Decades of regional economic integration in Africa and development

Source: Paul Frimpong | py.frimpong@yahoo.com
Date: 06-02-2014 Time: 12:02:57:am
Paul Frimpong

“We must unite for economic viability first of all and then to recover our mineral wealth in Southern Africa, so that our vast resources and capacity for development will bring prosperity for us and additional benefits for the rest of the world. That is why I have written elsewhere that the emancipation of Africa could be the emancipation of man” Dr. Kwame Nkrumah

The dream of a united economy or regional economic integration in Africa started since early years after independence. African leaders' quest for unity clearly demonstrates their commitment to this agenda. Since the formation of Organization of African Unity (OAU) in 1963, now African Union (AU); The African Union Commission (AUC); the Economic Commission for Africa (UNECA); the African Development Bank (AfDB), and the Regional Economic Communities (RECs) among others, African leaders have focused on promoting regional cooperation and integration.

They strongly believe that through the strategies, policies, programmes and activities of regional integration, the fifty-four fragmented economies on the continent could be integrated into one strong, robust, diversified and resilient economy, supported by a first-class trans-boundary infrastructure; highly educated, flexible and mobile workforce; highly mobile financial capital; sound health facilities and peace and security.

In the post-independence period, integration has being a core element of the development strategy of African countries. The importance that African countries attach to regional integration has been reflected in the high number of integration schemes on the continent. The integration is geared towards empowering Africa to take its rightful position in the global economy.

With nu­merous countries, small economies, low population den­sity and many landlocked nations, regional integration is absolutely pivotal to generating high rates of economic growth and development. Regional economic integration in Africa would mean that there is the unification of economic policies between different states through the partial or full abolition of tariff and non-tariff restrictions on trade, taking place among them prior to their integration.

In 2014 and beyond, this economic integration process would continue to see to it that barriers to trade are reduced or eliminated to facilitate trade between regions and nations. Thus, the elimination of tariff and non-tariff barriers to the flow of goods, services and factors of production between a group of nations, or different parts of the same nation. This is meant in turn to lead to lower prices for distributors and consumers with the goal of increasing the combined economic productivity of the states.

With clear focus, the years from 2014 and beyondare crucial ones for Africa’s regional integration project and actions by governments, regional organizations and the international community to be more critical in determin­ing the course of the continent’s development for many years to come. Africa would continue to achieve this through any of these means or combination of such processes of Preferential Trading Areas. A PTA is a trading bloc that gives preferential access to certain products from certain countries. This is usually achieved by reducing, but not eliminating tariffs.

Free Trade Areas:

This on the other hand is an agreement made between countries where the countries agree to trade freely among themselves, but are able to trade with countries outside of the FTA in whatever way they wish.

A typical example is that of the tripartite free trade agreement (FTA) of the Common Market for East and Southern Africa (COMESA), the South African Development Community (SADC) and the East African Community (EAC. Expected to conclude in 2014, this agreement will lead to the creation of a common regional market covering 27 African countries, which include more than half of Africa’s population and GDP.

Customs Union:

Thisis an agreement made between countries, where the countries agree to trade freely among themselves, and also they agree to adopt common external barriers against any country attempting to import into the customs union. All common markets and economic and monetary unions are also customs unions. There is itinerary for a customs union in 2015 for members of the Economic Community of West African States (ECOWAS).

Common Markets:

This is where there would bean extension of a customs union. It is different to a customs union because there are common policies on product regulation, free movement of goods, services, capital and labour. The best known example of a Common Market on the continent is Common Market for Eastern and Southern Africa (COMESA).

Economic & Monetary Union:

Economic & monetary union is a common market with a common currency. An example is the West African Monetary Institute. A single currency in east Africa – first scheduled for completion in 2016 is now moved to 2023.West Africa’s common currency also initially planned for 2015 is moved to 2020.

In terms of provision of security, plans for an African standby force have been modified into an interim African Capacity for Immediate Response to Crises. This will serve as quick response to crisis across the regions. The quest for integrating the continent remains ever stronger if African countries are to overcome the constraints of marginalization in the global market place. This is also to overcome the constraints arising from the small domestic markets and reap the benefits of economies of scale, stronger competition and increased domestic and foreign investment.

Again trade between African countries is substantially low, estimated between 10 – 12% as against 60-80% with Europe.  This is why it is extremely important for the integration of African markets.The marginalization of the region in international trade, weak infrastructure, weak performance in macroeconomic policies and in such regional commons as the environment and natural resource utilization, the continent would be bolder and resilient if well economically and politically integrated.

The Tripartite

In trying to understand the trade and integration in Africa, atripartite made up of East African Community (EAC), Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC), began its journey in June 2011, where at the tripartite summit, 26 African countries with a population of about 600 million people united and signed the land mark Free Trade Agreements (FTAs).

Under the Tripartite Free Trade Agreement, work is seriously ongoing to facilitate trade and remove non-tariff barriers. This is expected to be completed by 2014. The work of the tripartite in streamlining border posts has started playing a massive role in improving intra-African trade among the regions.

At Chirundu, a border post at Zambia and Zimbabwe; through the Tripartite Free Trade Area, it has brought the transit time from about 7 days to a matter of less than a day. This means that cargos or trucks which initially would be kept at the border for 7 days before setting off can do all documentations within a matter of ours, approximately, 1 day. This is a tremendous approach in reducing the cost of doing business in Africa.

From the opening quote by Dr. Kwame Nkrumah, we must first as Africans unite for economic viability.Africa’s regional integration efforts in 2014 look optimistic. Global economic imbalances leaves Africa with little or no choice than to decisively consolidate and build its regional trading market.

ABOUT THE AUTHOR

Paul Frimpong,CEPA

Chartered Economist (ACCE-Global) writes on the macro-economy and global affairs. He is also an African Affairs Analyst and Emerging Markets Strategist.

Tel: +233 -241 229 548

Email: py.frimpong@yahoo.com/py.frimpong90@gmail.com

 

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