ECONOMIC INTEGRATION IN AFRICA. Definition of economic integration. Economic integration may be defined as a condition of international trade in which all trade barriers and restrictions are removed. In economic integration, there is perfect capital mobility, complete freedom of establishment of business and an unhindered flow of information and technology.

Countries with common interests come together to form an organization whose major objectives are to remove trade barriers and other obstacles that reduce the free flow of goods and services between them. A good example of economic integration in Africa is the Economic Community of West African States (ECOWAS).

Types of regional economic integration in Africa

 Free trade area: free trade area is the type of integration in which member countries agree to remove all restrictions to trade among them. Tariffs, quotas and bans are not imposed on goods coming from or going to member- nations. There exists a common internal tariff policy among member nations. However, each country is free to have its own tariff policy as regards commodities from countries outside the free trade area.

  •  Common market: Common market also known as Economic Community, is a form of co-operation in which there is a common internal and external tariff policy. There is free mobility of labour and capital between member states. That is, there is free movement of goods, services, capital and labour. A common market harmonises taxation, social and economic policies. A good example of a common market is the European Economic Community (EEC).
  • Economic Union: Economic union is a type of integration which takes the form of total integration of the member countries. It is aimed at harmonizing the social, economic, industrial commercial and technological policies of member nations. Furthermore, it involves the unification of member nations and monetary and fiscal policies. A good example of an Economic union is the Economic Community of West African States (ECOWAS).

  •  Customs Union: Customs union is an agreement among nations to eliminate trade barriers such as tariffs and quotas among themselves or members and to adopt common barriers to imports from a non-member- countries.

Characteristics of customs union under economic integration in Africa

  • Tariffs are abolished.
  •  Each member country is given a free hand to maintain its customs duties and tariffs against non-member countries.
  •  All track restrictions are abolished.
  •  The members may agree on common customs duties and tariffs against any non-member country.

Advantages of Customs Union in Africa

  • It enhances good welfare for the citizen.
  • It improves efficiency and stimulation faster economic development.
  •  It results in lower costs per unit due to internal economies reaped by producing for a large market.
  •  There is a large internal market for members and increased trading activities between member countries.
Disadvantages of Customs Union economic integration in  Africa

There may be possible death of some industries resulting in some degree of frictional unemployment.

There may be a loss of revenue that would have accrued as a result of the abolition of tariffs.

While customs unions can bring some benefits, such as the elimination of tariffs and the promotion of regional trade, there are also several disadvantages associated with customs unions in Africa. Some of these disadvantages include:

Loss of sovereignty: Joining a customs union often requires member countries to surrender a certain degree of sovereignty over their trade policies. This means that individual countries may have less control over their tariff rates, import quotas, and trade agreements, which can limit their ability to pursue their own economic strategies and protect their domestic industries.

Unequal distribution of benefits: Customs unions may not distribute the benefits of regional integration equally among member countries. Larger and more developed countries within the union may have stronger bargaining power and be able to negotiate more favourable terms, leaving smaller and less developed countries at a disadvantage. This can exacerbate existing economic disparities and hinder the economic growth of less developed nations.

Limited market access: While customs unions aim to promote regional trade, they can also restrict market access to countries outside the union. This can disadvantage countries that rely on trade with non-member countries or have established strong economic ties with countries outside the union. It can limit their ability to diversify their trade relationships and access new markets, thereby hindering their economic growth and development.

Dependency on larger economies: Smaller economies within a customs union may become overly reliant on larger economies. This dependence can arise due to factors such as the concentration of production capacities and the market dominance of larger countries. As a result, smaller economies may face challenges in diversifying their trade and developing their own industries, leading to potential economic vulnerabilities.

Limited policy flexibility: Customs unions often require member countries to adopt common external tariffs and trade regulations. This can limit the flexibility of individual countries to respond to changing economic conditions, such as fluctuations in global markets or the need to protect specific industries. The lack of policy flexibility may hinder countries\’ ability to implement tailored trade policies that address their unique economic challenges and opportunities.

Trade diversion: Customs unions can lead to trade diversion, which occurs when member countries shift their trade away from more efficient external suppliers towards less efficient suppliers within the union. If countries are forced to trade with less competitive partners within the customs union due to tariff barriers against external suppliers, it can result in inefficient allocation of resources and hinder overall economic efficiency.

Complex decision-making processes: Decision-making within customs unions can be complex and time-consuming. Consensus among member countries is often required for important trade-related decisions, which can lead to delays and inefficiencies in decision-making processes. This can hinder the ability to quickly respond to changing market conditions or address emerging trade issues.


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