Saturday, October 25, 2008

African Economic Community target gets fresh impetus as RECs convene joint summit

by Munetsi Madakufamba

African leaders from three regional economic blocs are due to hold a historic joint summit in Uganda this month to harmonise regional integration policies and programmes in a move that may give fresh impetus to the long-conceived goal of an African Economic Community.

The Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC) will meet in the Ugandan capital Kampala on 20 October to, among other issues, resolve an overlapping membership conundrum that has threatened to derail efforts at deeper economic integration.

Membership overlaps exist among all three Regional Economic Communities (RECs) which plan to create customs unions, a situation that presents technical challenges as a country cannot belong to more than one customs union.

Eight SADC members -- the Democratic Republic of Congo, Malawi, Mauritius, Madagascar, Seychelles, Swaziland, Zambia and Zimbabwe -- also belong to COMESA, while Angola is a member of the Economic Community of Central African States and Tanzania belongs to the EAC.

With Botswana, Lesotho, Namibia, South Africa and Swaziland being members of the Southern African Customs Union (SACU), only one out of the 15 SADC member states is a member of a single REC – and that is Mozambique.

Four out of five EAC members -- Burundi, Kenya, Rwanda and Uganda -- belong to COMESA, the exception being Tanzania.

Yet SADC, COMESA and EAC either plan to create customs unions or have already declared one.

The three RECs have all attained Free Trade Area (FTA) status, the first major step towards creating a customs union. In an FTA, members agree to remove tariffs and non-tariff barriers on most, if not all, trading among them. Similarly, in a customs union, members agree among other issues, to charge a common external tariff to third countries.

The EAC is the most advanced of the three RECs, having already launched its customs union while COMESA plans to have its own by December this year.

SADC has just launched its FTA (in August this year) and plans to create a customs union by 2010.

Since all SACU members belong to SADC, it does not present much of a technical problem as the SACU arrangement automatically falls away with the creation of a SADC customs union.

However, real problems exist between SADC countries’ membership to either COMESA or the EAC.

The tripartite summit is expected to address some of these challenges and possibly agree on a framework that would allow for the creation of a grand FTA and customs union from Cape to Cairo.

If successful, the plan would merge as many as 26 African countries into a single trading zone, opening borders for literally half of the continent spanning the entire southern and eastern regions of Africa from South Africa to Egypt.

That would be a formidable economic bloc with a combined Gross Domestic Product (GDP) of US$625 billion.

And with a combined population of 527 million, it comes as no surprise that the joint summit will be seeking to facilitate easier movement of people across borders.

COMESA, EAC and SADC are three of the eight RECs that are officially recognized by the African Union (AU), and seen as building blocks of the envisaged African Economic Community.

Secretariats of the three RECs were optimistic about the prospects of forming a single trading zone when they met last month to work out logistics and finalise the agenda for the summit.

“The EAC-SADC-COMESA Summit is considered historic because for the first time since the birth of the AU, key building blocks of the African Economic Community are meeting on how to integrate territories and moving towards deepening and widening integration within the overall Abuja Treaty for the establishment of the African Economic Community,” said a statement issued after the preparatory meeting held in September in Nairobi, Kenya.

The preparatory meeting was attended by Juma Mwapachu, Secretary General of the EAC, Stephen Karangizi, COMESA Assistant Secretary General and Joao Caholo, SADC Deputy Executive Secretary.

“The summit is expected to decide on matters related to enhancing cooperation among EAC, COMESA and SADC, including deepening trade, investments, and infrastructure, linking transport corridors, promoting joint projects to boost industrialization of agriculture and food security as well as enabling free movement of people between the three RECs with the ultimate aim of creating a single market and investment area,” reads the statement in part.

The treaty establishing the African Economic Community, popularly known as the Abuja Treaty, was signed in 1991 by leaders of the Organisation of African Unity, the precursor to the AU. The treaty envisages a continental economic zone by 2028, gradually built upon merging of the many RECs across the African continent.

Thus the creation of a single market and investment area involving half of the continent in COMESA, EAC and SADC would represent a major step towards the continental target.