How Africa can achieve ‘elusive’ integration

 

Gaborone –  Africa’s mature economies such as Botswana, Cape Verde, South Africa, Mauritius, Namibia, Seychelles, Equatorial Guinea and Nigeria can play a role in regional integration and thereby help the continent feed itself, the latest African Development Bank (AfDB) report has revealed.

The report titled ‘Revised Version: Bank Group Regional Integration Policy and Strategy (RIPS) 2014–2023’ states that Middle Income Countries (MIC)   can serve as catalysts for regional integration.

In line with the bank’s Middle Income Countries Strategy, AfDB will identify opportunities to exploit the strengths of the MICs as growth poles and experience sharing, the report says.

AFDB says it will enhance dialogue with some countries to strengthen their interest in regional integration; and also help them prepare projects using the MIC Trust Fund, the NEPAD Infrastructure Project Preparation Facility and the Africa 50 Fund.

The bank says it will further promote other financing sources identified in the Dakar Agenda for Action on Infrastructure Financing.

The bank will mobilise resources to support regional operations, especially from donors that can provide financing on concessionary terms.

Like the African Union, the AfDB believes that at some suitable time in the future, Africa will unite as a continent in a phased approach.

In the first phase, countries within regions have to harmonise their systems and processes, while in the second and final phases, harmonisation occurs at regional level.

According to the bank, free movement of people is the hallmark of regional economic integration, facilitating trade and economic growth across the continent, as it brings considerable economic benefits ‑ temporary and long-term ‑ to the economies in the region.

“In addition to traditional sectors such as tourism, immigrants increase economic efficiency by filling gaps in low- and high-skilled labour markets and increase economic efficiency by reducing labour shortages.

“Immigrants also remit considerable amounts of money to support livelihoods and investments in their countries. Despite the benefits and commitment by African Union member countries under the Abuja Treaty regarding the free movement of persons and the rights of residence and of establishment by their nationals within the community, progress has been slow on this,” AfDB says.

AfDB says that it will continue to encourage mainstreaming of regional programmes in national development plans and provide targeted assistance to different categories of countries in accordance with their special circumstances.

As an African organisation serving Africans, the bank says it is well positioned to foster the continent’s economic integration. But fiscal constraints among donor countries suggest that official development assistance(ODA) may stagnate in the coming years, so the AfDB will seek new ways of mobilising resources, especially by levering its own resources through collaboration, harmonisation and information-sharing with other development actors.

Similarly, it will be at the forefront devising innovative infrastructure financing approaches that look purposefully and decisively inwards to raise additional financial resources, as has been the case with Africa50.

“New resource discoveries, such as oil, gas and coal in Eastern and Western Africa, present good opportunities for investment. Technology-driven opportunities in agriculture can support regional value chains, attract foreign investment and boost output, as seen in the rising importance of Chinese and Indian investments. Increasing the diversity of investment sources offers chances to develop the continent’s natural resources, infrastructure and value chains,” says AfDB.

Moreover, Africa’s current demographics are set to make the continent home to the world’s youngest population by 2040, that, allied with pertinent skills and an enabling business environment, presents a potential youth dividend.

“The bank will leverage its Human Capital Strategy for Africa (2014-2018) to build skills for better jobs, equal opportunities and competitiveness. Moreover, an expanding middle class, now put at 355 million, raises Africa’s profile both as a market and a destination for investment. 

“But only regional integration will help create larger markets that are attractive to the investment and trade critical for generating sustained growth, creating jobs and transitioning to inclusive growth,” says AfDB. 

Recent regional infrastructure and trade-related initiatives and various regional infrastructure master plans provide an added impetus for a more coherent approach to integration and at the national level, macroeconomic stability and robust growth, partly reflecting economic and governance reforms, have enhanced the potential to attract foreign investments, it says.

“Globally, a key challenge is adding value to African products, given the concentration of largely unprocessed commodities in African exports. Moreover, the share of African countries in agricultural commodity exports has declined, as Asia and Latin America increased their shares,” says the bank.

It notes that many Regional Economic Communities (RECs) are in “mixed” neighbourhoods, with fragile states grappling with challenges of reconstruction and transformation, alongside island economies and middle income countries, which also require innovative instruments to support their participation in regional programs.

Yet the operational structures of many RECs, the bank notes hinder their capacity to design, co-ordinate and monitor the integration process in a way that addresses different country challenges.

“Strong political support for regional integration has to be translated into action by ratifying protocols and affording sufficient attention to regional integration in national development plans.

“This gap illustrates national capacity and budgetary constraints and the resulting tension in supporting national or regional programs, as well as national concerns about uneven gains and losses.

“Further down the line, project issues include ownership, legal safeguards, procurement, financial management, monitoring and evaluation, and differences in environmental requirements across countries,” says AfDB.

It observes that development partner priorities are not always aligned with the African integration agenda.

It adds that global solidarity and goodwill, which underpin resource flows to the continent and have resulted in debt cancellation for some countries, continue to buttress the continent’s growth.

Similarly, global initiatives such as the World Trade Organisation are Aid for Trade and the recently adopted Trade Facilitation Agreement open opportunities for support.

Global technological advances, especially in ICT and agriculture, can help Africa leverage productivity gains and leapfrog competitors in other parts of the world, says AfDB.

New resource discoveries, such as oil, gas and coal in Eastern and Western Africa, present good opportunities for investment. Technology-driven opportunities in agriculture can support regional value chains, attract FDI and boost output, as seen in the rising importance of Chinese and Indian investments in Africa, the report says.

“Co-operation arrangements, through the RECs, are expected to foster Africa’s integration. And recent infrastructure and trade-related initiatives and various regional infrastructure master plans provide an added impetus for a more coherent approach to integration.

“At national level, macroeconomic stability and robust growth, partly reflecting economic and governance reforms, have enhanced the potential to increase trade and attract foreign investment,” says AfDB.

On countries affected by fragility, the bank says fragility is characterised by weak institutions and governance structures, and a fundamental lack of state capacity to fulfil core state functions, including the implementation of regional integration programs.

“Fragility has regional dimensions as a crisis in one country can spread, although regional mechanisms can also be used to resolve conflict. Tackling such issues involves supporting regional co-operation and state-building,” says  it the Bank,” says AfDB.

The bank’s group policy on regional integration is to create larger and more attractive markets, link landlocked countries to international markets and support intra-African trade to foster the continent’s development.

With infrastructure being the most binding constraint to production, trade capacity and Africa’s overall development, the bank says, will take a regionally integrated approach to infrastructure development, encompassing both “hard” and ‘soft’ infrastructure. 

At regional level, African countries are pursuing political and economic integration. However, as a development finance institution, AfDB says, its policy focuses on promoting intra-African economic integration, which the continent is pursuing in several sectors and through various initiatives that are relevant to supporting the objective of poverty reduction in African countries.

December 2014
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