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Economic Integration

African Economic Integration

by Mduduzi Immanuel Maphanga


The advent of the AU and NEPAD were aimed at Africa’s complete rebirth. For the purpose of this article, I would like to hone in on the matter of Africa’s economic integration.

There is consensus among African scholars and practitioners alike that the key for Africa’s economic rebirth lays in the unity of the Continent. This thought was aptly captured in the publication which emanated from the recent Africa Unity Conference in May 2014, entitled “Africa Unite or Perish”. Economically, there is also consensus that a total regional integration of the Continent will yield a better economic output. However, pragmatically, integration should be first aggressively sought after at a sub-regional level.

There needs to be an effort, preferably by the African Development Bank, in which the benefits for each country in a sub-region are clearly indicated so as to offer incentives for states to buy into economic integration. After all, whether realist or liberal, there has to be acknowledgment that even the most altruistic looking peoples are at times driven by enlightened self-interest. Perhaps the chief goal to be pursued at this level is an economic monetary union. On the other hand, there are other items on the agenda which require attention such as easing the movement of peoples and goods across borders and establishing electronic one stop borders such as those in the EU. Such efforts according to the AfDB will contribute immensely to increasing intra-trade.

Sub-regional bodies such as ECOWAS and SADEC need to take steps towards simplifying tax codes for both foreign and local firms seeking regional operation, such as, for instance, proposing a set regional tax which is collected by the sub-regional body and distributed accordingly to the states’ hosting operations and those receiving distributions. Such a tax code may also offer states a stronger bargaining power against companies operating regionally using transfer pricing as a means of tax avoidance, flirting with tax evasion.

While states still ponder on how to realise economic monetary union, the private sector has already taken steps towards mitigating currency volatility risks. In South Africa, the Johannesburg Securities Exchange has issued forward contracts on the Rand/Nigerian Naira exchange and Rand/Kenyan Shilling exchange. The reason for the issuing of this derivative instrument is because the trade volumes between South Africa and Nigeria and South Africa and Kenya are regarded as warranting the availability of this instrument. Such initiatives by the private sector are to be lauded. However, government officials cannot merely wait upon and rely on the private sector, as its initiatives are primarily motivated by profit as should be in the private sector.

Instead, it is important that African leaders begin to make the required efforts at a sub-regional level. It is also highly imperative that the AU makes a binding resolution which demands that states commit their membership to a single sub-regional body. While efforts are made at establishing frameworks for increased Africa intra-trade and stronger trading blocks which can stand up to both larger states and corporations, the private sector should be afforded space in which it can play in the facilitation of trade and accessing African capital markets, such as simplifying intraregional Securities Exchange listings.

In conclusion, efforts for regional integration lie with both the public sector and private sector, but primarily the public sector. Incentives for integration for each country should be clearly spelt out. Economics and not politics should dictate sub-regional body membership. Simplifying tax codes will ease sub-regional operations for firms and simplifying listing requirements will help Africa help itself in allowing African companies access to African capital markets.


Mduduzi Immanuel Maphanga

Political consultant

Managing Director:Strategic Political Solutions

Read more about Mduduzi and his view on being a futurist


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