OPINION: Integration requires an effective process

Economic integration in Africa is no longer about why countries should integrate, but rather on the process, that is, on how the countries should integrate. I will highlight five elements needed for an effective process.

The process must be realistic. There is a significant gap between the rhetorical support for integration and the reality on the ground, as revealed by the disparity between what economic blocs agree to do and what they actually do.

African countries should put a moratorium on new agreements on economic integration until old agreements have been implemented. Without such commitment, new agreements on top of old unfulfilled ones, become simply a political show.

The process must be inclusive. In creating ideas and finding solutions, states must collaborate with non-state actors and public institutions. The foundation for this collaboration could be the platforms that already exist in many countries.

For example, in Botswana the High-Level Consultative Council, chaired by the president, brings together all cabinet members and chairpersons of each sector from the private sector. Such platforms could be enhanced and integrated at the regional level, to be effective channels of dialogue between all stakeholders.

An example of this is the partnership between the East African Business Council and the EAC Secretariat in a number of fact-finding surveys and advocacy initiatives.

African countries can also learn from the Association of Southeast Asian Nations Chamber of Commerce and Industry which has had more years of experience and appears to be more comprehensive in its structure.

Integration should be pursued with unity among members of a regional bloc. In 2016, the leaders of the EAC agreed to begin a process for the eventual ban of imports of used clothes, commonly known as mitumba in East Africa.

Earlier this year when the EAC was about to go ahead with its plan, the US issued a stern warning that a ban on imports would lead to suspension of the AGOA benefits. The EAC couldn’t regroup and speak with one voice, one way or the other. Instead, the unity of EAC leaders regarding a ban on imports of mitumba fell apart. Rwanda was left standing alone. The US suspended AGOA benefits to Rwanda. Unity provides leverage.

Economic integration must take a long-term view when fostering trade relations with developed countries, particularly in regards to preferential treatment. Economic integration in Africa is not meant to discourage trade with the rest of the world. Nonetheless, caution must be exercised with regards to preferential treatment.

Preferential trade arrangements can make beneficiary countries too dependent on a few markets and products and, thus, complacent in exploring other markets and diversifying their products. Moreover, preferential arrangements may be biased in favor of raw products, thus discouraging industrialisation in preference-receiving countries.

Take advantage of preferential treatment, but also take a long-term view.

Member countries must create predictable and favorable environments for trade. Businesses think and plan long-term. Predictability is critically important in making long-term business decisions. It is achieved, in part, by having rules that are clear and respected.

What is lacking in economic blocs in Africa, are effective and predictable ways to resolve disputes. Disputes are inevitable, no matter how much countries might be committed to economic integration. Therefore, it is important for every economic bloc to have a dispute settlement system. The EAC has an elaborate dispute settlement procedure, but it is a mechanism pretty much just on paper.

The lack of effective dispute settlement mechanisms is part of the reason why countries feel comfortable seeking membership in multiple regional blocs and making commitments they don’t intend to fulfill.

The on-going pursuit of a Continental Free Trade Area (CTFA) will not achieve its goals even if all 44 countries that signed the launching of CFTA were to ratify it, if there is no reliable mechanism of holding countries accountable to their commitments. By the way, only 12 countries have ratified the CFTA so far.

Richard E. Mshomba is Professor of Economics, La Salle University, Philadelphia, Pennsylvania, U.S.A.