Monday, February 06, 2012

Status of Regional Integration in Africa

Status of regional integration in Africa

Saturday, 04 February 2012 23:11
Reprinted From the Zimbabwe Herald

There has been very little or no attempt to articulate and present the status of regional integration in Africa in a way that captures the essence of numerous and diverse studies, meetings, writings and declarations by a host of actors and players in the field.

The need for such analysis has stimulated The United Nations Economic Commission for Africa (ECA) initiative to conduct a regular assessment of the process through a comprehensive status report called Annual Report on Integration in Africa (ARIA). The report was conceived to provide accurate and up-to-date information, to help to streamline actions towards the achievement of the ultimate goal of African economic and political union. Effectively knowing where we stand is a key factor affecting where we go next and where we end up.

The past two decades have witnessed a resurgence of regional economic integration groupings at a global level. The challenges of African development are compounded by the globalisation and liberalisation of the world economy, greater economic integration of financial and money markets, and a shift towards the creation of large trading and economic blocs. These developments offer not only challenges but also timely opportunities to Africa, and there is a need to broaden the concept of regionalism and to rethink Africa's regional integration strategy.

The fundamental objectives for the formation of Africa's regional economic communities (RECs) derive from the need of the member countries in such arrangements to achieve, individually and collectively, higher levels of development that would otherwise prove elusive under the autarchy approach. The treaty establishing the AEC/AU makes it very clear that the realisation of the African Union depends critically on the performance of the RECs, which are the building blocks of the continental body. Although regional co-operation and integration has been on Africa's development agenda for quite a while, this strategy, in general, produced very limited results for the African region considering the protracted efforts of governments, institutions and other players. The African economies remain largely disconnected from one another, relatively underdeveloped and most are stagnant. The overall integration process has been fraught with a number of difficulties, not least of which are the lack of a concerted approach and direction, dispersed interventions and intentions, and sometimes confused responsibilities among the myriad of players.

It came out clearly from the first ARIA assessment that a combination of factors constituted a significant drag on advancement towards integration objectives.

Major features can be summarised as follows:

Inadequate ownership and follow-up of integration at national level

Inadequate interface between the objectives and instruments of regional and overall national development framework noted. Thus, measures agreed in regional forums are rarely incorporated in national policies and plans. Their implementation at country level is therefore not carried out forcefully at the level of legislation and administration.

Low impact of trade liberalisation on intra-REC trade flows

It is striking to note that despite the efforts to liberalise trade which almost all of the RECs have been actively and extensively doing, the volume of intra-REC trade is very low. There is a high degree of concentration in the same commodities with very little product diversification. The trade facilitation, liberalisation and promotion instruments do not seem to have had a major impact in boosting intra-REC and intra-African trade. Furthermore, the investment environment has not been attractive enough to induce a significant degree of foreign investment, including indigenous cross-board flows.

Inadequate infrastructure a serious
bottleneck for physical integration

Limited infrastructure availability and networks, particularly in energy, transport and communications, emerges strongly as a key bottleneck contributing to the high cost of doing business. This undermines the competitiveness of African products domestically and internationally, and acts as a disincentive to foreign investment.

Macroeconomic policy convergence remains largely a mirage

The importance of macroeconomic policy convergence as a critical ingredient for deeper integration is given due cognisance in all the integration arrangements. Some RECs such as UEMOA and CEMAC are making significant headway on this front. Many RECs have established parameters on macroeconomic convergence to help orient their member states' efforts towards reforms and stability that ensure cohesiveness and unity of purpose.

RECs have very limited resources and capacities to handle sectoral issues
RECs are involved in many sectoral areas in which they have very little capacity, resources or comparative advantage. At best, interventions are peripheral and a lot still remains to be accomplished. Furthermore, the overlap of RECs operating within the same sub-regional spaces in Africa continues to undermine cohesiveness and unity. This has been an issue much debated and discussed. It is perhaps something that will never go and which will not be solved without hard political decisions on merging of one REC with another or closing down one in favour of the another. These are politically sensitive options.

Global exigencies add to the formidable challenges facing RECs

With the advent of the twin phenomena of world trade liberalisation and globalisation, it is obvious that the pursuit of African integration cannot ignore the exigencies of the multilateral trading system in the context of the World Trade Organisation (WTO). Openness towards world markets and removal of barriers to international trade and investment are key characteristics of the phenomena of globalisation and liberalisation of world trade. The majority of African RECs are still to be recognised by WTO in the context of the rules governing regional trading arrangements as stipulated under GATT Article XXIV. The interface between

Africa's integration agenda and the increasingly liberalising and globalising world economy needs to be adequately addressed as a priority for REC activities.
Abuja Treaty framework: A loose or strictly binding blueprint for action?

Finally, congruence between REC policies and programmes and the continental integration agenda leaves much to be desired. The REC treaties appear to take precedence over the Abuja Treaty as far as policy formulation and implementation are concerned. There are no hard and fast rules binding REC integration agendas with the continental framework. All depend on best endeavour efforts with no "supra-national" oversight authority.

The above clearly shows the need for more effort and commitment to promote regional integration as it remains the key solution to overcoming economic fragmentation and promoting economic diversification.

Ultimately, the African Union is a means of transforming the continent from a fragmented region of least developed and developing states into a strong and a unified federation of developed nations. The current emphasis on integration led the move to form the AU. The New Partnership for Africa's Development (NEPAD) is the major supporting international initiative. —

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