Political-economy dynamics matter most to Africa’s regional integration

3 July 2015
ITC News

The world economy is increasingly integrated, a development marked by the dominance of global and regional value chains. This has been accompanied by a proliferation of bilateral, regional, mega-regional and cross-regional economic cooperation agreements and integration initiatives.

Africa, a less developed but fast-emerging continent, is no exception, though it occupies a special – some would argue paradoxical – position. While it has set itself a most ambitious regional agenda, it is home to a multitude of regional organizations and groupings generally characterized by heavy – though often weak – institutionalization. Eight of these regional organizations, the regional economic communities (RECs), are the building blocks to continental economic integration under the aegis of the 54-member African Union (AU).

One of the AU’s aims is to boost intra- Africa trade and create an integrated continental market, including by establishing a continental free trade area by (CFTA), by 2017. Yet Africa is seemingly still the least economically integrated continent, even though there is a lack of good data and the large informal sector is generally not accounted for. The gaps between regional headline commitments (let alone the vision) and their implementation at national levels are glaring.

Attention has therefore generally centred on the state of regional economic integration in Africa, its potential benefits for sustainable development, the merits of objectives set, the credibility of commitments made and the capacity to achieve them. This has often led to heated debates between optimists and pessimists and discussions on whether economic integration in Africa should be viewed as a glass half full or half empty. While this relates mostly to expectations of what regional integration should look like, a benchmark – which definitely matters – might not be essential.

Surprisingly, little attention has been devoted to the political economy dynamics of cooperation and integration in Africa. Just like in other parts of the world, regional processes there are complex. They involve multiple stakeholders with differing historical, cultural, political, institutional, social and economic interests and backgrounds. The interactions between economic objectives and other regional dimensions – such as political cooperation, peace and security, management of natural resources, and health – are often poorly understood and thus generally discounted.

Yet such dynamics are critical to explaining the shape, trajectory and speed of economic integration in Africa. They can help observers to understand, for instance, the multiple memberships of all African countries to more than one regional grouping. They can also aid in identifying the opportunities and driving forces for regional integration and better navigate the obstacles and challenges that hinder it. They can also help describe the political – not merely the technical – feasibility of particular reforms and the types of coalitions that may contribute to solving problems of regional dynamics.

This then assist policymakers find the room for manoeuvre and whether they should try to i) alter the incentives for behaviour currently in place, ii) somehow avoid current incentives through alternative approaches, iii) adapt to current behaviours and incentives, or iv) await more propitious circumstances before acting.

Despite the wide diversity of situations in Africa, a number of common features and factors regarding regional economic integration processes seem to emerge. (P. Brenton and B.D. Hoffman (2015), Political Economy of Regional Integration in sub-Saharan Africa, The World Bank Group, www.ecdpm.org/peria).

First, economic integration requires champions. These cannot come from outside the region, though international factors and actors have an influence. However, large dominant countries, or a coalition of countries, usually set the tone and speed for regional integration. They can boost, but at times also hinder regional initiatives. Think of South Africa in Southern Africa, Kenya and what some have termed the ‘coalition of the willing’ with Uganda and Rwanda along the Northern Corridor in the East African Community, or Nigeria in West Africa. Champions can also include private sector actors, as discussed below.

Second, the size of the REC affects its dynamics, with larger groupings facing greater challenges in aligning the interests of their members. Though this can influence the agenda setting, it seems to have an even greater impact on transposition and implementation of regional commitments at national level and the capacity to overcome coordination failures.

Third, while most RECs are heavily institutionalized, progress is more effectively achieved in areas where RECs build on bottom-up, functional economic integration based on private sector and civic stakeholder initiatives and specific interests. These are often expressed first at national levels and not necessarily institutionalized at the regional level.

Fourth, RECs play an important signalling role, identifying the path to greater economic integration and providing important political legitimacy. Still, momentum for action can more easily be generated around specific objectives and narrower set of priorities resting on strong domestic interests from ruling and economic elites. In such contexts, monitoring mechanisms can help increase the transparency on implementation while also providing additional incentives to fulfil commitments.

Finally, the international community, in particular donors, have so far played a key role in providing technical and financial support to Africa’s economic integration. The heavy reliance of RECs on donor funding may stand in the way of a given country or group of countries taking greater ownership of regional organizations, policies and programmes and hence block the process of institutional development by domestic state and non-state actors that is adapted to the regional context.

Traditional donors have often ignored some of the political economy dynamics of regional integration in Africa. Submitting donor support strategies and efforts to ongoing and regular political economy analysis would provide a healthy counterbalance to often well-intended but poorly targeted approaches and help guide interventions in an iterative way.

A more politically savvy approach to economic integration, based on a pragmatic and targeted set of priorities and informed by these dynamics, is more likely to effectively bring about the aspired regional cooperation and integration sought by Africans and their partners.