One of the important recent developments in global production and trade that has taken place over the last two decades is the growing importance of global value chains in managing and coordinating production and trade linkages across countries. This included a tendency toward more fragmentation in production and more trade in parts and components across countries and also a changing nature of governance of production particularly in developing countries. The strong growth of communication networks contributed widely to this transformation. Until recently, West African countries failed to adopt the necessary strategies to better organize and plan the diversification of their economies through proactive public policies and integration into global value chains.
Over the last ten years, many African resource rich countries have embraced a fundamental shift in their policies regarding the management of their extractive resources in an attempt to finally reap the benefits from the exploitation of the resources. In particular, many countries adopted a set of local content frameworks that included fiscal and industrial policies, supported by regulatory and institutional reforms, all aimed at triggering economic and social transformation and rebalancing economic gains in favour of their local population.
Nonetheless, the successful pursuit of national strategies and policies for economic transformation should be substantiated and complemented by strong regional policies. While globalization and technological progress have squeezed space, more than ever, countries need to combine forces through regional mechanisms to sustain competitiveness and boost their productivity, as micro-entities cannot be sustained on their own. Regional integration can be a powerful multi-dimensional process if pursued effectively. It is expected to lead to coordination, cooperation and convergence efforts around projects of common interest, but its level of ambition can be more or less deep, depending on the political and socio-economic realities of the member countries. In that sense, real region-wide progress, through improved connectivity (infrastructure, power, information, and communication technology etc.), competitive logistics, production value chain integration, convergence in regulatory policies and effective support to trade and trade-related policies are all important to accompany the development of regional value chains that will lead to a sustainable development in resource-rich West African countries.
2. Policy reforms for promoting regional value chains in West Africa.
Realizing the importance of promoting regional value chains through appropriate policy frameworks, the Economic Community of West African States (ECOWAS) implemented a unified mining legislation, as enshrined in the ECOWAS Treaty. This involves the adoption of a three-pronged approach, with the setting up of three regional legal frameworks, aimed at harmonizing mining regimes and legislations across its member states to create a more sustainable and transparent mining legal environment in the sub-region. These are (i) the adoption of a Directive on the Harmonization of Guiding Principles and Policies in the Mining Sector in 2009; (ii) the setting up of a Mineral Development Policy in 2011, to address issues such as optimizing the value chain through the processing and value addition to minerals for maximum benefit; and (iii) the Common Mining Code, meant to ensure a consistency in the approach by member states in harmonizing their national mining legislations.
The West African Economic and Monetary Union (WAEMU), the other sub-regional body, whose members are all a subset of the ECOWAS, has also deployed substantial efforts to the harmonization of mining policies, when it adopted a Common Mining Policy and a Common Mining Code in 2003. The Code regulates the ownership and granting of mineral titles, adopts a program for the protection of the environment, defines a tax system applicable to minerals, governs the recruitment and procurement rules, etc. Although these two sub-regional initiatives appear to mostly share the same underlying principles for the mining industry, it is important they are well coordinated and harmonized to ensure that they achieve their objectives.
The oil and gas sector remains remarkably largely uncovered by sub-regional policy reform initiatives. Being the largest economic sector in the sub-region, the convergence of domestic economic reforms and common regional economic policies and industrial linkages can only favour positive development outcomes. Oil and gas producers in the sub-region have, for long been considered as dormant regional partners although this is gradually changing with the recent enactment by Nigeria of the Petroleum Industry Bill (PIB) to promote regional cooperation and coordination in the oil and gas sector. Nigeria as the largest producer of oil and gas resources in West Africa is in a better position to drive sub-regional value chains in the oil and gas industry. But the hitherto passive participation in sub-regional integration in the oil and gas sector processes is reflected in the low level of coordination around the extractive sector at the sub-regional level, despite widely recognized efforts by regional institutions to harmonize policies and put in place sub-regional strategies and policies. Curiously, most attempts to coordinate sub-regional efforts were around the mining sector, rather than in the predominant oil and gas sector.
While these regional initiatives are commendable for attempting to promote sub-regional value chains through the coordination of legal frameworks and the need to ensure coherence, the production and infrastructure dimensions of integration are still largely absent. This is an absolute necessity to unlock the full potential of private enterprise participation in sub-regional value chains. The combination of national and sub-regional policy initiatives would, undoubtedly, enhance the expansion the market and the attractiveness of the sub-region that will sustain its economic prospects through the development of sub-regional value chains.
3. Concluding remarks.
The challenge facing countries and sub-regions is not just a matter of developing value chains. It is about increasing the share of value added created locally and to moving up the sub-regional chain. The successful deployment of West Africa’s mining, oil and gas resources into achieving sustainable development outcomes is conditional upon the extent to which sub-regional policy initiatives are implemented domestically and the ability to coordinate efforts among the wide range of stakeholders, notably at the sub-regional level. Efforts to harmonize mining codes have increased across the member countries of the sub-region, in particular emphasizing the need for transparent regulatory frameworks and efficient administrative systems, including one-stop shops in mineral licensing. The ECOWAS member countries have taken concrete steps towards harmonizing their national policies, laws and regulations and developing common standards to create a uniform business environment for investment which are fundamental to the development of sub-regional value chains.
These on-going sub-regional mineral policies and initiatives are quite key to support regional value chains. However, the main challenge is the difficulty to systematically define a common agenda among member countries, given often competing, and at times diverging interests in the sectors. For instance, it is still quite challenging to fully implement large common infrastructure projects, despite the fact that those are an absolute necessity to bring down the cost of doing business across borders, help connect markets and enhance cross-border trade and investment. Similarly, there are surprisingly few large scale regional projects around the extractive sector, despite its predominance as an economic activity. There is also the need to develop sub-regional policies and initiatives for harmonizing oil and gas industry processes to enhance the development of sub-regional value chains in the industry. Nonetheless, there is a remarkable progress in the West Africa sub-region to legislate policies and frameworks that, if well implemented, can enhance the development of sub-regional value chains in the mining, oil and gas industry.