Africa needs to accelerate links between national economies; goal is to form economic union, states new ECA report

United Nations, New York, 14 July 2004 -- African countries are taking concrete steps towards integrating their economies -- building regional communities, adopting common currencies and increasing trade with each other -- and laying the groundwork for the establishment of an African Economic Community which, like the European Union, could enable them to benefit from larger markets.

These are the findings of the United Nations Economic Commission for Africa (ECA) in a new report, Assessing Regional Integration in Africa, released in New York today.

"Africa's longstanding recognition of the needs and benefits of regional integration has spawned the proliferation of regional economies and protocols across the continent," ECA Executive Secretary K.Y. Amoako and African Union Chairperson Alpha Oumar Konaré write in the preface to the 278-page report. "But these have yet to be strategically consolidated." Forming a regional trading bloc is seen as Africa's best chance for promoting sustainable development and becoming a viable trading partner in the global economy.

There are now 14 regional economic communities -- considered the building blocks of the African Economic Community -- in addition to a number of bodies like the West African Monetary Institute and the Development Bank of Southern Africa's Preferential Trade Area, which have been created to support the process.

Numerous protocols have been signed aimed at strengthening transportation and telecommunications links and allowing the free movement of workers and capital between countries. But, so far, results do not reflect the efforts that have been made.

Ties between economic communities grew significantly between 1994 and 1996, but since then there has been "stagnation and, sometimes, backsliding." The report documents progress since the 1994 Abuja Treaty setting up the African Economic Community came into force. The treaty is part of a renewed drive to unify the continent including the establishment in 2002 of the African Union, a political organisation, and the adoption a year earlier of the New Partnership for Africa's Development (NEPAD), a plan to stimulate development in Africa.

According to an index created by ECA to measure "integration", the continent as a whole registered an average annual increase of 4.5 per cent between 1994-99. The African Integration Index measures the rate at which economies are being linked together in eight key sectors -- trade, transport, communications, energy, agriculture, manufacturing, money and finance, and human development and labour markets. It assesses, for example, to what extent countries are removing barriers to trade (such as tariffs) and developing policies that will allow people to move freely between countries and work in countries other than their own.

Mixed performance

ECA's report paints a picture of mixed performance. Some regional economic communities have done a great deal to liberalise trade with their neighbours, permit the free movement of people and build external infrastructural links. In 1981, members of the Economic Community of West African States (ECOWAS) began eliminating tariffs on unprocessed goods. In 1990, they started to lift tariffs on industrial products. Now, no ECOWAS country, except Liberia, charges tariffs on unprocessed goods. Only Benin has so far removed tariffs on industrial goods. Of the 14 regional communities, ECOWAS, the West African Economic and Monetary Union, and the Southern African Development Community had the highest integration rating, averaging 6 per cent in the period 1994-99.

In other areas, progress was limited. Africa's network of transportation infrastructure and services is still "disjointed." Africa's transport costs are among the world's highest. Along the West African corridor -- which provides port access to Burkina Faso, Mali and Niger -- trucking companies, in 1997, paid an estimated $320 mn for drivers to pass through various national police and customs checkpoints; fees that would not be payable if the regional transport accord eliminating such fees had been implemented, ECA notes.

Progress is also hampered by "a low level of implementation of treaty obligations, an inability to prevent and resolve conflicts decisively, and a lack of resources to support integration,"

the report states. Too many regional economic communities with overlapping memberships duplicate efforts and waste scarce resources. Of sub-Saharan Africa's 53 countries, 6 are members of a one regional economic community, 26 belong to two and 20 are members of at least three. Fewer regional bodies would reduce administration costs and provide funds to improve day to day operations and finance projects.

The way forward

To accelerate integration, the ECA calls on countries to ratify and implement existing protocols, find alternative sources of financing and involve the private sector. It proposes that:

-- All regional economic communities adopt common documents for cross-border transactions and clearance of cargo, vehicles and people within each community by 31 December 2004. There should be common documentation across Africa by 31 December 2007

-- Targets for completing free trade areas and customs unions should be fully met. There have been too many postponements, partly due to some countries' inability to fulfil their commitments to tariff and non-tariff elimination schedules

-- The private sector should be encouraged to participate in intra-regional trade and cross-border investment encouraged through investor-friendly policies

-- Trade and industrial policies should be harmonized to promote manufacturing as a driving force for development

-- Regional economic communities should develop policies that require member states to be more accountable, that guarantee the independence of the judiciary and create mechanisms to narrow differences between political parties to ensure peace and stability.

"Revitalized regional integration offers the most credible strategy for tackling Africa's development challenges," ECA states in the report. "Collective efforts, with dynamic political commitment to integration, can help overcome the daunting challenges."

Africa Section, Africa Renewal
Room S-955
United Nations
New York, NY 10017 USA

Tel: (212) 963-6857
Fax: (212) 963-4556
Email: africa_recovery@un.org

Website: www.africarecovery.org
Contact us by email: africa_recovery@un.org