By Christabel Ligami
African countries have made commendable progress in implementing their regional integration agendas, according to a report by the Economic Commission for Africa (ECA) on Assessment of progress on regional integration in Africa.
However, several challenges persist. These include inadequate financial resources; poor infrastructure networks; increasing violence, terrorism and political instability; slow implementation of policies and agreements, in particular the Protocol on the Free Movement of Persons, Right of Residence and Right of Establishment.
The report was presented by Stephen Karingi, the Director, Regional Integration and Trade Division, ECA at the Committee of Experts meeting ahead of the 55th Conference of African Ministers of Finance, Planning and Economic Development (March 15 – 21) in Addis Ababa, Ethiopia.
It provides an overview of the progress that has been made on important aspects of integration in Africa, using several monitoring frameworks and tools, including the indicators developed by pan-African institutions such as the ECA, the African Union Commission and the African Development Bank.
Mr. Karingi said the deterioration of global economic conditions over the past three years has also hindered the continent’s progress on key dimensions of regional integration.
“Collective efforts are therefore required from all member States, regional economic communities, key partners and stakeholders to realize the economic benefits of integration and the African Continental Free Trade Area,” said Mr. Karingi.
On trade, the ECA report shows that Africa’s contribution to global trade remains weak. Merchandise trade accounts for the largest share of the continent’s international trade, although trade in services has rapidly increased in recent decades.
The services trade in Africa performs far below its potential, accounting for only 1.7 per cent of global service exports in 2021. 4 6. Since 2017, Asia has become the continent’s main trading partner, followed by Europe. In 2021, Asia accounted for 43.7 per cent of Africa’s trade in goods with the rest of the world, with China contributing to over 40 per cent of the trade between Asia and Africa.
China, according to the report has gradually become the top trading partner of most African countries. As in preceding years, African countries traded less with each other in 2021, with a reduction of intra-African exports by 34 per cent over the period 2020–2021. This trend is attributable to the adverse trade impact of the pandemic.
At present, five of the eight regional economic communities recognized by the African Union have convergence criteria, which mainly consist of inflation targets and fiscal deficit, public debt and current account deficit ceilings.
Some regional economic communities also have secondary convergence criteria to promote greater fiscal accountability and foreign exchange stability.
According to Mr Karingi, to support member States in their formulation and implementation of economic policy, ECA has developed a prototype macroeconomic model and provided macroeconomic modelling support and training in 15 countries.
On the fiscal side, ECA supported taxation policy reform and revenue collection in Ethiopia, Kenya, the United Republic of Tanzania and Zambia.
Infrastructure and energy sectors
Africa remains constrained by huge infrastructure gaps, with an estimated annual financing need of between $130 billion and $170 billion, and an annual financing gap of between $68 billion and $108 billion.
Many African countries have made important investments in infrastructure, including in road, rail, air, water, energy and information and communications technology.
“The COVID-19 pandemic and the war in the Ukraine have worsened public deficits and the debt burden, which have reduced infrastructural investment in Africa,” said Mr. Karingi.
The report notes that access to information and communications technology has improved considerably in Africa over the past decade, constituting an important driver of the African infrastructure development index. Digitalization in Africa was further accelerated by the pandemic, creating greater potential for trade and business growth.
Energy price increases, exacerbated by the war in Ukraine, has increased the strain on African countries, in particular on those that are net energy importers. Electricity access and consumption in Africa remain low compared with other regions of the world. Africa’s energy demand is mainly driven by Nigeria, South Africa and North African countries.
At the meeting participants from Burkina Faso, Chad, Tanzania, Cote d’Ivoire, Tanzania, raised their concerns about the worsening insecurity, poor infrastructure, high cost of communication across the borders that are hindering the integration process.
Antonio Pedro, ECA Acting Executive Secretary said collaborative efforts by various stakeholders, including the United Nations, the African Union, and regional economic communities, have continued to be deployed to respond to threats to peace and security, to participate in the management and resolution of conflict, and to stem the tide of terrorism and coups on the continent, albeit with mixed results.
In West Africa and the broader Sahel area, he said ECA through its West African office in partnership with the African Union, the ECOWAS and other key players continue to fight the spread of violence, terrorism and drug trafficking while showcasing the opportunities available in the region.
“To foster regional integration on the continent, ECA will continue to prioritize the support that it provides to member States, regional economic communities, the African Union Commission and the secretariat of the African Continental Free Trade Area towards the implementation of the free trade area,” said Mr. Pedro.