The tipping point for African regional integration

Regional integration in Africa is not just about politics, but economics. The President of the African Development Bank, Donald Kaberuka, summarises the key points from their recent Development Report 2014 in this guest blog.  On behalf of the Swedish embassy in Nairobi, ECDPM and its partner theIDLgroup are undertaking a political economy study in order to better identify and support opportunities for regional cooperation. Regional integration has always appealed to Africa’s leaders. The unity of Africa was a rallying cry during the independence decade, seen by many as the key means to catapult countries onto the path of steady growth and development. Many other arguments have of course been made for regional integration including: providing access to the sea for Africa’s many landlocked countries, limiting the extent of external shocks on fragile economies, and preventing internecine conflict, with larger economic entities serving as agents of restraint. In a rapidly globalising world, Africa’s integration has become as important an economic argument as it was a political one in the past. Countries are striving to achieve the scale economies they need to compete and link to global value chains.

Over 50 years progress has been slow

In retrospect, Africa’s regional integration has been far slower than in other regions of the world.  In the last 50 years, the lofty projects and commitments made by Africa’s leaders have made only modest progress. The list includes the Lagos Plan of Action from 1980a, the Abuja Treaty of 1990 and the New Partnership for Africa’s Development of 2000. In matters of ambition these documents have what was required to push Africa’s integration agenda forward, but poor implementation of the main policy and strategic tenets of the strategies, often as a result of political indifference at the national policy levels, has been a recurring and severe constraint. The decades-long prevarication has had a number of impacts. The first is the low level of intra-regional trade in Africa, which today is the lowest in the world as a share of total trade. Indeed, the bulk of countries in Africa continue to send their exports to other regions of the world than to their neighbours, partly a reflection of low levels of specialisation, but also the proliferation of non-trade barriers, poor regional infrastructure, especially transport and communications, and a slow pace of financial integration. Africa’s skies are the least competitive in the world and air fares in the region continue to be prohibitive.

The future of African aviation: blue sky thinking?

The Yamoussoukro Agreement on Open Skies which had caused considerable optimism regarding the future of African aviation was never ratified, and the industry remains in a structural logjam. It is not uncommon to travel from one region of Africa to the other via Europe or the Middle East turning a journey of six hours into one of two days. Although some progress has been made in alleviating constraints to labour mobility in Africa, a number of serious constraints remain around visa requirements and residence and work permits.  Moreover, owing to differences in certification for education and skills, the mobility of talent in Africa is quite limited. National skills gaps remain serious, when there is excess supply in some skills next door. With the rapid growth of the past decade and improvement in economic management, Africa is on the cusp of rethinking the regional integration agenda, forced to do so by unavoidable pressure, including those of globalisation. A big driver has been the private sector, domestic and foreign. Markets are needed for the new push for industrialisation, and nowhere is there greater potential to grow and expand markets than in Africa—partly owing to the demographic transition, with a huge population of young people, and partly from starting from a low base. More importantly, the nature of global production is changing rapidly, with firms linking themselves to global production via regional and global value chains. Governments are aware that the most important part that they can play in boosting regional integration is the creation of an enabling environment, notably infrastructure. In a number of regions the pace of integration has picked up, with non-tariff barriers removed and visas provided on a regional basis, so that a holder could travel through a range of countries on a single visa.

Agenda 2063: Africa in the next 50 years

At the continental level, the African Union Commission, in collaboration with the Economic Commission for Africa and the African Development Bank, has developed the vision document for the continent called  “Africa 2063”, which was adopted by African leaders at a Summit in Addis Ababa in 2014. It sees Africa, fifty years ahead, as “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena.” It argues that success will emanate from committed implementation, good planning and attention to detail. It also argues that a number of vehicles will be needed for Africa’s integration in the coming decades, including for financing. The African Development Bank sees itself as the most important exponent of Africa’s regional integration. A number of leaders came together some 50 years ago to argue the case for the creation of an African Development Bank. In turn, the Bank has always supported regional integration projects, especially transport, it is the executing agency of the Program for Infrastructure Development in Africa, which focuses on energy, transport, ICT, and trans-boundary water resources. The Bank has supported regional trade by financing one-stop border posts, but also encouraging the elimination of non-tariff barriers. Looking ahead, the Bank’s Ten-Year Strategy, 2013-2022, sees regional integration as a priority, to be supported via infrastructure development and that of the private sector. The views expressed here are those of the author, and not necessarily those of ECDPM