The importance of regional grouping in africa

Regional Economic Grouping in Africa’s

THE IMPORTANCE OF REGIONAL GROUPING IN AFRICA’S ECONOMIC

DEVELOPMENT

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Regional Economic Grouping in Africa’s 2

Table of Contents

Chapter 1........................................................................................................................................4

Introduction.............................................................................................................................................4

Statement of the problem.......................................................................................................................5

Scope of the study...................................................................................................................................6

Justification of study................................................................................................................................6

Aims and objectives.................................................................................................................................7

Aim..........................................................................................................................................................7

Objectives ...............................................................................................................................................7

Research questions .................................................................................................................................8

Organization of the study..............................................................................................................8

Chapter Two.................................................................................................................................10

Literature Review........................................................................................................................10

Community of Sahel-Saharan States (CEN-SAD)....................................................................................11

Objectives of CEN-SAD...........................................................................................................................12

Free Trade Area.....................................................................................................................................15

Trade promotion....................................................................................................................................15

COMESA Institutions..............................................................................................................................16

East Africa Community (EAC)..................................................................................................17

Introduction...........................................................................................................................................17

Objectives..............................................................................................................................................19

Steps of achieving objectives.................................................................................................................20

Peace and security related activities......................................................................................................21

Economic Community of Central African States (ECCAS)....................................................22

Introduction...........................................................................................................................................22


Objectives..............................................................................................................................................22

Chapter Three..............................................................................................................................28

Methodology.................................................................................................................................28

Introduction...........................................................................................................................................28

Research questions that guided the study.............................................................................................28

Research Design.....................................................................................................................................29

Data collection methods........................................................................................................................30

Primary source.......................................................................................................................................30

Secondary source...................................................................................................................................30

Ethical consideration.............................................................................................................................31

Chapter Four................................................................................................................................33

Results and discussions................................................................................................................33

Regional Economic Communities in Africa.............................................................................................33

Importance of REC.................................................................................................................................33

Challenges facing RECs in Africa............................................................................................................37

Chapter Five.................................................................................................................................39

Conclusion and Recommendations............................................................................................39

Conclusions............................................................................................................................................39

Recommendations.................................................................................................................................39

References.....................................................................................................................................41


The Importance of Regional Grouping in Africa’s Economic Development
Chapter 1

Introduction

Historically, individuals, communities, nations, groups of nations, continents as well as

the entire world are struggling to better their economy through various mechanisms. One of the

mechanisms is forming blocs all aimed at fostering economic development. The trade blocs

refers to intergovernmental agreement or a section of regional intergovernmental organization in

which regional obstructions to doing business in most cases tariffs as well as non-tariff barriers

are tremendously cut down to enhance the member states to engage in business with ease

(Vanek, 1962).

Having in mind that Africa as a continent is made up of predominately an agricultural

community, experience has taught it that having regional trade integration can go an extra mile

in catalyzing growth in economy as well as sustainable economic development. Historically, the

path toward the current economic integration is thanks to the signing of a treaty in Abuja Nigeria

back in 1991 which committed Africa towards economic development (O’Connell, 1997).

Additionally, the significance of regional economic corporation or groupings as well as

integration being the wheel to drive and consolidate economic together with the social

development are among the attributes in the back of African leaders. Although integration or

grouping was initially aimed at gaining political power, the whole scenario changed as a result of

challenges brought forth by globalization as well as interdependence.

The mixture of the effects of REI on competence and accretion led to the

acknowledgment that the integration can positively impact on the continent economic

development. Having in mind that high efficiency as well as faster amassing is significant


components of a competitive system, economic grouping was then seen as a starting point for the

continent to find its way in the global economy (Asiedu, 2002).

Arguably, there are two sides of the story, those that support economic regional

integration and those that do not. It is on this basis that the research paper finds its foundation, to

establish how important such integrations are in Africa economic development. To do this

successfully, a number of questions such as; Are the regional groups the best way in fostering

African Trade, Can African counties do trade on their self without grouping?, Does it give you

hope to Continuing grouping? Among other are used to find the necessary information.

Statement of the problem

As noted previously, there is the desire to have a sound economic development as well as

a sustainable one in the whole of Africa as a continent. As a result of this quest a number of

strategies were brought forth to drive that among them regional integration. It is established that

regionalization in the continent were pursued not only for fostering economic development but

also enhancing political stability. Regionalism especially market integration has proven through

experience that to be one of the best way in solving the structural problems that face African

economies.

There have been very strong and bitter arguments for and against regional grouping or

blocs in Africa’s economic development. On one side, those who support regional economic

cooperation hold that it expands trade and opportunities for investment, promotes economic

growth and sustainable development, and contributes to growth of world economy, foster

political stability, remove barriers to the free movement of production factors, promote monetary

cooperation among others (Metzger, 2008).


On the other hands, the arguments brought forth by those who challenge the integrity of

grouping in fostering African economic development is that it has not delivered the much

anticipated objectives of uplifting economic conditions of member countries nor ensured a

sustainable growth in terms of economy. They see the grouping as a monster in it self as it will

bloc such groupings from doing business with other blocs (Kibret, 2000). It is on this basis that

the research seeks to unravel the existing arguments by drawing a conclusion on whether

economic grouping is important or not in economic development of African countries.

Scope of the study

With clear understanding that no single study can adequately address all aspects of any

given topic, there is need to clearly establish what the research addresses. The scope of this study

thus is to critically analyze the importance of regional grouping in Africa’s economic

development. In addition, issues such as the region’s grouping being the best way to enhance

African trade, the capabilities of African countries doing business on their own without being in

economic groupings, advantages and disadvantages of economic are addressed.

It is worth mentioning that the results that will be generated from the study will not only

have implications in a narrow scope but be applicable in economic decision making as well

providing a clear understanding of the importance of economic grouping in fostering economic

growth of Africa continent.

Justification of study

The research is of a lot of importance as it will be an in depth evaluation of ‘the

importance of regional grouping in Africa’s economic development’. Additionally, other issues

such as the regions being the best way to enhance African trade, the capabilities of African

countries doing business on their own without being in economic groupings, advantages and


disadvantages of economic grouping are brought forth. The findings will be of importance to

various stakeholders such as the African governments, Non-governmental Organizations, the

general public, decision makers, policymakers, and scholars as well as varied academic

institutions.

It is worth noting that the findings herein will make African countries make rational and

sound decisions regarding either joining any economic groupings or withdrawing from them.

This will be guided by the discussed pros and cons of the groupings. If the decision is arrived at

in a sober man then the desire to have a continent that is a powerhouse economically in the globe

could be realized in future.

Not carrying out this research will clearly depict that the various advantages and draw

backs associated with economic grouping in African will not be brought to light. This will mean

that the relevant stakeholders that seek to use such information to improve how to arrive in

making rational decisions, carrying out further research will not have such an opportunity.

Aims and objectives

Aim

The aim of the research is to critically analyze the importance of regional grouping in Africa’s

economic development.

Objectives

• To find out whether the regional groups the best way of fostering African Trade

• To evaluate if African countries can do trade on their self without grouping

• To examine the relevance of regional grouping in African economic development

• To find out the advantages and disadvantages of grouping for African countries in doing

trade.


Research questions

1. What is regional grouping in Africa’s economic development?

2. Are regional groups the best way to foster African trade?

3. Can African counties do trade on their self without grouping?

4. What is the relevance of regional grouping in African economic development?

5. What are the advantages of regional grouping as far as African economic development is

concerned?

6. What are the disadvantages of regional grouping as far as African economic development

is concerned?

7. What are the challenges facing the regional groupings in the quest to attained economic

growth and sustainable development?

8. What can be done to avert the challenges facing African economic groupings/blocs?

Organization of the study

Five distinct sections constitute the whole paper and this design makes it easy for those

who will review it get to the relevant section with ease.

Section one, the first chapter, is made up of the introduction, problem statement, scope of

the study, rationale/ justification of the study, aims and objective of the study, research questions.

Each of these subsections is adequately addressed to give insight to readers of what they expect

in the paper.

Section two, normally referred to as chapter two, and is made up entirely of all the

literature that relates to the study topic. Data that help explain the importance of regional

grouping in Africa’s economic development, the advantages and disadvantages, challenges

facing such are brought forth.


Section three is the methodology chapter. It entails the following subsections;

introduction, research questions, research design or approach, population and sampling

procedures, data collection methods, data analysis and presentations. Additionally, issues relating

to limitation, assumptions of the study as well as ethical considerations are brought to light in

this chapter.

The fourth section chapter four is results and discussion. It is here that all the findings

relating to importance of regional grouping in Africa’s economic development are synthesized

and linked to the research questions. It is this chapter that forms the backbone of the paper.

The last section is organized as chapter five and is under the title Conclusions and

Recommendations. A recap of the finding and recommendations are given in this section.


Chapter Two

Literature Review

The African countries have been having groupings to help them in mutual economic

development among the African states. The African Economical Community (AEC) mostly

motivates this, which is an organization of African union state. several organizations has been

established to cater for every bloc in the continent with an aim of creating free trade areas,

common central bank, customs union, single market and a common currency. This is eventually

aimed at establishing a common economic and monetary union (Africa-union.org, 1992).

In the realization of its aim, AEC has initiated formation of several regional blocs in the

continent. These regional blocs are also known as Regional Economical Communities, which

have intertwined membership. RECs are mostly trade blocs, but it also consists of military and

political cooperation. These blocs are the one entitled to taking forward the aim of the AEC in

attaining trade regions. Some groups have subgroups that make them much powerful. The

following table will show the group and the subgroup of the RECs.

Groups subgroups
Community of Sahel-Saharan States (CEN-

SAD)

East African Community (EAC)
Common Market for Eastern and Southern

Africa (COMESA)
Economic Community of Central African Economic and Monetary Community of

States (ECCAS/CEEAC) Central Africa (CEMAC)

Economic Community of West African States West African Monetary Zone (WAMZ)


(ECOWAS) West African Economic and Monetary Union

(UEMOA)
Southern African Development Community Southern African Customs Union (SACU)

(SADC)
Intergovernmental Authority on Development

(IGAD)

The function of the African Economical Community that was established less than 1991

Abuja treaty and entered into force in 1994 with six stage visions whose core value was to

establish an African common market. The first function was to create region blocs that were to

be completed in 1999 especially where such blocs were not in existence. By 2007, they had

projected to strengthen the intra-Region Economical Communities ensuing that they integrate

them and harmonize them. The third stage is to establish free trade and custom union in every

region by 2017 and by 2019, a wide continent customs union leading to a bigger free trade area.

They have also projected that by 2023, they will have established African Common Market

(ACM), eventually, a continent wide economic and monetary union, and a parliament by the year

2028 (Africa-union.org, 1992). This will be a complete currency union. The process is projected

to have been complete by 2034 the latest. Therefore, to accomplish these missions each region

bloc plays its part. Therefore, to establish and understand how each grouping worked towards

the economical development in Africa we will tackle each group independently.

Community of Sahel-Saharan States (CEN-SAD)

It is a framework of that is meant to bring integration and complimentary within the

region it works upon. Its intention is to work in conjunction with the rest of the region economic


communities in Africa. Its main core function was to strengthen peace within the region,

ensuring the stability, security and getting global economic and social development.

CEN-SAD came up into being on fourth of February 2011. It was formed after a conference of

leaders who convened ion Tripoli. A treaty was signed by the leaders of El-fateh Revolution and

the states leader of Burkina Faso, Mali, Niger Chad and Sudan before other central African

countries joined afterwards (Royal African Society, 1968). The region community was

recognized as a regional economic during the summit conference. It has joined several

partnerships in regional and international organizations with their function being to consolidate

their work in political, economical, social and cultural fields. The group is also under observation

status by The United Nation General Assembly.

Objectives of CEN-SAD

The aim was to establish a comprehensive economic union that was based on a strategy

that was too implemented in accordance with development plan that was supposed to be

implemented by the member state. The group was to include investment in the industrial field,

social, energy and agricultural. Therefore, to ensure that the group works with fewer obstacles,

they decided to adopt necessary measures that would make them achieve several objectives.

The objectives were to be removed to achieve the following, ensure that the people

moved around with ease in the member states, free flow of the capital and meet the interest of the

citizen of member state. they were also to ensure that the residence of the member state enjoy

freedom of residence in any member state, work in any country and under take free economic

activity as well as have ownership of property in the company. The group was also to provide

freedom of goods getting in and out of the member state, merchandised goods and services.

CEN-SAD also ensured that they boosted trade among the member states by encouraging foreign


trade. This was ensured possible by coming up with an implementation investment policy for the

member countries (Friedland & Rosberg 1965).

To ensure that the entire member states citizen enjoyed the business among each country,

they ensure that the member state gives equal privileges to all citizens in the member states. This

is supposed to be done with the consent of the community of the member countries. The group

has different mandate to ensure that they enhance trade within the region. The form of education

that is carried in the area is very important to ensure this is done; therefore, they coordinate

various education systems at various levels. They also support diversified cultural and scientific

methods to enhance the trade are done in a harmonized method (African Studies Association,

2008).

The group is well organized to help it oversee the stipulated mandate. It has different

organs in its leadership and even a bank to ensure that the member countries are able to bank

their investments and enhance the trade among the member countries (Davies, 2008).


Common Market for Eastern and Southern Africa (COMESA)

A map-showing member states of COMESA

It was formed in 1994 after Preferential Trade Area (PTA) was disbanded. PTA had

existed from 1981. COMESA was formed under a treaty to accomplish various mandates. The

organization was formed to be free and independent for all sovereign member states. These are

the states that have agreed to came together to expand cultural and human resources. This was

done for the sake of all citizens especially those of the member states (Gyekye, 1987). The

organization was also supposed to promote peaceful and secure region among the country that


united. However, the main objective of COMESA is to form a wide economic area that has less

economic barriers as faced by single member state.

Therefore, the functions of COMESA can be phrased as, ‘economic prosperity through

regional integration.’ The phrase summarizes the main objectives of the organizations. The

organization has twenty-one member countries that has a population of three hundred and eighty

fie million people. The annual bill of the member countries is around thirty billion US dollars.

Therefore, COMESA has made a great internal and external market for the member countries. It

is mostly boosted by the region it covers which create accessibility overseas and across the

member countries in trading (Silverman, 2004).

Free Trade Area

The organization is on it way in implementing an area that is free in trade. This is by first

ensuring that they remove completely the trade barriers that existed among the member

countries. This exercise of removing trade barriers was to be completed by 2000 (Erickson &

Murphy, 2010). They also put in place a target of four years to have come up with a tariff

structure that would be common for all external members on how to deal with third party cases

and to simplify the required procedures in the process of carrying on with trade.

Trade promotion

The organization has ensured that they have come up with concrete objectives to ensure

that the trade in the area is well done in the region. This is by ensuring that they offer trade

promotion to the member countries. They are projecting to have trade liberalization and

cooperating in custom so they are also in the verge of ensuring that they computerize the custom

collection in the region to ensure that they harmonize the trade all over the region (Leuthold,

1977).


To ensure that they improve the rate of the business and the way is carried in the region,

COMESA is dedicated to improve transport administration, communication systems to enhance

the movement of goods, people and information around the region with ease. This will be

followed by creation of a legal framework that will ensure that they encourage private sector

growth. The organization is also set to ensure that they come up with secure environment for

investment and setting standard measures that the countries concerned should adopt in carrying

out the business in the region. They are also at the point of ensuring that they harmonize

macroeconomics and policies concerning monetary issues over the region (Asante & Abarry

1996).

COMESA Institutions

The organization has set some institutions that will enhance regional cooperation and

ease development. A number of them are stipulated below.

• The COMESA Re-insurance Company (ZEP-RE) whose head office are in Nairobi

Kenya

• The COMESA Leather Institute in Ethiopia

• The COMESA Trade and Development Bank situated in Nairobi Kenya

• The COMESA Clearing House in Harare, Zimbabwe

• The Association of Commercial Banks, which is also situated in Harare, Zimbabwe.

There has been formation of Court of Justice under the organization treaty. The

organization is also on its way to ensure that cross border trade is initiated. They are also in the

verge of forming a common industrial policy and introduction of monetary program that is

harmonized.

The COMESA offers the following


According to Weiss 2004, the region offers various benefits to the member country.

They ensure that they harmonize the trade market making it more competitive. By offering

competitive market place, they ensure that they offer a productive and competitive

industrialization in the region. This is to ensure that they improve agricultural production and

food security in the region. COMESA offers a better and rational ground for natural resources

exploitation. There has been a more harmonized monetary and banking service to ensure that

they improve the financial policies of the region. COMESA ensures reliable communication and

transport infrastructure over the region to ensure that trading is made easier over the region.

East Africa Community (EAC)

Introduction

The East Africa Community date backs in 1967. It was initially formed as Permanent

Tripartite for East Africa Cooperation, which later collapsed in 1977 due to political differences

among the member states. It is after the dissolution of the organization when the member state

united once more under Mediation Agreement for the division Assets and Liabilities (Engel &

Porto 2010). This agreement was signed in 1984 by the member countries. For the provisions

that were made by the member countries, the Mediation Agreement helped them for future

cooperation helping them to make firm arrangements in cooperation.

The head of state ensured that they had regular meeting to ensure that they continue wit h

deliberation on reviving an organization. This lead to signing of an agreement that leads to

establishment of Permanent Commission for East Africa Co-operation. This was done on

November 30, 1993. In 1996, East Africa Co-operation formation started. The EAC head

quarters were to be in Arusha Tanzania.


In conjunction with the talks that the head of state held in Arusha in Tanzania in 22

January 1999, a treaty was signed to ensure that the EAC organization was re-established latest

1999. The organization was to substitute Permanent Tripartite Commission for East Africa Co-

operation.

Among the things that the summit raised in the meeting in Arusha was that, they were to

sign a Memorandum of Understanding on Foreign Policy Coordination. This was to ensure that

they operate their business at a zero tariffs rates among the member countries. This was to be

adapted as from July 1999. They also ensured that at the same time, 80% COMESA tariff

reduction provision was to be implemented. They also ensured that they improvised a

mechanism to deal with terrorism to ensure that the trade in the region was enhanced (African

Union 2002).

To ensure that the countries that are members of EAC, that is Uganda, Tanzania and

Kenya, improve their trade as well as international cooperation, they signed a Memorandum on

Foreign Policy Co-ordination. This was to help the member states to have a common stand in

international interests. They also have a process in which visa application in member countries

can be processed in any mission that either country is concerned internationally.

The passports process was therefore launched afterwards in April 1999. It is at this time

that the company launched the elimination of the internal tariff on July 1999. There was also to

be establishment of common external tariffs by July 2000. The agreement was that there would

be a removal of non-tariffs barriers that was being imposed to the imported goods coming from

the partner countries within twelve months of treaty coming into force.

The treaty is there also to establish customs within the regions in the member countries.

The main aim being common monetary union and common market there enhancing political


federation of east African states. The treaty also shows the institution that is to be composed in

the member sates. The first one was to be East Africa parliament, a joint court of justice and a

region stock exchange. To ensure that the ball is set rolling, the head of the member states signed

a protocol to help establish East Africa Custom Union. This protocol was to be ratified by the

member states and was to come into force as from 2004 July. By this, the members were able to

create a common market that was estimated to be worth thirty billion US dollars that will involve

about ninety million people. This shows that with organization made, trade potential increased in

the region to a great height.

The EAC was started by the following country;

• Kenya

• Tanzania

• Uganda

Objectives

The commission is aimed at strengthening and improving the cooperation of the member

countries. This was to be done by enhancing their historical ties making the people along the

region understand each other mainly through trade. The organization was also to ensure that this

cooperation was to be developed by such things as transport, communication, free immigration

process, security, trade and industries, investments and promotion done throughout the region.

In their projecting of creating a common market, they are meant to ease travelling

restrictions to ensure that people are able to access regional resources easily, harmonize tariffs

that are charged on goods along the region to ensure that people of the member states enjoy

equal priorities in their trade in the region. The organization is also dedicated to ensuring that

they improve the communication protocols to facilitate fast growth of the trade in the region.


They are also involved in the treaty of sharing electrical power and ensuring that they address

Lake Victoria issues (Okumu & Makinda 2008).

To achieve their objective there are things that they are supposed to ensure they do to

harmonize trade. These things are currencies that are freely exchangeable and if possible a single

currency that will ply in the region. There are also to ensure that they produce a common east

Africa n passport to ensure that the people are able to travel with little or no restrictions. The

EAC is also in the process of ensuring that the industries that are indigenous in the region are

protected by removing 10% of surcharges in some products they produce.

The surcharge that has been stipulated was to be meant by introduction of custom union

that will serve as an entry point for the community. Thus, it will be supported by a common

market, a monetary union, and a political federation of East Africa states.

Steps of achieving objectives

The regional organization aims to promote sustainable growth and regional development

that includes utilization rationally natural resources and protection of the environment across the

region. The organization has also strengthened consolidated economic, political, cultural, social

and traditions among the people of the regions. This ensures that people in the region promote

mutual development. The organization has enhanced and strengthened participation of the

private sector and the civil society to ensure that the trade in the region is improved. The

organization has also strengthened the participation of women in different field in the region

incorporating them in different programs and ensures that they participate in different

developments. The organization also ensures that it has positioned itself in a better trading region

by promotion of good governance. They ensure that the member countries respect the principle

of democracy, accountability in their functions and rule of law. They are also required to have


transparency, gender equality, social justice and equal opportunities for all the people of the

member countries to ensure fair distribution of equity in the region. Finally, the organization

ensures that they promote peace in the region, security and the stability to ensure that trade is

done without any fear. This will also attract investors in the region ((Okumu & Makinda 2008).

The East Africa Community works with in five-year strategy with development

document, which spells out policy guidelines, priority programs and implementation schedules.

This document emphasizes economic cooperation of the member countries to ensure that they

develop strong focus on the social dimension. The private sector is also put in a strong place to

ensure that they have a central and a crucial development stand. They also associate civil society

to ensure that there is integrated in the national development in partner ship with the public

sector. The organization has accorded the development of an internationally competitive market

in the region to ensure that they develop a regional infrastructure, human resource and science

and technology in the area.

Peace and security related activities

Despite EAC being so much inclined in the economical cooperation, they believes that

stability in the regional is vital for economical development as this will ensure that the investors

have a good ground to invest in the region. Therefore, the solidarity was shown by ensuring that

the soldiers from the member countries trained in northern part of Kenya in 1998. This troop of

soldiers was about fifteen hundred in number. They trained for one-month exercise with the

name Natural Fire. The organization also signed a memorandum of understanding to ensure that

the defense forces cooperate in 1998. The organization also support other organizations in Africa

like the agreement that was signed to support SADC during EAC summit in Nairobi in 1998

October 18 (Engel & Porto 2010).


Economic Community of Central African States (ECCAS)

Introduction

It was founded after the summit of Central Africa Customs and Economic Union

(UDEAC) that was held in 1981 decided that they would like to form a wider economic region.

Therefore, in 1983, the ECCAS come into being. The organization started its work in 1985, but

it became inactive for a while due to economic crisis, as most of the member countries had not

contributed their membership fees and the collision that happened in the Great Lakes States.

They signed a relation protocol with EAC in 1992. This was to ensure that they make the region

economic development firm (Leuthold, 1977).

Objectives

The organization was formed to accomplish various objectives to ensure that they arrive

at the goal that they have set. Their objectives were, first to have a collective autonomy in the

region. They were aimed to ensure that the living standard of the people in the regional. They

wee also meant to maintain the economic stability of the region through peaceful coexistence.

The harmonious cooperation among the member states is to ensure that they establish Central

African Common Market.

The organization ensured that they placed four priorities in the accomplishment of the

task ahead of them. The identified priorities were first to develop enough capacities to ensure

there was peace among the states in the region. They were meant also to maintain security and

stability to put a good economic foundation. The organization was meant also to ensure that they

come up with a way of establishing physical, monetary and economic integration. They were to

ensure that they developed human integration by ensuring that they integrate diverse culture


together. They were finally to prioritize on coming up with an autonomous method for financing

the organization.

Treaties and Protocol

The organization signed a treaty that helped in the establishment of the Economic

Community of Central African States. They have signed protocol that has helped in the

establishment of Network of Parliamentarians of ECCAS (REPAC). They have also mutual

assistance pact treaty between the member states. They have also signed a protocol that pertain

establishment of mutual security pact in the central, Africa (COPAX).

To ensure that they give economic development in the region the fist priority, they

ensure that they have a protocol giving rules that stipulates the origin for the products to be

traded between member states(Leuthold, 1977). They also ensured that they signed a non-tariff

trade barriers protocol. The protocol of re-exportation of goods within the region, transit

facilities, custom cooperation, fund compensation for loss of the revenues and cooperation in

agricultural development in the region among others. These protocols were there to ensure that

the organization develop a good place for trade among the member states.

Economic Community of East Africa State (ECOWAS)

The section of the map of Africa showing members of ECOWAS


ECOWAS came into being after the signing of protocol at Lome in Togo on 1976.

Afterwards, the countries revised the treaty to ensure that they accelerate economic development

in the region by ensuring that they integrated political cooperation.

Objectives

The organization is out to bring about economic cooperation and integration in the

region. This is by integrating social and cultural diversity of the region to enhance good

coexistence in the region leading to the mutual trade and peaceful trading. ECOWAS is out to

ensure that they a monetary union in the region by integrating the economies of the member

state. They are meant to ensure that they raise the living standard of the people in the region by

ensuring that they foster relation among the member states. The organization is out to maintain

and enhance economic stability in the region by ensuring that the trading potential is enhanced.

The organization has to ensure that integration policies that have been put in place are there to

increase the economic status of the region despite of the prevailing condition of each country.

Intergovernmental Authority for Development (IGAD)

The organization was formed in 1996 to take over Intergovernmental Authority on

Drought and Development (IGADD). This was due to the drought that reigned in the Eastern

Africa region between 1974 and 1984. It caused a lot of hunger, famine, degradation of the

ecology and economic strain. Therefore, they had to form an organization to help fight this

famine. However, the magnitude of the drought was so big to cope with s they used the

organization to get helping from the international community.

IGAD vision

To be a premier regional organization, to achieve peace, prosperity and regional integration.


IGAD mission

Its mission is to complement member states efforts to achieve the following through cooperation.

• Economic cooperation

• Promotion and maintenance of peace, security and prosperity of the member states

• Enhance economic cooperation and integration.

IGAD objectives

The organization has various objectives. The organization is out to develop strategies

and gradually harmonizing macroeconomics policies and programs in the social setting and the

technological fields. They are advocating to harmonize policies to favor the trade of the region,

ensure that the customs within the region are favorable. They are at the verge to also straighten

communication and transport systems within the region, increase agricultural practice by

ensuring that market is available for the products, ensuring that the natural resources are

maintained by coming up with appropriate policies to cater for that and promote free movement

of the people within the region, services and goods.

The organization is ensuring that they enable the foreigners who trade across the border

has a good environment as they do their business. They ensure that they advocate domestic

investment to enhance firm business in the region. They are also ensuring that they improve the

infrastructure in the region to improve the way the business is to be done in the region. They

have started project that will initiate food security in the region to ensure that they sustain

development of the region.

To enhance the unity of the community of the region, there are out to enhance peaceful

coexistence within the region and stability. This has been possible by the mechanisms that they

have come up with to ensure that they create a good and peaceful trading region where the


investors are attracted to come and do the business without interferences of insecurity. They have

also initiated programs that are able to mobilize resources that are able to implement emergency

in short, medium and long term framework for the regional cooperation. They are also in their

way to ensure that they meet COMESA and EAC objectives. Finally, the organization is out to

ensure that they promote the cooperation in research to development and application of science

and technology.

Southern African Development Co-ordination conference (SADCC)

The organization was formed in 1980 by head of states of nine countries from southern part of

Africa. This organization was formed through constant consultation of the member states at

around 1970. The leaders of the member countries realized that they are not able to raise the

people’s living standards by being democratic countries, but they need to unite work together to

ensure that they accomplish their objectives (Europa Publications Limited (2003).

SADCC objectives

The organization is out to achieve development in the member countries as well as

economic growth. They work in line with alleviating poverty in the region and therefore

enhancing the living standard of the region by supporting the disadvantaged group in the member

states. They are also out to ensure that they come up with common political values institutions

and systems. To make the region enjoy peaceful situation and security is also among their main

objectives. SADCC help promote self-sustenance of the member states by ensuring that they

advocate development in each country. The organization is out to ensure that they maximize

productivity in the region through proper utilization of the resources and enhancing employment.

They ensure that the environment is protected in the region and the natural resources. They are

also able to consolidate the culture of the whole region and integrate it to form a cohesive social


and cultural links among the people in the member countries (Europa Publications Limited,

2003).

Arab Maghreb Union

This is an organization brings together countries such as Tunisia, Libya, Mauritania,

Algeria and Morocco. It was formed through a treaty that was signed in 1989. The organization

has been dormant for some time but it is underway to make revival come back (African union,

1999).

Countries that are Arab Maghreb Union members

Objectives

The organization main objective is to make strong ties between the member states to

ensure that they create stability in the region to ensure that they can trade with ease. They have

put in place several policies to ensure that this happens. There are out to ensure that there are free

movement of goods within the region and ensuring that they have fair domestic strategy for all

the member countries. They have also provided a provision whereby, the countries in Africa will

unite at a later stage.


Chapter Three

Methodology

Introduction

This chapter describes in details the research methodology, the manner with which the

study was carried out. In addition the issue of qualitative and quantitative methods employed in

the study is brought out clearly, the entire mechanisms used to indentify the sample, mechanisms

of data collection, analysis and finally interpretation of the results and ethical consideration. The

study sought to explain the importance of regional grouping in Africa’s economic development

Secondary and primary sources of data aided in collecting the required data. Both

qualitative research methodology and quantitative methodology were used in carrying out this

research. This provided me with an opportunity to come up with suitable information that is

relevant, authentic and factual. Data was analyzed and presented descriptively by use of graphs

charts and tables where appropriate

Research questions that guided the study

1. What is regional grouping in Africa’s economic development?

2. Are regional groups the best way to foster African trade?

3. Can African counties do trade on their self without grouping?

4. What is the relevance of regional grouping in African economic development?

5. What are the advantages of regional grouping as far as African economic development is

concerned?

6. What are the disadvantages of regional grouping as far as African economic development

is concerned?


7. What are the challenges facing the regional groupings in the quest to attained economic

growth and sustainable development?

8. What can be done to avert the challenges facing African economic groupings/blocs?

Research Design

The research employed a mixed methodology. Theoretical research approach in which

the goal is to prove/disprove a hypothesized truth or proposed future research plans that may be

carried out in the future but not at the current moment. The choice of this method was as a result

of its cheapness. It is important to note that theoretical study calls for deeper digging of various

literatures ranging from journals, publications, books, other forms of literature and from the

internet. What this implies is that most of the data required will be collected by perusing through

secondary sources of data as compared to primary sources (Beiske, 2002).

Qualitative research is also employed in the study; the approach seeks to contextualize

the research by immersing the researcher into the study scenario as well as with the study

subjects. Hypotheses are developed and data is collected and the results tend to be subjective. A

case study as a sub type of qualitative research is used to ensure that the study is flexible enough

to give the researcher room to investigate issues that were not previously thought of and could be

worth being brought to light. It is worth noting that case study stimulate additional research or

identification of new phenomena. Additionally, it offers the chance to substantiate, challenge or

contradict some existing facts, opinions or ideas. However, according to Saunders, M. et al. 2007

case study does have a number of limitations. These include biasness since the researcher is

involved in the study due top his own feelings or value of systems. In cases where information

relied is not documented but in human memory, the finding might not be authentic.


Data collection methods

The data required to fully address all the objectives and research questions will be

obtained through perusal of secondary as well as primary data sources. It is worth mentioning

that before I embarked on collecting the required and necessary data I first sought permission

from the relevant authorities.

Primary source

To supplement the secondary tools of collecting data, interviews were also used. This

was chosen because when the research will be done, as a researcher I was be able to have direct

contacts with the interviewee and obtain first hand information. Both the interviewer and the

interviewee were able to clarify on issues of the research done hence, being able to obtain

information which is well elaborated and authentic (Beiske, 2002). It is also a flexible data

collection tool as when questions when not well grasped by the interviewee I will be in a position

to rephrase and elaborate them. Interview will allow me to learn about things and facts that

cannot be observed directly and finally it adds internal viewpoints to outward behaviors.

Despite the advantage mentioned, according to Cohen & Manion, (1996) it’s a slow

method because the process calls for interview of one person at a time, cannot fully trace events

and trends that occurred in the past concerning traditional, e-learning and blended learning.

Additionally, interview is an expensive tool to use; it is also subject to respondent and

interviewer bias.

Secondary source

Materials from the library, internet and related research reports were used to provide the

required data and information concerning the importance of regional grouping in Africa’s

economic development. Internal sources to be sort after as the study is being carried include


information compiled by the respective regional groupings such as COMESA, ECOWAS, and

SADC among others. External data sources included information from the government sources,

previous research studies and academic institution (colleges and universities material related to

African economic grouping for economic development.

Ethical consideration

Some of the ethical consideration includes the following; the targeted sample

populations that will be involved in the study to provide relevant information are to be

informed about the same in advance. The reasons for carrying out the survey as well as how

they stand to gain from the study will also be brought out clearly.

Additionally, research ethics demands that the information be sought after by the

researcher will be provided in good faith, and voluntarily without any influence be it

monetary or otherwise for instance giving of incentives, rewards, and gifts. It is important to

note here that the rights and welfare of the participants involved in the study is protected and

guaranteed. To do this, their identities will be kept confidential. Additionally, the information

collected while soliciting for data is to be kept confidential and opt not to be used in any

other purpose apart from what was initially intended for. It is expected that the

interviewees/respondents will be ethical and provide accurate information to the best of their

knowledge. This means that they should not knowingly give false full information.

More importantly, I opt to be ethical in providing the participant especially the

respondent’s guidelines and necessary information that are correct. Similarly, I should not be

judgmental on the information am provided with during the course of interview and should

be as neutral as possible during the entire process. Lastly, there is need to omit any kind of


personal bias that might arise; this will be done at the end of the study. This is with the

knowledge that such bias can negatively impact on the statistical analysis.


Chapter Four

Results and discussions

Regional Economic Communities in Africa

The research established that all African countries are a member of one or more REC.

There are as many as fourteen RECs in Africa and they fall in five major regions; West Africa

(UEMOA, MRU, ECOWAS), Central Africa (ECCAS, CEMAC, CEPGL), Eastern and Southern

African have six RECs (COMESA, EAC, IGAD, IOC, SADC, SACU), North Africa (UMA,

CEN-SAD) (Coulibaly & Fontagné, 2005) .

Statistics have it that out of fifty three countries in Africa, twenty seven are members of

two RECs; eighteen are members of three while only one country is a member to four. It is only

seven countries that are a member to only members of one REC. indeed there are reasons for

countries resorting to be a member of more than one bloc. Being a member of two or more RECs

helps such a member country to pursue their economic development and integration on the basis

of a multiple track approaches (Oyejide et al. 1997). Additionally, it has allowed countries of

larger RECs to progress faster but in a different group and help weak countries to gain benefits

from such groupings.

Importance of REC

To answer the question whether regional grouping are the best way to foster African trade,

it relevance in African economic development and whether African countries can do trade on their

own without being in groups, importance or advantages of RECs are adequately brought out.

It is worth noting from the onset that RECs are usually formed due to what members

expect from such grouping. Free trade has been thought to result to rapid expansion of doing

business between member countries that in turn is expected to catalyze economic growth.


According to Coulibaly & Fontagné, 2005 regionalism has played a major role in

providing a strategic plan from where partnerships can be formulated which ultimately translates

to catalyzed development initiatives as well as various programs in Africa. Despite the fact that

many scholars have discredited RECs in the recent past, there are a number of successes achieved

by such grouping aimed at fostering sustainable economic development. Several regional

groupings have been successful in transforming their economic as well as financial collaboration

efforts making them a power house in dictating as well as motivating the economy of the region

as well as that of the entire continent.

Aside from enhancing trade, RECs has led to improvement of various infrastructural

facilities in members countries. This has made it possible for the citizen within and without the

member countries to enjoy the existence of such facilities especially communication ones for

instance roads, rail among others (Oyejide et al.1997). Similarly, regionalism has reduced the cost

of doing business by the introduction of tariff removal. This translates to members to acquire

goods and services hence a better life.

More importantly Ndulu et al. 2008 suggested that it was previously thought that most of

the African countries carry serious potential risks due to unstable politics hence hindering foreign

investment. Corporation has averted the scenario as when African countries joined hands they

have tremendously made member countries to be stable politically hence encouraging investment.

On the same note, regionalism aimed at fostering economic development has made it possible for

signals to be transmitted to various stakeholders (member states) concerning various opportunities

as well as necessary information pertaining customers preferences on services and goods

produced.


It has been noted through experience that RECs has led to coherence of both policies from

these regions and countries translating to effective utilization of public resource. The pooling of

resources of a given region does ease the entire burden of financing various public goods for

instance infrastructure, water supply among others (Metzger, 2008). Additionally, such an

approach employed by African economic groups in spending public resources makes it possible

for all relevant steps such as implementation of investment in infrastructure as well as trade

measures to be done in a consistent, ordered and coordinated way.

Regionalism in terms of fostering economic development has resulted to expansion of

markets in Africa. One of the attributes of RECs is that there is free movement of goods, services,

people capital. All these in terms of economy has enabled economies of scales, stimulating

various types of investments, improving how competitive businesses are, increasing south to

south trade and more importantly it attract more foreign direct investment (Maylor & Blackmon,

2005).There are very high chances of such regional integration to contribute to a pro-poor growth

as it can integrate labor market and at the same time cut down the barriers against investment for

enterprises institution (World Bank, 2000). It has been argued that regional cooperation is a

stepping stone for developing countries to find themselves a say in the global economy and at

fundamentally helping such countries attain the Millennium Development Goals as well as

enhancing global interdependence.

Another reason that there is need for countries to operate in economic groups is due to the

benefit it brings regarding bargaining power in the global scene of business. The advantages of

such bargaining power of negotiation mean that member countries will always strike for better

deals when negotiating with their counterpart in developed countries. This for instance will make


member countries to sell their products at a fair price unlike when one country tries to market her

products and services (Longo & Sekkat, 2004).

Regional grouping addresses the issue of scale and variety effect which refers to a

situation whereby ineffective and inefficient industries are protected and cushion especially

during the time of import substitution. This lead to maintenance of unsuccessful industries that

instead of contributing the economy of the country, it indeed ate deeper into the economy it opt to

contribute to. The rationale for RECs is that they are in a better position to reduce such protection

which might lead to a rational industry in which resources are reallocated. Similarly larger

markets do have a greater potential of making smaller industries/firms to attain their optimum size

resulting to lowered average cost hence cutting down consumer prices (Ndulu, 2006).

On the side of consumers, regional; economic grouping provide them with a variety to

choose from there by increasing their welfare. On the same note, healthy competition as a result

of larger market might tremendously bring down product as well as service prices, beneficial to

end-users. Industries having in mind the fact that varied choices in the market are key in

satisfying consumers, they will be compelled to utilize the most apposite inputs increasing

productivity hence its growth.

Typical examples of how important can be illustrated by the integration of Kenya,

Tanzania and Uganda forming East African Community. It is a fact that during the colonial

period, various firms not indigenous heavily invested in these countries and Kenya was the hub

due to its better infrastructure as compared to the two other countries. The collapse of the

cooperation brought a number of serious economic consequences; loss of jobs,

disinvestment/relocation of the firm that had invested in the region and reduced export market.

The same case applies to Rwanda, Burundi, as well as parts of Congo when they de-integrated.


The consequences suffered by these countries thus illustrate that no country can successfully do

trade without being in one of the regions economic blocs.

Despite the advantages or importance of RECs in Africa, there are critics who hold

opinion that such grouping indeed can be self defeating. They posit that economic blocs do limit

instead of encouraging global development in terms of trade. They say such blocs raise tariffs as

well as non-tariff walls around them hence cutting down the frequencies of trade flow between

them and other relevant business partners. The results they suggest is that it might lead to

inefficiencies in allocating resources, productivity, work against consumer welfare as a result of

competition

Challenges facing RECs in Africa

It has been acknowledged by those who are in full support of regional economic grouping

that despite the efforts made to propel the initiatives to attain the desired need of economic

development, a number of challenges have been a hindrance. Among these major challenges

facing RECs include; behind-the-border problems, it has been established that it is what really

contribute to low intra-regional as well as global trade. Nonetheless, there are feasible

opportunities to avert this however there is need for further funding and authority.

Lack of project ownership from the grassroots level is another challenge. Most citizens

lack the motivation since they are always left while decision is arrived at. Additionally, the

problems of government playing politics when it comes to the private sector created conflict

between private and public sector (Fajana, 2004).

Other challenges include lack of political will to harmonize regional commitment and the

agreements arrived at, inadequate infrastructure, lack of sufficient skilled human resources,

presence of weak and national institutions, un harmonized economic policies, lack of


complementarily of member states, skewed allocation of resources away from economic related

things, increased probability of conflicts and political instability in most regions scaring investors,

the problem of overlapping and multiplicity in terms of membership and last but not least

inadequate financial resources that funds RECs processes as well as the entire institution (World

Bank, 2000).


Chapter Five

Conclusion and Recommendations

Conclusions

The existing global financial situation as well as how trade is being done does not

in any way give any continent an upper hand. Thus there is need for each continent and for this

matter Africa to look for ways on how it will be better place in doing business regionally and

globally. From the review of the importance of regional economic grouping in Africa, it is

apparent that no single country can successfully engage in trade without being a member of at

least one of the economic bloc. Additionally, the fourteen economic blocs have seen to it that

every African country is a member of at least one of them; there are incidences of multiplicity and

overlapping. Among the importance of RECs is that there is increase bargaining

power, increase global market, improved consumer welfare, productivity, and elimination of

ineffective industries. It has been established that most of the objective of these economic blocs

have not been realized thanks to the various challenges which include mentioning but a few lack

of adequate findings, poor infrastructure, inadequate skilled manpower, lack of political good

will, un harmonized economic policies, high potential of political instability and conflicts,

overlapping and multiplicity in terms of membership among others. Thus it is in my view that

RECs are relevant in fostering African economy in light of the example provided by what

happened in East Africa Community.

Recommendations

Although in my view, RECs is significant for African countries to develop

sustainably in economic terms and cut her self an edge in the global economy, there are number

of things that it opt to addressed, these include;


1. Thoroughly engage in activities that will help it reform her trade policy. There is need for

it to reform her trade policy to match with those of world trade organization. This include

harmonizing even member country policies to be inline with those of other members

2. Foster infrastructural development

3. Enhancing adoption of technology

4. Reforming custom laws as well a other procedures

5. Since funds has been seen as one of the major challenge, there is need to strengthen

financial infrastructure.

6. There is need for member states to actively indulge her citizen so that the entire project

will have grassroots support.

7. There is also need to revisit how resources are allocated to avoid skewed resource

allocation at the expense of economic development

8. More importantly, there is need for African countries to strive and create a stable, and

conflict free zone to attract Foreign Direct Investment

9. Due to the advent of technology innovations, it will be rational for institution of learning

from all levels to upgrade the quality of technical as well as scientific education.


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