Fast-tracking African regional integration agenda key to economic transformation
Africa’s quest for deeper integration has to be backed by active support of national governments and strengthening of national administrative capacity to achieve structural transformation.
During the closing ceremony of the eighth African Economic Conference (AEC) in Johannesburg on Wednesday, October 30, participants underscored that politicians and technocrats have to combine efforts to accelerate the regional integration agenda.
“Now is time for action,” said Prof. Mthuli Ncube, Vice-President and Chief Economist at the African Development Bank (AfDB), one of the conference partners, alongside the United Nations Economic Commission for Africa (ECA) and United Nations Development Programme (UNDP).
“We have to make sure that we invest in the regional infrastructure and move them forward. Regional integration should not be narrowly understood, it is much broader than movement of people and goods. It is about creating jobs, allowing capital to move.”
While over the past decade, Africa’s commitment to regional economic integration has moved closer to reality with the continent’s total trade (both imports and exports) tripling in value to $1.2 trillion, challenges remain, including inadequate hard infrastructure, in particular poor transport connections, costly and unreliable power supplies.
In addition, national laws and administrative procedures continue to impose unnecessary restrictions, costs and delays on regional trade.
And while most of the reforms needed to facilitate trade have already been agreed upon under regional trade agreements, they require the active support of national governments and strengthening of national administrative capacity.
“In practice, this will mean that governments commit to implement and facilitate the development of the relevant capacity of various actors including strengthening the role and capacity of Africa’s private sector to participate in large regional integration projects as well as negotiation with global actors,” said Emmanuel Nnadozie, Director, Macroeconomic Policy Division from ECA.
“The emphasis is to put priority on the political dimension of integration. We want the African Union to put emphasis on that. Regional integration should not been seen as an event , it is a process and it is not just an economic process.
“Everybody has role to play, the state and non-state actors. The leadership and political group, as well as citizens and the private sector have to support the integration process,” Nnadozie said.
According to the 2013 Africa Competitiveness Report, jointly produced by the AfDB, the World Bank and the World Economic Forum, regional integration can help Africa to raise competitiveness, diversify its economic base and create enough jobs for its young, fast-urbanizing population.
While African countries have made progress in integration, results have been less impressive, with intra-African trade estimated at between 12 per cent and 16 per cent.
To reach its goal, the AfDB is developing a new Regional Integration Strategy (RIS) for the period 2014–2023, which marks a steep change in its approach.
“Africa needs to move forward in translating the political will into stronger economic integration and this requires understanding why different countries have different reasons for not wanting to move forward so quickly on regional integration on the economic front,” said Pedro Conceição, the Chief Economist from the UNDP Regional Bureau for Africa.
He pointed out that some countries might be reluctant to pursue economic integration due to fears about loss of fiscal revenue after integration.
“We need to understand better the political economy and the challenges that different countries face. It is very important to understand the costs and benefits of regional integration,” Conceição said.
The African Development Bank has committed to continue to channel considerable resources into African integration mostly in the areas of hard and soft infrastructure and the diffusion of knowledge products.
For instance, between 2009 and 2011, the Bank completed 51 transport projects valued at over $3 billion, covering road, airport, seaport and railway infrastructure.
The institution has financed over 4,000 kilometres of roads and several major bridges in Africa.
Currently, while there are eight recognized African Union Regional Economic Communities – trade blocs and political – implementing the Abuja Treaty, their degree of success varies, with the East African Community (EAC) most advanced as it launched its Common Market in 2010.
The Common Market for East Southern Africa (COMESA) launched its Customs Union on June 2009.
ECOWAS and SADC have made progress in building their FTAs and plan to launch their Customs Union in 2015 and 2013, respectively. ECCAS has launched its FTA in 2004, but is facing enormous challenges in implementing it.
The AEC is an annual business intelligence forum organized by the African Development Bank (AfDB), the UN Economic Commission for Africa (ECA) and the United Nations Development Programme (UNDP), to discuss the continent’s major economic development challenges.