Thursday, October 30, 2008

Uganda Summit paves way for Africa’s economic integration

29 October 2008

African leaders from three regional economic blocs held a historic joint summit in Kampala, Uganda, last week, a move that adds fresh impetus to the long-term plan of setting up a continental economic community.

The planned creation of the African Economic Community, to be modelled almost along the lines of the European Union, will further advance the thrust for fuller economic and political integration of the continent, with the ultimate aim of setting up the United States of Africa.

Leaders from the three regional economic communities (RECs) - SADC, COMESA and the East African Community (EAC), including President Mugabe - gathered in Kampala for the epochal summit.

Africa has eight RECs, which are variously integrated. However, it is a fact that the level of integration among those blocs and individual countries remains limited, hence the ongoing initiatives to deepen political and economic co-operation on the continent.

Debate on the setting up of a union government has been going on for a few years now and African leaders agree on the need to unite the continent.

To that end the ordinary session of the AU in July last year in Ghana was devoted to the “Grand Debate on the Union Government”.

However, there are differences on the route to be taken to reach that end. While some countries such as Libya favour a rapid top-down approach to unity, others including Zimbabwe and most SADC members want some kind of organic growth - strengthening regional blocs first and then moving up.

Among other issues, the Kampala summit also discussed how to address overlapping membership that pose a threat to efforts at deeper economic integration. Many countries belong to more than one regional bloc, the same way Zimbabwe is a member of both SADC and COMESA.

All the three - SADC, COMESA and the EAC - plan to create customs unions, with Southern African having launched a Free Trade Area in August, ahead of the creation of a Customs Union in 2010.

But the challenge is that technically a country cannot simultaneously belong to two customs unions.

In addition to Zimbabwe, seven other SADC members - the Democratic Republic of Congo (DRC), Malawi, Mauritius, Madagascar, Seychelles, Swaziland, and Zambia also belong to COMESA.

Angola, also a SADC member, is a member of the Economic Community of Central African States while Tanzania, another SADC state, belongs to the EAC. Botswana, Lesotho, Namibia, South Africa and Swaziland are members of the Southern African Customs Union (SACU), yet they are also members of SADC and COMESA.

Of all the 15 SADC member states, only Mozambique belongs to one REC.

In the EAC, four out of five countries - Burundi, Kenya, Rwanda and Uganda - belong to COMESA, the exception being Tanzania.

All the three RECs have all achieved Free Trade Area (FTA) status, the youngest being the one declared during a SADC Summit in South Africa in August.

The EAC already has a customs union with COMESA planning to set up one by December.

In terms of the FTA, SADC countries removed tariffs and non-tariff barriers on about 85 percent of all goods and services traded within the region. The balance constitutes strategic goods which governments do not want to open to regional competition.

The key difference between a FTA and a customs union is that members agree, inter alia, to charge a common external duty to third countries.

A SADC think-tank, Southern African Research and Documentation Centre (SARDC), points out that when COMESA finally establishes a FTA and customs union, it would be easy for SACU members to quickly integrate despite the fact that they also belong to COMESA.

“Since all SACU members belong to SADC,” says SARDC, “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.”

COMESA has 26 member states and if they finally agree on the way forward, and all technical problems addressed, they would set up a huge economic bloc with a combined Gross Domestic Product (GDP) of US$625 billion.

It would be a huge market, given that the 26 countries have a combined population of 527 million people.

The COMESA member states are Angola, Botswana, Burundi, Comoros, Djibouti, the DRC, Egypt, Eritrea, Ethiopia, Kenya, Lesotho, Libya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Swaziland, South Africa, Sudan, Tanzania, Uganda, Zambia and Zimbabwe.

The Kampala conference is consistent with the 1991 Abuja Treaty, which seeks the establishment of a continental economic zone.

Meeting in Abuja, Nigeria, the then Organisation of African Unity (OAU), now Africa Union (AU) leaders signed the treaty, which envisions the creation of a continental economic zone by 2028.

The treaty says that single zone would be established through the gradual merger of the eight RECs that are officially recognised by the AU.

“Thus,” said SARDC, “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.”

In a communiqué issued after the Kampala Summit, the three RECs agreed to create a free trade zone spanning 26 countries as well as to establish joint infrastructure and energy projects.

The leaders acknowledged that disunity and lack of integration among African states contributed to slow economic growth in Africa.

They and analysts alike agree that Africa has yet to fully exploit intra-regional trade as most of the trade on the continent is conducted with countries’ former colonial masters.

“The greatest enemy of Africa,” said the host President, Mr Yoweri Museveni, “the greatest source of weakness has been disunity and a low level of political and economic integration.

“Bigger markets are a strategic instrument of liberating people from poverty.” The tripartite summit also approved the expeditious establishment of a FTA encompassing the member/partner states of the three RECs with the ultimate goal of establishing a single customs union.

The leaders agreed to a harmonisation of their operations to give way to the FTA. In the next six months, a taskforce comprising members of the three blocs would formulate a strategy for establishing the FTA.

In addition, the three blocs would undertake a study to take into account the principle of variable geometry; the legal and institutional framework to underpin the FTA and measures to facilitate the movement of businesspersons across the RECs.

The study will be presented to Tripartite Council of Ministers for consideration within the next 12 months.

The summit also directed the three RECs to put in place, within 12 months a joint programme for the implementation of a single seamless upper airspace; a joint programme for the implementation of an accelerated, seamless inter-regional ICT broadband infrastructure network.

It also called for joint financing and implementation mechanisms for infrastructure development within one year.

The summit established a Tripartite Summit of Heads of State and/or government, which shall sit once every two years.

Considering the progress made so far and that which is being made and planned at various levels towards enhancing greater African integration politically and economically, the goal of the founding fathers of the OAU, like Kwame Nkrumah of totally uniting the continent could soon come to fruition.

But for Africa to rise to be a united and powerful economic and political force on the globe, today’s leaders and those who will come tomorrow, must be guided by the Pan-African principles that the likes of Nkrumah and Julius Nyerere originated and practised.