Small domestic markets, unhealthy import reliance, low income and other negative factors are common challenges facing most African economies.
These, in turn, ensure that the continent as a whole continues to rank poorly in terms of global economic competitiveness.
An African problem deserves an Afro-centric solution: namely, an economic integration tool known as the African Continental Free Trade Agreement or AfCFTA.
What is Economic Integration?
Economic integration refers to an agreement between countries, usually within the same region, to reduce and eliminate barriers to trade, often by giving each other preferential treatment with regard to commercial and economic exchange.
It often includes mechanisms for increasing international market access and coordination via enabling monetary and fiscal policies.
The key elements of economic integration include a free trade area, a common market, and an economic union, as exemplified by the European Union.
History of Economic Integration in Africa
Before developing the African Union (AU) and the AfCFTA, regional economic communities were the main gears behind economic integration within Africa.
Upon attaining independence in the mid-twentieth century, most African countries were committed to a regional integration agenda.
Thus, regional economic communities sprang up in different corners of the continent.
In West and Central Africa, the African Financial Community (CFA) Zone was developed for countries within the region.
The South African Customs Union was also developed in the southern region.
The Arab Maghreb Union and the East African community were also founded to cater to Northern and Eastern African countries; these are known as regional economic communities (RECs).
Aside from those mentioned above, institutions such as the Economic Commission of Africa and the African Development Bank also exist to serve a similar purpose, namely economic integration.
However, all these RECs tended to reflect the idiosyncratic political and economic histories of their member countries, and so each used different approaches and mechanisms.
Consequently, while they were founded upon the fulcrum of lofty ideals such as pan-Africanism and joint economic growth, they have not been able to achieve their objectives.
For instance, intra-African trade accounts for just 10% of the total trade in Africa.
The Economic Commission for Africa’s 2019 African Integration Regional Report index also revealed that the level of integration in Africa is 0.321 out of 1.
Challenges of regional economic Integration In Africa
Attempts made at African economic integration made in the last four decades have not yielded any results and research reveals some of the reasons behind the fruitlessness of these attempts.
- Political instability: Most African countries are plagued by political instability and national insecurity. Until the dawn of the last century, most transitioned into popular democracies. This makes the implementation and rectification of treaties difficult, time-consuming, and often impossible.
- Weak institutions and infrastructure: The administrative forces in African countries seem to lack the capacity to implement economic integration attempts. There is inadequate infrastructure to enable the free and fast flow of trade.
- The sovereignty of states: Sovereignty as a concept is a significant spoke in the wheels of economic integration. Most African countries are in a historical stage where they need to assert their sovereignty as a state during international relations.
- The multiplicity of RECs: There are eight recognized regional economic communities (RECs) in Africa, and some countries belong to more than one. This overlapping membership affects the actualisation of the RECs’ objectives due to conflict of interest.
AfCFTA and African economic integration
The African continental free trade area began life in March 2018 as an agreement between 44 African countries to create a single market for African goods and services.
The primary objective of this agreement was to resolve the challenges of combating economic integration and inspire continent-wide economic prosperity.
Currently, in its implementation stage, the AfCFTA connects over 1.3 billion people across 55 African countries.
The World Bank projects that, if successful, it could lift over 30 million Africans out of poverty and boost regional trade by 7%.
Most importantly, it could increase the ease of doing cross-border business, as well as facilitate more trade by as much as 100%.
Indeed, the AfCFTA has the potential to improve the state of economic integration in Africa.
Here are some of the ways it can achieve this:
- Building on the foundational blocks of the RECs: The AfCFTA can successfully integrate Africa economically by taking lessons from RECs’ challenges, progress and failures. The issue of overlapping membership at the RECs should be dealt with, and every African country should be brought under the AfCFTA umbrella.
- Reconsideration of the risk involved in the free movement of goods and people: The African passport is one of the aims of the AfCFTA, and this initiative, although promising, might not be welcomed with open arms by all member countries. There needs to be a change in the perception of countries regarding sovereignty and economic integration. There needs to be a continuous dialogue on encouraging the cross-mobility of goods and services.
- Government prioritisation of the AfCFTA: The government of each state should also open AfCFTA administrative offices to see to the smooth implementation of policies. The objectives and the provisions of the AfCFTA should be made a priority amongst member states.
In conclusion, economic integration is instrumental to the overall development of Africa. African leaders need to understand its importance and treat the AfCFTA accordingly.