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Reaping the Benefits of African Economic Integration

Africa must industrialize to diversify away from natural resources and create jobs for its fast-growing young population. And by boosting intra-continental trade, consumption, and investment, regional integration can be a strong vector for improving productivity, building manufacturing powerhouses, and developing credible African brands.

ABIDJAN – When Kwame Nkrumah, under whose leadership Ghana became the first African country to claim independence in 1957, was overthrown by a military coup in 1966, few of his fellow citizens shed a tear for his regime. But one aspect of his legacy remains relevant to this day and merits careful consideration.

Nkrumah was a visionary and charismatic leader whose focus was on modernizing Ghana and on campaigning for Africa’s political unity. His most brilliant idea was to integrate the continent and create the United States of Africa. But he favored the development of costly, capital-intensive projects, which led to unsustainable foreign debt and deficits while creating few employment opportunities. Economic contraction led to widespread unrest and to a loss of credibility for the idea of African integration, and to a fallout with his famous economic adviser, the future Nobel laureate W. Arthur Lewis.

Nkrumah’s intuition about the potential benefits of Africa’s integration was based on a sound economic rationale, which he failed to articulate convincingly. With 16 landlocked countries, Africa is more fragmented than any other continent. The small size of many countries and the resulting fragmentation of domestic markets result in various diseconomies of scale, impeding economic development. In 2017, more than three-quarters of African countries had fewer than 30 million people, and about half had a GDP of less than $10 billion.