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Regional Integration in Africa
Statement by Alassane D. Ouattara,
An Important Step Toward Global Integration
Deputy Managing Director, International Monetary Fund
at the First Conference of Ministers of Economy and Finance
of French-Speaking Countries (Francophone)
Monaco, April 14, 1999
It is a great pleasure for me to participate in the first Conference of Ministers of Economy and
Finance of French-speaking countries, and to address such a distinguished audience. I shall take
this opportunity to share with you some thoughts on the importance of regional integration as an
intermediate step toward the integration of developing countries into the world economy. In this
connection, I believe that French-speaking Africa's experience with regional integration has been
very encouraging, has taught us much, and could serve as an example for other countries wishing
to take the same route.
After two decades of uneven performance, Africa's economic situation has improved during
the past four years, and the outlook is increasingly bright. What is even more remarkable is that
this progress is attributable primarily to domestic adjustment efforts, rather than to exogenous
factors. These efforts have featured the implementation of appropriate structural and
macroeconomic policies designed to improve economic efficiency and create the conditions for
greater integration into the world economy. Such policies can justify the optimistic view of what
is now being called the beginning of an "African renaissance." However, this
statement needs to be tempered by the risks posed by Africa's many internal conflicts, which call
for decisive action at the regional and international levels.
Having said this, we must acknowledge that Africa still has a long way to go to regain the
ground lost during the 1980s. Growth rates are not yet high enough to bring about a substantial
reduction in the widespread poverty, and African economies are still fragile and therefore
vulnerable to domestic and external shocks. While it is true that the slow pace of their integration
into the world economy has sheltered most African economies from the most violent effects of the
recent financial crises, the reverse of the coin is that Africa is not able to reap the full benefits of
globalization—a process that could increase the resources available for the productive
investment that Africa needs so badly. With its low rates of domestic saving, endemic poverty,
still-excessive dependence on commodities, and lack of market openness and liberalization, Africa
risks being marginalized from the rest of the world.
I would like to focus on two propositions today. The first is that developing countries really
have no choice—they must integrate into world markets if they wish to succeed. Second, for
most of these countries, regional integration can facilitate integration into the world economy.
The success of the European Union since the 1950s attests to the advantages of regional
integration. However, the same can be said for French-speaking African countries, which have
long cooperated in economic and monetary policy.
- Therefore, my first proposition is that developing countries cannot escape
globalization, and they should not try to avoid it.
For most of the past three decades, East Asia has demonstrated the advantages of an
outward-looking, liberalized economy. However, the Asian crisis and its spillover into Russia and
other emerging markets have overshadowed the advantages of globalization, shifting the focus of
the discussion to the risks inherent in an increasingly integrated world economy. Leaders of
countries that are not yet fully integrated into the world economy may rightly question whether it
is in their best interests to further expose their countries to the risks faced by the Asian
economies. Is globalization really good for small countries, and if so, under what conditions?
The Asian crisis has shown, first and forcefully, that economic openness is not enough. Sound
macroeconomic policies, unfailing transparency, a stable and rational regulatory and incentive
framework, robust financial systems accompanied by effective supervision mechanisms, and good
governance in the public and private sectors are also required to take full advantage of
globalization and to prevent the crises that struck several emerging countries.
This leads me to my second proposition:
- Regional cooperation can serve as a vehicle for nondiscriminatory liberalization
of multilateral trade and integration into the globalized economy.
If properly conceived, regional integration offers many advantages for developing countries.
First, closer trading links between these countries would strengthen their capacity to participate in
world trade. Regional integration would enable many countries to overcome the obstacles
represented by their relatively small domestic markets, by enabling producers to realize greater
economies of scale and benefit from the establishment of regional infrastructures. A regional
approach in key structural areas—such as tariff reduction and harmonization, legal and
regulatory reform, payment systems rationalization, financial sector reorganization, investment
incentive and tax system harmonization, and labor market reform—enables participating
countries to pool their resources and avail themselves of regional institutional and human
resources, in order to attain a level of technical and administrative competence that would not be
possible on an individual basis. The regional approach also allows countries to assert their
interests from a stronger and more confident position in the international arena.
Furthermore, the conditions and obligations associated with participation in an ambitious
reform program within a regional organization also facilitate the work of the domestic authorities
in implementing politically difficult measures, such as lowering tariffs or instituting wide-ranging
reforms of the regulatory and judicial systems. In addition, regional surveillance and the dialogue
between the various partners help reduce the risks of macroeconomic slippage, resulting in a more
stable, predictable environment—clearly an essential factor for the private sector to
What are the conditions for sound regional integration?
The real challenge is to ensure that regional organizations are perceived as effective vehicles
for the integration of developing countries into the world economy, fostering mutual support
among members in their reform efforts. Most importantly, these organizations should not be
perceived as mechanisms for defending certain established interest groups. Rather, they should be
seen as pushing for openness to the rest of the world.
What is needed to achieve these objectives? First, there must be the political will to adhere to
regional integration objectives, and to give them priority over domestic considerations. Second, a
resolute effort must be made to achieve greater institutional and economic policy convergence.
This assumes that countries establish ambitious, but feasible timetables for instituting reforms and
establishing regional institutions, while realistically evaluating the resources required. Third,
strong, efficient regional institutions are required. In fact, such institutions should be authorized to
develop appropriate policies independent of national interests without, however, losing sight of
each member's particular situation. They should also have enough human and material resources
to assist member countries in implementing these policies.
Lessons from regional integration initiatives in French-speaking Africa
Almost all the countries represented here in this great assembly of the French-speaking
countries are associated with some form of regional initiative. However, the CFA zone countries
in particular have been able to transform their economic and monetary cooperation effort into a
powerful driving force for economic policy coordination and integration. Moreover, their support
of the integration effort extends well beyond the "economic" domain, strictly
speaking. These countries are currently putting in place the structures required to achieve their
ultimate objective, which is the creation of a genuine single market. To this end, they have
established regional institutions, in which they have vested responsibility for regional integration
initiatives. I am referring not only to the subregional commissions, but also to the West African
Accounting System (SYSCOA), the Inter-African Conference on Insurance Markets (CIMA), the
Inter-African Conference on Social Security (CIPRES), the two subregional banking
commissions, the subregional stock exchange, and AFRISTAT.
It is true that the single currency (the CFA franc) has been and continues to be the
cornerstone of this integration. Long experience with a monetary policy conducted by a strong
institution that must preserve its independence vis-à-vis national governments has
accustomed these countries to yielding some of their economic policy matters to a regional
organization. Clearly, it will be more difficult for other countries that have not yet taken this step
of close coordination, to achieve similar institutional and policy convergence. Nevertheless, even
if the objective of regional cooperation remains more modest, it would be beneficial for these
countries to undertake an orderly expansion of the areas of responsibility and competence of their
regional organizations, and to strengthen the capacity and independence of these organizations
vis-à-vis national governments.
Another aspect of regional integration in French-speaking Africa that should be emphasized is
the Organization for the Harmonization of Business Law in Africa (OHADA), in which
16 African countries participate. Through this initiative, the leaders recognize the
importance of economic security, protected by an effective judicial framework, for economic
development. In addition to the provisions for harmonizing the legislation, it should be noted that
this initiative attaches great importance to human resources training-a prerequisite for the
institutions to operate effectively.
* * * * *
Clearly, French-speaking African countries—particularly the CFA zone
countries—have already subscribed to regional integration as the driving force for their
integration into the world economy. They must persevere on this path, while ensuring a balanced
distribution of the benefits of integration between maritime and landlocked countries. I would
encourage the French-speaking countries that have yet to make such progress in regional
cooperation to redouble their efforts, using the CFA zone's experience as an
example—integration models worthy of imitation are not found only in Europe and Latin
America! In general, I believe that all countries should engage in consultation, even outside a
formal framework of regional cooperation. Under the leadership and thanks to the energy and
enthusiasm of its Secretary-General, the International Organization of French-Speaking Countries
(la Francophonie) offers a framework in which to deepen this consultation. Despite the differences
in the history, culture, institutions, and experiences of its constituent countries, it represents a
structure for promoting better mutual understanding for the benefit of all its members, and
therefore of all humanity.
IMF EXTERNAL RELATIONS DEPARTMENT