The 5 largest powerhouses in the African Economy are Nigeria, South Africa, Egypt, Algeria, and Morocco. These economies feature various levels of diversification and growth. In 2016, they contributed well over 60% (62.24%) to the continent’s overall Gross Domestic Product.
ECOWAS is a regional economic group binding together 15 West African countries. One of its main goals is to ensure the smooth and free movement of goods, services and member States citizens within the bloc and to improve economic integration. As such, one would expect a significantly higher intra-regional trade volume compared to trade with rest of the world. This is however not the case. Even though it is on the increase direction-ally, it is still significantly lower than merchandise trade with high income economies. In fact, Intra-African trade is the lowest compared to intra-regional trade in other continents.
In the world of Finance and business, investment diversification is a way to ensure long term growth with minimal risks. This is because gains from profitable products offsets losses incurred by non-profitable ones. Even though the same concept applies to a country’s economy, governments find it difficult to follow this well-known rule of the Finance world. This is the case for some of the member States in ECOWAS, which tend to rely mostly on the sale of one particular product when it comes to merchandise export.
Nigeria has long been one of the largest economies in Africa. As of 2016, it was well ahead of Egypt and South Africa. Nigeria’s GDP in the ECOWAS regional group is significantly larger than that of all the other member States combined. With its substantial weight, the country is in a unique position to set the course of ECOWAS in particular, and Africa in general for years to come.