The United States of Africa - Pipe Dream, or the future of the new African economy?
Business in Africa June 2009
By Scherzando Karasu
“Hail The United States of Africa-free! Country of the brave black man’s liberty; state of greater nationhood thou has won, A new life for the race is just begun.”
Those words written first in 1924 by the activist and poet Marcus Garvey, gave voice to the socio-political world view which seeks to unify native Africans and indeed those of the African Diaspora as part of a, “global African community” The dream of achieving a politically United Africa.
“The United States of Africa” is the name sometimes given to one version of the possible future unification of Africa as a national and sovereign federation of states similar in form to the United States of America.
Alpha Ouamar Konare former head of the African Union has said, "The battle for the United States of Africa is the only one worth fighting for our generation - the only one that can provide the answers to the thousand-and-one problems faced by the populations of Africa,"
So how far has Africa come towards realizing this dream? What have been the milestones along the path to Africa’s longed for and much heralded unification? How will this supra-nationalism effect business and enhance African economic development? Or will the vested interests of the regional economic communities (RECs), (the imagined foundation stones on which to build this project), undermine its realization?
Is it just a pipe-dream? A trite phrase disconnected from reality and used by African leaders as a platform to grandstand at the expense of more pressing concerns?
Is it laughable for African leaders to wax-lyrical about regional integration when many of their countries cannot presently trade amongst themselves due to prohibitive tariffs and degraded or non-existent infrastructure let alone transcontinentaly? Are African’s too possessed of a narrow tribal jingoism that runs counter to these aspirations? And are the continents sub-regional bodies’ mostly sclerotic paper-tigers that too often delay decision making on important issues?
How does the concept of regional integration even make sense when there are 12 million internally displaced people in Africa? Can African leaders expect to be taken seriously when they meet and obfusticate over some of the most pressing continental emergencies; in Darfur, Somalia and Zimbabwe, in short is the, “United States of Africa” as an idea woefully ahead of its time?
This phrase “United States of Africa” deeply influenced the birth of the Pan-Africanist movement, but the concept is not new. The first attempts to create a politically unified state encompassing the whole of the African continent were made by the European colonial powers in the nineteenth century; a dream of a free-trade zone spanning the length of the African continent, “from Cape to Cairo” as was famously envisioned by the buccaneering imperialist Sir Cecil Rhodes in the 1890’s.
The geo-political union of an entity covering the entirety of the African continent can trace its genesis from the establishment of the early confederation of 31 nation’s as The Organization of African Unity (OAU) in 1963, by the man who came to be most closely identified with the Pan African mantle, Ghana’s first post-independence President Kwarme Nkrumah. Who regarded the emergence of a United Africa as an essential impetus to the continents collective but then incomplete struggle for independence and the striving for the socio-political development of African peoples.
With the global backdrop of the cold war its history was checkered with ideological disputes amongst members and the continuing reliance on former colonial masters. The OAU always attracted much criticism and did little to protect the rights and liberties of African citizens from their own political leaders and was scathingly dubbed by some the, “Dictators Club”.
The process of development of an African Union was however punctuated by greater continental integration and the closer cooperation of the sub-regions. The 1980, “Lagos plan of action” for the development of Africa and the 1991 treaty to establish, “The African Economic Community” known more commonly as the Abuja treaty; proposed the existing Regional Economic Communities as the basis for African Integration, with a timetable for regional and then continental integration to follow and provided a framework of the process for eventual economic integration in Africa.
This was essentially a “bottom-up” process that would start at the sub-regional level, (Central, Eastern, North, Southern and West and gradually evolve into a continent-wide single market. Each sub-region was expected to design and implement trade liberalization programs aimed at achieving free trade areas. These five regional groupings, COMESA, ECCAS, ECOWAS, SADC and the UMA where envisaged therefore as the building blocks towards an African Economic Community and eventual African Union.
The idea of reviving the African Union (AU) was spearheaded most publically in the mid 1990’s by a leader who often wears clothes emblazoned with the outline of the continent - Libya's Colonel Muammar Q’addafi, or to give him his full title; Guide of the First of September Great Revolution of the Socialist People's Libyan Arab Jamahiriya.
With the Sirte Declaration in September 1999 he called for the establishment of an African Union, declaring, ”I shall continue to insist that our sovereign countries work to achieve The United States of Africa”, with a single military force, a single currency and a single passport for Africans to move freely around the country.
This was followed by the summits in Lome, (where the Constitutive Act of the African Union was issued), and Lusaka in 2001, (which drew the road map for the implementation of the AU) and finally the Durban Summit in 2002 which officially brought the AU into existence. The vision behind its establishment was as the prerequisite for the development and integration agenda of the Union of Africa, the idea therefore, that an African could ideally travel from Monrovia to Cape Town without needing a visa.
Whilst there was great consensus about this at the time, how effective this rebranded Organization of African Union (OUA) has managed to be in shaking of its image as a mere talking shop where empty rhetoric and bombast thrive is still open to debate.
The thinking behind its establishment was the fear that unless Africa acted with more cohesion and solidarity the continent would become increasingly marginalized from the Global economy.
The vexed issue behind fulfillment of the African Union’s vision is of course that the more powerful African countries are perpetually wary of losing their own regional influence and concerned by any initiative that may weaken their sovereignty or ability to act independently.
Nigeria for example enjoys its role as the dominant force in the existing West African grouping the Economic Community of the West African States, (ECOWAS). This is similarly the case with South Africa in the South African Development Community (SADC). Many Africans it seems prefer to work towards regional integration before looking at Pan-African Unity. Moreover the African states trade far more with the rest of The World than they do with each other. Despite Colonel Qadafi’s grandiose plans; it is hard to see how an African Union will mean much in practical terms, at least in the short run.
One of the key debates to the achievement of greater continental integration is the relative priority that should be given to the integration of the continent as a unit in its self or to closer integration of the sub-regions.
The Abuja treaty, proposed that the Regional Economic Communities (RECs) should be the main building blocks of closer African integration. And sought to create the African Economic Community (AEC) through six stages culminating in the African Common Market. An area without internal frontiers in which the free movement of goods, people, and capital is ensured.
As well as the eventual establishment of a common central bank that would manage a single African currency theoretically by 2021. Essentially then a two-fold strategy, first building genuine monetary unions in Africa’s regional economic blocks with eventual “full-blown” economic and monetary union to be completed by 2028.
Currently there are a hodgepodge of eight RECs recognized by the AU, each established under a separate regional treaty; the most well know being the Common Market for Eastern and Southern Africa (COMESA) founded in 1993, the Economic Community of West African States (ECOWAS) founded in 1976 and the Southern African Development Community (SADC) founded in 1980, as well as the East African Community (EAC) re-established in 2000.
The membership of many of these communities does however overlap, and their rationalization has been under discussion for several years and was the theme of the 2006 Banjul summit that attempted to set a protocol on relations between the African Union and the RECs. In accordance with the Lagos plan of action time frames, The most significant step taken so far in this process has been the announcement by the EAC, SADC and COMESSA at the Tripartite Summit in Kampala of the creation of; The African Free Trade Zone (AFTZ) in October 2008.
This was historically significant and the realization of a dream more than a hundred years in the making. For the first time, since the birth of the African Union several key building blocks of the African Economic Community have been met on how to integrate territories and the movement towards deepening and widening the integration.
The African Free trade Zone Currently has a population of 527 million and a combined GDP of USD$ 625 billion. Roughly half the continents total industrial output. In size and capacity then the AFTZ rivals most trade blocks. The key question now is whether the AFTZ will fully integrate or simply be another white elephant African organization long on lofty rhetoric but with few tangible results.
This has though been hailed as a major step forward designed to mitigate the growing geostrategic importance of the Asian giants, China and India.
As Africa grapples with the effects of steep commodity price rises and the impact the global financial crisis is having on Africa’s levels of foreign direct investment notwithstanding the declining level of demand for African exports of goods and services.
The AFTZ will hopefully strengthen Africa’s bid to gain positions at the global financial institutions. Ugandan President Yoweri Museveni has described the envisaged single market as, “a strategic tool” for greater prosperity.
So what then are the challenges ahead?
There are of course massive hurdles associated with the creation of the AFTZ. Not least the organizational challenge of building a trade block and economic union from the ground up. Integrating three different organizations, (when some countries have overlapping membership in the blocks), presents a barrier to the creation of a common customs union) (see diagram below).
As well as the many other goe-strategic challenges faced by the continent including but not limited to the following:
The lure of regionalism has had profound effects on the foreign policies of African Countries. As has been seen these collaborative efforts are expected to serve as the foundation of a future Africa Economic community an African Union and the eventual realization of a, “United Sates of Africa”.
The theoretical arguments in favor of regional co-operation are simple and elegant: it can strengthen the efforts of countries to manage relations with powerful external actors and can facilitate the expansion of markets that will aid industrialization. But have these experiments delivered tangible results? And is regional integration an appropriate response by the developing World to the challenges of globalization?
Three effects of globalization must be kept in mind, the domestic state today is more permeable and vulnerable to trans-national developments, therefore it is not only more, “interdependent” but also more interpenetrated. Globalization erodes the capacity of the state to pursue broad-based projects such as reconciling capitalist development with social justice.
Over several decades, regional integration efforts have intensified both in the developed and developing countries, with many regions witnessing the expansion and deepening of the degree of regional integration.
In Europe, the European Union (EU) formed a monetary and Economic Union in 1999. In North America, the North American Free Trade Agreement (NAFTA) was launched 1993. In Southeast Asia, The Association of South East Asian Nations (ASEAN) was established in 1992. And In Latin America, the common market of the South (MERCOSUR) was launched in 1991.
Africa policy makers in common with their international counterparts have therefore viewed regional integration schemes as a means towards stability and development in helping countries diversify their economies and reverse deindustrialization and marginalization.
Mainly via the provision of access to a wider trading and investment environment, hopefully leading to the achievement of economies of scale. As well as to induce both backward and forward linkages contributing to regional value added and the promotion of diversification and exports to regional markets that helps also to build trade experience before entering global markets.
The main impetus for regional integration draws its rationale from the standard trade theory.
That free trade is superior to all other trade policies, and that free trade among two or more countries will improve the welfare of the member countries so long as the arrangement leads to a net trade creation. Due to factors like specialization, economies of scale, changes in the terms of trade and forced changes in efficiency owing to enhanced competition.
All of these factors should theoretically lead to an enhancement in the rate of economic growth. It is also hoped that additional benefits of integration should help to underpin stable and sound macro-economic policies and the rapid accumulation of human and physical capital. As well as having a “lock-in” effect by creating stronger ties between less well developed countries with the relatively developed ones. And lastly by forcing them to remain in a similar and agreed upon policy framework.
So much for the theories, but can this be judged empirically to have been a success?
Regional Economic Integration in Africa: A review of Problems and prospects:
The eminent Oxford Development Economist and author of The Bottom Billion argues in his new book, Wars, Guns and Votes: Democracy in Dangerous Places, that only credible way forward for Africa is through federalism.
His thesis contends that; America, the European Union and OECD have pooled sovereignty on a huge scale. Mighty Germany, for instance, has sacrificed national authority on its currency, interest rates and trade policy. Yet tiny Burundi does not. An academic model shows Africa functioning incomparably better as seven big federal entities than the present 47 largely dysfunctional economies. According to him the continent will only get the hydroelectric and railway networks it needs when there is real cross-border co-operation.
Regional integration initiatives In Africa have a long history, dating back to the establishment of the South African Customs Union (SACU) in 1910. And the East African Community (EAC) in 1919.
Since then a number of regional economic communities (RECs) have been formed across the continent and today there is no country in Africa that is not a member of at least one regional economic group.Indeed the issue continues to occupy centre stage in the economic policy agenda of all African countries and the intent and the declarations to form continent wide unity continue unabated.
The formation of the other regional blocks outside of Africa. Across Europe, Asia and the Americas has it seems forced African countries to reconsider the issues more seriously and with greater urgency if they are to avoid further marginalization.
As a result there is now a new momentum towards invigorating the process of African economic integration and this has been compounded by the realization among African countries, (particularly the small ones), that their respective national markets are too small to provide the benefits of economies of scale and specialization.
Additionally the liberalization initiatives undertaken by almost all counties in Africa have also created a more conducive environment to pursue an outward looking economic policy, encompassing economic cooperation in general and trade liberalization policy. In particular, the Doha development agenda if successfully negotiated by African’s could offer some degree of optimism. Whether these factors amongst others are sufficient to take the integration initiative to a higher level or not remains to be seen. But there is now more optimism for its realization than ever before. And In the case of regional integration in Africa, all regional groupings now have the stated unequivocal objective to eventually form a common market.
Judged against this consensus the reality however seems to be that none of the regional groupings have to date successfully filled the requirements of a functional common market. In many cases not even that of a customs union. Indeed Intra-REC trade in Africa is generally found to be very low compared with other RECs trade with non-member countries and in particular with the EU countries.
This suggests that often governments, despite the vainglorious rhetoric, are failing to implement the treaties they signed and which in turn suggests a lack of common political commitment in practice.
Despite the statistical findings then that regional integration efforts in Africa have so far registered disappointing results; the enthusiasm to revitalize existing groupings and form new ones as well as at a continent level has been catalyzed in recent years. And the global backdrop indicates that in doing so African leaders recognize the inevitability of this process and have striven to be on the right side of history.
Although the importance of regional economic groupings is crucial to survive in the increasingly integrating world economy; addressing the factors preventing its realization issues is a daunting task. African countries need therefore to take integration issues as more than a pan-African ideology and instead as a vital an economic survival strategy aimed at combating marginalization from the global economy.
Africa in Business would argue that the, “United States of Africa” has to be the objective and should not remain the stuff of fantasy.
“When Spiders Unite, they can tie up a lion” Goes an old Ethiopian proverb.
By Scherzando Karasu
March 2009
By Scherzando Karasu
“Hail The United States of Africa-free! Country of the brave black man’s liberty; state of greater nationhood thou has won, A new life for the race is just begun.”
Those words written first in 1924 by the activist and poet Marcus Garvey, gave voice to the socio-political world view which seeks to unify native Africans and indeed those of the African Diaspora as part of a, “global African community” The dream of achieving a politically United Africa.
“The United States of Africa” is the name sometimes given to one version of the possible future unification of Africa as a national and sovereign federation of states similar in form to the United States of America.
Alpha Ouamar Konare former head of the African Union has said, "The battle for the United States of Africa is the only one worth fighting for our generation - the only one that can provide the answers to the thousand-and-one problems faced by the populations of Africa,"
So how far has Africa come towards realizing this dream? What have been the milestones along the path to Africa’s longed for and much heralded unification? How will this supra-nationalism effect business and enhance African economic development? Or will the vested interests of the regional economic communities (RECs), (the imagined foundation stones on which to build this project), undermine its realization?
Is it just a pipe-dream? A trite phrase disconnected from reality and used by African leaders as a platform to grandstand at the expense of more pressing concerns?
Is it laughable for African leaders to wax-lyrical about regional integration when many of their countries cannot presently trade amongst themselves due to prohibitive tariffs and degraded or non-existent infrastructure let alone transcontinentaly? Are African’s too possessed of a narrow tribal jingoism that runs counter to these aspirations? And are the continents sub-regional bodies’ mostly sclerotic paper-tigers that too often delay decision making on important issues?
How does the concept of regional integration even make sense when there are 12 million internally displaced people in Africa? Can African leaders expect to be taken seriously when they meet and obfusticate over some of the most pressing continental emergencies; in Darfur, Somalia and Zimbabwe, in short is the, “United States of Africa” as an idea woefully ahead of its time?
This phrase “United States of Africa” deeply influenced the birth of the Pan-Africanist movement, but the concept is not new. The first attempts to create a politically unified state encompassing the whole of the African continent were made by the European colonial powers in the nineteenth century; a dream of a free-trade zone spanning the length of the African continent, “from Cape to Cairo” as was famously envisioned by the buccaneering imperialist Sir Cecil Rhodes in the 1890’s.
The geo-political union of an entity covering the entirety of the African continent can trace its genesis from the establishment of the early confederation of 31 nation’s as The Organization of African Unity (OAU) in 1963, by the man who came to be most closely identified with the Pan African mantle, Ghana’s first post-independence President Kwarme Nkrumah. Who regarded the emergence of a United Africa as an essential impetus to the continents collective but then incomplete struggle for independence and the striving for the socio-political development of African peoples.
With the global backdrop of the cold war its history was checkered with ideological disputes amongst members and the continuing reliance on former colonial masters. The OAU always attracted much criticism and did little to protect the rights and liberties of African citizens from their own political leaders and was scathingly dubbed by some the, “Dictators Club”.
The process of development of an African Union was however punctuated by greater continental integration and the closer cooperation of the sub-regions. The 1980, “Lagos plan of action” for the development of Africa and the 1991 treaty to establish, “The African Economic Community” known more commonly as the Abuja treaty; proposed the existing Regional Economic Communities as the basis for African Integration, with a timetable for regional and then continental integration to follow and provided a framework of the process for eventual economic integration in Africa.
This was essentially a “bottom-up” process that would start at the sub-regional level, (Central, Eastern, North, Southern and West and gradually evolve into a continent-wide single market. Each sub-region was expected to design and implement trade liberalization programs aimed at achieving free trade areas. These five regional groupings, COMESA, ECCAS, ECOWAS, SADC and the UMA where envisaged therefore as the building blocks towards an African Economic Community and eventual African Union.
The idea of reviving the African Union (AU) was spearheaded most publically in the mid 1990’s by a leader who often wears clothes emblazoned with the outline of the continent - Libya's Colonel Muammar Q’addafi, or to give him his full title; Guide of the First of September Great Revolution of the Socialist People's Libyan Arab Jamahiriya.
With the Sirte Declaration in September 1999 he called for the establishment of an African Union, declaring, ”I shall continue to insist that our sovereign countries work to achieve The United States of Africa”, with a single military force, a single currency and a single passport for Africans to move freely around the country.
This was followed by the summits in Lome, (where the Constitutive Act of the African Union was issued), and Lusaka in 2001, (which drew the road map for the implementation of the AU) and finally the Durban Summit in 2002 which officially brought the AU into existence. The vision behind its establishment was as the prerequisite for the development and integration agenda of the Union of Africa, the idea therefore, that an African could ideally travel from Monrovia to Cape Town without needing a visa.
Whilst there was great consensus about this at the time, how effective this rebranded Organization of African Union (OUA) has managed to be in shaking of its image as a mere talking shop where empty rhetoric and bombast thrive is still open to debate.
The thinking behind its establishment was the fear that unless Africa acted with more cohesion and solidarity the continent would become increasingly marginalized from the Global economy.
The vexed issue behind fulfillment of the African Union’s vision is of course that the more powerful African countries are perpetually wary of losing their own regional influence and concerned by any initiative that may weaken their sovereignty or ability to act independently.
Nigeria for example enjoys its role as the dominant force in the existing West African grouping the Economic Community of the West African States, (ECOWAS). This is similarly the case with South Africa in the South African Development Community (SADC). Many Africans it seems prefer to work towards regional integration before looking at Pan-African Unity. Moreover the African states trade far more with the rest of The World than they do with each other. Despite Colonel Qadafi’s grandiose plans; it is hard to see how an African Union will mean much in practical terms, at least in the short run.
One of the key debates to the achievement of greater continental integration is the relative priority that should be given to the integration of the continent as a unit in its self or to closer integration of the sub-regions.
The Abuja treaty, proposed that the Regional Economic Communities (RECs) should be the main building blocks of closer African integration. And sought to create the African Economic Community (AEC) through six stages culminating in the African Common Market. An area without internal frontiers in which the free movement of goods, people, and capital is ensured.
As well as the eventual establishment of a common central bank that would manage a single African currency theoretically by 2021. Essentially then a two-fold strategy, first building genuine monetary unions in Africa’s regional economic blocks with eventual “full-blown” economic and monetary union to be completed by 2028.
Currently there are a hodgepodge of eight RECs recognized by the AU, each established under a separate regional treaty; the most well know being the Common Market for Eastern and Southern Africa (COMESA) founded in 1993, the Economic Community of West African States (ECOWAS) founded in 1976 and the Southern African Development Community (SADC) founded in 1980, as well as the East African Community (EAC) re-established in 2000.
The membership of many of these communities does however overlap, and their rationalization has been under discussion for several years and was the theme of the 2006 Banjul summit that attempted to set a protocol on relations between the African Union and the RECs. In accordance with the Lagos plan of action time frames, The most significant step taken so far in this process has been the announcement by the EAC, SADC and COMESSA at the Tripartite Summit in Kampala of the creation of; The African Free Trade Zone (AFTZ) in October 2008.
This was historically significant and the realization of a dream more than a hundred years in the making. For the first time, since the birth of the African Union several key building blocks of the African Economic Community have been met on how to integrate territories and the movement towards deepening and widening the integration.
The African Free trade Zone Currently has a population of 527 million and a combined GDP of USD$ 625 billion. Roughly half the continents total industrial output. In size and capacity then the AFTZ rivals most trade blocks. The key question now is whether the AFTZ will fully integrate or simply be another white elephant African organization long on lofty rhetoric but with few tangible results.
This has though been hailed as a major step forward designed to mitigate the growing geostrategic importance of the Asian giants, China and India.
As Africa grapples with the effects of steep commodity price rises and the impact the global financial crisis is having on Africa’s levels of foreign direct investment notwithstanding the declining level of demand for African exports of goods and services.
The AFTZ will hopefully strengthen Africa’s bid to gain positions at the global financial institutions. Ugandan President Yoweri Museveni has described the envisaged single market as, “a strategic tool” for greater prosperity.
So what then are the challenges ahead?
There are of course massive hurdles associated with the creation of the AFTZ. Not least the organizational challenge of building a trade block and economic union from the ground up. Integrating three different organizations, (when some countries have overlapping membership in the blocks), presents a barrier to the creation of a common customs union) (see diagram below).
As well as the many other goe-strategic challenges faced by the continent including but not limited to the following:
- Somalia: The AFTZ cannot realistically integrate all of its countries, many of whom are Somalia’s neighbors and some of whom meddle in Somalia and/or are directly affected by Somalia’s manifold problems such as piracy, internal conflict and refugee migration. Indeed whether to leave Somalia behind altogether will be a stern test of the resolve of the AFTZ’s leaders to try to advance the whole continent of Africa.
- Zimbabwe: The SADC has thus far been conspicuously ineffective in dealing with Zimbabwe as it has descended into a pariah state and resolving the clearly untenable situation within that country. Under the leadership of South Africa’s former president, Thabo Mbeki, the SADC took a path of, “quiet-diplomacy”, talking to President Robert Mugabe behind the scenes to effect change rather than using the more confrontational approach favored by the international community. Zimbabwe with its astronomical inflation, chronic political repression, and mass exodus of people to neighboring countries, could threaten to destabilize the SADC’s very existence.
- Darfur: With Sudan as a member and with the recent warrant issued by the International Criminal Court (ICC), for the arrest of its President, Omar Al-Bashir. The Sudanese leader is now a wanted man for war crimes against humanity, thanks to his role in the on-going conflict in Darfur. The first ever incidence against a sitting Head of State, by a world body.
- Congo: With its vast resources and possibly the largest unrealized potential in the World, The Democratic Republic of Congo is a potential powder key waiting to explode. Many members of the AFTZ including Uganda, Rwanda, South Africa, and Burundi have a long history of meddling in the internal affairs of the DRC. Indeed the stability, territorial integrity and long term development of this country has to be a priority if the AFTZ is to be realized.
- South Africa: South Africa is at a political cross-roads that may result in the entrenchment of the democratic values of the country or may undermine the stability of its democracy and possibly even its social fabric. The ousting of Mbeki by the African National Congress (ANC) could lead to a possible split within the party, and the political complexion of the parties’ frontrunner for leadership Jacob Zuma remains to be seen.
- Djibouti-Eritrea: Within days of the AFTZ’s announcement, Djibouti announced that it may be heading to war with Eritrea if it continued to flout is territorial integrity. Which begs the question that if a border dispute amongst trade blocks members cannot be resolved without recourse to Clausewitzian means, how can they possibly achieve the necessary harmonization toward achieving monetary union?
The lure of regionalism has had profound effects on the foreign policies of African Countries. As has been seen these collaborative efforts are expected to serve as the foundation of a future Africa Economic community an African Union and the eventual realization of a, “United Sates of Africa”.
The theoretical arguments in favor of regional co-operation are simple and elegant: it can strengthen the efforts of countries to manage relations with powerful external actors and can facilitate the expansion of markets that will aid industrialization. But have these experiments delivered tangible results? And is regional integration an appropriate response by the developing World to the challenges of globalization?
Three effects of globalization must be kept in mind, the domestic state today is more permeable and vulnerable to trans-national developments, therefore it is not only more, “interdependent” but also more interpenetrated. Globalization erodes the capacity of the state to pursue broad-based projects such as reconciling capitalist development with social justice.
Over several decades, regional integration efforts have intensified both in the developed and developing countries, with many regions witnessing the expansion and deepening of the degree of regional integration.
In Europe, the European Union (EU) formed a monetary and Economic Union in 1999. In North America, the North American Free Trade Agreement (NAFTA) was launched 1993. In Southeast Asia, The Association of South East Asian Nations (ASEAN) was established in 1992. And In Latin America, the common market of the South (MERCOSUR) was launched in 1991.
Africa policy makers in common with their international counterparts have therefore viewed regional integration schemes as a means towards stability and development in helping countries diversify their economies and reverse deindustrialization and marginalization.
Mainly via the provision of access to a wider trading and investment environment, hopefully leading to the achievement of economies of scale. As well as to induce both backward and forward linkages contributing to regional value added and the promotion of diversification and exports to regional markets that helps also to build trade experience before entering global markets.
The main impetus for regional integration draws its rationale from the standard trade theory.
That free trade is superior to all other trade policies, and that free trade among two or more countries will improve the welfare of the member countries so long as the arrangement leads to a net trade creation. Due to factors like specialization, economies of scale, changes in the terms of trade and forced changes in efficiency owing to enhanced competition.
All of these factors should theoretically lead to an enhancement in the rate of economic growth. It is also hoped that additional benefits of integration should help to underpin stable and sound macro-economic policies and the rapid accumulation of human and physical capital. As well as having a “lock-in” effect by creating stronger ties between less well developed countries with the relatively developed ones. And lastly by forcing them to remain in a similar and agreed upon policy framework.
So much for the theories, but can this be judged empirically to have been a success?
Regional Economic Integration in Africa: A review of Problems and prospects:
The eminent Oxford Development Economist and author of The Bottom Billion argues in his new book, Wars, Guns and Votes: Democracy in Dangerous Places, that only credible way forward for Africa is through federalism.
His thesis contends that; America, the European Union and OECD have pooled sovereignty on a huge scale. Mighty Germany, for instance, has sacrificed national authority on its currency, interest rates and trade policy. Yet tiny Burundi does not. An academic model shows Africa functioning incomparably better as seven big federal entities than the present 47 largely dysfunctional economies. According to him the continent will only get the hydroelectric and railway networks it needs when there is real cross-border co-operation.
Regional integration initiatives In Africa have a long history, dating back to the establishment of the South African Customs Union (SACU) in 1910. And the East African Community (EAC) in 1919.
Since then a number of regional economic communities (RECs) have been formed across the continent and today there is no country in Africa that is not a member of at least one regional economic group.Indeed the issue continues to occupy centre stage in the economic policy agenda of all African countries and the intent and the declarations to form continent wide unity continue unabated.
The formation of the other regional blocks outside of Africa. Across Europe, Asia and the Americas has it seems forced African countries to reconsider the issues more seriously and with greater urgency if they are to avoid further marginalization.
As a result there is now a new momentum towards invigorating the process of African economic integration and this has been compounded by the realization among African countries, (particularly the small ones), that their respective national markets are too small to provide the benefits of economies of scale and specialization.
Additionally the liberalization initiatives undertaken by almost all counties in Africa have also created a more conducive environment to pursue an outward looking economic policy, encompassing economic cooperation in general and trade liberalization policy. In particular, the Doha development agenda if successfully negotiated by African’s could offer some degree of optimism. Whether these factors amongst others are sufficient to take the integration initiative to a higher level or not remains to be seen. But there is now more optimism for its realization than ever before. And In the case of regional integration in Africa, all regional groupings now have the stated unequivocal objective to eventually form a common market.
Judged against this consensus the reality however seems to be that none of the regional groupings have to date successfully filled the requirements of a functional common market. In many cases not even that of a customs union. Indeed Intra-REC trade in Africa is generally found to be very low compared with other RECs trade with non-member countries and in particular with the EU countries.
This suggests that often governments, despite the vainglorious rhetoric, are failing to implement the treaties they signed and which in turn suggests a lack of common political commitment in practice.
Despite the statistical findings then that regional integration efforts in Africa have so far registered disappointing results; the enthusiasm to revitalize existing groupings and form new ones as well as at a continent level has been catalyzed in recent years. And the global backdrop indicates that in doing so African leaders recognize the inevitability of this process and have striven to be on the right side of history.
Although the importance of regional economic groupings is crucial to survive in the increasingly integrating world economy; addressing the factors preventing its realization issues is a daunting task. African countries need therefore to take integration issues as more than a pan-African ideology and instead as a vital an economic survival strategy aimed at combating marginalization from the global economy.
Africa in Business would argue that the, “United States of Africa” has to be the objective and should not remain the stuff of fantasy.
“When Spiders Unite, they can tie up a lion” Goes an old Ethiopian proverb.
By Scherzando Karasu
March 2009
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