IS AFRICA’s “alphabet soup” of regional economic communities (RECs) slowly becoming less complex and confusing? Currently, 27 African countries are members of two of Africa’s 14-plus regional blocs, while 18 countries are members of three blocs, with just a handful belonging to just one. This flies in the face of grand plans in the 1960s to have a United States of Africa. But the continent may be seeing some movement towards that heady ideal, with talks at an advanced stage on the creation of a free trade area (FTA) stretching from Cape to Cairo.
Plans to harmonise three of the bodies — the Southern African Development Community (Sadc), East African Community (EAC) and Common Market for Eastern and Southern Africa (Comesa) — were given impetus at the heads of state summit in Johannesburg at the weekend.
The move was sparked by concern about the undue trade costs and bureaucratic complexity caused by the overlapping REC memberships of states from North to southern Africa. In 2001, Comesa and Sadc established a joint task force to look at harmonising the RECs and, in 2005, the task force was expanded into a tripartite initiative to include the EAC. Heads of state gathered in Uganda in 2009 to politically endorse the FTA plan.
The Johannesburg meeting was another step along the road.
The initiative has been criticised for slow progress, which fails to recognise the hard work being done behind the scenes by the technocrats to build a framework for this ambitious plan. The complexity of the detail involved means the technical process has fallen behind the political process.
But it is important to press on. Even though Sadc and Comesa have not yet maximised the benefits of regional integration, and both are beset by nontariff barriers even as the tariff walls come down, the fact remains that Africa needs to build bigger markets to offset its many trade disadvantages.
The FTA is designed to be a win- win situation for all concerned. Importantly, it aims to reduce trade barriers and costs and increase pitifully low intra-African trade volumes.
A larger regional market will be more attractive to funders of infrastructure projects and it will enable greater co-operation in areas such as agricultural development and the formulation of common regional positions and strategies in multilateral and international trade forums. Proponents of the initiative say other crucial benefits will emerge.
For example, it is likely to spark the development of national and even regional industrial policies, which are currently absent, to allow the development of comparative advantage and value addition in an environment of increased competition and reduced protection.
The lack of industrialisation in most African countries has created an undue dependence on trade taxes — more than 30% of state revenue in most cases — and countries will now be pushed to search for new ways to boost revenue . This could include greater policy support for the private sector to grow the corporate tax base.
In a second phase of the initiative, issues such as building regional competition policy, the free movement of people and trade in services are likely to be put on the table. Critics argue that it would be better to ensure the more efficient working of existing building blocks before adding a new layer of regional bureaucracy to the mix.
Nevertheless, the process is under way and it needs all the support it can get in recognition of the long-term benefits it will have for the regions concerned, and, ultimately, for the continent as a whole.
For the politicians, putting their signature on the deal is the easy part. African states have a poor track record of implementing the agreements they sign up to so it is crucial that leaders really believe in the FTA’s benefits and that the weekend’s back-slapping and statements of support were not just political posturing. And there will be many tough calls to make.
The support of the large economies in the FTA — SA, Kenya and Egypt — are especially critical to the success of the initiative. They need to be its champions. While they will gain from preferential access to each other’s markets, they will also have to make sacrifices.
It is where these sacrifices intersect with national interest that will be the true test of their commitment.