Akinwumi Adesina, the new president of African Development Bank, said there is a need to integrate the continent and grow together. AFP PHOTO
Last week Kenya hosted the Eastern Africa Region Pan African Congress and later this week will host the Nepad APRM Summit rooted in the notion of continental unity and co-operation.
This is therefore a good time to take stock of how economically viable Pan Africanism, loosely defined as the ideology of African unity, is for the country and continent.
It should be noted that current conversations on this concept are different from 20 years ago, which occurred in a context of poor economic performance and chronic dependence on international aid.
Today, African governments seek to make the shift from aid to trade and from dependence to self-reliance.
Indeed, the incoming president of the African Development Bank, Akinwumi Adesina in his inaugural speech last week said that, “We must integrate Africa– grow together, develop together. Our collective destiny is tied to breaking down the barriers separating us”.
The positive elements of economic Pan-Africanism are clear. Through economic integration, Africa can do three important things: co-ordinate economic development efficiently, negotiate more effectively on global trade and economic platforms, and leverage economies of scale.
As a unit, comparative advantage and efficiency can be preponderate in investment decisions and economic development. Further, a unitary Africa has stronger global bargaining power and is a more attractive investment destination with a market of more than one billion people.
Further, economic Pan Africanism can encourage regional convergence in key indicators such as the rate of inflation, budget deficit and public debt, as well as external current account balance.
But is economic Pan Africanism viable? Africa has taken important steps and countries are members of regional blocs like Ecowas, the Economic Community of Central African States (ECCAS), the EAC, the SADC, and the Comesa.
The aim is to eventually create a Continental Free Trade Area (CFTA) by 2017. Yet, even when one puts aside the difficulties faced in ensuring that such regional blocs actually function, there are two core problems that impede further integration.
Firstly, competition within blocs. This is partly informed by the heterogeneity of economies where weaker economies exist alongside stronger neighbours.
For example, Kenya is the strongest player in the EAC and thus dominates the union. This can give rise to a feeling that Kenya does not really ‘need’ other EAC countries. Or that it is a dominant partner.
Secondly, competition exists between blocs. This is exacerbated by the reality of overlapping and multiple regional bloc memberships. Here, it is no secret that South Africa and Nigeria dominate Africa economically.
Therefore, it can be difficult for countries in the EAC for example, to feel compelled to open their smaller economies to SADC or Ecowas that house dominant economies.
Unification of blocs may mean trade imbalances are exacerbated leading to wider economic gaps with larger economies and economic blocs dictating growth.
Indeed, there are general issues that hinder continental bloc’s integration such as national concerns of public revenue loss due to tariff reduction, a lack of assurance that market integration will align with national economic interests and the concern of an unequal distribution of integration benefits.
Further, there is difficulty in reconciling a trade-off between short-term losses and the long-term benefits from trade integration, which is particularly important in the context of the short-term five-year election cycles.
The (good) news is that there does seem to exist a commitment to regionalisation and continental economic integration. Let’s see how some of the challenges will be addressed.
