February 22, 2007—A recent conference in Nairobi may signal a change in the way the Bank does business in Africa. Regional Integration, Intra-African Trade and Economic Growth — January 30th through February 1st — brought together, first, stakeholders for a one-day consultation meeting on the Regional Integration Strategy that the Bank is preparing, followed by a two-day workshop for policy makers. Consult, debate and listen The stakeholder consultations, organized by the Africa Region’s Regional Integration Department and coordinated by Ms. Sonia Plaza, Senior Economist with the Department, were meant to gather a clear sense of roles and priorities as well as to seek feedback on shaping the equivalent of a regional CAS. The goal was to find better ways for donors and development partner to support Africa’s regional coordination efforts. Around 80 participants from West, Central, East and Southern African joined the various donors — including DFID, France, Germany, Japan, regional development banks, and regional economic communities — to plan a regional integration strategy. (For a complete list of participants, go here). As Mark Tomlinson, Director of the Africa Region’s Regional Integration Department, said, “The Bank is in a listening mode.” Following the stakeholder consultations, the Policy Workshop on Regional Integration, on January 31st and February 1st, brought together African policy-makers, high-level representatives from the regional economic communities (RECs), analysts, and Africanists from outside the region to debate the issues and find solutions. The policy workshop was organized jointly by the African Economic Research Consortium (AERC), Africa Development Bank (AfDB), Economic Commission for Africa (EAC), NEPAD, and the World Bank. It marked the third of a series of workshops intended to create dialogue on key African development issues. And all country roads lead to…the region  | Participants at the Stakeholders Consultations |
Integration is probably more important in Africa than in any other region. A third of African countries — hosting 40 percent of Africans — are landlocked, tiny economies (median size: US$4 billion). Each shares boundaries with, on average, four other countries, whose policies have spillover consequences on neighbors. In landlocked Rwanda, for example, the closest sea ports to the country — Mombasa in Kenya and Dar es Salaam in Tanzania — are 1,300 miles away. While it costs about US$80 per ton for goods to be transported from the United States to Mombasa, transport costs from Mombasa to Rwanda are an incredible US$250 per ton. This means that average prices for international goods are three times higher in Kigali than Nairobi. Africa is on the move, with growth rates similar to other developing countries. But the challenge is to bring the 35 percent of the population living in landlocked countries into the fruits of this growth. And trade is fundamental to this shared growth. Stakeholders support a regional effort The first meeting confirmed that stakeholders increasingly believe that many country challenges — accelerating economic growth and poverty alleviation, and improving trade and infrastructure — require regional solutions; and there should therefore be clear connections between national and regional issues. In Memoriam We mourn the passing of our colleague, Piet Viljoen, from the Development Bank of Southern Africa, who died suddenly while attending the Nairobi conference. We offer our deepest condolences to his family. |
Participants proposed that two types of reforms are needed to advance the regional integration agenda. First, there must be hardware reforms or cross-border infrastructure links — for example, transit corridors and telecommunications. Second, these must be accompanied by supporting software reforms that addresses various impediments related to policies, regulations, and standards. In addition, African clients will have to bridge the analytical gaps and open the exchange of experience with other developing countries. Clients agreed that the Bank offers an advantage in access to global knowledge and best practices. Participants said that new funding instruments for regional integration should be developed to establish links between national and regional programs. In light of the scarce resources available under IDA 14, clients requested that the Bank explore non-concessionary funding sources beyond the current limited IDA funds, such as guarantees, securitization of remittances, and diaspora funds. Policy makers look to moving goods, linking people, and growing food  | Participants at the Policy Workshop on Regional Integration |
Speaking to participants later at the policy workshop, John Page, the Africa Region’s Chief Economist said that factory floor costs (capital and labor) in Africa compare well with best performers in China, India and Vietnam. But, he warned, “… the high indirect costs (linked mostly to transport, barriers, corruption, energy, etc.) render African best performers uncompetitive once they leave the factory gates.” Infrastructure, in addition to transporting goods and people, connects rural poor to local and global markets. But, in Africa, there is an acute shortage of resources and programs to address the regional needs. It is estimated that fulfilling Africa’s infrastructure demand alone would require investments of about US$7.2 billion a year. Regional approaches are also needed for land and water management, markets and infrastructure related to trade, food security, science, and technology. One participant stressed that regional projects could help Africa grow the 50 percent of its food it currently imports at approximately US$18 billion a year, freeing up resources for other investments. The Common Market for Eastern and Southern Africa (COMESA) is now working jointly with the International Food Policy Research Institute (IFPRI) and Michigan State University to develop regional strategies for agriculture. African clients are also looking to regional approaches to agriculture biotechnology, asking that a process be created to promote interaction between national and regional actors to develop (a) joint research and development activities; (b) joint standards setting; (c) joint risk assessments; (d) joint monitoring of impacts and benefits; and (e) a regional biosafety clearing house. Currently, the World Bank is preparing a West Africa Regional Biosafety Project with the West Africa Economic and Monetary Union (UEMOA) to create a regional observatory to monitor the impact of the introduction of living modified organisms in the cotton sector. World Bank broadening its outlook A late-comer to regional integration, the World Bank’s portfolio in this area is currently US$1.1 billion in value covering 11 projects with a pipeline of US$1.4 billion envisaged between now and end-2009, as the Bank shifts away from country-focused to regional programs. Hart Schafer, Acting Vice President, of the Africa Region, told workshop participants that the Bank would broaden and deepen its work in this area, including building the capacity of regional and sub-regional organizations. For their part, attendees urged the Bank to re-tool its funding mechanisms to allow financing for regional programs through both its soft-lending arm (IDA) and its loan-making branch (IBRD). Clear and balanced goals Policy workshop attendees discussed the how’s of achieving regional goals. First, for programs to succeed, regional integration objectives must be clear; and, more important, national interests, regional goals, and sovereignty issues should be balanced and harmonized, with a buy-in by Africans at grassroots levels, including civil society and the private sector. Also, reforms to advance the regional integration agenda in Africa must be pursued from both the infrastructure and policy angles, recognizing the critical need for solid analytical work by partner and regional research networks from Africa. Of course, there can be no productive regional integration without peace, security, and stability. In addition the indigenous African private sector should be catalysts of regional integration. Mr. Mwencha, Secretary General from COMESA, stressed the importance of bringing more money to regional integration activities. “There is a need to develop capital markets jointly with infrastructure development,” he said. “Is there a role for using new instruments… to complement resources from the governments and donors?” Attendees agreed that African governments and donors have to find new and innovative ways of mobilizing local and international capital — such as, galvanizing funding from the African Diaspora, to drawing from remittances, insurance, pension and hedge funds, and providing investment guarantees and improving the business climate for the repatriation of an estimated US$600 billion held in investments by Africans outside the region. Charting a new course The Nairobi meetings opened a new direction for stakeholders. While regional integration is not new, the conversation that took place over the three-day event was. And this conversation led to detailed follow up actions to: - Promote the private sector in the financing of regional integration activities
- Coordinate actions among partners
- Support analytical studies in preparation for the negotiations of economic partnership agreements (EPAs)
- Disseminate knowledge.
Participants acknowledged that many country self-interest issues are better resolved through regional solutions, for example, power pooling, underwater cables, and cross-border disease control. However, the policy challenge is to help countries act collectively to achieve self-interest goals, for example in installing common regulations and customs procedures. Benno Ndulu, Senior Advisor to the Africa Region Vice President, concluded the session, saying that the Bank is translating the messages from the discussions into follow-up actions: “The objectives of the workshop were accomplished: The follow-up actions are a reflection of the priorities that partners have identified as areas of action. In addition, both events provided a platform for dialogue on key regional integration issues.” |
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