Background

The yearning for regional cooperation and economic integration in Africa was born in the United States within the pan-African movement in the 19th Century and has been kept alive ever since among the masses, the elite and the members of the Diaspora. This hope is so compelling that all African leaders have felt obliged to put it heartedly or opportunistically on their political agenda. No wonder then that today, at least 300 entities and bodies are dealing with this issue, although to no avail.
The reasons for the lack of success in building the required institutions in order to achieve the goal of creating a political, economic and monetary union in Africa are multiple. Among these are the following causes :
  1. absence of a strong motivation and a real commitment on the part of the African leadership;
  2. for their own cooperation and union, African rulers signed treaties that they failed to implement. On the other hand, treaties detrimental to the interests of their people have been signed with former colonial powers by most African leaders and duly honoured ;
  3. lack of resources and absence of a proper and unified budgeting system;
  4. use of a global and bureaucratic approach rather than a step-by-step approach to unity;
  5. recycling retired and failed politicians and patronage as a way of renewing human resources.
  6. Projects lending and structural adjustment programmes are country based rather than coordinated at regional and continental levels;
  7. continuous interference in African political and economic matters of former colonial powers determined to perpetuate the international labour division which devotes to Africa the role of supplier of basic products and raw materials;

The reconstruction of Africa needs restructuring the AU and repudiating Africa’s post colonial heritage

A clear departure from the OAU’s previous profile as an exclusively political organisation, a “Club of Head of States”, with the role of the Secretary General reduced to that of a Chief of Protocol is a sine qua non condition, if the AU is to succeed. However, this breakaway with the past should go hand in hand with that of the International community in its treatment of Africa as a continent doomed to be exploited and not developed.
The AU, which is still in its interim period after the official launching at the Durban summit in July 2002, in replacement of the OAU, is a mere reproduction of the institutions of the EU (Assembly, Executive Council, Commission, Parliament, Economic, Social & cultural Council, court of Justice, Financial institutions, etc). This is overlooking the fact that, beside being born from a combination of totally different circumstances, the EU has adopted, since the signing of the Treaty of Rome in 1957, a steady step-by-step approach towards realistic goals in building institutions, which led to landmark results in the areas of customs unions, single market, economic integration, EMS, Monetary Union, membership enlargement, etc. Such a copy carbon approach means that nothing has been learnt from the past and that nothing is being done to avoid the pitfalls that befell precedent experiences.
In my view, the AU as articulated in its present form should be basically viewed as a projection of a new vision for the future, with the strategy to achieve such a vision still to be defined on the drawing board. It should espouse these lines :

Targeted objectives and expected benefits

    1. expanded market and economic possibilities;
    2. increased efficiency and economies of scale;
    3. extended bargaining power;
    4. growing volume of intra-trade, profit, income generation and birth of middle class entrepreneurs ;
    5. better understanding between peoples and readiness to accept diversity and considering it as an asset rather than a source of confrontation ;
    6. greater solidarity and deepening sense of organisation, method, responsibility and respect for order ;
    7. instauration of a durable climate of peace and security;

The demonstration of the AU political credibility

The AU credibility will depend on its ability to deliver peace, economic progress, and better living standard of its population. Fulfilling these conditions will require:
  1. genuine motivation and political commitment from the African leadership and from the International community as well;
  2. well established criteria to hire the staff of the AU based solely on merit, competence, honesty and proven professional tract record ;
  3. involvement of the elite and the masses (Professional associations, Trade unions, NGOs, Civil society, Academics, Students, the members of the Diaspora particularly in the United States, Europe, Brazil, the Caribbean’s, etc.) in formulating policies and strategies. The African integration process will not be possible without the active involvement of the populations. They will be needed to keep the issue of African Union high on the agenda throughout the process. A way to achieve such aim would be to set up AU clubs linked to each other, to all regional groupings and to the centre in Addis Ababa through an intra-net network;
  4. educating the people on the costs and benefits of cooperation and integration which requires partial surrendering of national sovereignty to regional authorities;
  5. restructuring of existing regional groupings involved in regional cooperation and integration in order to give priority to increasing the volume of intra-Regional trade.

A step-by-step approach on institutions building

If it is vain and irresponsible to try to reproduce the European integration process in Africa, it is nonetheless worth drawing from the EU a number of lessons which may be relevant for further progress in Africa’s union. One very important lesson is the necessity to adopt a step-by-step approach on setting up institutions which ought to be articulated around existing regional and continental groupings such as ECOWAS, WAEMU, CAEMC, COMESA, AMU, ADB, ECA, etc..
The least thing that the AU needs is to be transformed into an inefficient club of Head of States, Commissioners, Members of African Parliament squandering scarce resources in useless expensive trips, window dressing meetings and making integration in Africa a purely bureaucratic and governmental matter with another failure as the end result.

The sequencing in building the institutions should take into account that the first overall priority of the AU is to eradicate poverty and to improve the living conditions of the masses.

To that end, the emphasis should be put on the creation of :

  • an “Organisation for Economic Cooperation” with the aim to dismantle quantitative restrictions on intra-African trade ;
  • an “African Payments Union” and “Clearing Houses” to finance intra-regional trade.
  • the establishment of “Compensatory Mechanisms” to mitigate disparities and to avoid out-migration from the less-favoured to the more prosperous areas;
  • a mechanism of “Monetary Cooperation” with an emphasis put on stable exchange rates and improvements in the area of monetary policy coordination and currency convertibility.
It is worth mentioning, in this respect, the particular case of the CFA franc whose existence as a colonial relic, has a nullifying effect on current policies to strengthen WAEMU and CAEMU. Under colonial times, the French colonies in these areas were operating as two distinctive Federation of States and the CFA franc was their common currency. On achieving independence, these countries undertook immediately to dismantle the federal structure in which they were operating and erected trade barriers between them. Paradoxically, they kept the CFA as their common currency and agreed to surrender the management of 65% of their foreign exchange reserves to the French Treasury in exchange for the convertibility of the CFA. France was also given the right of veto whenever the special account in which these funds were kept was overdrawn. Furthermore, since these former French colonies were no longer trading among themselves, the CFA money supply was mostly based on the volume of their trade with France if one excludes transfers from migrant workers, the disbursements from lenders and the turnover of speculative capitals.
Speculations in the franc zone areas have devastating effects on the economies of the former French colonies. Taking advantage of the franc CFA convertibility, the high interest rates practiced in these countries and the low level of inflation due to the drastic structural adjustment programmes of the Bretton Woods institutions, speculators from France packed enormous amount of money in the branches of the French banks of the region in short term placements. These banks use these considerable amount of money to lend, on a short term basis, at prohibitive interest rates, to the States, the economic operators and the members of the elite imported goods: petroleum, equipments, foodstuffs, luxury goods, etc.
As for the speculators, they only need to take their profits to France every three months and to keep repeating endlessly the same operations creating, with the consent of the French Treasury, economic imbalances with devastating effects on the African populations. Capital control is the only answer to these practices. France has made sure to put such measures of capital control but exempting capital flows from France and its former colonies while maintaining these controls among these countries in such a way that the franc CFA issued in the two zones : WAEMU & CAEMC are not exchangeable. It is how saving generated in Africa serve to finance France budget deficits when the concerned African French speaking countries have to borrow and beg for “aid” in order to finance their own deficits.
The political decision to maintain the existence of the franc CFA after the period of independence rather dismantling it the way the currency board was dismantled in the former English colonies, suited France and the governing African francophone elite. But it created an unsuitable economic environment for development and was, among other negative elements, a recipe for unabated flight capital and the main reason why these former French colonies remained plagued by appalling poverty worsened by the devaluation of the franc CFA in January 1994. No wonder than that, in spite of their attempt to recreate in reverse the economic and political integration they enjoyed during colonial times, they have failed. Only a radical overhaul of such an institutionalised exploitation scheme can avoid the implosion of these African societies over time.

Mobilisation of resources

Institutions such the regional Organisations for Economic Cooperation, the African Payments Unions, the regional Clearing Houses and the Compensatory mechanisms have to be strong, independent and well endowed with sufficient and readily available resources to function smoothly. The AU should put itself in the position to borrow in the capital markets at the most favourable conditions.

To achieve such a fate, the AU has to secure a AAA rating to be in the position to raise money in the Capital markets and issue bonds in international and African Stock Exchanges in addition to securing concessionary loans. This will be only possible with the involvement of the UN security council in the building of the AU. The security council might run a reformed scheme based on the Iraq oil sales for food. This time, the UN will earmark part of the export revenues of any given AU Member State for specific and defined programs and budget contributions. A zero tolerance policy must be applied for arrears on contributions.

There will also be for the AU the need to advocate through its publications and auditing a radical change with regard to the abusive use of state funds by the African rulers and elite. Given the derelict state of the finances of its Members States, it is quite revolting to witness the irresponsible attitude of Heads of States travelling in their own private aeroplanes, Ministers and Members of Parliament travelling first class or using a fleet of Mercedes and other expensive cars, addictive consumerism of expensive imported goods, etc. A whole new culture is to be implemented to eliminate these types of behaviour and to give overriding priority to improving the lot of the poor.
The role of the AU should extend to innovative proposals with regard to the involvement of the private sector, the implication of the international community, the resolution of the debt issue, the return of exiled capital, which was estimated by the Financial Times at $135 billion in 1991, including debt repayments, price differential between manufactured and primary goods, repatriated profits, excessive imposed reserves and flight capital. According to UNCTAD, every one dollar of net capital that enters sub-Saharan Africa is matched by a flight of 1.06 dollar out of the region. No wonder than 40% of Africa’s savings serve to finance the budget deficits of the OECD countries.
As for the international community it has to review its subsidising policies that penalise Africa, give greater access to their markets to African exports, stop backing despots and arming warlords. Speculation on African basic products and raw materials that is driving downward their prices for the last four decades must also be dealt with and a mechanism tidying up the prices of African basic products and raw materials to that of industrial goods and services should be put in place.
The permanent violation of international trade rules by the industrialised countries at the expense of the Africans must be reviewed. They impose, through the IMF, the World Bank and the WTO policies, the opening up of the African markets to their subsidised industrial and agricultural products. These dumping practices drive to bankruptcy the farmers and the local entrepreneurs, while institutionalising famine.
There is also a need to revamp the lending programmes of the Bretton Woods institutions and the African Development Bank : projects financing will be left to the private sector, structural adjustment programmes conducted by regional groupings while the World Bank, the IMF, the ADB and other multilateral donors such as the EU and UNDP will provide back up loans coordinated at regional and continental levels rather than granted on country basis.

Africa’s rebuilding is the cure to globalisation woes

Time has come when the western countries must realize that the development of Africa is in their own interest the same way the USA perceived that the reconstruction of post war Europe was in its interest.
The world will have to wake up to the fact that globalisation is a factice world where wealth is illusionary because measured in paper money. The Achilles’ heel of globalisation is in the formation of its money supply. Since the scrapping of the gold standard and fixed exchange rates system in the early 1970s by Richard Nixon, money supply is determined by the volume of credits created to finance state, corporate and private borrowings. In this context of an unlimited amount of liquidity born out of unchecked money supply, prosperity stems from short-term economic activities fuelled by derivative trading, gigantic takeovers, acquisitions and mergers. This economic cycle is not sustainable.
The poor states of the economies of the countries at the forefront of globalisation is a testimony to that. Germany and France, the most prominent economies in Europe are having difficulties meeting their obligations in terms of budget deficits. The Stability and Growth Pact, although an important element in Europe strategy, is now being question by the EU President himself, out of impotence to control the tremors of globalisation. Japan’s economy has been in the doldrums for the last decade in spite of billions of dollars of expansionary measures taken. The economy at the top of the world, the USA, is now running a widening trade and budget deficit. The Bush’s Administration bomb-and-rebuild Keynesian economics in such place as Iraq can provide work for US companies but is no recipe for world-wide expansionary policy. Sooner or later, the world will have to reconstruct in reversing to productive investments. And it is only the reconstruction of Africa that can do the trick.
Prejudice against Africa is one thing, but the costs and benefits for the International community in the rebuilding of Africa should be clearly perceived now, mostly by the Europeans and the Americans so they can provide the financial, technical and military resources, scale down their subsidies, give greater access to their markets to African exports, increase productive investments, solve Africa’s debt problems, stop backing incompetent despots and corrupt leaders and arming warlords, allow subsidies and protectionism to take place in Africa in some key areas during the AU building process for the endeavour to succeed.
This is not doing a favour to the Africans for the West to work along these lines. A healthy world economy depends on that. Tony Blair and Jean Chrétien, respectively Prime minister of Britain and Canada advocated the case to the G8 countries to no avail. It is to be hoped that good sense and pragmatism will end up prevailing to the greatest benefit of humanity. In that respect, it is worth recalling that according to the US Bureau of Economic Analysis (quoted in HSBC’s World Economic Watch, October 11, 2001) the rates of return on foreign direct investment were higher in Africa in 2000 – 19.4 per cent compared with 18.9 per cent in the Middle East, 15.1 per cent in Asia-Pacific, 8.3 per cent in Latin America and 10.9 per cent in Europe. So, even as a “ghetto continent, it is still Africa that yields the highest return on investments.

Work Programme : the AU and NEPAD

While NEPAD had different origins than the AU, efforts are now being made to integrate it as a programme of the AU. NEPAD development strategy is based on neo-liberal politics which require an environment that Africa does not have. Chief among these requirements are : a solid industrial base, high percentage of manufactured goods in external trade, access to the capital markets, transfer of technology and a sizeable amount of foreign direct investments (FDI).
Industrial growth was under 1% in the 1990s (compared with 8% in the 1960s).Transport, insurance and telecommunications costs are the highest in the world which contributes to increase the lack of competitiveness of the Continent. Africa’s share of world trade fell from 3% in 1990 to just over 1%, the total of which being basic products and raw materials and not manufactured goods. Africa has no access neither to technology and know-how nor to international capital markets. Africa attracted only $1.1 billion of direct inflows in 2000 with three countries: Nigeria, Angola and Mozambique receiving the lion’s share of it. The investments were made to finance exploitation of natural resources. In such a context, throwing Africa into the minefields of globalisation without any safeguards whatsoever, is suicidal.
In the face of the backwardness of African’s economic fabrics, what is needed is not a neo-liberal medicine but a rebuilding process based on Keynesian economics. As far as NEPAD is concerned, no one would question the need to involve the private sector in any development process, when properly channelled. The private sector can bring about productive investments in a Continent where investment is in short supply. It can also increase efficiency, provide jobs and good management practices. It is, in that context, that links between the AU and NEPAD can be envisaged in addition to good governance. The AU. must take the lead in scrutinizing all the aspects and implications of NEPAD in order to amend the counterproductive aspects of NEPAD with regard to Africa’s interests, coordinate, monitor and control the interventions of the international community. To that end, the NEPAD secretariat should be under the umbrella of the AU.

AU way of functioning

The owners of the AU are the people of the Member States. African integration cannot progress without the active participation of the African populations and the members of their Diaspora
The AU must be the centre that links them with regard to strategy, policy coordination, harmonisation of macro-economic and sector policies, initiating debates through forums, workshops, teleconferences and other means on the issues that affect their daily
On the Political side, the AU should demonstrate its capacity to be independent from political interference from any individual Member State in order to focus on general welfare and to work for the common interests of all the Members States.
The AU should set the criteria and create a surveillance system for democratic elections. It should treat the end of ethnic slaughtering, nepotism, tribalism as a priority area of action. Suitable control systems should be put in place to stop and correct any failure to meet the set criteria by any means necessary, including suspension of membership or exclusion of culprit countries without exception. Emphasis should be put on quality rather than quantity. As the experience of the EU demonstrates, the smaller, the better in the first phase of consolidation of partial or complete union. This should make it easier to dispense of unworthy members. Success of the core members in delivering economic progress is the best incentive for other countries to follow suit.
Peace keeping should also be part of the AU mandate with a rapid deployment force equipped and trained with the help of the International community providing air cover and other facilities whenever necessary. A pan-African peace keeping army will gain experience, enforce peace, discipline, solidarity, organisation, responsibility and order. It will help to sideline warlords, incompetent despots and corrupt leaders, eradicate tribalism and contribute to political union.

Conclusion

The fortune of nations, companies and individuals in the era of globalisation is an illusory wealth based on a paper standard : the dollar. To insulate themselves from the instability inherent to this form of unbridled capitalism, the holders of great amount of the green notes are the main contenders in the derivative trading which amounts daily to staggering amounts of thousands of billion of dollars. This is a race that cannot be won but which lives in its trail a universe of desolation.
Productive investments in Africa within the framework described previously is more likely to guarantee world economic stability, job creations, actual profit and income generation for decades to come while safeguarding the international economic and monetary order from collapsing. As for Africa, a long overdue rehabilitation and regeneration of the black people will, at long last, take place.

By Sanou MBAYE

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