Explain the meaning and uses of the ECOWAS Fund for co-operation, compensation and development.

Answer Details

Meaning: The ECOWAS Fund for Co-operation, Compensation and Development was one of the principal institutions established under the 1975 Treaty of Lagos that founded the Economic Community of West African States. It was set up as the community's financing arm, with its headquarters in Lome, Togo. Its capital was contributed by member states, and it also drew resources from grants, loans and aid from within and outside the region. Its central purpose was to correct the imbalance in the levels of economic development among member states and to bear the cost of integration. (The Fund was later transformed into the ECOWAS Bank for Investment and Development, EBID.)

Uses / functions of the Fund:

1. Financing development projects: It provided loans and financial assistance for infrastructure and development projects such as roads, telecommunications, energy and other community programmes.
2. Compensation for revenue loss: It compensated member states, especially the poorer ones, for the loss of import duties and other revenues suffered as a result of trade liberalisation and the removal of tariffs within the community.
3. Reducing developmental imbalance: It channelled resources to the less-developed member states so as to narrow the gap between the richer and poorer economies of the region.
4. Promoting balanced regional development: It financed projects of a community-wide character that individual states could not undertake alone, thereby spreading the benefits of integration.
5. Guaranteeing and mobilising investment: It guaranteed foreign investment and helped to mobilise both internal and external capital for regional development.
6. Supporting integration and cushioning adjustment: It cushioned the adverse effects of the establishment of the common market on the economies of member states.

In short, the Fund served as the instrument for financing co-operation, compensating members for integration losses, and promoting even development across West Africa.