USAID: West Africa Regional FY 2002 Congressional Budget Justification

Program: WEST AFRICA REGIONAL
Title and Number: Regional Economic Integration Strengthened in West Africa, 624-004
Status: New
Planned FY 2001 Obligation and Funding Source: $1,920,000 DA
Proposed FY 2002 Obligation and Funding Source: $2,000,000 DA
Initial Obligation: FY 2001 Estimated Completion Date: FY 2008

Summary: Since becoming independent nearly forty years ago, the fifteen countries of the Economic Community of West African States (ECOWAS) have shared a common vision of national economies integrated into a regional system. Unfortunately, this vision has not yet been transformed into reality. West Africa remains one of the least developed regions on earth with poverty rates as high as 50%. With the exception of Nigeria, national markets in West Africa are too small to support scale-sensitive industry or trade. The agricultural sector, which is generally considered to represent the greatest potential for growth in the region, is underproductive, because of a combination of low natural potential, lack of investment and poor management under state control. West Africa also suffers from serious inefficiencies in the supply and pricing of energy, roads and telecommunication. Traditional trading practices, the types and volumes of goods traded, and major trading routes are ill adapted to the realities of a regional or of a global economy. Political instability and conflict have served merely to exacerbate the situation. Consequently, long-term economic growth has been stagnant, or negative, in most of the countries in the region.

Economic trends began to improve, originating in large part from the devaluation of the African Financial Community (CFA) franc in 1994, coupled with some benefits from structural adjustment programs initiated in the mid-1990s. However, since the end of 1999, this has begun to level out, or in some countries, decline. And where improvement in investment levels and growth is notable, it remains below other developing regions, and clearly below levels required for sustainable growth and significant poverty reduction. The development problem is clear: how to achieve rates of economic growth that will increase incomes to levels that can stimulate domestic markets, encourage private investment and eliminate poverty.

This activity directly supports USAID Agency goals in economic growth and the U.S. National Interest of "Global Economic Prosperity, Expanding Markets" as defined by the Strategic Plan for International Affairs Agencies (SPIAA).

FY 2001 Development Assistance (DA) Economic Growth funding of $1,920,000 is planned to support, West African Regional institutions (e.g. ECOWAS, CILSS) and associations in the development of mechanisms to reduce intra-regional trade barriers.

FY 2002 DA funding in the amount of $2,000,000 will be used to further rationalize the intra-regional trade agendas and initiatives between regional institutions and bilateral donors; support development and implementation of sub-regional trade and investment policies; and assist in the development of improved national and regional institutional capacity to provide a reliable, competitively priced supply of energy within the region.

Key Results: The problem in the West Africa region is not the absence of donor programs that seek to stimulate private investment and domestic markets. Rather, the current donor programs are not comprehensive enough, and they have not achieved the intended results. For example, significant amounts of donor assistance are provided to the three major regional institutions (i.e. ECOWAS, West African Economic Monetary Union-WAEMU, and the Permanent Interstate Committee for Drought Control in the Sahel-CILSS), but the assistance is not structured to encourage interaction, collaboration and a logical division of responsibilities among these entities. This activity will address this issue by supporting fora at which these organizations can discuss and formulate a common agenda for regional economic integration in the important areas of trade, monetary and fiscal issues and energy. In fact, it is anticipated that one of the most important elements of the WARP will be its effort to assist in the establishment of the West African Power Pool (WAPP).

Achievement of results for this activity will help insure that individuals from various parts of civil society in West Africa participate in consultations, dialogue and information sharing on key development issues in order to: (a) build true African leadership of the development agenda and (b) strengthen the political will of governments to implement programs developed by, or with, civil society.

Performance and Prospects: This activity will continue and expand those of the Sahel Regional Program (SRP). The WARP will assist regional institutions and associations to reduce intra-regional barriers to trade by supporting the Forum of West Africa's (FOWA) (composed of CILSS, WAEMU, ECOWAS, and the West African Enterprise Network--WAEN) current efforts to establish a mechanism for monitoring and reporting on trade barriers in West Africa. Support of FOWA is also intended to further the rationalization of the numerous inter-governmental organizations in the region, create coherence between the bilateral and regional agendas of donors and address regional tensions.

Promotion of fora for the discussion of international, regional and sub-regional trade and investment policies will occur through activities that: (a) enhance civil society participation in policy dialogue; (b) support business linkage activities between regional industry and trade organizations and U.S. counterpart organizations; and (c) improve donor coordination on issues related to strengthening the private sector. In FY 2001, the WARP will also support regional activities related to improving monetary and fiscal policies, and a greater understanding of global trade through capacity-building activities on the World Trade Organization. Specific activities will include: (a) conducting studies and holding conferences to address critical issues such as taxation and the monitoring, supervision and regulation of equity and debt markets; (b) promoting dialogue on issues such as the future of the CFA franc and/or a broader monetary union that may be created under West Africa Monetary Authority; (c) supporting current efforts by FOWA to find practical solutions to cross-border monetary transfers; and (d) helping build capacity in regional private sector organizations through technical assistance.

Finally, this activity will assist in the development of improved national and regional institutional capacity to provide a sustainable, competitively priced, reliable supply of energy within the region. The recent and on-going experience of USAID/Ghana with the development of the West Africa Gas Pipeline provides a starting point for future assistance in this sector. In addition to assuming responsibility for the regional aspects of the Gas Pipeline, the WARP will assist the ECOWAS countries in the establishment of a regional power pool. The first phase of the interconnections will likely involve the countries of Côte d'Ivoire, Ghana, Togo, Benin, Burkina Faso, Nigeria and Niger.

Possible Adjustments to Plan: As indicated above, this activity will continue and expand on interventions initiated under the Sahel Regional Program. The major adjustment, or addition, is the initiation of activities to assist the ECOWAS countries in developing a dynamic private energy sector that feeds power to an efficiently managed West African power grid. The WARP is committed to collaborating with ECOWAS countries to ensure the availability of reasonably priced, reliable energy supplies that will contribute to industrial growth, employment generation and increased productivity. A key element of this initiative is the participation of domestic and foreign private sector investors in the financing, construction and management of the regional energy transmission systems.

Other Donors: Donor support for West African regional economic integration comes primarily from the European Union and France. The European Union and France have been the main source of support to WAEMU. The European Union has been the primary source of support for ECOWAS. USAID complements support given to WAEMU and ECOWAS in the policy arena by other donors by providing support to the private sector voice, the WAEN. For the WAPP, USAID is the leader donor, but the World Bank and France are also providing support.

Principal Contractors, Grantees, or Agencies: Activities initiated under the Sahel Regional Program are implemented through grants to ECOWAS and via grants and contracts between USAID and U.S. entities, including the Corporate Council on Africa, PA Consulting, Booz, Allen & Hamilton, Nathan/MSI Joint Venture, Associates for International Resources and Development, Purdue University and the Barents Group, and DAI, Inc.

Selected Performance Measures: WARP is a new program with the first obligation planned in 2001. Baselines and targets are being developed.

U.S. Financing

(In thousands of dollars)

	Obligations		Expenditures		Unliquidated
Through September 30, 1999	0	DA	0	DA	0	DA
	0	CSD	0	CSD	0	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Fiscal Year 2000	0	DA	0	DA
	0	CSD	0	CSD
	0	ESF	0	ESF
	0	SEED	0	SEED
	0	FSA	0	FSA
	0	DFA	0	DFA
Through September 30, 2000	0	DA	0	DA	0	DA
	0	CSD	0	CSD	0	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Prior Year Unobligated Funds	232	DA
	0	CSD
	0	ESF
	0	SEED
	0	FSA
	0	DFA
Planned Fiscal Year 2001 NOA	1,920	DA
	0	CSD
	0	ESF
	0	SEED
	0	FSA
	0	DFA
Total Planned Fiscal Year 2001	2,152	DA
	0	CSD
	0	ESF
	0	SEED
	0	FSA
	0	DFA
			Future Obligations		Est. Total Cost
Proposed Fiscal Year 2002 NOA	2,000	DA	28,863	DA	33,015	DA
	0	CSD	0	CSD	0	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA

WEST AFRICA REGIONAL PROGRAM

Activity Data Sheet

U.S. Financing