Feasible Aspects of Regional Integration for Africa SYPALA 2015

7/17/2019 Feasible Aspects of Regional Integration for Africa SYPALA 2015

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What Aspects of Regional Trade IntegraFeasible for Africa Today?

Presentation by: Patrick K Stephenson

Venue: SYPALA 2015, UGBS



Outline3

Synopsis of RI from Other Jurisdictions

2

4

1

Key Issues for Discussion

Key Facts about RI in AfricaHistorical LegacyAfrica & RIUpside of RI

The Integration Process

Outcome of RI efforts in Africa5

Feasible Aspects of RI for Africa, 2015

2

Feasible Aspects of the RI Model5



Key Facts: Historical Legacy

Balkanisation of the African continent: 55fragmented and fragile economies (focus o

poverty rather than production)

Permanent situation of insecurity and conflicts:Madagascar, Mali, Guinée Bissau, Sudan, etc.

High dependence on agriculture fordevelopment and employment

Lack of adequate infrastructure: high costs oand communication, lack of education and llevel


3



Key Facts about Africa and RI

The African Economic Community AEC (Abuja Treadopted a six stages roadmap:

Regional Economic blocks (RECs) – 1999

Strengthening intra REC integration and intro REharmonisation – 2007

Establish a continent-wide Customs Union and F

African Common Market - 2023 African Economic and Monetary Union with sing

, plus the Pan African Parliament – 2028

Transitional Period for continental integration - 2


4



Key facts: Upside (What has been done

African Union recognised eight RECs as pillars of the AECCOMESA, EAC, ECCAS/CEEAC (CEMAC), ECOWAS (UEMIGAD, SADC (SACU), AMU/ UMA

Tripartite FTA signed by COMESA, ESA and SADC:representing half of the continent with a population of morand a combined GDP of 700 Billion USD

Emerging economies: 7 out of 10 world´s fastest growing ec

in Africa, the prospects of discoveries of extensive mineralover the continent

Need for a new development model and shift towIntegration, regional infrastructure and fast tract industrial d


5



Regional Integration Proces

PreferentialTrade Area

(PTA)

FreeTradeArea(FTA)

CustomsUnion(CU)

CommonMarket

EconomicUnion

LowTariffs

betweenmembers

NoTariffs

betweenmembers

CommonExternalTariffs

Freemovement

of factors ofproduction

Unifiedmonetaryand fiscalpolicies


6



Eccentric Focus of RI; Redefine?

Free-Trade Area

Customs Union

Common Market

Economic Union

Political Union


7



Why Regional Integration (Pros & Co

PROS

Foster competitonAccess to wider markets

Diversified investment and production

Socioeconomic policy harmonization

Infrastructure development

Defense, peace, governance and security


8



Key Issues for Discussion

Understand the different levels of eINTEGRATION among nations

What are the POLITICAL and ECarguments FOR and AGAINST regional inte

What are the IMPLICATIONS for businregional economic integration?

What should be the course of ACTION for


9



SYNOPSIS OF RI IN OTHER JURISDICT


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The EUROPEAN UNION

15 member countries; 350mm people; GD

1951 6 members of coal and steel commuFrance, Germany (W.), Italy, Belgium, Netherlan

Luxembourg

1957 Treaty of Rome: European Communit

Common market

Elimination of internal trade barriersCommon external tariff

Free movement of factors of production

1973 1st enlargement: Britain, Ireland, Den


11



The EUROPEAN UNION1981 2nd enlargement: Greece

1983 3rd enlargement: Portugal, Spain

1992 single European act

Remove all frontier controls

Principle of mutual recognition to product standards

Open public procurement to non-national suppliers

Lift barriers of competition to banks and insurance

Remove restrictions on foreign exchange transactions

Abolish restriction on cabotage (trucking)

1994 Maastricht treaty: European Union

1996 4th enlargement: Austria, Finland, Sweden

2002 5th enlargement: Cyprus, the Czech RepublicHungary, Latvia, Lithuania, Malta, Poland, the Slovaand Slovenia conclude accession agreements.


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The EURO (€)

Maastricht treaty:

European common currency adopted

Common foreign and defense policyCommon citizenship

EU parliament with “teeth”

€ now used by 28 countries (x-SwedeDenmark, Britain)

Currency was issued 1/1/2002 and 12national currencies were withdrawn 2002


13



The AMERICAS

North American Free Trade Agreement (N

USA, Mexico, Canada The Andean Pact

Bolivia, Chile, Ecuador, Colombia, Peru

MERCOSUR (FTA)

Brazil, Argentina, Paraguay, Uruguay

Central American Common Market (CARICosta Rica, El Salvador, Guatemala, Honduras


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The AMERICAS

North American Free Trade Agreement (NAFTA)

Andean Community

Latin American Integration Association (ALADI)

Southern Common Market (MERCOSUR)

Central America and the Caribbean

Free Trade Area of the Americas (FTAA) Transatlantic Economic Partnership (TEP)


15



ASIA

Association of Southeast Asian Nations

Brunei, Indonesia, Laos, Malaysia, MyanmaPhilippines, Singapore, Thailand, Vietnam

Asia Pacific Economic Cooperation

USA, Japan, China + 15 Pacific nations


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Outcome of RI Efforts in Africa


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Total imports in US$ (not to scale), 2011

Cameroon

Kenya

Zambia

Crude & petroleum products

Metals, ores & precious stones

Timber & wood products

Cocoa, coffee & tea

Cotton

Cote d’Ivoire Ghana Nigeria

Exports

Angola

AlgeriaLibya

Egypt

SouthAfrica




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Total imports in US$ (not to scale), 2011


Machinery, vehicles & electronics

Iron & steel

Cereals & flour

Sugar

Imports

Cameroon

Kenya

Zambia

Cote d’Ivoire Ghana Nigeria

Angola

Algeria

Libya

Egypt

South Africa




20Commodity exporters dominate trade volumes

The oil & gas exporters run large trade surpluses

SouthAfrica has by far the largest trade volumes, followed by Nigeria & Algeria Oil exporting countries run healthy trade surpluses, with the exception of Cameroon Egypt has the largest trade deficit, followed by Kenya, South Africa & Ghana

Total trade, US$ million, 2011

Country Exports Imports Total trade Trade

balance

Algeria 73,562 46,426 119,988 27Angola 59,349 15,181 74,530 44

Cameroon 4,387 4,187 8,574

CDI 11,049 6,720 17,769 4,

Egypt 30,782 59,269 90,051 (28,

Ghana 7,988 12,341 20,330 (4,3

Kenya 5,853 15,028 20,881 (9,1

Libya 18,266 6,084 24,350 12

Nigeria 95,199 43,389 138,588 51South Africa 92,976 99,726 192,702 (6,7

Zambia 8,954 7,149 16,102 1,

EU Chi d USA d i bil l d




21

35%

17%12%

9%

2%

6%

19%

OtheBraz

EUUSAOthers

ChinaIndia

% of

total

34.8%17.6%

11.8%

9.0%

5.6%

2.3%

19.0%

100.0%

Intra-regional trade totalled US$133bn in 2011, just 11.8% of Africa’s trade withworld

Although it has grown from 4% in 1960, it is still below the peak of 15% in 1997 Key trade partners are the EU (35%), China (18%) and the USA(9%) Africa’s share of world trade is just 3.1%, a proportion that has been stable for year

Africa’s trade with the world, 201 Africa’s key trade partners, 2011

EU, China and USA dominate bilateral trade

Country Exports t o

Africa

(US$ m)

Imports from

Africa

(US$ m)

Bilateral

trade

(US$ m)

EU 186,387 206,125 392,512China 85,212 113,136 198,348

Other Africa 70,191 63,024 133,215

USA 32,845 68,522 101,367

India 23,346 39,780 63,126

Brazil 12,210 14,266 26,476

Others 125,231 89,131 214,362

World 535,422 593,984 1,129,406




22

Intra-regional and extra-regional tradeUS$ billion & %, 1990-2009

Source: World Bank.

Africa’s Intra-regional Trade Is Poorly Developed




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Metals, ores & precious stones

Food products

Cash crops

EAC

Intra-African exports

WestAfrica

SADC

Maghreb




24

EAC

.

Intra-African Imports

WestAfrica

SADC

Maghreb



Food products

Iron & steel

Cement




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18%

7%7%

44%

13%

32%

4% 5%

46%

Maghreb

West Africa

Central Africa

EAC

SADC

SADC dominates intra-African tradeWestAfrica is more focused on crude oil exports

• SADC dominates external and intra-regional trade flows• Nigeria’s share of intra-regional trade is smaller than its external trade, reflectin

dominance of hydrocarbons in the country’s exports

Share ofAfrica’s intra-regionalShare ofAfrica’s trade with world, 2011

B t f h ll d l d i t i l t d li k




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But few have well developed intra-regional trade link

Top 20 African traders, US$ billion, 2011

200

Commodity exporters contribute little to intra-regional trade

0

50

100

150

Landlocked countries drive intra-regional trade




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Landlocked countries drive intra regional trade

Top 20 African countries intra-regional trade, US$ billion, 2011

Country Total intra-African

trade

% of country’s

total trade

% of region’s tot

trade

Mali 1.85 60.9% 0.5%

Zimbabwe 3.49 54.0% 0.7%

Namibia 6.67 54.0% 1.2%

Rwanda 0.85 47.8% 1.7%Côte d’Ivoire 7.20 40.5% 1.9%

Botswana 4.91 37.3% 0.9%

Zambia 5.40 33.4% 1.0%

Togo 0.69 33.2% 0.2%

CAR 0.10 32.3% 0.2%

Malawi 1.18 30.6% 0.2%

DRC 3.54 30.5% 6.5%

Senegal 2.35 27.8% 0.6%

Niger 0.68 23.7% 0.2%

Uganda 1.74 22.3% 3.5%Burkina Faso 0.97 20.6% 0.3%

Guinea-Bissau 0.13 20.3% 0.0%

Mozambique 2.01 20.3% 0.4%

Kenya 3.99 19.1% 8.1%

Libya 4.67 18.1% 3.0%

Cameroon 1.61 16.9% 3.0%

Burundi 0.19 15.2% 0.4%

Ghana 4.75 14.9% 1.3%

Intra Regional Trade (EAST & SOUTH AFR



Intra Regional Trade (EAST & SOUTH AFR

Intra-regional Trad

threefold between

grew from $30 bill billion:

Comesa: $8 billion

SADC: $20 billion

EAC: $2.6 billion to


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FEASIBLE ASPECT OF THE RI MO


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Feasible Aspects of the RI Model for Afri



Feasible Aspects of the RI Model for Afri


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PreferentialTrade Area

(PTA)

FreeTradeArea

(FTA)

CustomsUnion

(CU)

CommonMarket

EconomicUnion

LowTariffs

betweenmembers

NoTariffs

betweenmembers

CommonExternalTariffs

Freemovement

of factors ofproduction

Unifiedmonetaryand fiscalpolicies

THIS IS A REQUIREMENT WHA

TRIPARTITE FREE TRADE AREA




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TRIPARTITE FREE TRADE AREA

• From Cape Town to Cairo

• Possibly the most significant event inAfrica since the formation of theOrganization of African Unity in1963.

• The TFTA covers a population of 632

million and a combined GDP of $1.3trillion. The area spans 17.3 millionsquare kilometers, which is nearlytwice the size of China or the UnitedStates.



TFTA Cont’d The TFTA will benefit Africa in at least six mutually reinforcing ways

The conclusion of the agreement will generate the impetus for the carrangements in western Africa, bringing economic powerhouses suc

a continental free trade area.

A much larger market whose free flow of goods and services willeconomic growth at 6 – 7% per year. At this rate the combinedprojected to reach $29 trillion by 2050, which would be equacombined GDP of the EU and the US. With additional policies,contribute significantly to spreading prosperity and reducing poverty

The TFTA will serve as an impetus for investment in Africa's cross-bordeis estimated that Africa needs to invest nearly $100 billion annuallyover the next decade. Less than half of this target is met currently.


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TFTA Cont’d



TFTA Cont d

The prospects for the larger markets and supporting infrastrucindustrial development. The associated technological develead to the creation of new industries.

The signal of larger markets will also help to stimulate trade infirst beneficiary is likely to be the financial sector, which will beto larger industrialists seeking to benefit from economies ofinancial services will reinforce the increase in cross-border inemerging African firms that are serving as regional championdevelopment.

By being part of larger markets small African countries willrestricted to producing their traditional products. With betterhuman resources they can become the locus of new moperations that serve wider markets.


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Costs of Inaction!!! Over US$ 138 Billion lost through corporate tax incentives as

“racing to the bottom”

It’s enough to put every primary school aged child in school, mhealth-related Millennium Development Goals, and invest in thprogrammes needed to end hunger

Kenya loses net of US$ 3Billion Dollars

Ghana loses net of US$ 2.27Billion Dollars

Net negative benefits from trade agreements with other tra

Loosing out on the pro’s of globalization; which cannot be a

Strategies for dealing with current security threats across the


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Thank You


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Feasible Aspects of Regional Integration for Africa SYPALA 2015

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