Share

Working paper no. 293, development centre, organization for economic cooperation and development, Paris, Draper, Peter. 2010

A multi-disciplinary analysis of regional economic integration in Africa perceives a movement towards institution and regulation-heavy integration, and recommends a less ambitious approach which centers around a regional leader, avoids supra-national institutions, and stays within the political and economic capacity of the nations involved.

The agenda for regional economic integration in Africa has long been promoted, and is being formalized with the “Africa Union’s plan to achieve a continental common market by 2028.”  Despite the support for a regional economic community (REC), only 10% of African trade is among regional partners. Removing natural resource exports improves the figure greatly, but it remains the lowest in the world.

The author questions the process of regional integration, suggesting that a ‘European’ influence is present but ill-suited for Africa.

A multi-disciplinary approach is used to analyse the challenges and possibilities for regional economic integration, focussing on southern Sub-Saharan Africa. The author reviews the extensive literature emanating from political and economic perspectives, and sets out to draw conclusions on both.

The political dimension captures the aspirations for using regional economic integration to discourage conflict, as was the motivation in post-WWII Europe. The major ideological disjuncture between African and Europe, however, make integration an unlikely solution. Southern African states are not likely to have the capacity to engage in the complex, supra-national institutions found in the European Union. Instead, the author draws on the “theory of hegemonic stability,” suggesting that a leading state with financial clout could step in to underwrite the costs of integration, and thus avoid using coercion. Ultimately, inter-governmental relations should form the basis of integration, and not a new overarching institution.

In terms of economics, the complex specialization and trade within industries characteristic of the European Union would not work in Africa where tariff levels remain relatively high and specialization is restricted to producing goods for which a country has a basic advantage. Nevertheless, expanding regional markets would help advance the “low level of economic development to begin with.”  Even a strategy of combining resources to create public goods would facilitate regional trade, such developing network services in finance, energy, transport, and telecommunications. Since the institutional capacity is not strong enough for imposing tariffs or custom unions, regulation could be directed at the network services to further facilitate trade.

The case is made for the benefits of regional markets and regional public goods, but the author argues that the European institutional and regulation-heavy method of integration will not be effective in Sub-Saharan Africa. The political and economic literature point to a form of regional economic integration that is less ambitious and better suited for the African context. The author recommends avoiding complexity in implementation, and remaining within the political and economic capacity of the countries involved. Although discouraging conflict is not a primary goal of African economic integration, it should involve a “security regime emphasising the good governance agenda.” The importance of a regional leader is greater if outside (donor) funding is provided to enable integration. States are less likely to ‘buy-in’ if the initiative is foreign, but a leader’s financial strength could inspire confidence and backing.