• Political Stability and Security


• Economic Integration


• Governance and the African Peer Review Mechanism


• Future of the African Union

Open to all countries in the African continent, the African Union (AU) is an organization designed to foster political and economic cooperation and development among its member countries. To such ends, it stands ready to address any and all issues relevant to state building, security, and economic development and integration among countries on the African continent. Hence the AU can contribute to factors deemed essential to greater integration of the continent in the world economy. It was officially launched onJuly 9,2002, replacing theOrganization of African Unity (OAU), whose charter was signed onMay 25, 1963, with an originalmembership of 33 countries; theAUhas53members.The headquarters are in Addis Ababa, Ethiopia, although the various organs can be located in other member states; for example, the Pan-African Parliament is in Midrand, South Africa.

Political Stability and Security

In order to advance political stability and security, the AU focuses on conflict resolutionwithin and between states, peer review among the African states to facilitate state building and the democratization process, and building solidarity to increase the leverage exercised by African countries at the international level. Still, the AU has found it difficult to speed up democratic transition in the continent; impediments to this transition include the manipulation of institutions by elites or breakdowns in the democratic political process because of ethnic conflicts or political fragmentation. The AU has also been handicapped in dealing with the resolution of conflicts in which the sources of conflict are deep seated and the combatants well armed.
With few exceptions, the AU has supported the territorial integrity of the African states since independence from colonialism, as well as noninterference in the internal affairs of those states. Enshrined in the Constitutive Act of the AU are the ‘‘condemnation and rejection’’ of ‘‘political assassinations,’’ ‘‘subversive activities,’’ and ‘‘unconstitutional changes of governments.’’ Moreover, the AU has pronounced resolutely in favor of human rights. Thus one of the tenets of the Constitutive Act is the ‘‘right of the union to intervene in aMember State pursuant to a decision of the Assembly in respect of grave circumstances, namely war crimes, genocide and crimes against humanity.’’

Economic Integration

The economic integration program of the AU is contained in the June 1991 Treaty Establishing the African Economic Community (AEC) signed in Abuja, Nigeria. That treaty has been operational since May 1994. The plan contained in the treaty calls for the AEC to reach fruition after a period of 34 to 40 years from 1994. The consequence, among other things, would be a single domesticmarket and a Pan-African Economic andMonetaryUnion, a single AfricanCentral Bank, and a single African Currency. A number of regional economic communities (RECs) operate under the aegis of the AEC, as part of the transition to full, continentwide union, namely, the Arab Maghreb Union (AMU), the Economic Community of the Central African States (ECCAS), the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), and the Economic Community of West African States (ECOWAS).
Progress in economic integration has been hampered by certain political and economic strains, overlapping membership among the RECs, competing subregional groupings within RECs, and a lack of clear commitment to integration among the populations and the political leadership. Political difficulties have included personal animosity among heads of states and governments; ideological differences among leaders; deep-seated disputes such as that over the Western Sahara (independence for a Sahrawi Arab Democratic Republic), in the case of the AMU; and regional conflicts, as in the Great Lakes area for ECCAS. But prospects are improving in these respects: Increasing democratization and acceptance of market solutions to economic problems are reducing ideological differences. Conflicts involving many states simultaneously are diminishing in number and those that remain are being better handled by the AU. Moreover, proponents of integration have been working hard to ensure that institutions and organizations of regional economic communities can function in spite of temporary personal hostilities in high political circles.
There is need to rationalizemembership of RECs by encouraging countries to join only one. Also, subregional organizations with the same goal of economic integration exist. The best example is the East AfricanCommunity (EAC), the threemembers of which are also members of either COMESA or SADC. In addition, the Francophone African countries are apparently happy with their monetary union arrangements. But they have been expanding their cooperation objectives in the direction of general economic integration, despite theirmembership in ECOWAS and ECCAS.
Economic obstacles to integration include (1) fear of a loss of national sovereignty overmacroeconomic policy to some union authority or body; (2) disagreements over the nature and content of protection of local industries through tariffs and nontariff barriers, which reduce certain imports of commodities and services from outside an REC; and (3) concern about unequal distribution of gains and losses of REC membership. The RECs continue to make progress toward resolving these issues.
For instance, a common external tariff is an important objective of the RECs, and the structure of a tariff system has important implications for the protection bestowed on different commodities. If a simple rulewere established, such as equal protection for all commodities, then the determination of tariff rates could be left to technical experts to decide. But to assist infant industry and foster industrial development, African countries want differential protection. Given the economic structure and the state of development of the various countries concerned, different schedules of tariff rates have dissimilar implications for comparative advantage of the countries. Hence, such considerations seriously affect discussions of the detailed tariff schedules to be put into effect.
Many in the continent fear that gains to countries from economic unions will be positively related to the degree of their economic development and/or the size of their domestic economies. The allegedly ‘‘unfair’’ distribution of gains and losses is widely believed to have been at the root of the breakup of the first EAC, where it was felt that Kenya’s industrialization was greatly helped but, in the process, Tanzania’smay have been adversely affected. An attempt to use differential intraunion tariffs designated transfer taxes could not alleviate the problems, at least not to the satisfaction of Tanzania.
In general, many want some kind of internal (intraunion) tariff structure that protects some national domestic production activities from direct competition within an REC. But once the principle is accepted (and applied) that the location of industries among countries should be determined in a world of open competition and free mobility of all factors of production including labor, rather than in an arena of negotiated industrial planning buttressed by restricted mobility of factors, especially labor, the case for transfer taxes becomes weak.
A challenge would still remain as to how to balance such a market-oriented approach to the location of industries with permitting selective intervention of governments for economic development of the countries, as deemed useful by all the countries. The difficulty would be compounded by the need to observe certain macroeconomic constraints set by the union as a whole for example, limits on government budget deficits and on government debt in relation to gross domestic product.
Differences in taxation systems and structures also continue to engender issues of unequal gains and losses. In particular, countries have different reliance on import taxes as sources of government revenue. This fact has slowed down reduction of intraunion tariffs, since a formula to compensate those who will lose tax revenue from large intraunion tariff reductions is not easy to negotiate. Thus countries realize they need to reform their tax systems to lessen their dependence on import taxes if substantial and rapid intraunion tariff reductions are to occur in practice. The attempts of countries to reformtheir tax systems and to move toward greater reliance on income, profits, and value-added taxes should be of help in this regard.
One theme in the integration debate in the African continent is the degree to which African leaders are committed to full economic integration in the foreseeable future. For many of the countries, intraregional trade is very small in relation to extraregional trade, and the countries in each of the regions often produce similar goods. Hence countries sometimes do not feel an urgent need for a common market, given the widespread belief that integration would not yield substantial economic benefits for some time.
Still, every single leader of the countries voices the view that, in time, the benefits of integration will be substantial, as the effective size of domestic markets will greatly enlarge, so that technological economies of scale can be realized and the returns to investment enhanced. Hence it is along these lines that the most fervent proponents of integration have argued their case. Those who prefer a slower pace are content to push now for (1) promotion of greater intraregional trade, employing the instrument of a common external tariff, probably supplemented by some formof transfer tax or taxe de coope´ration regionale, until full labor mobility becomes socially and politically feasible; (2) cooperation in infrastructure and industrial ‘‘regional’’ projects; and (3) some harmonization of policies (especially macroeconomic) as feasible. This could be followed, in the eyes of the gradualists, by some form of monetary union. Only later, when mass support for integration is strong and ideological obstacles are minor, according to this perspective, should full integration be pursued.

Governance and the African Peer Review Mechanism

The AU aims at improving governance in African countries, in a context of enhanced country ownership of policymaking. In 2001, the AU launched theMillenniumPartnership for theAfrican Recovery Program (MAP). It was billed as a pledge by African leaders to take decisive steps to improve governance, reduce poverty, and enhance economic growth of their countries. In particular, it claimed that a new crop of leaders was emerging in Africa committed to democracy and the integration of their countries into the world economy. It called for ‘‘a new relationship’’ with the international community, especially the industrial countries: African countrieswould take charge of their own destiny, and the rest of the international communitywas called on tomake a concerted effort to enhance resource flows to the continent via ‘‘improvements’’ in aid, trade, and debt relationships. Several goals were specified, including most notably achieving a 7 percent average annual growth rate of gross domestic product over the following 15 years.Among the ‘‘policy thrusts’’ to achieve the objectives would be negotiating ‘‘a new partnership’’ with the industrialized countries and multilateral organizations. African ‘‘ownership, leadership, and accountability’’ were thus highlighted as central elements of theMAP. The African peoples were henceforth going to set and direct their agendas and shape their own destinies. This, then, is the idea of the New Partnership for Africa’s Development (NEPAD).
Within the NEPAD framework, the African countries have instituted the African Peer Review Mechanism(APRM). Participating countrieswill do self-assessments, using the services of domestic autonomous bodies and individuals who in turn involve business and civil society groups throughout the countries. The governments will then draw up programs of action to address weaknesses identified in the self-assessments in the areas of political governance, economic governance, corporate governance, and socioeconomic governance. Review teams of African experts will visit the countries to assess the integrity of the self-assessment exercise and make recommendations, including on the action plans of the governments. Future expert teams will visit to review progress in implementing the action plans. Central in this arrangement will be a panel of eminent persons of the continent, overseeing the APRM processes to ensure their integrity and guiding the preparation of the country reports draftedmainly by the experts to be presented to theAfricanPeerReview Forum. This forum comprises heads of state and government of participating countries (the ‘‘peers’’).
If high and transparent standards aremaintained, the APRM can be an effective means of separating those African countries committed to good policies from the rest, because only those countries whose leaders are committed to implementing good policies will want to have their progress continuously reviewed andmade known to the global community. In this respect, the APRM could address a major credibility problem: Africa as a region is considered high-risk for investors, and the credit ratings of countries within the region are adversely affected simply by their being there. The APRM can contribute to separation of African countries into those with good policy environments and thosewithout. In addition, if the reports get widely circulated within the continent, and especially in those countries that have chosen not to participate, the APRM will help provide essential information to potential actors in civil society.
Moreover, if the APRM is to have any effect on NEPAD, and especially influence the aid and debt relationships, it would be important that it become credible among aid donors, who then allow it transparently to influence their aid policies. Those of the international community interested in providing aid to support good policiesmaywant to see evidence that theAPRMis influencing governance in the right direction, for recent research in the social sciences has concluded that good policies emerge exogenously, when countries own such policies and voluntarily adopt them.

Future of the African Union

The AU is poised to have an enhanced, though still limited, role in the world economy in the foreseeable future. Its efforts are bringing peace, political stability, and democratization to African states. Peace and political stability are good for economic growth and democratization improves governance. But good political leadership remains elusive and this ultimately is the route by which the political regime has its greatest influence on economic growth. The AU is not likely to have much influence on political leadership in individual African countries. Economic integration also will proceed more slowly than envisaged by official AU pronouncements. But economic cooperation will accelerate, leading to faster infrastructure development, policy harmonization within the regional economic communities, and more efficient and development- oriented industrial, agricultural, and service projects. Moreover, in arenas such as the International Monetary Fund, the World Bank, and the World Trade Organization, African countries more frequently will speak with one coherent voice under the aegis of the AU. See also Common Market for Eastern and Southern Africa (COMESA); Economic Community of West African States (ECOWAS); European Union; regionalism.