Statement by K. Y. Amoako, Executive Secretary of ECA to the 74th Ordinary Session of the Council of Ministers of the OAU, Lusaka, Zambia, 5 July 2001

Towards the African Union: A Development Perspective:

His Excellency, Dr. Salim Ahmed Salim, Secretary-General of the Organization of African Unity, Honourable Ministers, Ladies and Gentlemen,

Permit me to begin by saying how much I appreciate again collaborating with my good friend and colleague, OAU Secretary-General Salim Ahmed Salim. I have so enjoyed our work together. His stewardship, friendship, wisdom and personal warmth have made my work both more productive and more pleasurable. So thank you again, my brother, for all your contributions to Africa's progress and for the opportunity of being at your side once more.

I am particularly pleased to be with you again as this is no ordinary time for Africa and this is no ordinary meeting. In past years it has been my pleasure to commence my discussion with you by reviewing Africa's current economic situation. Forgive me if I do not do that this time. For this time you and our Heads of State and Government are at the centre of considering major regional initiatives. These initiatives have the potential of altering the history of our continent's development and its relations with our partners abroad.

So permit me now to come directly to these initiatives and to comment on them both as an economist and from the vantage point of your regional commission on economic and social development. The two critical initiatives on which I wish to focus are first the initiative to create an African Union, and second the initiatives to articulate Africa's own vision of development and development cooperation.

Mr. Chairman,

By moving ahead with the African Union, this meeting represents a historic opportunity to accelerate regional integration - a challenge to Africa made more demanding today by the far-reaching changes occurring in the global economy. A pragmatic regional integration agenda holds out the prospects of improved living standards for our people and the dividends of assured peace and stability that will accrue from the synergies between diplomacy and development. It also offers a gateway for our continent to enter the competitive global market. Furthermore a strong regional economy can facilitate the pooling of risks between otherwise vulnerable economies, and enable the continent to exploit complementarities and attract the levels of investment required to sustain economic growth and development in Africa.

Let me for a moment turn to the experience of the rest of the world to draw lessons for Africa. What have been the key factors that have propelled or hindered integration processes in other parts of the world?
Europe's leaders, in a bid to ensure stability following two world wars, came together to counterbalance the strength of Germany and to defend against the political threat from the east. Gradually the economic union in Europe closely approximated the political union of NATO. One reason the North American Free Trade Agreement (NAFTA) came about was to address the economic and social problems associated with drug trafficking and migration. NAFTA also sought to create a strong trading bloc in the face of growing concern over American industrial decline, the mounting trade deficit with Japan, and the deepening regionalization in Western Europe. On the other hand, in Asia and the Pacific, there has been a lack of an effective single political structure in the region. With Japan unable to take the economic and political initiatives required to move the region forward, integration has remained fragmented.

If there is one overarching lesson to be learned from these experiences, it is that a regional union cannot proceed far without a strong political foundation. Sustained political commitment is therefore a necessary first step towards the African Union. Kwame Nkrumah and his contemporaries offered Africa this political vision four decades ago. Since that time, Africa has made considerable strides towards regional integration. However, we have also lost a great deal of time due to conflict, the debt and structural adjustment crisis, and perhaps most fundamentally, due to the cold war. We moved away from our regional vision and we lost momentum. Now, with the recovery of political vision symbolized in the African Union, we have new chances. And these chances come just in time because economic union is now needed more than ever due to the process of globalization. With the advent of the African Union, our vision is now rekindled. We therefore welcome the coming into force of the African Union as an expression of the political commitment of our leaders to regional integration, and beyond this, to a united Africa.

Now, much more needs to be done to accelerate the integration process in order to improve production and productivity, to encourage regional trade, and to prepare our national economies to become competitive in the global economy. With 40 years of work in this area, many of us here today know the key strategic decisions that need to be taken.

We know that with renewed political impetus, it is important that we also take a candid and critical look at our past record, in order to make our shared aspirations of the African Union a concrete reality. Why has regional integration fallen so far short of its early promise? Let me offer a few of the key reasons.

For one thing, political commitments of member states to regional plans have far too often not been translated into national policies and actions. For another, national policies have conspired against a higher degree of private sector-driven regional integration, resulting in low levels of intra-regional as well as inter-regional trade. On the institutional side, the integration agreements have contributed little to the higher levels of industrial growth envisaged for the continent's development. Overlapping memberships of the regional economic communities have worked against the overall objective. And let us not forget that in every subregion, endemic political instability exacerbated by persistent conflict has undermined the effectiveness of regional integration.

In drawing these lessons, we must also recognize that the peculiarities of Africa make our integration challenge all the more difficult. Africa has more borders and states than any other region; We have the deepest levels of poverty and lowest levels of GDP and lowest share of world trade; We have the weakest development of human capital and infrastructure; and our national policies and institutions are the least conducive for regional interventions and investments.

These factors pose a particularly difficult challenge as we look into the practicalities of the African Union, what it means for regionalism and how it relates to the overarching challenge of attaining a meaningful participation in the global economy. So what will we have to do to achieve a Union? Let me reiterate a few principles and offer some suggestions.

First, African integration must necessarily be different from that in Europe, East Asia and the Americas. It is 'south-south' integration of economies with weak industrial bases which, are generally reliant on agriculture and have relatively low levels of intra-regional trade. For Africa to become an active player in the global economy, the process of regional integration must focus on improving our competitiveness, integrating markets through trade liberalization, harmonizing monetary policies, and promoting private sector investment - first and foremost at the national level. For all this to happen, expanding and interconnecting Africa's infrastructure is critical.

Second, we should recognize that by dint of their sheer market size and industrial base, our more powerful nations, such as South Africa, Nigeria and Egypt, have a special role to play in pushing regional integration. These countries can act as poles of growth. They can also lead the way through what I call variable geometry, whereby it is possible for certain states to proceed on an accelerated track of regional integration.

Third, and linked to my previous point, we need to ensure that there are no losers in regional integration. This requires the establishment of well-designed and well-funded compensatory mechanisms for states with small markets that are more vulnerable to external shocks.

Fourth, to have any meaningful role internationally, we need to develop our Institutional and human capacity. The history of integration runs parallel to a history of building strong multi-state institutions. Almost all of the big issues confronting Africa - and certainly the regional trade and investment issues - require stronger and more financially viable subregional and regional organizations. Added to this, expert knowledge and understanding are the primary credentials for participating and contributing in the global economy.

Fifth, regional integration is a political as much as an economic project. The lack of sustained political commitment to put in place agreed policies and plans has been one of Africa's major shortcomings, and in the context of the Africa Union, this is an issue that needs to be addressed. Subregional integration is the reality of today, and as we strengthen our subregional institutions, we also need to take politically difficult rationalization steps, which only the brave leaderships of national, governments can see through.

Mr. Chairman,

You can tell from these issues, that political leadership is essential for successful integration. Political leadership must help by focusing on the ends to be achieved, for as we say, he who forgets the aim of his journey is still on the road.

However, even when directions are set, there are a host of strategic choices before us as to how Africa should proceed in its integration efforts. With limited resources, what issues should be addressed first, what organizational steps should be taken and in what sequence should these steps be taken to build and implement the African Union? These are more that technical matters, because of the need to have the support of political leaders and that of many interest groups in our societies, such as the business community, in order to have effective integration.

Mr. Chairman,

As you are aware, the Economic Commission for Africa has long been an ardent supporter and promoter of regional integration. Let me now briefly share with you how, working in partnership with the OAU and other institutions, we at ECA intend to continue to keep integration at the top of the development agenda.
As many of you know, the African Development Forum is approaching its third year. In the short time since its establishment, it has registered significant impacts and gained recognition as an effective forum for regional consensus building. Building on this success, we intend to devote our third Forum in early December 2001 to the whole question of how Africa can accelerate its progress towards regional integration.

The coming into force of the African Union provides a timely opportunity for governments, business, civil society, our development partners and a number of other expert groups to reach consensus on what we need to do to re-energize the march towards regional integration. ADF 2001 will examine the lessons of regional integration in Africa and abroad. The discussions will debate and identify key strategy options on accelerating integration in Africa. I urge your governments to be fully engaged in this process.

ECA is also launching a regular assessment of regional integration in Africa using newly devised indicators. This will provide an objective base as well as a periodic report card on Africa's progress. Our newly developed indicators of regionalization will help decision-makers identify areas which require actions to accelerate regional integration. Our assessments will be captured in an annual report on the state of integration in Africa, which we hope will help keep the momentum on the policy dialogue going.

Mr. Chairman,

If we in Africa are talking about building on our best practices towards integration, then our international partners certainly need to look in a more systematic way at how they can build on their best practices in fostering regional solutions in Africa. It is in this context that we are looking forward to a transformed relationship between Africa and its development partners. This relationship is a two-way street: Africa should put in place the necessary political reforms to ensure that its economies take off. In return, the developed countries should invest the necessary resources through enhanced aid, debt relief and market access to give African economies the jump-start they need.

In Algiers in May, at ECA's Joint Conference of African Ministers of Finance and Planning, I outlined four guiding principles for this new relationship: African ownership of development goals, objectives and policies; Mutual accountability of African countries and their partners to achieving shared objectives; Predictable and long-term donor support; and Recognition of the diversity of different country conditions that exist in Africa. Cutting across these principles is the need for African commitment to poverty reduction, the macro-economic fundamentals, and good governance.

I am pleased to say that these principles, as outlined in ECA's 'Compact for African Recovery', underpin the single African development initiative that should emerge from the MAP and the Omega. Let me pause here to salute the leaders of South Africa, Algeria, Nigeria, Senegal and Egypt, for their foresight and vision in articulating these two initiatives which aim to arrive at a leadership framework for Africa's future relations with the international community. A single initiative is important to us because it can focus Africa better in its relations with partners, as well as strengthen our internal impetus towards integration.

We are honoured to have had the opportunity to work closely with experts from all the countries involved, in supporting their efforts to converge towards a single African initiative. Indeed, as we look forward to helping to implement this initiative, we bring to the table a wealth of analytical work, particularly on benchmarking governance and peer reviewing the economic performance of African countries.

Mr. Chairman, Honourable Ministers,

Let me end by assuring you that we at ECA will continue to join hands with the OAU and will put our full weight behind the realization of the Africa Union. We will be as helpful as we can in Africa's efforts to more effectively deal with its international partners.

Thank you for your kind attention, and please accept my good wishes for a successful meeting.