Regional integration cornerstone for development

Lazarus Sauti

Harare - Africa needs accelerated growth and ‘structural transformation’ in order to take the bulk of its population out of poverty.

Critical to the attainment of this structural transformation is without a doubt the regional integration of the continent’s weak, small and disparate economies.

Due to this fact, Professor Mthuli Ncube, the African Development Bank (AfDB) vice president and chief economist, believes regional integration is indispensible to building the economies of scale and achieving the international competitiveness necessary for Africa’s structural transformation.

He said, “Regional integration basically is about really facilitating movement in a region, in a zone, in a country, within a country.

“It is about moving people, it is about making sure that our seaports function well so as to service the countries where they are located, but as well as the hinterland.

“So it is about movement of investment within Africa and capital as well; and greater regional integration can act as a buffer for possible future economic crises.”

AfDB is one organisation determined to help ensure the success of Africa’s regional integration and serve as its “motor”.

“Regional economic integration is essential for Africa to realise its full growth potential, to participate in the global economy and to share the benefits of an increasingly connected global marketplace,” the bank says in its Strategy for 2013–2022 titled “At the Center of Africa’s Transformation”.

It is critical therefore to note that promoting regional integration requires investments at a number of levels.

This takes in the development of adequate physical infrastructure, including regional transport links and energy and telecommunications networks, together with institutional arrangements for their management and maintenance.

However, most – if not all – African countries are facing challenges in transforming their economies due to under investment in infrastructure.

AfDB president, Donald Kaberuka, noted this by saying, “While African economies have made progress towards integrating their economies and boosting intra-regional trade, the pace is probably a little slower.”

Dr Kaberuka added: “Integrating African economies and boosting investment in infrastructure buffered the continent ‘against external shocks’ and ‘business as usual will not do’.

“There is a strong conviction that although many countries have done well in the last decade, that momentum will be hard to sustain without a quantum leap on integration.”

What it means, Kaberuka said is that African countries should prioritise integrating their economies and at the same time investing in infrastructure.

The African Union (AU) also added its voice to give credibility to infrastructure its paramount importance to regional integration.

AU Commission Chairperson, Dr Nkosazana Dlamini-Zuma, says: “Integration will gain greater traction when we see greater cooperation in implementing our infrastructure projects, grow our agricultural and agro-processing sectors, industrialise and diversify our economies, increase trade among ourselves, build pan-African businesses, people to people links and harmonise our vocational and higher education sectors to allow for mobility of skills and professions in the continent.

Sharing the same sentiments, was Caroline Ko ‑ a junior economist at the Global Competitiveness and Benchmarking Network, who is optimistic that investing in infrastructure can help Africa build regional value chains and thereby tap into global value chains.

Ko noted that regional integration efforts and infrastructure development, however, need to go hand in hand with competitiveness enhancing policies.

“The importance of regional integration is being felt across the continent, as evidenced by African leaders now calling for a free trade area by 2017.

“Nevertheless, it still takes almost twice as long to trade across borders in Sub-Saharan Africa (SSA) compared with other regions, such as Latin America and the Caribbean and South-East Asia. Thus, much remains to be done to fully reap the benefits of regional integration for Africa,” said Ko.

Ko’s sentiment was raised in the Africa Competitiveness Report 2013, themed Connecting Africa’s Markets in a Sustainable Way, and jointly produced by the African Development Bank, the World Bank and the World Economic Forum.

The report provides that, “The strides made by African economies in achieving economic growth must be accompanied by efforts to boost long-term competitiveness if the continent is to ensure sustainable improvements in living standards.

It adds, “Regional integration is a key vehicle for helping Africa to raise competitiveness, diversify its economic base and create enough jobs for its young, fast-urbanising population.”

This means African countries must prioritise integration as an economic development tool for the continent to be seen in the wider international context.

Jennifer Blanke, Chief Economist, World Economic Forum thus says, “Africa’s growth needs to be seen in the wider international context, where encouraging gains in economic growth belie an underlying weakness in its long-term competitiveness.”

For this to happen, regional integration should be key to addressing this weakness through the delivery of wider social and economic benefits and should be prioritised by Africa’s leaders as they look to ensure that Africa delivers on its promise.

Gaiv Tata, World Bank director for Financial Inclusion and Infrastructure Practice for Africa Region, also says, “To turn its economic gains into sustainable growth and shared prosperity, Africa’s public and private sectors must work together to connect the continent’s markets, deepen regional integration, and adopt reforms that enhance national competitiveness.”

Dlamini-Zuma urged African leaders to preach integration. She said leadership on regional integration should therefore happen, not only at government level, but at all levels of African society and all institutions — whether business, civil society and private sector.