By Xie Meihua
NAIROBI, Dec. 18 (Xinhua) -- Africa has scored substantive progress in the economic integration in 2008 with the Southern African Development Community (SADC) officially launching its Free Trade Area (FTA) and the East African community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and SADC reaching agreement on working immediately toward a merger into a single regional economic community with the objective of fast tracking the attainment of the African Economic Community (AEC) .
Despite the progress, there is still a long way to go for Africa to realize the economic integration goals set by AEC because there are numerous challenges lying ahead which need to bead dressed comprehensively.
SADC LAUNCHES FREE TRADE AREA
Under the theme "Free Trade Area for Growth, Development and Wealth Creation," SADC officially launched its FTA in August at its summit this year, a significant step toward SADC's ultimate goals of a custom union in 2010, a common market in 2015 and a monetary union in 2018.
With the launch, FTA will allow goods originating from SADC member states to enter neighboring countries free of customs duties. From August 2008, producers and consumers will pay no import tariffs on an estimated 85 percent of all trade on goods among 11 of its then 14 member states. Angola, the Democratic Republic of Congo and Malawi will joint FTA later.
During the summit, approved by all SADC member states, Seychelles made a comeback after quitting the bloc for years, bringing the number of the member states of SADC to 15 now.
FTA is believed to provide an ideal environment for rapid industrialization and modernization as firms in the bloc raise their productivity levels to maintain a competitive edge over others.
It will also allow industrialists to enjoy enhanced market access as well as benefit from economies of scale as they produce for a bigger region.
And for the consumers of the bloc, they will surely benefit from FTA. They will have access to cheaper and wider product range on supermarket shelves as goods will now enter their countries free of customs duties.
Hailing the launching of FTA, Thabo Mbeki, then president of South Africa, said at the summit "We reach an extraordinary milestone in our collective and ongoing integration program of SADC."
"We say with pride that our collective have borne fruit, and that we have successfully met the objective we set for ourselves. Indeed, it required hard work, dedication, resolve and an unswerving commitment to mobilizing our limited resources so as to meet our objective," he said.
EAC, COMESA AND SADC AGREE TO FORGE SINGE REGIONAL ECONOMIC COMMUNITY
The leaders of the member states of EAC, COMESA and SADC held their first ever summit in October in Uganda, seeking cooperation and coordination of the three blocs in all sectors with an ultimate goal to form a single market.
The summit brought delegates from the 26 member states of EAC, COMESA and SADC, three of the eight regional economic communities recognized by the African Union (AU) conventions as the bundling blocs for AEC.
A joint communique adopted at the summit said the tripartite agreed on starting immediately working toward a merger into a single regional economic community. The summit directed the Tripartite Task force to develop a roadmap for the implementation of the merger for consideration.
The summit also approved the expeditious establishment of a free trade area encompassing the member states of the three blocs with the ultimate goal of establishing a single customs union. It also underscored the fact that the tripartite arrangement is a crucial building bloc toward achieving AEC as outlined by the 1991 Treaty of Abuja.
The tripartite summit is considered as historic because for the first time since the birth of AU, key building blocs of AEC were meeting on how to integrate territories and moving toward deepening and widening integration within the overall Abuja treaty for the establishment of AEC.
The three regional economic communities comprise 26 countries with a combined population of 527 million people, and a GDP for capital averages 1,184 U.S. dollars. The 26 countries make up half of AU in terms of contribution to GDP and 57 percent of the total population of AU.
CHALLENGES LYING AHEAD IN ACHIEVING CONTINENT-WIDE ECONOMIC INTEGRATION
However, SADC's launching of FTA and the agreement by EAC, COMESA and SADC to forge a regional economic community are far from realizing the stated goals of AEC, including creating regional blocs in regions where such do not yet exist by 1999, strengthening intra-regional economic community integration and inter regional economic community harmonization by 2007, establishing a free trade area and customs union in each regional bloc by 2017, creating a continent-wide customs union by 2019, setting up a continent-wide African Common Market by 2023, forging a continent-wide economic and monetary union and parliament by 2028. The African countries must first cope with the challenges that constrain their efforts.
Varying greatly in size, resources, capacity, economic development level and national interests, it is very difficult for African countries to adopt coherent and coordinated policies to guide their activities toward economic integration. Observers here note that even if there are coherent and coordinated economic policies in place, it is also difficult for African countries to fully implement or to implement spontaneously due to lack of strong political will and the means. Coordinated and harmonized economic policies and trade arrangements are seen as a must in moving the integration process forward.
The economic integration process in the African continent is also hampered by lack of sound infrastructure. The current road, railway, port networks used by the African countries were mainly built by the colonialists and they do not link with each other. After their independence, the African countries have lacked necessary resources to repair, update, expand and connect the transport systems.
Poor infrastructure has blocked the quick movement of goods and people in the continent and skyrocketed the transport costs.
South African Finance Minister Trevor Manuel said early this year in a seminar that poor infrastructure has remained a severe impediment to more rapid growth in Africa.
"Some of the handicaps affecting African economies are a legacy of colonialism -- railways and roads leading from the interior to the coasts but not between contiguous countries," the finance minister said.
"Today Africa's transport costs, local, national and international, are around twice as high as those for a typical Asian country. Shipping a car from Japan to Abidjan costs 1,500 U.S. dollars, whereas moving it from Abidjan to Addis Ababa costs 5,000 U.S. dollars," he noted.
Multiple membership is also seen as a big hurdle in the process of the African economic integration. EAC, for example, has already had a customs union but it shares four members with COMESA and one member with the SADC.
Five of SADC members are also members of the Southern African Customs Union (SACU). There are 10 countries in the region which are already members of customs unions but all of them are also involved in the negotiations that are aimed at establishing alternative customs unions to the one they currently belong to.
Further, COMESA and the SADC have seven members in common that are not part of a customs union but are all involved in preparing customs unions for both COMESA and the SADC.
Despite these challenges, the African countries have seen integration as an imperative.
"There is no other way except to work together. Integration is a global phenomena," Julius Onen, deputy secretary general of EAC told Xinhua in a interview in October.
"Whether it is in Europe, whether it is in America, whether it is in Asia, that is a world of integration. Your immediate opportunity is your immediate neighbor and that potential is tremendous," Onen added.
