Regional integration in Africa remains low
But finding reveals that the SADC region is the most integrated in terms of trade, with SA trading with most of its peers on the continent
Co-operation and economic integration between African countries remains low despite recent efforts by policymakers to boost trade and investment on the continent.
This is according to the UN’s draft African Regional Integration Index. However, the findings reveal that the Southern African Development Community (SADC) is the most integrated region in terms of trade, with SA rated as the “most integrated” country on the continent. SA trades with most of its peers on the continent.
SA recently joined 50 other countries in signing the Continental Free Trade Area (CFTA) agreement that aims to create a single continental market for goods and services, with free movement of business persons and investments.
With about 1.2-billion people on the continent, the agreement is set to create one of the largest free trade market zones in the world. However, the agreement is yet to gain traction with intra-African trade still very low compared to other major regions in the world such as the EU and Asia.
According to the UN Economic Commission for Africa index, in the five areas analysed — trade integration, regional infrastructure, productive integration, free movement of people and macroeconomic integration — SA topped the ranking; with South Sudan as the least integrated mainly because of its modest performance in regional infrastructure and financial integration.
Meanwhile, integration in services contributed more than 53% of the continent’s GDP, but ratification of the protocol on the free movement of people has been slow, despite the 2016 launch of the Common Electronic Biometric African Passport, and the African Union protocol on free movement of persons, according to the index. The continent’s large infrastructure deficit remains a major hindrance to intra-regional trade, it states.
“It is up to Africans themselves to ensure that the initiative benefits them through hard work and efficient implementation of the mechanisms of the CFTA,” said David Luke, coordinator of the African Trade Policy Centre, Regional Integration and Trade Division of Economic Commission of Africa (ECA).
Leila Mokadem, country manager and resident representative in Morocco for the African Development Bank, said despite the “tremendous” political support for the CTFA, there are still major challenges ahead in terms of implementation and pushing the agenda forward to meet the goal of increasing intra-African trade to 25% by 2023 from between 15% and 18%.
Mokadem cited weak productive capacity in Africa, high production costs, large infrastructure deficits and other challenges that affected Africa’s competitiveness.
“We cannot gloss over the challenges, but it is important to underscore the fact that it cannot be business as usual if Africa is to progress,” she said.