Regional Integration in Africa: An Important Step Toward Global Integration

Alassane Ouattara
Published Date:
September 1999
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It is a great pleasure for me to participate in the first Conference of Ministers of Economy and Finance of French-Speaking Countries and to address such a distinguished audience. I shall take this opportunity to share with you some thoughts on the importance of regional integration as an intermediate step toward the integration of developing countries into the world economy. In this connection, I believe that French-speaking Africa’s experience with regional integration has been very encouraging, has taught us much, and could serve as an example for other countries wishing to take the same route.

After two decades of uneven performance, Africa’s economic situation has improved during the past four years, and the outlook is increasingly bright. What is even more remarkable is that this progress is attributable primarily to domestic adjustment efforts, rather than to exogenous factors. These efforts have featured the implementation of appropriate structural and macroeconomic policies designed to improve economic efficiency and create the conditions for greater integration into the world economy. Such policies can justify the optimistic view of what is now being called the beginning of an “African renaissance.” However, this statement needs to be tempered by the risks posed by Africa’s many internal conflicts, which call for decisive action at the regional and international levels.

Having said this, we must acknowledge that Africa still has a long way to go to regain the ground lost during the 1980s. Growth rates are not yet high enough to bring about a substantial reduction in the widespread poverty, and African economies are still fragile and, therefore, vulnerable to domestic and external shocks. While it is true that the slow pace of their integration into the world economy has sheltered most African economies from the most violent effects of the recent financial crises, the reverse of the coin is that Africa is not able to reap the full benefits of globalization—a process that could increase the resources available for the productive investment that Africa needs so badly. With its low rates of domestic saving, endemic poverty, still-excessive dependence on commodities, and lack of market openness and liberalization, Africa risks being marginalized from the rest of the world.

I would like to focus on two propositions today. The first is that developing countries really have no choice—they must integrate into world markets if they wish to succeed. Second, for most of these countries, regional integration can facilitate integration into the world economy. The success of the European Union since the 1950s attests to the advantages of regional integration. However, the same can be said for French-speaking African countries, which have long cooperated in economic and monetary policy.

  • Therefore, my first proposition is that developing countries cannot escape globalization, and they should not try to avoid it.

For most of the past three decades, East Asia has demonstrated the advantages of an outward-looking, liberalized economy. However, the Asian crisis and its spillover into Russia and other emerging markets have overshadowed the advantages of globalization, shifting the focus of the discussion to the risks inherent in an increasingly integrated world economy. Leaders of countries that are not yet fully integrated into the world economy may rightly question whether it is in their best interests to further expose their countries to the risks faced by the Asian economies. Is globalization really good for small countries and, if so, under what conditions?

The Asian crisis has shown, first and forcefully, that economic openness is not enough. Sound macroeconomic policies, unfailing transparency, a stable and rational regulatory and incentive framework, robust financial systems accompanied by effective supervision mechanisms, and good governance in the public and private sectors are also required to take full advantage of globalization and to prevent the crises that struck several emerging countries.

This leads me to my second proposition:

  • Regional cooperation can serve as a vehicle for nondiscriminatory liberalization of multilateral trade and integration into the globalized economy.

If properly conceived, regional integration offers many advantages for developing countries. First, closer trading links between these countries would strengthen their capacity to participate in world trade. Regional integration would enable many countries to overcome the obstacles represented by their relatively small domestic markets, by enabling producers to realize greater economies of scale and benefit from the establishment of regional infrastructures. A regional approach in key structural areas—such as tariff reduction and harmonization, legal and regulatory reform, payment systems rationalization, financial sector reorganization, investment incentive and tax system harmonization, and labor market reform—enables participating countries to pool their resources and avail themselves of regional institutional and human resources in order to attain a level of technical and administrative competence that would not be possible on an individual basis. The regional approach also allows countries to assert their interests from a stronger and more confident position in the international arena.

Furthermore, the conditions and obligations associated with participation in an ambitious reform program within a regional organization also facilitate the work of the domestic authorities in implementing politically difficult measures, such as lowering tariffs or instituting wide-ranging reforms of the regulatory and judicial systems. In addition, regional surveillance and the dialogue between the various partners help reduce the risks of macroeconomic slippage, resulting in a more stable, predictable environment—clearly an essential factor for the private sector to flourish.

What Are the Conditions for Sound Regional Integration?

The real challenge is to ensure that regional organizations are perceived as effective vehicles for the integration of developing countries into the world economy, fostering mutual support among members in their reform efforts. Most important, these organizations should not be perceived as mechanisms for defending certain established interest groups. Rather, they should be seen as pushing for openness to the rest of the world.

What is needed to achieve these objectives? First, there must be the political will to adhere to regional integration objectives and to give them priority over domestic considerations. Second, a resolute effort must be made to achieve greater institutional and economic policy convergence. This assumes that countries establish ambitious, but feasible, timetables for instituting reforms and establishing regional institutions, while realistically evaluating the resources required. Third, strong, efficient regional institutions are required. In fact, such institutions should be authorized to develop appropriate policies independent of national interests without, however, losing sight of each member’s particular situation. They should also have enough human and material resources to assist member countries in implementing these policies.

Lessons from Regional Integration Initiatives in French-Speaking Africa

Almost all the countries represented here in this great assembly of the French-speaking countries are associated with some form of regional initiative. However, the CFA zone countries in particular have been able to transform their economic and monetary cooperation effort into a powerful driving force for economic policy coordination and integration. Moreover, their support of the integration effort extends well beyond the “economic” domain, strictly speaking. These countries are currently putting in place the structures required to achieve their ultimate objective, which is the creation of a genuine single market. To this end, they have established regional institutions, in which they have vested responsibility for regional integration initiatives. I am referring not only to the subregional commissions, but also to the West African Accounting System (SYSCOA), the Inter-African Conference on Insurance Markets (CIMA), the Inter-African Conference on Social Security (CIPRES), the two subregional banking commissions, the subregional stock exchange, and AFRISTAT.

It is true that the single currency (the CFA franc) has been and continues to be the cornerstone of this integration. Long experience with a monetary policy conducted by a strong institution that must preserve its independence vis-à-vis national governments has accustomed these countries to yielding some of their economic policy matters to a regional organization. Clearly, it will be more difficult for other countries that have not yet taken this step of close coordination to achieve similar institutional and policy convergence. Nevertheless, even if the objective of regional cooperation remains more modest, it would be beneficial for these countries to undertake an orderly expansion of the areas of responsibility and competence of their regional organizations and to strengthen the capacity and independence of these organizations vis-à-vis national governments.

Another aspect of regional integration in French-speaking Africa that should be emphasized is the Organization for the Harmonization of Business Law in Africa (OHADA), in which 16 African countries participate. Through this initiative, the leaders recognize the importance of economic security, protected by an effective judicial framework, for economic development. In addition to the provisions for harmonizing the legislation, it should be noted that this initiative attaches great importance to human resource training—a prerequisite for the institutions to operate effectively.

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Clearly, French-speaking African countries—particularly the CFA zone countries—have already subscribed to regional integration as the driving force for their integration into the world economy. They must persevere on this path, while ensuring a balanced distribution of the benefits of integration between maritime and landlocked countries. I would encourage the French-speaking countries that have yet to make such progress in regional cooperation to redouble their efforts, using the CFA zone’s experience as an example—integration models worthy of imitation are not found only in Europe and Latin America! In general, I believe that all countries should engage in consultation, even outside a formal framework of regional cooperation. Under the leadership and thanks to the energy and enthusiasm of its Secretary-General, the International Organization of French-Speaking Countries (la Francophonie) offers a framework in which to deepen this consultation. Despite the differences in the history, culture, institutions, and experiences of its constituent countries, it represents a structure for promoting better mutual understanding for the benefit of all its members and therefore of all humanity.

Statement by Alassane D. Ouattara at the First Conference of Ministers of Economy and Finance of French-Speaking Countries (Francophonie), Monaco. April 14, 1999 (translated from French).

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