings on the specific difficulties that Ghanaian companies face when exporting to Nigeria. Last, we offer policy recommendations to address the challenges identified.
Source: www.trademarksa.org/news/removing-barriers-trade-between-ghana-and-nigeria
