Integration can transform Africa’s growth ‘turning point’ into development ‘tipping point’

28th October 2013

By: Terence Creamer

Creamer Media Editor

  

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Africa’s current growth “turning point” should not be construed as a sustainable-development “tipping point”, African Development Bank (AfDB) president Donald Kaberuka stressed on Monday. He added that accelerated economic integration would offer the greatest prospect for sustaining the current growth momentum and building resilience against internal and external shocks.

Addressing the eighth Africa Economic Conference in Johannesburg, Kaberuka said Africa, which was currently growing at around 5.5%, needed a minimum growth rate of 7% over a sustained period to create jobs and tackle chronic poverty. The debate, he added, was no longer about the need for regional integration to support that vision, but rather about ensuring accelerated implementation.

“If you look at where the global economy is going now, the export model is beginning to show its limitations. So, all countries are trying to develop their domestic markets,” he said, asserting that Africa’s “domestic market” was currently inhibited by the fact that it was broken into 54 individual countries.

Flanked by African Union chairperson Dr Nkosazana Dlamini-Zuma, Kaberuka likened the fragmentation to declaring South Africa’s nine provinces as separate countries and still expecting the same economic performance, notwithstanding the accompanying limitations to the movement of goods and people and the proliferation of currencies and bureaucratic restrictions.

BULL BY THE HORNS

For her part, Dlamini-Zuma urged the continent’s eight, often overlapping, regional economic communities (RECs) to “take the bull by the horns” and deal with the prevailing constraints to accelerated regional integration.

She commended the 27 countries participating in an initiative to create a free trade zone, or Tripartite Free Trade Area (T-FTA), from Cape Town to Cairo up Africa’s East coast and lauded the recent decision of the Economic Community of West African States to pursue a customs union. But she also lamented the slow pace of progress, particularly with regard to the T-FTA talks between the three RECs of the Common Market of Eastern and Southern Africa, the East African Community and the South African Development Community.

Dlamini-Zuma also lambasted the European Union’s efforts to conclude reciprocal Economic Partnership Agreements (EPAs) with individual African countries, saying that these did not “encourage the spirit of integration” that Africa was currently envisaging. “If anything, they [the EPAs] undermine that.”

Kaberuka encouraged leaders to “rethink the zero-sum calculus” currently impeding regional-integration progress for fear that should one country benefit the other might lose out. “Evidence is ample that along the way it is a win-win for each and every one.”

However, United Nations Economic Commission for Africa deputy executive secretary Dr Abdalla Hamdok cautioned that, while regional integration is a key developmental tool, it would also be essential for countries to weigh both the benefits and costs so as to boost gains and minimise losses. “Strategies should include a transparent, equitable, rules-based system for sharing gains and resolving disputes,” Hamdok said.

TANGIBLE SUCCESSES NEEDED

Also speaking at the event, South Africa’s Finance Minister Pravin Gordhan stressed the need for early successes and tangible progress on both cross-border infrastructure projects and trade-facilitation initiatives, such a one-stop border posts.

“We need to show a half a dozen success stories over the coming five years,” Gordhan averred, while also underlining the need for a greater sense of urgency and the creation of institutions capable of supporting economic integration.

He also emphasised the need to improve project preparation, indicating that money could be secured for well-designed infrastructure projects. Part of that finance could be mobilised through creating the conditions necessary for African investors to repatriate the $500-billion in savings that was currently invested abroad.

Kaberuka saw a major opportunity arising in the power sector, but said progress would only be possible if reforms were made to deal with ill-conceived energy subsidies, which were placing severe strain on even well-managed national utilities.

The development of African infrastructure would require “loads of money”, but Kaberuka said major strides could also be made simply through the implementation of the commitments that had already been made by African leaders.

He referred specifically to the Yamoussoukro Agreement, which was concluded in 1998 in a bid to deregulate the aviation sector. “That single act alone would most likely bring more investors into the sector, driving flying costs down, probably as much as 40%,” Kaberuka said.

Edited by Creamer Media Reporter

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