Dr. Wolassa Kumo
1.Introduction

Rapid technological advances and globalisation coupled with the widespread use of the information and communication technology have extended the global reach of economic agents and countries. To fully benefit from these irreversible global mega trends, poorer countries such as those in Africa need to rapidly adjust their economies. Economic cooperation and integration are major instruments of adjustment.

Africa has been pursuing integration programmes for a very long time. From the 1960s to the present, many integration groupings have emerged and faded away. Examples of earlier groupings are the African Common Market comprising Algeria, Egypt, Ghana, Guinea, Mali and Morocco in 1962; the Equatorial Customs Union composed of Cameroon, Central African Republic, Chad, Congo and Gabon in 1962, which eventually led to the present Central African Economic and Monetary Community; and the former East African Community (EAC) comprising Kenya, Tanzania and Uganda in 1967, which until its demise, was the most developed of all the integration experiences in Africa. New groupings have since emerged, reflecting the continued belief by African countries in the virtue and importance of economic cooperation and integration [1].

The African Economic Community (AEC) was founded on June 3, 1991 through the Abuja Treaty which came into effect in May 1994 when it was ratified by a number of countries. Building on the existing Regional Economic Communities (RECs) and with commitment to establish new ones, where they do not exist, the AEC was envisioned to be created in six stages [1]:

a)   Creation of regional blocks in regions where such do not exist (to be completed in 1999)

b)   Strengthening of intra-REC integration and inter-REC harmonization (to be completed in 2007)

c)   Establishing of a free trade area and customs union in each regional bloc (to be completed in 2017)

d)   Establishing of a continent-wide customs union and thus also a free trade area (to be completed in 2019)

e)   Establishing of a continent-wide African Common Market or ACM (to be completed in 2023)

f)   Establishing of a continent-wide economic and monetary union (and thus also a currency union) and pan-African Parliament (to be completed in 2028)

The Treaty envisages further that all transition periods will end by 2034 at the latest with full fledged African economic and monetary union, and pan- African Parliament paving a way for the creation of the United States of Africa. Are the AEC goals achievable? African countries have set a number of grand goals including the Millennium Development Goals (MDGs) to halve poverty in the continent by 2015, which most of the countries are unlikely to achieve. Only 18 years are left to realize the goal of continent-wide economic and monetary union and 13 years to create the African Common Market (ACM). These are yet another set of ambitious and challenging goals for the continent. The remaining sections of this brief article assess the prospects, progress and challenges of the AEC endeavour.

2. Prospects

The justification for the creation of the AEC was the existence of a number of RECs. These include, the South African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), Economic Community of Central African States (ECCAS), East African Community (EAC), Economic Community of West African States (ECOWAS), and the Arab Maghreb Union (AMU). These RECs are envisaged to form the foundation of the AEC. Two more RECs, the Community of Sahel-Saharan States (CEN-SAD) and Intergovernmental Authority on Development (IGAD) were formed in 1998 and 1996 by Sahel- Sahara States and North East African Countries respectively.

The Abuja Treaty also recommended the creation of an African Union (AU) and a Pan-African Parliament with the primary goal of facilitating the creation of the African Economic Community. The African Union was established on July 9, 2002 following further endorsement of the Abuja Treaty proposals on 9 September 1999 in Sirte, Libya, when the member states decided to form the African Union and Pan-African Parliament. On May 29, 2000 a detailed document on the creation of the African Union and the plan-African parliament was adopted in Libya[2].

The Pan-African Parliament was established in March 2004, by Article 17 of The Constitutive Act of the African Union, as one of the nine Organs provided for in the Treaty Establishing the African Economic Community signed in Abuja. The ultimate aim of the Pan-African Parliament is to evolve into an institution with full legislative powers, whose members are elected by universal adult suffrage which is envisaged to happen in 2034.

The creation of the AU and the pan African Parliament indicates the increased awareness by many African countries about the importance of economic cooperation and integration in the continent. These intuitions, if effective are indispensable for the realisation of the grand objective, the establishment of the African Common market and economic and monetary union.

While the progress in political commitment is encouraging, the actual economic cooperation and integration has been very slow. The following section highlights key progresses made and the challenges the continent faces in this regard.

3. Progress and challenges

Some progress has been made by RECs towards regional economic integration in the continent. The RECs have been observed to be most active in areas of trade and market integration. In all RECs, market and trade integration is being advanced through a series of
measures such as[1]:

a)   Removal of tariff barriers to intra-REC trade

b)   Removal of non-tariff barriers

c)   Development and enactment of common trade policies.

The effective implementation of these and other measures will lead in the long run to the achievement of zero tariffs for intra-REC trade and, conditional on convergence of RECs, a common external tariff for the continent.

The Constitutive Act of the African Union makes it clear that the primary goal of the Union is to establish an African Economic Community and assigns to RECs the primary responsibility for making that happen. An intermediate step in this effort is the transition of RECs into customs unions. Significant progress has been made on this issue. The East African Community (EAC) became a customs union on January 1, 2005 with the introduction of the EAC Customs Union Protocol. SADC hopes to establish a customs union by 2010. This will be a significant achievement for SADC, whose success will depend greatly on the compatibility of the planned customs union with the already existing Southern African Customs Union (SACU)[1].

COMESA planned to become a customs union in 2008 but failed to meet the target. ECOWAS is working to resolve a possible conflict with the already existing customs union in West Africa – the West African Economic and Monetary Union (WAEMU/UEMOA) – by adopting that Union’s tariff bands so that a customs union could be in place by 2008 which was not met [1].

According to [1] in addition to the existing tariff barriers, non-tariff barriers (NTBs) are a growing concern in Africa. Customs officials, police roadblocks and constant harassment by immigration officials hamper free trade. But these are not simply cases of extortion; they also reflect the slow implementation of regional integration agreements to remove tariff and non-tariff barriers to trade. If left unattended, these will negatively affect the benefits of greater market openness. NTBs have an extensive scope as they impede intraregional trade and serve the cause of protectionism.

Despite persistent efforts of trade liberalization by RECs, Africa’s trade within itself has been constantly poor compared with the internal trade of other regions such as Europe and Asia. According to WTO 2006 international trade statistics, intra-African trade as a percentage of total exports was only 9.8 per cent and 8.9 per cent in 2000 and 2005 respectively, compared with 72.7 per cent in 2001 and 73.2 percent in 2005 for Europe’s export trade, and 66.8 per cent and 66.7 per cent respectively,among the 25 countries of the European Union[1].

The main causes of the low Intra-African trade are a narrow production and manufacturing base and infrastructure inadequacies. Most African countries continue to trade in a narrow band of natural resource-based products. In some cases, one commodity accounts for over a third or even half of a country’s total merchandise exports. The corollary is a continued heavy dependence on imports from outside the continent, particularly in manufactured goods, to satisfy consumer demands in the subregional/regional markets[1].

Progress in the area of free movement of people remains modest, largely because unemployment remains very high in Africa and there are fears that such liberalization ill bring about asymmetric benefits.

Apart from these, physical integration remains poor in the continent. Enhanced physical integration is critical for economic integration. Trade infrastructure in much of Africa is in a very poor state and needs to be rehabilitated and upgraded, in order to improve trade on a cost-effective platform and maximize regional competitiveness. Three areas are critical: transport; information and telecommunications technology; energy and water are critical areas for integration[1].

Another challenge to RECs is an overlapping membership which has threatened to derail efforts at deeper economic integration. Membership overlaps exist among many RECs but more pronounced in SADC, COMESA and EAC. For instance, 8 of SADC members are also COMESA members while Angola is a SADC as well as ECCAS member and Tanzania is SADC and EAC member. An overlapping membership poses serious technical problems to these three RECs that plan to create customs unions, as a country cannot belong to more than one customs union [3].

A discussion was held between the three RECs in 2008 in Uganda to address some of these challenges and possibly agree on a framework that would allow for the creation of a grand FTA and customs union from Cape to Cairo which if successful, would merge as many as 26 African countries into a single trading zone, opening borders for literally half of the continent spanning the entire southern and eastern regions of Africa from South Africa to Egypt with a combined Gross Domestic Product (GDP) of US$625 billion and population of 527 million[3].

The AU also planned to create continent-wide financial institutions to promote continental economic integration. These included the proposal to establish:

a)   African Central Bank – Abuja, Nigeria

b)   African Investment Bank – Tripoli, Libya, and

c)   African Monetary Fund – Yaounde, Cameroon.

None of these institutions have been established yet except the recent finalization of the constitution of the Steering Committees working on their founding. These institutions were envisaged to serve as the foundation of the planned single African currency, the Afro.

4. Rhetoric vs. reality

There is no doubt that to fully participate in the global economics during this era of rapid technological change and globalization, African countries must urgently adjust their economies. The establishment of the AU and the pan African Parliament following the Abuja Treaty and the Sirte agreements are moves in the right direction.

However, the continent is unlikely to realise the primarily goals of economic integration with in the planned time frame, i.e. with in the coming 13 years. The performances of the existing RECs on which the success of AEC crucially depends are mediocre at best. Except the AEC, no REC has yet created a viable customs union to ensure greater trade integration. The overall intra-REC trade remains to be dismally low by any regional standard globally.

On top of these, non tariff barriers pose serious challenges for trade in Africa. The movement of people with the REC regions are seriously constrained by immigration bureaucracies worsened by rampant domestic unemployment and lack of common and accepted regional travel protocols.

Physical integration is very much limited. The development of transport infrastructure: road, railways, waterways are underdeveloped and non-integrated. To make matters worse, more than 15 African States are land locked and depend on their neighbours to export and import commodities.

The promised financial institutions crucial for the viability of the economic integration have not yet been established in the continent. The introduction of the envisioned common currency, Afro, depends of the existence of strong African central bank which has not yet been established.

In general, the continent is a long way to go to create the macroeconomic convergence crucially required for successful economic and monetary union.

Apart from these, the continent is still home for half of the world’s kelptocracies that are inimical to economic growth and development. Although the AU is a step in a right direction, it is a toothless tiger to enforce democratisation and ensure conflict resolution in the continent.

Given such facts on the ground, the current debate on the “United States of Africa” is rhetoric, far removed from reality.

References

[1] UNECA, 2008. Assessing Regional Integration in Africa 2008 — Towards Monetary and Financial Integration in Africa, ARIA III, Addis Ababa, Ethiopia.

[2] Manelisi, genge; Francis Kornegay and Stephen, Rule. 2000. Formation of the African Union, African Economic Community and Pan-African Parliament. African Union and Pan-African Parliament: Working Papers, October 2000.

[3] Munetsi Madakufamba. 2008. Africa: Economic Community Target Gets Fresh Impetus As RECs Convene Joint Summit. AllAfrica.com, 16 October 2008.

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