"Unlocking North Africa’s potential through regional integration" is the title of a new report published by the African Development Bank (AfDB), which examines the key issues and challenges facing regional integration in the North African countries across a number of thematic areas, including: (i) energy; (ii) climate change and environment; (iii) financial sector; (iv) trade facilitation and transport; (v) human development; and (vi) information and communication technology.
The report indicates that efforts to promote regional integration in North Africa have often been constrained by political differences as well as diversity in economic performance, pace of reforms and openness, and disparities in legal and regulatory frameworks. Overlapping preferential trade agreements and a large number of trade barriers have also emerged as a constraint to regional integration efforts. Together, these impediments have increased transaction costs. Similarly, the existence of these barriers reflects weak political commitment to the integration process, as a large number of decisions taken at the regional level have not been translated into action at the country level.
"Despite these challenges, in the wake of the Arab Spring, the emerging political landscape in North Africa promises to give new impetus to regional integration efforts," said Jacob Kolster, AfDB Regional Department Director for North Africa. The diversity of resource endowments in the region, coupled with the existing physical infrastructure, represent an important opportunity for further development through regional integration.
The report makes proposals for the continued engagement of the African Development Bank in the region, geared towards exploiting the full potential of regional integration in North Africa for the promotion of a new, inclusive and sustainable growth model.
“The potential is huge,” says Emanuele Santi, an Economist at AfDB and Coordinator of the report.
Regional integration is still in its infancy in North Africa. With intra-regional trade accounting for less than 4% of total trade, the region is the least economically integrated neighborhood in the world. "The new political context in North African countries and the crisis in Europe, which compel countries to diversify markets, offer a golden opportunity to refocus on the regional integration agenda as an engine of growth for all countries," Mr. Santi emphasized.