News

Status of Integration in Africa (SIA V)

Status of Integration in Africa (SIA V)
Photo credit: UN

30 Jun 2014

The fifth edition of the Status of Integration in Africa report (SIA V) contains information on the implementation process of the integration agenda by the Regional Economic Communities (RECs) and the African Union Commission.

The overall objective of this report is to inform the political decision makers of the Continent on the status of integration in Africa and provide some recommendations on how to speed up the economic and political integration of the continent.

The RECs are undertaking various activities and programmes in many areas of integration. The report is intending to capture the progress made in key integration areas, such as, Trade, investment promotion, infrastructure, free movement of persons, macroeconomic convergence, agriculture and food security, peace and security, social affairs, tourism, industry and planning, monitoring and evaluation.

In this regard, analysis of the progress, the challenges and the future outlook of each of the abovementioned sectors are presented. The Report is also assessing the status of integration at Continental level, especially at the AUC level by capturing the progress made regarding the implementation of the key African Union Integration programmes and initiatives. 

Finally, some best practices and experiences in Africa need to be highlighted and major one is the EAC-SADC-COMESA Tripartite Arrangement. In this regard, the report looks at progress made in the tripartite negotiation process as well as implementation of various agreed programmes.

What is the status of integration in the Regional Economic Communities?

Trade

The African countries, as an economic bloc, occupy a very low position in the global economic classification. The African continent is home to 14% of the global population; it accounts for less than 3% of the global GDP and receives only 3% of foreign direct investment. As regards to global goods trade, the continent accounts for only 1.8 % of imports and 3.6 % of exports. These rates are even lower in the services sector: 1.7% and 1.8% of imports and exports, respectively.

Beyond the relatively unfavourable general positioning, the situation is quite mixed if the countries are considered on individual basis. Intra-African trade stands at around 12 per cent compared to 60 per cent, 40 per cent, 30 per cent intra-regional trade that has been achieved by Europe, North America and ASEAN respectively. Even if allowance is made for Africa’s unrecorded informal cross-border trade, the total level of intra-African trade is not likely to be more than 20 per cent, which is still lower than that of other major regions of the world.

The African Union recognises eight RECs, which consist primarily of trade blocs and, in some cases, involve some political cooperation. All these Communities form the 'pillars' of the African Economic Community (AEC). The RECs are moving towards implementing the Abuja Treaty with different rhythms. EAC is the most advanced Community which have launched its Common Market in 2010. COMESA has launched its Customs Union on June 2009. ECOWAS and SADC have made progress in building their FTAs. ECCAS have launched its FTA in 2004 but is facing enormous challenges in implementing it. UMA, CEN-SAD and IGAD are moving slowly and still in the stage of cooperation amongst their Member States.

Non-Tariff Barriers (NTBs)

Apart from the problems in implementing the agreed FTAs, RECs are also facing Non-tariff barriers to trade. In this regard, RECs have different approaches in dealing with NTBs. The three RECs composing the tripartite arrangement have adopted one programme on elimination of NTBs which is an internet based system for use by stakeholders in the Member States to report NTBs as well as monitor the processes of their elimination.

For example, the online system has been in place since 2009 and between that time and 2013, a total of 338 NTBs had been reported in SADC region, out of which 300 have since been addressed. ECOWAS has put in place National Committees to deal with problems of NTBs and complaint desks in the borders, whereas, the rest of the RECs are yet to establish such a system to eliminate NTBs.

One-Stop Border Posts (OSBPs)

Few RECs have elaborated competition policies and generally these are the Communities either moving towards the Customs Union and Common Market or have reached these stages. One of the main tools for trade facilitation is the initiative of One Stop Border Posts (OSBPs). The concept is used to minimize delays at cross border points on major transport corridors in the region, often as a result of poor facilities, manual processes, lengthy and non-integrated procedures and poor traffic flow.

Under the OSBP concept, all traffic would stop once in each direction of travel, facilitating faster movement of persons and goods, and allowing border control officers from the two Partner States to conduct joint inspection. The concept was first used at the Chirundu OSBP between Zimbabwe and Zambia which was judged successful. The establishment of the OSBPs is now widely adopted in various RECs such as, COMESA, EAC, ECOWAS, SADC and ECCAS.

Competition policies and investment promotion

Few RECs have elaborated competition policies and generally these are the Communities either moving towards the Customs Union and Common Market or have reached these stages. The COMESA competition Commission commenced its activity and aim to facilitating notification and acquisitions in the region. A COMESA Regional investment Agency has been created and is located in Cairo, Egypt. It has a role to coordinate and strengthen the activities of the COMESA national investment promotion agencies.

In addition, several COMESA investment fora were held, aiming at promoting COMESA as an investment destination and creating business linkages between COMESA and non COMESA business actors. The positive impact of the COMESA Micro Small and Medium Enterprises (MSMEs) Cluster Programme has contributed towards national and regional value chains and business partnerships among MSMEs. The COMESA had recently adopted the COMESA Micro, Small and Medium Enterprises (MSME) Strategy.

EAC has a model Investment Code in place and plans underway to upgrade it into an EAC Legislation/Protocol promoting EAC as an investment destination. The East African Business Council (EABC) is the apex body of business associations of the Private Sector and Corporates from the five East African Countries. The East African Business Directory is the first and the most comprehensive business directory in East Africa. SADC has finalized a Protocol on Finance and Investment in 2006 and entered into force in April 2010.

ECOWAS is working in three areas, namely: creation of the ECOWAS Common Investment Market (ECIM), investment climate promotion and financial market integration. ECCAS is working on putting in place a Regional Strategy on investment promotion and establishing a Small and Medium Enterprises (SMEs) Guarantee Fund.