Economic integration in Sub-Saharan African countries

written by Eric Pichon
Last update: 9 January 2014. In a globalised world, regional economic integration is seen by many (liberal) economists as a way to realise economies of scale in goods’ and services’ production and distribution. An open and wider market should attract investments and in turn help create more jobs, which eventually would improve people’s welfare. Although the economic crisis in the EU has shown this “virtuous circle” is not always functioning, another argument for economic integration is that it would give African countries a stronger position in global economic fora. The African Economic Community is still on the agenda for 2034.

Overview: African economic communities

A presentation of Africa’s regional economic communities (RECs): CEN-SAD, COMESA, EAC, ECCAS, ECOWAS, IGAD, SADC and UMA is provided by the African Union website.
To this list have to be added:

• two economic and monetary unions: WAEMU (West African Economic and Monetary Union) – UEMOA  (union économique et monétaire ouest africaine –  in French) and CEMAC (communauté économique et monétaire d’Afrique centrale).
• the Southern African Customs Union (SACU)

Note that some of them are overlapping, as this figure shows (p.6)

The Abuja Treaty Establishing the African Economic Community (1991) foresees further integration.

“The AEC was established by the Abuja Treaty in 1991 and ratified in 1994. The treaty aims to build the AEC gradually through harmonization, coordination and effective integration of Africa’s RECs, eight of which have been chosen as “pillars” of the AEC. It proposes the establishment of a continental free trade area (CFTA) by 2017, and integration of the RECs into a single customs union with a common currency, central bank and parliament by 2028. The Abuja treaty does not lay out precise, top-down steps for achieving this goal, but the African Union (AU) and the RECs have defined their relationship in working toward the AEC in the 2007 Protocol on Relations between the AU and the RECs. Towards this end, the Africa Union has embarked on various programs at the regional and sub-regional level to promote integration.” (Brookings Institution)

NEPAD (The New Partnership for Africa’s Development), the “African Union strategic framework for pan-African socio-economic development” manages a varieties of projects, among which Regional Integration and Infrastructure, dedicated to “promote regional economic integration by bridging Africa’s Infrastructure gap.”

Agenda 2063 is  a “global strategy to optimize use of Africa’s resources for the benefits of all Africans over the 50 years to come”.

The founding treaties and main agreements of African RECs can be found on the website of the United Nations Economic Commission for Africa (UNECA).

It would be difficult to get a complete list of laws related to economic integration (approximation, etc.)  in all sub-Saharan countries. In 1996, the World Bank published:  “Facilitation of Transport and Trade in Sub-Saharan Africa:  A Review of International Legal Instruments Treaties, Conventions, Protocols, Decisions, Directives” – but it has not been updated since.

Analyses

Studies about African economic integration

The quest for an African economic community : regional integration and its role in achieving African unity / Wolff-Christian Peters, Frankfurt am Main: Peter Lang, 2010

This book gives a good overview about regional economic integration and the various structures that have taken place since the colonial times until today. Introductory chapters presents the theories and rationales for regional economic integration.

UN

UNECA’s Observatory on Regional Integration in Africa (ORIA) provides assessments of the various Regional Economic Communities (RECs) according to the “4 pillars” of regional integration: Harmonisation of Sectoral Policies in Infrastructure, Natural Resources, Climate, Food and Agriculture,  Macroeconomic Policy Convergence, Financial and Monetary Integration, Peace, Security,  Stability and Governance  and Trade and Market Integration.

Best Practices in Regional Integration in Africa / United Nations Economic and Social Council; United Nations Economic Commission for Africa,  6 September 2012, 13 p.

Regional Integration and Human Development: A Pathway for Africa / UNDP Bureau for Development Policy. April 2011, 100 p.

This report analyses the (possible) impacts of regional integration processes on human development.

World bank

Africa Competitiveness Report 2013:  Connecting Connecting Africa’s Markets in a Sustainable Way / African Development Bank; World Bank Group; World Economic Forum. May 2013, 221 p.

Biennial report. It includes the “competitiveness profiles” of 38 African countries.

WTO

Regional Integration in Africa / Trudi Hartzenberg. WTO World Trade Organization. Working Paper, October 2011, 27 p.

Historical backgroung and current challenges.

VISA (financial services company) 

Realising Potential: connecting Africa: VISA Africa Integration Index summary paper / VISA Sub-Saharan Africa; Adrian Saville; Lyal White. VISA Sub-Saharan Africa. September 2013, 57 p.

“The index measures the degree of economic integration within key trade corridors of sub-Saharan Africa namely West Africa, East Africa and Southern Africa.”

Think tanks

Will there be an African Economic Community? / Amadou Sy. Brookings Institution, 9 January 2014.

The Political Economy of Regional Integration /Graham Smith; ECDPM European Center for Development Policy Management. GREAT Insights, Vol. 2, no. 7, October 2013.

The African Union Can Do More to Support Regional Integration. Brookings, 17 May 2013.

Topical studies

Regional analyses

Inequalities and Growth in the Southern African Customs Union (SACU) Region / Basdevant, Olivier; Benicio, Dalmacio; Yakhshilikov, Yorbol. IMF International Monetary Fund. Working Paper, 12/290, 10 December 2012, 22 p.

UEMOA, CEMAC : quelle performance en matière de commerce ? / Céline Carrière. Revue d’économie du développement, Vol. 27, no. 1, pp. 33-60, 2013.

Monetary Union in the CFA franc zone: opportunities, challenges and prospects. The African Business Review, 2013.

Exchange rates

Choice of exchange rate regime in a selection of developing African countries / André C. Jordan. University of Pretoria. June 2013, 21 p.

Exchange Rate Liberalization in Selected Sub-Saharan African Countries: Successes, Failures, and Lessons / Mæhle, Nils; Teferra, Haimanot; Khachatryan, Armine. IMF International Monetary Fund. Working Paper, 13/32, 31 January 2013, 71 p.