ECONOMIC INTEGRATION

TABLE OF CONTENT PAGES
1. Introduction
2. Past and Present Efforts On
Economic Integration in Africa
3. Emergence of Various Economic
Integration Bodies in Africa
4. Forms of Economic Integration
5. Economic Benefits of Regional
Economic Integration
6. Reasons for failures of Africa’s
Regional Economic Integration
7. Conclusion
8. References


















1. INTRODUCTION
Economic integration refers to the cooperation of several countries for the sake of enjoying economic benefits. It is aimed at increasing the benefits of international trade and may result in political integration. Political integration can be national or inter-state. National Political integration is the one in which there is creation and maintenance of national unity among different ethnic groups in a country. Inter-state political integration is the political union between two or more independent countries.
The earliest scholarly writing on economic integration had their origins in the theory of comparative advantage in the international trade. Jacob Viner (1950) and Robert Heller (1972) are two outstanding economists who have made contributions to the theory of economic integration. Their work has been instrumental in the development of modern ideas about economic integration and trade liberalization. They argue that economic integration should be aimed primarily at enhancing resource productivity and allocation. Proponents of the traditional school believe that certain requisite conditions must be present in order to realize the goal of economic integration. They include, but not limited to, the existence of substantial amounts of intra-regional trade and complementary economies. In addition, the size of foreign trade as percentage of the gross domestic product should be relatively small. The traditionalist further suggest that the larger the size of the potential union, the greater the likelihood of obtaining beneficial results. Finally, they argue that the possibilities of having a beneficial integration scheme will be greater to the extent that individual country tariff rates prior to union are high in comparison to the common external tariff established after the union (Heller, 1972).
In this paper, we shall examine the economic benefits of economic integration with reference to various, economic integration such as the East African Community (EAC). The Southern African Development Community (SADC), the Economic Community of West African States (ECOWAS), the Common Market for Eastern and Southern African (COMESA) and the European Economic Community (EEC).
In our provision for benefits of economic integration we shall basically assume that the economic integration has already attained the highest level of integration, that is, total Economic integration whereby there is free movement of commodities and a few factors of production among, member states and there is also a unification of monetary, fiscal, social and other policies. The member countries here can start using a common currency. In addition, supra-national authority will be erected which makes decisions binding to all member countries.
This paper also intends to provide the reader with the insights about several efforts and intentions the African leaders used to have and yet still pursuing in a bid to pull their countries out of poverty, misery and ultimately improve the well- being of their citizens.
Conclusion will be drawn basing on lessons learned and our own experience.


2. PAST AND PRESENT EFFORTS ON ECONOMIC INTEGRATION IN AFRICA
During the colonial period there were many attempts to integrate African Economies. At this time all of the integration efforts were financed by European capital.
These schemes however were not designed to improve economic growth and development in the colonies but to further European objectives and Interests. The Primary objective was to insert the African economies into International capitalist system. The colonial state was tasked with the role of facilitating the integration of African Economies into the Global Capitalist Economy as part of the overall strategy to advance the interests of the forces of Western Imperialism. In other words, the primary aim of the colonial integration scheme was the extraction of Africa’s minerals and natural resources and the protection of the continents large but untapped market for manufactured goods imported from the metropolitan countries. In essence the integration schemes established by the colonial authorities provided a larger policy framework for deepening the exploitation of Africa and integrating the continent into the Western Capitalist System. In order to actualize this aim the imperial powers first imposed their currencies on Africa. Thereafter, they imposed various forms of taxes (direct and indirect) on the colonies and monopolized both export and Import trade in Africa.
The colonial governments also constructed roads and railways. Provision of such infrastructure however, was not designed to promote the development of the colonies, but to facilitate both export and imports trade. While these integration schemes during colonial era, furthered the capitalist exploitation of Africa by European mercantile companies a great majority of them did not survive when the colonies gained independence.
The demise of the many colonial-era integration schemes however, did not mark the end to Africa’s interest in regionalism. Shortly after independence many countries indicated an interest in creating new and more viable integration schemes. Interest in regionalism was motivated by several factors which include:
Many post-Independence African Leaders felt an urgent need to integrate their relatively small economies with those of their neighbours in order to create larger and move viable markets, which could support the type of development projects that were expected to provides jobs for a restless population and generate the resources needed to confront poverty.
There was fear that without unity and cooperation, many of the newly independent countries could not effectively rip the benefits of independence and deal effectively with many societal issues, including the alleviation of poverty.
There was a desire by the newly elected leaders to rid their countries off colonial institutions and establish new ones that were locally focused and enhanced their ability to undertake economic growth and development
African leaders were eager to emulate the relative success of the European Economic Community (Onwuka, 1982; Onwuka and Sesay, 1995).

3. EMERGENCE OF VARIOUS ECONOMIC INTEGRATION BODIES IN AFRICA
In 1964, the Central African Customs and Economic Union (UDEAC) was formed to liberalize and promote trade among the French colonies in the Region.
In East Africa, former British Colonies, namely Kenya, Uganda and Tanzania, established the East African Community (EAC) in 1967 to further integrate their economies, increase trade among them, facilitate free movement of people of the region, provide the three heads of state a forum to discuss the economic and political issues of concern to their countries, manage the East Africa examination council and provide common services like those of all railways, harbours, post and telecommunication and airways.
However, EAC could not last for more than ten years. It collapsed in 1977 due to dissatisfaction among the members that Kenya was favoured, differences in ideologies, political misunderstanding between Tanzania and Uganda (Nyerere and Idd Amin), the fall of President Milton Obote in 1971 and the restriction of the transfer and exchange of currency.
On 1st January, 2001, the East African Heads of state formally launched the New East African Community at a ceremony held at Sheikh Amri Abeid Stadium in Arusha. It is imperative to note that so far Rwanda and Burundi have also joined EAC. The new EAC aims at widening and deepening cooperation among the Partner States in, among other areas, political, economical, social, cultural, health, education, science and technology, defense, security, legal and judicial affairs for their mutual benefit. This will be achieved through the establishment of a custom union as the entry point of the community, common market, subsequently a monetary Union and ultimately a political federation of the East African States.
In West Africa the Mano River Union (MRU) was created in 1973, consisting of Guinea, Liberia and Sierra Leone. The MRU was different from (EAC) and UDEAC in the sense that geographical proximity was an overriding factor. In 1974, the CEAO, linking six francophone countries in West Africa was formed.
The Economic Community of West African States (ECOWAS) remains the largest economic grouping in Africa with member states from different colonial backgrounds. This was formed in 1975 with member states being Guinea, Ivory Coast, Mauritania, Senegal, Benin, Mali, Niger, Burkina Faso, Gambia, Nigeria, Ghana, Sierra Leone, Liberia, Guinea-Bissau, Togo, Cameroon and Cape Verde. This organization aimed at eliminating custom duties between member states, harmonizing agricultural economic monetary policies, financing dam projects and mineral extractions, improving transport and communication among the member states, abolishing obstacles to the free movement of persons, services and capital, creating a collective bargaining power with the industrialized world and finally setting ventures so as to reduce economic dependency on the outside world.
In Southern Africa, Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, Swaziland, Tanzania, Zambia and Zimbabwe established the Southern African Development Coordination Conference (SADCC) IN 1980. The original aim of SADCC was to reduce dependence on the apartheid regime in South Africa (Legume 1979). It was later renamed the Southern African Development Community (SADC) following the collapse of apartheid regime in South Africa, and the subsequent admission of democratic South Africa into the regional scheme. SADC now aimed at improving trade arrangements among the member states, improving transport and communication links and systems, developing agriculture and industries, developing and harnessing of energy and energy resources, developing and training of manpower, using appropriate financial policy and reducing dependency on other nations.
The emergence of New Global Economic order after the collapse of the former Soviet empire in the early 1990s has had significant impact on regional economic groupings around the globe. Efforts have also been made at the continent level to increase cooperation among African countries as a way to enhance economic growth and development as well as improve Africa’s participation in the global economy. In 1980, African leaders adopted the Lagos plan of action as a blueprint for the development of the continent.
In 1991, at the summit of African Heads of State in Abuja the African Economic Community (AEC) was established. Known as the Abuja treaty; it is aimed at liberalizing trade establishing a custom union and ultimately creating a common market.
Similarly, the Preferential Trade Area for Eastern and Southern African States (PTA) established in 1981 was transformed in 1994 to the common market for Eastern and Southern Africa (COMESA). To date, the member countries include Angola, Malawi, Lesotho, Mozambique, Zambia, Swaziland, Zimbabwe, Botswana, Mauritius, Sudan, Comoro Islands, Djibouti, Ethiopia and Somalia.
COMESA aimed at promoting and facilitating cooperation among the member states in trade, industry, agriculture, transport and communication, harmonizing and coordinating development strategies, policies and plans within the region, improving the environment for investment and private sector growth and generally accelerate the economic development of the individual member states, encouraging cooperation in monetary and financial affairs to facilitate sub-regional integration, establishing joint industrial and agricultural institutions with the aim of increasing the sub-region’s production capacity, building a strong economic base for members as a step towards the economic independence of the region and improving security and overall welfare of the people.
However, Tanzania pulled out of COMESA in September, 2000. Reasons for Tanzania’s withdrawal from COMESA were: failure to realize its goals of strengthening, developing and positively maintaining socio-economic relations with other countries, lack of seriousness among the members in implementing the set objectives, the need for trimming its membership in score of regional economic groupings because of conflicting interests, Tanzania was already having low national rates, hence to continue being a member of COMESA and therefore reduce the tariffs on the movement of goods could mean experiencing revenue losses and making the exports to other countries with high tariff rates less competitive, there were a lot of cheap manufactured products entering Tanzania and these could contribute in the decline of the local industries which tend to produce high costs and hence expensive products and finally dissuasion by South Africa which argued that by Tanzania being the member of COMESA it would sow discord and also interfere with serious efforts of SADC in creating the Free Trade Zone, which would encompass even the members of COMESA.
As part of the new wave of regionalism blowing across the world, the United States, Canada and Mexico successfully brought their economies closer by establishing the North American Free Trade Area (NAFTA). The European Economic Community has evolved into a single market called the European Union (EU). In 1995, EU member countries agreed with the twelve Mediterranean countries to form the EUROMED with the hope of establishing a free trade area force by 2020 (Bergsten, 1996). Also, the EU has used its Horizon 2000 under the Lome IV Agreement—now overtaken by the new ACP-EU Agreement ( otherwise known as the Cotonou Accord), signed in June 2000 at Cotonou, Benin—to further integrate the Union with selected developing countries from Latin America, Asia and the Mediterranean (Parfift, 1996).
Tanzania is related to European Union through membership in the Lome convention. The basic provision of Lome Convention include: trade cooperation whereby goods from ACP countries to have a free access into EEC, free of custom duty and other charges; protection of ACP industries whereby ACP countries can impose tariff against the industrial products from the EEC; stabilization of Export Earnings (STABEX) whereby EEC countries guarantee the stability of the earnings from the ACP exports; ACP countries to have more control over the EEC Development Fund than formerly; ACP countries were now at liberty to enter into the equally favourable agreement with other industrialized or even the developing countries; and any ACP country can opt to out of the Lome Convention if the agreement is no longer satisfactory.
In bid to reposition the Asian-Pacific countries in the new global division of power, the Association of Southern Asian Nations (ASEAN) is taking steps to redress the imbalance in its compensatory mechanism and to relocate industries to less developed member-states.

4. FORMS OF ECONOMIC INTEGRATION
According to Bela Balasa (1961), economic integration can be classified according to the five levels or stages of development as follows:

4.1. A free Trade Area
In this stage the member countries eliminate trade restrictions such as tariffs, imports and export quotas or device which obstruct the free movement of goods or services among them. But each member country is free to establish independent tariffs (taxes on imports) against non-member countries (third countries).
4.2. A Custom Union
In addition to having abolished trade restrictions among member countries as in a free trade area, the members have a common tariff against non-members (third countries).
4.3. A Common Market
In this case, on top of what takes place in customs union there is a free factor movement among the member countries. This means that capital and labour are free to move within the region. The nationals can find employment in any member country.
4.4. An Economic Community (Union)
It embodies all the elements of the common market, in addition the member countries institute joint ownership of certain enterprises e.g. roads, railways, ports, telecommunications, e.t.c. All economic policies in this case are harmonized or are common.
4.5. Total Economic Integration
In this case, not only there is free movement of commodities and other factors of production among the member states as in an economic union, but also there is a unification of monetary, fiscal, social and other policies. The members can start using a common currency. In addition, is supra-national authority, which makes decisions binding to all member countries.

5. ECONOMIC BENEFITS OF REGIONAL ECONOMIC INTEGRATION
5.1. Expansion of market
The economic integration leads to abolition or reduction of trade barriers among the member countries. The abolition of trade barriers increase the size of the market for the goods produced by member countries. For example, in the former East Africa Community (EAC), the three East African Countries i.e. Kenya, Uganda and Tanzania enjoyed expanded market among themselves. Even the present EAC enables the industries operating under it to access a wider market than before the integration. On the other hand, COMESA has enabled member states to become more cooperative in the field of trade.
The integration also enables the member countries to attain a common voice in advocating for the market of the goods. For instance, through African Growth and Opportunity Act (AGOA), African Countries have continued to open up their economies and build free markets.
However, the benefits of enlarged market cannot be fully realized because of poor infrastructure like poor roads, railways etc. That is, most part of African Countries is still inaccessible.

5.2. Establishing a good condition for Industrial Development and investment
Economic integration enable member countries to establish good condition for industrial development for instance, one of the achievements of the Economic Community for West African States (ECOWAS) was to set up special energy resources development fund for exploiting energy resources and financing dam projects. This would enable the member countries to access both water and energy resources which are the necessities of industrial development. Through COMESA, member states are able to access financial assistance from the Trade and Development Bank for financing trade and development projects.
However, the political instability among, most ECOWAS members such as Ghana, Algeria and Ivory Coast may hinder the positive progress of the collective activities of ECOWAS. The success of COMESA is also limited by the absence of the economically important nations like Nigeria and South Africa hence lifting trade barriers only may not necessary increase trade volume among the countries. A smaller group centred on one economically dominant nation is more sensible than having such a big organization full of economic vagaries due to inefficiency.

5.3. Promoting Transport and Communication
Transport and communication may be facilitated among the member countries of economic integration in order to ease distribution of goods and achieve efficient information flow. For instance, in the former EAC the three countries were efficiently joined by East African Railway, the Great North road, East African Airway and East Africa Ports and harbour. Even the present EAC enjoys the services of Vodacom and Zain as communication industries. This has been done through agreement with Kencel and Safari COM of Kenya and MTN and Mango of Uganda.
However, some Economic integration, such as ECOWAS still experience poor communication and transport systems i.e. the region is not well linked by transport and communication systems. There are few roads and railway lines as well as language variation which bar mutual interaction among the members.
5.4. Intensified security, fraternity and Unity
Economic integrating enables the member countries to enjoy intensified security, fraternity and unity. The countries under the same economic integration are unlikely to go into war because of the frequent forum for discussing problems facing them. The people in general and leaders in particular develop the feeling that they belong to one state. ECOWAS, for instance, has been in the fore front in defending the Liberian independence and the independence of other member states.
However, intensified security fraternity and unity among the member countries may be short-lived in a case where there is a frequent change of leaders as was experienced in EAC. Following the overthrow of President of Uganda in 1971 by Idd Amin Daddah, the continuity of EAC war put at stake. The difference between Uganda and Tanzania was so much intensified that the EAC was to collapse in 1977 and the two countries ultimately went into war in 1978.

5.5. Transfer of Technology
Economic integration leads to exchange of technology among the member countries for instance, the technology which was developed in Kenya, the Money Maker Pump is now used effectively in other two countries, that is, Uganda and Tanzania.
The diffusion of technology among the member states of economic integration may also not be very effective particular when these countries are in the same level of technological development as it is experienced in the EAC.

5.6. Employment Opportunities
There are possibilities of increase in employment due to free movement of factors of production and expansion in investment. For instance, the new EAC is committed to enhancing free movement of factors of production (labour, services and persons) and the right to establish residence. The free movement of the people of the region will foster greater cooperation and profound understanding among the people of the region. The old EAC managed to achieve the objective of freedom of movement of people.
However, the free movement of the factors of production particularly labour may be curtailed by cultural differences. This may be in terms of different religions and political ideologies. There are some countries within the community which may be skewed towards Muslim and others towards Christian for example within Nigeria, in the Northern part, they cherish Muslim principles while in the Southern part, they cherish Christianity.

5.7. It enables countries to specialize
Economic integration enables each country to specialize in the product of a commodity of its comparative advantage. Specialization leads to increase in output and gain from trade. For instance, within the Southern African Development Community (SADC), South Africa may specialize in production of industrial products and Tanzania specialize in production of agricultural products because of the vast fertile land and then the exchange of these products may effectively take place.
However, there is a danger of having movement of goods in one direction leaving other countries without goods. This can encourage the occurrence of polarized development in which same countries develop at a higher speed than others. This was one time experienced in the old EAC where, it was thought, Kenya developed faster at the expense of Uganda and Tanzania. In practice, member continues tend to produce the same goods and hence be forced to look for market outside the region.

5.8. It encourages the Diversification of the Economies
Member countries of economic integration may be encouraged to diversify their economies. As it is today, most countries in most economic integration, particularly in Less Developed Countries (LDC), very much depend on agriculture as source of their revenue. But upon forming economic integration countries may diversify their economies by developing service industries such as tourism, transport and communication and manufacturing industries because of high demand for manufactured products in the region. For example, through the New EAC, the member countries aim as developing a collective and coordinated policies and approaches to the promotion and marketing of quality tourism, conservation and utilization of wildlife and other tourist sites in the community.
However, the benefit of diversified economies can be realized when there is promotion of peace, security and stability within the region and good neighborliness among the partner states.

5.9. Stimulating a smooth Development of Trade
Economic Integration also aims at stimulating a smooth development of trade by using a common currency. A common currency removes complication of converting currencies which sometimes tends to be cumbersome and time consuming leading to inefficiency and ineffectiveness in the commercial aspects. For instance, the member states of European Economic Community have progressed further into trade following the introduction of EURO currency on the 1st January 2002.
However, lack of the common market, poor organization of local market and wide spread poverty in less Developed Countries, do not allow for the positive cooperation among the member countries. Since the purchasing power of the people is still low.

5.10. Promoting the capacity for rational or sustainable use of resources
The new East Africa Community also aims at adopting the concerted measures in joint efficient management and sustainable utilization of natural resources within the community and to cooperate and coordinate partner states’ environmental policies and actions for the protection and conservation of natural resources and the environment against all forms of degradation and pollution arising from different development activities. ECOWAS, on the other hand has managed to set up special energy resources development fund for exploiting energy resources.
However, the above objective can be realized if the EAC’s member states promote good governance, including adherence to the principle of democracy, rule of law accountability, transparency, social, equal opportunities and gender equality.

5.11. It leads to Political Cooperation and Sharing of Ideas
EAC just like ECOWAS, aims at unifying political matters which are aimed at safeguarding common values, fundamental interests and the independence of the community. Likewise, they also aim at developing and consolidating democracy and the rule of law and respecting human right and fundamental freedoms. They further aim at promoting cooperation at international level and to enhance the eventual establishment of a political federation of the partner states.
The success of the above objective will entirely depend on the commitment of the leaders to drop their lust for power and be ready to relinquish some of their powers to other leaders.

6. REASONS FOR FAILURES OF AFRICA’S REGIONAL ECONOMIC INTEGRATION
To the larger Extend failures override successes in all attempted Regional Economic Integration in Africa. All the attempts turned out to be an outright failure. These are many reasons provided by different scholars and theories.
One theory is the dependency theory which site that the failure of economic Integration schemes has been brought about by all African countries having their economies relying too much on the Economies of the North for critical production inputs like capital and technology.
The other major reason for failure is because most integration schemes were established for opportunistic purposes and not to enhance development. There was no effort on the part of many post-independence leaders to engage their citizens in discussions in development policy, a process that would have resulted in the design of more effective and viable integration schemes.
Many of African leaders simply engaged in integration talks or opted to join integration schemes in an effort to draw attention away from their failures or unwillingness to deal with mass poverty and other societal problems.
The other critical reason for failure in Africa’s Regional Economic Integration is the low volume of intra-regional trade in Africa. Much more important is the structure of production. It will be misleading to expect trade within African integration networks to improve when the member-states produce virtually the same goods - mostly primary commodities. With the manufacturing sector contributing an average of 5 percent to the gross domestic products (Omoweh, 1995) trade between and among African regional schemes is not expected to improve in the nearest future. The solution to poor trade outlook within African economic integration schemes lies in industrialization. Trade among the member states may also be curtailed by the differences in currency among the member states and the rate at which the currencies fluctuates in relation to the US dollar. Such a state of currencies creates problems or hinders trade among the member countries.
Political Instability characterized by civil wars as it is among the ECOWAS members. Ghana, Algeria, Ivory Coast and Nigeria have experienced several military coups and this has been prevailing since their independence. Some countries have border disputes such as Benin and Togo, Mali and Upper Volta leading to the disruption of attainment of the original goals.
Different levels of Economies – common tariffs become a problem to agree upon. Some countries might be in favour removing tariffs while other countries might be unwilling as they want to protect their economies (i.e. market for their locally produced products). Disparity among the member countries militates against the automatic viability of the organization. Some other countries are poor while others are rich. For example in West Africa, Nigeria is rich and other small countries can lose confident in Nigeria and hence can feel inferior to participate in decision making and implementation of objectives of the organization. The same may also apply to member states of EAC over Kenya and member states of SADC over South Africa.
The divided allegiance may be another failure of economic integration. For instance, some countries are members of ECOWAS while they are also members of other organizations such as Commonwealth, the French Community e.t.c. All these organizations place heavy demand on ECOWAS. Also members fail to contribute substantial amount of dues to ECOWAS. In the case of EAC, some member states are also members of Commonwealth as well as COMESA.
A poor transport and communication system, which is a common phenomenon in most Third World Countries, is a big barrier in fostering trade. Shipping facilities are poor and there are no linkages between the member states. The railway systems among the member countries are also having different gauges, leading to escalation of the problem of transport and communication within COMESA’s sphere of influence, for instance. ECOWAS’ member states on the other hand, have few roads and railway lines as well as language variation which bar mutual interaction among the members.
Reluctance by some leaders to hand over power to the group may be another barrier to the success of economic integration. Some leaders are not ready to resign a part of their powers to the other people. They want to be in power all the time even if they do not perform efficiently and effectively.
Environmental problems like floods in Malawi and Mozambique, Earthquakes, diseases like Ebola in Uganda and the Democratic Republic of Congo and AIDS disrupt cooperation due to the emerging fear of the spread of such moribund diseases as well as drought conditions which cause agricultural failure.



7. CONCLUSION
In the face of the emerging global economic order, many countries are becoming more interested than they have been before in regional economic Integration. If integration is undertaken properly and with the participation of the people (that is, the design of Integration scheme is bottom up and not top down) it could provide African countries with a lot of benefits, including improving the continents ability to participate in and benefit from the new global economy. However if African economies fail to create viable integration schemes they are certain to suffer marginalization in the International Economy.
The benefits driven from Economic integration by the member states cannot be undermined. All over the World trade blocs are currently under construction, recent examples being MERCOSUR of Latin America and AFTA in Asia. These have actually made Africa feel that it should not lag behind.
Whether a country should join an economic integration or not is not a big issue but a careful evaluation should be done to safeguard the country against the disadvantages which are accompanied with economic integration. Such disadvantages may include trade diversion whereby a low cost trade may be replaced by a high cost trade and some countries may be compelled to buy goods of poor quality within the region.

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