Will the African Integration Revolution be Televised?

“The Accidental Ecowas & AU Citizen”:

Will the African Integration Revolution be Televised? (1)

By E.K.Bensah Jr

You would not know it if you saw it, but Africa’s at the cusp of historic change. If the month of November is anything to go by, you might think that Africa’s about to take off in 2012. Five major developments have conspired to remind us that the issue of regional integration and trade are very much at the forefront of the minds of policy-makers, civil society activists and citizens alike.

Africa Trade Forum

According to the website of the ATF, the “strategic objectiveof the inaugural Africa Trade Forum, ATF 2011is to promote and enhance multi-stakeholder policy dialogue and advocacy on trade issues in Africa, by mobilising all the different trade constituencies Africa and the world in general, to debate and exchange views on all the key issuesrelating to intra-African trade, and Africa’s trade with the rest of the world”. Additionally, the Executive Secretary of the UNECA was perhaps more instructive and insightful. In his opening speech, he touched upon the low performance of Africa’s trade performance at “international and regional levels”, going on to say that “the continent’s share of global trade remains low at about 3% and continues to be dominated by primary commodity exports.”

He also touches upon how intra-African trade is faring, saying that it is “just about 11% of total trade as compared to 72% in Europe and 52% in Asia.” He suggests that a solution is through “regional value chains, which have contributed to high intra-regional trade elsewhere, which in turn has helped firms in other parts of the world to be key players in global value chains.”

Another positive outcome finds expression in the forthcoming Economic Report on Africa2012, which shows “some regional economic communities have exceeded the average intra-African trade growth.” One example cited is that of intra-COMESA trade that is reported to have grown “by at least 35.4 percent between 2009 and 2010, rising from US$12.7 billion to $17.2 billion.”

Janneh further maintains that the Forum is “intended to deepen the dialogue on how these challenges can be best addressed including through sharing of best practices.” In this respect, the Heads of States and Governments from the Tripartite of COMESA-SADC-EAC have committed themselves to the establishment of an FTA by 2014 “that will be based not just on market integration, but that will seek shared benefits through industrialization and infrastructure development.” 

That the AU Assembly will in January 2012 focus its meeting on the discussion of boosting intra-African trade can only “contribute to the process of helping build consensus around some key areas.” In addition, the forthcoming Assessing Regional Integration in Africa V, (jointly published by the AUC and AfDB) “suggest that harmonization of RECs trade policies through a continental FTA would result to an additional US$34 billion in intra-African exports…” In short, he maintains, “if we do what is required, we can optimize intra-African trade.”

Seventh Ordinary Session of Conference of African Trade Ministers

 A second major development is that of the Conference of African Trade Ministers currently being held in Accra this week, and which ends on 3rdDecember. A quick perusal of the AU website reveals two major documents that make recommended reading – that of an “Action Plan for boosting Intra-African Trade” a ‘Draft Framework, Roadmap and Architecture for Fast-Tracking the Continental Free Trade Area(CFTA)”. In the interests of space, I will seek to summarise the major highlights of the action plan, which comprises no less than six(6) programme clusters—namely: Trade policy; Trade Facilitation; Productive Capacity; Trade-Related Infrastructure; Trade Finance; and Trade Information.

The primary objective of the TRADE POLICY cluster is to fast-track intra-African trade development. Some of the activities outlined include: mainstreaming of intra-African trade in national trade development strategies; boosting of intra-African trade in food products so that tariffs, non-tariff measures and quantitative restrictions on intra-African trade in food products are removed; promotion of “Buy in Africa” and “Made in Africa” goods, which ought to lead to increased trade in goods among member states.

The main objective of TRADE FACILITATION is to reduce the time it takes to move goods from one point to another by 50%. Activities include: reduction of road blocks; the harmonization and simplification of customs and transit procedures, documentation and regulations; and the establishment of an “Integrated Border Management”, which output is a harmonized and simplified set of customs procedures; standards; regulations and documentation.

The third cluster – the PRODUCTIVE CAPACITY cluster – is perhaps the most contentious – and not just because the Action Plan dedicates a longer explication of it! The Plan reports that “to a large extent…the inadequacy of productive capacity, especially in the dynamic sectors of global trade” has a lot to do with the low level of intra-African trade.  While Africa exports more than it imports of ores, “metals, precious stones and fuels”, the reverse is the case with manufactured goods, chemicals, machinery and transport.

In short, the necessity of the diversification of Africa’s economy and the enhancement of its productive capacity and competitiveness for meeting the challenges of sustainable economic growth and development has led the Assembly of Heads of State and Government of the AU to adopt a number of initiatives.

These include the adoption of the Action Plan for Accelerated Industrial Development of Africa(AIDA), which is aimed at the enhancement of the continent’s industrial capacities and capabilities. In addition, there is the African Productive Capacity Initiative(APCI); the Action Plan for the Development of Science and Technology; and the Africa Technology and Innovation Initiative(ATII); the African Mining Vision; and the African AgriBusiness and Agro-industry Development Initiative(3ADI). The report maintains “the effective implementation of these initiatives is essential for the enhancement of the productive capacities of African countries and for the boosting of intra-African trade.”

Little wonder, then, that the main objective of this cluster is to create regional and continental value chains/complementarity, to increase local production/ trade in goods produced in Africa. Some of the programmes and activities scheduled include: the prioritization of the implementation of continentally-agreed programmes, such as AIDA; ATII; APCI; and 3ADI; the establishment of integrated and inter-connected trade information systems; and the establishment of Regional Centers of Excellence for technology development, adaptation and diffusion resulting in each regional economic community(REC) having its own regional centre.

The fourth cluster deals with TRADE-RELATED INFRASTRUCTURE, with its main objective being the development of innovative, legal, financial and other mechanisms for multi-country infrastructural development projects. Some of its programmes include: the prioritization of the implementation of the AU Programme for Infrastructural Development in Africa(PIDA); and  the enabling environment for private sector participation in the development of infrastructure.

Cluster number five—TRADE FINANCE—focuses on developing and strengthening African financial institutions and mechanisms to promote intra-African trade and investment. Programmes include: strengthening and enhancing the capacity of existing regional and continental financial institutions; improving payment systems so that cross-border payments are facilitated; and finally, enabling environment for financial service companies to supply export credit and guarantees.

The sixth and final cluster—TRADE INFORMATION—focuses on bridging the information gap so as to enhance opportunities for intra-African trade, with, among other things, the envisaging of the creation of inter-connected centers of trade information exchange; as well as the development of “innovative legal, financial and other mechanisms for multi-country infrastructure and industrial projects”.

All this notwithstanding, there is even better good news to help resolve the problem of Africa’s low level of trade – and that is with the establishment of CFTA, or a Continental Free Trade Area Architecture. This would include: a High-Level African Trade Committee; a Joint Conference of Trade/Finance Ministers; an African Trade Forum; African Business Council; Trade Observatory; and an African Court of Justice. AU policymakers envisage the CFTAA to be ready by 2017.

UNCTAD’s Least Developed Countries Report

The report was launched last week—sadly without much fanfare. First, Ghana is not a Least Developed Country, and secondly, LDCs rarely make the headlines these days. Nonetheless, the report came out with much interesting analysis, including an issue I touched on last week – that of the regional and sub-regional banks.

According to the report, regional monetary funds are “instrumental in avoiding uncontrolled exchange devaluations that may compromise the integration process.” The report maintains “it might be argued that a regional reserve pool would not work if an external shock affects the whole region.” Despite that, they continue to be “an important source of development finance for regional member countries.”

It was back in 2002 that the Monterrey Consensus of the International Conference on Financing for Development (FfD) emphasized the crucial role regional and subregional banks can play “in serving the development needs of developing countries and countries with economies in transition.” Further, they can serve as “a vital source of knowledge and expertise on economic growth and development for their developing member countries.” Third, given the structure of regional ownership, regional development banks can facilitate a stronger voice to developing country borrowers, as “well as enhance regional ownership and control”. Fourth, they can be effective because they tend to govern more through informal peer pressure “rather than imposing conditionality.” Finally, “information asymmetries are smaller at the regional level, given the proximity as well as close economic and other ties.”

(to be continued…)

In 2009, in his capacity as a “Do More Talk Less Ambassador” of the 42nd Generation—an NGO that promotes and discusses Pan-Africanism--Emmanuel gave a series of lectures on the role of ECOWAS and the AU in facilitating a Pan-African identity. Emmanuel owns "Critiquing Regionalism" (http://www.critiquing-regionalism.org ). Established in 2004 as an initiative to respond to the dearth of knowledge on global regional integration initiatives worldwide, this non-profit blog features regional integration initiatives on MERCOSUR/EU/Africa/Asia and many others. You can reach him on ekbensah@ekbensah.netekbensah@ekbensah.net  / Mobile: +233.268.687.653.