The need for integration in Africa is unquestionable

By Isaac Twumasi Quantus in Accra.

Given Africa’s overall weak economic stature, it can, however, be argued demonstrably that the continent has made notable progress towards regional integration. The political keenness to make progress is visible, even if the political rhetoric on Africa’s integration is not always accompanied by commensurate actions. Africa has been pursuing integration programmes for a very long time. From the 1960s to the present, many integration groupings have emerged and faded away.

Examples of earlier groupings are the African Common Market, the Equatorial Customs Union, which eventually led to the present Central African Economic and Monetary Community; and the former East African Community (EAC) which until its demise, was the most developed of all the integration experiences in Africa. New groupings have since emerged, reflecting the continued belief by African countries in the virtue and importance of economic cooperation and integration.

Recent developments reflect a greater sense of urgency in advancing the integration process and an acknowledgement that the stakes are extremely high, considering the galloping momentum of  globalization. Within the various integration groupings, the development of trade has been a major
objective pursued through programmes aimed at achieving a free trade area, a customs union and a common market.

But outcomes of decades of experimentation with integration in Africa have on balance remained modest. For instance, African trade statistics continue to paint a generally modest picture of intra Regional Economic Communities and intra African trade.

The countries generally lack a strong industrial capacity to produce diversified manufactured goods for trade within regional markets. Many of the multiple national currencies in Africa lack convertibility and efforts towards monetary, financial and physical integration have not been very promising.

The cost of doing business in the continent is generally high, due in part to infrastructure gaps, duplicative border procedures and cumbersome paper requirements. Paperless trade still remains a distant objective. The free movements of people and the right of establishment have progressed in some regional economic communities, but remain a paper objective in many other African sub regions.

African exports remain heavily concentrated in a few primary commodities, in particular fuels and mining products. Of the top 20 products exported by the region, the great majority are fuels, fuel products and mineral products. A few are basic agricultural commodities (sugar, cotton, cocoa and coffee) and a very small number are manufactured products.

Intra African trade remains low because of the obstacles it faces. The literature suggests that a narrow production and manufacturing base and infrastructure inadequacies constitute important obstacles to trade expansion. Most African countries continue to trade in a narrow band of natural resource-based products. In some cases, one commodity accounts for over a third or even half of a country’s total merchandise exports. The corollary is a continued heavy dependence on imports from outside the continent, particularly in manufactured goods, to satisfy consumer demands in the sub regional/regional markets.

To deal with this challenge, regional economic communities and their constituent member States need to push harder than ever for a fully integrated common market with the removal of all tariff and non-tariff barriers and the free circulation of all factors of production, including capital, labor and investments. A fully operational common market could provide an incentive for economies of scale production.

Furthermore, the regional economic communities should consciously promote the multinational exploitation of and investments in natural resource endowments to take advantage of economies of scale and the rational and optimal use of such resources. The establishment of multinational production and investment charters geared towards this objective would be a useful catalyst.

This would also help to promote dependence on community/domestic inputs and the sub regional/regional markets in support of the development and integration process. Indeed, a fair share of the “Aid-for-Trade” Initiative should be dedicated to building this multinational production capacity for the use and transformation of primary commodities into higher value-added activities.

 

This article was originally posted on Egypt - Sudan Business Communities

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