The Africa Continental Free Trade Area (AfCFTA) signed in March 2018 aims to establish a single market across the continent. This challenge is also an opportunity to extend the provision of regional public goods beyond hard infrastructure. Peace and security, mining, and energy are such examples covered in the Africa Economic Outlook 2019.

Until now, evaluation of the progress of integration across Africa has centered on the eight African Union-recognized Regional Economic Communities—and seven other economic organizations—all primarily aimed at deepening intra-regional trade. But regional integration has always been about more than an exchange of market access and cooperation. At the very least, there is always a need for rail, road, and other means of communication. In its assessment of progress and prospects for the recently signed African Continental Free Trade Area (AfCFTA), the Africa Economic Outlook 2019 concentrates on the progress of cooperation to develop regional public goods. A tally of regional organizations dealing with regional public goods shows that five deal with energy, 15 with the management of rivers and lakes, three with peace and security, and one with the environment.

The key distinctive feature of regional public goods is that, unlike national public goods, no single body with the authority of a state exists to ensure the supply of the good. Since all Regional Economic Communities have more than two members, some collective action is necessary to provide these regional public goods. Governance (implementing shared standards and policy regimes) is the intermediate public good necessary to generate the desired regional public goods: knowledge (education and scientific research), construction and operation of cross-border infrastructure, environment, health, peace, and security.

From an economic perspective, the application of the principle of subsidiarity requires that the scope of the established regional institutions should match the region benefiting from the spillover. This is not an easy task across Africa’s landscape where the benefits of common policies are high because of widespread cross-border physical (i.e., environmental) and policy (air transport, corridors) spillovers. The costs are also high because of policy preference differences across member countries. Common decisionmaking internalizes the spillovers but it moves the common policy away from its preferred national policy (i.e., a loss of national sovereignty). Because of low trust in Africa, but also in other regions, most regional cooperation is intergovernmental. Each state then retains veto power, and the regional organization is a secretariat that coordinates and/or harmonizes policies, sets standards, or provides services. In short, these regional bodies lack real authority over member states to deliver these regional public goods.

The Africa Economic Outlook 2019 gives evidence of growing cooperation in several areas: (i) peace and security; (ii) hard infrastructure (roads, ports, railways, and corridors); (iii) soft infrastructure (logistics markets including regulatory policies for mining and energy). Progress and challenges for peace and security, and soft infrastructure (mining and energy) are summarized here.

Peace and security

As political scientists have argued, the creation of supranational institutions when regional integration is deep reduces international insecurity through dialogue and the exchange of information on military capabilities. Discussions among members spill over to political issues diffusing political disputes that could escalate into political conflicts. Sufficiently deep regional trading arrangements increase the opportunity costs of conflict and reduce information asymmetries as partners know each other better. These two channels reduce the probability of costly conflicts.

Deep regional trade arrangements like customs unions and common markets require more encompassing political institutions than shallow arrangements like free trade areas. Evidence shows that membership in a deep regional trade arrangement reduces the probability of a dispute escalating into war, giving direct support to the often-mentioned objective of peace in Regional Economic Communities (e.g., Economic Community of West African States and East African Community). Viewed in this light, the costs associated with negotiating the deep African regional trade arrangements (Southern African Customs Union, Central African Economic and Monetary Community, and West African Economic and Monetary Union) have been borne by colonizers. Increased trade among members then raised the opportunity cost of future wars among members by increasing their interdependence.

Source: Brookings

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.