A report released last month by the UN Conference on trade and Development suggested that deeper regional integration was the best way for African countries to bolster their economies – more so as we are in the midst of a global economic crisis. The issue of African regional integration has been on the cards for quite a while now. The Economic Commission for Africa (ECA) has been publishing regular reports on the issue of regional integration since 2004. This year’s report focuses on monetary integration in Africa. It is apt that a report on integrating the continent’s monetary systems is being released at this time. With the current toxic nature of the world’s banking system and the global financial crisis, it is important that those charged with the responsibility of ensuring Africa’s economic fortunes take note and act more decisively in furthering the idea of African regional economic cooperation.
As the recession continues to bite deeply in industrialised countries, protectionism is looming large over the global economy. The Director-General of the World Trade Organisation, Pascal Lamy, may see “limited evidence” of protectionism. However, he is not leaving anything to chance. He has warned of protectionist risks. So, being the seasoned trade negotiator that he is, the WTO boss has created a system to monitor trade policies introduced by governments to see whether they involve protectionism that could deepen what is already the worst downturn in decades.
Describing the monitoring initiative as reflecting “the responsibility of the WTO to play an active and constructive role” in managing the crisis and contributing to the restoration of healthy trade growth, Lamy expressed the belief that it should continue “as long as the global economic situation justifies it”.
Now he is talking. Surely, protectionism is a serious threat right now. Look at what is happening in the US. The foremost free market country in the world is becoming unashamedly protectionist. Americans want President Barack Obama to protect their markets and industries as his administration attempts to revive a flagging economy.
When the US Senate and House of Representatives approved a stimulus bill earlier this year, it included the controversial ‘Buy American’ clause. Although Obama says he does not like the clause, arguing that it could lead to a trade war with Europe, where US attempts to introduce protectionist policies have raised hackles, he however signed the Act into law.
So, what does all this portend for Africa? Well, it clearly means that African countries, in order to protect themselves from global protectionist tendencies, must integrate their economies fast or suffer the consequences. Despite the hue and cry over the global banking crisis, Africa, to a large extent has not been exposed to its full toxic effects.
Although, on the one hand, this is not a bad thing, on the other hand, it highlights the fact that the African continent is not fully integrated into the global financial system – the system that fuels economic growth and general development. The problem with Africa’s limited integration in global markets is because each country wants to chart its own economic course even though most do not have the population or economic clout to make an impact on international trade and finance.
According to the ECA, of the 53 countries in Africa, 38 have populations of 15 million or fewer, while one-third have populations of three million or fewer. Furthermore, of the 46 least developed countries in the world, 31 are in Africa. In this regard, as the ECA noted in the current edition of Assessing Regional Integration in Africa, “the contribution of regional cooperation and integration to the promotion of intra-group trade, growth, development and social and political cohesion is unquestionable”.
This is not lost on Africa’s leaders who believe that the various regional economic commissions, of which the Economic Community of West African States is one, are the way forward for the continent. But the problem that one has with African leaders is that they tend to acknowledge the solutions to the continent’s problems but then fail to act decisively to reach these solutions.
It is all well and good to make transformations to regional bodies, such as ECOWAS becoming a commission. But will such a change give impetus to the move towards full economic integration? Or is the transformation merely for political reasons? What about the African Union, the continent’s supreme organisation? At their summit in Addis Ababa earlier this year, African leaders decided that the AU Commission should become the AU Authority in anticipation of a United States of Africa. Such a cosmetic change to the AU’s status is to satisfy the huge ego of Libyan leader Muammar Gaddafi – the prime mover of the United States of Africa.
Is this what African leaders should be giving priority to at a time when nations around the world are vying for economic self-preservation? The proposed United States of Africa will, in the main, be a political entity that will throw up new problems for the continent. Even after almost 50 years of independence, many African countries are still grappling with old political problems. I don’t think they need new ones.
But when you talk about economic integration, this makes sense to ordinary Africans. You are now talking about economies of scale here. Small African countries, as has been pointed, will disappear in the global mass if they are not part of a larger bloc. Indeed, I think this makes more sense to ordinary Africans than their leaders who mainly talk about abstracts. They are far removed from economic reality, while it is ordinary Africans who live economic integration. For example, in ECOWAS, it is these citizens who traverse this vast region as they commit themselves to the principle of free movement of goods and people – even though ignorant customs and immigration officers at some border posts do their level best to disrupt this. In fact, this is where economic regional integration in Africa will come unstuck.
So governments should forget about the abstracts and ensure that they face up to the realities. The current ECA report unambiguously states the need for Africa’s regional economic commissions to work: integrate or become lost within the global economy.
“The case for strengthening Africa’s integration is even much more pressing now than ever because of new pressures for more multilateral trade liberalisation superimposed on Africa’s weak initial conditions,” the report said. “The world is experiencing major and irreversible mega trends in trade and technology driven by rapid technological advances and globalisation. These developments, coupled with the widespread use of information and communications technology, are extending the global reach of economic agents.
“Weaker economies are bound to suffer the most if they do not adjust, as integration is a major instrument for even richer countries. The EU is now a full-fledged internal market buoyed by the euro.”
Need I say more?