Regional Integration

The Vision

The Bank’s vision is of an empowered and prosperous continent, which is integrated regionally, and into the global economy. It is supportive of the African Union strategic vision of building a united and integrated Africa underpinned by political, economic, social and cultural integration.

It proposes a bolder, yet more focused and co-coordinated set of interventions by the AfDB Group, and closer collaboration and partnership with key stakeholders.

The Strategy

The strategy builds on the Bank Group Regional Integration and cooperation Policy developed in 2000 and the African Development Fund (ADF) 11 Regional Operations Framework. It emphasizes a triple role of catalytic financier, knowledge broker and partner, and builds on the Bank’s key comparative and competitive advantages as Africa’s premier development finance institution.

The strategy is underpinned by two mutually reinforcing pillars, which reflect priority areas in which the Bank has specific competencies, and where it is strategically well-placed to intervene.

These are:

• Regional infrastructure; and
• Institutional capacity building, including trade facilitation.

While the Bank will work with African Union-designated regional economic communities (REC), it will assess its partner regional organizations for the strength of commitment and support of their member countries, program implementation capacity and governance structures in order to ensure the sustainability of programs. There is also the issue of fragile states, other low income countries and middle income countries involved in some common integration programs.

The strategy, therefore, proposes for the Bank to provide special capacity building support to fragile states that have very weak institutions and to develop innovative instruments to help address the problem of the middle income countries that have to borrow at market rates to participate in regional operations with the low income countries benefiting from concessional resources.

Understanding Regional Integration

“Regional integration” refers to the outcome of processes, including cooperative arrangements, the implementation of intergovernmental treaties and market-led processes, through which economies of countries in a region become more closely interconnected.

Regional integration is essential to building markets, creating robust and diverse economies, increasing opportunities for growth, and attracting new sources of investment finance.  

The small size and primary production structure of the typical African economy provided the rationale for pursuing mutually beneficial economic cooperation and regional integration particularly among adjacent states.

Since the early years of Africa’s independence, the imperative of regional integration has been central to the political and economic vision of the continent’s leadership. The fragmentation of Africa into many nation states with scant economic coherence led African leaders, following political independence to embrace regional integration as a central element of their development strategy.

Over the past two decades, the forces of globalization have brought this imperative ever more sharply into focus as Africa has grappled with the challenges of globalization. Notwithstanding political commitment and efforts to bring Africa’s regional integration vision to fruition, progress has not proceeded apace with other developing regions.

Challenges to regional integration and to realizing Africa’s trade potential are complex and diverse.
A key dimension is the wide-ranging and pervasive ‘soft’ infrastructure constraints that hamper the regional integration process and discourage investment and trade.

These include: poorly developed financial markets; complex procedures regulating investment and business activity; complex customs arrangements; and lack of harmonization of policies, regulations and procedures governing investment, trade and infrastructure development at regional and continental level.

In addition, poor physical infrastructure and connectivity remains a key constraint to Africa’s business, investment and trade competitiveness and challenge to benefiting meaningfully from globalization and regional integration.

What the AfDB has done

The AfDB Group has provided extensive technical assistance, policy advice, advocacy and a range of knowledge products for regional integration and trade initiatives at continental and regional levels.

Non-lending activities

The Bank has been instrumental in the establishment of key regional organizations. As a strategic partner to the NEPAD process, the Bank has also been designated as lead agency for infrastructure development, and banking and finance standards.

In the latter role, the Bank participated in the design of the Africa Peer Review Mechanism (APRM), which the Bank continues to support. As lead advisor to the African Union/NEPAD on the infrastructure development program, the AfDB Group has provided significant support for the development of the Short Term Action Plan (STAP) and ongoing Program for Infrastructure Development in Africa (PIDA).

In response to the many challenges facing the continent in the transformation of priority NEPAD projects into bankable projects, in 2004, the Bank facilitated the establishment of the NEPAD Infrastructure Project Preparation Facility (IPPF), which it is hosting.

The AfDB has forged strong partnerships with the UNECA and the African Union, and contributed
to the study, which formed the basis of the streamlining of the RECs.

The Bank has also and provided extensive technical support and policy advice to regional member countries and regional economic communities on approaches to building and strengthening regional cooperation, trade and economic integration, including the processes towards the establishment of the African Economic Community.

Strong partnerships have also been forged with multilateral and bilateral partners seeking to assist African countries to strengthen cooperation and deepen regional integration as well as participation in the WTO processes.

In the sphere of knowledge creation, mobilization and dissemination, the Bank has conducted and published extensive research and statistical analysis on key topics related to regional integration and trade,

Lending activities

The AfDB Group has provided financing for multi-country, sub-regional, and continental initiatives since the early 1970s. Over this period it has financed more than 200 multi-country operations involving virtually all African countries. These operations span project/sector investment, capacity-building, project preparation support, technical assistance, and participation in risk-taking investment funds.