Given this background, strong economic integration could present some opportunities for alleviating the debt problem. Increased trade among the RECs in Africa and would allow foreign currency, which would otherwise have been used to pay for out-of-zone imports, to be saved. Foreign currency is also saved because of the incorporation of a common currency factor. This would be much more pronounced if a supranational organ for debt management were put in place for the implementation of certain disciplinary rules. A harmonised debt policy, within the framework of economic integration and in relation to global economic policy, is necessary for all the regional member states. This would need to deal with issues such as export diversification, industrialisation geared towards encouraging manufactured products, and fighting against capital flight. For all these to succeed, the different states must respect the terms of integration that they have signed.
There have always been disparities between the countries of each REC. Apart from the common purpose that unites them; they have never looked for a collective solution to their problems especially the external debt burden. Meanwhile, the problem of debt is similar in all countries. United these countries would constitute a very strong force. The problem of debt would be dealt with by debtor cartels. Countries of the region would be able, as a bloc, to negotiate with bilateral donors to cancel unpayable, odious and illegitimate debts. Regional integration creates the platform for collective bargaining by debtor countries with the north and in international fora that is generally lacking but is very important for reducing debts and relaxing their terms and conditionalities.
A common currency would make foreign investment more attractive in the region of any REC, particularly when it became convertible; and the examples of other experiences in Francophone Africa and Europe are positive. Some of the conditions appropriate to the introduction of a common currency are balanced economic structures (GDP deficit, external account, rate of debt, or inflation etc.) across the zone, a more diversified regional economy, disposal of a minimum quantity of international currencies by the central bank of the zone to enable it to protect the future common currency in the exchange market and a decision on whether the future currency will be linked to another international currency in the short run or be independent and flexible.
Regional economic communities need to promote sustainable development and debt reduction by taking advantage of the numerous opportunities to integrate their subregion’s markets for goods, services and capital to other sectors of the economy, to promote closer cooperation in all other sectors both economic and social, to coordinate monetary, fiscal and exchange rate policies of member states and to promote monetary intervention, among other things.
Existence of a regional monetary authority, or a common development bank is needed to finance regional and national projects in each REC, to assist in the integration process and to reduce economic disparities between the member countries. The problem of each REC member state clamouring to get a regional project could be solved by introduction of such a development bank.
Regional integration affects the savings of member countries that have a direct bearing on the debt levels. Cooperation in banking, insurance and social insurance can reinforce financial mobilisation. More importantly, the process warrants the harmonisation of interest rates that increases the savings rate and lowers indebtedness. Given the mobility of capital from one country to another, the savings rate can even be increased in a poor country. Within this framework, investment risks are reduced and opportunities created for large-scale injection of capital into a region.
African integration process has always been government-led, but it does not need to be monopolized by governments. Where Africa has been regrettably lacking is the failure to bring the people on board, and motivate and mobilized them. Informal trade in which the majority of Africa’s people are involved in has a role in regionalism and debt amelioration.
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