AHRAM ONLINE
North Africa should integrate economies to speed growth: Report
Nesma Nowar, Wednesday 8 Aug 2012
The continent’s six northern nations should lower trade barriers and
enhance co-operation to ensure greater development for all, says the
African Development Bank
Better integration of North African economies can have a vital impact
on their overall development, claims a new report from the African
Development Bank (AFDB).
Entitled ‘Unlocking North Africa’s potential through regional
integration,’ the report looks at the key challenges for regional
integration in North Africa’s six Arab countries: Tunisia, Morocco,
Algeria, Egypt, Libya and Mauritania.
Among its recommendations are that these nations, which have widely
different natural and human resources, attempt closer integration to
create new opportunities for growth, employment and improved living
standards.
It points to Tunisia, Morocco and Egypt, which have large private
sectors and diversified production bases, contrasting them with Libya
and Algeria, which
have a surplus of capital and large markets for goods and services as
well as job opportunities for migrants.
Despite the potential, regional integration remains extremely limited,
the AFDB says.
The level of intra-regional trade in North Africa is the lowest of any
region in the world, the report claims. It calculates the economic
cost of this lack of integration at around 2 to 3 per cent of total
GDP.
Security concerns and a lack of political will are named as the
greatest obstacles to regional integration, with the report citing the
example of the Algeria-Morocco border, closed since 1994.
The AFDB claims the closure has effectively split North Africa into
two distinct parts, limiting trade and investment initiatives.
Political support for change in North Africa has also been sporadic,
it says, with countries having a poor history in implementing various
bilateral agreements.
Further proof of the difficulties comes in the lack of a single
institution to unite North Africa’s six countries.
The Arab Maghreb Union (AMU) includes all nations except Egypt, which
belongs to the Common Market for the Eastern and Southern Africa
(COMESA). By contrast, the Community of Sahel-Saharan states (CEN-SAD)
includes all countries except Algeria.
Though AMU and CEN-SAD have developed long-term programmes to
encourage economic integration, these are little reflected in national
policies and no significant progress has been made in ratifying
regional agreements.
The region’s political uprisings, which resulted in the toppling of
half the governments of the six nations, is having a complicated
effect on the drive for North African integration, says the report.
More open political systems might strengthen economic collaboration
among countries and encourage integreations as the best approach for
increased development, AFDB says.
But there is also a chance that some countries may adopt more
inward-looking economic policies, perhaps introducting protectionism
and greater financial controls to cope with the new demands of their
citizens.
Overall, however, the bank sounded a positive note.
“Despite these challenges, in the wake of the Arab Spring, the
emerging political landscape in North Africa promises to give new
impetus to regional integration efforts,” said Jacob Kolster, AFDB
Regional Department Director for North Africa.
Among the report’s proposals are for countries to strengthen their
financial infrastructure, harmonise regulatory policies, and remove
market impediments to cross-border activities.
Improvements in road networks and ports are encouraged, as well as
reduction in trade barriers between the six North African nations.
The IT sector is also touted as having great potential, with the AFDB
pointing to the region’s trained personnel and the presence of
multinationals with advanced technology.
“The potential is huge,” says Emanuele Santi, economist at AFDB and
coordinator of the report.
“The new political context in North African countries and the crisis
in Europe, which compel countries to diversify markets, offer a golden
opportunity to refocus on the regional integration agenda as an engine
of growth for all countries.”
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