Rationale for Development of Transport and Infrastructure to Strengthen Regional Integration in Africa
The process of integrating Africa gained traction when the Abuja Treaty, adopted in June 1991, entered into force in May 1994. Article 28 of the treaty proposed regional economic communities (RECs) as the building blocks of integration in Africa. It sought to create an African Economic Community (AEC) through the gradual harmonization, coordination, and effective integration of Africa’s eight RECs as the “pillars” of the AEC. Moreover, the Abuja Treaty delineated a clear plan for the establishment of a continental free trade area by 2017, and the integration of the RECs into a single customs union with a common currency, a central bank, and a pan-African parliament by 2028. Progress toward achieving these objectives has been slow because the RECs are moving at different paces, making the attainment of the AEC by 2028 more challenging.
The African Continental Free Trade Area (AfCFTA) was founded in March 21, 2018 in Kigali Rwanda. It was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations. The AfCFTA became effective on May 30th 2019. The AfCFTA went live with commencement of trade on January 1st 2021 thus giving life to an intra-Africa free trade initiative aimed at improving intra Africa trade and movement of labour across borders. AfCFTA is expected to accelerate intra-African trade and boosting Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations.
Whereas Seven key Building Blocks/ working groups, namely; Legal and Institutional Affairs, Rules of Origin, Non-Tariff Barriers & Barriers to Trade, Trade Remedies, Trade in Services, Sanitary & Phytosanitary Measures (SPS), Customs Procedures & Trade Facilitation have been identified and formed to further the implementation of the AfCFTA, the aspect of Transport, Infrastructure as a pivotal anchor to regional integration in the continent is still subsumed. ACTIRI strongly believes that transport and infrastructure must be addressed in the contect of continental regional integration if AfCFTA is to be fully addressed.
The evident gap of integration in Africa is now clearly seen as the link between regional integration efforts like the AfCFTA and the “missing Eighth building block” of Africa’s regional transport and infrastructure which has created physical disconnects and barriers between countries and regions. Currently, Africa is the least-integrated continent physically and economically; intra-African imports accounted for only 14 percent of Africa’s total imports in 2013, and Africa’s share of total global exports was only 3 percent in 2014. Africa’s mounting infrastructure deficit has been frustrating integration efforts and stunting growth. Experiences from elsewhere in the world demonstrate that infrastructure, in both hard and soft forms, facilitates regional integration. The European Union (EU), the Association of Southeast Asian Nations (ASEAN), and the North American Free Trade Agreement (NAFTA) have shown how integrating infrastructure can deliver economies of scale in production and support spatial integration, speed up industrialization, enabling market efficiency and trade as well as the mobility of production factors, such as capital and skilled labor. Moreover, infrastructure integration constitutes an integral part of many regional integration schemes such as ASEAN and the Unión de Naciones Suramericanas (UNASUR).
The basis of regional integration in Africa is for its countries to come together to achieve large markets for themselves, reap the benefits of economies of scale, and attain a coherent political cooperation. These benefits notwithstanding, regional economic integration in Africa has often been plagued with several challenges, which include transportation and mobility of factors of production, multi-memberships and duplication of programs and procedures, minimal intra-regional trade, macroeconomic divergence, and conflicts.
The issue of transportation is imperative to the smooth functioning of regionalism and economic integration, as with integrated economies, people have to be able to move easily from one place (economy) to the other, with no structural impediments. A developed transport system is necessary for economies to operate efficiently, enhancing trade by minimizing cost and time of moving people and goods to where there are jobs and markets (KPMG 2013a). Teravaninthorn and Raballand (2009) indicate that improvement of a region’s transportation system is an ultimate priority for regionalism and economic integration. However, for landlocked status of some African countries, poor transport infrastructure, among others, account for the continent’s high transportation costs (Abuka 2005; Teravaninthorn and Raballand 2009); Afeikhena and Nabena (2016).
Studies have shown that the problem of the costs of transportation in Africa impede trade more than import tariffs do (Amjadi and Yeats 1995). Statistics show that at times, it is even cheaper to transport things outside the region, even to as far as Asia, than to transport into the region. A scenario is given by the ECA (2004a): shipping a car from Japan to Abidjan cost only US$ 1,500, and shipping that same car from Addis Ababa to Abidjan could cost US$ 5,000. At some point in time, traveling from New York to Amsterdam costs US$ 164, relative to US$ 395 from Abuja to Bamako, which is a shorter distance (Njoh 2008); Afeikhena and Nabena (2016). Another key feature of transportation in Africa is the underdeveloped nature of the transport system linking countries. Many road, air, and rail systems in African countries are unconnected (ECA 2004b).
A survey by KPMG (2013a) indicates that only Morocco, Tunisia, Egypt, Namibia, South Africa, and Swaziland have better rail systems than the world average, and only 11 African countries have road systems that rate above the world average. Air transport in Africa is also very limited. As KPMG (2013a) notes, an estimated 62 million passengers travelled by air within Africa during 2010, compared with the 457 million that travelled by air within Europe the same year. It is important to note that an efficient transportation system will effectively link suppliers to consumers of a variety of goods and also labor to employers (ILO 2006; Ondiege et al. 2013); Afeikhena and Nabena (2016).
The transportation system can, if efficient, guarantee the safety of both goods and people crossing borders as well as the movement of workers to and from work. This notwithstanding, the transportation. Going forward, increased trade within regional and economic groups in Africa has the potential to develop its communication infrastructure, transportation, spur industrialization and financial market, as these are essential for smooth trade. Despite these potential benefits, African countries have not made enough efforts to enhance intra-regional trade (UNCTAD 2013).
Poor transport infrastructure and limited access to finance to support trade have often been cited as hampering intra-African trade (Longo and Khalid 2001; UNCTAD 2009; World Economic Forum 2010). UNCTAD (2013) adds that African leaders have over-concentrated on the removal of trade barriers at the expense of developing productive capacity that will enhance trade and have also neglected Africa’s private sector in integration initiatives and efforts.
The different stages of development and particular policy focuses of transport and infrastructure development of the various African countries constitute a hindrance to regional economic integration. Afeikhena and Nabena (2016) states that for such integration to be made possible and successful, certain levels of coordinated transport and infrastructure policy, programmes and projects development are set to be attained. The quest for regional economic integration cannot be attained unless there is a framework for strengthening transport and infrastructure policy, programmes, projects and knowledge sharing to build capacity of countries in the continent.
It is evident that efforts to integrate Africa, strengthen intra-Africa trade, incubate, nurture and grow industrialization, improve labour mobility across borders, facilitate efficient and cost effective logistics, harness urbanization, harvest the synergies of Africa’s youth population bulge, harvest the benefits of technology and thrust the continent to claim its position in global trade cannot be achieved without addressing the key structural subjects of transport and infrastructure in Africa.