The West African sub-region is moving beyond its violent past to focus on regional economic integration, seeking to become the continent's economic powerhouse, Liberia's Finance Minister said last week.
Minister Amara Mohammed Konneh also told Reuters in Washington D.C that he was worried about the effect of China's slowdown and overall market volatility on Liberia's economy, though he did not foresee any immediate impact on planned bond sales.
West Africa’s regional body, the Economic Community of West African States (ECOWAS), was originally created in the 1970s to focus on economic integration, but instead turned to peacekeeping in violent conflicts in Liberia, Sierra Leone and Ivory Coast, Konneh said.
“West Africa and Africa as a whole experienced a lot of conflicts as a result of bad governance. So the focus shifted from economic cooperation to security," Konneh said, speaking to Reuters on the sidelines of the ongoing International Monetary Fund (IMF)-World Bank Group Spring Meetings in Washington.
"As conflicts are disappearing, the focus is now shifting more and more to economic integration through infrastructure development," he said in an interview.
The Banker Magazine African Finance Minister of the Year said projects such as a highway along West Africa's coast and an electricity pool for most of the 15 countries in the ECOWAS bloc should help cement stronger economic ties.
The question of how to accelerate regional integration in West Africa has been cast in stark relief to the progress made in Africa's two other main blocs, the South African Development Community (SADC) and the East African Community (EAC).
“Nigeria's new status as the number-one economy in Africa may help shift the dynamic in West Africa's favor,” Konneh observed. Nigeria on Sunday officially became Africa's biggest economy when it rebased its GDP.
"I believe West Africa is on its way to becoming an economic giant in terms of the regional dimension within Africa," Konneh said. "But still, the SADC (South African Development Community) is very strong. I think we still have to wait and see whether Nigeria's new position will change all of that."
Konneh also said ECOWAS was unlikely to meet a two-month deadline to eliminate lingering disagreement over a free trade deal with the European Union.
The Economic Partnership Agreement stalled two years ago after countries in the West African region resisted lifting tariff barriers over fears they could crush nascent industries unable to cope with European imports. "I think it's important to understand than anything, anything that has to do with regional matters is always difficult to resolve in one shot, because there's an issue of sovereignty, relinquishing control of certain things," he said. "The parliaments of these countries are not generally supportive."
"I think that eventually West Africa will come around, after we've looked at all of the pros and cons of this agreement," he added, “though that process would take more than two months.”
Konneh also said he was worried about potential market volatility and its impact on Liberia's economy, but strong macroeconomic policies and greater foreign direct investment should help weather market scares.
"I don't think it is going to affect anything immediately," he said, referring to potential market volatility and its impact on Liberia's planned bond sales. "But we need to watch it."
Liberia has "medium-term" plans to launch an international bond but will first seek a debt rating which it anticipates will be in the single-B category, Konneh said earlier this year.
Liberia may also be hard hit by the slowdown in China as the world's second-largest economy rebases towards consumption-led growth away from investment, crimping its demand for resources like iron ore, a key export.
"The declining demand for iron ore there is going to hurt our bottom line," he said.
However, Konneh said he saw Liberia beating the IMF's "very conservative" forecast for economic growth of 7 percent this year.
"We are determined as a government to do better than that," he said, adding that removing bottlenecks in the mining and agriculture industries would help.
"In order for us to meet our aspiration of reaching a middle-income country, we have to grow consistently at least 8 percent," he said.