Overcoming Challenges of Regional Trade: What Solutions For Africa?

Dr. Francis Nguendi IKOME

Transcribed Version

Question:  Dr. Jean Cedric Kouam

Where do you think the process of economic integration in Africa really stands?

Answer: Dr. Francis Ikome

It is common knowledge that regional integration and cooperation have been a permanent feature in Africa’s development, thinking, and practice. Africa has experimented with diverse forms and shades of regional integration initiatives, and it is largely been in response to the reality that the continent has faced from the very early days of independence. Mainly because it is a very fragmented continent with very small states and population sizes and markets that are ordinary and standing alone which on their own, would not be competitive both internally and globally. So regional integration, as we know, is important and has been important for all regions of the world. But it would not be wrong to assert that it’s been even more important for Africa than other regions because of the colonial legacy of fragmentation. So over the years lots of initiatives have been tabled and experimented with.

The integration processes in the continent have not been stagnant or uniform, they have continued to be dynamic and evolving and have been shaped by circumstances, both internal and external. Internally, there are market issues of market size and externally there has been global dynamics throughout various stages of various periods in history. African integration has had its defining moments since the 1960s. With the desire to have a united continent, with the strong impulses of pan-Africanism, that the continent should prioritize integration like the United States, both politically and economically, but the realities have somewhat neutralized this ambition, and very little has been achieved, even with the creation of the OAU at that time. The second phase was the one that emphasized the sub regional dimension. So, to say, let us start on a small scale and then build on that to get to the continental ambition. One of the defining initiatives during this period was the now famous Lagos Plan of Action and its implementation instrument, the full act of Lagos.

Subsequently in the early 1990s, Africa did not drop the ball. It established the Abuja Treaty, which prescribed the establishment of an African economic community. As a matter of fact, if we were to talk about Africa’s integration history, the Abuja Treaty is one of the most important and lasting legacies. It still defines and shapes Africa’s integration processes. Moreover, if you ask the question, as where we find ourselves in the integration journey, I would want us to start this journey from the Abuja treaty and the prescriptions that it made. It revived the prescriptions of the Lagos Plan of Action. It talked about the way it was to be implemented in six phases. Nevertheless, what is most significant about the Abuja treaty is that it anchored the continental integration agenda on the successes of regional economic communities and the fortunes of regional economic communities. Many of them were established in some way in existence even before the Abuja Treaty. The fortunes have been very mixed. Progress has varied from REC to REC. Many people have been dismissive of the progress RECs have made, but my take is that I always like to look at the progress of regional integration on the continent as being a glass half full as opposed to a glass half empty, so progress has been made in the regional integration efforts. It has been slow at the pace, should have been faster and it has not lived up to the expectations of the ordinary man and woman on the continent.

Question:  Dr. Jean Cedric Kouam

Do you think we are on the right track towards effective economic integration in Africa especially with the AfCFTA?

Answer: Dr. Francis Ikome

I would answer positively and it is a strong positive response. If you look at the speed and dispatch with which the AfCFTA came into being, one would say it has been unprecedented, be it the processes or negotiations. The conversation began in 2012, when directives from an AU summit called for the creation of an African free trade area and the establishment of a framework for the free movement of people. Negotiations began in 2015 and were completed in 2018. When the treaty was signed, it was signed by an unprecedented 54 of the 55 member states that make up the African Union. It took only a few months, or less than a year, for it to get the required ratification and enter into force. Implementation has effectively begun with trade starting in February 2021. In terms of political will and the support from various stakeholders and actors, I think the AfCFTA is unprecedented. However, the one reality, and you indicated very clearly that the continent has faced is that it has been very good at putting initiatives, establishing institutions, but it has failed woefully when it comes to implementation.

The biggest fear that many people and political observers have is the fear that the AfCFTA should not go the route of earlier initiatives. But there are elements on the ground that seem to suggest that this time around it is likely that it would be different and that the AfCFTA would be implemented effectively. Various stakeholders, including the ECA itself, have been hard at work, to provide all the support that is needed to ensure that the AfCFTA is implemented. ECA has been helping member States in developing AfCFTA implementation strategies.  We have about 46 AfCFTA strategies that have been developed and some of them are already in the implementation phase. So, the fact that there is this deliberate and conscious effort to accompany member States in the implementation reflects the awareness that implementation or failure thereof has been the bane of African integration over the years.

Question: Dr. Jean Cedric Kouam

What do you think are the factors that hinder regional integration in Africa?

Answer: Dr. Francis Ikome

The issue of the deep disconnect or mismatch between the initiatives that are in place and the results is common knowledge and it has been very disturbing for various stakeholders, including the ordinary African, man and woman who would want to see regional integration bring about a change in their lives. This has not happened, even though there has been some progress or significant progress the pace has been slow. There is a constellation of factors that have contributed to this reality and going back to the one we started with, there is this gap between the signing of agreements and implementation. This is something that needs to be attended to with the seriousness that it deserves. At some point, one may be tempted to say the agreements are signed with ease because there are no consequences if you do not implement. So there is that disconnect and the disconnect is self-explained by a number of factors, some including unrealistic and even unfeasible goals and objectives and deadlines.

There are also challenges around the lack of appropriate institutions to support the implementation of processes. There are issues regarding resources, human and material integration has dividends, but it also requires investments in terms of putting the human and financial resources to support implementation. Critically though, there is also the issue which is known by everybody regarding challenges posed by the multiplicity of regional integration initiatives on the continent and there are overlapping mandates and the costs these overlaps and duplication brings to the continents and as well as the inefficiencies that these breed. This issue has been the subject of research, analysis, and policy interventions, but concrete solutions have not really been found. Despite efforts such as the rationalization of RECs, where the AU recognizes only seven regional economic communities, it could be argued that rationalization is probably needed. This rationalization was envisaged not long ago by the ongoing effort for the tripartite initiative between the East African Community, the Common Market for Eastern and Southern Africa and SADC, the Southern African Development Community.

Also, there are challenges around the difficulty of reconciling regional and continental levels of integration processes. You have RECs that are integrating and are supposed to be the building blocks of the continental agenda but these RECs have their own treaties, they have their own agencies, legal frameworks and so on. Therefore, the interface between the Continental and the regional integration agenda has also been a contributory factor in the inefficiencies or ineffectiveness of the regional integration on the continent.

Importantly, also the challenges around the lack of complementarities among regional partners within regional economic communities. Historically, the continent has just been specialized in primary goods and commodities. Actually they can export no value addition. So practically almost every country was seem to be producing the same commodity. Therefore, integration cannot occur under these circumstances. It is necessary to add value, to diversify activities in order to create an internal competitiveness that would depend on integration.

Then most importantly probably is the issue of weak and poor infrastructure. Africa is the least connected continent using all the modes. If you consider all the modes of communication of all the diverse forms of infrastructure, whether you’re talking roads, rails, ports, energy, telecommunication, Africa lags behind compared to other regions and this has been a factor in installing integration. You need improved infrastructure to be able to properly integrate.

There’s also issues of economic disparity. The African states in as much as majority of them are developing states, or least developing states, are not at the same level of development and these too creates a problem of suspicion, of dominance that more economically viable countries could dominate the weaker ones and that has been a source of reluctance to genuine integration. A key example is the reluctance for African states to embrace the free movement of people, which is a critical requirement for integration. So these are some of the issues that need to be addressed or that contribute to the low levels of integration.

Question: Dr. Jean Cedric Kouam

Some experts support the idea that regional integration provides a framework for Africa to overcome these barriers to regional and continental trade. Other experts, on the other hand, believe that regional integration in Africa cannot be achieved simply by removing trade barriers, but will also require policies to promote industry and job creation.  What is your opinion on the matter?

Answer: Dr. Francis Ikome

Regional integration and the AfCFTA in particular is not just about trade barriers and removing barriers. It is like I said, a free trade agreement, unlike others, because it moves deeper away from what we call a shallow integration into deep integration because it touches critical across-the-border issues that need to be addressed for us to really have the free movement of goods and services beyond tariffs. The AfCFTA, as you know, has as its objective to harmonize the trade regimes. There are many trade regimes but it has as one goal to harmonize the trade regimes so that we do not have this multiplicity. But critically, it is also an agreement that pushes for industrialization, diversification, and for competitiveness. It has as its objective to make the African economies competitive among themselves. That is within, but also to get to a stage where they will be able to compete favorably in the global arena. I mean, we are living in an open global economy. Therefore, it is not an agreement that is intended to close Africa up to the rest of the world, but it opens a market space of 1.4 billion people where production can happen. One of the issues that has been raised in the past,  why certain industries including, for instance, the pharmaceutical industry, could not locate or be located in the African continent, was the lack of economies of scale. The AFCFTA has killed that debate. It has settled that discussion. We have a wide enough market space for investment in pharmaceutical and other sectors. We have not just space but the market population, and market size in terms of who can pool chase. So, investors both local and international have no argument not to invest in the continent. So that is one of the reasons why many see and characterized the AfCFTA as a game-changer.

Question: Dr. Jean Cedric Kouam

Do you think the AfCFTA really offers African regional economic communities the means to strengthen their regional integration?  Is the AfCFTA the ultimate step that should ensure true trade integration in Africa?

Answer: Dr. Francis Ikome

Visit the ECA website, you will find a publication entitled Governing the Interface between the AfCFTA and RECs free trade areas. The AfCFTA aims to coordinate and harmonize the multiple trade regimes that currently exist on the continent, multiple trade regimes that have not been sufficiently effective. It is also recognized that in terms of integration and trade integration in particular, regional economic communities have made significant progress that AfCFTA may need to build on. There is in fact a provision that constitutes a framework established by the African Union to govern the relationship between the free trade area and the regional economic communities. The AfCFTA is a milestone in the integration process, and a game changer that offers opportunities for Forex and for information, even in the negotiations that ultimately led to the establishment of the AfCFTA. Negotiators drew heavily on what already existed on the ground, on the progress made by the RECs, and there is a provision in the AfCFTA to manage this relationship. There is evidence that the RECs have made significant progress in some aspects or dimensions of integration, and these achievements will be maintained in their relationship with the continental integration agenda. If one looks at the regional economic communities, they offer large markets relative to the markets of individual African countries. But if we compare the market size of our individual RECs with the continental market, we realize that the continental market is larger and therefore offers greater opportunities. Therefore, the RECs have everything to gain by taking advantage of the platforms, opportunities and institutions that the AfCFTA offers. And if they are to be the building blocks of the Abuja treaty, they need to work closely with the AfCFTA framework so that we achieve the ultimate stage of the African economic community envisaged by the Abuja treaty.

Question: Dr. Jean Cedric Kouam

What policy recommendations do you propose to overcome the challenges of regional integration in ECCAS?

Answer: Dr. Francis Ikome

Well, there are many interventions that may need to be taken but I think that may need to be taken if you are aware of the framework on boosting Intra-African trade. It has a seven priorities intervention that needs to be acted upon to accompany the AfCFTA and to make African economies sufficiently competitive and more amenable to meaningful and transformative integration.

You have issues with trade facilitation. As you said, we started the conversation and we agree that the AfCFTA is not just about removing tariffs. There are a host of non-tariff barriers or blockages that kind of serve as an obstacle to the free movement of goods and services and people. So, there is a need to purposefully and deliberately, really focus on addressing these issues, for instance, relating to harmonizing and simplifying and also automating the custom procedures of, for instance, the operations of regional economic communities.

It’s nice to harmonize. It’s nice to automate. We are living in a different age. If you want to be competitive, you must go digital, and so on and so forth. There’s also the need for us to have too many border posts, especially when you factor in landlocked countries. You know, we have 32 in the world and 16 of them on the continent and  for them to get to their goods, coastal countries to the hinterland, they have so many border posts to cross.

So, there’s also the need to consider a dip in the already ongoing efforts on the establishment of one-stop border posts where you control, they do controls and you get the certificate and you can travel across countries with that and it is recognized. It also is trade and reduces the burden and costs to business operators. Then there is critically the need to develop policies that would enhance and strengthen Africa’s productive capacity. We need to rethink that and add value to commodities. We need to develop productive capacities. Africa needs to industrialize. It needs to embark on commodity-based industrialization.

Since we have so much in terms of commodities, we need to add value, transform these commodities so that this will create jobs. It will give us and indeed the produce that will get more value.

There’s also the issue of infrastructure, regional infrastructure. Our countries are not sufficiently interconnected. It is true that is a challenge internally. Nationally, we don’t have enough infrastructure that the situation is even worse when you consider the connection between and among African countries. We have a program on infrastructure development in Africa, which has been in implementation for the past several years.

But this has not gone far enough because of missing links and so on. Therefore, there is a need for deliberate interventions to complete these missing links and to make the promise of becoming true so that we can fully support the AfCFTA. There are issues of the macro-economic environment. We need to have a stable macroeconomic environment. The reality we face in recent months is the emergence of the debt crisis again on the continent. You cannot integrate when you are so heavily indebted. Then everybody begins to look inward. And so, there are those issues there. Then there are also payment system issues. You are our currencies are not convertible so. So, we need to look at why you cannot integrate when you have currencies that are not compatible. So, Afreximbank and not our continental institutions are working on that to greatly improve the regional integration problem.

And I think that would greatly improve the regional integration project. And then critically, there’s the free movement of people. We need to ratify the protocol. African people need to be allowed to move freely, to be able to do business, and to foster our integration. I think there was another question you asked that I seem to have forgotten. If you can remind me, then I can attend to that.


Please enter your comment!
Please enter your name here

eighteen + 12 =