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.
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.
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
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
Foreign direct investment
Free trade area
General Agreement on Tariffs and Trade
International Monetary Fund
North American Free Trade Agreement
Organization of African Unity
Organization for Economic Cooperation and Development
Preferential trade area
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
World Trade Organization
List of Abbreviations
1 Opening Address
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
4 Trade Liberalization in Sub-Saharan Africa
5 The Revenue Implications of Trade Liberalization
Liam P. Ebrill and Janet G. Stotsky
6 Globalization: Implications for Africa
7 Why Is Trade Reform So Difficult in Africa?
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
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
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.