Integration:Why institutional framewrork matters

Fifty years since the establishment of the Organisation of African Unity (OAU), now named the African Union (AU), the debate continues as to what type of institutional framework works best in promoting continental and regional integration.

 The transformation of the OAU to AU in May 2001, in itself, constituted a major shift in strategic focus of Africa’s continental organisation. However, before that transformation, Africa saw changes in institutional structures of the Preferential Trade Area of Eastern and Southern Africa (PTA) established in December 1981 into COMESA in December 1994 and the Southern African Development Coordination Conference (SADCC) established in 1980 into SADC in 1993. Indeed, even the current East African Community born in November 1999 is a pale shadow of the erstwhile EAC that collapsed in 1977 in terms of the institutional framework.

Structure Follows Strategy

In his landmark book, Strategy follows Structure: Chapters in the History of the Industrial Enterprise, the late Harvard Professor Alfred D. Chandler Jr. had posited that “structure follows strategy and the most complex type of structure is the result of concatenation of several basic strategies.”

In this vein, at the turn of the 21st century, the OAU leaders were seized of the changed and fast changing political and economic environment demanding a major overhaul of the institutional framework of the continental organisation to fit the new ecosystem.

It would be recalled that the OAU was born out of two major goals: the quest to liberate Africa from minority rule and the apartheid regime and to bring about the realisation of a continental government. Thus the OAU structure was determined to primarily achieve the two goals.

 And even though the OAU was later to embrace the goal of constructing an African Economic Community, the organisation was not well modelled to pursue this objective as rigorously as the other two more political objectives.

The institutional transformation from OAU to AU was thus a strategic one giving the new organisation a strong role in promoting African economic integration. To cite Thabo Mbeki, the AU was established to lead the realisation of an economic renaissance.

The AU Commission and the supporting vehicle for driving the agenda of continental economic integration-the New Economic Partnership for Development (NEPAD), were crafted to respond to Africa’s new demands and the fast changing global economic landscape marked by globalisation.

Institutional Frameworks Matter

In the context of all these transformations it is important to examine how institutional frameworks matter in making sense of continental and regional integration. Evidently, there have been several studies on regional integration in Africa.

However, most of them have a slant and thrust on trade and cooperation in economic matters. A huge lacuna exists in the area of politics of integration and how institutional frameworks of regional organisations play out in enabling the achievement of integration objectives.

When one looks at the trials and tribulations that afflict the East African Community (EAC) in recent years, as an example, you come head on with issues that centre on institutional framework and the politics that underlie decision making processes. In these series of articles I try to unravel the challenges posed by institutional frameworks and competences in the realisation of integration objectives.

No Best Practice

At the outset, I should point out that given the political character of all integration processes, the very idea that there are ‘best practices’ or ‘one size fits all’ institutional models should be debunked. Indeed I agree with Professor Francis Fukuyama who in his book, State Building: Governance and World Order in the 21st Century, postulates that the “importance and pervasiveness of norms in management and public administration imply that institutional development will be heavily impacted by social structure, culture and other variables not under the direct control of public policy.”

 This is a thesis that should occupy the minds of those in search of factors that influence institutional models that best govern integration systems.

This line of argument should not, however and necessarily, belittle isomorphism in determining institutional models. In fact, in his Background Note of April 2013 published by the Overseas Development Institute titled, Of Institutions and butterflies: Is Isomorphism in developing countries necessarily a bad thing? Philip Krause posits a valid argument in debating whether copying of organisational systems and structures deemed ‘best practice’ is necessarily bad.

Actually the current institutional framework of the AU Commission is, to a large extent, an ‘isomorphic mimicry’ of the European Union (EU) Commission institutional framework. What matters, in my view, in the design of institutional frameworks of organisations is a clarity about the ecosystem in place and how best it can be responded to and the determination of the type of strategy that can be applied in the pursuit of set out objectives.

Ideology and Reality

The late US Professor John Kenneth Gabraith in a landmark essay published in 1989, an epochal year in global geo-politics titled, Ideology and Reality, had observed that the conflict between ideology and reality was the “dialectic of our time.”

I would like to argue, in the context of the current and future direction and prospect of African continental and regional integration and in the process of constructing appropriate institutions that the conflict between the primacy of the ideology of national political interests and power (call it sovereignty) and the reality of the brave new world of deepening globalisation and intensification of competition which is driven by accelerating technological innovations is the dialectic of our time.

This is a reality that calls upon Africa to embrace deeper and wider integration and, in very deliberate and bold ways, minimise the force of the ideology of national sovereignty on matters of trade, social, economic and science and technology cooperation and integration.

 Such a policy shift has fundamental implications on the present and future institutional structures of the AU and the Regional Economic Communities (RECs) in Africa.

The New Economic Realities

What are these realities? Let me start with the 2013 Africa Competitiveness Report jointly authored by the World Economic Forum (WEF), the World Bank (WB) and the African Development Bank (AfDB).

 This Report which was launched at the World Economic Forum in Cape Town this year paints a troubling African picture.

Whilst celebrating Africa’s impressive strides in GDP growth averaging 6.6per cent in 2012, it points out that 48.5 per cent of Sub-Saharan Africa’s population still survives on less than $1.25 per day. It further points out that Africa’s competitiveness in the global economy remains very weak especially with respect to the quality of institutions, infrastructure, education and technology adoption.

Africa’s share in total global trade has been in decline since 1980 and that in 2012 it stood at between 2-3 per cent. Moreover, intra-African trade also stood at only 12 per cent of Africa’s total trade in contrast to EU’s 68 per cent, ASEAN’s 52 per cent and NAFTA’s 48 per cent.

The report further exclaims that two out of every three African countries make it difficult for their neighbours to trade with them than they do with the rest of the world! Why should anybody wonder, in such a context, why the EAC is seeing a new phenomenon of ‘coalition of the willing’?

On 25th May this year, in his address to the African Development Bank Annual General Meeting in Marrakech, Morocco, President Paul Kagame lamented that only 5 per cent of cereals imported by African countries are imported from within Africa itself even when Africa produces a huge amount of cereals.

 It is in this context that the 2013 Africa Competitiveness Report views regional integration as key in addressing Africa’s competitiveness weaknesses, noting that such integration can forge delivery of wider social and economic benefits. The report recommends in particular that regional integration should be prioritised by Africa’s leaders if Africa is to deliver on its promise.

Getting Institutional Basics right

In a sense, it is paradoxical that the WB, the AfDB and the WEF should collectively reach out to Africa’s political leaders, in 2013, about prioritising regional integration. For several years, the AU has recognised eight RECs that spearhead regional integration.

So what type of prioritisation could they have in mind? In my view, these institutions could be referring to institutional models and competencies in moving integration forward.

After all, it is well recognised that there is variability in the performance of RECs. Some have performed better than others. Indeed, Ruchir Sharma in his book, Breakout Nations-In Pursuit of the Next Economic Miracles refers to the EAC as one REC ‘heading in the right direction’ and having a good ‘chance to be breakout nations’. However, Sharma cautions that the EAC economies have to get their ‘basics right’.

In recent months this issue about getting basics right has featured prominently as the EAC faced a possible derailment with the development of a ‘two speed’ integration process.

Presumably in reference to such ‘basics’, the AfDB President in his opening address to the Bank’s Annual General Meeting in Marrakech on 30 May this year, observed that “ any strategy-anywhere- is only as good as the people who implement it and the health of the organisation that delivers it.”

Dr Kaberuka went on to ramify that a good strategy is about sound finances, the human assets and the ‘robustness’ of the institution which means its being ‘responsive, nimble and results-driven.’

In sum, what Dr Kaberuka was positing is that delivering on institutional goals and objectives, a function of a good strategy, demands the existence of a well-structured institutional framework supported by competent human skills and financial wherewithal.

Regional Integration vehicles face serious challenges in these areas.

Conclusion

In the next article, I will explore the challenges facing RECs with specific reference to the EAC in linking strategies to structure.