the challenges of regional integration in africa: in the ... · the challenges of regional...

ThechallengesofregionalintegrationinAfrica•page1 Paper145•June2007

Introduction

It is widely acknowledged that Africa’s integration efforts have thus far failed to bear satisfactory fruit.While other regions have successfully used theirintegration mechanisms to improve their economicwelfare, Africa lags behind with respect to GDPgrowth, per capita income, capital inflows, andgeneral living standards. This is a problem acrossmostof thecontinent, in spiteof theexistenceof aplethoraofpolicyplansandgrandvisions.

The first major blueprint for Africa’sdevelopment–theLagosPlanofActionand the Final Act of Lagos – wasadopted almost three decades ago,and set out a vision of an integratedAfrican market by the year 2000.It was given further impetus by theAbuja Treaty which was approved in1991 and came into force in 1994.According to this Treaty, the African EconomicCommunity (AEC)wouldbeinplaceby2028.Someofitsmilestoneswouldincludestrengtheningofexistingregional economic communitiesand the formation of the new ones (between1994and1999);stabilisationofexisting tariffs,and integrationandharmonisationof economic sectors (1999 to 2007); establishmentof a free trade area and customs union (2007 to2017);harmonisationof tariff systemsacrossvariousregional economic communities (RECs) (2017 to2019); the creation of a common African marketand harmonisation of monetary, financial, and fiscal policies; and the establishment of a pan-Africaneconomicandmonetaryunion(2023to2028).

This plan envisaged that, through RECs, deep-seatedchallengesofpovertyandunderdevelopmentwould be eradicated. Among the latest initiativeshasbeentheNewEconomicPartnershipforAfrica’sDevelopment (NEPAD),aswellas thevisionfor the‘United States of Africa’. The establishment of thePan-African Parliament (PAP) in March 2004 can

be regarded as an important achievement towardsthis strategic objective. While the previous plansplacedapremiumonintra-regionaltrade,agriculture,technology and the environment, it would seem asif the new initiatives are emphasising ownership,economic reform and political modernisation. It isunclearifandwhenthefruitsofthelatest initiativeswillbegintomanifest.

The question is: In view of the fact that the plansthatwerearticulatedby the first generationofpost-colonial leaders failed to materialise, what gives

force to the new-found optimism thatcharacterises today’s proponents ofAfrica’s integration? Could there havebeen something fundamentally wrongwith the initial casting of this vision that today’s elite can successfullyrectify, so that Africa can be set ona promising developmental trajectory?The contention in this paper is thattoo little has changed since the 1980sto advance regional integration and to ensure developmental progress on thecontinent.

It would seem that Africa’s elites arefocusing on thewrong set of priorities

withtoolittlegenuinecommitmenttowardsthegoalof Africa’s development. For regional integration inAfrica to be a success, Africa’s leaderswill have tomove beyond grand gestures and abstract visions.Africa’s challenges call for pragmatism and a senseofurgencyinaction.Morefocusedandgradualstepsthatarecarefullyexecutedatthedomesticlevelmaybethebestplacetostart.

Thefocusofsuchstepsatthedomesticlevelshouldbe on bold and sustainable political and economicreforms. At the regional level the focus shouldbe on developmental coordination and gradualharmonisationofpoliciesandregulations,whichcouldformthefoundationforgreaterintegration.AsPercyMistry contends: ‘African governments need to belessambitiousandmorerealisticandpragmaticabout

The old model of regionalism, cast

on the ideological paradigmofPan-Africanism...isincompatiblewiththe new challenges ofglobalisation

The challenges of regional integration in AfricaIn the context of globalisation and the prospects for a United States of AfricaMzukisi QoboISS Paper 145 • June 2007 Price: R15.00


theobjectivesandintermediatetargetsforintegration,takingintoaccount theconstraintsandcapacitiesofintegrating national governments’ (Mistry 2000:566)Thecoreofthispaperisadiscussioningreaterdetailonwhatthiswouldentail.

In the paper the theme of regional economicintegration within the AU’s notion of building aUnited States of Africa is explored. The validityof the proposition that political integration is adesirablestrategyforovercomingAfrica’sdeep-seateddevelopmental challenges is critically assessed. Theold model of regionalism, cast on the ideological paradigmofPan-Africanismwithitsprimaryfocusonpolitics rather thaneconomics, is incompatiblewiththenewchallengesofglobalisation.Lastlyprospectsfor Africa’s economic progress, focusing on tradereformunderthecurrentpoliticalarrangementandinthecontextofglobalisation,isassessed.

Africa’s regional integration in historical perspective

After independence regional integrationbecameapillarofAfrica’sdevelopmentalstrategy. Pan-Africanism, an ideologywhich emphasises continental unityand strong identification with ongoing anti-colonialstruggles,was the leitmotifof Africa’s developmental framework.This perspective sought to externaliseAfrica’s problems, with much of theblamelaidatthedoorofformercolonialpowers, with little responsibility andaccountability demanded of the post-colonialAfricanelite.Politicallythiswasthesafestpositiontobeinaseconomicfailurescouldalwaysbeascribedtothelegacy of imperialism and colonialism.AsMistry(2000:554)pointsout,‘Africa’scommitment to integration appears to have beenvisceralratherthanrational,morerhetoricalthanreal.’

From the beginning of the decolonisation processin the 1960s, the establishment of sub-regionaleconomic communities was a significant part ofAfrica’s development strategy. Regionalism inAfricabegan during this period, spearheaded in largemeasurebytheOrganisationofAfricanUnity(OAU)and Economic Commission on Africa (ECA), partlyas a response to the last vestiges of colonialism aswell as to spur political and economic progress onthecontinent;andpartlyasapolitical instrumenttodealwith thepower imbalances in the internationalsystem.ItisworthpointingoutthatatindependenceAfrica lackedthehumanandphysicalcapital that isrequiredforindustrialisation.

InitiativessuchastheEconomicCommunityofCentralAfrican States, the Arab Maghreb Union, and the

Preferential Trade Agreement for East and SouthernAfrica(latertheCommonMarketforEastandSouthernAfricanStates–Comesa)were inspiredby thispan-Africanist vision. There are other initiatives thatevolvedoutsidethisframework,suchastheSouthernAfricanCustomsUnion(SACU),theSouthernAfricanDevelopmentandCoordinatingConference(andlatertheSouthernAfricanDevelopmentCommunity),andtheEastAfricanCommunity(EAC).

Whilecolonialismdidplaya role inAfrica’s lackofdevelopment, the policies adopted by postcolonialleaders as well as their practices in power, deniedAfrica any room for growth and development.Consider, for example, that the growth path ofthe post-colonial elite mostly took the form ofimport-substitution industrialisation. Predicated onsubstituting domestically produced products forforeignimportsandforpreservingforeignexchange,thisgrowthstrategyconstrainedthefulldevelopmentofproductiveforcesinmostpartsofthecontinent.Itproduced inefficient and uncompetitive economies,withstuntedprivatesectors.

Such an approach would not help toovercome the intractable challengesof rural poverty; the small size ofthe economies; the lack of productcomplementaritiesasmanifestedinthenarrow set of similar commodities; thelow value of primary export productsandbasicminerals;andthedependenceonimportsforintermediateandfinishedgoods. As Ndulu and O’Connell(1999:63) observe: ‘In choosing state-ledandinward-lookingindustrialisation,Africa’s first generation of leaders were captivetoideasratherthaninterests.’

The foregoing realityhas tobeviewedwithin the context of Africa’s positioning in theinternationaldivisionoflabour,inwhichthecontinentisexportdependentonoilandnon-oilcommoditiesand is import dependent on manufactured goodslargely from Europe, and is adversely affected byfluctuating terms of trade. Although there has beena gradual shift by some countries towards exportsof processed goods and manufactured items, thereare serious supply-side constraints and lack ofcompetitiveness in most of the economies on thecontinent.

Indeed, Africa’s challenges are a combination ofexternal and internal factors. In this paper theemphasis is on the latter.Much has beenmade oftheunequalrelationshipbetweenEuropeandAfrica,andtheadverseeffectsof theunfavourableexternalenvironmentonthecontinent,withlittleresponsibilityapportionedtoAfrica’sleaders.AsispointedonintheUNCTAD report, ‘even under a favourable external

Itwouldseemthat Africa’s elites arefocusingonthe wrong set of prioritieswithtoolittlegenuine

commitment towards the

goal of Africa’s development


trading and financial environment, considerabledomestic policy effortswould be needed to ensurethat economies gradually become self-reliant insustainingrapidgrowth’(UNCTAD2001:12).

African leaders have had little success in theirintegration and development efforts. They hopedto achieve at the continental level what they had failed to do on the domestic level, namely economic developmentthroughacombinationofsoundpolicies.Thus regionalism as applied in Africa can only beviewedasaformofescapismfromrealchallengesatthe domestic level, as well as a strategy to consolidate alliances that would reinforce political sovereigntyof member countries. But policy makers cannotcompletelyescapetherealitythatdomesticsuccessesprecede continental successes. The measure ofprogressinAfricashouldbethesuccessofsoundandfunctionalpoliciesatthedomesticlevel.

African countries remained largely internallyunintegrated in the post-colonial period. Theywere not states in the true sense of statehood asreflected, for example, in the states of19thcenturyEurope.Rather,as JosephNye Jr suggests, they bore a closeresemblance to the types of 16th- and 17th-century Europe. Today, as then,national consciousness remains a stateeliteprojectratherthanaprocessthatisdrivenfromthebottomup.Asaresult,thereisnonationalisminthetruesenseof theword,butonlyelitenationalisticprojects(Nye2004:112).

This underscores the futility ofattempting continental integration onthebasisofweaknationalfoundations.In a sense, Africa’s regional integration projectaswellasitsslowandtortuousintegrationintotheglobaleconomyisanintegrationof incomplete states; states that cannot fully laya claim to complete nationhood and suffer frominternal insecurities. Thus, as Nye (2004) suggests,internal heterogeneity presents oneof theproblemsfor Africa’s developmental prospects. The matter ismade all the more difficult by the unwillingness ofmember states to cede or share sovereignty at theregionallevelbyagreeingtoasupranationalbody.IftheEACsucceedsinachievingitsgoalofapoliticalfederation by 2010, this would indeed be a majorachievement.

The balance sheet of regional integration in Africa

African countries have very smallmarkets. In 1998,36 of the 54 countries in Africa had a populationof12million,hardlyanattractivemarket (especiallygiventheirlowlevelsofpurchasingpower),andtheir

percapitaincomestoodatUS$500peryear(Mistry2000:554). In landlocked countries transport costsoftenaccounted forbetween30and50percentofthefinalretailpriceofconsumergoods.

Inthepastpoliciesthatwereanti-market,anti-privatesector and anti-foreign investment contributed toAfrica’s stuntedgrowth.Therewasalso lackof trustandfaithintheintegrationprocess,sothatcountrieswere not willing to yield sovereignty to a supra-nationalregionalbody.Independentimplementationmonitoringstructurestoensureprogressinintegrationcanonlysucceedifpoliticalcommitmentisexpressedbymeansofasupranationalentity.Insomeinstancesprogresshasalsobeen retardedbypoliticalconflictandinstability,especiallyincountriessuchasSomalia,Sudan, Côte d’Ivoire, Sierra Leone, Liberia and,untilrecently,Burundi,RwandaandtheDemocraticRepublicofCongo(DRC).

Initsobservationoftheproblemsthathaveimpededprogress, the Economic Commission on Africahas noted difficulties regarding RECs, such as that

created by overlapping membershipof various RECs; lack of adherenceto the implementation programme;insufficient technical and analyticcapacity;divergentandunstablemacro-economic policies; and lack of a linkwith the AEC objectives (ECA 2004).Different countries and regions pursuethe goals of integration from the pointof view of narrow economic interests, rather than as part of a broader andsingle vision towards continental unityanddevelopment.

InmostAfricancountriesthepropitiousconditions for success of regionalintegration are simply lacking and

politicians demonstrate little effort towards creatingsuchconditions.Apartfromtheoftencitedproblemsrelated to corruption, instability, undemocratic ruleand civil strife, there is also a lack of privatesector activity in regional integration schemes. Insome instances economic reforms have also not beenproperlydesignedandimplemented.Thereareindeedvery few success storieson the continent inthisrespect.

Therearesuccessesinverylimitedareas,butevensoitisdifficulttomeasurethemagainsttheobjectivesoftheAECassomeoftheinitiativeshavebeenpursuedinspiteoftheAEC.Oneoftheareasthathaveseennotable success is the establishment of the PAP inMarch2004.Thishasavalueforenlargingthespacefor dialogue and ensuring that actors beyond theexecutivearmsofgovernmentparticipate inshapingcontinental development and influencing processesofregionalintegrationandcooperation.Significantly,

Africa’s regional integrationproject

as well as its slowandtortuousintegration into the globaleconomyisan integration of incompletestates


duringitsseventhsessioninMay2007,thePAPhasalsocreatedanopportunityforcivilsocietytoengagewithitsprocessesandsubsidiarystructures.

Success in regional economic integration is oftenmixed and cannot be easily measured against acommonstandard,becauseofthedifferenteconomiclevels of countries that are participating in suchschemes as well as variations in the number ofcountriesthatconstitutethedifferentschemes.Thereare,however,somepromisingcases.

The Central African Economic and MonetaryCommunity (Cemac) has managed to form amonetaryandcustomsunion.Thereisharmonisationofcompetitionandabusinessregulatoryframework,and there is a move towards macro-economicconvergence (ECA 2004).1 However, the level of intra-regionaltradeinthisgroupisstillverylow,butincreased tradeprovides an important spur towardsintegrationinotherareas.

Similarly,Comesahascomealongwaytostrengtheningtradeamongninemembersoutof20.2 There is no fully functioning customsunion despite the fact that 2006 wassetasadeadlineforitsformation.(Thedeadlinehasbeenshiftedto2008.)Thelackofacommonexternal tariffcouldbeattributed to fearof revenue lossaswell as removal of local policies thatprotect new industries (see Draper etal2007:10).Comesahasbeenworkinghardtowardstheachievementofmacro-economicconvergence.

It is important to note that the 20Comesa members belong to otherregional integration schemes as well.KenyaandUgandaforexampletogetherwith Tanzania form an East African CommunityCustoms Union. Comesa is one of the free tradeagreements that have worked relatively well, with simplerulesoforiginandadeterminedfocusonthesimplificationofcustomsprocesses.Someofitsotherachievements include the elimination of non-tariffbarriers (for example import licensing), removal offoreignexchangerestrictions,andremovalofimportandexportquotas(Draperetal2007:10).

MostComesamembercountriesdependonprimaryproductsfortheirexportsandtherearehugedisparitiesbetween the four biggest members, namely Egypt,Kenya, Mauritius and Zimbabwe (Lee 2003:87),withEgypt’seconomybeingabouteighttimeslargerthan the second strongest economy, which is Kenya (ibid). The agglomeration effect – where industriestend toprefer largereconomies for locationof theirproduction facilities–couldwellbe somethingofachallenge forComesacountries in the future.These

challenges notwithstanding, Comesa is pursuingcomprehensive trade liberalisation and facilitationmeasures.

SADC signed a protocol on trade in 1996, whichcameintoforceinSeptember2000.3 While this was a positive step towards greater integration in theSouthern African region, it wasmotivatedmore bypolitics than by economic logic. The SADC tradeprotocol has also established an asymmetrical tariffphase-down arrangement to help less developedmembers. However, rules of origin have watereddown this benefit. These rules are product specificand very complex, and this has served to constrainthe trade liberalisation progress. SADC aspires toestablishacustomsunionby2010,butgiventheslowpaceoftariffphase-downintheregionit isunlikelythatthistargetwillbemet.

In other developmental cooperation areas, suchas for example the power pool, there has beengood progress. SADC countries are exploring adevelopmental fund alongside efforts to expedite

trade integration. In addition to this,harmonisationofpoliciesinareassuchastaxation,investment,stockexchanges,insurance and macro-economicconvergencehasbeenagreedtoaspartoftheFinanceandInvestmentProtocol,whichwas ratified in 2006.Given theslow progress of trade integration inSouthern Africa and the complexitiescausedbymultipleregional integrationschemesandoverlappingmembership,SACUexpansion4wouldseemthemostcredible path to follow. Kirk and Sternhave suggested that ‘SACUcould formthe core of a new regional customsunion that could gradually expand toinclude other members of SADC and

possibly Comesa’ (Kirk & Stern 2003:17). SACUseeks to develop common policies in areas suchas competition, industrial development, agriculturalpolicyandunfairtradepractices.5

The EAC has in recent times witnessed significant progress towards integration, having launched acustoms union in 2006.6 This is another promisinginitiative in accelerating integration in the region.Giventhelonghistoryofstrifebetweentheintegratingpartners,theEAChashadagreatdealtolearnaboutmanaging tensions in the integration process andreducing the asymmetrical distribution of benefitsis indeed one of the objectives of the EAC. Otherobjectivesincludeestablishingathree-yearrevolvingpresidency by 2010; electing a president for theentire federation by 2013; and developing commonpolicy frameworks in the areas of competition,customs procedures and trade remedies (Draper etal2007:19).

Successinregional economic

integration is oftenmixedandcannotbeeasilymeasuredagainstacommon standard


Other groupings such as the Economic Communityof West African States (Ecowas) are difficult tomeasure overall as they are pursuing a number ofintegrationefforts.7ECOWAShasremovedtariffsonrawmaterials andhasmade someprogress towardsmacro-economic policy convergence, but tariffs onindustrialgoodsremainhigh.ThereisahighdegreeofsuccesswithinanoffshootofECOWAS,theWestAfrican Economic andMonetary Union (UEMOA).8 A customs union has been established and couldserveasafast-trackmechanismforthelargergroup.Thereisalsoharmonisationofbusinessregulationandconvergenceonmacro-economicpolicies.

Despite these successes, it should be stressed thatthese RECs still have a long way to go to achievethe objectives of the AEC. Various protocols of thecommunityincludingthosetodowithtrade,customs,dispute settlement mechanisms, infrastructure andsector development have not yet been ratified bymostmembercountries.

African ministers of foreign affairs met in Durban,SouthAfrica,inMay2007totakestockoftheprogresssofarandexplorewaysof moving forward. The meeting wasdesigned to pave a way for extensiveformal discussions by the AU Headsof State meeting in Uganda at theend of June 2007 when a road maptowards building the United States ofAfrica is expected to be formalised. Itisunlikelythatanyimmediatesolutionsfor addressing more deep-seatedchallenges in the area of for exampletradeintegrationwillbeadvanced.

One of the factors that inhibit tradeintegration is the existence of differentrules, regulations and standards aswell as divergent customsprocedures (Shimuyemba2000:8). In addition, the levels of intra-regionaltrade are still too low to contribute significantly tointegration.Intra-Africatradeamountstosome10percent of Africa’s trade with the rest of the world, hardly asolidbasisuponwhichtobuildaUnitedStatesofAfrica. Moreover, success with regard to economicconvergencewould largely depend on sound fiscaland monetary policies at the domestic level. Thiswould have to be combined with firm and clearindicatorstowhichcountrieswillhavetoadhere,tomakemacro-economicconvergencepossible.

EveninEuropeconvergencewasnotreachedwithoutdifficultyandmonetaryintegrationwasonlyachievedon the back of the collapse of the BrettonWoodssystem in the early 1970s. The pivotal states suchas France and Germany advocated the integration,with the Deutschmark acting as an anchor for theEuropeanmonetarysystem(Munchau2007).

ThisisnottosuggestthatconvergenceinAfricawouldrequireashockakinto thatofEuropeora financialcrisissuchastheoneinAsiaadecadeago,butratherthatthedomesticsystemsmayrequireajolttoforcethem to a real commitment to convergence. Mostimportantly,itwouldhavetobeaccompaniedbyfar-reachingeconomicreforms,withtheaimofensuringthat institutions are strengthened, public financesareprudentlymanagedandexternal indebtedness isreduced.

EventhoughanumberofAfricancountriesundertookstructural reformsin the1980sand1990swhentheideologicalclimateinAfricashiftedinfavourofneo-classical policies,9 thesewere implementedwith farlessvigour thanelsewhere in thedevelopingworld.Externallyimposedstabilisationprogrammeshaveafarsmallerchanceofsuccess–howeverexcellentthesemay be – than those that are endogenously driven.Moreover,thetransmissionmechanisms(institutions)forsuchreformsweretooweaktosustainthemintothefuture.

International financial institutionsoverestimated the impact of reformsincountries thathadweakinstitutionalmechanisms for their implementation.This, coupled with weak politicaladministration, poor design of thestructural adjustment programmes,intolerant political cultures in recipientcountriesandpoortimingofthereforms,are some of the reasons cited for the lackofpositiveresults.

With a number of African countriesstrugglingtobuildwell-functioningandproperlyintegratedinternaleconomies,the project of regional integrationwasalways going to experiencedifficulties.

IntheviewofOyejide(2000:8),‘regionalintegrationschemes should constitute an extension of thedomestic reforms of member countries rather thanactasa force toengineer them’.Thiswouldrequirethat countries have in place a strong governanceculture and financial infrastructure that includesviablepublicserviceinstitutions,thatthereismacro-economicstabilityandthattheydevelopthecapacityfor competitive domestic economy through thedevelopmentoftheprivatesector.

The economic reform agenda and regional integration

Without a credible infrastructure of governancesupported by regular, free and fair elections, andobservanceof the ruleof law, it is difficult tobuildconfidenceforeconomicgrowth.Itisaninescapablereality that in an increasingly interdependent globaleconomy,thecriticalvariablesforgrowingconfidence

Intra-Africantradeamountsto10percentofAfrica’strade with the rest of the world, no basisuponwhichtobuildaUnitedStatesofAfrica


in Africa and injecting momentum for economicprogress are normative values that encompass acommitment to democratisation, upholding of theruleoflawandrespectforhumanrights.

As far as a reform agenda is concerned, unilateraltrade (sometimesmanaged) liberalisation is the firstbest strategy and, with proper sequencing withsupporting policy measures, including those aimedat strengthening the social infrastructure (health,education,andsocialwelfare),hasabetterchanceofgeneratingeconomicsuccessthanremainingaclosedeconomy.Theargument in thispaper is thataclearcommitmenttoboldeconomicreformsandgrowth-enhancing policieswill help to buildmuch neededconfidenceintheeconomy.Thiscannotbeachievedthrough regional integration alone. Instead, regionalintegrationcanactasa ‘bank’ for reforms thathavealreadybeenundertakenatthedomesticleveltohelpsustainthereformagendaatahigherlevel.

RegionaleconomicblocksaretheremaininglegacyoftheLagosPlanofActionand,castinamouldsimilartothatofEurope,arestilltheinstrumentsin which state elites place their faithfor Africa’s development. Oyejide(2000)criticiseswhathecalls therigidstructures proposed by the Lagos Planof Action and Abuja Treaty, in whichRECsareusedasagentsofcontinentalintegration. This is unrealistic as RECsoften pursue narrowaims and there isno way of ensuring that all will worktowards collectively agreed objectives.Astheexamplesaboveshow,thereisaweaklinkbetweenwhatistakingplaceinvariousregionsandtheobjectivesoftheAEC.

Auniformapproachtointegrationdoesnottakeintoconsiderationtheuniquecircumstancesofthedifferentregionalgroups.Whatisclearisthatgenuine regional integration is unlikely to emergeasaresultofatop-downapproach.Itismorelikelyto evolve over time together with a convergence in political norms of the different countries, and as afunctionofcompetitivepressuresorthedemonstratedeffectthatintegrationhasonsuccessandcompetitionofeconomiesoftheregion.Europeanintegrationwasincrementalandthecriteriaformembershipincludeddemocraticindicators,fiscalprudenceandmonetarypolicyvariables.

ThusAfrican countries should spend less effort andresources on the creation of an unworkablemodelof regional integration and more on undertakingfar-reaching economic reforms and building thecompetitivenessoftheirowneconomies.Thetaskofensuringregionalintegrationwiththeaimofachievingeconomicandpoliticalunionwillbecomplicatedall

themorebythelackofsharedvaluesandcommoninterests.

Countries should focus on milestones that canbe achieved, and in this respect particularly oninfrastructuraldevelopment.Indeed,theAECalreadyhas protocols in place for cooperation in a rangeof areas including science and technology, energyand natural resources, environment, transport,communicationandtourism,educationandtraining,humanresources,healthandsocialaffairs.

Over and above macro-economic reforms andstrengthening governance mechanisms, attention needs to be paid to improving the transport andtelecommunications infrastructure and domesticregulatory environments to create a morepredictableinvestmentclimateforbusiness.Already,intergovernmentalagencies suchas theWorldBankare channellingmassive financial resources towardsthe improvement of the infrastructure is areas ofwater and roads, public financial systems and localeconomicgovernanceinvariouscountries.

Towards a new understanding of regionalism

It should be pointed out that eventhough the vestiges of Pan-Africanistideology – with regard to its aim ofcreating economic enclaves insulatedfromtherestoftheworld–arestillhardto dislodge in the current integrationprocess,therehasbeenagrowingcropofelitewhoispredisposedtowardspoliciesthatareorientedoutward.Thecolonialera left most African nationalists, as GeorgeAyittey(2005:29)hasobserved,withaloathingforcapitalism,whichledtosocialismbeingseenas theroute to

Africa’s development.However, an emerging groupof African reformers are increasingly realising that history’s inexorable evolution is not to the socialistnirvanaofautarchyandself-reliancebuttoamarket-basedeconomyandglobalinterdependence.

Indeed, since the 1990s there has been a noticeabletrend in some parts of Sub-Saharan Africa towards‘structuralreforms’,includingmacro-economicreforms,privatisation and liberalised trade. Although theseconstitutepositive steps towards anewapproach, thereformshavenotby themselvesproduced spectacularresults.Thefactthatthestructuraladjustmentprogrammesdidnotmeetwithmuchsuccessexplainsthesuccessionofinterventionsundertherubricofenhancedstructuraladjustmentprogrammes,WorldBankinitiativesandthePovertyReductionsStrategyPapers.

Nonetheless, the Pan-Africanist ideology is slowlybecoming eclipsed by pragmatism. Notions such

Withoutcrediblegovernance supportedbyregular,freeand

fair elections, and theruleoflaw,itisdifficulttobuild

confidence for economic growth


as Ujaama or African socialism coined by JuliusNyerere are gradually losing their popular appeal,as various African countries start to favour market-basedapproaches.LeaderssuchasKwameNkrumah(Ghana),AhmedSékouTouré(Guinea),ModiboKeita(Mali), Gamal Abder Nasser (Egypt), Julius Nyerere(Tanzania) andKennethKaunda (Zambia) –mostofwhom expounded Pan- Africanism and played keyrolesindecolonisationeffortsonthecontinent–werealsocommittedtosocialistsystems.

Similarly, countries like Angola and Mozambiqueexperimented with African versions of Marxism-Leninism.Theprogrammesusually took the formofimport-substitution industrialisation, collectivisationof agricultural production, and state control ofmarketingboards.Needlesstosay,theseapproachesdidlittletoadvancedevelopmentinthesecountries.In some instances failureswere accelerated by lackof accountability and growing corruption amongstateelites.

The character of Africa’s post-colonial developmentis excellently summed up by Ayitteywho calls it ‘one giant false start’, characterisedbyawrongpoliticalsystem(one-party states); a wrong economicsystem (statism); a wrong ideology(socialism); and a wrong growth path(industrialisationviaimportsubstitution)(Ayittey 2005). It shouldbenoted thatnotallAfrica’sleadersfellfortheelusiveappeal of socialism – although statismwas particularly powerful because ofits link to sovereignty and the naturalinclinationofnewlyindependentAfricanstatestoassertandjealouslyguardtheirnew-foundstatus.

Some of the notable exceptions thateschewed the socialist pathwere FélixHouphouët-Boigny (Côte d’Ivoire), Abubaker Tafawa Balewa(Nigeria), Hastings Banda (Malawi), and Danielarap Moi (Kenya). Their questionable democraticcredentials notwithstanding, these leaders favouredmorepragmaticapproachesthatemphasisedfosteringentrepreneurship and attracting foreign investments(Ayittey 2005). However, their good economicapproaches were undermined by their personalcorruption, so that the economic potential of theircountrieswasnotfullyrealisedundertheirrule.

The journey towards stable democratic rule andmarket-based economies in Africa is by no meansgoing to be an easy one. The underlying politicalvaluesandeconomicsystemsstillprevailinginmanycountriesdonot liveup to thedemandsofmoderneconomic systems. But the current approach byreform-minded African leaders towards integrationinto the global economy could lead to a more

cosmopolitanbrandof Pan-Africanism–onewhicharticulatesAfrica’sidentityaspartofthenarrativeofglobalisation,andlinksitsdestinytothatoftheglobaleconomy.Intheabsenceofsuchanintegrationintotheglobaleconomy,Africa’schancesfordevelopmentare pretty slim. It is from this platform that therenewedeffortstowardsbuildingtheUnitedStatesofAfricashouldbelaunched.

MostofAfricaisplayingcatchuptootherdevelopingcountries, especially the Asian newly industrialisingcountries (NICs).Oneof themarked featuresof thesuccess of these countries is their close integrationinto the global economy. They attract large flowsof foreign direct investment (FDI) and are nowemerging as sources of such investment (UNCTAD2006).Measuresaimedatdevelopinghumancapitaland increasing domestic savings in the economy enabledtheEastAsiancountriestobuildcompetitiveeconomies. It is precisely difficulties in raising thedomestic savings to levels that could support rapidcapitalaccumulationandgrowththathavehamperedAfricancountriesinthepast(ibid).

Rethinkingregionalintegrationschemesin Africa, and basing them on anoutwardly oriented approach aimed atintegration into theglobal economy, isno longer an option for Africa. It is anecessityifeconomicprogressis tobeachieved, and if regional integration is tobemeaningful.

Regional integration and liberalisation of the domestic polity

Inthepost-colonialeratheuseofstatepower as a means for self-enrichmentandpatronagebythepoliticalelitewasthenorminmostpartsofthecontinent.

TheuseofpublicresourcesandpatronagetopreservepoliticalpowerweresomeofthemostshamefulaspectsofthisperiodanddefinedAfrica’spoliticalcharacterthroughoutthisperiod.Whiletheunderdevelopmentof Africa has its origins in colonialism, it worsened as a result of the post-independence politicalmismanagement by the new leaders. They createdanewformofunderdevelopment,becausethestatewasusedasan instrument forpersonalenrichment,divertingresourcesawayfromthepoor.

Since this period of authoritarian rule Sub-SaharanAfricahascomealongway.Awaveofdemocratisationhassweptoveritsincethe1990s.Countriesaffectedinclude the DRC, Liberia, Malawi, Nigeria, Ghana,Kenya, Rwanda, Tanzania and Zambia. It is stilldifficulttojudgewhetherelectionswerefreeandfairinanumberofinstances,suchasinNigeriain2007.Unfortunately, theobverseof thedemocratisation intheformofadescentintoautocracy,isalsoseenon

Thejourneytowardsstabledemocraticruleandmarket-based

economies in Africaisbyno

meansgoingtobean easy one


thecontinentincountriessuchasZimbabwe,whichmakestheprospectsofcontinent-widedemocratisationdoubtful.Yet,Africa’sfutureeconomicprospectsareconditionalupontheexistenceofastrongdemocraticpolity. The shift from one-party states and militaryjuntastomultipartysystemswasnotachievedlightlyandalthough somechanges seemsmall, it certainlyrepresents a step towards a better future for thecontinent.

However, there must be a convergence ofdemocratisationand thepromotionofhuman rightsas cardinal principles underpinning integration if itsprogressistogatherpace.Thiswillrequireadeparturefrom the current paradigm of negative sovereignty, which is state-centric and anti-imperialistic, to awillingness to explore more positive expressions ofsovereignty that take into account the importanceof non-state actors in promoting development. Itincludes recognition of the role of civil society andindependentinstitutionssuchasthemedia.Someofthemeasuresthatshouldbeimplementedincludetheintroductionofchecksandbalancesintheformofanindependent judiciary, clear separationofpowers,andpluralityinpartypoliticsif permanent economic reforms are tobesecured.

The notion of sovereignty derives its force from international law. It is anessentially normative, juridical conceptwhich, according to Robert Jackson(1990:5), was applied in contexts inthe Third World that was not ready for it. Jackson argues that these statesappeared to be ‘juridical more thanempiricalentities,andshouldbegivenadesignationofquasi-states’ (ibid).Theseentities could not give substance tothe concept partially because of thechallengeofweakinstitutionsandunderdevelopment.Indeed, in the aftermath of decolonisation the state forms that were bequeathed or rather transplantedontomuchoftheThirdWorlddidnotresonatewiththe long-established traditions, institutions and thelanguageof authority (Jackson1990)and therewasnostrongnormativeframeworkforhumanrightsanddemocracywhichcorrespondedtosovereignty.

While there seems to be a commitment towardshumanrightspromotion,asexpressedinforexampletheAU’sCourtsof JusticeandHumanandPeople’sRights, there is still an inclination towards personalrule in some parts of Africa.Mugabe in ZimbabweandMuseveniinUgandapersonifyAfricanrulerswhohold tight tostatepower, to theextentofamendingthe constitutions of their countries to ensure yetanother terminoffice.SuchpracticesdimoptimismaboutAfrica’sfutureandcastdoubtonthedurabilityofreforms.AsRotchildandHaberson(2000:8)point

out, although variables such as transparency, non-corruptibilityandaccountability ‘can inprinciplebenurtured in non-democratic political regimens, theycanmoreplausiblysurviveovertimeinademocracybecause these elements are regarded as part of itsdefinition’. Regional integration mechanisms on thecontinent will have to make tough decisions abouttheappropriatenessofpoliticalnormswhichshouldunderlie the integration process, and agree on asystemofincentivesandpunitivemeasuresforthosewhoeitherfloutthemorcondoneit.

As Schiff andWinters observe, integration schemesaremosteffectivewhentheyimpose‘clubrules’suchas democracy and human rights (Schiff & Winters2003:188), something that is generally lacking inAfrican regional integration schemes. The dilemmaoftenfacedbysuchschemesisthatmemberswouldfind it difficult to impose strictures or conditions atthe regional level when they themselves are guilty,too.Butregionalintegrationschemescanderivetheireffectiveness from a strong domestic institutionalpolityoftheirmembers.Furthermore,itcanonlybe

on the basis of ‘pooled sovereignty’,which in itself is aproductofpoliticalwillingness to cede sovereignty, that political institutionalisation can takefirmrootattheregionallevel.

An example of such ‘club rules’ isfound in theMercado Comun der Sul (Mercusor) integration process.10 In June 1996 the presidents of the fourcountriesmakingupMercusorsignedadeclaration on democratic commitment in Argentina, making democracy a precondition for membership. In June1998 this was extended to the FTAsbetween Mercusor and Bolivia andChile, in theProtocolofUshaia (Schiff

&Winters2003:199).Suchrulescouldthusservetoensureaccountabilitybymembers.

In Africa such accountability should extend todomestic public finance. Most African countrieswere affected by uncontrolled expenditure andembezzlement of public funds after independence.Today,public finances inmostcountriesare still farfromstable,andcorruptionisstillrife,asituationthatisexacerbatedbyanabsenceofindependentcentralbanks in a number of these countries. Even thoughUEMOAforexamplehasaconditionthatthebudgetdeficitshouldbekeptbelow4percentoftheGDP,inflationatbelow5percentandforeignreservesbeincreasedtoanagreeduponlevel,suchtargetshaveproventobeunrealistic.

As Ayittey (2005:142) observes: ‘The absence ofindependent central banks means that monetarypoliciesaresubjectedtothefiscalwhimsofthecentral

Theremustbeaconvergence of democratisation andthepromotionofhumanrightsascardinalprinciplesunderpinning

integration


government.’TheadvantageofanindependentCentralBankistransparency,predictability,andaccountabilityin monetary policy. This lends credibility to theeconomy and insulates monetary policy, especiallyinterestrates,frombeingmanipulatedbypoliticiansforshort-termgains.Manycountrieshavecompensatedfor reckless expenditure by simply printing morebanknotes,whichperpetuatestheproblem.Theneteffectofthishasbeenthatprivatesectorinvestmenthasdwindled,duetofearsofrisinginflationandhighinterestrates.

WithAfrica’scentralbanksinachaoticstate,itmaybe difficult to establish a supra-national AfricanCentral Bank that would be able to bring aboutharmonisation and overall coordination of monetary policies. This is nevertheless an extremely desirabledevelopment,provideditalsoreceivesthenecessaryauthority to impose uniform standards and enforcefinancial accountability frommember governments.But with the exception of plans for an Africa-widesingle currency, these reforms may not become areality for many decades if there is no commitment toasupra-nationalauthority.Essentially,thereneedstobecredibleandsustainedreforms at the domestic level beforeharmonisation at regional level can becomepossible.

The challenges of globalisation and Africa’s integration

During the period between 1960 and1970 Sub-Saharan Africa experiencedsomethingofaneconomicboom.This,however, was short-lived. Africa wasseverelyaffectedby the steep increasein oil prices by the Organisation ofPetroleumExportingCountriesand thedebtcrisesoftheearly1970s.Itusheredinaperiodofeconomicdecline,aptlycharacterisedbyAfricanscholarsasthelostdecade.ItisatroughfromwhichAfricaisstillstrugglingtorecover.

Theeconomic strainexperiencedduring thisperiodmade itself felt both in production and socialstructures, with literacy and life expectancy ratesbeginning to decline.11 Internal factors, such as ill-conceived domestic policies, overvalued exchangerates,theinefficiencyofparastatalorganisations,andexcessive regulation of domestic economies furthercontributedtothepooreconomicsituation.

Rostow notes that Africa’s share of global GNPdropped from1,9percent to1,2percentbetween1960 and 1989; its share of global trade fell from3,8 per cent to 1 per cent during this period; thedecline in commodity prices of exports cost AfricasomeUS$50billionbetween1986and1990;Africa’sexternal debt has tripled since 1980, and debt

service stands at about 19per cent of total exportsofgoodsandservices;andby1987nearlyonethirdof Africa’s skilled workers had moved to Europe(Rostow 1999:33). Even the Highly Indebted PoorCountry Initiative launched in 1996 has not beenveryeffectiveinstemmingAfrica’sindebtedness.Thisinitiative was also marred by insufficient funding,excessive stipulations, restrictions on eligibility andinadequatedebtrelief(UNCTAD2001).

Intheyearssincethecrisisoftheearly1970sAfrica’sposition has continued to worsen, exacerbated byits marginalisation from the global economy. Bythe beginning of the 21st century, Africa’s socio-economic profile had not changedmuch from thattime. Africa’s contribution to the global GDP andworld investment flows remain negligible at 1 percentand3percentrespectively(Soko2005:273;seealsoUNCTAD2006).

Africaisalsoacontinentthatisadverselyaffectedbysoaringforeigndebtandishighlydependentonflowsofoverseasdevelopmentassistance–mostofwhichis

re-channelled todevelopedeconomiesand multilateral credit institutions toservice debt. Much has already beenwritten about Africa’s debt crisis andthe role of foreign aid andwill not berepeatedhere,excepttobrieflyrefertothe negative implications this has hadfor Africa’s integration into the globaleconomy.

Unlike the first generation of post-colonial elite, present-day Africanleaders have demonstrated some willingness to take on the challenges of globalisation. This hashowevermainlybeen restricted to participation in theglobalgovernancestructuresandsigning

of bilateral investment treaties. Africa’s position inthe international market as an exporter of primarycommodities and the unfavourable external tradeenvironment,with for examplebarriers to access inkeydevelopedmarkets,alsoacttolimitthescopeforAfrica’sintegrationintotheglobaleconomy(Oyejide2005:19). There is also still some resistance toglobalisation,whichisstillregardedmoreasathreatthananopportunity.

This dual view of globalisation is likely to persist,particularly as globalisation does entail real riskswhich are difficult to defend to domestic socialgroups. Some of these risks concern the loss ofautonomy over some aspects of macro-economicpolicymanagement.On thewhole, however, thereis more risk attached to being outside the globaleconomy.Buffermechanismssuchasadevelopmentfund which may be created with the assistance of

With Africa’s centralbanksinchaos,itmaybedifficulttoestablishasupra-nationalAfrican Central

Bankthatwouldbeabletobringabout

harmonisation


externalpartners,mayhelpalleviatesomeoftherisksassociatedwithglobalisation.

Whilethereisgrowingappreciationoftheimperativesof globalisation, bold action is required regardingtrade reforms and the adoption of policies that areconducive to a better investment climate inAfricancountries. Improvement of policy mechanisms isespecially important to give Africa better access tocapital in global markets (Helleiner 1999:121). AsHausmann (2006) observes: ‘Successful integrationisimportantinthesensethatthecountriesthatgrowfastalsohaveaveryfastgrowthinexports.’

Exportgrowth,especiallyindynamicsectors,canbestbefacilitatedbytheinflowoftechnology,know-howandinnovativemethodsthatusuallyaccompanyFDI.Thecurrentlackofintegrationhasanegativeimpactonhowforeignprivateinvestorsassessthecontinent.ThisinturnnegativelyinfluencesAfrica’sdevelopmentof itsproductivecapacities anddiversificationawayfromprimaryproducts.

A lack of or insufficient technologicaldiversity which under idealcircumstances follows political andeconomic liberalisation in the form ofbettergovernancemechanisms,vigorousmacro-economicpoliciesandcommercialframeworks, sound regulatory policies(including transparency in the taxstructure),andeasingoftraderestrictions,confines Africa to a static productionphase. However, as Schiff andWinterssuggest, if regional integration is seton a right path and accompanied by agenuine desire to improve efficiencies,to create larger markets, to encouragemorecompetitionandtoimprovepolicycredibility, the incentive for investmentincreasesaswell(Schiff&Winters2003:17).

Itisimportantthatnottoomuchemphasisisplacedontheabovereformmeasures,aspoliciesandpracticesaimedat humancapital development, infrastructuredevelopment, sound regulatory measures, and abusiness-friendlyenvironmentareequallyimportantinensuringgoodlong-termprospectsandtransparencyintheinvestmentclimate.

Rodrik (2002:201-223) also suggests that betterdiagnostictoolsneedtobeusedtoidentifyinherentconstraints to growth. Such diagnostic tools wouldgo beyond orthodox prescriptions for growth andconcentrate on factors unique to each situation.Theyincludesocialreturntoaccumulation(includingphysicalcapital,humancapital,entrepreneurshipandtechnology); the extent to which social return canbe appropriated by private entrepreneurs; and thecostoffinancingaccumulation(ibid).Acommitment

to improvingthesocial infrastructure in theareasofhealth care provision and provision of basic socialservicescanbeapowerfulindicatorofthelong-termdevelopmentalpotentialofthecountry.

The role of FDI in regional integration and economic growth

Capital inflows and higher investment, improvedtechnology and expanding export markets – whichinturncontributepositivelytogrowth–canonlybepossible in an enabling environment for economicreformandwithpoliciesfavouringintegrationintotheglobaleconomy.Africaismoreinneedofincreasedinvestment toaccelerate its economicprogress thananyotherregionintheworld(seeCamdessus1995).Regionalintegrationislikelytobemoresuccessfulifitisoutwardlyorientedandpromotesglobalintegration,thanifitsfocusisinward.Africashouldlearnnottorepeat the mistakes of its failed import-substitutionindustrialisationprogrammesofthepast.

Itisthereforeobviousthatoneofthecrucialfactorsforsuccess in Africa’s regional (and global)integration is the maintenance of close economicrelations(integration)withrichcountriesinthenorthastheytendtobethe sources of knowledge and capitalinvestment.12 (This does not mean thatother developing countries that couldbenewsourcesofinvestmentshouldbeignored.)But,asBhagwatiandPanagariya(1996:43) caution, such relationshipsshould not be oriented to serving theinterestsofthenortherncountriesattheexpenseof improvingeconomicwelfarein southern countries, especially withrespecttofreetradeagreements.

Africa has witnessed a consistent rise in FDI flows,especiallyduring the last threeyears.Forexample, FDI to Africa grew fromUS$17 billion in2004toUS$31billionin2005anditcurrentlystandsat US$38 billion (UNCTAD 2006). These numberslook impressive until they are compared to FDI toregions suchasSoutheastAsia,whichhasattractedUS$165billion, constituting18percentof the totalglobalFDIflows.

FDI flows to Africa still largely relate to naturalresourcessuchaspetroleumaswellasdiamonds,goldandplatinum.Countriesthathavebenefitedthemostinclude Algeria, Angola, Chad, Equatorial Guinea,Sudan,Morocco, LibyaandTunisia,whilecountrieswith limited natural resources have been bypassed(UNCTAD 2003:32; ECA 2005:29). Countries suchasMoroccohavebenefitedfrominvestor-friendlyFDIpolicies (ibid). FDI driven by natural resources andservices are likely to continue experiencing growthforsometimeinthefuture,butmoreeffortsneedto

While there is growing

globalisation,boldactionisrequiredregarding trade reforms and the

adoptionofpoliciesthatareconducive

toabetterinvestment climate


be devoted to the development of labour-intensivemanufacturingcapabilities.

ManufacturingattractslessFDI,whilethisispreciselythetypethatisrequiredforstructuraltransformationin those African economies that are still trapped inprimaryproductionactivities.Thespill-overeffectofFDI to domestic firms, resulting in ‘backward’ and‘forward’links,mayhelpwiththediversificationoftheoveralldomesticproductionbasefromstaticprimarytodynamicsecondaryproducts inbothverticalandhorizontal directions. Specifically, benefits couldbe in the form of integration into the internationalproduction, marketing and distribution networks oftransnationalcorporations(UNCTAD2006:111).

On the regulatory side there are promising signsthat a number of African countries are improvingtheir policies with a view to attracting FDI, asmore than 500 bilateral investment treaties and365 double taxation treaties by African countriestestify (UNCTAD 2003:37). As Oyejide (2005:17)points out, ‘all West African countries offer furtherinternational protection to foreigninvestors through their membership tothe Multilateral Investment GuaranteeAgency (MIGA) and the InternationalCentrefortheSettlementofInvestmentDisputes (ICSID)’.Countries inCentral,EastandSouthernAfricaprovidesimilarguaranteesinvaryingdegrees.

More still needs to be done in manycountriestoincreasethesizeofforeigninvestmentsontheonehand,butatthesame time further the development ofindigenouseconomicactivity,andbothaspectswillbenefitfromareductioninbureaucracy,enforcementofcontracts,simplification of procedures andreductionoftaxesforpreferredproductionactivities.Theseregulatoryissuesalsoneedtobefactoredintoregionalintegrationmechanisms.

One should however not lose sight of the fact thatanimprovementoftheinvestmentclimatehingesonmuchmorethanthis,andespeciallyonthelong-termpredictabilityofthemacro-environmentandpoliticalstability.AccordingtoCollierandGunning(1999:80),‘thesinglemostimportantdeterrenttoinvestment[is]thefearofpolicyreversal,[currency]inconvertibilityand confiscation.’ Such risks would be mitigated ifbetter domestic and regional agencies, in the formofbetter governedandautonomous institutions, arein place as Africa would then be in a position toimproveitsinvestmentprospectsregardingeconomicdevelopment.

ResearchontherelationshipbetweenFDIandregionalintegration suggests that low trade restrictions are

likely to attract investment flows (Blomstrom et al2000:111). This precludes ‘tariff jumping’ types ofFDI, which is attracted by high tariffs mainly in alimited set of sectors such as clothing and textiles,automotive production and parts. Such FDI is lessdesirable as it has a short lifespanandcanactuallylead to a reduction in domestic economic welfare(Schiff&Winters2003:118).

OneproblemwiththeflowsofFDIintheintegratingregionistheagglomerationeffect.Regionalintegrationtends to pull firms towards central (as opposed toperipheral) locations that offer attractive featuressuchastradecostadvantagesandproximitytootherindustrialactivitiesandsuppliers(seeVenebles1999).While agglomeration takes place at the expenseof smaller countries in the short term, its benefitsoutweigh this problem in the long term. As firmsbecome more familiar with their environment andsearch for lower labour costs, cheaper sources ofproductionandproximitytomarkets,smallercountriesbecome more attractive. Moreover, the investmentopportunities should prompt smaller countries to

improve their investment climate andto seek opportunities for their privatesector in value-chain links with largerfirmsatthecentre.

The future of regional integration in Africa

Ithasalreadybeenpointedoutthatprimaryfactorsofsuccessforregionalintegrationin Africa would require firstly politicalliberalisationandsoundmacro-economicreforms. This should be underpinnedbyinfrastructuredevelopment,attractingandnurturingprivateeconomicactivities,supporting socially and economicallyviableindigenouspractices,andcreating

the right climate for the expression of a plural anddivergentpoliticalvoice incivil society.These factorstogethercouldcontributesignificantlytothevitalityofAfrica’sintegrationprocess.

Inmostcountrieson thecontinent thestate, throughparastatalorganisations, stillplaysadominant role intheeconomicsphere,andthissidelinesprivatesectorentrepreneurs, generates rent-seeking behaviour andperpetuates inefficient practices. As Nkurundzinzaand Bates (2003) observe, this could also act as adrainonthefiscus.Nationallegislation,policies,rulesand regulationswill have to accommodate change ifintegration is to be a success. Such flexibilitywouldfurtherhavetotranslateintosubordinationofdomesticpolitical interests to common regional goals (Mistry2000:557).

Anotherareathatwouldneedtoreceiveattentionisthat related to high dependence by a large number

Primaryfactorsofsuccessforregionalintegration in Africa wouldrequirefirstlypoliticalliberalisationandsoundmacro-

economic reforms


of African countries on external financing. In 2003thenetdevelopmentalaidtoAfricareachedarecordofUS$26,3billion(ECA2005:33).Thisplaces thesecountriesatthemercyofthedevelopedcountriesandinternational financial institutions. This dependenceon aid flows is partly caused by an absence ofstrongcapitalmarketsandpoorlydevelopedfinancialsystems(Draperetal2007).

Inthepastaidhasnotreachedareasthattrulyneeddevelopment,buthasfounditswayintogovernmentcoffers, with little accountability on its use. Eventhough the provision of aid has been conditional,the conditions were not sufficient to ensure that itpreventedrecipientgovernmentsfromspendingitastheydeemedfit(Collier&Gunning1999:74).

In this respect continued linkswith providers of aid,such as countries and institutions in Europe, couldserve as the much needed agencies of restraint,even though such links may not be desirable inthe long run. Appropriately managed, these couldinject dynamism into Africa’s integration efforts. Theagents of restraintswouldhave to offerrealistic incentives as well as mete outpenaltiesiftherearefailuresordelaysinimplementation.Theyshouldbebackedupbyindependentmonitoringstructuresthat have the full political supportof the relevant governments. Such asystem,togetherwithexternalactorsthathave power to provide the necessaryincentives,canbecrucialtothesuccessofregionalintegrationinAfrica.

At the regional level, regional integration agreements need to ensurethat recipientscannotdeviate from theagreed-uponreforms.Astheexperienceof Sub-Saharan Africa has shown, theexistence of regional integration schemes does notautomaticallyensurereformprogress.Again,crediblepunitivemeasuresandincentivesshouldaccompanyaid to regional integration schemes. For regionalmechanism to have credibility, larger countries orgroupswithin the integrating regionsneed toplayamoreactiveandinfluential leadershiprole.Thiswillalsocreateamoreconduciveclimateforinvestment.

Atindependencetheexistingagencies,intheformofimperialcolonialadministrators,wereremovedwhichleftAfrica’sleaderswithlimitlessroomformanoeuvreandnobodytowhomtheywereeffectivelyaccountable(see discussion in Collier&Gunning 1999:74). Badpolicy decisions, including massive nationalisation,trade restrictions and deficit-financing increasedpolitical risk, which in turn removed certainty andpredictabilityfromgovernmentdecision-making,andreducedinvestorconfidence.Theonlycertaintythatremainedwasthatofinstitutionalmismanagement.

Ahighlevelofmacro-economicconvergenceintheintegrating economies, including stabilising cross-regional exchange rates, achieving intra-regionalconvertibility and establishing common regionalcurrencies,aresomeofthestepsthatneedtobetakenin building a viable regional integrationmechanismon the continent. This should be accompanied byefforts aimed at reducing tariffs and tariff barriers,harmonising customs procedures and improvingtransportandtelecommunicationsinfrastructureinallparticipatingcountries.

As Schiff and Winters (2003:20) suggest, policyintegration or harmonisation at the regional level can helppave theway formuchdeeper integrationatalaterstage.Itmaynotbepossibletopursuetheseatthesametime,assomeregionalgroupingsaretryingto do, in view of the high demand for resourcesof such efforts. Rather than attempting to achieveeverything at once, progress should be a gradualprocessinwhichonestepisfollowedbyanother.

Much hope has been placed on the CotonouAgreementandtheEconomicPartnershipAgreements between Europe andAfrican countries that were launchedin2003toactasexternaldrivingforcesto push the regional organisations torationalise and harmonise their regional trade arrangements. It is unclear howsuccessful this process could be, butit is hoped that they could at leastforce various countries to establishcustomsunionsandreduceoverlappingmemberships.Withregard to the latterDraperetal (2007:25) suggest that theSACUandEACcouldhelptoconsolidateotherorganisations,suchasComesaandtheSADC,byabsorbingthem.BurundiandRwanda(bothmembersofComesa)

haveforexamplealreadyaccededtotheEAC,thoughnot yet to the common external tariff. Whetherthis would be achieved through the rationalisationefforts of the agreements or bymember states owncommitment to deepening integration is a differentmatter. Similarly, Mozambique, a SADC member,has in recentpastexplored thepossibilityof joiningSACU.Draperetal(2007)furthersuggestthatstatessuch as Zimbabwe, Zambia, Malawi and TanzaniacouldbedrawnintoanexpandingSACU.

Benefits such as a share in the common revenuepool and developmental assistance are likely to bestrong considerations for drawing other countriesinto customs union arrangements. There does notseem to be active and deliberate efforts towardsrationalisation of RECs along such obvious lines bythe AU. Although the possibilities are there, thesehave not been formally discussed in RECs such asComesa,theEACandtheSACU.Itwouldthusseem

AstheexperienceofSub-Saharan

Africa has shown, theexistenceof

regional integration schemes does notautomaticallyensureareform

process


asifthepossibilitiesforrationalisationwouldrequirean as yet unconsidered commitment frommembercountries.Thisissomethingthatcannotbelefttotheindeterminateagreementprocesses.

Afurthernegativeaspectistheslowpacewithwhichthe agreements are being negotiated. The growinginfluence of China in Africa could also underminethe long-standing relationship between the EU andAfrican countries, especially if China also starts toprovidedevelopmentalassistance.

Finally, regional integration in Africa should beoriented strongly towards producing developmentaloutcomes. In other words, this must in the firstinstancebeadevelopmental regionalismasopposedto integration-focusedregionalism.Whereasthelatterfollows a linear path along the EU lines and placesmore emphasis on trade creation and unilateralliberalisation, the former emphasises removal ofsupply-sideconstraintsandinfrastructuredevelopmentand views trade in a more integrated manner, linked todomesticdevelopmentalchallenges.

Increasing emphasis on thedevelopmentalnatureofregionalismbysomeAfricanscholars(seeAsante1997)cautions against uncritically followingthe linearapproachexemplifiedby theEU which – though attractive – maynot necessarily accord with regional developmentalchallengesinAfrica.Thethrust of developmental regionalism isto contribute to ‘collective betterment’beyond mere trade expansion and,as Asante contends, to encouragedevelopment of new industries, helpdiversify national economies and increase the region’s bargaining powerwiththedevelopedeconomies(ibid)byforexamplemultilateraltradenegotiations.

Apremiumshouldbeplacedoninfrastructure-relatedor project-based regional cooperation to manageregionalpublicgoods,ratherthanonthecreationofregion-wideimport-substitutionschemes.Anexampleof project-based cooperation is the Great LimpopoTransfrontierParkthatwasofficiallyopenedinAugust2006 to preserve biodiversity and facilitate tourismbetweenSouthAfrica,ZimbabweandMozambique.AnotherexampleistheIngaPowerPool,aninitiativebetweenAngola,Namibia,theDRC,SouthAfricaandBotswanaandsupportedbytheWorldBank,withtheaimofpoolingregionalenergyresources.

Conclusion

RegionalintegrationinAfricahasrepeatedlymetwithfailure in the past. Wrong priorities have hinderedsuccess. Much has been written about the lack of

‘political will’ without an accompanying explanationastowhatitreallymeans.

In this paper an attempt was made to highlightthe challenges related to non-implementation ofcommitments and to trace its reasons to a lack of focusandwillingnessby leaders to transcendnarrownationalistic concerns. In other words, defendingsovereignty has been more important than the realcommitmenttogrowthanddevelopmentwhichisthemeanstoawell-managedintegrationprocess.

The argument was put forth that a strong base forregionalintegrationisboldeconomicreformsthatareundertakenatthedomesticlevel.Suchreformsshouldnotfocussolelyonimprovingthemacro-environmentorstabilisation.Whilepoliticalandeconomicreformsshould beginwith strengthening the infrastructure ofgovernance,according importance to the ruleof lawand human rights, stabilising themacro-environmentand creating the right climate for investment, shouldtranscendtheseminimalistobjectives.

Building a strong social infrastructure(especiallyimprovinglandmanagement,educationandthehealthcaresystem),as well as addressing other constraints to growth may differ from country tocountry.Suchconstraintsincludealargeandunregulated informal sectorwhichmay hinder private sector investmentandproductivity;hightransactioncostsfor formal sector business; corruption;lack of entrepreneurial skills; and lowreturnsonsocialinvestment.Ratherthanassessingtheconstraintsfromamacro-economic perspective, each countryshould be examined individually todetermine which of these aspects arepresentthere.

What is abundantly clear is that African leaderswillnotachievesuccessat the regional level if theyfail to do so at the domestic level, and therefore soundpoliciesthatfocusoneconomicdevelopmentmust be in place. If the ‘United States of Africa’ isnot to be another still-born dream, it will have tobegin with gradual and pragmatic steps. Perennialproblemssuchassmallmarkets,anarrowproductionbase, poor infrastructure and a high dependenceon external financing can only be overcome bydetermined efforts to improve the overall politicaland economic environment, which would in turnstimulateinvestmentintheregion.

Furthermore, normative values that capture acommitment towards democratisation, upholding oftheruleoflawandrespectforhumanrightsareneededifprogressistobesustained.This,alongwithgreaterintegrationwithdevelopedcountriesinthenorth,will

If the ‘United StatesofAfrica’isnottobeanotherstill-borndream,itwillhavetobeginwithgradualandpragmaticsteps


helpcreate thenecessaryconditions for restraint thatwillguardagainstreversal.

Atthisstageitisfartooearlytoexpendresourcesondeepeningregionaltradeintegrationwhilecountriesarestillreluctanttoliberalisetheirtradepolicies.Progressislikelytobeachievedgraduallythroughdevelopmentalcoordination and infrastructure development in theregion.IfRECsarerationalised,itcouldbethefirststepon thepath towardsa successful regional integrationthat supports theobjectivesof theAfricanEconomicCommunity.

Notes

1 Cemac ismade up of Cameroon, the Central AfricanRepublic,Chad, theRepublicof theCongo,EquatorialGuineaandGabon.

2 Comesa is made up of Angola, Burundi, Comoros, theDRC,Djibouti,Egypt,Eritrea,Ethiopia,Kenya,Madagascar,Malawi,Mauritius,Namibia,Rwanda,Seychelles,Sudan,Swaziland,Uganda,Zambia,andZimbabwe.

3 Angola,Botswana,theDRC,Lesotho,Malawi,Mauritius,Mozambique, Namibia, Seychelles, South Africa,Swaziland,Tanzania,ZambiaandZimbabwe.

4 ThiscomprisesBotswana,Lesotho,Namibia,Swazilandand South Africa. Lesotho, Swaziland, Namibia andSouth Africa are members of the CommonMonetaryAreaanchoredbytheSouthAfricanrand.

5 This is according to articles 38, 39, 40 and 41 of theSACUAgreement2002.

6 Kenya,TanzaniaandUgandaarethefoundingmembers.Recently,RwandaandBurundihaveacceded.

7 EcowasismadeupofBenin,BurkinaFaso,CapeVerde,Côted’Ivoire,Gambia,Ghana,Guinea,Guinea-Bissau,Liberia,Mali,Niger,Nigeria,Senegal,SierraLeoneandTogo.

8 Benin,BurkinaFaso,Côted’Ivoire,Guinea-Bissau,Mali,Niger,SenegalandTogo.

9 ThesepolicypositionswerereflectedinvariousWorldBankreports,principallytheElliotBergReportin1981,as well as the subsequent stabilisation programmes.Africa’s Priority Programme for Economic Reform,implemented between 1986 and 1990, signalled theendoftheLagosPlanera.

10 Mercosur is a regional trade agreement betweenArgentina, Brazil, Uruguay, and Paraguay founded in1991.

11 ForamorecomprehensivediscussionofAfrica’sgrowthchallenges,seeNduluandO’Connell(1999:41-66).

12 MauriceSchiffandAlanLWintersalludetoevidenceinliteraturethatsuggestsupport theassertionthatNorth-South integration promotes growth and investment insoutherncountries.SeeSchiffandWinters(2003:18).

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The ISS missionThevisionoftheInstituteforSecurityStudiesisoneofastableandpeacefulAfricacharacterisedbyarespectforhumanrights,theruleoflaw,democracyandcollaborativesecurity.Asanappliedpolicyresearchinstitutewithamissiontoconceptualise,informandenhancethesecuritydebateinAfrica,theInstitutesupportsthisvisionstatementbyundertakingindependentappliedresearchandanalysis;facilitatingandsupportingpolicyformulation;raisingtheawarenessofdecisionmakersandthepublic;monitoringtrendsandpolicyimplementation;collecting,interpretinganddisseminatinginformation;networkingonnational,regionalandinternationallevels;andcapacitybuilding.

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About this paper Thispaperseekstoexplorethethemeofregionalintegrationwithreferencetotheestablishmentofa‘UnitedStatesofAfrica’.ThepapercriticallyassessesthevalidityofthepropositionthatintegrationisadesirablestrategyforovercomingAfrica’sdeep-seateddevelopmentalchallenges.For regional integration tosucceedithas tobebasedoneffectivenationalgrowthanddevelopmentstrategies.Furthermore,thereneedstobeanormativeconvergenceontheissuesofdemocratisationandpromotionofhumanrights.Thiswillrequireadeparturefromthenegativesovereignty,whichisdecidedlystate-centricandobsessedwithanti-imperialism,towardstheexplorationofmorepositiveexpressionsofsovereigntythattakeintoaccounttheimportanceofnon-stateactorsinpromotingdevelopment.

About the author MZUKISIQOBOisaMellonpost-doctoralresearchfellowattheDepartmentofPolitics,UniversityofStellenbosch,andaresearchassociateat theSouthAfrican Institute for InternationalAffairs.Theauthorwould like to thank theanonymousreviewerforthehelpfulcommentsandsuggestionsontheearlierdraft.

FunderThispaperandtheresearchuponwhichitisbasedwasmadepossiblethroughthegenerousfundingoftheSwitzerlandEmbassyinEthiopia,theDanishEmbassyinEthiopiaandtheDeutsche Gesellschaft für Technische Zusammenarbeit (GTZ).

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