Trade Reform and Regional Integration in Africa

Title Page

Trade Reform and Regional Integration in Africa


Zubair Iqbal

Mohsin S. Khan

Papers presented at the IMF African Economic Research Consortium Seminar on Trade Reform and Regional Integration in Africa December 1–l3, 1997

IMF Institute

International Monetary Fund

Washington, D.C.


© 1998 International Monetary Fund

Production: IMF Graphics Section

Cover design: Massoud Etemadi

Typesetting: Joseph A. Kumar

Library of Congress Cataloging-in-Publication Data

Trade reform and regional integration in Africa / editors, Zubair

Iqbal, Mohsin S. Khan.

p. cm.

“Papers presented at the IMF and African Economic Research Consortium seminar on Trade reform and regional integration in Africa, December 1997.”

Includes bibliographical references.

ISBN 1-55775-769-0

1. Africa, Sub-Saharan—Commercial policy—Congresses. 2. Africa, Sub-Saharan—Economic conditions—Regional disparities—Congresses.

3. Africa, Sub-Saharan—Economic integration—Congresses.

4. Africa, Sub-Saharan—Foreign economic relations—Congresses.

I. Iqbal, Zubair. II. Khan, Mohsin S. III. International Monetary Fund.

IV. African Economic Research Consortium.

HF1611.T734 1998 98-11659

382’.3’0967-dc21 CIP

Price: $22.00

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In recent years, economic performance in most of sub-Saharan Africa has improved. Growth has picked up, resulting in an increase in per capita output in a number of countries, inflation has decelerated markedly, and the fiscal and external deficits have been reduced. In large part, the economic recovery can be attributed to improved macroeconomic and structural policies rather than to favorable external developments, such as terms of trade gains. Indeed, these favorable developments have been achieved at a time when official development assistance has been declining. Key structural reforms have been implemented in many African countries, including curtailing of price controls, dismantling of some inefficient public monopolies, privatization, elimination of nontariff barriers in most countries, and a reduction in import duties in many. At the same time, exchange rates have been largely freed and unified, restrictions on current transactions liberalized, and important progress has been made toward market-determined interest rates in most countries.

The economic situation remains difficult. But sub-Saharan Africa may have reached a turning point. The incipient improvements need to be nursed assiduously if the recent gains are to be translated into sustained growth.

Experience and research demonstrate that trade liberalization is a critical element in a growth strategy. As part of the effort to address trade issues in Africa, the IMF, in collaboration with the African Economic Research Consortium (AERC), conducted a seminar on Trade Reform and Regional Integration in Africa in Washington in early December 1997. The event provided an important opportunity to government officials, academics, and representatives from multilateral and regional agencies to exchange views on the complex issues relating to trade reform and regionalism in Africa. This volume brings together papers presented during the seminar. They cover a range of important issues, including the role of trade liberalization in promoting sustained growth, interdependence of trade and macroeconomic policies, impediments to effective trade reforms, and steps needed to accelerate trade reform in Africa. The role that regional interaction can play in supporting trade reform is also covered extensively.

What emerges from these papers, and the ensuing seminar discussions, is a clear consensus that trade liberalization is essential if African countries are to take advantage of globalization. Combining forces with similarly placed African countries through the formation of appropriate regional trading arrangements can lead to faster liberalization and can reduce vulnerability to external shocks.

Stanley Fischer

First Deputy Managing Director

International Monetary Fund


We are grateful to the following for their advice and support: Michael Mussa, Economic Counselor and Director, Research Department, IMF; Evangelos Calamitsis, Director, African Department, IMF; Pierre Dhonte, Deputy Director, Middle Eastern Department, IMF; and Benno Ndulu, Executive Director, African Economic Research Consortium. Thanks are also due to Alfred F. Imhoff for providing valuable editorial help; to Juanita Roushdy, External Relations Department, for editorial guidance; to Arturo Rios and Rosa Vera-Bunge, IMF Institute, for research assistance; and especially to Susan E. Jones, IMF Institute, for preparing the manuscript speedily and efficiently. We would also like to express our gratitude to many other staff members of the IMF Institute who helped in organizing the joint AERCIMF seminar where papers contained in this volume were presented.

Zubair Iqbal

Mohsin S. Khan

List of Abbreviations

Several African regional organizations have abbreviations based on their proper French names; however, the commonly used English translations of the names are given here.


African Economic Community


African Economic Research Consortium


Central African Monetary Union


Communauté francophone d’Afrique


Cross-Border Initiative


Central African Economic Community


Common Market for Eastern and Southern Africa


Economic Commission for Africa


Economic Community of Central African States


Economic Community of West African States


Extended Fund Facility


Enhanced Structural Adjustment Facility


European Union


Foreign direct investment


Free trade area


General Agreement on Tariffs and Trade


International Monetary Fund


Multifiber Arrangement


North American Free Trade Agreement


Nontariff barriers


Organization of African Unity


Organization for Economic Cooperation and Development


Preferential trade area


Quantitative restrictions


Southern African Customs Union


Southern African Development Community


Southern African Development Coordination Conference


Structural Adjustment Facility


Structural Adjustment Program


West African Economic and Monetary Union


Central African Economic and Customs Union


United Nations Conference on Trade and Development


Value-added tax


World Trade Organization


  • Preface

    • Stanley Fischer

  • Acknowledgment

  • List of Abbreviations

  • 1 Opening Address

    • Alassane Ouattara

  • 2 Trade Reforms and Regional Integration—An Overview

    • Zubair Iqbal and Mohsin S. Khan

  • Part I. Trade Reform, Macroeconomic Adjustment, and Growth

  • 3 Trade Liberalization

    • Michael Mussa

  • 4 Trade Liberalization in Sub-Saharan Africa

    • Robert Sharer

  • 5 The Revenue Implications of Trade Liberalization

    • Liam P. Ebrill and Janet G. Stotsky

  • 6 Globalization: Implications for Africa

    • Paul Collier

  • 7 Why Is Trade Reform So Difficult in Africa?

    • Dani Rodrik

  • 8 Africa’s Role in Multilateral Trade Negotiations: Past and Future

    • Zhen Kun Wang and L. Alan Winters

  • 9 Trade and Growth in Sub-Saharan Africa

    • Benno J. Ndulu and Njuguna S. Ndung’u

  • 10 Africa: Industrialization Strategy in the Context of Globalization

    • Charles Chukwuma Soludo

  • Part II. Regional Integration in Africa

  • 11 Regional Integration: Lessons from Asia and the Western Hemisphere

    • Gary Hufbauer and Barbara Kotschwar

  • 12 Trade Policy and Regional Integration in Sub-Saharan Africa

    • Ademola Oyejide

  • 13 Beyond Trade: Regional Arrangements as a Window on Globalization

    • Christian A. François and Arvind Subramanian

  • 14 Regional Integration, Trade, and Foreign Direct Investment in Sub-Saharan Africa

    • Ibrahim A. Elbadawi and Francis M. Mwega

  • 15 Sub-Saharan African Experiences with Regional Integration

    • Ernest Aryeetey

  • 16 Regional Integration Arrangements in Southern Africa: SADC and SACU

    • Trudi Hartzenberg and Gavin Maasdorp

  • 17 Regional Trade Arrangements: The COMESA Experience

    • Louis A. Kasekende and Charles A. Abuka

  • 18 The Role of ECOWAS in Trade Liberalization

    • Charles D. Jebuni

  • List of Participants

The following symbols have been used in this book:

  • … to indicate that data are not available;

  • – between years or months (e.g., 1995–96 or January-June) to indicate the years or months covered, including the beginning and ending years or months; and

  • / between years (e.g., 1996/97) to indicate a fiscal (financial) year.

“Billion” means a thousand million.

Dollars are U.S. dollars.

Minor discrepancies between constituent figures and totals are due to rounding.