African Regional Integration

African Economic Development

Renata Serra – April 9 th 2007

Why Integration in Africa?

• • • • • Overcome economic fragmentation – Smallness of borders, landlocked-ness Promote peace and security – Common peace-keeping force Promote cooperation in regional issues – Migration, drought (e.g. Sahel), public health, and displaced populations Search for ‘African’ solutions Increase African political and strategic position internationally

Progressively integrated entities

Free Trade Area + Common trade barriers with outside Custom Union + free factor movement Common Market + common fiscal & monetary policies Economic Union

The end dream An African Economic Community!!

– Plan is to get there in steps: • • • Strengthening regional communities Evolutions of free trade areas and customs unions Consolidation of a common market covering the whole continent

Questions for debate

• • • Terminology: Trade diversion: – Diversion of trade away from former trade partners as a result of the creation of a free-trade agreements (which makes trade with less-efficient producers more advantageous) Does it make sense to reinforce regionalism if the goal is an economic union?

– Is there conflict between regionalism and multilateralism?

What is (or should be) the weight of economic versus political/strategic goals in regional unions?

– What lessons do emerge from the comparison with the EU experience?

Main African Economic Regions

• • • • • UMA: the Arab Maghreb Union ECOWAS: West Africa – WAEMU (or UEMOA) regroups 8 Franco-phone countries, which have the Franc CFA ECCAS: Central Africa – CEMAC: Economic and Monetary Union of Central Africa, among CFA countries COMESA: Eastern and Southern Africa – SACU and associated Common Monetary Area – SADC: Southern Africa Development Community – EAC: East Africa Community Some of these have been more effective than others

Note:

Tanzania and Namibia have now left COMESA

R. Sharer, “An Agenda for Trade, Investment, and Regional Integration” Finance and Development Dec 2001, [online at: http://www.imf.org/external/pubs/ft/fandd/2001/12/sharer.htm]

Ex. SACU

• • • The longest unbroken custom union (from 1889 until today) Functioning and effective to some degree However there are tensions and problems: – Political tensions between SA and BLNS states during apartheid – End of apartheid did not change the power balance by much: SA dominates – Difficult future given over-lapping claims of authority by SADC

Constraints

• What have been the main reasons for limited success of African regional unions?

– Governments’ unwillingness to cede power – Power of custom departments – Fear of dominance by large country members – Poor physical and institutional infrastructures – Perception of low current economic benefits – Over-lapping membership and too many groups (see Southern Africa)!