Monday, August 15, 2022

Onus on Botswana, SA, Mauritius to spearhead regional integration

In its quest to integrate African economies, the African Development Bank (AfDB) says middle income countries (MICs) like Botswana should play a key role in such a process.

“MICs can serve as catalysts for regional integration. In line with the Bank’s Middle Income Countries Strategy, it will identify opportunities to exploit the strengths of the MICs as growth poles and experience sharing. It will enhance the dialogue with some countries to strengthen their interest in regional integration. It will also help them prepare projects using the MIC Trust Fund, the NEPAD Infrastructure Project Preparation Facility and the Africa 50 Fund. It will also promote other financing sources identified in the Dakar Agenda for Action on Infrastructure Financing. The Bank will play a catalytic role by mobilising resources to support regional operations, especially from donors that can provide financing on concessionary terms,” the Bank says.

In the particular case of SADC, the MICs are Botswana, South Africa and Mauritius. Like the African Union, the Bank hopes that at some suitable time in the future, Africa will unite as a continent in a phased approach. In the first phase, countries within regions have to harmonise their systems and processes. In the second and final phase, such harmonisation happens at a regional level. This approach is the exact opposite that the late Libyan leader, Muammar Gaddafi preferred, in which all countries folded into a single geopolitical entity without going through the process that the AU and AfDB recommend.

In 2009, the African Union formulated a Minimum Integration Programme which sets out the overall priorities and establishes monitoring and evaluation processes. Within this framework, each Regional Economic Community (REC) determines its own pace and sequence of activities. The AfDB says that the most ambitious initiative is the COMESA-EAC-SADC Tripartite Free Trade Agreement launched in 2008. The 26 Tripartite countries account for 58 percent of Africa’s total GDP and have a market of 600 million people – about half of Africa’s total population.

Its recommendation notwithstanding, the bank is mindful of the fact that “many RECs are in “mixed” neighbourhoods, with fragile states grappling with challenges of reconstruction and transformation, alongside island economies and middle income countries, which also require innovative instruments to support their participation in regional programs.” It adds that the operational structures of many RECs hinder their capacity to design, coordinate and monitor the integration process in a way that addresses different country challenges.

“Strong political support for regional integration has to be translated into action by ratifying protocols and affording sufficient attention to regional integration in national development plans. This gap illustrates national capacity and budgetary constraints and the resulting tension in supporting national or regional programs, as well as national concerns about uneven gains and losses,” the Bank says.

By 2040, Africa will be home to the world’s youngest population and its expanding middle class, now estimated at 355 million, raises the continent’s profile both as a market and destination for investment. With wages rising in China, it is estimated that 85 million jobs in labour intensive industries will be shed, providing Africa with an opportunity to woo some of that investment. AfDB says that African countries cannot take advantage of these opportunities as “balkanized” states.

“Only regional integration will help create larger markets that are attractive to the investment and trade critical for generating sustained growth, creating jobs and making growth inclusive. Cooperation arrangements through the RECs are expected to foster Africa’s integration. And recent infrastructure and trade-related initiatives and various regional infrastructure master plans provide an added impetus for a more coherent approach to integration,” the Bank says.

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