Economic challenges of the African Union

Dakar- Senegal (PANA) -- The euphoria evoked by the much-touted launch of the African Union 26 May, certainly masks the chronic economic ill-health of a marginalised continent, which accounts for less than two percent of the total world trade.
Economic indicators point to abysmal performances by most African countries with little signs on the horizon for improved sustainable development.
Preliminary estimates by the Addis Ababa-based Economic Commission for Africa (ECA) showed an increase in the real Gross Domestic Product (GDP) by 3.
7 percent in 2000.
But this growth rate "nevertheless masks wide variations between sub-regions and groups of countries" such that the performance in the least developed African island and landlocked economies "declined in 2000 compared to 1999.
" Similarly, while current account deficit declined significantly to 2.
5 billion US dollars, owing to higher export earnings of African oil exporting countries, it increased sharply for the oil importing nations.
Addressing the 73rd OAU Council of Ministers in Tripoli, Libya in March, ECA Deputy Executive Secretary Lalla Ben Barka said the "overall picture makes for sober reflection, with growth in Africa slowing significantly in recent years.
" That could be putting it mildly.
The official figures showed that the average per capita GDP fell by close to one percent in 1998-99, and combined with this is the slowdown in foreign direct investment and development assistance.
These have declined in sub-Saharan Africa from 32 dollars per capita in 1990 to 19 dollars by 1998, "despite clear evidence that aid has worked in countries with the right social and economic environments.
" As poverty ravages the population, Africa remains vulnerable to conflicts, unfavourable terms of trade and external market shocks.
There is also the debt burden of more than 350 billion dollars.
To the apostles of the African Union, the worrying trends make regional integration imperative, but there is hardly any unanimity on the approach for the achievement of the desired goal.
It is forcefully argued that the Union and the African Economic Community (AEC) floated under the 1991 Abuja Treaty, would help reverse the marginalisation of Africa in global trade.
This is because the small size of the African markets, does not allow for the realisation of the economies of scale necessary for an economy to be competitive.
Among other benefits, integration, it is said, can lead to the diversification of the economies, providing the relevant linkages for regional value-added and the framework for African countries to develop a common infrastructure.
Many experts therefore recommend a broad and outward-oriented approach to regional integration.
This, they say, would require the broadening of areas of integration beyond macro-economic policy co-ordination, trade liberation and a common external tariff, to co-operation in investment in transport and communications, energy and other natural resources.
Other priority areas are food security, promotion of regional capital markets, higher education and training institutions and programmes, science and technology education, information and communications technology, and conflict and post-conflict reconstruction and peace-building.
But despite numerous copious protocols and declarations on regional integration, the record of implementation has been characterised by failures.
Africa has never lacked Regional Economic Communities (RECs), formed with the intention of serving as the engine of economic growth.
But these have been dogged by institutional and operational bottlenecks that render them ineffective.
In some cases, the multiplication of such organisations with overlapping objectives and conflicting loyalties, have been counterproductive.
One area, where the African approach to development has been profoundly pathetic is on the debt question, whose burden continues to wipe out whatever little gains that has been achieved from the excruciating Structural Adjustment Programmes (SAPs) in the name of economic reforms of the past 20 years.
While the creditor nations and institutions form Clubs to extract their pound of flesh, African debtors have been unable to forge a common front to argue their case for debt reprieve, with the result that many African countries continue to spend much of their earnings to service just the interest of the huge loans contracted under dubious circumstances.
Some experts consider most of the SAPs unhelpful to Africa's socio-economic development.
Hassan Sunmonu, Secretary General of Accra-based African Trade Union Unity (OATTU), says the programmes have been notorious for the job losses and hardships inflicted on Africans.
Sunmonu, whose Organisation has 73 affiliates in 50 African countries, supports the African Union, which he hopes, if well co-ordinated, would better the lot of the long-suffering workers.
But he remains sceptical of the so-called Poverty Alleviation Programmes being sold to the continent by the creditor nations and international financial institutions.
"What we need is wealth creation and not poverty alleviation, which is becoming an industry by itself," complained the Nigerian trade unionist, who said "you cannot create wealth without creating well-remunerated jobs.
" For the ambitious African Union to impact positively on the continent's more than 700 million people, the disturbing adverse economic indices must be reversed, perhaps beginning with the planned African Development Forum (ADF-2001), to take stock of previous integration efforts and chart the new way forward.
This is because integration without a solid economic base is like a house on a weak foundation - a disaster waiting to happen.

25 may 2001 17:37:00




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