By Victoria Ojeme

Tax instrument is the means by which every government generates a large amount of its revenue. In this case, the ECOWAS community levy plays a key role in the regulation of the economy, as well as its performance, as it serves as a tool of either increasing or decreasing money supply in the community.

Last year, the 1st seminar of the Parliament of the Economic Community of West African States (ECOWAS) held in Freetown, the capital of Sierra Leone, centred on the involvement of ECOWAS Parliamentarians in the monitoring of the implementation of the protocol on the Community Levy. The objective of the meeting was to involve Members of ECOWAS Parliament in monitoring the implementation of the protocol on the Community Levy in order to ensure adequate collection of resources, which is necessary for financing the activities of the community.

Community Levy is a mechanism put in place by the ECOWAS Heads of State and Government. It has been operational since 2003. This mechanism is intended to mobilize funds necessary for the accomplishment of ECOWAS missions.

This levy is 0.5%, imposed on goods from non-ECOWAS member states. The funds from this Community Levy are intended to cover between 70 and 90% of the community’s budgetary revenues. “Unfortunately, we are witnessing low mobilization of these resources,” Speaker Tunis lamented in his address. “Over the past three years, mobilization was around 30% of forecasts. He was concerned. The difficulty of recovery threatens the implementation of community projects and programs. Faced with the situation, Speaker Tunis invited community parliamentarians to make relevant and innovative proposals in order to make a significant contribution to solving the problem.

Thus, there is a need for a larger pocket of revenue, and tax revenue could be a very important and significant source. The drive towards sustainable development, which is a base of the improved welfare and living standard, depends crucially on the availability of massive resources mobilized within the economy via tax revenue. Improvements in macroeconomic variables have been put forth as a boost to government tax revenue achievement.

Earlier in the week, the Commissioner for Finance at the ECOWAS Commission, Halima Ahmed noted that there was a five percent reduction in the revenue of ECOWAS in 2022.

Mrs Ahmed announced this in Lome, Togo, where she gave an overview of the Community’s 2020 Consolidated annual financial report at the delocalized meeting of the joint committees of the ECOWAS Parliament, which includes Public Accounts/Administration; Finance and Budget; Macroeconomic Policies and Economic Research, as well as Trade and Customs.

According to Mrs Ahmed, the revenue accruing to the Community from all sources decreased by about 13 million UA (Unit of Account), representing 5%, from 257 million UA in 2019 to 244 million UA in 2020.

Unit of Account (UA) refers to a monetary denomination used for accounting purposes, but not necessarily corresponding to any real currency.

Mrs Ahmed attributed the drop to the COVID-19 pandemic, which affected several economies of the world. However, she said that with improved economic activities, there has been appreciable improvement in the Community Levy in the 2021 Fiscal Year.

She also pointed out that the Revenue from development partners increased from 35 million in 2019 to 48 million in 2020. The raise, she said, was attributed to receipt of more funds, especially from the West African Health Organization (WAHO), due to the COVID-19 pandemic.

In terms of expenditure, it was revealed that the community, during the period, incurred about 81% increase in spending.

“The total expenses for all Community institutions increased by 135 million (81%) from 166 million in 2019 to 301 million in 2020,” Mrs Ahmed explained. “The huge expenses were due to the provision of debt of 134 million made in the financial statement, in respect of long outstanding receivables from Member-States.”

She gave assurances of the Management’s commitment to improve the quality of ECOWAS’ Financial reporting across the Community’s institutions and agencies.

It would be recalled that the 2022 financial estimates of the ECOWAS Parliament was projected to be financed almost solely from community levy.

The Federal Government of Nigeria in 2021 said it has paid over 1,177 billion dollars to ECOWAS as its Community Levy contribution in the last 16 years.

Nigeria’s payment represents 40.42 per cent of the total payment of 2,913,088,908 dollars payment made by all the 15 member states and is higher than payments made by 12 other countries put together except Ghana and Cote d’Ivoire.

According to documents from a presentation by the ECOWAS Commission to Parliament at Plenary during its Virtual Second Extraordinary Session, Nigeria paid 853,310,564 UA (West Africa Unit of Account) for the period under review.

The West African Unit of Account (WAUA) is the authorised currency used in ECOWAS.

Ghana paid about 508,577 million dollars, Cote d’Ivoire 347,262 million dollars, while Benin, Burkina Faso, Cape Verde, Guinea, Guinea Bissau, Gambia, Liberia, Mali, Niger, Senegal, Sierra Leone and Togo paid a total of 879,711 million dollars.

Ghana’s payment represents 17.45 per cent of the total sum, Cote d’Ivoire 11.9 per cent, while the cumulative payment by the other 12 countries represents 30.1 per cent.

Within the period under review, Guinea Bissau paid the lowest amount of 6, 204 million dollars, representing 0.2 per cent of total community levy proceeds in the 16 years under review.

The relevance of ECOWAS in the region cannot be underestimated. Today ECOWAS functions on a regular platform for peace and security, developing infrastructure, policy harmonization (to facilitate trade) and good corporate governance. These need to be sustained.