Regional Economic Integration in Africa: Challenges and Prospects

Author:MB Hailu
Position:LL.B (AAU), LL.M (UWC), PhD Candidate (Martin Luther University of Halle Wittenberg, Germany). I am grateful for the comments I received from internal and external reviewers. All errors remain mine. E-mail: martha.b.hailu[at]gmail.com
Pages:299-332
SUMMARY

Africa has witnessed various efforts of economic integration at the continental and regional levels. While the idea of regional integration is as old as the Organization of African Unity now renamed as African Union, recent summits have reaffirmed Africa’s commitment toward boosting intra-Africa trade and integration. With the grand aim of forming a continental economic community (African... (see full summary)

 
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Regional Economic Integration in
Africa: Challenges and Prospects
Martha Belete Hailu
Abstract
Africa has witnessed various efforts of economic integration at the
continental and regional levels. While the idea of regional integration
is as old as the Organization of African Unity now renamed as African
Union, recent summits have reaffirmed Africa’s commitment toward
boosting intra-Africa trade and integration. With the grand aim of
forming a continental economic community (African Economic
Community) in the future, African countries aspire to use the various
regional economic communities as building blocs. Despite such
endeavors, however, the continent’s economy has remained
fragmented, inter alia, due to low level of infrastructure development
and the state-centric nature of the integration efforts. The overlapping
multiple memberships of countries to the regional groupings has
complicated the integration effort. The absence of clear rule on the
relationship between the existing regional economic communities and
the ‘to-be-formed’ African Economic community has also contributed
to the uncertainty in the integration process. In view of these
challenges, I argue that the focus on speeding up the formation of the
continental wide free trade area (FTA) does not seem timely; and the
focus should rather be redirected at strengthening the regional
economic communities. These pursuits meanwhile call for addressing
the legal and non legal issues that are important steps in bringing the
continent closer to integration.
Key terms
Regional Integration, African Economic Community, Continental
Free Trade Area, Intra Africa Trade, Regional Economic
Communities
DOI http://dx.doi.org/10.4314/mlr.v8i2.2
LL.B (AAU), LL.M (UWC), PhD Candidate (Martin Luther University of Halle
Wittenberg, Germany). I am grateful for the comments I received from internal
and external reviewers. All errors remain mine. E-mail: martha.b.hailu[at]gmail.com
300 MIZAN LAW REVIEW, Vol. 8, No.2 December 2014
Introduction
For several years, there is a movement towards regional economic
integration throughout the world. A regional integration arrangement can be
regarded as preferential (usually reciprocal) agreement among countries that
reduces barriers to economic and non-economic transactions.1 It is the
unification of different economies of states in order to promote and facilitate
the free movement of goods and services within themselves. All regional
integration agreements have the objective of reducing or eliminating barriers
between their members. However, they also exhibit a wide range of
variation. In terms of depth, their variation depends on the level of
integration undertaken by member countries.
The different stages of integration were originally formulated by
Professor Bela Balassa in 1961. According to Balassa, the first stage of
integration is Free Trade Area which leads to the abolition of tariffs (and
quantitative restrictions) between the participating countries, while each
country retains its own tariffs against non members.2 In free trade areas,
states have the autonomy to maintain their individual tariff and other
measures against non member countries. The second stage which elevates
the level of integration a step forward is customs union and it requires
common external tariff maintained by its members. As described by Balassa,
establishing a customs union goes beyond the suppression of discrimination
in the field of commodity movements within the union, and further involves
the equalization of tariffs in trade with nonmember countries.3
At the third stage of economic integration common market is formed
whereby, not only trade restrictions but also restrictions on factor
movements like labor and capital are abolished.4 The pursuits of economic
integration can further lead to economic union, as distinct from a common
market which combines the suppression of restrictions on commodity and
factor policies, in order to remove discrimination that was due to disparities
in these policies.5 The countries in an economic union get a common
monetary system and policies. The European Union, through its adoption of
a common monetary policy and using of the Euro as a common currency,
1 UNECA, (2004), Assessing Regional Integration in Africa, Addis Ababa , p 9.
2 Bela Balassa (1961), The Theory of Economic Integration, Greenwood Press, p.
174.
3 Ibid.
4 Ibid.
5 Id., p. 175.
Regional Economic Integration in Africa: Challenges and Prospects 301
has furthered the integration process into an economic union. Finally, total
economic integration presupposes the unification of monetary, fiscal, social
and countercyclical policies and requires the setting up of a supra national
authority whose decisions are binding for member states.6
While many of the regional integration schemes in the world are based on
such formulation, the Balassan stages are not necessarily expected to be
pursued with sequential rigidity, and there is no compelling reason to expect
a FTA to ‘evolve’ into a CU or toward total economic integration.7 One
should also keep in mind that the names given to some regional
arrangements may not necessarily reflect the level of integration reached by
the arrangements. A good example here is the Common Market for Eastern
and Southern Africa (COMESA). Despite the use of the term ‘Common
Market’, COMESA has only recently launched a Customs Union and it has
not yet attained Common Market level integration.
Countries wish to join their economies for various reasons, some of
which include attraction of foreign investment, enhancing cooperation,
fostering security and generally attaining economic development. With these
aims in mind, governments sign and become members of multiple regional
integration schemes. However, some of these integration schemes simply
reflect the desire but not always the political will to capture the economic
gains and international negotiating strength that regionalization can bring.8
Africa is not peculiar in this respect. A number of initiatives have been
launched in the continent to bring economic and political integration. These
integration efforts have been undertaken concurrently at continental and
regional levels. On the continental level, the effort of integration started with
the adoption of the OAU Charter in 1963 which envisions initiatives to
integrate the Africa region for the promotion of economic and social
development. The integration effort in Africa was taken a step further, at
least on paper, through the adoption of the Lagos Plan of Action (LPA) in
1980. The failure of African countries to implement the LPA did not stop the
governments from wishing to have a continent wide economic and political
integration. That is why, in 1991, the Heads of States decided to give
another try for the talk of integration and revived the 1980 LPA through the
adoption of the Treaty Establishing the African Economic Community
6 Ibid.
7 Andrew T Guzman and Joost H.B.Pauwelyn (2009), International Trade Law,
Kluwer Law International, p.330.
8 R.H. Folsom, M.G Wallace and J.A. Spanogle (2000), International Trade and
Investment in a Nutshell, (2nd ed.), St Paul Minn, West Group, p 393.

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