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Regional Integration and Debt in Africa: A Comparative Report of Africa’s Regional Groupings
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1. Introduction
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Despite the widely documented failures of regional integration schemes in the past, lack of a breakthrough and even the demise of some regional integration arrangements, the dawn of the 21st century have seen the revival of regional integration in Africa. The ever-increasing challenges of globalization, the birth of the European Union and the African Union amongst other processes have been inspirational in reviving regionalism in Africa. Africans and their leaders are becoming more convinced than ever before that integration is one way by which the relevance of a debt and poverty-free continent can be established in an increasingly globalizing world.
The heavy debt burden and continual reliance on countries of the North for hard currency has been a major impediment to accelerated integration within and across regional groupings in Africa. There is growing concern over the amount of borrowing indulged in, the servicing of such foreign debt and the future strain on regional schemes and general sustainable development. Resources transferred abroad for debt servicing reduce what can be devoted to regional schemes and economic development. Not only is potential regional integration foregone, but also in many cases previous development achievements are being eroded1. Debt repayments in the form of arrears have grown rapidly giving rise to questions regarding the credit worthiness of many countries. On the other hand, conditionalities associated with debt repayments and trade have stood in the way of successful African regional groupings’ intra-trade, monetary and fiscal policies especially payment mechanisms. Some states are left without trade options but to trade with the northern creditor at the cost of intra-regional trade.
In general, regional integration refers to the unification of neighbouring states working within a framework to promote free movement of goods, services and factors of production and to co-ordinate and harmonize their policies. This might involve convergence of trade, fiscal, debt management and monetary policies as a prelude to integration. It can also be defined as a process and a means by which a group of countries strive to increase their levels of welfare- reduction of poverty, indebtedness and economic malaise. It recognizes that partnership between countries can achieve this goal in a more efficient way than unilateral or independent pursuance of policy in each country. In Africa, regional integration was also introduced to promote development among African countries as well as help reduce indebtedness and dependence on western countries2. Regional unification in Africa through meaningful co-operation is expected to help arrest the ballooning external debt burden in many countries.
Recent developments in regional integration schemes could spur enhanced progress that might help develop strong monetary ties within the RECs that could help alleviate the burden of debt. Such development include the implementation of a Free Trade Area in COMESA, the beginning of the implementation of the SADC trade protocol, the fast track monetary harmonization by non-UEMOA members of ECOWAS and the attempts to revive integration efforts in ECCAS.
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Footnotes:
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Joe Umo (2002) Regional Integration and Debt in West Africa, A study Report to AFRODAD, Harare.
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Ibid
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