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REGIONAL INTEGRATION IN SUB-SAHARAN AFRICA, TOWARD RATIONALIZATION AND GREATER EFFECTIVENESS
GCA/EC/02/4/2001
 

Regional economic integration has a fairly long history in virtually all parts of Sub-Saharan Africa, in some sub-regions pre-dating independence. Although a number of leaders called for the integration of Africa soon after independence, it was only in the 1970s and 1980s that concrete steps were taken to re-launch or establish economic integration institutions in all sub-regions. The Abuja Treaty of 1991 laid down the phases and time table for deepening economic integration at the sub-regional level such that these in time could form the building blocks for the continent-wide African Economic Community.

The expressed interest and continuing political rhetoric in support of regional integration has not, however, for the most part been matched by political will and systematic action to advance and deepen regional integration. Although a few of the integration groupings are beginning to make modest progress, the overall achievement to date has been insignificant, both in terms of cross-border trade and investment among member countries and with respect to the strength of the integration institutions themselves. Moreover, the proliferation of integration schemes operating within the same geographic area has inevitably resulted in overlapping membership and duplication of mandates.

Despite the disappointing record, the promotion of regional integration remains an important economic and political goal in Africa. In view of this, it is appropriate to reexamine the constraints faced, and to consider actions that would promote an effective and rationalized integration structure. It is with this intent that this paper summarizes the rationale and benefits of integration, and then briefly reviews the less-than-satisfactory record of regional integration in Sub-Saharan Africa, including the general and specific constraints that account for the poor performance. Following this, the paper discusses in some detail the measures that need to be taken at the country, sub-regional and regional levels to rationalize and improve the effectiveness of integration institutions. It also outlines some of the support measures that may be taken by external partners. In almost all cases, the proposed approach to rationalization is one of harmonization of policies and regulations, together with step-by-step convergence of institutions.

Rationale and Benefits of Regional Integration

There are significant economic as well as "non-economic" reasons why African countries should pursue regional integration. The principal benefits to be gained include the following:

Regional integration enables neighboring African countries to link their small economies to create relatively larger markets, thus allowing current and future production to benefit from economies of scale. In other words, it provides more opportunities for trade, while also making new investment by both domestic and foreign capital more likely to be viable and profitable. In particular, it provides a wider market that enables the private sector to expand existing operations or to initiate new economic activities. Competition in regional markets may also serve as an intermediate stage that can be used by enterprises to prepare for successful export performance in global markets. Deeper integration involving the free cross-border movement of all factors of production would create wider economic opportunities for individuals and businesses. Expanded opportunities, and enhanced trade and investment, will all contribute to economic growth and improved welfare in each member country.

Member countries of a regional integration set-up can present themselves as a united and credible group in international trade negotiations and at other multilateral forums. This advantage is however dependent on the existence of a pool of expertise that can analyze the trade and related issues under negotiation.

National-level reforms and other economic policies may gain more credibility if closely coordinated and harmonized with neighboring countries. Reforms may be more securely "locked-in" to a sub-regional framework, which can also shield policy-makers from domestic pressure groups seeking to dilute or reverse such reforms. Conversely, some reforms can have negative spillovers on neighbors, if the timing and content of such reforms are uncoordinated among neighboring countries.

An integration framework enhances the potential for sub-regional specialization and cooperation in a variety of economic and social spheres. Universities and research centers can enter into cooperative arrangements whereby each will specialize in a few disciplines, rather than spreading their resources thinly and ineffectively in an effort to cover a large number of academic or research areas. Programs for combating corruption may also be jointly undertaken and coordinated within a sub-regional setup. Controlling diseases, countering the operations of crime syndicates, achieving equitable sharing of such trans-boundary resources as water from international rivers, and developing transport corridors and other multi-country infrastructure will all be much better facilitated if undertaken within a formal integration framework. The development of infrastructure along major trade corridors reduces transactions cost and encourages new investment.

The nurturing of new and fragile democracies, promotion of stability, management of conflict, and development of joint security arrangements against external threats are possible and useful undertakings at the sub-regional level within the context of regional integration institutions. In time, the deepening of integration within a sub-region may minimize the potential for hostilities between neighboring countries.

The Record of Regional Integration and the Persistence of Duplication and Overlap

Realization of some or all of the foregoing benefits is a motivating factor for countries to join regional integration schemes. Unfortunately, due to a variety of constraints, few of Africas integration arrangements have yielded significant benefits to their members. Duplication and overlap, though significant, are not the only obstacles facing regional integration in Africa. A number of more general constraints also need to be addressed.

Overall Constraints

Well-known obstacles to the overall success and effectiveness of regional economic integration include:

Lack of political will and commitment to promote regional integration; this is reinforced by reluctance to transfer a part of national sovereignty to the integration entity.

Inadequacies in transport and communications, together with rent-seeking, controls and delays at border customs stations, impede efficient cross-border investment and trade.

Non-complementarity of production systems, with the result that the export products of one member country may not match the import requirements of others, thus limiting the scope for increased trade among members (South Africa is an exception in this regard.

Absence of workable and credible mechanisms for addressing, at least during a reasonable transition period, the concerns of those member countries that see themselves as "losers" from regional integration.

Weaknesses in the functioning of payments mechanisms for settling or clearing foreign exchange balances among members.

Conflict and instability in one or more member countries which -- by curtailing both domestic and cross-border economic activity and through spillover effects on other member countries -- become a significant impediment to regional integration.

Failure to fully involve key stakeholders, particularly the private sector.

Limitations on the efficiency and effectiveness of the integration institutions themselves, due to inadequate financial resources and inappropriate recruitment systems.

Dissimilarities in political systems as member countries are at different stages of democratization, as well as lack of "governance" standards that countries must meet for entry and continued membership.

Overlap and Duplication Among Institutions

Although the foregoing listing of obstacles to regional integration is not exhaustive, it provides a context in which the additional constraints arising from overlap and duplication among integration institutions can be analyzed, sub-region by sub-region.

Eastern and Southern Africa: In Eastern and Southern Africa, institutions that have declared regional economic integration mandates include the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), the Southern African Customs Union (SACU), the Indian Ocean Commission (IOC), the East African Community (EAC), and the Inter-Governmental Authority on Development (IGAD). As indicated in Table 1, nearly every country in Eastern and Southern Africa is a member of more than one of these institutions. There is thus overlap in membership. The objectives of the various institutions are for the most part similar, which raises the issue of duplication of effort. Countries find it burdensome to pay membership contributions to two or more institutions. As a result, the loyalty of member countries is divided and their commitment to both the ideal of integration and to individual institutions is reduced.

The main overlap and duplication that has to be addressed in Eastern and Southern Africa is between COMESA and SADC. The two cover geographic areas that overlap to a considerable extent. A number of countries are simultaneously members of both of them. COMESA has for long been pursuing a market integration program. As SADC has recently adopted its own trade protocol, in this as in some other aspects the two integration schemes have more or less similar objectives. The other integration groupings in Eastern and Southern Africa, each of which has a smaller and presumably more compact and "like-minded" membership, were expected to be subsets of one of the major integration bodies and, as such, help to facilitate integration among the larger group. In fact, with the exception of SACU, and to a lesser extent the EAC, the smaller regional integration groupings have yet to make significant progress towards their stated objectives. Moreover, there are no formal mechanisms of coordination governing the relationships between the larger institutions and the smaller groupings.

Western and Central Africa: Broadly similar problems of multiplicity of institutions, overlap of membership, and duplication of mandates prevail in Western and Central Africa. As indicated in Table 2, in West Africa, the institutions that have explicit economic integration mandates are the Economic Community of West African States (ECOWAS), the Western African Economic and Monetary Union (UEMOA), and the Mano River Union (MRU), although only the first two are currently functional. The MRU, whose members are Sierra Leone, Liberia, and Guinea, is dormant due to the internal conflict and general instability prevailing within the countries, particularly Sierra Leone. After the withdrawal of Mauritania, the membership of ECOWAS covers all the remaining fifteen countries in Western Africa. Eight of the fifteen, namely the West African CFA Franc zone countries, are members of UEMOA. Hence the eight are expected to simultaneously implement the integration programs of UEMOA and ECOWAS. In practice, UEMOA has moved faster and further in that, as of the end of 2000, it has established a free trade area (FTA) and a common external tariff, in addition to its existing CFA Franc-based monetary union. The non-UEMOA members have recently agreed to pursue their own "fast-track" approach to the creation of a monetary union, which will soon after enter an agreement with UEMOA to form a single ECOWAS-wide monetary union. Whether an early achievement of an ECOWAS-wide monetary union is the most urgent and advisable approach to the rationalization of the two integration institutions is at best debatable. Meanwhile, other relationship issues remain to be addressed, including coordination and harmonization of policies, and in particular the convergence of the two trade regimes and the merging of subsidiaries pursuing similar objectives.

As shown in Table 3, in Central Africa there are three integration institutions, namely the Central African Economic and Monetary Union (CEMAC), the Economic Community of Central African States (ECCAS), and the Economic Community of the Great Lakes Countries (CEPGL). Burundi, Rwanda, the Democratic Republic of Congo and Angola are members of ECCAS as well as COMESAand in addition the last two are in SADC. It would appear that there is again considerable overlap and duplication. However, in practice, only CEMAC, which encompasses the six member countries of the Central African CFA Franc zone, is active and functional. Although CEMAC is following the same integration agenda as UEMOA, it has not moved at UEMOAs pace in establishing a customs union. In addition, the poor condition and overall underdevelopment of infrastructural links within and among member countries inhibits regional integration. Also, the widespread prevalence of conflict and instability in the sub-region, including in some member countries of CEMAC, is a major obstacle that hampers economic integration in Central Africa.

Problems and Issues at the Country-Level

There is little doubt that member countries themselves are ultimately responsible for the proliferation of institutions and the resultant overlap and duplication. A variety of actions at the country level have contributed to the problem:

Most countries join two or more integration groupings without carefully weighing the costs and benefits to themselves, and without fully assessing the implications of too many institutions co-existing within the same geographic area.

Many countries do not have a clear and authoritative focal point or ministry for regional integration, although a number of countries mostly in West African have recently created ministries responsible for regional integration. Where there is no effective coordination and clear focal point, different Ministries may advocate membership in and support for different integration arrangements, thus perpetuating the multiplicity of institutions.

Where there is no focal point, responsibility is diffuse. Hence there will be little likelihood of a sustained effort to promote and create awareness of regional integration. Without wide consultation and debate, the problems and cost/benefits of association in multiple organizations may not be clearly analyzed and understood. Fuller involvement and consultation of the private sector would more clearly highlight some of the negative outcomes of overlap and duplication. After all, businessmen would be the ones to engage in the cross-border trade, investment and service provision that regional integration is expected to facilitate.

At the same time, countries can suffer adverse consequences as a result of the proliferation of institutions and duplication of mandates:

When a country is a member of two or more integration schemes, the financial contributions it has to make will be much more burdensome. This may partly explain why counties accumulate arrears in their contributions. Even where institutions are moving away from contributions toward levies on imports, multiple membership may mean charging many or larger levies on the same imports, which would be an additional cost to their economies and the welfare of their citizens.

The business community will face more than one set of rules of origin, customs regulations, and potentially conflicting trade regimes where multiple membership and overlap prevail.

With multiple membership, experts, officials and leaders of member countries will be expected to attend duplicate meetings, and to process and implement the rules and regulations of several institutions, all of which will be burdensome financially and in terms of human resources.

Measures to Rationalize Regional Integration Institutions

The global trend is clearly toward the formation, expansion, and deepening of integration arrangements. As outlined earlier, the rationale for establishing and strengthening regional economic integration groupings in Africa is quite compelling. Furthermore, the expressed wish of Africas leaders is demonstrably in support of integration. In one sense, Africa has been keeping up with the global trend by establishing its own regional integration institutions and in a number of cases by updating their mandates. Indeed, as indicated earlier, a major problem in this regard is that African governments have authorized and subscribed to the formation of too many integration institutions, which inevitably led to overlap, duplication and conflicting agendas. The challenge now is to take serious and pragmatic action to streamline and rationalize, and then strengthen and deepen regional integration arrangements within the framework of the rationalized structure. The following proposals are made regarding measures that need to be taken at the national, sub-regional and regional levels to move African regional integration schemes towards such a rationalized and more effective structure.

Measures to be taken at the Country-Level

The support and loyalty of member countries are critical to the growth and effectiveness of regional integration arrangements. Beyond broad support, the degree of political commitment each member country shows, and the specific measures it takes to facilitate and expedite the rationalization and strengthening of integration institutions in its sub-region will determine whether the full potential of integration is realized. The more important rationalization-related steps to be taken at the country level include the following:

Governments must designate a single focal ministry/department for regional integration, and create clear mechanisms for the coordination of all departments dealing with integration-related issues.

The policy-making leadership must first be convinced of the benefits of integration and the objectives to be achieved by participation in regional integration arrangements. It must then lead efforts at educating all concerned parties and the public at large, to create general awareness of the benefits and to build a national constituency in support of regional integration. In particular, key political and economic stakeholders including the legislature, civil society groups, and above all the business community need to be fully informed and involved. In consultation with relevant stakeholders, particularly the private sector, the government needs to evaluate and decide in which regional integration schemes the country ought to retain membership. Decisions should be based on careful analysis of current and long-term gains and losses. Consideration should be given, not only to the static short-term trade balances, but also to the realistic possibilities of each country building longer-term "dynamic" comparative advantages, which may in time lead to more balanced trade relations among member countries.

Countries should also promptly meet their financial and other membership obligations to the institutions with which they will have chosen to continue to be associated.

Countries can and need to support the promotion of regional integration by giving priority to investment in infrastructure that removes bottlenecks to increased cross-border economic activity, and by encouraging and enabling investment in productive facilities that create and enhance exports.

Regional cooperation and integration can serve as a useful framework for the harmonization, coordination and synchronization of macro-economic, trade and investment policies among member countries.

To further facilitate trade and investment within the rationalized integration arrangement, governments should focus on the removal of administrative and regulatory barriers, as well as on combating corruption and reducing other impediments at border crossings.

While country-level action aimed at rationalization is critical to the emergence of a unified and streamlined integration structure, the overall economic and political environment in each member country is equally decisive for the effectiveness of a regional integration arrangement. Regional integration will gain in strength and effectiveness if member countries have sound macro-economic policies, stable and participatory political systems, and efficient and transparent administrative and regulatory institutions. Ideally, to qualify for membership countries should meet established requirements or standards in terms of political liberalization, governance and civil liberties. Even if there have been no clear political and governance-related entry conditions, integration groupings should make every attempt to establish such standards and then put in place mechanisms for evaluating progress and convergence to such goals. On macro-economic issues, the need for harmonization and convergence among member countries appears to be reasonably well understood, although most regional integration institutions have yet to adopt macroeconomic surveillance mechanisms. However UEMOA does have a surveillance program that has been in place for a few years, but its effectiveness may have been less than expected due to unreliable data and weak institutional capacity. ECOWAS and CEMAC have recently launched similar programs. In general, macroeconomic harmonization and convergence may be more meaningful and achievable among neighboring countries in small integration groupings.

As indicated earlier, countries can also advance regional integration through increased investment in essential infrastructure that enables efficient domestic as well as cross-border links. Sound policies and increased investment outlays for essential infrastructure are likely to trigger a positive response from the private sector in the form of investment in additional productive capacity, which in turn may lead to increased regional trade. Governments may further demonstrate their commitment to regionalism by ensuring the incorporation of regional integration programs and projects in national development strategies and by carefully assessing the regional dimension of new reforms and other changes in economic policies. In this connection, country poverty reduction strategy papers (PRSPs) should also take into account the regional dimension of the overall strategy as well as the individual policies ensuing therefrom.

Measures to be Taken at the Sub-Regional Level

Measures aimed at addressing the issues of multiplicity, overlap and duplication of institutions are of critical importance. A convenient approach for this purpose is to consider each sub-region by turn:

West Africa: The MRU is now dormant, and it may be best to leave it that way. The principal attention in the sub-region will thus have to be on relations between UEMOA and ECOWAS. In earlier years, the main focus was on the choice of a "sole regional integration institution" for the sub-region, and the related maneuvering as to which one will succeed in absorbing the other. Recently, member countries appear to have adopted a more realistic approach of guiding the two institutions, by stages, towards convergence.

UEMOA has the goal of associating its member countries in an economic and monetary union. Right from its formation in 1994, it had signaled its intention to move expeditiously towards deeper integration. Monetary union among its members -- with its features of a common currency, a single central bank, an external peg and externally guaranteed convertibility -- has existed for decades. Economic union was thus the principal remaining agenda. As per its plan, UEMOA established an FTA in 1998 and a customs union with a CET by 2000. The loss of revenue by member governments is partly being offset by external assistance on a transitional basis. At the same time there is a 1% surcharge on imports from non-UEMOA countries, the proceeds of which is also partly used to offset, during a transition period, revenue losses arising from reduction and elimination of tariffs. As regards policy harmonization, members have adopted convergence criteria on such indicators as fiscal balance, inflation target, and total government debt. To enforce these, it was agreed to institute a system of mutual surveillance and penalty for breaching the convergence targets. Balanced development among member countries is to be achieved by funding development projects in the less developed countries. While the UEMOA plan for deepening integration is fairly comprehensive, the results in terms of markedly increased intra-UEMOA trade, as well as in enhanced economic growth and improved welfare, have yet to be seen. Meanwhile, at least in the short-term, actual impediments to regional trade persist particularly in the form of non-tariff barriers and administrative controls. Also, recent adverse political developments in Cote dIvoire are bound to have a negative impact on both intra-UEMOA economic activities and on the cohesion among member countries.

ECOWAS has recorded considerable success in conflict management and sub-regional security. Another success area is the ECOWAS "passport" whereby citizens of member countries travel visa-free within the sub-region. It is in the economic sphere that ECOWAS had remained a relative laggard. However, recently ECOWAS appears to have adopted a "catch-up-with-UEMOA" program for its non-UEMOA members. The priority focus of this program is the establishment of a monetary union among non-UEMOA member countries by 2003, followed by a merger between the non-UEMOA and UEMOA monetary union in 2004. A convergence council, made up of relevant ministers and central bank governors has been set up. The council is to be assisted by a technical committee.

The overemphasis on, and the rapid drive toward, a monetary union would appear to require re-examination. First, there could be less demanding and more feasible alternative means of achieving coordination and harmonization of monetary and broader macro-economic policies, both among non-UEMOA countries and among these and UEMOA itself. The ECOWAS convergence council and its technical arm could fruitfully focus on such pragmatic issues. Second, it may be more important to speed up integration between the UEMOA and non-UEMOA subgroups in the area of trade and tariffs, with a view of converging toward the establishment of an ECOWAS-wide free trade area. An early agreement between the two to adopt similar rules of origin, CET structure and customs nomenclature will contribute to the achievement of trade integration. Third, the early merging of subsidiaries of UEMOA and ECOWAS with similar mandates, including for example their respective agencies engaged in financing development projects, will make their stated goal of convergence more credible.

Central Africa: The cessation of conflicts and the restoration of security and stability are a prior requirement for revitalizing regional integration in Central Africa in general, and for the Great Lakes countries in particular. With ECCAS and CEPGL inactive, CEMAC, with its six Franc-zone member countries, is as of now the only functioning integration organization in the sub-region. The objectives and structure of CEMAC are more or less identical with those of UEMOA. UEMOAs plans and procedures for harmonization and convergence and its mechanisms for mutual surveillance may thus be applicable to CEMAC. There is marked imbalance, in terms of "benefits" from integration, with the less developed and land-locked member countries gaining least, or perceiving themselves as relative losers, making this an important issue that needs to be addressed. CEMAC and its member countries have also to address the overall under-development of transport and communication links, as this is a major factor inhibiting the advancement of regional integration as well as the growth and diversification of individual economies.

Eastern and Southern Africa: On the positive side, favorable conditions for the implementation of regional integration were created by the significant trade and macroeconomic liberalizations undertaken by a large number of countries during the 1990s. The reforms were carried out partly unilaterally in accordance with individual country adjustment programs, but also to a considerable extent in a coordinated manner within the framework of the Cross-Border Initiative (now continuing under the Regional Integration Facilitation Forum). However, the Eastern and Southern Africa sub-region still appears to be the one in most need of rationalization and streamlining with respect to its economic integration institutions.

As indicated earlier, SADC and COMESA are pursuing objectives that in many respects are similar largely the same geographic area. However, as of now, the two bodies have separate and non-harmonized trade and tariff systems. As of the end of 2000, COMESA has launched its free trade area with about half of its member countries having fulfilled the conditions for adopting the agreement. It plans to create a customs union and a common external tariff (CET) structure by 2004. Meanwhile, SADC has started to implement its own trade protocol and the tentative plan is to establish a SADC "free trade area" by around 2008 2010, possibly to be followed by a common external tariff some time later. The clash between the trade and tariff regimes of the two institutions is not only in the phasing of liberalization towards an FTA, but also with respect to tariff structures and rules of origin.

In the countries having dual membership in COMESA and SADC, the business community will face two separate trade regimes and thus encounter difficulties in determining which rules apply to a particular transaction. To minimize such confusion, the two integration schemes will have to move towards rationalization of their institutional setup and harmonization of their tariff and trade regimes. A first step in this direction would be the harmonization of their rules of origin, reconciliation of their trade regulations and adoption of a common customs nomenclature. It is recommended that the non-SACU member countries of SADC (as well as all COMESA member countries) operate under these harmonized trade and customs regulations. The implications of the EU-South Africa Free Trade Area agreement should be carefully weighed before proceeding to a "merger" of the COMESA and SADC FTAs a related issue is whether the non-SACU members of SADC may have to reassess, from this angle, the time-frame for achieving the SADC FTA.

SACU is a well-established customs union, and the renegotiation and updating of its treaty is about to be completed. It is reported that the smaller member countries will henceforth have more say in the affairs of the customs union. Meanwhile, the existing practice of macro-economic policy harmonization among the member states needs to continue, with more transparent and regular consultation and coordination.

It was expected that IGAD, EAC, and IOC would function as closer-cooperating subsets of COMESA. In particular, it would contribute to the eventual aim of rationalization of integration of institutions in the sub-region if all three continued to follow the COMESA customs and trade regulations, including its rules of origin and nomenclature. An integration scheme composed of a few like-minded neighboring countries may move faster towards fuller integration and in the process serve as a positive model to other members within a larger regional integration scheme. It was hoped that the East African Community was following this approach, referred to as "variable geometry", within COMESA, in that there were promising prospects for closer harmonization of the policies of the three member countries and faster convergence of their trade and investment regulations. However, these prospects appear to be somewhat clouded by the recent withdrawal of Tanzania from membership in COMESA. IGAD member countries will have to first focus on ending all forms of conflict, and on reestablishing security and mutual trust as preconditions for promoting economic integration among them. The membership overlap between IGAD and EAC also needs to be addressed. Within the IOC, the significant cross-border investment from Mauritius to Madagascar should continue and serve as a model for mutually beneficial relations between more developed and less developed member countries in integration groupings.

Addressing Other Issues Related to the Effectiveness of Regional Integration

The rationalization of institutions, though essential, may not by itself be sufficient for achieving the all-round effectiveness of regional integration arrangements. There are two other issues that have significant bearing on the viability and effectiveness of regional integration: i) the strengthening and empowerment of the secretariats of integration institutions themselves, and ii) the need to increase investment and enhance productive capacity, particularly in the less developed member countries.

Strengthening the Secretariats of Integration Institutions: To provide both leadership and technical expertise to the integration effort, the secretariats or commissions have to be staffed with qualified and experienced staff, recruited on the basis of merit rather than on nationality or political connections. The organizational structure, as well as the managerial, planning and implementational capacities of the secretariats, must be commensurate with their key roles and responsibilities with respect to both the formulation and implementation of the integration agenda. An important function that must be taken up by the secretariats is the building-up of in-house and/or sub-regional capacities for follow-up and analysis of current and emerging trade issues, so as to assist member countries to develop their joint negotiating positions in multilateral trade talks. A related point is the extent to which the secretariats should be empowered. UEMOA, for example, has a commission with considerable powers including the authority to initiate policies, rules and regulations. With increased deepening of regional integration, the necessity for progressively expanding the powers and responsibilities of the secretariats will become a significant issue.

Towards Higher Growth and More Balanced Development Among Member Countries: The ultimate goal to be achieved through strengthened regional integration is higher growth and more effective and tangible poverty reduction in member countries as a whole. For this to materialize, it is necessary to significantly raise investment levels, improve productivity, and minimize transactions costs. When these conditions are met, production and exports will grow, which in turn will lead to growth and poverty reduction as well as to increased trade, both among member countries and with the rest of the world. A related issue that needs to be addressed is the concern of the less developed countries that they may continue to be "losers" vis-à-vis the more developed partners in a regional integration grouping. Admittedly, trade imbalances between countries are the norm than the exception. It can also be granted that regional integration between a relatively less developed country and a developed country may in some cases be quite beneficial to the less developed country, as illustrated by the case of Mexico vis-à-vis the United States (as cited in one of the accompanying papers sponsored by the GCA). However, the more usual outcome is likely to be that the relatively more developed economy will reap both static and dynamic gains. The static gain is obvious in that, at the start, the more developed economy produces more tradables and exports than the less developed one. The dynamic gain will also accrue to the more developed country, with its better infrastructure and services and more skilled labor, in that new investment, particularly FDI, is likely to gravitate to it. The result will be further imbalance between the less and more developed economies in a regional grouping. Also, the weaker economy is usually more dependent on revenues from customs duties, and thus can ill afford the revenue losses arising from its compliance with the tariff reduction and elimination requirements of the integration group.

The appropriate long-term approach is to promote development programs and projects, particularly investment projects in infrastructure and in new productive capacities, in the less developed member countries, with a view of gradually closing the development gap and bringing about more balanced sharing of the benefits of integration. External partners, the African Development Bank and sub-regional development finance entities can all play important roles in this. With appropriate additional incentives and targeted skills development, private investment both from within the region and from abroad may in time be induced to increasingly locate within the less developed economies.

Regional Level

The OAU/AEC should encourage the various integration initiatives to address duplication and overlap and to work towards convergence and harmonization as early as possible. In particular, new initiatives that will further add to existing duplication should be discouraged. More broadly, the OAU/AEC can encourage and create a favorable political/security environment for regional integration by further strengthening its own role in the management and resolution of conflicts and by promoting good governance.

Implications for External Partners

African countries individually and through their respective sub-regional groupings have the principal responsibility for rationalizing and streamlining integration arrangements. However, Africas external partners can contribute to the strengthening and rationalization of integration institutions and in the process facilitate Africas integration into the global economy -- by taking appropriate supportive measures, including in particular the following:

Provide financing for investment in physical infrastructure as well as in productive sectors to enhance the supply capacity, particularly in the less developed countries in regional integration groupings.

Assist countries associated in integration arrangements in meeting the transitional adjustment costs arising from trade and tariff liberalization.

Promote and encourage FDI in each integrated sub-region. Steps to be taken in this regard can range from information and publicity about investment opportunities in Africa to the provision of additional incentives and guarantees for investors.

Take appropriate precautions to ensure that proposed North-South free trade agreements fall in line with and do not conflict with or complicate each sub-regions expected post-rationalization integration structure. It may also be helpful if North-South partnership agreements reflected the promotion of investment in the territories of the African side.

Remove all market access barriers in the OECD countries for exports originating from the member countries of such integration groupings.

Ascertain that country level donor-initiated or supported policy reforms and liberalization measures including PRSPs, as well as analytical work, proposals and "conditionalities", all take into account the regional dimension within the rationalized integration structure as a whole.

Conclusion

The foregoing proposals for the rationalization and effectiveness of Africas integration institutions are expected to be discussed and debated at a forthcoming GCA meeting. The GCA, in consultation and association with other relevant parties, may promote the conclusions and recommendations of the meeting through an Eminent Persons Group to be established for this purpose.

Table 1: Membership of regional integration groupings in Eastern and Southern Africa

Country
COMESA
EAC
IGAD
IOC
SACU
SADC
Angola
X
X
Botswana
X
X
Burundi
X
Comoros
X
X
Congo (DR)
X
X
Djibouti
X
X
Egypt
X
Eritrea
X
X
Ethiopia
X
X
Kenya
X
X
X
Lesotho
X
X
Madagascar
X
X
Malawi
X
X
Mauritius
X
X
X
Mozambique
X
Namibia
X
X
X
Rwanda
X
Seychelles
X
X
X
South Africa
X
X
Sudan
X
X
Swaziland
X
X
X
Tanzania
X
X
Uganda
X
X
X
Zambia
X
X
Zimbabwe
X
X

Table 2: Regional Integration Schemes in West Africa

Organization

Year Established

Objective
UEMOA

1972/1994

FTA/EU

MRU

1973

CU/EU

CEDEAO

1975

FTA/EU
Benin
X




X
Burkina Faso


X


X
Cape Verde



X
Cote dIvoire


X


X
Gambia



X
Ghana



X
Guinea


X
X
Guinea Bissau



X
Liberia


X
X
Mali


X
X
Mauritania


X
Niger


X
X
Nigeria


X
Senegal


X
X
Sierra Leone



X
X
Togo


X
X

* Mauritania withdrew from ECOWAS in 1999.

Table 3: Regional Integration Schemes in Central Africa

TABLE REFORMATTING IN PROGRESS

Scheme

Year Established

Objective
ECCAS

1983

CU
CEMAC

1964/1994

FTA/EU
CEPGL

1976

FTA
Also Member in

Others

Angola
X


COMESA/SADC

Burundi
X

X
COMESA

Cameroon
X
X



Central African Republic
X
X



Chad
X
X



Congo
X
X



Congo Democratic Republic
X

X
COMESA/SADC

Equatorial Guinea
X
X



Gabon
X
X



Rwanda
X

X
COMESA

Sao Tome & Principle
X



 

Highlights
2004 Policy Forum - Migration and Development in Africa
TICAD Asia-Africa Trade and Investment Conference (AATIC) - Tokyo, Japan - November 1 and 2, 2004
Annual Reports
 
   
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