This paper examines how Africa’s recent efforts to promote economic integration, specifically the Regional Economic Communities (RECs) and the proposed Continental Free Trade Area (CFTA) are supported by and in harmony with the Post 2015 Development Agenda and the African Union’s Agenda 2063 initiative.
The World Bank’s Global Economic Prospects projects for the period 2014-2017 that five of the world’s 13 top growing economies will be in Africa. However, it is distressing and puzzling that such growth has not been accompanied by reduced poverty, income inequality and unemployment. It is also unsettling that few states met all of the Millennium Development Goals (MDGs) which expired at the end of last year. Furthermore, Africa will likely be confronted by daunting challenges in the near term. This ominous situation is enhanced by the nature of Africa’s trade, both within the continent and in the global economy.
To counter some of these constraints, especially the tariff barriers, the RECs and the CFTA will be critical in stimulating trade growth. Increased economic integration, either on a regional level or on a continent-wide level under the general guidelines of the Sustainable Development Goals (SDGs) and Agenda 2063 will result in increased trade which will, in the long term, increase incomes, reduce poverty, increase employment, provide greater consumer choice, and will offer shelter from exogenous external shocks. However, at least in the short term, such gains are also typically accompanied by loses.
This paper calls for a continental Integration Compensation Funding Mechanism (ICFM) to balance some of these loses. The ICFM would be developed and managed by the African Development Bank, the United Nations Economic Commission for Africa and the African Union.
Donald Lee Sparks
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