department of economic affairs african union commission status of integration in africa joint annual...

Department of Economic Affairs

African Union Commission

Status of Integration in Africa

Joint Annual Meetings ofthe AU Conference of Ministers of Economy and

Financeand ECA Conference of Ministers of Finance, Planning

and Economic Development

STATUS OF INTEGRATIONSTATUS OF INTEGRATIONIN AFRICA (SIA)IN AFRICA (SIA)

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OUTLINE OF THE PRESENTATION

Introduction I. Status and Progress made

by the RECs II. Minimum Integration

Programme (MIP) Conclusion


Introduction The Abuja Treaty stipulates that African States

must endeavour to strengthen the Regional Economic Communities (RECs), in particular by coordinating, harmonizing and progressively integrating their activities in order to attain the African Economic Community (AEC) during a thirty-four (34) year transition period subdivided into six (6) varying stages

However, in spite of the adoption and implementation of numerous initiatives, the results about Regional and Continental integration still remain mitigated.

3Status of Integration in Africa

During the Second and Third Conferences of African Ministers of Integration, held in Kigali in July 2007 and Abidjan in May 2008, respectively, various important recommendations came up, namely:

i. Need for the AU Commission, in close collaboration with other key stakeholders to review the Abuja Treaty, taking into account the Sirte Declaration;


ii. Need for the Commission to coordinate the activities of RECs as well as to harmonize their policies and programmes as a key strategy to enhance the rationalization process

An assessment report on the Status of the RECs was presented and discussed during the Third Conference of African Ministers in charge of Integration held in Abidjan, in Cote d’Ivoire from 22 to 23 May, 2008.


The report was submitted for adoption by the Assembly of the African Union held in Sharm-El-Sheikh, Egypt, from 30 June to 1 July 2008.


I. Status and Progress made by the RECs

Stage 1: Completed Stage 2: Completed (except IGAD which is

in the process of conducting a study on its FTA including gradual elimination of its tariff and non tariff barriers)

Stage 3: In progress Stage 4: no progress yet Stage 5: no progress yet Stage 6: no progress yet


Status of Integration in Africa 8

Stages of the Abuja Treaty

Stage one: 1994-1999

Stage two:2000- 2007 Stage three: 2008-2017

Stage four: 2018-2019

Stage five: 2020-2023

Stage six: 2024-2028 latest 2034

RECs

Strengthening existing RECs and creation of new RECs where they do not exist

Coordination and harmonization of activities

Gradual elimination of tariff and non tariff barriers

Free Trade Area

Customs Union

Continental Customs Union

Establishment of an African Common Market

Monetary and Economic Union

IGAD study in progress

to be fixed

to be fixed

This stage will be achieved when all RECs have achieved Customs Union and harmonized their respective CET, with a view of creating one single continental CET

This stage will be achieved when all RECs have achieved continental customs union as well as free movement of labour and capital

This stage will be achieved when all RECs have achieved African Common Market at which time there will be a common currency, issued by the African Central Bank.

SADC 2010

CENSAD in progress

to be fixed

ECOWAS 2009

COMESA 2009

ECCAS 2010

EAC

STATUS OF THE REGIONAL ECONOMIC COMMUNITIES

COMESA, ECOWAS, SADC, EAC, and ECCAS have achieved Free Trade Area

CENSAD and IGAD are in the process of having their own

COMESA, ECOWAS planned to have their own Customs Union by the year 2009

ECCAS and SADC in 2010 CENSAD and IGAD in progress EAC is already in Customs Union and

hope to fully implement all programmes to support the Customs Union by 2010


Since IGAD Member States also belong to COMESA, IGAD could adopt similar programmes with the latter and the study that it intends to carry out on FTA should be in line with that of COMESA

IGAD could also be part of the tripartite agreement that is taking shape between COMESA, EAC and SADC


CEN-SAD, which also includes ECOWAS Member States, could be invited to closely study the status of ECOWAS and harmonize its programme with that of the latter


It is notable that among the inter-REC activities is the collaboration of the EAC particularly with the COMESA, SADC and the IGAD. A number of activities are taking place within the context of the Inter-Regional Coordination Committee


The question remains on how to move to the fourth stage which is the continental customs union that has to be achieved by the year 2019

One way is to make sure that at regional level, and in line with variable geometry, RECs to continue implementing the FTA’s, and customs union, before 2019

The remaining stages common market, economic and monetary union should also be implemented taking a close look at the remaining fifth and sixth stage


Secondly, while RECs are moving to accomplish these stages in line with the Abuja Treaty, a study on the Minimum Integration Programme (MIP) which prioritized some sectors to be implemented at the continental level could be used as guidelines towards bringing RECs to achieve the remaining stages.


Challenges

The Continent’s regional integration has not been matched by commensurate political will and commitment of Member States to effectively implement agreements reached under various integration arrangements.


The implementation process by some Member States is very slow. Additionally, in some RECs that have achieved FTA, there are some Member States that have not complied with the FTA Protocol

The integration process on the Continent is also constrained by the numerous conflicts in some Member States


Contd. Challenges

Conflicts hinder integration and development by curtailing economic activities, destroying infrastructure and constituting a serious impediment to the flow of trade and investment

The absence of self-financing mechanisms for the regional integration organizations


Contd. Challenges

The inadequacy of mechanisms to ensure that the benefits of integration are equitably distributed among the Member States

The lack of involvement of the private sector and civil society in the integration process; and the disproportionate time allocated to conflict-related issues,


Contd. Challenges

The continent’s development endeavours are also compounded by numerous challenges, prominent among which are the HIV/AIDS, malaria and tuberculosis pandemics, which pose serious threats to human capital development


Contd. Challenges

The current global economic crisis may also pose its own challenges as well as create opportunities for regional economic integration in Africa.

On the one hand, it could spin-off a slow down in trading and economic activities, and adversely affect the revenue of Member States;

While on the other hand, it could force African countries to trade more amongst themselves and engage in higher volume economic transactions with each other, thus facilitating the integration process.


Contd. Challenges

Given the challenges facing Africa in the slow down of integration process and based on a study prepared by the AUC on the Rationalisation of the RECs, the Third Conference of African Ministers in charge of integration (COMAI III) held from 22 to 23 May 2008 in Abidjan, Côte d’Ivoire, requested the AUC, in collaboration with RECs, to complete development of the Minimum Integration Programme (MIP) in the priority sectors with clear timeframes and benchmarks to be used by the RECs in attaining convergence of RECs programmes.


II. Minimum Integration Programme (MIP)

The AUC, in order to implement the Recommendation agreed upon, series of consultations has been made with the RECs in order to get the same understanding on the MIP.


Definition of MIP The Minimum Integration Programme is composed of different activities, projects and programmes on which the RECs agree to speed up and conclude successfully the Regional and Continental integration process.

The MIP is, therefore, seen as a convergence mechanism between the RECs, which should concentrate on some priority areas of concern at the Regional and Continental level where the RECs can enhance their cooperation and benefit from comparative advantages and good experiences of each one in the field of integration.

The MIP encompasses the attainable objectives in terms of the AU Strategic Plan (Four years), supported by a Follow up and Evaluation mechanism. It is supposed to be implemented by the RECs, the Member States and the AUC, in cooperation with the different Development partners of Africa.

The MIP has been developed in relation with the integration approach of variable geometry according to which the RECs should progress at different speed in the integration process. Indeed, the RECs will continue to implement their respective programmes(considered as their own priority programmes) and try concurrentlt to carry out the other activities in the MIP. 23

Objectives of the MIPThe MIP aims at several objectives among which the main ones are the

following: Assign the RECs in relation to the implementation of the Abuja Treaty; Highlight the Regional and Continental priority programmes initiated by the

Commission and whose implementation, in the name of the principle of subsidiarity, falls within the competence of the National or Regional authorities;

Identify the Regional and Continental projects within the AUC and the RECs whose implementation rests on the principle of subsidiarity;

Stregthen the ongoing initiatives of economic cooperation between the RECs and identify the measures likely to speed up integration in a selection of priority sectors or areas;

Identify the priority sectors which demand a bold coordination and harmonisation within each REC and between them;

Emulate the successful experiences of integration in some RECs and generalise them in the other Communities;

Help the RECs identify and implement the priority activities in order to cross the different stages of integration provided for in Article 6 of the Abuja Treaty;

Help the RECs implement the MIP through a clearly determined calendar; Develop and implement other support measures to facilitate the

establishment of a single market around priority sectors; Identify the projects and programmes whose implementation is based on the

activation of inter-REC relations. 24

What the Concept of “Minimum” means?


In the framework of the MIP, there are two school of thoughts:One School of thoughtConsider 1-4 activities and concentrate on them. It is believed to be more flexible and could be financed and implemented easilyArgument is:RECs are in different stages as outlined in the Abuja Treaty. Taking into consideration all the sectors proposed in this thought, the advantage is that all RECs regardless of which stage thy are would be able to cope up with other RECsSecond School of thought Consider all the sectors recognised by the RECs as priority, within each of them identify few activities and consider them as MIP. Argument is:All sectors are priority in Africa

and all the areas are interconnected that’s why we

opted to prioritize first some key sectors, then subsectors within those sectors and finally identified priority activities/projects under each subsector

The Second School of thought is believed to be more realistic due to the fact that all RECs will have something to do in the sense that the performance achieved by some RECs could be a source of stimulus to the remaining RECs and the Ministers during our Fourth Conference of African Ministers in charge of integration, held in Yaoundé 7-8 May 2009 were in agreement of the second thought


Contd. Concept of MIP

The Ministers adopted MIP as a dynamic strategic framework for the integration process at the Continental level

The AUC, is in the process of collaborating with the ADB, to explore the possibility of establishing a special continental fund for the implementation of the MIP and

collaborating with Member States, RECs and our partners, to organise sectoral meetings to identify the prioritized sectors which are considered as accelerators of the integration process within a defined time schedule in line with the African Union strategic Plan;


Contd. Concept of MIP

How to implement the MIP?


The successful implementation of the minimum integration programme depends on concerted efforts of Member States , RECs, the AUC, and other development partners.

At sectoral meetings, which the AUC plans to organize with the RECs, detailed plans of action will be developed in every sector by experts in that field in order to adapt them to the needs of every REC.

With regard to every MIP activity, there is a result obligation, a fixed indicator for the realization of the objective as well as a distribution of responsibilities.

How to finance the MIP?

Three essential sources of financing are generally proposed:

The internal sources (Statutory contributions of the Member States and the Alternative sources of financing being identified);

The contribution of African financial institutions (ADB, African Central Banks) ;

The external sources (essentially from Development partners);

But for the implementation of the MIP not to face any problem of financing, we propose the establishment of an «Integration Fund» devoted to the financing of the MIP and which can be located in the African Development Bank or the future African Investment Bank, being established.

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How to finance the MIP? (Contd.)

Furthermore, the AUC will undertake a series of consultations with the RECs to work out a financing Strategy of the MIP:Identify the financing sources of the different RECs ;Identify the funds used by the RECs to implement the ongoing activities and projects contained in the MIP;Identify the existing sources within the AUC allotted to activities of the MIP being concretised;Estimate the necessary amounts for the implementation of each activity or project contained in the MIP;Establishment of a Financial Resource Mobilisation Strategy from Development partners; Propose the necessary measures for the establishment, functioning and management of the Integration Fund; andDetermine the relations between the Specialised Regional Funds within the RECs and the proposed Integration Fund.

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Conditions of Success of the MIP implementation


The RECs will play the role of regional coordinator of all the projects and activities to be implemented by them. Moreover, they will ensure the monitoring of the activities of which the responsibility falls on the Member States of every REC.

The African Union Commission will ensure the coordination and harmonization of all the activities at the continental level.

The progress made in the implementation of the MIP will feature in an annual report by the RECs.


•The AUC will draft an annual report on the monitoring of activities of the MIP on the basis of the different reports produced by the RECs and present it to the decision making organs namely, summits of the African Union as well as the Conference of African Ministers of integration.

•Regarding the evaluation of the MIP, a biannual evaluation of the programme based on the annual monitoring reports and other documents produced by the RECs should be made.

Contd. Condition of Success of MIP

The MIP will be implemented on phases and the main priority areas selected by the RECs and Member States to constitute the first phase of the MIP (2009-2012) are:

Trade and industry; free movement of persons, goods,

services and capital; infrastructure and energy; peace and security; and agriculture;

The MIP agreed upon is contained in the following table:



MIP PrioritySectors (2009-2012)

MIP Sub- Sectors Objectives Projects, activities and programmes to be implemented in (2009-2012)

Trade Tariff barriers (TB) Gradual elimination of tariff barriers (TBs) in all the RECs

Speeding up of the implementation of programme for the elimination of TBs in every REC

Non tariff barriers (NTB)

Elimination of non tariff barriers (NTBs) in the RECs

Establishment / operationalisation of the computerized system in all the RECs in order to detect and eliminate all the non tariff obstacles to trade

Rules of origin Simplification and harmonisation of the rules of origin

Simplification and harmonisation of the rules of origin in all the RECs and among them

FTA Signing of partnership agreements between RECs

Signing of partnership agreements between RECs

Harmonisation of programmes of the RECs

Industry All the sectors Develop the industrial sector in Develop a legal framework to promote industrial policies (protocol) in each REC

Operationalisation in every REC of the plan of action on the industrial development in Africa

Components of MIP

MIPPriority Sectors (2009-2012)

MIP Sub-sectors Objectives Projects, activities and programmes to be implemented in (2009-2012)

Free Movement

Customs Gradual harmonisation of the customs procedures and establishment of a customs union in every REC with a CET

Speed up the establishment of the customs unions in the RECs

Address the problem of multi adherence of Member States to more than one REC. It would encourage the establishment of cooperation between communities with a view to establishing in the long run, customs unions among REC groupings

Free movement of persons

Complete Free movement in the regions and partial among them

Speed up the effective establishment of regional protocols in the free movement of persons, the right of residence and establishment

Exemption of Visa requirement for Africans holding diplomatic and service passports

Relax visa requirement for some categories of people (business people and academicians)

Put security instruments in place to improve security cooperation and the fight against terrorism among regions

Free movement of goods

Free movement of goods in the regions

Establish mechanisms which facilitate the free movement of goods in the regions

Harmonisation in the regions of some instruments which facilitate free movement of goods in the regions.

Free movement of services and capital

Gradual freedom of movement of services and capital in the regions

Establishment in every REC of a legal framework (protocol) for the free movement of services and capital.

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Components of MIP

MIPPrioritySectors (2009-2012)

MIP Sub-sectors Objectives Projects, activities and programmes to be implemented (2009-2012)

Peace and security

All the sectors Conflict prevention and resolution and post conflict development in

Establishment and functioning of an early warning system of conflicts and observatories for observation and monitoring

Establishment and functioning of an African standby force and regional brigades

Implementation of the African Union borders programme.

Promote the deployment of preventive diplomacy in conflict resolution

Infrastructure and energy

Transport/ energy/ICT Development of infrastructure in

Speed up the implementation of the PACT Ensure the effective participation of the RECs

in the development process of the PIDA Assist RECs to strengthen their capacity in

elaboration and development of infrastructure projects

Agriculture All the sectors Speed up the implementation of the CAADP

Harmonisation of the various regional programmes on food security;

Establishment where it does not exist, of an information management system on agricultural markets;

Exchange experience among the RECs Implementation of Maputo Decision inviting

Member States to contribute 10% of national budgets to agriculture development

Establishment of a special fund for agriculture in every REC

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Components of MIP




Investment Investment policies Establish a regional and continental platform to promote investment

Establishment of regional investment protocols,

harmonisation of different protocols and

elaboration of a continental investment code

Accelerate the establishment of the African Investment Bank

Science and technology

Education Development of the educational system in

Encourage the RECs and the Member States to implement the plan of action of the second decade for education

Science and technology

Promote the use of science and technology for the eradication of poverty in

Encourage the RECs and Member States to implement the African consolidated plan of action on science and technology

Social affairs

Health Increase access of Africans to primary healthcare

Implementation of the African Health Strategy (2007-2015)

Gender Promote the participation of women in economic development

Establishment of regional business women associations

Components of MIP


Components of MIPMIPPrioritySectors (2009-2012)


Political affairs

Elections and promotion of democratic institutions

Democratic elections and changeover of political power

Ratification and implementation of the African Charter on democracy, elections and governance

Governance Improvement in governance in the RECs

Creation of a peer review mechanism in each REC

Encourage all Member States to accede to the APRM process

Statistics Harmonisation of statistics

Establish instruments which enable the harmonisation of statistics in

Ratification of the African Charter on statistics by Member States

Preparation of continental guide for the collection of data, harmonisation of measuring standards, etc…

Capacity building

All the subsectors Build the capacities of the RECs, the AUC and Member States

Organize training sessions in various subsectors of the MIP for officials of the RECs, the AUC and Member States

Develop a programme for institutional capacity building for RECs and AUC

Fiscal policy Inflation/ interest rates/ fiscal deficit

Harmonisation of fiscal policies at the level of each REC

Support the harmonisation of fiscal policies at the level of each REC

Monetary policy

Payment systems/ macroeconomic convergence/ banking sector

Deepening of actions towards the creation of the African Central Bank and the African Monetary Fund

Speed up the establishment of the African Central Bank and the African Monetary Fund




Development of the financial market

Transferable stock market

Setting up the Pan African Stock exchange

Create an appropriate environment for the development of national and regional financial markets

Components of MIP


Example 1. Free movement of personsECOWAS : Has made progress within its region such that no visa

is required anywhere for nationals of Member States who travel across the ECOWAS region

What is minimum for ECOWAS to do is to make ECOWAS Customs Union more effective. Progress should be made on free movement of goods, services and capital in order to move to the next stage (Common Market)

Example 2. Monetary PolicyECOWAS is about to have a second monetary zone by 2009. To

make it more effective, ECOWAS need to start implementing it so that within four year period it would be fully implemented

In implementing regional and continental integration agenda, progress has been made but a lot still need to be done

To fast track the process, the MIP is a consensus document that needs:

i. Collective energy from all the stakeholders : MIP need to be integrated at National, Regional and Continental Plan of Development so that is owned by Africa


Conclusion

Contd. Conclusion

ii. MIP need to be integrated by various partners because it is an opportunity for our partners to support the integration through assisting in implementing the existing projects of the MIP

Call upon Pan African Institutions partners ECA/ADB to own it

The MIP if implemented can provide hope to African Population


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THANK YOU


Mr. Charles Kossi AwitorHead of Economic Integration and Regional CooperationE-Mail: [email protected]

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