The importance of regional grouping in africa

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The importance of regional grouping in africa

  1. 1. Regional Economic Grouping in Africa’s THE IMPORTANCE OF REGIONAL GROUPING IN AFRICA’S ECONOMIC DEVELOPMENT Name: Grade Course: Tutor’s Name: (DATE)
  2. 2. Regional Economic Grouping in Africa’s 2 Table of ContentsChapter 1........................................................................................................................................4 Introduction.............................................................................................................................................4 Statement of the problem.......................................................................................................................5 Scope of the study...................................................................................................................................6 Justification of study................................................................................................................................6 Aims and objectives.................................................................................................................................7 Aim..........................................................................................................................................................7 Objectives ...............................................................................................................................................7 Research questions .................................................................................................................................8Organization of the study..............................................................................................................8Chapter Two.................................................................................................................................10Literature Review........................................................................................................................10 Community of Sahel-Saharan States (CEN-SAD)....................................................................................11 Objectives of CEN-SAD...........................................................................................................................12 Free Trade Area.....................................................................................................................................15 Trade promotion....................................................................................................................................15 COMESA Institutions..............................................................................................................................16East Africa Community (EAC)..................................................................................................17 Introduction...........................................................................................................................................17 Objectives..............................................................................................................................................19 Steps of achieving objectives.................................................................................................................20 Peace and security related activities......................................................................................................21Economic Community of Central African States (ECCAS)....................................................22 Introduction...........................................................................................................................................22
  3. 3. Regional Economic Grouping in Africa’s 3 Objectives..............................................................................................................................................22Chapter Three..............................................................................................................................28Methodology.................................................................................................................................28 Introduction...........................................................................................................................................28 Research questions that guided the study.............................................................................................28 Research Design.....................................................................................................................................29 Data collection methods........................................................................................................................30 Primary source.......................................................................................................................................30 Secondary source...................................................................................................................................30 Ethical consideration.............................................................................................................................31Chapter Four................................................................................................................................33Results and discussions................................................................................................................33 Regional Economic Communities in Africa.............................................................................................33 Importance of REC.................................................................................................................................33 Challenges facing RECs in Africa............................................................................................................37Chapter Five.................................................................................................................................39Conclusion and Recommendations............................................................................................39 Conclusions............................................................................................................................................39 Recommendations.................................................................................................................................39References.....................................................................................................................................41
  4. 4. Regional Economic Grouping in Africa’s 4The Importance of Regional Grouping in Africa’s Economic Development Chapter 1 Introduction Historically, individuals, communities, nations, groups of nations, continents as well asthe entire world are struggling to better their economy through various mechanisms. One of themechanisms is forming blocs all aimed at fostering economic development. The trade blocsrefers to intergovernmental agreement or a section of regional intergovernmental organization inwhich regional obstructions to doing business in most cases tariffs as well as non-tariff barriersare tremendously cut down to enhance the member states to engage in business with ease(Vanek, 1962). Having in mind that Africa as a continent is made up of predominately an agriculturalcommunity, experience has taught it that having regional trade integration can go an extra milein catalyzing growth in economy as well as sustainable economic development. Historically, thepath toward the current economic integration is thanks to the signing of a treaty in Abuja Nigeriaback in 1991 which committed Africa towards economic development (O’Connell, 1997).Additionally, the significance of regional economic corporation or groupings as well asintegration being the wheel to drive and consolidate economic together with the socialdevelopment are among the attributes in the back of African leaders. Although integration orgrouping was initially aimed at gaining political power, the whole scenario changed as a result ofchallenges brought forth by globalization as well as interdependence. The mixture of the effects of REI on competence and accretion led to theacknowledgment that the integration can positively impact on the continent economicdevelopment. Having in mind that high efficiency as well as faster amassing is significant
  5. 5. Regional Economic Grouping in Africa’s 5components of a competitive system, economic grouping was then seen as a starting point for thecontinent to find its way in the global economy (Asiedu, 2002). Arguably, there are two sides of the story, those that support economic regionalintegration and those that do not. It is on this basis that the research paper finds its foundation, toestablish how important such integrations are in Africa economic development. To do thissuccessfully, a number of questions such as; Are the regional groups the best way in fosteringAfrican Trade, Can African counties do trade on their self without grouping?, Does it give youhope to Continuing grouping? Among other are used to find the necessary information. Statement of the problem As noted previously, there is the desire to have a sound economic development as well asa sustainable one in the whole of Africa as a continent. As a result of this quest a number ofstrategies were brought forth to drive that among them regional integration. It is established thatregionalization in the continent were pursued not only for fostering economic development butalso enhancing political stability. Regionalism especially market integration has proven throughexperience that to be one of the best way in solving the structural problems that face Africaneconomies. There have been very strong and bitter arguments for and against regional grouping orblocs in Africa’s economic development. On one side, those who support regional economiccooperation hold that it expands trade and opportunities for investment, promotes economicgrowth and sustainable development, and contributes to growth of world economy, fosterpolitical stability, remove barriers to the free movement of production factors, promote monetarycooperation among others (Metzger, 2008).
  6. 6. Regional Economic Grouping in Africa’s 6 On the other hands, the arguments brought forth by those who challenge the integrity ofgrouping in fostering African economic development is that it has not delivered the muchanticipated objectives of uplifting economic conditions of member countries nor ensured asustainable growth in terms of economy. They see the grouping as a monster in it self as it willbloc such groupings from doing business with other blocs (Kibret, 2000). It is on this basis thatthe research seeks to unravel the existing arguments by drawing a conclusion on whethereconomic grouping is important or not in economic development of African countries. Scope of the study With clear understanding that no single study can adequately address all aspects of anygiven topic, there is need to clearly establish what the research addresses. The scope of this studythus is to critically analyze the importance of regional grouping in Africa’s economicdevelopment. In addition, issues such as the region’s grouping being the best way to enhanceAfrican trade, the capabilities of African countries doing business on their own without being ineconomic groupings, advantages and disadvantages of economic are addressed. It is worth mentioning that the results that will be generated from the study will not onlyhave implications in a narrow scope but be applicable in economic decision making as wellproviding a clear understanding of the importance of economic grouping in fostering economicgrowth of Africa continent. Justification of study The research is of a lot of importance as it will be an in depth evaluation of ‘theimportance of regional grouping in Africa’s economic development’. Additionally, other issuessuch as the regions being the best way to enhance African trade, the capabilities of Africancountries doing business on their own without being in economic groupings, advantages and
  7. 7. Regional Economic Grouping in Africa’s 7disadvantages of economic grouping are brought forth. The findings will be of importance tovarious stakeholders such as the African governments, Non-governmental Organizations, thegeneral public, decision makers, policymakers, and scholars as well as varied academicinstitutions. It is worth noting that the findings herein will make African countries make rational andsound decisions regarding either joining any economic groupings or withdrawing from them.This will be guided by the discussed pros and cons of the groupings. If the decision is arrived atin a sober man then the desire to have a continent that is a powerhouse economically in the globecould be realized in future. Not carrying out this research will clearly depict that the various advantages and drawbacks associated with economic grouping in African will not be brought to light. This will meanthat the relevant stakeholders that seek to use such information to improve how to arrive inmaking rational decisions, carrying out further research will not have such an opportunity. Aims and objectives AimThe aim of the research is to critically analyze the importance of regional grouping in Africa’seconomic development. Objectives • To find out whether the regional groups the best way of fostering African Trade • To evaluate if African countries can do trade on their self without grouping • To examine the relevance of regional grouping in African economic development • To find out the advantages and disadvantages of grouping for African countries in doing trade.
  8. 8. Regional Economic Grouping in Africa’s 8 Research questions 1. What is regional grouping in Africa’s economic development? 2. Are regional groups the best way to foster African trade? 3. Can African counties do trade on their self without grouping? 4. What is the relevance of regional grouping in African economic development? 5. What are the advantages of regional grouping as far as African economic development is concerned? 6. What are the disadvantages of regional grouping as far as African economic development is concerned? 7. What are the challenges facing the regional groupings in the quest to attained economic growth and sustainable development? 8. What can be done to avert the challenges facing African economic groupings/blocs? Organization of the study Five distinct sections constitute the whole paper and this design makes it easy for thosewho will review it get to the relevant section with ease. Section one, the first chapter, is made up of the introduction, problem statement, scope ofthe study, rationale/ justification of the study, aims and objective of the study, research questions.Each of these subsections is adequately addressed to give insight to readers of what they expectin the paper. Section two, normally referred to as chapter two, and is made up entirely of all theliterature that relates to the study topic. Data that help explain the importance of regionalgrouping in Africa’s economic development, the advantages and disadvantages, challengesfacing such are brought forth.
  9. 9. Regional Economic Grouping in Africa’s 9 Section three is the methodology chapter. It entails the following subsections;introduction, research questions, research design or approach, population and samplingprocedures, data collection methods, data analysis and presentations. Additionally, issues relatingto limitation, assumptions of the study as well as ethical considerations are brought to light inthis chapter. The fourth section chapter four is results and discussion. It is here that all the findingsrelating to importance of regional grouping in Africa’s economic development are synthesizedand linked to the research questions. It is this chapter that forms the backbone of the paper. The last section is organized as chapter five and is under the title Conclusions andRecommendations. A recap of the finding and recommendations are given in this section.
  10. 10. Regional Economic Grouping in Africa’s 10 Chapter Two Literature Review The African countries have been having groupings to help them in mutual economicdevelopment among the African states. The African Economical Community (AEC) mostlymotivates this, which is an organization of African union state. several organizations has beenestablished to cater for every bloc in the continent with an aim of creating free trade areas,common central bank, customs union, single market and a common currency. This is eventuallyaimed at establishing a common economic and monetary union (Africa-union.org, 1992).In the realization of its aim, AEC has initiated formation of several regional blocs in thecontinent. These regional blocs are also known as Regional Economical Communities, whichhave intertwined membership. RECs are mostly trade blocs, but it also consists of military andpolitical cooperation. These blocs are the one entitled to taking forward the aim of the AEC inattaining trade regions. Some groups have subgroups that make them much powerful. Thefollowing table will show the group and the subgroup of the RECs.Groups subgroupsCommunity of Sahel-Saharan States (CEN-SAD)East African Community (EAC)Common Market for Eastern and SouthernAfrica (COMESA)Economic Community of Central African Economic and Monetary Community ofStates (ECCAS/CEEAC) Central Africa (CEMAC)Economic Community of West African States West African Monetary Zone (WAMZ)
  11. 11. Regional Economic Grouping in Africa’s 11(ECOWAS) West African Economic and Monetary Union (UEMOA)Southern African Development Community Southern African Customs Union (SACU)(SADC)Intergovernmental Authority on Development(IGAD) The function of the African Economical Community that was established less than 1991Abuja treaty and entered into force in 1994 with six stage visions whose core value was toestablish an African common market. The first function was to create region blocs that were tobe completed in 1999 especially where such blocs were not in existence. By 2007, they hadprojected to strengthen the intra-Region Economical Communities ensuing that they integratethem and harmonize them. The third stage is to establish free trade and custom union in everyregion by 2017 and by 2019, a wide continent customs union leading to a bigger free trade area.They have also projected that by 2023, they will have established African Common Market(ACM), eventually, a continent wide economic and monetary union, and a parliament by the year2028 (Africa-union.org, 1992). This will be a complete currency union. The process is projectedto have been complete by 2034 the latest. Therefore, to accomplish these missions each regionbloc plays its part. Therefore, to establish and understand how each grouping worked towardsthe economical development in Africa we will tackle each group independently. Community of Sahel-Saharan States (CEN-SAD) It is a framework of that is meant to bring integration and complimentary within theregion it works upon. Its intention is to work in conjunction with the rest of the region economic
  12. 12. Regional Economic Grouping in Africa’s 12communities in Africa. Its main core function was to strengthen peace within the region,ensuring the stability, security and getting global economic and social development.CEN-SAD came up into being on fourth of February 2011. It was formed after a conference ofleaders who convened ion Tripoli. A treaty was signed by the leaders of El-fateh Revolution andthe states leader of Burkina Faso, Mali, Niger Chad and Sudan before other central Africancountries joined afterwards (Royal African Society, 1968). The region community wasrecognized as a regional economic during the summit conference. It has joined severalpartnerships in regional and international organizations with their function being to consolidatetheir work in political, economical, social and cultural fields. The group is also under observationstatus by The United Nation General Assembly. Objectives of CEN-SAD The aim was to establish a comprehensive economic union that was based on a strategythat was too implemented in accordance with development plan that was supposed to beimplemented by the member state. The group was to include investment in the industrial field,social, energy and agricultural. Therefore, to ensure that the group works with fewer obstacles,they decided to adopt necessary measures that would make them achieve several objectives. The objectives were to be removed to achieve the following, ensure that the peoplemoved around with ease in the member states, free flow of the capital and meet the interest of thecitizen of member state. they were also to ensure that the residence of the member state enjoyfreedom of residence in any member state, work in any country and under take free economicactivity as well as have ownership of property in the company. The group was also to providefreedom of goods getting in and out of the member state, merchandised goods and services.CEN-SAD also ensured that they boosted trade among the member states by encouraging foreign
  13. 13. Regional Economic Grouping in Africa’s 13trade. This was ensured possible by coming up with an implementation investment policy for themember countries (Friedland & Rosberg 1965). To ensure that the entire member states citizen enjoyed the business among each country,they ensure that the member state gives equal privileges to all citizens in the member states. Thisis supposed to be done with the consent of the community of the member countries. The grouphas different mandate to ensure that they enhance trade within the region. The form of educationthat is carried in the area is very important to ensure this is done; therefore, they coordinatevarious education systems at various levels. They also support diversified cultural and scientificmethods to enhance the trade are done in a harmonized method (African Studies Association,2008). The group is well organized to help it oversee the stipulated mandate. It has differentorgans in its leadership and even a bank to ensure that the member countries are able to banktheir investments and enhance the trade among the member countries (Davies, 2008).
  14. 14. Regional Economic Grouping in Africa’s 14 Common Market for Eastern and Southern Africa (COMESA) A map-showing member states of COMESA It was formed in 1994 after Preferential Trade Area (PTA) was disbanded. PTA hadexisted from 1981. COMESA was formed under a treaty to accomplish various mandates. Theorganization was formed to be free and independent for all sovereign member states. These arethe states that have agreed to came together to expand cultural and human resources. This wasdone for the sake of all citizens especially those of the member states (Gyekye, 1987). Theorganization was also supposed to promote peaceful and secure region among the country that
  15. 15. Regional Economic Grouping in Africa’s 15united. However, the main objective of COMESA is to form a wide economic area that has lesseconomic barriers as faced by single member state. Therefore, the functions of COMESA can be phrased as, ‘economic prosperity throughregional integration.’ The phrase summarizes the main objectives of the organizations. Theorganization has twenty-one member countries that has a population of three hundred and eightyfie million people. The annual bill of the member countries is around thirty billion US dollars.Therefore, COMESA has made a great internal and external market for the member countries. Itis mostly boosted by the region it covers which create accessibility overseas and across themember countries in trading (Silverman, 2004). Free Trade Area The organization is on it way in implementing an area that is free in trade. This is by firstensuring that they remove completely the trade barriers that existed among the membercountries. This exercise of removing trade barriers was to be completed by 2000 (Erickson &Murphy, 2010). They also put in place a target of four years to have come up with a tariffstructure that would be common for all external members on how to deal with third party casesand to simplify the required procedures in the process of carrying on with trade. Trade promotion The organization has ensured that they have come up with concrete objectives to ensurethat the trade in the area is well done in the region. This is by ensuring that they offer tradepromotion to the member countries. They are projecting to have trade liberalization andcooperating in custom so they are also in the verge of ensuring that they computerize the customcollection in the region to ensure that they harmonize the trade all over the region (Leuthold,1977).
  16. 16. Regional Economic Grouping in Africa’s 16 To ensure that they improve the rate of the business and the way is carried in the region,COMESA is dedicated to improve transport administration, communication systems to enhancethe movement of goods, people and information around the region with ease. This will befollowed by creation of a legal framework that will ensure that they encourage private sectorgrowth. The organization is also set to ensure that they come up with secure environment forinvestment and setting standard measures that the countries concerned should adopt in carryingout the business in the region. They are also at the point of ensuring that they harmonizemacroeconomics and policies concerning monetary issues over the region (Asante & Abarry1996). COMESA Institutions The organization has set some institutions that will enhance regional cooperation andease development. A number of them are stipulated below. • The COMESA Re-insurance Company (ZEP-RE) whose head office are in Nairobi Kenya • The COMESA Leather Institute in Ethiopia • The COMESA Trade and Development Bank situated in Nairobi Kenya • The COMESA Clearing House in Harare, Zimbabwe • The Association of Commercial Banks, which is also situated in Harare, Zimbabwe. There has been formation of Court of Justice under the organization treaty. Theorganization is also on its way to ensure that cross border trade is initiated. They are also in theverge of forming a common industrial policy and introduction of monetary program that isharmonized. The COMESA offers the following
  17. 17. Regional Economic Grouping in Africa’s 17 According to Weiss 2004, the region offers various benefits to the member country.They ensure that they harmonize the trade market making it more competitive. By offeringcompetitive market place, they ensure that they offer a productive and competitiveindustrialization in the region. This is to ensure that they improve agricultural production andfood security in the region. COMESA offers a better and rational ground for natural resourcesexploitation. There has been a more harmonized monetary and banking service to ensure thatthey improve the financial policies of the region. COMESA ensures reliable communication andtransport infrastructure over the region to ensure that trading is made easier over the region. East Africa Community (EAC) Introduction The East Africa Community date backs in 1967. It was initially formed as PermanentTripartite for East Africa Cooperation, which later collapsed in 1977 due to political differencesamong the member states. It is after the dissolution of the organization when the member stateunited once more under Mediation Agreement for the division Assets and Liabilities (Engel &Porto 2010). This agreement was signed in 1984 by the member countries. For the provisionsthat were made by the member countries, the Mediation Agreement helped them for futurecooperation helping them to make firm arrangements in cooperation. The head of state ensured that they had regular meeting to ensure that they continue wit hdeliberation on reviving an organization. This lead to signing of an agreement that leads toestablishment of Permanent Commission for East Africa Co-operation. This was done onNovember 30, 1993. In 1996, East Africa Co-operation formation started. The EAC headquarters were to be in Arusha Tanzania.
  18. 18. Regional Economic Grouping in Africa’s 18 In conjunction with the talks that the head of state held in Arusha in Tanzania in 22January 1999, a treaty was signed to ensure that the EAC organization was re-established latest1999. The organization was to substitute Permanent Tripartite Commission for East Africa Co-operation. Among the things that the summit raised in the meeting in Arusha was that, they were tosign a Memorandum of Understanding on Foreign Policy Coordination. This was to ensure thatthey operate their business at a zero tariffs rates among the member countries. This was to beadapted as from July 1999. They also ensured that at the same time, 80% COMESA tariffreduction provision was to be implemented. They also ensured that they improvised amechanism to deal with terrorism to ensure that the trade in the region was enhanced (AfricanUnion 2002). To ensure that the countries that are members of EAC, that is Uganda, Tanzania andKenya, improve their trade as well as international cooperation, they signed a Memorandum onForeign Policy Co-ordination. This was to help the member states to have a common stand ininternational interests. They also have a process in which visa application in member countriescan be processed in any mission that either country is concerned internationally. The passports process was therefore launched afterwards in April 1999. It is at this timethat the company launched the elimination of the internal tariff on July 1999. There was also tobe establishment of common external tariffs by July 2000. The agreement was that there wouldbe a removal of non-tariffs barriers that was being imposed to the imported goods coming fromthe partner countries within twelve months of treaty coming into force. The treaty is there also to establish customs within the regions in the member countries.The main aim being common monetary union and common market there enhancing political
  19. 19. Regional Economic Grouping in Africa’s 19federation of east African states. The treaty also shows the institution that is to be composed inthe member sates. The first one was to be East Africa parliament, a joint court of justice and aregion stock exchange. To ensure that the ball is set rolling, the head of the member states signeda protocol to help establish East Africa Custom Union. This protocol was to be ratified by themember states and was to come into force as from 2004 July. By this, the members were able tocreate a common market that was estimated to be worth thirty billion US dollars that will involveabout ninety million people. This shows that with organization made, trade potential increased inthe region to a great height.The EAC was started by the following country; • Kenya • Tanzania • Uganda Objectives The commission is aimed at strengthening and improving the cooperation of the membercountries. This was to be done by enhancing their historical ties making the people along theregion understand each other mainly through trade. The organization was also to ensure that thiscooperation was to be developed by such things as transport, communication, free immigrationprocess, security, trade and industries, investments and promotion done throughout the region. In their projecting of creating a common market, they are meant to ease travellingrestrictions to ensure that people are able to access regional resources easily, harmonize tariffsthat are charged on goods along the region to ensure that people of the member states enjoyequal priorities in their trade in the region. The organization is also dedicated to ensuring thatthey improve the communication protocols to facilitate fast growth of the trade in the region.
  20. 20. Regional Economic Grouping in Africa’s 20They are also involved in the treaty of sharing electrical power and ensuring that they addressLake Victoria issues (Okumu & Makinda 2008). To achieve their objective there are things that they are supposed to ensure they do toharmonize trade. These things are currencies that are freely exchangeable and if possible a singlecurrency that will ply in the region. There are also to ensure that they produce a common eastAfrica n passport to ensure that the people are able to travel with little or no restrictions. TheEAC is also in the process of ensuring that the industries that are indigenous in the region areprotected by removing 10% of surcharges in some products they produce. The surcharge that has been stipulated was to be meant by introduction of custom unionthat will serve as an entry point for the community. Thus, it will be supported by a commonmarket, a monetary union, and a political federation of East Africa states. Steps of achieving objectives The regional organization aims to promote sustainable growth and regional developmentthat includes utilization rationally natural resources and protection of the environment across theregion. The organization has also strengthened consolidated economic, political, cultural, socialand traditions among the people of the regions. This ensures that people in the region promotemutual development. The organization has enhanced and strengthened participation of theprivate sector and the civil society to ensure that the trade in the region is improved. Theorganization has also strengthened the participation of women in different field in the regionincorporating them in different programs and ensures that they participate in differentdevelopments. The organization also ensures that it has positioned itself in a better trading regionby promotion of good governance. They ensure that the member countries respect the principleof democracy, accountability in their functions and rule of law. They are also required to have
  21. 21. Regional Economic Grouping in Africa’s 21transparency, gender equality, social justice and equal opportunities for all the people of themember countries to ensure fair distribution of equity in the region. Finally, the organizationensures that they promote peace in the region, security and the stability to ensure that trade isdone without any fear. This will also attract investors in the region ((Okumu & Makinda 2008). The East Africa Community works with in five-year strategy with developmentdocument, which spells out policy guidelines, priority programs and implementation schedules.This document emphasizes economic cooperation of the member countries to ensure that theydevelop strong focus on the social dimension. The private sector is also put in a strong place toensure that they have a central and a crucial development stand. They also associate civil societyto ensure that there is integrated in the national development in partner ship with the publicsector. The organization has accorded the development of an internationally competitive marketin the region to ensure that they develop a regional infrastructure, human resource and scienceand technology in the area. Peace and security related activities Despite EAC being so much inclined in the economical cooperation, they believes thatstability in the regional is vital for economical development as this will ensure that the investorshave a good ground to invest in the region. Therefore, the solidarity was shown by ensuring thatthe soldiers from the member countries trained in northern part of Kenya in 1998. This troop ofsoldiers was about fifteen hundred in number. They trained for one-month exercise with thename Natural Fire. The organization also signed a memorandum of understanding to ensure thatthe defense forces cooperate in 1998. The organization also support other organizations in Africalike the agreement that was signed to support SADC during EAC summit in Nairobi in 1998October 18 (Engel & Porto 2010).
  22. 22. Regional Economic Grouping in Africa’s 22 Economic Community of Central African States (ECCAS) Introduction It was founded after the summit of Central Africa Customs and Economic Union(UDEAC) that was held in 1981 decided that they would like to form a wider economic region.Therefore, in 1983, the ECCAS come into being. The organization started its work in 1985, butit became inactive for a while due to economic crisis, as most of the member countries had notcontributed their membership fees and the collision that happened in the Great Lakes States.They signed a relation protocol with EAC in 1992. This was to ensure that they make the regioneconomic development firm (Leuthold, 1977). Objectives The organization was formed to accomplish various objectives to ensure that they arrive at the goal that they have set. Their objectives were, first to have a collective autonomy in the region. They were aimed to ensure that the living standard of the people in the regional. They wee also meant to maintain the economic stability of the region through peaceful coexistence. The harmonious cooperation among the member states is to ensure that they establish Central African Common Market. The organization ensured that they placed four priorities in the accomplishment of thetask ahead of them. The identified priorities were first to develop enough capacities to ensurethere was peace among the states in the region. They were meant also to maintain security andstability to put a good economic foundation. The organization was meant also to ensure that theycome up with a way of establishing physical, monetary and economic integration. They were toensure that they developed human integration by ensuring that they integrate diverse culture
  23. 23. Regional Economic Grouping in Africa’s 23together. They were finally to prioritize on coming up with an autonomous method for financingthe organization. Treaties and Protocol The organization signed a treaty that helped in the establishment of the EconomicCommunity of Central African States. They have signed protocol that has helped in theestablishment of Network of Parliamentarians of ECCAS (REPAC). They have also mutualassistance pact treaty between the member states. They have also signed a protocol that pertainestablishment of mutual security pact in the central, Africa (COPAX). To ensure that they give economic development in the region the fist priority, theyensure that they have a protocol giving rules that stipulates the origin for the products to betraded between member states(Leuthold, 1977). They also ensured that they signed a non-tarifftrade barriers protocol. The protocol of re-exportation of goods within the region, transitfacilities, custom cooperation, fund compensation for loss of the revenues and cooperation inagricultural development in the region among others. These protocols were there to ensure thatthe organization develop a good place for trade among the member states. Economic Community of East Africa State (ECOWAS) The section of the map of Africa showing members of ECOWAS
  24. 24. Regional Economic Grouping in Africa’s 24 ECOWAS came into being after the signing of protocol at Lome in Togo on 1976.Afterwards, the countries revised the treaty to ensure that they accelerate economic developmentin the region by ensuring that they integrated political cooperation. Objectives The organization is out to bring about economic cooperation and integration in theregion. This is by integrating social and cultural diversity of the region to enhance goodcoexistence in the region leading to the mutual trade and peaceful trading. ECOWAS is out toensure that they a monetary union in the region by integrating the economies of the memberstate. They are meant to ensure that they raise the living standard of the people in the region byensuring that they foster relation among the member states. The organization is out to maintainand enhance economic stability in the region by ensuring that the trading potential is enhanced.The organization has to ensure that integration policies that have been put in place are there toincrease the economic status of the region despite of the prevailing condition of each country. Intergovernmental Authority for Development (IGAD) The organization was formed in 1996 to take over Intergovernmental Authority onDrought and Development (IGADD). This was due to the drought that reigned in the EasternAfrica region between 1974 and 1984. It caused a lot of hunger, famine, degradation of theecology and economic strain. Therefore, they had to form an organization to help fight thisfamine. However, the magnitude of the drought was so big to cope with s they used theorganization to get helping from the international community. IGAD visionTo be a premier regional organization, to achieve peace, prosperity and regional integration.
  25. 25. Regional Economic Grouping in Africa’s 25 IGAD missionIts mission is to complement member states efforts to achieve the following through cooperation. • Economic cooperation • Promotion and maintenance of peace, security and prosperity of the member states • Enhance economic cooperation and integration. IGAD objectives The organization has various objectives. The organization is out to develop strategiesand gradually harmonizing macroeconomics policies and programs in the social setting and thetechnological fields. They are advocating to harmonize policies to favor the trade of the region,ensure that the customs within the region are favorable. They are at the verge to also straightencommunication and transport systems within the region, increase agricultural practice byensuring that market is available for the products, ensuring that the natural resources aremaintained by coming up with appropriate policies to cater for that and promote free movementof the people within the region, services and goods. The organization is ensuring that they enable the foreigners who trade across the borderhas a good environment as they do their business. They ensure that they advocate domesticinvestment to enhance firm business in the region. They are also ensuring that they improve theinfrastructure in the region to improve the way the business is to be done in the region. Theyhave started project that will initiate food security in the region to ensure that they sustaindevelopment of the region. To enhance the unity of the community of the region, there are out to enhance peacefulcoexistence within the region and stability. This has been possible by the mechanisms that theyhave come up with to ensure that they create a good and peaceful trading region where the
  26. 26. Regional Economic Grouping in Africa’s 26investors are attracted to come and do the business without interferences of insecurity. They havealso initiated programs that are able to mobilize resources that are able to implement emergencyin short, medium and long term framework for the regional cooperation. They are also in theirway to ensure that they meet COMESA and EAC objectives. Finally, the organization is out toensure that they promote the cooperation in research to development and application of scienceand technology. Southern African Development Co-ordination conference (SADCC)The organization was formed in 1980 by head of states of nine countries from southern part ofAfrica. This organization was formed through constant consultation of the member states ataround 1970. The leaders of the member countries realized that they are not able to raise thepeople’s living standards by being democratic countries, but they need to unite work together toensure that they accomplish their objectives (Europa Publications Limited (2003). SADCC objectives The organization is out to achieve development in the member countries as well aseconomic growth. They work in line with alleviating poverty in the region and thereforeenhancing the living standard of the region by supporting the disadvantaged group in the memberstates. They are also out to ensure that they come up with common political values institutionsand systems. To make the region enjoy peaceful situation and security is also among their mainobjectives. SADCC help promote self-sustenance of the member states by ensuring that theyadvocate development in each country. The organization is out to ensure that they maximizeproductivity in the region through proper utilization of the resources and enhancing employment.They ensure that the environment is protected in the region and the natural resources. They arealso able to consolidate the culture of the whole region and integrate it to form a cohesive social
  27. 27. Regional Economic Grouping in Africa’s 27and cultural links among the people in the member countries (Europa Publications Limited,2003). Arab Maghreb Union This is an organization brings together countries such as Tunisia, Libya, Mauritania,Algeria and Morocco. It was formed through a treaty that was signed in 1989. The organizationhas been dormant for some time but it is underway to make revival come back (African union,1999). Countries that are Arab Maghreb Union members Objectives The organization main objective is to make strong ties between the member states toensure that they create stability in the region to ensure that they can trade with ease. They haveput in place several policies to ensure that this happens. There are out to ensure that there are freemovement of goods within the region and ensuring that they have fair domestic strategy for allthe member countries. They have also provided a provision whereby, the countries in Africa willunite at a later stage.
  28. 28. Regional Economic Grouping in Africa’s 28 Chapter Three Methodology Introduction This chapter describes in details the research methodology, the manner with which thestudy was carried out. In addition the issue of qualitative and quantitative methods employed inthe study is brought out clearly, the entire mechanisms used to indentify the sample, mechanismsof data collection, analysis and finally interpretation of the results and ethical consideration. Thestudy sought to explain the importance of regional grouping in Africa’s economic development Secondary and primary sources of data aided in collecting the required data. Bothqualitative research methodology and quantitative methodology were used in carrying out thisresearch. This provided me with an opportunity to come up with suitable information that isrelevant, authentic and factual. Data was analyzed and presented descriptively by use of graphscharts and tables where appropriate Research questions that guided the study 1. What is regional grouping in Africa’s economic development? 2. Are regional groups the best way to foster African trade? 3. Can African counties do trade on their self without grouping? 4. What is the relevance of regional grouping in African economic development? 5. What are the advantages of regional grouping as far as African economic development is concerned? 6. What are the disadvantages of regional grouping as far as African economic development is concerned?
  29. 29. Regional Economic Grouping in Africa’s 29 7. What are the challenges facing the regional groupings in the quest to attained economic growth and sustainable development? 8. What can be done to avert the challenges facing African economic groupings/blocs? Research Design The research employed a mixed methodology. Theoretical research approach in whichthe goal is to prove/disprove a hypothesized truth or proposed future research plans that may becarried out in the future but not at the current moment. The choice of this method was as a resultof its cheapness. It is important to note that theoretical study calls for deeper digging of variousliteratures ranging from journals, publications, books, other forms of literature and from theinternet. What this implies is that most of the data required will be collected by perusing throughsecondary sources of data as compared to primary sources (Beiske, 2002). Qualitative research is also employed in the study; the approach seeks to contextualizethe research by immersing the researcher into the study scenario as well as with the studysubjects. Hypotheses are developed and data is collected and the results tend to be subjective. Acase study as a sub type of qualitative research is used to ensure that the study is flexible enoughto give the researcher room to investigate issues that were not previously thought of and could beworth being brought to light. It is worth noting that case study stimulate additional research oridentification of new phenomena. Additionally, it offers the chance to substantiate, challenge orcontradict some existing facts, opinions or ideas. However, according to Saunders, M. et al. 2007case study does have a number of limitations. These include biasness since the researcher isinvolved in the study due top his own feelings or value of systems. In cases where informationrelied is not documented but in human memory, the finding might not be authentic.
  30. 30. Regional Economic Grouping in Africa’s 30 Data collection methods The data required to fully address all the objectives and research questions will beobtained through perusal of secondary as well as primary data sources. It is worth mentioningthat before I embarked on collecting the required and necessary data I first sought permissionfrom the relevant authorities. Primary source To supplement the secondary tools of collecting data, interviews were also used. Thiswas chosen because when the research will be done, as a researcher I was be able to have directcontacts with the interviewee and obtain first hand information. Both the interviewer and theinterviewee were able to clarify on issues of the research done hence, being able to obtaininformation which is well elaborated and authentic (Beiske, 2002). It is also a flexible datacollection tool as when questions when not well grasped by the interviewee I will be in a positionto rephrase and elaborate them. Interview will allow me to learn about things and facts thatcannot be observed directly and finally it adds internal viewpoints to outward behaviors. Despite the advantage mentioned, according to Cohen & Manion, (1996) it’s a slowmethod because the process calls for interview of one person at a time, cannot fully trace eventsand trends that occurred in the past concerning traditional, e-learning and blended learning.Additionally, interview is an expensive tool to use; it is also subject to respondent andinterviewer bias. Secondary source Materials from the library, internet and related research reports were used to provide therequired data and information concerning the importance of regional grouping in Africa’seconomic development. Internal sources to be sort after as the study is being carried include
  31. 31. Regional Economic Grouping in Africa’s 31information compiled by the respective regional groupings such as COMESA, ECOWAS, andSADC among others. External data sources included information from the government sources,previous research studies and academic institution (colleges and universities material related toAfrican economic grouping for economic development. Ethical consideration Some of the ethical consideration includes the following; the targeted sample populations that will be involved in the study to provide relevant information are to be informed about the same in advance. The reasons for carrying out the survey as well as how they stand to gain from the study will also be brought out clearly. Additionally, research ethics demands that the information be sought after by the researcher will be provided in good faith, and voluntarily without any influence be it monetary or otherwise for instance giving of incentives, rewards, and gifts. It is important to note here that the rights and welfare of the participants involved in the study is protected and guaranteed. To do this, their identities will be kept confidential. Additionally, the information collected while soliciting for data is to be kept confidential and opt not to be used in any other purpose apart from what was initially intended for. It is expected that the interviewees/respondents will be ethical and provide accurate information to the best of their knowledge. This means that they should not knowingly give false full information. More importantly, I opt to be ethical in providing the participant especially the respondent’s guidelines and necessary information that are correct. Similarly, I should not be judgmental on the information am provided with during the course of interview and should be as neutral as possible during the entire process. Lastly, there is need to omit any kind of
  32. 32. Regional Economic Grouping in Africa’s 32personal bias that might arise; this will be done at the end of the study. This is with theknowledge that such bias can negatively impact on the statistical analysis.
  33. 33. Regional Economic Grouping in Africa’s 33 Chapter Four Results and discussions Regional Economic Communities in Africa The research established that all African countries are a member of one or more REC.There are as many as fourteen RECs in Africa and they fall in five major regions; West Africa(UEMOA, MRU, ECOWAS), Central Africa (ECCAS, CEMAC, CEPGL), Eastern and SouthernAfrican have six RECs (COMESA, EAC, IGAD, IOC, SADC, SACU), North Africa (UMA,CEN-SAD) (Coulibaly & Fontagné, 2005) . Statistics have it that out of fifty three countries in Africa, twenty seven are members oftwo RECs; eighteen are members of three while only one country is a member to four. It is onlyseven countries that are a member to only members of one REC. indeed there are reasons forcountries resorting to be a member of more than one bloc. Being a member of two or more RECshelps such a member country to pursue their economic development and integration on the basisof a multiple track approaches (Oyejide et al. 1997). Additionally, it has allowed countries oflarger RECs to progress faster but in a different group and help weak countries to gain benefitsfrom such groupings. Importance of REC To answer the question whether regional grouping are the best way to foster African trade,it relevance in African economic development and whether African countries can do trade on theirown without being in groups, importance or advantages of RECs are adequately brought out. It is worth noting from the onset that RECs are usually formed due to what membersexpect from such grouping. Free trade has been thought to result to rapid expansion of doingbusiness between member countries that in turn is expected to catalyze economic growth.
  34. 34. Regional Economic Grouping in Africa’s 34 According to Coulibaly & Fontagné, 2005 regionalism has played a major role inproviding a strategic plan from where partnerships can be formulated which ultimately translatesto catalyzed development initiatives as well as various programs in Africa. Despite the fact thatmany scholars have discredited RECs in the recent past, there are a number of successes achievedby such grouping aimed at fostering sustainable economic development. Several regionalgroupings have been successful in transforming their economic as well as financial collaborationefforts making them a power house in dictating as well as motivating the economy of the regionas well as that of the entire continent. Aside from enhancing trade, RECs has led to improvement of various infrastructuralfacilities in members countries. This has made it possible for the citizen within and without themember countries to enjoy the existence of such facilities especially communication ones forinstance roads, rail among others (Oyejide et al.1997). Similarly, regionalism has reduced the costof doing business by the introduction of tariff removal. This translates to members to acquiregoods and services hence a better life. More importantly Ndulu et al. 2008 suggested that it was previously thought that most ofthe African countries carry serious potential risks due to unstable politics hence hindering foreigninvestment. Corporation has averted the scenario as when African countries joined hands theyhave tremendously made member countries to be stable politically hence encouraging investment.On the same note, regionalism aimed at fostering economic development has made it possible forsignals to be transmitted to various stakeholders (member states) concerning various opportunitiesas well as necessary information pertaining customers preferences on services and goodsproduced.
  35. 35. Regional Economic Grouping in Africa’s 35 It has been noted through experience that RECs has led to coherence of both policies fromthese regions and countries translating to effective utilization of public resource. The pooling ofresources of a given region does ease the entire burden of financing various public goods forinstance infrastructure, water supply among others (Metzger, 2008). Additionally, such anapproach employed by African economic groups in spending public resources makes it possiblefor all relevant steps such as implementation of investment in infrastructure as well as trademeasures to be done in a consistent, ordered and coordinated way. Regionalism in terms of fostering economic development has resulted to expansion ofmarkets in Africa. One of the attributes of RECs is that there is free movement of goods, services,people capital. All these in terms of economy has enabled economies of scales, stimulatingvarious types of investments, improving how competitive businesses are, increasing south tosouth trade and more importantly it attract more foreign direct investment (Maylor & Blackmon,2005).There are very high chances of such regional integration to contribute to a pro-poor growthas it can integrate labor market and at the same time cut down the barriers against investment forenterprises institution (World Bank, 2000). It has been argued that regional cooperation is astepping stone for developing countries to find themselves a say in the global economy and atfundamentally helping such countries attain the Millennium Development Goals as well asenhancing global interdependence. Another reason that there is need for countries to operate in economic groups is due to thebenefit it brings regarding bargaining power in the global scene of business. The advantages ofsuch bargaining power of negotiation mean that member countries will always strike for betterdeals when negotiating with their counterpart in developed countries. This for instance will make
  36. 36. Regional Economic Grouping in Africa’s 36member countries to sell their products at a fair price unlike when one country tries to market herproducts and services (Longo & Sekkat, 2004). Regional grouping addresses the issue of scale and variety effect which refers to asituation whereby ineffective and inefficient industries are protected and cushion especiallyduring the time of import substitution. This lead to maintenance of unsuccessful industries thatinstead of contributing the economy of the country, it indeed ate deeper into the economy it opt tocontribute to. The rationale for RECs is that they are in a better position to reduce such protectionwhich might lead to a rational industry in which resources are reallocated. Similarly largermarkets do have a greater potential of making smaller industries/firms to attain their optimum sizeresulting to lowered average cost hence cutting down consumer prices (Ndulu, 2006). On the side of consumers, regional; economic grouping provide them with a variety tochoose from there by increasing their welfare. On the same note, healthy competition as a resultof larger market might tremendously bring down product as well as service prices, beneficial toend-users. Industries having in mind the fact that varied choices in the market are key insatisfying consumers, they will be compelled to utilize the most apposite inputs increasingproductivity hence its growth. Typical examples of how important can be illustrated by the integration of Kenya,Tanzania and Uganda forming East African Community. It is a fact that during the colonialperiod, various firms not indigenous heavily invested in these countries and Kenya was the hubdue to its better infrastructure as compared to the two other countries. The collapse of thecooperation brought a number of serious economic consequences; loss of jobs,disinvestment/relocation of the firm that had invested in the region and reduced export market.The same case applies to Rwanda, Burundi, as well as parts of Congo when they de-integrated.
  37. 37. Regional Economic Grouping in Africa’s 37The consequences suffered by these countries thus illustrate that no country can successfully dotrade without being in one of the regions economic blocs. Despite the advantages or importance of RECs in Africa, there are critics who holdopinion that such grouping indeed can be self defeating. They posit that economic blocs do limitinstead of encouraging global development in terms of trade. They say such blocs raise tariffs aswell as non-tariff walls around them hence cutting down the frequencies of trade flow betweenthem and other relevant business partners. The results they suggest is that it might lead toinefficiencies in allocating resources, productivity, work against consumer welfare as a result ofcompetition Challenges facing RECs in Africa It has been acknowledged by those who are in full support of regional economic groupingthat despite the efforts made to propel the initiatives to attain the desired need of economicdevelopment, a number of challenges have been a hindrance. Among these major challengesfacing RECs include; behind-the-border problems, it has been established that it is what reallycontribute to low intra-regional as well as global trade. Nonetheless, there are feasibleopportunities to avert this however there is need for further funding and authority. Lack of project ownership from the grassroots level is another challenge. Most citizenslack the motivation since they are always left while decision is arrived at. Additionally, theproblems of government playing politics when it comes to the private sector created conflictbetween private and public sector (Fajana, 2004). Other challenges include lack of political will to harmonize regional commitment and theagreements arrived at, inadequate infrastructure, lack of sufficient skilled human resources,presence of weak and national institutions, un harmonized economic policies, lack of
  38. 38. Regional Economic Grouping in Africa’s 38complementarily of member states, skewed allocation of resources away from economic relatedthings, increased probability of conflicts and political instability in most regions scaring investors,the problem of overlapping and multiplicity in terms of membership and last but not leastinadequate financial resources that funds RECs processes as well as the entire institution (WorldBank, 2000).
  39. 39. Regional Economic Grouping in Africa’s 39 Chapter Five Conclusion and Recommendations Conclusions The existing global financial situation as well as how trade is being done does notin any way give any continent an upper hand. Thus there is need for each continent and for thismatter Africa to look for ways on how it will be better place in doing business regionally andglobally. From the review of the importance of regional economic grouping in Africa, it isapparent that no single country can successfully engage in trade without being a member of atleast one of the economic bloc. Additionally, the fourteen economic blocs have seen to it thatevery African country is a member of at least one of them; there are incidences of multiplicity andoverlapping. Among the importance of RECs is that there is increase bargainingpower, increase global market, improved consumer welfare, productivity, and elimination ofineffective industries. It has been established that most of the objective of these economic blocshave not been realized thanks to the various challenges which include mentioning but a few lackof adequate findings, poor infrastructure, inadequate skilled manpower, lack of political goodwill, un harmonized economic policies, high potential of political instability and conflicts,overlapping and multiplicity in terms of membership among others. Thus it is in my view thatRECs are relevant in fostering African economy in light of the example provided by whathappened in East Africa Community. Recommendations Although in my view, RECs is significant for African countries to developsustainably in economic terms and cut her self an edge in the global economy, there are numberof things that it opt to addressed, these include;
  40. 40. Regional Economic Grouping in Africa’s 401. Thoroughly engage in activities that will help it reform her trade policy. There is need for it to reform her trade policy to match with those of world trade organization. This include harmonizing even member country policies to be inline with those of other members2. Foster infrastructural development3. Enhancing adoption of technology4. Reforming custom laws as well a other procedures5. Since funds has been seen as one of the major challenge, there is need to strengthen financial infrastructure.6. There is need for member states to actively indulge her citizen so that the entire project will have grassroots support.7. There is also need to revisit how resources are allocated to avoid skewed resource allocation at the expense of economic development8. More importantly, there is need for African countries to strive and create a stable, and conflict free zone to attract Foreign Direct Investment9. Due to the advent of technology innovations, it will be rational for institution of learning from all levels to upgrade the quality of technical as well as scientific education.
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