6.2. African Regionalism in a Global Neo-liberal Environment
6.2.2 End of the Cold War and Regionalism in Africa
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The resurgence of global neo-liberal capitalism as the only economic system for the whole world saw pressure being increased to weaken the state and effectively reduce its role in determining the economic activities in the countries and regions. The most recent desire to attract foreign direct investment in most poor SADC countries is a clear indication that neo-liberal global capitalist practices are essential for economic growth and development. For Africa as a region, regional integration was subjected to many forms of pressure related to global neo-liberal capitalism. In the SADC similar trends were observed (FAO, nd).
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a new world order and regions had to revisit their approach to integration. Fawcett (1995) and Hurrell (1992) observed that the new world order saw some old regional groupings which had ceased to function being revived, new regional organisations being established, and there were calls for stronger regional cooperation (Salvatore, 1993:10). In Africa there was the revival of the East African Community in 2000 and the SADC was reconstructed in 1992. The Intergovernmental Authority for Development (IGAD) which was earlier known as the Intergovernmental Authority on Drought and Development was formed in 1996. At the regional level, the OAU was reconfigured to the AU in 2001. The Arab Maghreb Union was established in 1989. In 1999 the Central Economic and Monetary Community was established. The Common Market for Eastern and Southern Africa (COMESA), another wider regional arrangement focusing on economic cooperation, was also established in 1994. The revival and revision of regionalism in Africa at the end of the Cold War clearly testifies to a new world order. The effect of global-neo-liberal economics and politics was notable.
Apart from Africa focusing on its cooperation and development internally, there were notable activities in negotiations aimed at securing Africa’s space in the global economy. The Economic Partnership Agreements (EPAs) were designed as schemes to create free trade arrangements or a free trade area between the European Union and Africa, the Caribbean, and the Pacific Group of Countries. This saw a series of Lomé Conventions and the Cotonou Agreement which lead to the negotiations within the World Trade Organisation (WTO) (Hartzenberg, 2011:3).
Realising the need to participate in the global economy, African leaders had a long-term vision in which they saw regional integration as a viable strategy to use with the intention to unite the continent politically and economically. This collective approach to global liberal capitalism saw the region engaging in various economic and trade negotiations with many global players.
Regionalism in Africa has therefore taken different forms in response to the changes of the national, regional, and international political and economic environment. With the end of the Cold War, regional integration in Africa followed the market integration model as part of the strategy to increase trade within the regions. The market integration followed the European Union integration model with linear stages of integration from the free trade area or preferential trade integration to total economic integration (Lee, 2002:1). Despite having been noted as a failure in the African continent, market integration is still highly regarded by African leaders as
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an appropriate model and strategy for the African continent to participate in the global neo- liberal capitalist economy (Lee, 2002:1).
There is no doubt that regional integration in Africa was shaped more by developments in the global market than its internal dynamics. For African leaders, their main concern was to develop an African capitalist who would participate in the global economy, hence the emphasis on intra- regional trade. An effort to domesticate capitalism is evident, though internal trade has remained very low in Africa. The idea of promoting intra-regional trade was to see an increase in the participation of black Africans in their economies. The overall expected benefits were economic development and the eradication of poverty, in which case the majority of the African people will have improved social welfare. The benefits of regional integration were expected to satisfy the principles of utilitarianism in ethics where the greatest good was to be delivered to the greatest number of people.
It should be noted that despite all the efforts to conform to the existing political and global neo- liberal demands, African intra-regional and external trade has remained very low. As at 2015, African intra-regional trade was about 12 percent of its total trade, which is very low compared to intra-regional trade of over 60 percent of total trade occurring among western European countries and 40 percent intra-regional trade in North America. In 2009 intra-Africa trade accounted for only 11 percent of the total trade in the continent. This was a one percent increase from 9.7 percent that was recorded in 2000. Despite the confidence which the African leaders have in regional integration and the potential it has, economic integration in Africa remains limited, hence the need to rethink the approach to regional integration (CUTS International, 2015:4)
The failure of regional integration in Africa is a result of a number of chronic challenges to effective transformation and deeper integration. Some of the well-documented challenges include… “Undiversified markets with low value addition, overdependence on raw material exports numerous trade and non-trade barriers that increase transaction costs, inadequate infrastructure works, regional food insecurity, conflicts and political instability in some countries” (CUTS International, 2015:4-5). Evident as one of the major challenges is the failure
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to do value addition in Africa which is related to the lack of industrial capacity and failed domestication of capitalism or the development of African capitalism.
As a build up towards the African Continental Free Trade Area (CFTA), efforts have been made to bring together three African regional arrangements, namely COMESA, EAC and SADC, under a tripartite Free Trade Area (TFTA) which was launched recently. It is expected that the CFTA and TFTA would promote industrialisation and increase production and value addition in Africa. However, there have been fears that the actual beneficiaries of CFTA and TFTA would be multinational corporations which are not based in Africa. Multinational corporations are based in many big African cities and, because of the large free trade areas, they will have easy access to huge markets. Ethically, the beneficiaries will not be the majority Africans. If these fears are becoming a reality, then poverty in Africa will remain at high levels. It is further feared that there would be huge revenue losses to African countries as they will fail to collect customs duties. Customs duties are major sources of revenue for many African countries such as Zambia, Uganda, Namibia, Malawi, Mozambique, Lesotho, DRC, Tanzania and Swaziland, which get more than half of their revenue from customs duties. This has the potential of having a negative impact on the provision of essential public goods and services (CUTS International, 2015:5).
Another challenge to deeper regional integration in Africa has been a lack of infrastructure to support deep regional integration. Hartzenberg (2011:4) argued that most of the infrastructure in Africa was established during the colonial times and was designed to facilitate the transportation of raw materials and primary products to colonial countries. As a result, transport costs in Africa have been among the highest in the world. There are poorly developed connections across individual countries and across the continent. Main air, road and rail networks in different countries are not connected (Economic Commission for Africa, 2004:2). Further to this there are inefficiencies that are inherent in underdeveloped technologies. All these factors make the cost of doing business in Africa high. The few products that are availed for the global capitalist market become expensive and fail to compete in the global market. The competition in the global market will suppress local African business growth. This has a negative effect on the development of indigenous capitalists. There is therefore a need for a new approach to help make indigenous African products more competitive on the global market. Further to the challenge of potential
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loss in revenue from CFTA and TFTA, the individual countries will not be able to improve on the infrastructure which is necessary for deeper regional integration.