ASSESSMENT OF PROGRESS ON REGIONAL INTEGRATION IN AFRICA Stephen Karingi OiC Regional Integration and Trade 11 - 15 May 2018 Addis Ababa, Ethiopia 2018 Conference of Ministers

AFRICA HAS MADE SIGNIFICANT STRIDES TOWARDS INTEGRATION CHAPTER 1 | OVERVIEW 2 AFRICA HAS MADE SIGNIFICANT STRIDES TOWARDS INTEGRATION Regional integration is a longstanding priority for Africa Continental initiatives on integration: E.g. Agenda 2063, MIP, PIDA, BIAT; Most recently, launch of the African Continental Free Trade Area; At subregional level, eight Regional Economic Communities Global rise in protectionism challenge for Africa’s structural transformation Underlines the importance of regional integration Assessment of progress on regional integration in Africa UNECA.ORG

CHAPTER 2 | Status of integration 3 LEVEL OF INTEGRATION VARIES Three RECs have reached free trade area stage A customs union (ECOWAS) and a single market (EAC) 2 economic and monetary unions: WAEMU and CEMAC Level of integration varies also within RECs Intra-African trade increased to 18% in 2016, from 9% in 2000 EAC and SADC best performers in terms of intra-REC trade Yet, no REC recorded intra-REC trade of over 25% Assessment of progress on regional integration in Africa UNECA.ORG

CHAPTER 2 | Status of integration 4 INDUSTRIAL DEVELOPMENT HINDERED BY BY INFRASTRUCTURE GAPS An estimated $93 billion/year needed to fill infrastructure gaps Priority projects under PIDA alone require $68 billion up to 2020 Infrastructure development commitments $75 billion/year (2012-16) Under 10% of investment from private sector Launch of the Single African Air Transport Market in January 2018 Expected to contribute to growth of African aviation industry 25 countries have acceded to the initiative Assessment of progress on regional integration in Africa UNECA.ORG

CHAPTER 2 | Status of integration 5 NON-TRADE INTEGRATION STILL LIMITED 50 African countries have signed at least one African BIT Majority have not entered into force Pan-African Investment Code: continental investment regulation harmonization Productive integration hindered by reliance on primary commodities Underused potential for regional value chains E.g. cotton-to-textile, cocoa-to-chocolate, coffee to by-products Only 10 African countries offer liberal access (visa-free or visa-on-arrival) Protocol on Free Movement of Persons signed by 30 countries Assessment of progress on regional integration in Africa UNECA.ORG

Agreement Establishing the African Continental Free Trade Area CHAPTER 3 | African Continental FTA 6 AfCFTA A NEW MILESTONE IN AFRICA’S INTEGRATION Agreement Establishing the African Continental Free Trade Area 44 member States signed in Kigali, 21 March 2018 Agreement will enter into force after 22 ratifications Outstanding issues include annexes to adopted protocols and the schedules All outstanding work to be completed by Jan 2019 Second phase will begin late 2018, completed by Jan 2020 Investment, competition and intellectual property rights E-commerce is also being mooted as a possible additional topic Assessment of progress on regional integration in Africa UNECA.ORG

AfCFTA AND INCLUSIVE DEVELOPMENT CHAPTER 3 | African Continental FTA 7 AfCFTA AND INCLUSIVE DEVELOPMENT All African countries expected to gain in the long term Better access to affordable inputs and larger markets; But diversity on the continent will drive differentiated impacts More industrialized countries will be better placed to benefit High share of agricultural labour can drive benefits Inclusive gains will be contingent on supporting measures and policies Both between and within countries Assessment of progress on regional integration in Africa UNECA.ORG

TOWARDS AN EFFECTIVE AFCFTA CHAPTER 3 | African Continental FTA 8 TOWARDS AN EFFECTIVE AFCFTA Measures to overcome short-term costs will be required Countries with high initial tariffs on and levels of intra-African trade, Less industrialized countries, Vulnerable populations such as smallholder farmers Exclusion lists can address some of the challenges Implementation of BIAT will alleviate barriers to intra-African trade Benefiting less advantaged countries and small-scale businesses Strong institutional and M&E structures will enhance implementation Assessment of progress on regional integration in Africa UNECA.ORG

Prompt signing, ratification and implementation of AfCFTA will be key CHAPTER 4 | Conclusions 9 RECOMMENDATIONS Prompt signing, ratification and implementation of AfCFTA will be key ECA and AUC cooperation in supporting the process remains important AfCFTA should be complemented by investment regulations and policies Pan-African Investment Code provides basis for investment chapter of AfCFTA Impact assessments crucial to ensure that no one is left behind Will also ensure that appropriate supporting measures put in place Implementation of BIAT required to overcome barriers to intra-African trade Such as infrastructure gaps and cumbersome procedures Assessment of progress on regional integration in Africa UNECA.ORG

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