Deeper regional integration is crucial for building stronger and more resilient African economies, particularly in light of the current global financial crisis, which has hit the continent hard, the United Nations Conference on Trade and Development (UNCTAD) said in a new report released two weeks ago and reported in last week�s edition of Graphic Business.
Economic Development in Africa 2009: Strengthening regional economic integration for Africa's Development argued that regional integration, which would address the long-standing structural weaknesses of African economies, was essential for sustained development.
�Better links between countries, ranging from paved roads to banking cooperation, are needed to spur mutual economic growth,� the agency said in a news release.
�Indeed, weak physical and institutional infrastructure is the key obstacle to increasing intra-African trade and investment.� The report recognises the progress made in Africa over the last 20 years in creating sub-regional institutions dedicated to economic integration. They include the Economic Community of West African States (ECOWAS), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA).
However, these groups had not �substantially� increased intra-African trade, investment and mobility of people as expected, said UNCTAD. In fact, the report finds that relative to other regions, Africa has by far the most fragmented market. �The result of intra-African trade is still quite insignificant,� UNCTAD Secretary-General Supachai Panitchpakdi told a news conference in New York as he launched the report. He added that the cost of transportation was a major factor hampering intra-African trade.
In addition, intra-African investment was �quite small�, amounting to about 13 per cent of total foreign direct investment (FDI) into Africa. Mr Panitchpakdi said that Africa had been enjoying some benefits of the five to six per cent economic growth experienced between 2002 and 2007, and several nations had made progress in reducing poverty and achieving some of the other targets that made up the Millennium Development Goals (MDGs). But he said these achievements were under threat because the drops in external demand for exports from Africa, remittances from migrant workers, FDI and official development assistance (ODA) would mean that Africa would have less resources for growth.
Source: Daily Graphic
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