Can Regional Integration Save Africa?

During the last quarter-century, global economic growth has soared, but Africa continued to lose ground. Indeed, the continent’s share of world exports fell from 4.6% in 1980 to 1.8% in 2000, and its share of world imports declined from 3.6% to 1.6% over the same period.

Africa’s share of global flows of foreign direct investment (FDI) also fell, from 1.8% in 1986-90 to 0.8% in 1999-2000. Can regional economic groupings, such as the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC), help increase trade and bolster growth?

Overall trade flows in southern Africa fell from $131.1 billion in 2002 to $112.3 billion in 2003, with South Africa – one of only three countries in the region that recorded current-account surpluses – accounting for 65% of the total. Whereas South Africa’s foreign trade almost doubled between 1994 and 2002, exports from, say, Malawi to Tanzania or from Mozambique to Zambia remained negligible, despite their geographic proximity.

The low level of intraregional trade, despite the SADC and COMESA, reflects several factors, including a range of non-tariff barriers – mainly communication and transport problems, customs procedures and charges, and a lack of market information. Moreover, in the past, southern African countries put their faith in protectionism and import substitution policies. Relying on “infant economy” arguments, major exports were restricted and legal obstacles were erected against foreign participation in the development of natural resources, as well as financial and other services, further impeding regional integration.