AfCFTA is Here: Regional Integration on Steroids?

Regional Integration

Emmanuel.K. Bensah Jr.Perhaps the United Nations Conference on Trade and Devolopment (UNECA) said it best when it argued in 2019 that the African Continental Free Trade Area (AfCFTA) is not just about intra-African trade, but about “dispelling the crisis of implementation” that had persisted in the telling of the African narrative. Now that AfCFTA is alive, its Policy Network Deputy Executive Director, E.K.Bensah Jr, maintains here that Africa should now ave greater impetus to sign and ratify outstanding protocols, such as the Free Movement Protocol; and sign onto the AU levy of 0.5 percent that less than 20 countries are currently paying.

Ten years ago, when UNCTAD launched its flagship Economic Development in Africa (EDAR) Report, entitled “Strengthening Regional Integration for Africa’s Development”, one could have been forgiven for thinking that it was yet-another publication to gather more dust in the voluminous literature around Africa’s integration.

By a twist of fate, the UNCTAD EDAR was launched in June 2009 – almost ten years to the month when AfCFTA would also be launched. This interesting coincidence has compelled some of us to scramble back to our copies to look for highlights.

Most noteworthy about the report was the conspicuous silence of AfCFTA in the report. It would actually take the 2013 report before mention was made of Africa needing to pursue “a continental free trade area” (note the lack of capitalisation).

But the 2009 report contains critical information that informs us all about the journey towards deepening Africa’s integration with projects like AfCFTA.

Comprising five chapters, the report dealt with the issues of challenges and opportunities in the context of the experience of regional integration for Africa; expanding intra-African trade for Africa’s growth; intra-African investment; emerging issues in regional trade integration in Africa; and policy recommendations on strengthening regional integration.

The report dedicated Chapter 1 to the “Experience with regional integration in Africa: challenges and opportunities”, offering more than just a theoretical justification for economic integration. There was provision for a graphical illustration of the eight AU-mandated sub-regional blocs (ECOWAS/ECCAS/SADC/COMESA/AMU/IGAD/EAC), along with the existing monetary zones (UEMOA; CFA franc zone). The Libya-sponsored CENSAD was the only one that is missing in the graph. This omission notwithstanding, the report explained that the African Union has classified the multiplicity of regional groupings in Africa into two groups—the regional economic communities (RECs) and other integration blocs.

Given that this was the latest report by UNCTAD after the larger 2007 TDR on the importance of regional integration, it is fair to say that although developing countries had made quite some progress, they continued to be found wanting—and napping—on concrete strategies to make regional economic integration work for them.

Infrastructure for intra-African trade
Truth be told, it is difficult to speak about infrastructure without broaching the issue of intra-African trade. UNCTAD in this report was explicit in treating it as a critical element in facilitating regional economic integration. It admits that although intra-African trade is low in comparison to other regions, “Intra-African trade is important for many African countries taken individually.” This is buttressed by the point that “over three-quarters of intra-African trade take place within regional trading blocs, highlighting their importance.” The third critical point is that this kind of trade occurs around what the report considers “influential” countries. That is to say “trade poles” that could become development poles.

The report summarised the section on intra-African trade by recommending AU and sub-regional policy-makers pay greater attention to the landlocked countries on the continent that are “constrained by their own poor infrastructure as well as their neighbours’.” The report expressed hope, however, in multilateral processes, such as the EPA negotiations between countries of regional economic communities and the EU; AGOA processes and the WTO Doha Round of multilateral trade negotiations that are bound to re-configure the future of intra-African trade.

Intra-African investment
UNCTAD identified in its report the importance of financially integrating the economies of the AU. Citing examples for each region of Africa, it referred to ECOBANK as a trailblazer, describing it as a “prominent West African investor in Africa’s banking sector.” Created by the Economic Community of West African States (ECOWAS) and established in Lome, Togo, in 1985, the company was not licensed to operate as a bank until 1988. Today, through manifold investments, it has followed what the report considered to be “a proactive policy of African expansion.” In 2009, it was represented in 25 countries, including China, and had over 500 branches. ECOBANK’s strategy for geographic expansion is consistent with what UNCTAD called “a sound financial sector”, which it maintains to be a “prerequisite for increasing the flows of investment within Africa.”

In addition to ECOBANK, Nigerian banks were also cited as key to the development of the financial sector in the ECOWAS region. UNCTAD indicated that the banking sector has “become a major player in African finance following a radical consolidation undertaken in 2005.” The centrality of these Nigerian banks in Africa’s financial system (with the biggest banks in Africa comprising 9 out of 20 that were Nigerian in 2008) can only go to complement the increasing financial integration of the economies—not just of West Africa but the continent, brought about by the fact that Nigeria’s banks go beyond the shores of the ECOWAS sub-region.

Migration and free movement
The May 2009 report by the African Union entitled “Status of Integration in Africa” disclosed that free movement had generally been achieved throughout the eight regional economic communities, but some were more advanced than others. ECOWAS perhaps has the oldest arrangement, which dates back to 1979, with a revised treaty in 2003. It has experienced many challenges throughout the three decades. Despite the presence of ECOWAS passports in then-only three of the 15 ECOWAS countries, citizens of the sub-region are able to move freely throughout the region with only their ID cards or passports, and enjoy right of residence for 90 days.

The report pointed to already-existing initiatives, such as the 2006 African Common Position on Migration and Development, which highlighted, among others, the need “to ensure coordination in the development of common regional policies for the management of migration within the RECs.” In this report, UNCTAD avers that policy-makers have to build on the existing initiatives on facilitating labour mobility and migration management “already laid out in various RECs and other consultative forums in the region.” Those above are certainly ones that the report would like to see consolidated and help inform national development strategies so necessary for developing countries.

In the final analysis, it is arguable that UNCTAD’s return to regional integration was not a coincidence. By re-visiting the issue of regional integration, it was reminding both policy-makers and interested constituents that its concern for strategic development policies that will help integrate developing countries into the global economy against the backdrop of a global economic recession remains sound.

As it indicates in the report, there is nothing wrong with trade policy, but it should “be part of an overall long-term development strategy which defines a country’s development objectives and the way they should be reached.” Cooperation and collaboration are important elements insofar as regional economic integration is concerned, but it should be done on a holistic basis, which includes regional policies on energy; industry; migration; and infrastructure. Regional integration done without attention to these will only go so far, and end up hindering the progress that the regional economic communities have made.

As the report so aptly concluded: “regional integration is not an end in itself; it should be seen as a stepping stone towards Africa’s attractiveness to investment and export competitiveness.”

AfCFTA as a global player
Now that AfCFTA is operational, its merits transcend what benefit it would ensure to Ghana. Too many Ghanaians, oblivious of the AU, and what AfCFTA really is about, have doggedly sought to question the benefits for Ghana. That few are talking about how it will transform the AU into a global player is a source of concern. In this country, we are still not connecting the dots on what projects like these seek to do in amplifying the appetite of the AU as an assertive and global player within the context of Agenda 2063.

So, while many Ghanaians can identify with Agenda 2063, they remain unconvinced that what looks like a mere trade agreement could boost Africa to a place the world has never seen it go. AfCFTA is unchartered territory – a sea with infinite opportunities in helping us deliver the AU as an effective player on the world’s stage.

By E.K.Bensah Jr, Deputy Executive Director of Afcfta Policy Network & an ECOWAS & AU Policy Analyst with expertise on ECOWAS & AU’S peace, security & governance

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