Integration is key to building resilient economies- Africa Regional Integration Index

Integration is key to building resilient economies- Africa Regional Integration Index
  • The Index ranks the level of integration of African countries within their respective RECs and also with the rest of the continent.
  • the East African Community (EAC) scored highest for overall integration, with the Southern African Development Community (SADC) coming last.
  • the Index shows that levels of integration on the continent are relatively low with an average score of 0.327 out of 1.
  • David Luke, coordinator of the African Trade Policy Centre (ATPC) at the ECA pointed out that the productive and infrastructure dimensions of regional integration are intricately linked.

 

The second edition of the Africa Regional Integration Index (ARII 2019), has called on African economies to deepen their integration in order to build more resilient economies.

The index noted that this could be done by improving regional networks of production and trade by enhancing countries’ productive, distributive, and marketing capacities; building innovative, regional value-chain frameworks in different sectors using improved technology, higher-quality inputs, and updated marketing techniques; and the full implementation of the AfCFTA to remove non-tariff barriers, which remain a major challenge for regional integration.

The index also recommended enhanced African workers’ competencies to match the technology and production capacities of today and tomorrow to succeed in the global economy; improved infrastructure through increased public–private partnerships, tapping into national resources and using regional and global infrastructure development funds and other innovative financing tools, accompanied by rigorous competition and transparency in procurement and construction processes; and implementation of the Protocol on the Free Movement of People, which will enhance economic growth through increased opportunities for tourism, trade and investment, human capital mobility, and allow firms to find skills more easily, in turn driving productivity.

Launch of the Index

The Africa Regional Integration Index was launched by the Economic Commission for Africa (ECA), the African Development Bank, and the African Union Commission (AUC).

The Index, which builds on the first edition published in 2016, provides up-to-date data on the status and progress of regional integration in Africa. It also helps to assess the level of integration for every Regional Economic Community (REC) and their member countries.

The report observed that although 20 countries score above average, no African country can be considered well integrated in its region. Even the most integrated country, South Africa, scores 0.625 less than two-thirds of its potential on the scale.

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ARII uses a 95 percent confidence interval from the mean to identify countries’ performance as low, average, or high. Under linear conditions, a score below 0.333 is classified as low, a score between 0.334 and 0.667 is classified as average, and a score above 0.668 is classified as high.

The report found that much more needs to be done to integrate regional economies to make them more resilient to shocks such as the current COVID-19 pandemic. Overall, the Index shows that levels of integration on the continent are relatively low with an average score of 0.327 out of 1.

Advancing regional integration

The Regional Integration Division Director at the ECA, Stephen Karingi, noted that whereas the Index has data cut off points in 2019, the present COVID-19 pandemic has reopened the question of whether enough is being done in advancing regional integration as a means to help Africa withstand systematic shocks.

“This index is both a measurement exercise and a call to action; to build resilient economies through integration. It will identify the solutions needed to truly build an integrated Africa,” he stated.

Welcomed collaboration

Jean-Denis Gabikini, Acting Director of the AUC’s Economic Affairs Department, welcomed the collaboration in producing the Index.

He noted that the Index covers issues of intellectual property, competition policy, investment and digital trade which are critical to the successful negotiations of Phase II and III of AfCFTA.

“To achieve an “integrated, prosperous and peaceful Africa, representing a dynamic force in the concert of nations”, this ARII report will support AU Member States and RECs to address industrialisation and value addition priorities for the development of the continent,” Gabikini said.

With the establishment of RECs and the creation of AfCFTA, Africa has reinforced regional integration as a major development priority for the continent under the 2012 Boosting Intra-African Trade (BIAT) Action Plan.

The Index ranks the level of integration of African countries within their respective RECs and also with the rest of the continent. It scores across five key dimensions: trade, productive capacity, macroeconomic policy, infrastructure, and free movement of people.

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Among the eight RECs recognised by the AU, the East African Community (EAC) scored highest for overall integration, with the Southern African Development Community (SADC) coming last.

Useful tool

The African Development Bank’s Director for Regional Development and Regional Integration, Moono Mupotola, said the Index was a useful tool for tracking progress on the regional integration front and would help countries identify priorities to improve integration.

“The crippling effects of COVID-19 illustrate the need for enhanced production of African finished goods and services that can readily be traded across the continent,” Mupotola said.

David Luke, coordinator of the African Trade Policy Centre (ATPC) at the ECA pointed out that the productive and infrastructure dimensions of regional integration are intricately linked. Tackling these two dimensions along with implementing the AfCFTA would be a massive boost for trade, he said.