Economic integration and trade liberalization in Southern Africa: is there a role for South Africa?

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While the rest of the world becomes increasingly fractured and disparate, it is time for Africa to create ways to better integrate its fragmented markets which have long constrained growth and acted as barriers to trade. These regional trading corridors cannot work in isolation but must be scalable to improve connectivity across the African continent. It is estimated that the implementation of the CFTA will nearly double intra-African trade by early next decade.

This includes harmonizing development and economic policies, regulation, market structure and governance, along with their implementation. Any regional initiative will need to be accompanied by huge investments in cross-border infrastructure. If we are looking to the rest of the world to show faith in the African growth story, then as Africans ourselves, we must demonstrate our own commitment.

South Africa is in the unique position of holding membership to several multilateral fora.

Economic integration and trade liberalization in Southern Africa: Is there a role for South Africa?

As we take over the BRICS presidency for and as the only permanent African member of the G20, it is our responsibility to champion the case for Africa and its agenda by being at the nexus of discussions with our international counterparts. South Africa must continue to cultivate its role in facilitating positive changes for Africa as this is where our own long-term economic success lies.

The views expressed in this article are those of the author alone and not the World Economic Forum. I accept. How do we build a sustainableworld? Submit a video. Most Popular. Greta: the voice of climate activism who says 'don't listen to me' Sean Fleming 23 Sep More on the agenda. The two organizations have made little progress towards market integration through sub-regional trade liberalization, but this is not surprising.

This is not to deny that progress may have been achieved in the field of functional cooperation The simple truth is that one simply cannot see any sign of the qualitative leap which would differentiate their activities from those concerned with the mere promotion of sectoral cooperation. This legacy of unfulfilled pledges cannot be ignored, especially as the Abuja Treaty considers the revitalization of the regional integration as the preliminary step towards the establishment of a Pan-African Economic Community by the year The goals to be achieved and the strategy for their implementation have not changed since the adoption, in , of the Lagos Plan of Action LPA , which never went beyond the stage of institution-building.

There is no sub-regional integration process under way at this time.

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Sub-regional economic groupings in Africa Where they have had an impact, it has been on balance negative [as a result], member states are providing financial support to agencies that make no significant contribution in terms of improving Africa s economic situation. Regional integration organizations have sought to promote market integration through trade liberalization programmes, however, they have not taken cognizance of the crucial importance of survival and accumulation strategies associated with cross-border trade or the management of frontier disparities.

Simultaneous attempts at prioritizing outward-oriented adjustment policies have not achieved any substantive results either.

In sub-Saharan Africa, the regionalization process is associated far more than in the case of the Asian economies, with the exploitation of boundary disparities and distortions on a rent-seeking basis. These concepts depict the processes of cross-border interactions which have their own distinctive features, although they combine elements of inter-state and transnational regionalization. Trans-state trade is dependent on opportunities created by tariff, fiscal and monetary discrepancies between neighbouring economies.

Transactions range from basic commodities to sophisticated high tech products or even narcotics. Curtailing the costs incurred by trans-state flows between the Franc Zone and such countries as Nigeria, Ghana or Congo-Kinshasa was an essential component in the decision to suspend, on 2 August , the convertibility of CFA banknotes outside the Franc Zone banking network. The leverage effect of the convertibility factor should not be exclusively tied to currency. Poor transport facilities through the national outlets, as in Congo-Kinshasa, or political uncertainty, may also stimulate cross-border trans-actions.

Regional integration in SADC holds great economic potential – SADC Finance Director-NBC

As the colonized territories were progressively integrated into the metropolitan economies, competing communication systems and market centres developed. Distinct currency zones also emerged, while restrictive tariff policies attempted to discourage the entry of goods from rival colonial blocs. During the early phase of the partition process, European rulers also competed fiercely to establish their territorial claims, with the resulting effect that the populations established on the fringes of the imperial spheres of influence were often subject to intimidation and reprisals.

Once the boundary lines were demarcated, the colonial administrations tried to restrict contact, including cattle rearers who habitually migrated with their herds to various pastures without regard to boundary lines or the borderline farmers whose farmlands may have been truncated.

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Caravan trade underwent an irresistible decline as a result of the imposition of new trade routes, and the introduction of tariffs designed to promote integration among the various component parts of the empire. The colonial rulers soon discovered that patrolling and ensuring the effective enforcement of inter-imperial boundary lines were impossible due to their sheer length. As a result, boundary lines never proved much of a physical obstacle. Whenever attempts to control cross-border trade and migrations were made, they remained limited in duration, due to their cost, as much as to their ineffectiveness.

Chapter Trade and economic reforms in Africa[]

By ,. In the British colonies, the imperial preference system meant cheaper imports of manufactured products and this created an incentive to clandestine re-exportation towards the neighbouring French and Belgian territories. Accordingly, industrial and electronic equipment, liquor, tobacco and paraffin lamps were imported into Senegal through the frontier with Gambia, while French wines, agricultural implements and fertilizers were clandestinely exported to the neighbouring British territory.

Pre-existing customs or monetary agreements sometimes survived e.

Services Trade Liberalisation and the Role of the Services Sector in South African Development

The financial difficulties encountered by a growing number of African states, following the OPEC price increase in , meant a collapse of official circuits in large parts of the continent and this created fertile ground for trans-state regionalization. Population groups who had come to rely on the state for health, housing, education, transport and marketing, were compelled to seek alternatives. Entire sectors of the society redeployed into the second economy, with the effect of an unprecedented boost to trans-state regionalization. Farmers living in areas where the public sector services are no longer available, can find vital outlets for their production in the second economy, as well as pre-harvest cash advances essential to the maintenance of their families and the purchase of tools, seeds and other inputs.

The expansion of trans-state networks beyond the borderland areas is associated with the capacity of powerful patrons, motivated by accumulation strategies, to take advantage of farmers and urban dwellers confronted with severe situations of dispossession or hardship.

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Indeed, MacGaffey concludes with respect to Congo-Kinshasa that if there is an element of social security in the patron-client relationship between traders and producers, it is a very crude one. Although trans-state regional lobbies have a strong interest in the preservation of good relations between neighbouring states, they are equally active in preventing the implementation of sub-regional programmes towards the liberalization of customs and tariff barriers.

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Trans-state trade took advantage of fiscal, excise and customs disparities which the rent-seeking policy of the Gambian government carefully preserved. For that very reason, during the subsequent negotiations, no compensation was planned for the loss of revenue which Gambia could anticipate due to its loss of autonomy with respect to tariff and fiscal policy. It was at this stage that strong representations were made by the Gambian trade lobby which outlined the economic and financial costs that the customs union would carry.

These appeared overwhelmingly high since Gambian resources were scarce, and substantial employment opportunities in Banjul were tied to harbour activities. Throughout the s, managing frontier-disparities on a rent-seeking basis was a vital component of the policy orientation of Benin, Togo, Gambia, Niger and, to a lesser extent, Chad. For the Beninois national administration, boosting trans-state trade was considered as a development strategy. Trans-state regionalization, far from being seen as antagonistic to state interests, was treated as an external shock-absorber and an agent of social regulation.

Nigerian initiatives towards a reduction of macroeconomic imbalances induced a steady reduction of the scope for manoeuvre by the Beninois administration. On the contrary, the 17 years concerned witnessed the establishment of mechanisms of economic and societal destruction. Yet, in Benin as elsewhere, the state remained and still remains largely powerless to implement any policy of borderland control due to the powerful impact of cross-border trade flows on interest groups and state revenues. The prosperity of trans-state networks also depends on their capacity to evade state control or negotiate support from its functionaries.

Since the mid- s, it has adapted to the spread of structural adjustment programmes, which have tended to reduce the fiscal, excise and monetary disparities among African states. The re-exportation of consumer goods is supplemented by transactions on gold, diamonds, ivory, arms and narcotics. The reduction of opportunities associated with the exploitation of intra-African border resources is being increasingly compensated by the internationalization, and at times criminalization of the transactions.

The continentalization of trade and financial flows is occurring, but paradoxically, as the outcome of the preservation of market segmentation and inter-state disparities. Globalization is seen as providing renewed opportunities for inter-personal networks which contribute to the deconstruction of state affiliations without seeking to promote the emergence of alternative territorial arrangements.

Neither is the pervasive development of trans-state regional flows at the expense of official circuits. Sub-Saharan Africa owes its specificity to the widespread and highly destructive effects of such antagonistic trends. It would also aggregate some of the smaller unviable African states into larger and more viable economic and political entities. To this effect, the coordination of macro-economic policies on a regional basis should be targeted as an intermediate objective on the road towards improved global integration.

The establishment, consolidation and geographical extension of areas of monetary stability should be treated as a strategic imperative in this context. As witnessed in the case of the Franc Zone, due to the lack of any coordination between its Structural Adjustment Programme and those of the neighbouring states, the trans-state flows were induced to redeploy along the external frontiers of the newly formed monetary groupings. Operating on a national basis reduces the capacity of governments to assess social responses to adjustment policies, a situation which favours the reproduction of trans-state networks on an ever-broadening basis.

Monitoring the regional impact of adjustment programmes as a first step, coordinating their implementation on a regional basis at a later stage, will improve the capacity to correct their social and economic impact. It will also highlight the plunder-thy-neighbours strategies which currently feed the development of trans-state regionalization.

Such areas would be justified on two grounds. First, they would alleviate the social cost of adjustment policies and facilitate the reconversion of trans-state networks into non-criminalized linkages based on real comparative advantages.