ANNUAL REPORT ON INTEGRATION IN AFRICA (ARIA-2002) OVERVIEW.
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Transcript of ANNUAL REPORT ON INTEGRATION IN AFRICA (ARIA-2002) OVERVIEW.
ANNUAL REPORT ON INTEGRATION IN AFRICA (ARIA-
2002)
OVERVIEWOVERVIEW
Establish objective analytical tools, methods and
benchmarks for tracking regional integration in Africa
Establish objective analytical tools, methods and
benchmarks for tracking regional integration in Africa Assist member States, regional
integration organs and other stakeholders in developing their policies and programmws
Assist member States, regional integration organs and
other stakeholders in developing their policies and programmws
ARIA’s MISSION STATEMENT ARIA’s MISSION STATEMENT
Assess performance in major sectors
Assess performance in major sectors
SCOPE OF ANALYSIS
Examine performance of RECs Examine performance of RECs
Assess overall trends in regional integration across countries
and sub-regions
Assess overall trends in regional integration across countries
and sub-regions Identify critical issues and the
wayforward in regional integration
Identify critical issues and the wayforward in regional
integration
INDICATORS ASSESSING REGIONAL INTEGRATION
Innovative indices of quantitative and qualitative indicators : Innovative indices of quantitative and qualitative indicators :
Cover sectoral, national, sub- regional and Africa wide performance
Cover sectoral, national, sub- regional and Africa wide performance
Serve as benchmarks to measure and compare performance
Serve as benchmarks to measure and compare performance
MAIN FINDINGS
I. RECs AND AFRICA’S INTEGRATION
Building blocks
Africa has 14 RECs varying design, seven of which are considered building blocks
Africa has 14 RECs varying design, seven of which are considered building blocks
RECs map the entire continent, some are sub-sets of the seven
major ones
RECs map the entire continent, some are sub-sets of the seven
major ones
UMA
COMESA/EAC/IGAD
ECOWAS/UEMOA
MRUECCAS/CEMAC
CEPGL
SADC/SACU
IOC
CEN-SAD
To be effective RECs require political commitment and rationalization
To be effective RECs require political commitment and rationalization
Trade liberalization schemes fully or partially
implemented by almost all RECs
Trade liberalization schemes fully or partially
implemented by almost all RECs
RECs have achieved success
Some RECs (UEMOA, CEMAC) already exist as monetary unions. Others such as ECOWAS, COMESA, EAC actively pursuing monetary cooperation
Some RECs (UEMOA, CEMAC) already exist as monetary unions. Others such as ECOWAS, COMESA, EAC actively pursuing monetary cooperation Headway in infrastructure
development particularly in West Africa (ECOWAS) and southern Africa (SADC)
Headway in infrastructure development particularly in
West Africa (ECOWAS) and southern Africa (SADC)
Joint development of energy-eg. SADC power pool
Joint development of energy-eg. SADC power pool
Some RECs ( ECOWAS, CEMAC, EAC) made progress in free
movement of people
Some RECs ( ECOWAS, CEMAC, EAC) made progress in free
movement of people
Some tangible results but generally:
Results not matched protracted efforts
Results not matched protracted efforts
Many unfinished AEC protocols
Many unfinished AEC protocols
Little interaction among the RECs
Little interaction among the RECs
Regionalism not effectively mainstreamed in member country structures and operations
Regionalism not effectively mainstreamed in member country structures and operations
Low REC capacity particularly caused by shortage of
financial resources
Low REC capacity particularly caused by shortage of
financial resources
Overlapping membership Overlapping membership
0
5
10
15
20
25
30
35
Overlapping Membership
7
27
18 1
1 2 43
1. Membership to 1 REC
2 .Membership to 2 RECs
3. Membership to 3 RECs
4. Membership to 4 RECs
Countries
Membership
RECs made significant efforts on trade
liberalization
RECs made significant efforts on trade
liberalization
A. TradeA. Trade
II. SECTORAL PERFORMANCE
UEMOA, SACU, CEMAC already are custom unions (CUs)
UEMOA, SACU, CEMAC already are custom unions (CUs)
COMESA, ECOWAS, SADC,ECCAS AND UMA not yet CUs. But COMESA launched its FTA
COMESA, ECOWAS, SADC,ECCAS AND UMA not yet CUs. But COMESA launched its FTA
Greater harmony needed in trade liberalization programs
Greater harmony needed in trade liberalization programs
Formal intra-REC trade still low at about 10.5%
Formal intra-REC trade still low at about 10.5%
Intra-REC trade benefits are not widely shared since only a few countries dominate export trade
Intra-REC trade benefits are not widely shared since only a few countries dominate export trade
Would be higher if informal trade is recorded
Would be higher if informal trade is recorded
SADC, ECOWAS, CEN-SAD, COMESA, are top four
in intra- REC trade
SADC, ECOWAS, CEN-SAD, COMESA, are top four
in intra- REC trade
0
5
10
15
20
25
30
35
Four Best Performers in intra-REC Trade
Exports
Imports
%
SADC ECOWAS CEN-SAD COMESA
UEMOA and CEMAC put high premium on policy
convergence and making significant headway through surveillance mechanisms
UEMOA and CEMAC put high premium on policy
convergence and making significant headway through surveillance mechanisms
B. Macro-economic convergenceB. Macro-economic convergence
African countries making efforts to meet targets ( inflation rates, budget deficits etc.)
African countries making efforts to meet targets ( inflation rates, budget deficits etc.)
ECOWAS, COMESA and EAC also established
parameters
ECOWAS, COMESA and EAC also established
parameters
Inflation rates progressively reduced : UMA, UEMOA and
CEMAC leading. SADC and COMESA lagging
Inflation rates progressively reduced : UMA, UEMOA and
CEMAC leading. SADC and COMESA lagging
0
5
10
15
20
25
30
35
Inflation (1994-1999)
SADC UMA
10
UEMOA
10
CEMAC
12
ECOWAS COMESA
%
15* 17*
* Excluding Angola
and DRC
7
Budget deficits cut. UMA, CEMAC, SADC, ECOWAS and COMESA moved to acceptable levels
Budget deficits cut. UMA, CEMAC, SADC, ECOWAS and COMESA moved to acceptable levels
-6.0%
-5.0%
-4.0%
-3.0%-2.0%
-1.0%
0.0%
1.0%
UMA CEMAC UEMOA SADC ECOWAS COMESA
BUDGET DEFICIT AS % OF GDP
1994-1999
FDI grew by about 1.2% annually (1994-1999)
FDI grew by about 1.2% annually (1994-1999)
Most FDI went to SADC, CEN- SAD, COMESA and ECOWAS
Most FDI went to SADC, CEN- SAD, COMESA and ECOWAS
Capital Markets emerging-would encourage FDI inflows Capital Markets emerging-would encourage FDI inflows
% Share in Total FDI Inflows to Africa, by REC ( 1994-1999)
% Share in Total FDI Inflows to Africa, by REC ( 1994-1999)
21
16.4
11.9
5.4
3.1
2.7
1.9
COMESA
ECOWAS
UMA
UEMOA
IGAD
ECCAS
SADC
CEN-SAD 21
FDI Flows to REC as % of their GDP
(1994-1999)
FDI Flows to REC as % of their GDP
(1994-1999)
2.0
1.9
1.9
1.8
1.4
1.0
0.9
UEMOA
CEN-SAD
SADC
UMA
ECOWAS
ECCAS
IGADCOMESA
2.8
Inadequate infrastructure and physical integration Inadequate infrastructure and physical integration
C. InfrastructureC. Infrastructure
Limited infrastructure and networks, particularly in
energy, transport and communications
Limited infrastructure and networks, particularly in
energy, transport and communications
Still a major constraint Still a major constraint
Results in or compounds high cost of doing business Results in or compounds high cost of doing business
However some notable achievements
A number of transport missing links of the Trans African Highway filled in (e.g. ECOWAS)
A number of transport missing links of the Trans African Highway filled in (e.g. ECOWAS)
Railways interconnection projects in West Africa and Eastern sub-regions conceived
Railways interconnection projects in West Africa and Eastern sub-regions conceived
Major efforts on Air transport liberalization underway (Yamoussoukro Decision/Open Skies)
Major efforts on Air transport liberalization underway (Yamoussoukro Decision/Open Skies) Some recent achievements in telecommunications. Private
sector leading expansion of services
Some recent achievements in telecommunications. Private
sector leading expansion of services Progressive cooperation in hydropower, oil and gas pipelines
D. Production sectorsD. Production sectors
Supply side constraints Supply side constraints
Very limited REC cooperation in productive sectors Very limited REC cooperation in productive sectors
Low range of products constrained inter and intra-REC trade
Low range of products constrained inter and intra-REC trade
Inadequate attention to building and managing regional food reserves.
Inadequate attention to building and managing regional food reserves.
III. OVERALL ASSESSMENT USING INDICATORS
SADC, COMESA, and ECOWAS made good progress through 1997, however momentum weakened thereafter
SADC, COMESA, and ECOWAS made good progress through 1997, however momentum weakened thereafter
REC trends REC trends
Pace of Integration by RECPace of Integration by REC
Above average
6.6%
6.3%
6.0%
Average
4.7%
4.6%
4.2%
UEMOA
CEN-SAD
SADC UMA
ECOWAS
CEMAC
Close to average
3.7%
3.7%
3.6%
Erratic
COMESA
IGAD
EAC CEPGL
ECCAS
IOC
MRU
Pace of Integration by RECPace of Integration by REC
Overall continental trends Overall continental trends
A discernible move towards greater integration with
a burst from 1994 through 1997, but a general slow-down thereafter
A discernible move towards greater integration with
a burst from 1994 through 1997, but a general slow-down thereafter
The average pace towards integration in 1994 -1999
was 4.7 %, faster than GDP growth
The average pace towards integration in 1994 -1999
was 4.7 %, faster than GDP growth
The burst in 1995 aside, the real pace of integration was only 1 -2%
The burst in 1995 aside, the real pace of integration was only 1 -2%
Composite regional integration index
0
20
40
60
80
100
120
140
1994 1995 1996 1997 1998 1999
Weighted average
Recent developments could spur enhanced progress in regional integration:
Recent developments could spur enhanced progress in regional integration:
Implementation of FTA by 11 members of COMEASA Implementation of FTA by 11 members of COMEASA
Future prospectsFuture prospects
Beginning of the implementation of the SADC trade protocol
Beginning of the implementation of the SADC trade protocol
Increased energy coordination in ECOWAS and UEMOA Increased energy coordination in ECOWAS and UEMOA
Attempts to revive integration efforts in ECCAS
Attempts to revive integration efforts in ECCAS
Fast track monetary harmonization by non-UEMOA members of ECOWAS
Fast track monetary harmonization by non-UEMOA members of ECOWAS
IV. OUTSTANDING ISSUES AND THE WAY FORWARD
How can gains and losses from trade
liberalization schemes be reconciled and losses minimized ?
How can gains and losses from trade
liberalization schemes be reconciled and losses minimized ?
A. Trade A. Trade
Shouldn’t the supply-side constraints be addressed first ?
Shouldn’t the supply-side constraints be addressed first ?
How can informal trade be mainstreamed and
measured regional integration arrangements ?
How can informal trade be mainstreamed and
measured regional integration arrangements ?
How best can RECs attain policy convergence
among their members ?
How best can RECs attain policy convergence
among their members ?
B. Macroeconomic convergence B. Macroeconomic convergence
C. Physical integration C. Physical integration
What needs to be done to complete missing
links in infrastructure
What needs to be done to complete missing
links in infrastructure
How can the private sector be attracted to invest in physical infrastructure ?
How can the private sector be attracted to invest in physical infrastructure ?
D. Strengthening RECs D. Strengthening RECs
How best can the RECs be rationalized ?
How best can the RECs be rationalized ?
How can RECs have supranational authority to enforce decisions ?
How can RECs have supranational authority to enforce decisions ?
How can effective coordination between RECs and
Countries be attained ?
How can effective coordination between RECs and
Countries be attained ?
How can political and stakeholders support be solidified for accelerating regional integration ?
How can political and stakeholders support be solidified for accelerating regional integration ?
E. African Union and regional integration
E. African Union and regional integration
How can the phases of the Abuja Treaty (AEC) be aligned to the African Union time table and process ?
How can the phases of the Abuja Treaty (AEC) be aligned to the African Union time table and process ? How can the Union reinforce and complement the activities of RECs ?
How can the Union reinforce and complement the activities of RECs ?
How can the Union institutions be sequenced and aligned to ensure maximum support to regional integration.
How can the Union institutions be sequenced and aligned to ensure maximum support to regional integration.
How can RECs be made more effective in building the
African Union ?
How can RECs be made more effective in building the
African Union ?
ENDEND
ENDEND
ENDEND
Recent developments could spur enhanced progress in regional integration:
Recent developments could spur enhanced progress in regional integration:
Implementation of FTA by 11 members of COMEASA Implementation of FTA by 11 members of COMEASA
Future prospectsFuture prospects
Beginning of the implementation of the SADC trade protocol
Beginning of the implementation of the SADC trade protocol
Increased energy coordination in ECOWAS and UEMOA Increased energy coordination in ECOWAS and UEMOA
Attempts to revive integration efforts in ECCAS
Attempts to revive integration efforts in ECCAS
Fast track monetary harmonization by non-UEMOA members of ECOWAS
Fast track monetary harmonization by non-UEMOA members of ECOWAS
Early momentum may be due to : Early momentum may be due to :
The initial impulse of coming into force of AbujaTreaty
The initial impulse of coming into force of AbujaTreaty
Two possible explanations
Earnest effort to harmonize the mandates and policies of the RECS
Earnest effort to harmonize the mandates and policies of the RECS
UEMOA, ECOWAS, SADC-above the average
UEMOA, ECOWAS, SADC-above the average
CEMAC, CEN-SAD, UMA on the average line CEMAC, CEN-SAD, UMA on the average line
EAC, IGAD, COMESA close to average EAC, IGAD, COMESA close to average
CEPGL, ECCAS, MRU, IOC lagging with erratic
performance
CEPGL, ECCAS, MRU, IOC lagging with erratic
performance