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At closing of the 2018 African Economic Conference, economic integration is seen as a game-changer for achieving inclusive sustainable development

At closing of the 2018 African Economic Conference, economic integration is seen as a game-changer for achieving inclusive sustainable development
Photo credit: AfDB

07 Dec 2018

Economic integration is a game-changing reality and African countries must fully embrace it to achieve sustainable and inclusive development that reduce poverty and inequality in all its dimensions.

Such is the main conclusion of the 2018 African Economic Conference (AEC) which closed on 5 November 2018 in Kigali, Rwanda.

“Regional and Continental Integration for Africa’s Development” was the theme of this year’s conference, jointly organized by the United Nations Development Programme, the United Nations Economic Commission for Africa and the African Development Bank.

The 2018 AEC brought together close to 400 participants, including African researchers, government officials, policy-makers, youth, civil society and private sector leaders. This is the first such gathering since the adoption of the African Continental Free Trade (AfCFTA) in March 2018, which plans for a single continental market for goods and services, with free movement of business persons and investments.

During panel discussions and presentations, AEC participants underscored the need to address impediments to greater regional and continental integration such as weak institutions, productive capacity and infrastructure connectivity; a mismatch between local consumption and production modes; the profusion of multilateral agreements to the detriment of homegrown agreements; the inadequate engagement of the African private sector; illicit capital flight and unnecessary policy regulations.

It was also noted that a greater level of integration could help African countries make their voices heard on the global stage and that the AfCFTA framework could go a long way towards correcting the imbalance the powers during negotiation between regional trading blocs.

Addressing the conference’s last plenary session, Ayodele Odusola, Chief Economist, UNDP Africa, said: “Integration should be a means not an end. We need to make sure that it is people driven and inclusive.”

Ms. Moono Mupotola, Director of Regional Integration Department at the African Development Bank noted that: “Since there is political will, policy makers and implementers of the African Continental Free Trade Area (AfCFTA) should try to come up with a perfect situation to start implementing what our political leaders have agreed.”.

Adam Elhiraika, Director of ECA’s Macroeconomics and Governance Division called on African countries to meet their commitments on signing and ratifying AfCFTA.  

“We all know the benefits of facilitating free movement of goods, services and people when we open our borders and integrate. Africa’s GDP would increase as high as 6% every year,” he said. “We need to make sure that our leaders’ commitment and vision to form African Continental Free Trade is realized and implemented. One single continental market for goods and services means wealth and prosperity for all Africans.”

To date, 49 African countries have signed the landmark African Continental Free Trade agreement. Twelve out of the required 22 countries ratified it. The deadline for ratification is March 2019.

Highlights of the conference included the launches of the 2018 Africa Sustainable Development Report, the African Governance Report 2018, and the presentation of the 2018 Visa Openness Index which measures how open African countries are on visa policy.

Following an annual tradition, on the final day of the conference, awards were presented for the two best research papers presented at the conference as selected by conference participants based on innovation, academic rigor and policy impact.

The best conference paper award went to Blaise Gnimassoun, of the University of Lorraine, France for his paper, pdf Regional Integration: Do intra-African trade and Migration improve income in Africa? (5.64 MB)

The runner up research paper,  pdf The Economic Diplomacy in Africa: The Impact of Regional Integration versus Bilateral Diplomacy on Bilateral Trade (809 KB)  was authored by Sylvanus Kwaku Afesorgbor, of the University of Guelph in Ontario, Canada and the Centre for Trade Policy Analysis and Development Accra, Ghana.

The 14th African Economic Conference is scheduled to take place in December 2019.

Overview of the outcome from the 2018 African Economic Conference

Emerging Issues

Some of the emerging issues from the Conference include:

  1. Integration is a means, not an end: It must be people-driven – a strategy to help lift and keep people out of multi-dimensional poverty and exclusions – farmers, youth and women.

  2. Current levels of infrastructure and connectivity linkages hinder African integration and economic growth.

  3. Complementarity challenge: One of the structural impediments to Africa’s trade and economic integration is that Africa “produces what it does not consume – and consumes what it does not produce.” This again borders on lack of complementarity between production and consumption between neighbouring countries.

  4. Subsidiarity challenge: Most of existing trade and investment agreements (both bilateral and multilateral, including EPA and AGOA) make the African Continental Free Trade Agreement (ACFTA) subsidiary to these agreements, which make ACFTA implementation challenging.

  5. Inadequate engagement of the African private sector in the negotiation, discussion and design of the ACFTA – a major stakeholder responsible for trade and investment – may hinder effective regional integration.

  6. The proliferation of multiple trade and investment barriers across the 54-member states of African included in the ACFTA. Good news: the EAC is setting the pace on accelerating trade facilitation across member states.

  7. Inadequate cost-benefit analysis and lack of compensation mechanism: The inability of most countries to undertake a copious cost-benefit analysis and the absence of compensation mechanisms could weaken the implementation of strong political buy-in for regional integration.

  8. The rising trend of illicit capital flight on the continent is denying Africa resources required to build infrastructure and connectivity for regional integration on the continent and undermining capacity for domestic resource mobilization for inclusive growth and development.

  9. A tool to balance the power in globalization: Globalization can be brutal because of power asymmetries. For instance, the situation where EU, USA or China negotiating with each of most African countries – without a collective approach like ACFTA – could lead to unfavourable results for most African countries. A tool to balance power would help to address unequal negotiations.

Emerging Recommendations

These include, but are not limited, to:

  • Advocating regional integration not as an end but a means to lift and keep 560 million Africans living in multidimensional poverty out of poverty. In this regard, participation in – and the distribution of benefits of regional integration must include farmers, youth and women. Inclusiveness in the design, implementation and monitoring of regional integration should be people-driven.

  • Strengthening infrastructure and connectivity within the African continent is necessary for proper integration and stronger economic growth.

  • Investing heavily on changing mindsets of Africans that often prefer ideas, goods and services from outside Africa to “African made products” – learning to “consume what is produced” and to “produce what is consumed” in Africa.

  • Reviewing and revisiting all African trade agreements is necessary to provide African economies with the strongest opportunities to access international and intra-continental markets. This is to ensure all existing trade agreements serve as instruments to implement Africa’s regional integration.

  • Developing mechanisms for compensating losers. To elicit political buy in of all losers, it is important to mitigate the potential costs from regional integration by ensuring benefits regional integration is distributed fairly.

  • Harmonizing trade and investment policies and programmes to reduce transaction costs and facilitate trade. This includes promoting strong linkages between national and regional value chains through regional development.

  • Promoting champions of regional integration at national, regional and continental levels. Being the largest trade agreement in the world, realizing its maximum benefits will require strong and sustained dedication from member states, including establishing national, regional and continental champions. This requires investing in communication on the opportunities and strengths of regional integration – and how to address its risks.

  • Addressing regional public goods: The emerging risks like conflicts and security, pandemic diseases like Ebola and HIV/AIDS, and climate change adaptation and mitigation to be treated as public goods.

  • Tacking illicit financial flows is key to mobilizing resources required to bridge the infrastructure deficit that could help boost regional integration. Solidarity and collective efforts to prevent, stop and return illicit financial flows stockpiled outside Africa could help enhance domestic resource mobilization, reduce debt stocks and direct resources towards national and regional public goods needed to deepen regional and continental integration.

Source African Development Bank
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Date 07 Dec 2018
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