The African Union Commission, United Nations Economic Commission for Africa and the African Development Bank are proud to present the second edition of the Africa Regional Integration Index. The timing could not be better with the recent endorsement of the African Continental Free Trade Area (AfCFTA) by more than 50 African countries. AfCFTA creates the largest free trade zone in the world, with a combined GDP of over USD 3.3 trillion and a population of more than 1.2 billion people. Breaking down tariff barriers alone will spur trade by at least 53% while the elimination of non-tariff barriers could double intra-African trade.
Africa’s economic growth is projected to exceed 4% in 2019-2020, an increase from 3.5% in 2018. Spurred by AfCFTA, more than 40% of African countries are projected to post growth of at least 5% this year as commodity prices rise and domestic demand and infrastructure investments boost growth.
This then leads us to the importance of regional integration and the Africa Regional Integration Index. To reach or exceed growth targets, Africa needs greater integration. Regional integration is indispensable for factor connectivity, investment flows and value creation. Whether connecting landlocked countries to ports or ICT portals, from household to warehouses across the continent, connectivity is the chain link that characterises the economy of the 21st century. Africa must forge ahead with these trends and lead where appropriate.
For our continent, that means not just the movement of people, goods and services within our member nations, but data transmission to allow for the flow of information and tools needed for higher value-added. These dual components of industrialisation and value addition are critical in creating wealth.
For free trade to happen seamlessly, African countries need to implement the Protocol on the Free Movement of People, which will in turn enable traders and investors to operate beyond their national borders. Africa must trade more with itself. And as markets trade on information, we need to move in the direction of connecting people and companies with data platforms and information to facilitate trade, investment, and promote the continent’s economic development and welfare.
There is much to be said about the considerable investments being made in Africa in anticipation of future growth. Across the continent, we are seeing investments in power generation, transmission and distribution improving access to power for businesses and households. Roads and bridges, rail networks as well as new and improved airports will help to move goods and connect passenger and business traffic. Ports are being upgraded to enhance maritime exchange. We are doing all this sustainably — promoting a cleaner environment, and strengthening water basin management.
These investments are not happening in isolation, but complement improvements in the business environment to stimulate private sector growth and development, while strengthening trade flows across borders. This is sending strong signals that investment opportunities await those with capital to benefit from returns that come with increased economic activity. Sound infrastructure investments with explicit contractual economic pay-outs can spur integration efforts, trade and investment for sustainable growth.
In this regard, we are seeing the emergence of stronger banks, renewed interest from capital providers, and growth in trade finance. This attests to the kinds of opportunities that can be leveraged for Africa today and into the future.
However, it is not just about money — ultimately, it’s about development impact and enhancing the quality of life for all Africans. So, while we continue to support social and economic initiatives across the continent, we reiterate that regional integration is crucial for sustainable and inclusive development. If we remain fragmented and weighed down by trade barriers, we create obstacles that only impoverish our people and penalise Africa in a competitive global market.
So how are we doing? The Africa Regional Integration Index provides a snapshot of progress made by member states. Some countries are forging ahead and showing positive results, particularly in terms of trade and macroeconomic policy alignment. Others are holding back and as a consequence, are missing out on opportunities that come with integration.
The index takes these dimensions into account, namely trade integration, productive integration, macroeconomic integration, infrastructure integration and the free movement of people. The index shows that trade and macroeconomic integration on the continent are moving ahead at a reasonable pace, but the need to improve on infrastructure connectivity, productive capacity and movement of people across borders is evident.
The 2019 Africa Regional Integration Index indicates that overall, the level of integration on the continent is low, with an average score of 0.327. Africa is poorly integrated on the productive and infrastructural dimensions, which are key aspects forming the foundations upon which the other dimensions of regional integration depend to function. The index shows that 20 African countries are performing well while 25 are low performing.
This index presents policy proposals that tackle weaknesses while supporting progress made so far on the continent. We intend to support these policy recommendations and initiatives within our member countries and regional economic communities. Now that we are moving forward with the implementation of AfCFTA, it is time for quantum leaps. Regional integration is the glue that will make that happen.
Dr. Akinwumi A. Adesina, President of the African Development Bank Group
Moussa Faki Mahamat, Chairperson of the African Union Commission
Vera Songwe, Under-Secretary General of the United Nations and Executive Secretary of the United Nations Economic Commission for Africa
About the Index
“Now that we are moving forward with the implementation of AfCFTA, it is time for quantum leaps. Regional integration is the glue that will make that happen"