African Regional Integration African Economic Development Renata Serra – April 9 th 2007

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

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

The end dream An African Economic Community!! –Plan is to get there in steps: Strengthening regional communitiesStrengthening regional communities Evolutions of free trade areas and customs unionsEvolutions of free trade areas and customs unions Consolidation of a common market covering the whole continentConsolidation of a common market covering the whole continent

Questions for debate Terminology: Trade diversion: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?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 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 UnionUMA: the Arab Maghreb Union ECOWAS: West AfricaECOWAS: West Africa –WAEMU (or UEMOA) regroups 8 Franco-phone countries, which have the Franc CFA ECCAS: Central AfricaECCAS: Central Africa –CEMAC: Economic and Monetary Union of Central Africa, among CFA countries COMESA: Eastern and Southern AfricaCOMESA: 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 othersSome of these have been more effective than others

R. Sharer, “An Agenda for Trade, Investment, and Regional Integration” Finance and Development Dec 2001, [online at: Note: Tanzania and Namibia have now left COMESA

Ex. SACU The longest unbroken custom union (from 1889 until today)The longest unbroken custom union (from 1889 until today) Functioning and effective to some degreeFunctioning and effective to some degree However there are tensions and problems: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?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)!