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Will Africa’s mega trade bloc take off?

October 23, 2008

Three African trading blocs comprising some 527 million people and with an estimated gross domestic product of $624 billion, have agreed to move towards a free trade area. It would span 26 countries from Egypt to South Africa, and would go a long way towards streamlining some of the continent’s numerous trading blocs. Africa is home to some 30 regional trade arrangements, and on average each nation belongs to about four groups, according to international financial institutions. This has led to conflicting and overlapping agreements.

So in a move to ease some of these issues, heads of state who chair the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), and the Southern African Development Community (SADC),  met in the Ugandan capital to draw up a pact on integration, and eventually hoping to have a unified customs union. Ugandan President Yoweri Museveni said at the meeting’s opening that: “The greatest enemy of Africa, the greatest source of weakness has been disunity and a low level of political and economic integration.” The meeting’s final communiqué said a timeframe for integration would be considered in one year. Rwandan President Paul Kagame cautioned delegates that African nations must make sure to enforce the protocols and treaties that they’ve adopted. Heads of state at the meeting stressed the need to create economies of scale, bigger markets equal more opportunities to grow, they said.

But many of the existing blocs have already run into trouble. The EAC’s integration, for example, has had some hiccups because some member countries felt their economies would be dominated by neighbours.

So, should Africa think bigger and bigger or try to work on existing institutions? Do you think the creation of a free trade zone spanning COMESA, SADC and the EAC will take off, or will it just remain on the drawing board? What do you see as the major challenges in implementing this agreement?

Comments

Not likely, political stabilization among many of the countries must occur first.

Posted by buffalojump | Report as abusive
 

Regional economic blocks without a strong political platform for unified policies, especially diplomatic engagements with non-continental African states will not solve Africa’s problems. President Museveni is absolutely correct in arguing that disunity and lack of political and economic integration are sources of Africa’s weakness relative to the international community. Consequently, Africans have to revisit the infamous Berlin Conference that partitioned the continent for the interest of outsiders; in order to re-envision the political and economic spaces necessary for transformative change in Africa.

Posted by kelechi Kalu | Report as abusive
 

I hope it does. Hope it wouldn’t end up being another talk shop.

Posted by Nduka Tolefe | Report as abusive
 

Disunity is killing Africa. In my opiniom, they should start with some political arrangement, look into their intercontinental relationships (especially with the west). Listen carefully to what Kagame is saying, he sounds to me like someone who is in it but does not trust it. He is actively involved in the war against the Congo (he knows best)

Posted by Tim | Report as abusive
 

Its another wild chase at integration, like the AU, without a platform or at best a nebulous one. On paper, it is a good idea, but knowing that Africa’s bane is that of quality leadership in the component nations is a must address issue. Museveni had hit the nail on the appropriate spot. We still struggle at the integration of a political platform called AU- it can’t make policies talkless of implementing any.We also need to sanitize the political and economic policies of the various component countries in Africa to achieve result, if any.

Posted by Edwin Adakole Inegedu | Report as abusive
 

There is no necessity for regional organizations beyond political stabilization because legal inter-regional trade is neither promoted or efficiently carried out due to the lack of infrastructure. However, if the economic union is established to encourage inter-regional trade by using the collective government’s to fund projects that will enable the union to be necessary to coordinate coherent policies than thats a entire separate discussion. Considering the history of the AU and other regional orgs I sincerely doubt anything will come of this that will effect the underlying poverty of African people.

Posted by C Enekwe | Report as abusive
 

It is better to start by focusing on practical programmes, such as harmonizing customs regulations, interbank transfers (subregional clearing systems, etc.), electric power pools, and other practical issues. The customs regulations, drivers licences, etc. make a difference in SADC already. It is often much easier to work on practical projects – within the framework of a positive, panAfrican and farsighted perspective – than to try for the bigger political issues, or even basic steps such as free movement of people. The main problem is dominant countries within regions, and steps have to be taken to ensure that industrial development and especially jobs and skills are spread around all countries.
As we get used to each step and the benefits of it, we can move to the next. There’s no reason to wait a year but African nations can continue working on the small steps that will eventually pave the way to the bigger goal, of uniting economies that are too small currently to be viable or competitive, in most cases.

 

The plan is plausible. The challenges are massive. They should be overcome first:1. African leaders should REALY be true to their commitments and be consistent with the protocols no matter who is involved. 2. These issues should involve the business community and the wider civil society. 3. The RIAs and trade blocks in Africa should first work towards first, intra-regional, then inter-regional and eventually, Pan-African harmonisation and convergence of economic policies and other related issues. Africa presently has diverging policies and economic systems. What about the seemingly endemic corruption? Missrule and disrespect of the rule of law? Can Africa first focus on improving the investment environment so that both FDI and domestic direct investment can be attracted, please. Deal with the negative factors that scare foreign investors and discourage domestic investors. These issues will continue to undermine noble intentions of TRUE leaders. No rush. Take time and take along the nation- business sector, academics, etc. Small but efficient regions are better than large inefficient ones.

Posted by Kwena Matjekana | Report as abusive
 

Even though Economic integration is the next global destination, Africa nations should work on their individual stability first. African leadership must be brave enough to intervene when other parts of Africa are burning.

 

I believe the UN, WTO, IMF, and such will make those decisions for Africa. The biggest “challenge” is for them to actually be able to make those decisions for themselves.

Posted by jason | Report as abusive
 

Economic intergration does lead to spread of wealth. The main obstacles will always be neo-colonialism. Africa physically liberated itself, but since independence of most african countries, they have and are still under economic colonialism to a barage of neo colonial masters. Be they the former colonisers, the IMF, the Worldbank etc…. which facilitate Loans whcih they know will be pillaged, but they are content to issue them because they have the countries as hostage for posterity. Which African country dares do what Argentina did under Forme president Kirchner, where he froze all debt repayments, and put the citizens first. Or like his wife is currently doing to nationalise the pension system so that the country is not a hostage to currency manipulations similar to the Asian crises….. Economic independence coupled with investments in infrastructure as well as fair trade.. not free trade which is a race to the bottom and devalues cost of production below sustenance levels….

Posted by Abdul Ali | Report as abusive
 

The tragic reality is that africa is neither ready nor mentally equipped to pull this off. Destrusctive intra-national forces are still much stronger than the desire for inter-national cooperation. But that’s not to say we cannot give it a try – if only to have some lessons from which future generations can learn.

Posted by The Condor | Report as abusive
 

Africa has a problem,we can not do anything unless the west approves.do you think after 50 years Africa sholud by now be able to settle wars,we can not feed the hungry or protect it citizens from internal strife.all these ideas are good but until there peace and fair play then things will work out, there is no peace in a house if there is hunger

 

The western countries have no bussiness in Africa.The African countries must learn to handle their own problems. Mugabe has succeded in destroying a country but also by kicking out all the foriegn interests he has put all the responsibility on his own people. From the ashes a new nation will be born. Necessity is the mother of invention. Africa will rise but first it needs to burn. Remember the great fire of London? Now is the time to send all illigal immigrants back to their country with 10000 Dollars each. Take a photo of them so that if they return they will be put in jail with hard labour.
Block all illigal immigration and stop giving aid to African governments. These people in power us this aid to buy war material and kill honest workers. only this way will power go back to the people.

Posted by Youssef | Report as abusive
 

I believe the rest of Africa should take a peek into the ECOWAS region..They have done things moderately well by trying to integrate a lot of things:sector like the banking and Airline industries are become solid..soon its going to be telecoms…next energy supplies,They are moving slowly but surely….its not easy to just form a bloc that spans from cairo to capetown..the regional economic blocs should be made to work first before a pan African one is lunched.

 

Honestly my friends what is the need for this money there is enough nessicites to go around to eveyone more then 5 tims twice. On this god given earth we have what we need to surive, to be honest we are digging ourselfs into a huge hole. We contine fighting about things that are erelvient. Please we need to worrie about the future food for out children. We need to start caring about our land that has been givin to us. Quite honestly what the united states is doing is wronge and quite frankly will probly sink one day because of the things that they are doing to their land. SO please my brothers and sisters I ask again please send your finest banana seeds. World peace will come one day. Soon. GOD BLESS YOU ALL>>

 

A good idea that may or may not be implemented. From start, it is important to highlight that Africans waste too much food due the lack of technology overall, but especially because of unfunctioning governments.
It takes a great of investments to operate free market in Africa. Participant countries need to have functioning government that investment in public infrastructures and promote the entrepreneurship spirit among its people. Transport and telecommunication are vital in bridging countries and these are mega projects that require appraisal if financial institutions have to invest funds to this end. The reality is that political instability is the key characteristic of African countries at large – Investors are not always keen to take risk, no especially when it comes to Africa whose leaders are known for mismanagment and corruption, but the idea should still be tried and tried and tried until it works.

 

Well, we return here three years after to say that no progress has been done on that front. Simple, a great idea gone to the dogs……again.

Posted by BuriteJoseph | Report as abusive
 

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