Gerhard Erasmus, tralac Associate, discusses the reluctance among African nations to address governance challenges and implement the necessary policy reforms in order to further regional integration

Regional integration is a key element of the African strategy to deal with problems of underdevelopment, small markets, a fragmented continent and the absence of economies of scale. The agreements concluded to anchor such inter-state arrangements cover mainly trade in goods; meaning that trade administration focuses primarily on the physical movement of merchandise across borders. The services aspects of cross-border trade are neglected. And there are specific local needs such as the wide-spread extent of informal trading across borders.

This state of affairs calls for specific governance and policy reforms. Effective border procedures and the identification of non-tariff barriers will bring major cost benefits and unlock huge opportunities for cross-border trade in Africa. The costs of trading remain high, which prevents potential exporters from competing in global and regional markets. The cross-border production networks which are a salient feature of development in especially East Asia have yet to materialise in Africa.

Policy makers have started paying more attention to trade-discouraging non-tariff barriers, but why does the overall picture still show little progress? The 2012 World Bank publication De-Fragmenting Africa – Deepening Regional Trade Integration in Goods and Services shows that one aspect needs to be singled out in particular: that trade facilitation measures have become a key instrument to create a better trading environment.

The main messages of this WB study are:

• Effective regional integration is more than simply removing tariffs – it is about addressing on-the-ground constraints that paralyze the daily operations of ordinary producers and traders.

• This calls for regulatory reform and, equally important, for capacity building among the institutions that are charged with enforcing the regulations.

• The integration agenda must cover services as well as goods……services are critical, job-creating inputs into the competitive edge of almost all other activities.

• Simultaneous action is required at both the supra-national and national levels. Regional communities can provide the framework for reform, for example, by bringing together regulators to define harmonised standards or to agree on mutual recognition of the qualification of professionals……. But responsibility for implementation lies with each member country.

African governments are still reluctant to implement the reforms needed to address these issues. They are sensitive about loss of ‘sovereign policy space’ and are not keen to establish supra-national institutions. They are also opposed to relaxing immigration controls. The result is that border control functions have been exercised along traditional lines and not with sufficient emphasis on trade facilitation benefits. This is changing but specific technical and governance issues remain unresolved, despite the fact that the improved border management entails various technical aspects which are not politically sensitive.

The required reforms involve domestic as well as regional dimensions. Regional integration is a continental priority but implementation is compounded by legal and institutional uncertainties and burdens caused by overlapping membership of Regional Economic Communities (RECs). The monitoring of compliance remains a specific challenge.

There are many incremental steps which can be taken and policy reforms which will not require major sacrifices. Many of these reforms can be implemented within the participating states and will in fact bring additional benefits.* Coordination between national border control agencies is an obvious example; it requires a strategy and a plan of action to achieve meaningful reform. In some southern African states up to eleven national agencies are operating, in terms of separate legal frameworks, at a single border post.

Political commitment is needed to initiate change. Closer cooperation will lead to a reallocation of responsibilities which may be resisted by border agencies due to vested interests. To deal with such challenges, continued political will and oversight are necessary.

Internal cooperation should be anchored in a comprehensive legal instrument. It should define procedures, the division of tasks, and responsibilities of the agencies concerned. It should also take into account privacy concerns, data protection laws associated with border controls, exchange of information among the various government agencies, legal relations with adjoining countries, cross-border identity management, and the protection of employees working in foreign countries.** The categories or levels of the officers involved should be defined, while a transparent legal framework on the collection of information, creation of databases and work procedures should form the basis for intra-service cooperation. There should be consultation with relevant stakeholders (governmental and private sector) before new legislation is finalised.

When law reforms about border management are implemented the applicable instruments of the WCO should preferably form the basis for new customs law, customs administration, the powers of customs officers, customs offences and penalties, flow of information and mutual assistance. Specialized disciplines are explained in e.g. the Guidelines for the Development of National Laws for the Collection and Transmission of Customs Information; the Model Bilateral Agreement; and the International Convention on Mutual Administrative Assistance in Customs Matters.

The ultimate goal is trade facilitation and good governance. This should be stated as part of the formal objectives which guide such reforms. The monitoring of implementation and compliance should be provided for. And it is vital to pursue these aims as part of the broader regional integration agendas.

Regional integration schemes will improve and show tangible results. Well-functioning regional markets will attract investment in e.g. agro-processing and new services activities. But this requires that the basic approach to integration itself needs to be looked at. Regional arrangements should target non-tariff barriers, regionally integrated services markets and build the institutions that are necessary to allow small producers and traders to access regional markets. As stated in the WB report cited above:

“The appropriate metric for successful integration is not the extent of tariff preferences but rather reductions in the level of transaction costs that limit the capacity of Africans to move, invest in, and trade goods and services across their borders….This is a different approach to one that proceeds within the straightjacket of specific sequential steps to integration: free trade area, customs union, common market, and economic and monetary union. For example, there are enormous opportunities from trade in services in Africa that are not dependent on a common external tariff being in place. Countries can work to improve trade facilitation at the border and to remove non-tariff barriers with neighbours while free trade agreements are being designed and implemented.”