An Overview of The Obstacles To The African Economic Integration Process in View of The African Continental Free Trade Area

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Africa Review

ISSN: 0974-4053 (Print) 0974-4061 (Online) Journal homepage: https://www.tandfonline.com/loi/rafr20

An overview of the obstacles to the African


economic integration process in view of the
African continental free trade area

Michael Takudzwa Pasara

To cite this article: Michael Takudzwa Pasara (2020) An overview of the obstacles to the African
economic integration process in view of the African continental free trade area, Africa Review, 12:1,
1-17, DOI: 10.1080/09744053.2019.1685336

To link to this article: https://doi.org/10.1080/09744053.2019.1685336

Published online: 05 Nov 2019.

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AFRICA REVIEW
2020, VOL. 12, NO. 1, 1–17
https://doi.org/10.1080/09744053.2019.1685336

An overview of the obstacles to the African economic


integration process in view of the African continental free
trade area
Michael Takudzwa Pasara
Department of Economic Sciences, North-West University, Vanderbjipark, South Africa

ABSTRACT ARTICLE HISTORY


African governments signed the largest trade agreement, the Received 9 May 2019
Continental Free Trade Agreement in 2018 in order to boost intra- Accepted 23 October 2019
trade thereby improving economic welfare of African citizens. This
KEYWORDS
paper provides an overview of the obstacles to the African Regional economic
economic integration process experienced in the past and the integration; intra-trade;
possible solutions. The paper discussed the theoretical regional economic
postulations and empirically reviewed some African experiences. communities (RECs); CFTA
Some theoretical aspects included not only the traditional
international trade theories but also other non-orthodox theories JEL
such as organizational theories which include F1; F4; E6; G2
intergovernmentalism, neofunctionalism and neorealism.
Empirically, Africa’s economic integration challenges range from
economic such as polarization of benefits towards larger
economies at the expense of smaller economies, an unclear
model of distributing welfare gains (or losses), traditional trade
models which do not stimulate intra-African trade, several non-
tariff and institutional barriers among other factors. Other
challenges include lack of political will to implement signed trade
contracts and political instability in some economic regions which
results in small and fragmented markets. The paper also discussed
the legal challenges such as lack of standardization on products
and procedures which result in subjectivity in interpretation of
trade instruments. The paper made recommendations to each
identified challenge in order to make the CFTA more effective.

Introduction
International trade has been and will continue to be a fundamental growth tool for every
economy. However, Africa continues to engage at the periphery of the global economy as
evidenced by a declining share in global production and trade (WTO 2011; AfDB 2014;
AEO 2016). Most sub-Saharan Africa (SSA) economies are small and least developed,
characterized by low income per capitas and small markets. With globalization, African
countries have responded by signing the largest continental trade agreement namely the
Continetal Free Trade Agreement in order to boost intra-African trade. Africa’s intra-
trade levels are currently the lowest compared to their European and Asian counterparts.

CONTACT Michael Takudzwa Pasara michaelpasara@gmail.com North-West University, Office 211 Building 4,
Vanderbjipark, South Africa
© 2019 African Studies Association of India, New Delhi
2 M. T. PASARA

In Africa only 12% of trade is intra-regional trade as compared to averages of 61% and
67% of the European Union and Asia-Pacific Economic Cooperation, respectively
(AfDB 2014; AEO 2016). Other sources such as UNCTAD (2016) and IMF (2017) state
that intra-African trade is pegged at slightly higher figures of around 18% compared to
69% intra-Europe and 59% intra-Asia trade. The figures remain low on the whole com-
pared to other regions. However, the sources acknowledge some slight improvements in
Africa over the past decade especially on the share of exports but highlights that the
share of imports remained stagnant despite the increase the volume of total imports.
Sow (2018) highlighted that sub-Saharan African trade was trending away from developed
economies towards emerging countries especially in the past decade.1 Exports to the
United States of America (USA) and the EU declined by 66% and 5%, respectively
between 2009 and 2017. In the same period, exports to Brazil, India, Indonesia, Turkey
and Russia doubled (IMF 2017). Although the proportion of aggregate exports to tra-
ditional partners (the EU, USA and China) remained noticeably higher compared to
that of the emerging partners, this progress indicates a new picture on the future of
African trade.
The appreciation of economic integration by African leaders was reflected from as
far back as when the Organisation of African Unity (OAU) was established in 1963
before it transformed to the African Union (AU) in 2002 (AEO 2016). Regional econ-
omic integration remains a key developmental pillar and was identified by the African
Development Bank (AfDB) among its ‘high five’ priorities. The other priorities
include development of infrastructure and the private sector, accountability and gov-
ernance, skills and technology which are all highly linked to the subject matter of
region economic integration (AfDB 2014; ACBF 2017). However, the African
process of economic integration has not always been smooth because of several chal-
lenges which were either institutional, economic, social or political in nature. Upon its
full implementation, the CFTA2 is set to become Africa’s largest continental trade
agreement and is aimed at boosting intra-trade in Africa thereby improving the
welfare of Africans.
This paper intends to provide a general overview of the obstacles which have been
encountered in the past integration processes in order to provide relevant recommen-
dations for the new relatively ‘large and ambitious’ trade integration project. This is
timely and can assist in the process of establishing a feasible implementation plan for
the CFTA which is aimed at fostering economic integration in Africa. There is a
general feeling that progress made on the economic integration programmes in
Africa have invariably been disappointing (Njinkeu and Fosso 2006; Qobo 2007;
Beyene 2014; Juma and Mangeni 2015; UNECA 2016). Targets have either not been
met or in some cases achievements have been reversed or lost. With the renewed
vigour and the fruition of the CFTA, the key question will be whether progress will
be made and targets achieved. It is likely that economic integration in Africa will not
be successful as desired if obstacles are not addressed. It is unlikely that the African
Economic Community (AEC) will be built if trade agreements and institutions are con-
tinuously established in an uncoordinated manner (Ismail 2017). This will result in a
wastage of resources and a complex web of frameworks which may ultimately
become an institutional mess.
AFRICA REVIEW 3

Theoretical and empirical review


Economic integration is a multi-dimensional matter which is influenced by economic, pol-
itical and social matters and as such can be discussed from variant angles. Thus, this
section attempts to review some theoretical postulations from both economic and non-
conventional sources to give a succinct analysis on the subject. In terms of economic argu-
ments, although the theory was later challenged by David Ricardo in his comparative
advantage thoery, most African countries are still trying to implement, in part, the mer-
cantilist view. Mercantilists held the notion that countries with larger reserves of precious
minerals such as gold, silver and diamonds will have leverage over those with smaller
reserves (Smith 1776; Napoleoni 1975; Irwin 1996). This view resulted in countries impos-
ing trade restrictions in order to minimize their level of imports relative to exports. Con-
sidering the African economic integration in retrospect, several free trade areas (FTAs)
which were signed across African RECs did not result in much economic benefits
because they were countered by member countries still reluctant to remove non-tariff bar-
riers in order to consolidate their trade balance positions of limited imports. These non-
tariff barriers come in various forms which include but are not limited to delays in customs
clearances, work and trading licences, unnecessary litigation and excessive insurance, vari-
ations in health, safety, environmental and labour regulations and other standards such as
packgaging (Kalaba and Tsedu 2008; Erasmus 2013). All these can be interpreted as pro-
tectionist policies which lead to huge increases in production costs thereby constituting
barriers to market acess (Mothae 2005; Lopes 2013). Thus, the CFTA must be complemen-
ted by removal of non-tariff barriers if the agreement is to result in much economic fruit.
Of course, there is an economic rationale to these African countries pursuing protectionist
policies such as protecting local and relatively vulnerable industries from international
predators. However, as Ricardo (1817) indicated in his comparative advantage theory,
African countries need to appreciate that trading eocnomies can be both well-off due to
comparative advantages in both production and consumption.
Perhaps the reluctance to fully open up borders and integrate despite having signed
FTAs in the past was also motivated by the economic arguments postulated by Jacob
Viner’s theory. Viner (1950) argued that trade liberalization is not always welfare enhan-
cing due to trade creation and trade diversion effects. Proponents of Viner argued, using
empirical evidence, that economic integration is likely to lead to polarization of benefits
towards some regions, countries and economic sectors at the expense of others. For
instance, a simulation study by Mold and Mukwaya (2015) indicated that although the
Tripartite Free Trade Agreement was likely to increase intra-trade by 30%, welfare
gains will be skewed towards manufacturing and textiles sectors whilst Makochekanwa
(2012) estimated a 22% increase in agrifood production. For the majority of African
studies, the benefits were mainly skewed towards the huge, coastal and well developed
economies as South Africa, DRC, Egypt, Kenya, Mozambique at the expense of smaller
and landlocked economies like Malawi, Zimbabwe and Swaziland. These economic argu-
ments have led to some African countries who have inherent disadvantages to become
reluctant to open up their economies despite them having joined a regional economic
community. For example, statistics reflect that seven countries are not FTA members of
either COMESA or SADC (Shujiro and Misa 2010; Makochekanwa 2012; Gurova 2014;
Karambakuwa, Makochekanwa, and Kairiza 2015; Mold and Mukwaya 2015). In
4 M. T. PASARA

general, the process of economic integration is likely to become stalled when countries do
not see the potential economic gains which are likely to accrue to the individual countries
because economic integration comes at a cost of losing soveregnity and this trend is likely
to continue in the recently signed CFTA since little has been done upto this point to
address these variations.
The CFTA must also develop a clear model of sharing welfare gains and losses in order
to stimulate participation in the continental trade agreement. The benefits of economic
integration is usually economic development due to increased market opportunities and
economies of scale that are exploited. These are usually manifested in the form of
increased access to the regional market which would have been previously
untenable (Ismail 2017). Economic integration tends to favour economies which are stron-
ger relative to others, with more competitive enterprises which tend to dominate regional
markets, thereby, outperforming weaker enterprises in supplying regional markets. Some
analysts highlighted that the size of regional markets is usually the attraction factor in the
sense that single enterprises can supply to several economies. The effect will be dispersed
via a trickle down process from relatively well-established industrial centres with devel-
oped infrastructure. However, resistance may rise if other member countries on the
lower end of the trickle-down effect perceive that the linkages do not yield much gain
as is obtained by the best performing economies (Cheong and Wong 2007; Kopsakan-
gas-savolainen 2009). On the other hand, a free trade area such as CFTA leads to losses
in customs revenue due to reduced or eliminated tariffs. Consequently, political rhetoric
may lead to economic nationalism thereby destroying the whole process of economic inte-
gration on the basis of imbalance which will be perceived as unfair gains or uneven dis-
tribution of welfare.
Economic policies should be structured in a manner which complements economic
development by complementing industrialization in partner countries. These policies
should be allowed and promoted by economic integration projects in a way which
equips an economy’s comparative advantage, that is, to take in imports and incoming
capital through linkages. This approach may avoid the bureaucracy and dirigism3 associ-
ated with using common approaches (Lundberg, Bacharach, and Lawler 1980; Alesina,
Enrico, and Romain 2000). The possible solutions include transfer of taxes, regional indus-
trial planning and allocating foreign investment to specific economies and engaging in
regional national projects such as dams and electricity grids which are targeted in least
developed areas within the community. Alternatively, a development fund can be
created although care should be taken so that ventures into depressed regions are done
in a sustainable manner. Regional development banks can be successful if they are
given operating permits which have commercial considerations (Bekaert, Campbell, and
Lundblad 2001; Tornell et al. 2003; UNECA 2008, 2012).
In terms of customs revenue, the CFTA can designate a community institution to
collect or simply design a formula to collect and disburse the revenue, for instance, collect-
ing at a point of production, sale or consumption. However, the latter approach may not
adequately address the problem of imbalances, thus the former serves better. Others
argued that since the process of economic integration only attracts the support of govern-
ments when they envisage actual gains, indispensable political will is needed for foregoing
the revenue especially where customs revenue forms a significant source of government
revenue. This is because short term losses are usually more apparent with welfare gains
AFRICA REVIEW 5

from economic integration usually being realized in the long-term. With the majority of
African governments being largely depended on customs revenue in their governement
expenditures in providing merit and public goods, the trade off isvery significant and is
unlikely to lead to resistance on part of the implementation of the CFTA if pragmatic
alternatives are not put forward. This is because the very politicians use these merit and
public goods to consolidate their domestic positions and are usually not willing to
sacrifice their short term positions for long term economic gains.
Member countries must also be clear about both the nature and timing of available
gains, taking into account transition stages. Those economies which are less endowed
to benefit from the process can be allowed derogation from the regional incentive
regime so that they can offer a more enhanced regime to attract investment into their
depressed areas. This can also be done in collaboration with regional development
banks (Mukasa et al. 2013). The derogation should be uniform throughout the regional
market so that losses associated with competitively generous incentive regimes are
avoided. Overall, the aim should be to achieve continental economic development
which is uniformly distributed among member countries.
Apart from economic challenges, several other challenges could be extrapolated from
the non-conventional views. The neofunctionalist perspective explains integration from
a governance view using two main theories of neofunctionalism and intergovernmental-
ism. Neofunctionalism theory, founded by Edmond Haas, views society as composed of
various interest groups in which an integration process would better satisfy them. Neo-
functionalism brought the idea that an integrated union would acquire the features of
the ‘domestic political systems’ and argues that there exists a high authority above
nation states which gives direction to the integration process (Rosamond 2000a, 2000b).
In Africa, the high authority can be presumed to be the Organs of the State and Govern-
ment and the Secretariat which determine the overall direction of the trade arrangement
and have the supreme organizational authority. Neofunctionalists purpot that a high auth-
ority guides its members either to success or failure even though the process itself would be
led by technocrats. Thus, some African integration challenges could be attributed to lack of
a difinitive direction by the high authorities especially the African Union. The African
Union has been accussed by some countries and various interest groups of failing to
provide measurable goals and decisively solve domestic political affairs of its member
countries especially when these member countries have experienced pre-post election vio-
lence, civil unrest and even wars. The resultant effect was a lack of trust of the entity by
member countries. This mistrust has had spillover effects into economic affairs such as
trade agreements.
Consequently, member countries have joined FTAs with one leg in and another out
under the fear that should a dispute arise, the African Union which is the higher authority
will not be neutral and decisive. For instance, there was an acrimonious and perplexing
relationship which resulted in open tensions between COMESA and SADC in the
1990s. On one hand, COMESA blamed SADC of being reluctant to merge while on the
other hand the SADC Executive Secretary gave members who belonged to COMESA a
notice to choose between the two, but denied this shortly afterwards (Carmignani 2006;
Sunde et al. 2009). The COMESA Secretariat pushed for a merger basing their arguments
on the original goal of developing the Preferential Trade Area (PTA) into a common
market for eastern and southern Africa. On the other hand, the SADC Secretariat with
6 M. T. PASARA

support especially from Botswana, South Africa and Zimbabwe upheld the contrary view
that SADC should also continue.
Consequently, South Africa and Botswana did not join COMESA even though pro-
visions were made for their membership should they decide to join in future. Zimbabwe
later joined although it had doubts initially, especially when South Africa gave notice that
it would not join COMESA. In 1996, Lesotho and Mozambique gave a 12 month notice to
leave citing reasons that they preferred smaller organizations with fewer problems.
Mozambique also argued that it did little business with COMESA members. In fact, the
Mozambican president Mr Joachim Chissano had initially signed the COMESA Treaty
against his economists’ advice. Namibia also came close to leaving COMESA but later
reaffirmed its membership citing that the relationship between COMESA and SADC
had been clarified.4 The major concerns rocking the two RECs were that the programmes
were uncoordinated and duplicated which made implementation difficult (Juma and
Mangeni 2015; Tumwebaze and Ijjo 2015).
In January 1993 in Lusaka, Zambia, the Authority noted that the PTA and SADC had to
continue to exist as autonomous but complementary entities with distinct objectives. They
decided that matters of harmonization, co-ordination and merger should be resolved by
the PTA Authority (later COMESA). The matter of points of duplication of responsibil-
ities and difference was later sorted in June 1993 in Harare, Zimbabwe with the assistance
of a ministerial committee. At the same time, they also discussed how the PTA and SADC
could evolve towards AEC which ultimately led to successful initiation of the TFTA dis-
cussions in 2008. Within the same year of 1993, the COMESA Treaty was being discussed
and drafted which later came into effect in 1994. A position was concluded, then, that the
two communities are to co-exist but they had to harmonize their policies and instruments.
It was, however, viewed by some analysts as an unsatisfactory solution especially due to
the continued refusal by South Africa and Botswana to join COMESA, coupled with the
departure of Mozambique and Lesotho who cited lack of proper coordination as their
reason. Since COMESA had a much wider agenda which also encapsulated that of
SADC, it appeared a fair suggestion that SADC be regarded as part of COMESA. With
the fruition of the bigger continental agreements such as the Tripartite Free Trade Area
(TFTA) and CFTA, much progress has been made over the last two and half decades
from the 1990s towards harmonization and coordination of policies and instruments. It
should be noted, however, that the TFTA agreement has so far failed to meet its 2017
implementation targets due to participating nations failing to agree on certain trade
instruments such as rules of origin, trade in services and intellectual property rights
among other points and this is likely to continue again into the CFTA.
Nonetheless, the merging of African countries into the CFTA is superlative in the sense
that some RECs such as COMESA, EAC and WEAMU5 have already been implementing
(in their own unique ways) project- or sector- oriented approaches to economic inte-
gration thereby attracting the interest and partnerships of international financial insti-
tutions (IFIs). It seems unreasonable that gains available to a country in a sector or
project co-operation should be foregone on account of differences in membership of
RECs. Therefore, fusing the RECs into one large continental trade agreement together
is likely to lead to multiplier effects in both acquiring benefits of economic integration
and in distributing them. Areas which affect trade such as rules of origin will no longer
be of much concern as long as commodities are of an African origin.
AFRICA REVIEW 7

Using the neofunctionalists arguments, there is need for member countries of African
RECs to transfer or ‘give up’ some of its power (or sovereignty) to the high authority. The
sovereignty or power transference equips the high authority to not only outline terms of
trade but also have some monitoring and enforcing power to ensure successful implemen-
tation of the agreement. Controversy usually arise in terms of the amount and extent of
sovereignty that each country is willing to give up (Bacharach and Lawler 1980, 1998;
Krapohl, Meissner, and Muntschick 2014). The power should not be so little that the
high authority does not have an enforcement capacity, but neither should it be too
much that the member countries are crippled to make certain strategic domestic decisions.
Unlike in Europe where there are well developed institutions for implementation of stan-
dadised procedures and accountability of actions, empirical evidence in Africa indicates
that the signing of trade agreements is one thing but the actual transference of sovereignity
is another. Lack of trust in Africa’s higher authority has significantly contributed to this
outcome and it is likely to continue with the CFTA. However, without the existence of
a high authority, implementation of economic integration through the continental trade
agreement in Africa would be difficult if attainable at all.
Neofunctionalism was, however, criticized for decreasing the role and authority of
member countries. In addition, the idea of spill over, particularly the view that economic
integration matures into political integration was contested (Ujupan 2005). For instance,
Stanley Hoffmann opined that economics and politics are independent of each other and
he differetniated high and low politics. He described low politics as engaging technocrats
and does not require too much sovereignty transfer from members; therefore, integration
would be feasible in such instances. On the other hand, high politics involves key policy
issues such as defence, taxation, macroeconomic strategies and Hoffmann argued that
nation states will be unwilling to transfer their sovereignty to the high authority
(Hoffmann 1966, 1982; Edwards 1992). However, for trade integration to be effective,
there is also need to integrate common macroeconomic institutions which will monitor
macroeconomic policies. For instance, there was a significant improvement in the
macro-variables of COMESA, EAC and SADC from the time they established the macro-
economic convergence criteria which established parameters and instilled fiscal and mon-
etary discpline among member countries (Maleleka 2007). Thus, despite smaller
economies feeling more vulnerable and exposed to external economic shocks (Mundell
1973), there is need to open up their borders in order to exploit the gains of economic
integration.
Promoted by Putnam (1998), the intergovernmentalism school of thought also provides
some interesting insights into Africa’s economic integration challenges. The intergover-
mentalism is anchored on binary curents. The first is neorealism whose main idea is
that the distribution of competencies between members induce variances in power.
Ujupan (2005) also argues that others challenges emerge from the fact that stakeholders
do not carry the same weight. Bacharach and Lawler argued that stakeholders are charac-
terized by bases of power and those with greater weight (economic or political) are likely to
pursue the majority of their objectives. This applies even within the European Union and
North America where countries like Germany and the United States, respectively, have
more influence in negotiating the terms of the economic community. In Africa, South
Africa exerts a much greater level of influence in the South African Customs Union
(SACU) while Kenya has more influence in the East African Community (EAC) with
8 M. T. PASARA

Egypt in the North and Nigeria in the West. Similar to the Principal-Agent theory, the
management system will influence the preferences and priorities of the organization
while at the same time considering the preferences of the other stakeholders to avoid
loss of position. However, creating this balance when it comees to international affairs
in a broad and dynamic African context is a mammoth task in which proponents of
the continetal trade agreement must be ready to deal with. The second is neoliberalism
which focuses on interaction of interests of members. Putnam viewed economic inte-
gration as a game consisting of two levels (Putnam 1998). The first one is the national
level where coalitions are built by office holders among domestic groups and the second
level consists of the unions where members bargain by satisfying demands of strategic
interest groups in order to enhance their positions at the domestic level. Consequently,
challenges may emerge in trying to balance the outcomes of both games. The comparative
politics school of thought also acknowldged that multi-level governance (MLG) is affected
by several complex actors because economic integration favours power devolution from
the state to both sub- and supra-national levels.
In Africa, the initial signing of trade agreements has not presented so many challenges
as this is mainly driven by the political elites. However, ratification of the trade agreements
by the member countries to bring the agreement into effect has been relatively slower. For
instance, the TFTA was initiated in 2012, signed in 2015 but until now is not yet oper-
ational due to challenges on trade instruments especialy on rules of origin. Slower ratifica-
tion has been as a result of several factors such as domestic beareaucracies among member
countries as some may take longer to approve in national parliaments. Other factors
include, as the organizational theory suggests, reluctance by member countries to
implement when they do not perceive the created value of the new arrangement. Accord-
ing to the theory, organizations survive because they create vaue for different
stakeholders (Edwards 1992). Thus member countries will be motivated to join as long
as they perceive their ‘inducements’ exceed their contributed value. Thus, when the per-
ceived inducements are greater then the economic integration process is quickened. Like-
wise, when the perceived gains are lower, the process is stalled (Morgan 1998; Jones 2004;
Cheong and Wong 2007; Johnston and Trebilcock 2013). Applying the elements of the
organizational theory, generalizations can be made that although countries maybe be
motivated to join the African CFTA so that they can pool their resources together, how
the trade arrangement will further deepen or stagnate is largely explained by the processes
of how the CFTA will adapt or resist to change as an organization. For instance, not much
economic gains can be derived from the FTA as it is the most basic form of a trade agree-
ment, therefore, the rate and manner in which in CFTA will transform and deepen into
common markets with common financial instituions will have a significant influence on
its long term impact and survival.
One enigma of the organization is that stakeholders are continuously engaged in a
process of simultaneous competition and collaboration (Ujupan 2005). Member states
have to constantly compete for factors of production and markets for their products
while simultaneously collaborating in order to either adopt new technologies or pro-
duction methods and expand their markets and sell their products to other regions as a
joint supplier. Thus, all stakeholders would want the organization, that is, the CFTA to
survive as a basic condition for them to pursue their goals, and they collaborate in this
sense. They compete over the distribution of welfare gains so that they maximize their
AFRICA REVIEW 9

main individual country interests. As Bacharach and Lawler argued, actors compete and
collaborate when necessary. No actor has an absolute intention to annihilate the others,
but all together no actor is willing give up their own goals for the purpose of cooperating
on every matter simply to achieve organizational harmony. However, frictions emerge
when economies fail to balance between competition and collaboration. Sadly, this has
been the case for Africa. Competition for Asian, American and European markets has
taken precendence over collaboration. This could possibly be explaned by the historial
trade models which were tailored to siphon resources out of the continent. Perhaps,
there could be more collaboration within the CFTA if African countries harness a way
in which their products and trade as a unit in international markets.

Other generic challenges of Africa’s economic integration processes


The role of political stability on intra-African trade cannot be understated. Apart from the
institutional frameworks in Africa, economic integration generally predicates on the atti-
tudes of political leaders to an extent that projects live or die with them. The drawback in
such a framework is that Africa is known for endemic political instability which is charac-
terized by political leaders who either do not stay in office for long or stay around too long
until they are forcibly ejected. This has usually resulted in acrimony which in turn paral-
yzed the activities of political organs (Alesina, Enrico, and Romain 2000; Mothae 2005;
Büthe and Milner 2008; Hanieh 2010). A possible solution would be for economies to
incorporate economic integration into their national laws as a fundamental national
policy as a democratic agendum through which elections are held or contested. This
will place the economic integration programmes above the fleeting spans of African pol-
itical leaders.
Some analysts argued that, even though many resources have been devoted by political
leaders to speeches, conferences, resolutions and treaties; they still identified lack of pol-
itical will as another basic problem to the process of regional economic integration. There
are several reasons which can possibly explain this kind of outcome. Firstly, leaders could
have concluded the treaties without the endorsement of the parliament and as a result the
concluded treaty does not reflect popular opinion. It therefore becomes difficult to attract
follow-up action from people who may not even be aware of the treaty. Secondly, there
may be delays in the ratification process due to lack of support from relevant institutions,
resulting in the treaty failing to take-off at all in some instances. In some cases, ratified
treaties are not timely disseminated to relevant stakeholders such as the business commu-
nity and service providers who are usually interested in expanded markets (Hartzenburg
2012). Leaders may not disseminate the ratified treaties intentionally so that they do not
become accountable to electorates with regards to the performance of these treaties and as
such political leaders will not have an incentive to implement them. A possible solution
might be to give sufficient power to technical organs to proceed irrespective of the political
outlook might be a more effective approach. However, for the approach to be effective
there is need for treaties to be sufficiently comprehensive and leave the implementation
phase to national technical agencies such as immigration or customs authorities.
Political leaders have also reneged on their obligations assumed under the treaties due
to national emergencies. Pursuing of long-term strategies of regional economic integration
appeared like a luxury which is unjustified to disregard domestic national emergencies.
10 M. T. PASARA

National emergencies appear in various forms such as internal civil strife, ethnic conflicts,
suppressed popular or political dissent, transition periods between elected governments
and national disasters (le Roux 2005; Gibbs and Treasure 2014; Candau and Dienesch
2015). Except for national disasters, the majority of these national emergencies are govern-
ance issues, lack of democracy and gross violation of human rights sustained over long
periods. These concerns usually draw the attention of governments and civil society
thereby taking priority over issues of economic integration. If economic integration is suc-
cessful, it can significantly and positively promote good governance and human rights for
member countries leading to much greater welfare.
Clevages are also another factor. Africa is divided so much that it has posed serious
challenges for the continent to take a common stand on several issues. Although this
has resulted in defeat and humiliation for the continent on several fronts, it is interesting
that there has not been enough shock (stimuli) for Africans to take necessary actions to
address the divisions (Draper 2010; Van der Loo and Van Elsuwege 2012). The past
decades have seen African economies being overtaken and those economies which are
already strong are uniting and creating even stronger blocs and Africa appears to be luke-
warm on its approach to integration. Rather than focusing on forging stronger alliances,
Africans have shifted from blaming super powers to finding fresh sources of hatred and
divisions amongst themselves resulting in stalled processes of economic integration.
The nature of disunity is multifaceted with sustained cleavages emanating from political
instability in various forms in different regions of the continent. These range from terrosit
attackes, civil unrest and wars, pre- and post-election violence and ethnic violence which
sometimes spill over into neighbouring countries (Johnston and Trebilcock 2013; Walters,
Bohlmann, and Clance 2016). There are also differences over changes in government
where in some cases a forceful change of government makes host of the deposed leader
an enemy of the incumbent government. This can become a serious dividing factor
especially when some governments are apparently committed to democratic governments.
Unfortunately, there is little that can be done to address some of the political challenges in
terms of the trade instruments of the CFTA apart from perhaps generally encouraging
peace and stability within the region since more forciful measures like sanctions and iso-
lation might lead to might exacerbate challenges. However, the African Development Bank
(AfDB) highlighted that there has been a general appreciation lately by the new breed of
leaders who are making efforts to form a core group of united African countries by follow-
ing up on the vision of the African Economic Community (AEC).
In addition to Africa’s political challenges, some schools of thought posit that inter-
national systems have been unfavourable to economic integration efforts by political
leaders in Africa. Historically, international systems have promoted open market econom-
ies and export promotion policies which place access to markets of developed countries
higher on the national agenda, possibly to the prejudice of intra-African integration.
For instance, although the European Union (EU) was cooperating with African, Caribbean
and Pacific countries under the Lóme Conventions and Cotonou agreement by offering
preferential access, the conditions were still designed to offer considerable protection
for the EU market, especially in textiles and agriculture. Similar schemes were also
employed under the Generalised System of Preferences, EC-South African FTA Agree-
ment, the USA sub-Saharan Africa co-operation arrangement under the US African
Growth and Opportunity Act and several other bilateral treaties and investment codes
AFRICA REVIEW 11

(Mansfield and Reinhardt 2003; van den Boogaerde and Tsangarides 2005; Manservisi and
Mény 2009; Witkowska 2016). Africa can address these issues by taking a position in these
agreements with the AEC and constituting part of the negotiating teams. This will enable
some African countries to focus their efforts in trying to meet the criteria unilaterally set by
the United States of America in dealing with their trading partners. Otherwise, regional
trade agreements (RTAs) with countries outside the AEC could become another source
of detraction from the economic integration aim of the AEC Treaty. Moreover, economic
policies of most African countries tended to focus on foreign markets and not seriously
consider African markets, thereby shifting emphasis away from the AEC. This has resulted
in small proportions of intra-African trade. The new continental agreements, that is, the
CFTA should address some of these biases and complement them with policies which
promote regional markets through African economic integration. In other words, there
is need for a significant transformation of Africa’s trade model. This should, of course,
be complemnted by the relevant infrastructure (transport, border systems etc). The
expected outcome is a significant boost of intra-trade and welfare levels in Africa.
However, some argue that the continent will not realize significant increases in trade
since African economies and products are homogeneous and in competition. This has
become the basis for the conclusion that African countries have nothing to carry out
trade exchange with and, therefore, without trade, economic integration cannot arise.
Yet, in reality, even developed countries exchange a lot in trade despite producing
similar or competing manufactured goods (Leontief 1965; Hiziroglu, Hiziroglu, and
Hulusi Kokcam 2013; Beyene 2014). This is because the grounds for exchange decisions
can arise from various factors which range from different structures of industrial and com-
mercial properties, varying technical developments for production processes and product
differentiation, considerations of market access and location and also differences in legal
and political regimes (Limao and Venables 2001; Karim and Ismail 2007; Mold and
Mukwaya 2015). Therefore, even in the case of production of similar products or of sub-
stitutes trade can take place on the basis of differences in production costs and external-
ities, which is actually the basis of comparative advantage.
Other analysts argue that African economies are, in fact, not competitive but rather
produce substantially different products due to differences in resource endowments. On
the contrary, therefore, Africa is characterized by heterogeneous economies which
produce primary products on the whole, but varied primary products. In other words,
Africa produces similar but differentiated products. For instance, coffee from Kenya is
different from coffee from Uganda. The substantial levels of processing industries make
the situation conducive for transnational trade. Rather, historical factors have caused
the paucity of intra-African trade since economies have been oriented to export to devel-
oped economies.
There is also need to harmonize laws applicable to cross-border trade, establishment of
businesses and labour movement including the right to work. These complement free
movement of goods, capital and enforcement obligations regionally. Legalities may also
include establishing and regulating standards in various areas so that policies are
uniform and harmonized in economic communities. Harmonized laws increase
efficiency and certainty in operations thereby lowering transaction costs. Without an
enabling legal framework, the economic integration objective of free movement of mer-
chandise can hardly be achieved due to national administrations that can lawfully resist
12 M. T. PASARA

any efforts. Positive legislation is needed to remove and prohibit barriers to the freedoms
and the limitations on the operation and jurisdiction of community institutions (Van der
Loo and Van Elsuwege 2012; Johnston and Trebilcock 2013; Fox, Fox, and Gilson 2016).
When such frameworks are absent or inadequate, as was the case in several African RECs,
there will be high transactions costs will will dissuade intra-African trade within the
CFTA. The costs could emanate from actual cross border transaction costs for both
tariffs and costs linked to restrictions under work permits and various licences.
Other additional costs may be due to uncertainties of applicable laws and of the exact
nature of assumed obligations which may leaperhd to unnecessary litigation and excessive
insurance (Kalaba and Tsedu 2008; Erasmus 2013). For instance, production costs may
include time taken to process the clearances and permission which could have been
avoided. Differences in health, safety, environmental and labour regulations and other
standards such as packaging can be interpreted as protectionist policies which lead to
huge increases in production costs, thereby constituting barriers to market access
(Mothae 2005; Lopes 2013; Gibbs and Treasure 2014). Moreover, MNCs may deem it
necessary to locate in various national markets so that they qualify to be national entities
and avoid barriers to market access, but this may possibly lead to higher production and
operating costs as well as leading to firms operating below their optimal levels or even
withdraw from the market altogether (Giroud and Mirza 2006). Legal frameworks can
be harmonized using treaties, model laws or by commercial practices or by regulating
and making decisions through community institutions. Interpretation of rules is crucial
in generating a uniform understanding and application. Therefore, institutions play a
crucial role in developing a legal framework which leads to the attainment of economic
integration. The institutions include courts of law, arbitral tribunals and Assemblies of
Heads of State and Governments.

Conclusion and policy recommendations


The paper highlighted the several challenges and obstacles which have limited Africa from
realizing its full potential from the regional economic arrangements. The challenges range
from economic to political differences to challenges related to the markets. Other obstacles
also emanated from disputes in terms of how the welfare gains (or losses) should be dis-
tributed. The continent is also rocked by legal inconsistencies and unclear instruments
which have resulted in some member countries manipulating the existing systems and
hindering progress. The paper also discussed how international finance institutions
(IFI) have designed blueprints which were not very relevant and effective to the African
context. Some possible solutions for each identified obstacle were presented so as to accel-
erate the rate of growth and welfare increases due to economic integration.
The paper recommends that member countries should ensure independence of the
CFTA so that there is minimal influence from political offices. This will not only ensure
continuity of the continental trade agreement but also increase its credibility and accep-
tance levels when taking key regional decisions such as setting targets, deciding and imple-
menting disciplinary decisions and policing of trading and regulatory systems. However,
this should be done in a manner which ensures that the higher authorities are still accoun-
table to governments and transparent in their operations. The challenge is to find an
optimal balance between the three; that is, independence, transparency and accountability
AFRICA REVIEW 13

especially in the African context where the continent is affected by several governance
issues. The balance can be achieved by including a proper mix of authority between poli-
ticians and technocrats who are experts in various fields such as economics, international
trade, law, customs and logistics among others.
The African narrative has been one that is dominated by political structures especially
at the executive level. Whilst this model was desirable in the sense that it reflected political
will and also that politicians have the domestic political authority to implement the out-
comes of agreements in their respective economies, sometimes regional integration pro-
gress was stalled when the politicians get absorbed in domestic squabbles in a quest to
retain power. Measures can be put in place to transfer part of this executive authority
to technocrats so that regional integration progress is not solely depended upon the pol-
itical powers. The ultimate effect is a smoothened implementation of the CFTA thereby
stimulating intra-trade. This is because, in some cases, domestic political developments
have discouraged some economic stakeholders especially in the private sector to engage
in international trade with certain countries because contracts will be largely depended
upon the fact a certain regime continues to hold power. Once power shifts, the incoming
regime disrupts all existing trade agreements thereby affecting economic players especially
in the private sector. Thus, a blend of politicians and technocrats in the executive of the
economic communities will ensure continuity of trade agreements even when power
changes hands because these agreements would have been made on economic merit
rather than political basis.

Notes
1. This was necessitated by several national policies such as the Look East policy in Zimbabwe
which shifted its trade focus towards Asian nations, Zambia shifting its main trade to China
and South African joining the BRICS community.
2. Signed in March 2018 in Kigali, Rwanda the CFTA consisted of 44 African countries at the
time of its signing with more members being subsequently added. The ratification process
had already started at the time of the writing of this paper.
3. Dirigism is a socioeconomic system built upon the basis of totalitarianism as the best system
for humanity.
4. A report by experts advised and clarified that COMESA and SADC were to remain as two
autonomous organs (Article 29 of the PTA Treaty, 1993). See also, Item VII of the Final Com-
munique of the 11th Meeting of the Authority of the Ministerial Meeting of the Plenipotenti-
aries of the Draft COMESA Treaty dated 29-30 October 1993 ref. PTA/LEG/MP1/2,
[COMESA Secretariat]; and the preamble to the COMESA Treaty (ECDPM 2013).
5. West African Economic and Monetary Union.

Notes on contributor
Michael Takudzwa Pasara (Ph.D) is a Researcher and Economic Consultant.

ORCID
Michael Takudzwa Pasara http://orcid.org/0000-0003-4298-9585
14 M. T. PASARA

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