Economic Grouping in West Africa (CONTD) West Africa Clearing House (WACH), Mano River Basin Commission. – SS3 Commerce Lesson Note (Second Term)

The West African Clearing House (WACH) and the Mano River Union (MRU) are two West African groupings that promote trade and economic cooperation among member states.

Behavioural objectives

By the end of the lesson, students should be able to:

1. State when and why the West African Clearing House was established and what it became in 1996;
2. List the objectives, functions and challenges of the West African Monetary Agency (WAMA);
3. Name the member states of the Mano River Union;
4. State the goal and aims of the Mano River Union;
5. Describe the institutions of the Mano River Union and their functions.

What is the West African Clearing House (WACH)?

The West African Clearing House (WACH) was a multilateral payment facility set up in 1975 to improve trade among West African countries.

• Clearing house: a place where members settle the payments they owe one another.
• Multilateral: involving many countries, not just two.
• Year set up: 1975, when the Central Banks of the sub-region signed the agreement.
• Change in 1996: WACH became the West African Monetary Agency (WAMA), with wider roles and functions.

How does a multilateral payment arrangement work?

1. Traders in different countries buy and sell goods in the sub-region.
2. The Central Banks record the amounts each country owes and is owed.
3. The debts and credits are set against one another.
4. Only the remaining balance is settled.

• Benefit: less foreign exchange is needed to pay for trade within the sub-region.

What is the West African Monetary Agency (WAMA)?

WAMA is an autonomous specialised agency of ECOWAS, based in Freetown, Sierra Leone, that replaced WACH in 1996.

What is the history of WAMA?

• 1975: Central Banks in the sub-region signed the agreement that set up WACH.
• Participants in WACH: the Central Banks of West Africa, including BCEAO (La Banque Centrale de l’Afrique de l’Ouest).
• Commercial banks: those in the sixteen (16) West African countries also took part.
• 1987: a step was taken towards the intra-ECOWAS Monetary Cooperation Programme (EMCP).
• EMCP: adoption of joint policy measures for a harmonised monetary system and common management institutions.
• Link to WAMA: changing WACH into WAMA was an integral part of the EMCP.
• 1996: WAMA was established to coordinate the affairs of member countries towards a single monetary zone for ECOWAS.

What is the difference between WACH and WAMA?

WACH was a payment arrangement for settling trade debts. WAMA is an ECOWAS agency with a wider monetary mandate.

Who are the members of WAMA?

WAMA comprises seven Central Banks of the West African sub-region.

• BCEAO: represents the eight (8) Francophone countries.
• Bank of Cape Verde: the central bank of Cape Verde.
• Central Bank of Gambia: the central bank of The Gambia.
• Central Bank of Ghana: the central bank of Ghana.
• Central Bank of Liberia: the central bank of Liberia.
• Central Bank of Sierra Leone: the central bank of Sierra Leone.
• Central Bank of Nigeria: the central bank of Nigeria.

What are the objectives of WAMA?

The objectives of WAMA are the aims it was set up to achieve for member states.

1. Promote the use of national currencies for regional trade and transactions.
2. Bring about savings in the use of foreign reserves for member states.
3. Encourage and promote trade exchange liberalisation.
4. Enhance monetary cooperation and consultation among member states.
5. Facilitate the harmonisation and coordination of monetary and fiscal policies.

What are the functions of WAMA?

The functions of WAMA are the tasks it carries out to meet its objectives.

1. Promote the use of local currencies for West African transactions, to save foreign exchange.
2. Promote trade liberalisation in member countries.
3. Encourage member countries to consult often on monetary cooperation matters.
4. Coordinate the implementation of the EMCP.

What are the challenges facing WAMA?

WAMA faces two main challenges: inadequate funding and the problem of identity.

• Inadequate funding: the agency lacks enough money to carry out its programmes.
• Problem of identity: other Pan-West African bodies with similar functions existed before WAMA, so outsiders find it hard to see what makes it unique.

Examples of such bodies:

• WAMI: the West African Monetary Institute.
• BCEAO and the West African Economic and Monetary Union: bodies of the Francophone West African States.

What is the Mano River Union (MRU)?

The Mano River Union (MRU), also called the Mano River Basin Commission, is an association set up on 3rd October 1971 between Liberia and Sierra Leone.

• Founding document: the Mano River Declaration, also called the Malema Declaration.
• Signed by: President William Tolbert Junior of Liberia and President Dr Siaka Stevens of Sierra Leone.
• Enlargement: Guinea and Côte d’Ivoire joined later, as shown below.

Why is it called the Mano River Union?

The Union is named after the Mano River, which forms part of the border between Liberia and Sierra Leone.

• The river: the Mano River begins in the Guinea Highlands.
• Reason for the name: the river is the natural and formal boundary between the two founding states.
• Earlier history: the area between present-day Liberia and Sierra Leone was once one state or kingdom known as Kailahun Luwa.
• Wealth of the area: diamond mining is a major industry there.
• Conflict: control of the area’s wealth and unstable governments led to violent conflicts in the 1990s.

Who are the member states of the Mano River Union?

There are four member states of the Mano River Union.

1. Côte d’Ivoire
2. Guinea
3. Liberia
4. Sierra Leone

What are the goal and aims of the Mano River Union?

The goal of the Union is to speed up economic growth, social progress and cultural advancement of its members.

• Original wording: to “accelerate the economic growth, social progress and cultural advancement of our two countries … by active collaboration and mutual assistance in matters of common interest in economic, social, technical, scientific and administrative fields”.

The Union aims to strengthen the capacity of member states to integrate their economies and coordinate development programmes in these areas:

• Peacebuilding: a prerequisite to any development.
• Trade promotion: more trade among member states.
• Industry: development of industry.
• Energy, agriculture and natural resources: joint development of these sectors.
• Transport and telecommunications: better links among member states.
• Monetary and financial affairs: cooperation on money and finance.

What is the MRU mandate?

The MRU mandate is the task given to the Union Secretariat in May 2008 to revive the Union and drive development in the sub-region.

• Origin: in May 2008, the Heads of State and Government decided to revive the Union.
• Task: the Secretariat pursues revival, growth, socio-economic development and integration of the sub-region.
• Plan: a strategic plan has been prepared to deal with all issues related to the pillars.

The work is organised under four pillars:

1. Institutional revitalisation and restructuring, with focus on the Union Secretariat and the public sector of member states.
2. Peace and security.
3. Economic development and regional integration.
4. Social development.

What is the work of the MRU in the West African sub-region?

The MRU works to bring its member states and their peoples closer together.

• Dialogue: starts talks at all levels between member states to achieve greater unity and solidarity.
• Goodwill: promotes neighbourly cooperation and peaceful co-existence among its people.
• Governance: promotes peace, security, democratic principles and citizens’ participation in good governance.

What is the organisational structure of the MRU?

The MRU is run by a Secretariat headed by a Secretary-General.

• Headquarters: the Secretariat is based in Freetown, Sierra Leone.
• Other offices: Conakry in Guinea and Monrovia in Liberia.
• Planned parliament: in April 2016 the Union announced plans for a Mano River Union Parliament.
• Role of the parliament: legislators from the member states would coordinate national laws on matters of regional importance.

What are the institutions of the Mano River Union and their functions?

The Mano River Union has four institutions, set up to carry out its objectives.

1. The Union Summit of Heads of State and Government
2. The Union Ministerial Council
3. The Union Technical Commissions
4. The Union Secretariat

What is the Union Summit of Heads of State and Government?

The Summit is the supreme institution of the Union.

• Meetings: it meets as and when necessary.
• Business: it deals with matters submitted to it by the Union Ministerial Council.

What is the Union Ministerial Council?

The Council is made up of the ministers of member states in key economic and social areas.

• Members: Ministers responsible for Planning, Development, Economic Cooperation, Finance, Education, Trade, Industry, Agriculture, Transport, Communications, Energy, Natural Resources and Works.
• Other ministers: they may attend when matters of interest to them are on the agenda.
• Decisions: reached by consensus, as resolutions.

The resolutions of the Council:

• To the Summit: make recommendations to the Union Summit of Heads of State and Government.
• To member states: recommend certain actions to be taken.
• To the Secretariat: give directives to the Secretariat and other subordinate institutions.

What are the Technical Commissions of the Union?

Technical Commissions are expert bodies proposed for specific fields of the Union’s work.

• Trade and Industry
• Agriculture, Forestry and Fisheries
• Transport and Communications
• Education, Training and Research
• Finance and Administration
• Energy and Natural Resources
• Peace and Security

• Members: government officials and professionals chosen by the member states.
• Work: they examine issues in their fields on their own initiative, on the directive of the Ministerial Council, or at the request of the Secretary-General.
• Meetings: at least once a year, with special meetings when necessary.

What is the Mano River Union Secretariat?

The Secretariat is the technical and administrative instrument through which the Union pursues its objectives.

It works with the other institutions of the Union, and with support from donors and development partners. Its functions are:

• Planning: prepares strategic plans for the Union.
• Projects: oversees the formulation of projects and programmes, and their implementation, monitoring, evaluation and reporting.
• Meetings: plans and facilitates meetings of the Union’s institutions.
• Approval: approves projects and programmes that support the Union’s objectives.
• Representation: represents the Union at forums on the political, social and economic development of the sub-region.
• Resources: mobilises resources for the Union’s projects and programmes.

Evaluation

1. When was the West African Clearing House established, and what did it become in 1996?
2. State three objectives of the West African Monetary Agency (WAMA).
3. State two challenges facing WAMA.
4. Name the four member states of the Mano River Union.
5. List the four institutions of the Mano River Union.

Assignment

Write a short note on the Mano River Union. Explain why it was given that name and state four functions of its Secretariat.