tralac’s Daily News Selection
Calestous Juma and Francis Mangeni: African Regional Economic Integration (Belfer Center)
This paper provides an alternative explanation of the emergence and evolution of regional economic integration by focusing on institutional innovation. The paper is divided into five sections. The first section provides background analysis of the forces that shaped Africa’s early efforts to search for new approaches for economic transformation. This is followed by an elaboration of the theoretical basis for understanding how Africa sought new models of economic order from the post-World War II chaos. The section builds on the theoretical foundations outlined to explain the behavior of systems that operate far from equilibrium and under conditions of uncertainty. Section 3 explores how the far-from-equilibrium dynamics led to the emergence of a variety of novel institutional arrangements aimed at governing regional integration. Section 4 explains how Africa has charted its own novel approach that combines the strengthening of state capacity with the expansion of complex economic networks to foster economic integration. Here we outline how Africa’s emerging regional integration approaches radically differ from those adopted in other regions. The last section examines Africa’s long-run economic outlook, with emphasis on a 50-year vision that is guided by the need for inclusive growth and sustainable development transitions.
The report covers the 10 partner countries: Argentina, Costa Rica, Côte d’Ivoire, the Dominican Republic, Ghana, Kyrgyzstan, Nepal, Rwanda, South Africa and Thailand. The report shows that labour migration has a relatively limited impact in terms of native-born workers’ labour market outcomes, economic growth and public finance in the ten partner countries. This implies that perceptions of possible negative effects of immigrants are often unjustified. But it also means that most countries of destination do not sufficiently leverage the human capital and expertise that immigrants bring. Public policies can play a key role in enhancing immigrants’ contribution to their host countries’ development. Extract:
The estimated contribution of immigrants to GDP ranges from about 1% in Ghana to 19% in Côte d’Ivoire, with an average of 7% across the 10 countries studied. The contribution of immigrants to value added exceeds their population share in employment in five countries: Côte d’Ivoire, the Dominican Republic, Kyrgyzstan, Nepal and Rwanda. In countries where this is not the case, differences are small. Overall, immigration is unlikely to depress GDP per capita. The analysis of how immigrants affect the fiscal balance and the quality of public services in developing countries shows that immigrants help increase overall public revenues. However, the increase may not be always sufficient to offset the public expenditures they generate. This is the case in two countries, Kyrgyzstan and Nepal, where the deficit is less than 1% of GDP. In the other countries studied, the net direct fiscal impact of immigrants is positive but below 1% of GDP. Overall, immigrants’ net fiscal contribution tends to be positive but limited. [ISS: Will Africa allow the free movement of people?]
AU Summit updates:
(i) CFTA updates from @AUTradeIndustry: The AU Department of Trade and Industry and the AfroChampions Initiative’s Executive Committee will create a high-level platform for regular dialogue on the CFTA. The two organizations also want to launch a vast mobilization campaign in favour of the CFTA, targeting both governments and the general public in Africa.
(ii) President Kagame’s acceptance speech on taking over as new AU chair. Africa’s defining challenge is to create a pathway to prosperity for our people, especially young people. Elsewhere, this has been achieved through industrialisation. But the growth trajectory that transformed Asia is not necessarily any longer a viable option for Africa, simply because we waited too long to act. Technology has evolved so rapidly in recent years, that Africa’s window to follow that strategy is narrowing much more rapidly than previously understood. We are running out of time, and we must act now to save Africa from permanent deprivation. Scale is essential. We must create a single continental market, integrate our infrastructure, and infuse our economies with technology. No country or region can manage on its own. We have to be functional, and we have to stay together.
(iii) Guterres lauds strong AU-UN partnership, outlines areas for more cooperation. Spotlighting these and other initiatives as key examples of the successful work the two organizations are carrying out across the continent, Mr Guterres said this partnership could be further strengthened in five key areas: addressing corruption; cooperation in peace and security; inclusive and sustainable development; climate change; and international migration. Combatting the “far-reaching and devastating” impact of corruption, tax evasion and illicit financial flows, a main theme of this year’s AU Summit, “requires an unimpeachable commitment to transparency and accountability,” he said, commending the decision to highlight this scourge, and offering the strong support of the UN. He also welcomed the designation of 2018 as African Anti-Corruption Year.
(iv) Single African Air Transport Market Initiative: IATA commentary. The International Air Transport Association says effective implementation of the Single African Air Transport Market Initiative would boost the economy of Africa by creating 155,000 jobs with an annual GDP of $1.3bn. The Vice President, International Air Transport Association in Africa, Mr. Raphael Kuuchi, stated this in a statement issued on Sunday. “Enhanced connectivity will stimulate demand, improve the competitiveness of the African airline industry, and make air travel more accessible. In turn, this will enable higher volumes of trade, expanded tourism and growing commerce between African nations and with the rest of the world.” [Association of African Airlines hails Single Air Transport Market, How Africa’s open skies treaty will short-change Nigerian airlines]
(v) AU Peace and Security Council communiqué: Towards a comprehensive approach to combatting the transnational threat of terrorism in Africa
The union has relied on agreements and announcements to meet its integration goals. But they aren’t enough. ECOWAS needs to operate beyond the office and paper agreements. It needs to establish physical operations at border points. Leaders have lessons to learn from history – both ancient and recent. Our latest study shows that policymakers concerned with deepening integration in ECOWAS should look back in time to regional trade institutions in West Africa.
Starting today in Dakar: Regional Forum on ECOWAS Quality Infrastructure (ECOWAS)
Under the aegis of the Ministry of Industry and Small and Medium Industry of Senegal, ECOQUAF will gather about 300 participants, including representatives of the 15 members of ECOWAS and Mauritania, Morocco, Tunisia, regional and international quality institutions, technical and financial partners and national, regional and international civil society organizations. Debates will be organized around the following topics: development and implementation of quality policies, financing quality infrastructure, major challenges of the main components of the quality infrastructure, and promotion of quality.
Ethiopia: Second International Agro-Industry Investment Forum (UNIDO)
AIFE 2018 (5-8 March, Addis Ababa) aims to mobilize private investment in light manufacturing, with a particular focus on sectors with high growth potential, namely agro-processing, textiles and garments, and leather and leather products, as well as related sectors such as packaging and renewable energy. The Forum will present specific investment opportunities and investment incentive regimes, as well as facilitate business linkages through a series of networking activities – including B2B and B2G meetings, an exhibition for national and international companies and a field visit to an industrial park
Global cassava coalition wants support for cassava transformation in Africa (Africa Science News)
Ahead of the international conference on cassava, the Global Cassava Partnership for the 21st Century (GCP21) has called on policy makers, donors and the international community to support all efforts that will bring about cassava transformation in Africa. Presenting the upcoming conference on cassava to donors and the international community in Cotonou on Thursday, Dr Claude Fauquet, Director of GCP21 said, “despite the key role cassava is playing in Africa’s food security, its productivity had remained low (about 9 tons per hectare), keeping the growers in the trap of poverty. When compared to Asia, cassava productivity in that continent is more than 21 tons per ha—a situation that gives Asia competitive advantage in global cassava trade.”
Mozambique: Exports from Tete reach more than 18bn meticais (Club of Mozambique)
Tete province earned more than 18.8 billion meticais in 2017 from the export of various products, particularly coal, electricity, tobacco, maize, cotton, fish (tilapia and kapenta), wood and maize flour, reports AIM cited by O País. According to Tete Provincial Director of Industry and Commerce, João Feliciano, most of the products were exported to South Africa, Germany, Turkey, Argentina, Belgium, Singapore, Portugal and Romania. According to Feliciano, the figure represents a growth of 10% compared to 2016, an increase influenced by the rise in the volume of exports of tobacco, wood and fish from the Cahora Bassa reservoir.
South Africa: China’s thriving special economic zones show way forward for SA (Business Day)
One consequence of the current set-up is that the SEZs are not drawing in as much investment as they could. SA ought to tinker, as the Chinese do; not be too ideologically tied to one particular model. The country must find the way that works. If SA made it easy for the private sector to participate and it did not participate, the country could then conclude that it had got something wrong. But if private enterprise is locked out, surely SA is stretching the state too much? This is too much for the government to do alone. Even the Chinese have realised this. A new partnership on SEZs could see them flourish, expand and meet real needs. Surely, if the Chinese were prepared to give it a go, SA could as well? [The author, Tumelo Chipfupa, is a founding partner of Cova Advisory]
South Africa: Competition Act changes will create conflict (Fin24)
The proposed amendments to the Competition Act could face opposition from other parts of government and invite an onslaught of challenges from companies that find themselves subject to the powerful new market inquiry mechanism. Overzealous competition law can neuter industrial policy, warned Garth Strachan, deputy director-general: industrial development policy at the department of trade and industry. “If we get it wrong, we may fall prey to competition or free market fundamentalism,” he said at a panel discussion on the amendments Economic Development Minister Ebrahim Patel released in December. Strachan complained about the way competition concerns already constrained government’s attempts at drawing up industrial policy. [Willemien Viljoen: Competition policy as an instrument for economic transformation – a careful balancing act]
Today’s Quick Links:
South Africa’s Lesetja Kganyago: Fintech is a central banker’s friend
International Customs Day 2018: message from the World Customs Organization