Africa's regional integration economic communities REC

Course summary (Africa's regional integration)

Africa. Trade and market integration. Trends in intra-African trade. Physical integration: Monetary, transport, information and communications technologies (ICTs).

The RECS (Regional economic communities) are ECA's (Economic Commission for Africa UNECA) main clients at the sub-regional level. As such, the commission and its SROs work closely with the main RECs to harmonize membership, strengthen policy and build technical capacity to pursue Regional integration.

These RECs include:
- Arab Maghreb Union (AMU),
- Southern African development community (SADC),
- Common market for Eastern and Southern Africa (COMESA),
- East African Community (EAC),
- Inter-governmental Authority on Development (IGAD),
- Economic Community of West African States (ECOWAS),
- Central African Economic and Monetary Community (CEMAC),
- Economic Community of Central African States (ECCAS), and
- West African Economic and Monetary (UEMOA).

Currently, there are multiple regional blocs in Africa known as Regional economic communities, many of which have overlapping memberships.

Example of the course Africa’s regional integration:

The ultimate goal of the AEC is to create an African Common market. An area where RECs have been observed to be most active is trade and market integration.

On average, all the RECs and IGOs (intra-intergovernmental organizations) registered positive growth in exports to community members, with CEMAC, CEPGL, COMESA and CENSAD showing an average increase of 40 per cent or more. UEMOA, IGAD, SADC, ECOWAS, UMA and IOC registered growth in exports to the community in the range of 20-40 per cent.

The Constitutive Act of the African Union makes it clear that the primary goal of the Union is to establish an African Economic community and assigns to RECs the primary responsibility for making that happen. An intermediate step in this effort is the transition of RECs into customs unions. Significant progress has been made on this issue. The East African Community (EAC) became a customs union on January 1, 2005 with the introduction of the EAC Customs Union protocol. SADC hopes to establish a customs union by 2010.

COMESA plans to become a customs union. This means that by 2010, practically all countries in Southern Africa will belong to a customs union and those countries that currently belong to more than one REC will have to decide which customs union to join. ECOWAS is working to resolve a possible conflict with the already existing customs union in West Africa – the West African Economic and Monetary Union (WAEMU/UEMOA) - by adopting that Union’s tariff bands.

A continuous appraisal of Africa’s integration performance is essential, in order to gain a deeper understanding of the strengths and weakness of the integration efforts, and to help shape the future through lessons learned. It is from this perspective that the African Union Commission and the Economic Commission for Africa publish the report on Assessing regional integration in Africa, well known by its ARIA acronym.

ECOWAS is working hard to have a common currency. It hopes to start with a common currency zone for Nigeria, Ghana, Gambia, Guinea and Sierra Leone, which would be merged with the UEMOA franc zone at a latter date to create an ECOWAS currency. SADC, COMESA and EAC all have plans to establish common currencies.

There are good reasons to doubt official statistics pertaining to intra-African trade flows; if informal trade flows are counted, the true degree of integration is much higher than is commonly thought. Bank financing continues to be concentrated at the short end of the term structure. Effective financial integration in Africa can only be achieved through the Regional economic communities.

The cost of doing business in the continent is generally high, due in part to infrastructure gaps, duplicative border procedures and cumbersome paper requirements. Paperless trade still remains a distant objective. The free movement of people and the right of establishment have progressed in some RECs, but remain a paper objective in many other African subregions.

The strengthening of African financial markets through integration with world financial markets would also lead to the promotion and consolidation of trade and investments. Financial integration would enhance competition, promote efficiency and productivity and facilitate the flow of information.

The Maghreb Bank for Investment and External Trade has been established to operate in the Arab Maghreb Union (UMA) zone. The Bank supports the Economic integration agenda of the UMA region by financing agricultural and industrial projects in which the member states have a common interest.

- In SADC, the South African Development Bank serves the interests of all community members.
- The COMESA Clearing House provides foreign exchange support for the facilitation of intra-COMESA trade.
- The COMESA Bankers' Association is one of the official organs of the COMESA (Common market for Eastern and Southern Africa). COMESA Bankers' Association has worked to promote and strengthen links between banks in the sub-region. Along with the other three COMESA institutions-the Trade and Development Bank (PTA Bank), the COMESA Clearing House and the PTA Reinsurance Company - The Association has played a vital role in providing a forum for exchange of information on banking practices in the sub-region.
- The PTA Reinsurance Company (ZEP-RE), which became operational in 1991, provides insurance coverage and re-insurance to investors in the region.
- The COMESA PTA Bank provides financing for trade and projects at national and regional level in the form of credit, credit guarantees and minority equity participation in joint ventures.
- The ECOWAS Fund for Cooperation, Compensation and Development (EFCCD), formed in 1975, serves as a source of finance for the compensation of revenue loss accompanying Regional trade liberalization.
- Ecobank, a parent holding company, has subsidiaries in twelve countries across West and Central Africa. Ecobank was established to provide commercial banking and other financial services to individuals and private and public sector organizations.

China’s emergence as the world’s fourth-largest economy is also an important variable in this outcome. Sino-Africa trade grew from $US12 million in 1956 to $US817 million in 1979 and to $US39.7 billion in 2005. China, now the world’s second biggest consumer of oil after the United States of America, currently imports 25 per cent of its oil from Africa, and in 2006, China scrapped tariffs on 190 commodities from 25 African countries. See: Africa-India relationships.

African exports remain heavily concentrated in a few primary commodities, in particular fuels and mining products. of the top 20 products exported by the region in the period 2000-2005, the great majority are fuels, fuel products and mineral products. A few are basic agricultural commodities (sugar, cotton, cocoa and coffee) and a very small number are manufactured products.

Transport is critical for the attainment of the Millennium Development Goals and the objectives of Africa’s regional integration. It is particularly important to strengthen Africa’s competitiveness in regional and Global markets by reducing the high cost of doing business in the continent, exacerbated by deficiencies in transport infrastructure.

ECOWAS is implementing the project on the Abidjan- Lagos corridor, while UEMOA is handling the Tema-Ouagadougou-Bamako and Lome-Ouagadougou-Niamey corridor initiatives.

In September 2006, Celtel international, the leading pan-African mobile telecommunications company, made history by breaking boundaries and offering its customers in Kenya, Tanzania and Uganda (EAC) the opportunity to move freely across geographical borders without roaming call surcharges and without having to pay to receive incoming calls.

AFRICA Scholarships Grants

Africa's, Regional, integration, Economic, Communities, REC, AFRICA, Trade, market integration, Trends, intra-African trade, Physical integration, transport, Information, communications, technologies, ICTs, Monetary, Master, international business