The need for regional-trade integration

Thursday, October 25, 2018

It is an undisputable fact that regional integration plays a pivotal role in Africa’s politics, and has contributed to shape Africa’s political, economic and institutional landscape. Regional organisations in Africa have taken on central roles and embarked on multiple functions in promoting regional cooperation and integration. This has led to the articulation of broad and ambitious integration agendas.

Yet, implementation of these agendas has often been slow and hampered by many obstacles, leading to what is commonly referred to as an ‘implementation gap’. Trading within our common borders has long been a strategic objective for Africa yet, despite some success in eliminating tariffs within regional communities, the African market remains highly fragmented.

Reforms aimed at improving the effectiveness of regional organisations should thus focus on the core functions such organisations are attempting to perform, with a greater chance of demand for improved functions through problem solving and the likely coalition building this requires or involves. A range of non-tariff and regulatory barriers still raise transaction costs and limit the movement of goods, services, people and capital across borders throughout Africa.

Again barriers to trade continue to limit the growth of trade throughout all African regional groupings. By imposing unnecessary costs on exporters these barriers raise prices for consumers, undermine the predictability of the trade regime, and reduce investment in the region.

For instance in most African countries, a truck serving stores across a border may need to carry more documents as a result of permits and licences and other requirements. Slow and costly customs procedures and delays caused by other agencies operating at the border, such as standards, raise the costs of trading. There are other examples and evidence of the high costs of intra-African trade. It is estimate that intra-African trade costs are around 50% higher than in East Asia, and are the highest of intra-regional costs in any developing region.

 “There will never be a day where the depth of integration, unless it was all built from the bottom ground up, will be integrated as any of us would like.”

Mark V. Hurd