Regional development and integration are key to faster growth in Africa

July 28, 2006

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The small size of many African countries is a major obstacle to Africa’s economic and social development, a source of the continent’s extreme vulnerability, and one of the leading factors of its external dependence. The rationale for regional integration in Africa reflects the desire to deal, in one way or another, with the perceived growth-retarding constraints inherent in small markets. The importance of economic co-operation for Africa derives mainly from the opportunities that emanate from integrating the markets of individual countries in the continent.

It is true that disease, unemployment and poverty reduction remain the major challenges confronting policymakers in Africa. For this reason it is encouraging that African leaders have embraced NEPAD to confront the challenges facing the continent.

NEPAD is a strategic development plan that addresses the economic, social and political dimensions of Africa’s future development. It is a clear demonstration of the willingness of the leaders in Africa to take responsibility for actions needed to advance development. The vision and way forward basically consist of creating the policy environment and institutions that are necessary to translate the political commitment into economic benefits.

Since the African Union launched NEPAD five years ago, Africa’s leaders have been seeking to bring regional integration into the mainstream of the continent’s development efforts.

African leaders understand that cooperation and economic integration can help reverse the declining presence of Africa in the increasingly competitive global growth rates needed to combat poverty. Programs of coordinated action and regional approaches are needed to spur the additional trade that can be the engine of faster growth.

The NEPAD program represents a rare and historic clarity of the complexity of Africa’s development problems, its challenges and opportunities. The action program calls for, among other things, the promotion of public-private sector as a vehicle through which the private sector would make its contribution towards the implementation of priority projects.

The Summit that took place in Nairobi on 29 October 2003 recognised the importance of the private sector in the overall development agenda for Africa, and emphasised the significance of the sector in the implementation of the NEPAD regional projects and programs. In addition, the meeting of the NEPAD Heads of State and Government Implementation Committee held in Algiers in November 2004, called for more and active participation of the private sector in the implementation of NEPAD projects.

Africa’s efforts must be supported

It is further encouraging that there has been some improvement in Africa’s growth performance since the mid-1990s, albeit from a low level. The average growth rate in Africa amounted to 3, 7 per cent in the period from 1995 to 2004, compared with 1,9 per cent in the preceding 10 years.

This improvement was underpinned by some reduction in conflict on the continent and the achievement of greater macroeconomic stability.
According to the International Monetary Fund, African economic growth is expected to rise even further. While this improvement can be acclaimed, the progress needs to be accelerated. Only seven African countries achieved economic growth rates above 7 per cent – the level required to attain the United Nations Millennium Development Goals. A continued concerted effort is therefore still required to raise living standards in Africa.

Because regional cooperation is so vitally important to Africa’s economic development and future in international trade, it is necessary that these indigenous efforts be understood and supported by Africa’s would-be trading partners. In the U.S., unfortunately, these regional development efforts have attracted only minimal attention.

To the extent that they are known, it is generally their failures rather than their successes that have captured public attention.
A notable research void exists concerning Africa’s regional organisations, successes and failures, both within the international academic community and the development community generally. The World Bank, to its credit, has shown increased interest in the topic, reversing a long period of exhibiting an essentially negative attitude toward African regionalism and economic integration activities.

Shortcomings and constraints

While Africa has achieved various results in several areas like increased democracy, stability and relative growth over the past decade, these achievements notwithstanding, the overall assessment indicates that regional integration schemes in Africa have not met expectations and that much remains to be done in order to move toward achieving the declared objectives.

In virtually all cases, the volume of intra-regional trade has stagnated or even declined slightly, and there have been no changes in the composition of trade indicating that integration has not led to any significant structural change in African economies.

Furthermore, most African regional integration schemes have not achieved full integration and the domestic policy in individual member countries have also been generally at variance with the ideals of harmonised and coordinated pursuit of regional objectives.
Regional integration in Africa and with Africa will be different from that of Europe and Asia. It will be South/South integration involving under-industrialised economies generally based on agriculture, in which intra-regional trade plays a negligible part.
If integration is to succeed it will therefore be essential for the economically better-performing African states to become the driving force behind regional communities, taking the less affluent countries with them.

While regions are geographical not political or cultural entities, they are a basis for cooperation among states only to the extent that geography coincides with culture. Divorced from culture, propinquity does not yield commonality and may foster just the reverse. Meaningful regional organisations will emerge only if there is sufficient cultural commonality to sustain them.

Regional cooperation in such areas as water basins (lakes, rivers), infrastructure (roads, railways, and dams), the environment, hydroelectric and other sources of energy, fisheries, and more– can generate large benefits.

Regional cooperation has been supported by the World Bank across the developing world, together with other multilateral, regional and bilateral agencies. The World Bank provides expertise, financing and credibility. The latter is often crucial for the success of the project because joint projects imply binding commitments and thus some loss of sovereignty, and countries may not fully trust their neighbours to comply with their commitments.

What must be done for growth

For growth to take place on the continent, the following initiatives have to be undertaken:

– Implementation of customs union – harmonised regional customs facilities and systems.
– Gap-filling in regional infrastructure – focus on trade corridors, regional power systems and international telecommunications.
– Financial sector development and integration – focus on broadening access to financial services and introduction of trade-related instruments.
– Agricultural productivity – regional approaches to enhance agricultural research and technology development .
– Management of water resources at basin level – water supply, irrigation, flood control, environmental objectives.
– Improving outcomes in tertiary education, health care through rationalising facilities regionally.
– Combating migratory diseases , malaria, HIV/Aids and tuberculosis.
– Capacity development of the Regional Economic Communities closely aligned with near-term capacity needs in view of regional deliverables set by member states.
– Strengthening capacity of the Regional Economic Communities to select and prepare priority regional investments, including through establishment of multi-donor sub-regional funds.

Development is not about helping a few people get rich or creating a handful of pointless protected industries that only benefit the country’s elite. Development is about transforming societies, improving the lives of the poor, enabling everyone to have a chance at success and access to health care and education.

Source : nepad news, July 28, 2006