3 December 2018
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African Development Bank (Abidjan)

Importance of Regional and Continental Integration for Africa's Development

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Africa's integration is no longer a matter of choice. Against an international backdrop of changing political and economic priorities, Africa must plot a new course for its industrialisation and economic development, using the momentum of regional integration.

For Africa, a vast continent of over 1.2 billion people, integration has considerable potential not only for promoting robust and equitable economic growth through markets, but also for reducing conflict and enhancing trade liberalisation.

Development economists, policymakers, African and non-African researchers are meeting in Kigali, Rwanda this week to discuss the shape and future of continental integration at the 13th African Economic Conference (AEC). Convened on the theme, "Regional and Continental Integration for Africa's Development", the three-day event will explore proposals for enhancing the broad and inclusive integration of African economies.

The build-up to the conference began in March 2018, when 44 African countries committed to the launch of a common market for Africa - the African Continental Free Trade Area (AfCFTA). This followed the launch of an African Common Passport in July 2016.

The African Continental Free Trade Agreement seeks to bring Africa into the global trade environment as one continent rather than as individual countries.

Recent research by the African Development Bank shows that intra-African trade is the lowest of all global regions at approximately 15%, compared to 54% in the North American Free Trade Area, 70% within the European Union and 60% in Asia.

The Organization of African Unity and its successor, the African Union, have championed continental cooperation since the 1960s, culminating in the signing of the Abuja Treaty in 1991. This was the genesis of Africa's regional economic communities (RECs), regarded as the building blocks of the African Economic Community.

To date, the RECs have made slow but steady progress on Africa's integration, particularly in infrastructure (SADC, EAC), trade liberalisation and facilitation (West Africa economic and monetary Union, COMESA), free movement of people (ECOWAS), and peace and security (ECOWAS and SADC).

To build on these accomplishments, this year's African Economic Conference (AEC) in Kigali must define what the African Continental Free Trade Agreement means for Africa, and how it will foster integration.

The AfCFTA agreement brings together the largest number of countries within a free trade area in the world. 44 countries signed the pact in March. The number has since risen to 49. It proposes to create a single market for goods and services, with free movement of people and investments across 55 countries. This will redefine trade relations among African states. It also promises to promote trade liberalisation and improve interactions within the existing regional economic communities. A dispute settlement mechanism, similar to that set up by the World Trade Organization is embedded in the agreement.

In September 2018, the Geneva-based International Trade Centre (ITC) published a private sector guide to the AfCFTA. Beyond lifting people out of poverty and invigorating Africa's growth trajectory, the ITC observes that the African private sector will be the key beneficiary.

"Potential advantages to the private sector include increasing economies of scale and access to cheaper raw materials and intermediate inputs; better conditions for regional value chains and integration into global value chains," the ITC says.

To accelerate the integration, the priority of economic integration must be balanced by those of social, cultural and political integration. Policy instruments, especially for overlapping REC member nations, need to be harmonised. Currently, weak enforcement of existing treaties and non-tariff barriers continue to hinder free movement of goods, services and persons across borders.

The preponderance of bilateral and multilateral agreements between African states and the international community should also be reviewed to ensure that existing and future trade and investment arrangements align with regional and continental integration.

Another key concern is that integration must be people-centred, with stronger citizens' partnerships, especially among Africa's burgeoning youth population, private sector players and civil society institutions, in order to ensure sustainable development.

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