ASSESSMENT OF PROGRESS ON REGIONAL INTEGRATION IN AFRICA

ASSESSMENT OF PROGRESS ON REGIONAL INTEGRATION IN AFRICA Stephen Karingi Oi. C Regional Integration and Trade 11 - 15 May 2018 Addis Ababa, Ethiopia 1 2018 Conference of Ministers

CHAPTER 1 | OVERVIEW 2 AFRICA HAS MADE SIGNIFICANT STRIDES TOWARDS INTEGRATION • Regional integration is a longstanding priority for Africa • Continental initiatives on integration: • E. g. Agenda 2063, MIP, PIDA, BIAT; • Most recently, launch of the African Continental Free Trade Area; • At subregional level, eight Regional Economic Communities • Global rise in protectionism challenge for Africa’s structural transformation • Underlines the importance of regional integration Assessment of progress on regional integration in Africa UNECA. ORG

CHAPTER 2 | Status of integration 3 LEVEL OF INTEGRATION VARIES • Three RECs have reached free trade area stage • A customs union (ECOWAS) and a single market (EAC) • 2 economic and monetary unions: WAEMU and CEMAC • Level of integration varies also within RECs • Intra-African trade increased to 18% in 2016, from 9% in 2000 • EAC and SADC best performers in terms of intra-REC trade • Yet, no REC recorded intra-REC trade of over 25% Assessment of progress on regional integration in Africa UNECA. ORG

CHAPTER 2 | Status of integration 4 INDUSTRIAL DEVELOPMENT HINDERED BY BY INFRASTRUCTURE GAPS • An estimated $93 billion/year needed to fill infrastructure gaps • Priority projects under PIDA alone require $68 billion up to 2020 • Infrastructure development commitments $75 billion/year (2012 -16) • Under 10% of investment from private sector • Launch of the Single African Air Transport Market in January 2018 • Expected to contribute to growth of African aviation industry • 25 countries have acceded to the initiative Assessment of progress on regional integration in Africa UNECA. ORG

CHAPTER 2 | Status of integration 5 NON-TRADE INTEGRATION STILL LIMITED • 50 African countries have signed at least one African BIT • Majority have not entered into force • Pan-African Investment Code: continental investment regulation harmonization • Productive integration hindered by reliance on primary commodities • Underused potential for regional value chains • E. g. cotton-to-textile, cocoa-to-chocolate, coffee to by-products • Only 10 African countries offer liberal access (visa-free or visa-on-arrival) • Protocol on Free Movement of Persons signed by 30 countries Assessment of progress on regional integration in Africa UNECA. ORG

CHAPTER 3 | African Continental FTA 6 Af. CFTA A NEW MILESTONE IN AFRICA’S INTEGRATION • Agreement Establishing the African Continental Free Trade Area • 44 member States signed in Kigali, 21 March 2018 • Agreement will enter into force after 22 ratifications • Outstanding issues include annexes to adopted protocols and the schedules • All outstanding work to be completed by Jan 2019 • Second phase will begin late 2018, completed by Jan 2020 • Investment, competition and intellectual property rights • E-commerce is also being mooted as a possible additional topic Assessment of progress on regional integration in Africa UNECA. ORG

CHAPTER 3 | African Continental FTA 7 Af. CFTA AND INCLUSIVE DEVELOPMENT • All African countries expected to gain in the long term • Better access to affordable inputs and larger markets; • But diversity on the continent will drive differentiated impacts • More industrialized countries will be better placed to benefit • High share of agricultural labour can drive benefits • Inclusive gains will be contingent on supporting measures and policies • Both between and within countries Assessment of progress on regional integration in Africa UNECA. ORG

CHAPTER 3 | African Continental FTA 8 TOWARDS AN EFFECTIVE AFCFTA • Measures to overcome short-term costs will be required • Countries with high initial tariffs on and levels of intra-African trade, • Less industrialized countries, • Vulnerable populations such as smallholder farmers • Exclusion lists can address some of the challenges • Implementation of BIAT will alleviate barriers to intra-African trade • Benefiting less advantaged countries and small-scale businesses • Strong institutional and M&E structures will enhance implementation Assessment of progress on regional integration in Africa UNECA. ORG

CHAPTER 4 | Conclusions 9 RECOMMENDATIONS • Prompt signing, ratification and implementation of Af. CFTA will be key • ECA and AUC cooperation in supporting the process remains important • Af. CFTA should be complemented by investment regulations and policies • Pan-African Investment Code provides basis for investment chapter of Af. CFTA • Impact assessments crucial to ensure that no one is left behind • Will also ensure that appropriate supporting measures put in place • Implementation of BIAT required to overcome barriers to intra-African trade • Such as infrastructure gaps and cumbersome procedures Assessment of progress on regional integration in Africa UNECA. ORG

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