INTERNATIONAL ECONOMIC ORGANISATION

Economic Community of West African States (ECOWAS)

The Economic Community of West African States (ECOWAS; French: Communauté économique des États de l’Afrique de l’Ouest, CEDEAO) is a regional group of fifteen West African countries. Founded on 28 May 1975, with the signing of the Treaty of Lagos, its mission is to promote economic integration across the region.

Considered one of the pillars of the African Economic Community, the organization was founded in order to achieve “collective self-sufficiency” for its member states by creating a single large trading bloc through an economic and trading union. It also serves as a peacekeeping force in the region. The organization operates officially in three co-equal languages—French, English, and Portuguese.

The ECOWAS consists of two institutions to implement policies—the ECOWAS Commission and the ECOWAS Bank for Investment and Development, formerly known as the Fund for Cooperation until it was renamed in 2001.

Membership:
There are currently 15 member countries in the Economic Community of West African States. The founding members of ECOWAS were: Benin, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania (left 2002), Niger, Nigeria, Senegal, Sierra Leone, Togo, and Burkina Faso (which joined as Upper Volta). Cape Verde joined in 1977.

Regional security cooperation

Economic Community of West African States Monitoring Group

The ECOWAS nations assigned a non-aggression protocol in 1990 along with two earlier agreements in 1978 and 1981. They also signed a Protocol on Mutual Defence Assistance in Freetown, Sierra Leone, on 29 May, 1981 that provided for the establishment of an Allied Armed Force of the Community.

Expanded ECOWAS Commission

For the third time since its inception in 1975, ECOWAS is undergoing institutional reforms. The first was when it revised its treaty on 24 July 1993; the second was in 2007, when the Secretariat was transformed into a Commission. As of July 2013, ECOWAS now has six new departments (Human Resources Management; Education, Science and Culture; Energy and Mines; Telecommunications and IT; Industry and Private Sector Promotion. Finance and Administration to Sierra Leone has been decoupled, to give the incoming Ghana Commissioner the new portfolio of Administration and Conferences)

The Community Court of Justice

The ECOWAS Community Court of Justice was created by a protocol signed in 1991 and was later included in Article 6 of the Revised Treaty of the Community in 1993. However, the Court did not officially begin operations until the 1991 protocol came into effect on 5 November 1996. The jurisdiction of the court is outlined in Article 9 and Article 76 of the Revised Treaty and allows rulings on disputes between states over interpretations of the Revised Treaty. It also provides the ECOWAS Council with advisory opinions on legal issues (Article 10). Like its companion courts the European Court of Human Rights and East African Court of Justice, it has jurisdiction to rule on fundamental human rights breaches.

Sporting and cultural exchange

ECOWAS nations organize a broad array of cultural and sports event under the auspices of the body, including the CEDEAO Cup in football, the 2012 ECOWAS Games and the Miss CEDEAO beauty pageant.

The Economic Community of West African States (ECOWAS) was created by the Treaty of Lagos in Lagos, Nigeria, on 28 May 1975. A revised treaty intended to accelerate integration of economic policy and improve political cooperation was signed on 24 July 1993. It sets out the goals of a common economic market, a single currency, the creation of a West African parliament, economic and social councils, and a court of justice, which primarily interprets and mediates disputes over ECOWAS policies and relations, but has the power to investigate alleged human rights abuses in member countries.

Structure:
The structure of the Economic Community has changed several times over the years. As of 2015, ECOWAS listed seven active institutions: the Authority of Heads of State and Government (which is the leading body), the Council of Ministers, the Executive Commission (which is sub-divided into 16 departments), the Community Parliament, the Community Court of Justice, a body of Specialized Technical Committees, and the ECOWAS Bank for Investment and Development (EBID, also known as the Fund).

 The treaties also provide for an advisory Economic and Social Council, but ECOWAS does not list this as part of its current structure.

In addition to these seven institutions, the Economic Community includes three specialized institutions (the West African Health Organisation, West African Monetary Agency, and the Inter-governmental Action Group against Money Laundering and Terrorist Financing in West Africa) and three specialized agencies (ECOWAS Gender and Development Centre, Youth and Sports Development Centre, and Water Resources Coordination Centre).

Peacekeeping Efforts: 
The 1993 treaty also lays the burden of settling regional conflicts on the treaty members, and subsequent policies have established and defined the parameters of ECOWAS peacekeeping forces. These forces are sometimes incorrectly called ECOMOG, but the ECOWAS ceasefire Monitoring Group (or ECOMOG) was created as a peacekeeping force for the civil wars in Liberia and Sierra Leone and was disbanded at their cessation. ECOWAS does not have a standing force; each force raised is known by the mission for which it is created. 

The peacekeeping efforts undertaken by ECOWAS are just one indication of the increasingly multifaceted nature of the economic community’s efforts to ensure the prosperity and development of West Africa  and the well-being of its people.

The functions of Ecowas

The functions of ECOWAS include:
1. ECOWAS promotes co-operation and integration in economic, social and cultural activities among its member nations.
2. ECOWAS prevents and settles regional conflicts
3. ECOWAS contributes to the progress and development of the African continent

1. It was created to promote economic trade, national cooperation, and monetary union, for growth   and development throughout West Africa.

The major problems facing ECOWAS

Major problems facing the Economic Community of West African States, or ECOWAS, include political instability and poor governance of member states, weakness and lack of diversification of national economies, poor or absent infrastructures for transportation and communications, and an abundance of similar organizations with the same objectives. ECOWAS also faces various social problems endemic to the region and the indifference to progress manifested by some of its members.

Another major problem is human trafficking, especially of women and children, but a lack of statistics and other information hinders law enforcement. Public safety concerns include the lack of building codes and infrastructure sufficient to handle natural disasters in the region.

International Monetary Fund

The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C., of “188 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.”[1] Formed in 1944 at the Bretton Woods Conference, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system. Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments difficulties can borrow money. As of 2010, the fund had XDR476.8 billion, about US$755.7 billion at then-current exchange rates.

Through the fund, and other activities such as statistics-keeping and analysis, surveillance of its members’ economies and the demand for self-correcting policies, the IMF works to improve the economies of its member countries. The organization’s objectives stated in the Articles of Agreement are: to promote international monetary cooperation, international trade, high employment, exchange-rate stability, sustainable economic growth, and making resources available to member countries in financial difficulty.

Functions

The principal function of the IMF is to super­vise the international monetary system. Several functions are derived from this. These are: granting of credit to member countries in the midst of temporary balance of payments deficits, survei­llance over the monetary and exchange rate policy of member countries, issuing policy recommen­dations.According to the IMF itself, it works to foster global growth and economic stability by providing policy, advice and financing to members, by working with developing nations to help them achieve macroeconomic stability and reduce poverty. The rationale for this is that private international capital markets function imperfectly and many countries have limited access to financial markets. Such market imperfections, together with balance-of-payments financing, provide the justification for official financing, without which many countries could only correct large external payment imbalances through measures with adverse economic consequences. The IMF provides alternate sources of financing.

Upon the founding of the IMF, its three primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, and to provide short-term capital to aid balance of payments. This assistance was meant to prevent the spread of international economic crises. The IMF was also intended to help mend the pieces of the international economy after the Great Depression and World War II. As well, to provide capital investments for economic growth and projects such as infrastructure.

The IMF’s role was fundamentally altered by the floating exchange rates post-1971. It shifted to examining the economic policies of countries with IMF loan agreements to determine if a shortage of capital was due to economic fluctuations or economic policy. The IMF also researched what types of government policy would ensure economic recovery. The new challenge is to promote and implement policy that reduces the frequency of crises among the emerging market countries, especially the middle-income countries that are vulnerable to massive capital outflows. Rather than maintaining a position of oversight of only exchange rates, their function became one of surveillance of the overall macroeconomic performance of member countries. Their role became a lot more active because the IMF now manages economic policy rather than just exchange rates.

In addition, the IMF negotiates conditions on lending and loans under their policy of conditionality, which was established in the 1950s. Low-income countries can borrow on concessional terms, which means there is a period of time with no interest rates, through the Extended Credit Facility (ECF), the Standby Credit Facility (SCF) and the Rapid Credit Facility (RCF). Nonconcessional loans, which include interest rates, are provided mainly through Stand-By Arrangements (SBA), the Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL), and the Extended Fund Facility. The IMF provides emergency assistance via the Rapid Financing Instrument (RFI) to members facing urgent balance-of-payments needs.

Surveillance of the global economy

The IMF is mandated to oversee the international monetary and financial system and monitor the economic and financial policies of its member countries. This activity is known as surveillance and facilitates international cooperation. Since the demise of the Bretton Woods system of fixed exchange rates in the early 1970s, surveillance has evolved largely by way of changes in procedures rather than through the adoption of new obligations. The responsibilities changed from those of guardian to those of overseer of members’ policies.

The Fund typically analyzes the appropriateness of each member country’s economic and financial policies for achieving orderly economic growth, and assesses the consequences of these policies for other countries and for the global economy.

Conditionality of loans

IMF conditionality is a set of policies or conditions that the IMF requires in exchange for financial resources. The IMF does require collateral from countries for loans but also requires the government seeking assistance to correct its macroeconomic imbalances in the form of policy reform. If the conditions are not met, the funds are withheld. Conditionality is perhaps the most controversial aspect of IMF policies [weasel words] The concept of conditionality was introduced in a 1952 Executive Board decision and later incorporated into the Articles of Agreement.

Structural adjustment

Some of the conditions for structural adjustment can include:

Cutting expenditures, also known as austerity.

Focusing economic output on direct export and resource extraction,

Devaluation of currencies,

Trade liberalisation, or lifting import and export restrictions,

Increasing the stability of investment (by supplementing foreign direct investment with the opening of domestic stock markets),

Balancing budgets and not overspending,

Removing price controls and state subsidies,

Privatization, or divestiture of all or part of state-owned enterprises,

Enhancing the rights of foreign investors vis-a-vis national laws,

Improving governance and fighting corruption.

Benefits

These loan conditions ensure that the borrowing country will be able to repay the IMF and that the country will not attempt to solve their balance-of-payment problems in a way that would negatively impact the international economy. The incentive problem of moral hazard—when economic agents maximize their own utility to the detriment of others because they do not bear the full consequences of their actions—is mitigated through conditions rather than providing collateral; countries in need of IMF loans do not generally possess internationally valuable collateral anyway.

Conditionality also reassures the IMF that the funds lent to them will be used for the purposes defined by the Articles of Agreement and provides safeguards that country will be able to rectify its macroeconomic and structural imbalances. In the judgment of the IMF, the adoption by the member of certain corrective measures or policies will allow it to repay the IMF, thereby ensuring that the resources will be available to support other members.

Member countries

All members of the IMF are also International Bank for Reconstruction and Development (IBRD) members and vice versa.[citation needed]

Former members are Cuba (which left in 1964) and the Republic of China, which was ejected from the UN in 1980 after losing the support of then U.S. President Jimmy Carter and was replaced by the People’s Republic of China. However, “Taiwan Province of China” is still listed in the official IMF indices.

Apart from Cuba, the other UN states that do not belong to the IMF are Andorra, Liechtenstein, Monaco, Nauru, and North Korea.

The former Czechoslovakia was expelled in 1954 for “failing to provide required data” and was readmitted in 1990, after the Velvet Revolution. Poland withdrew in 1950—allegedly pressured by the Soviet Union—but returned in 1986.

Qualifications

Any country may apply to be a part of the IMF. Post-IMF formation, in the early postwar period, rules for IMF membership were left relatively loose. Members needed to make periodic membership payments towards their quota, to refrain from currency restrictions unless granted IMF permission, to abide by the Code of Conduct in the IMF Articles of Agreement, and to provide national economic information. However, stricter rules were imposed on governments that applied to the IMF for funding.

The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates secured at rates that could be adjusted only to correct a “fundamental disequilibrium” in the balance of payments, and only with the IMF’s agreement.

Some members have a very difficult relationship with the IMF and even when they are still members they do not allow themselves to be monitored. Argentina, for example, refuses to participate in an Article IV Consultation with the IMF.

Benefits

Member countries of the IMF have access to information on the economic policies of all member countries, the opportunity to influence other members’ economic policies, technical assistance in banking, fiscal affairs, and exchange matters, financial support in times of payment difficulties, and increased opportunities for trade and investment.

Leadership

Board of Governors

The Board of Governors consists of one governor and one alternate governor for each member country. Each member country appoints its two governors. The Board normally meets once a year and is responsible for electing or appointing executive directors to the Executive Board. While the Board of Governors is officially responsible for approving quota increases, Special Drawing Right allocations, the admittance of new members, compulsory withdrawal of members, and amendments to the Articles of Agreement and By-Laws, in practice it has delegated most of its powers to the IMF’s Executive Board.

The Board of Governors is advised by the International Monetary and Financial Committee and the Development Committee. The International Monetary and Financial Committee have 24 members and monitors developments in global liquidity and the transfer of resources to developing countries. The Development Committee has 25 members and advises on critical development issues and on financial resources required to promote economic development in developing countries. They also advise on trade and environmental issues.

Executive Board

24 Executive Directors make up Executive Board. The Executive Directors represent all 188 member countries in a geographically based roster. Countries with large economies have their own Executive Director, but most countries are grouped in constituencies representing four or more countries.

Following the 2008 Amendment on Voice and Participation which came into effect in March 2011, eight countries each appoint an Executive Director: the United States, Japan, Germany, France, the UK, China, the Russian Federation, and Saudi Arabia. The remaining 16 Directors represent constituencies consisting of 4 to 22 countries. The Executive Director representing the largest constituency of 22 countries accounts for 1.55% of the vote.[citation needed] This Board usually meets several times each week. The Board membership and constituency is scheduled for periodic review every eight years.

List of Executive Directors of the IMF, as of April 2015

Managing Director

The IMF is led by a managing director, who is head of the staff and serves as Chairman of the Executive Board. The managing director is assisted by a First Deputy managing director and three other Deputy Managing Directors. Historically the IMF’s managing director has been European and the president of the World Bank has been from the United States. However, this standard is increasingly being questioned and competition for these two posts may soon open up to include other qualified candidates from any part of the world.

In 2011 the world’s largest developing countries, the BRIC nations, issued a statement declaring that the tradition of appointing a European as managing director undermined the legitimacy of the IMF and called for the appointment to be merit-based.

On 28 June 2011, Christine Lagarde was named managing director of the IMF, replacing Dominique Strauss-Kahn.

Criticisms

Overseas Development Institute (ODI) research undertaken in 1980 included criticisms of the IMF which support the analysis that it is a pillar of what activist Titus Alexander calls global apartheid.

Developed countries were seen to have a more dominant role and control over less developed countries (LDCs).

Secondly, the Fund worked on the incorrect assumption that all payments disequilibria were caused domestically. The Group of 24 (G-24), on behalf of LDC members, and the United Nations Conference on Trade and Development (UNCTAD) complained that the IMF did not distinguish sufficiently between disequilibria with predominantly external as opposed to internal causes. This criticism was voiced in the aftermath of the 1973 oil crisis. Then LDCs found themselves with payments deficits due to adverse changes in their terms of trade, with the Fund prescribing stabilization programs similar to those suggested for deficits caused by government over-spending. Faced with long-term, externally generated disequilibria, the G-24 argued for more time for LDCs to adjust their economies.

Some IMF policies may be anti-developmental; the report said that deflationary effects of IMF programs quickly led to losses of output and employment in economies where incomes were low and unemployment was high. Moreover, the burden of the deflation is disproportionately borne by the poor.

Lastly is the suggestion that the IMF’s policies lack a clear economic rationale. Its policy foundations were theoretical and unclear because of differing opinions and departmental rivalries whilst dealing with countries with widely varying economic circumstances.

History of the IMF

The IMF has completely reshaped the global economy and redefined the ways in which countries trade with and take loans from other countries. The IMF was first conceived at a UN conference in 1944, among the 44 attending countries, before it was officially created in 1945. These countries wanted to globally stabilize exchange rates and financial communication between countries, especially following the disastrous Great Depression and World War II. Goals included international cooperation and trade, the reduction of poverty and financial crises, and economic growth. Although the Fund has evolved over the years to become what it is today and adapt to changing times, it still operates around the same guiding principles.

The IMF played a large role in the economic restructurization of the post-World War II world. After the war, some countries were in economic distress, and others were reluctant to trade with certain countries after the fighting. The Fund helped smooth over the economic post-war transition period and restabilize the global economy so it could move toward prosperity, using systems such as fixed exchange rates.

Objectives:

I. To promote international monetary cooperation through a permanent institution which provides the machinery for consolation and collaboration on international monetary problems.

II. To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objective of economic policy.

III. To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.

IV. To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.

V. To give confidence to members by making the general resources of the Fund tempo¬rarily available to them under adequate safeguards, thus providing them with the opportunity to correct maladjustments in their balance of payments, without resor¬ting to measures destructive of national or international prosperity.

VI. In accordance with the above, to shorten the duration and lessen the degree of dis¬equilibrium in the international balance of payments of members.

All these objectives of the IMF may be summarized:

To promote international cooperation; to facilitate the expansion and balanced growth of international trade; to promote exchange stability; to assist in the establishment of a multi¬lateral system of payments; to make its general resources available to its members experiencing balance of payments difficulties under adequate safeguards; and to shorten the duration and lessen the degree of disequilibrium in the international balance of payments of members.