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OAU Says Integration Is Only Road To Competitiveness

PANA, 3 March 1999

DAKAR, Senegal (PANA) - African is made up of small country markets which can only weather the onlslaught of international competition through integration, the Organisation of African Unity said in Dakar Wednesday.

Speaking at a forum on the Future Competitiveness of African Economies, the organisation's assistant secreatary-general, Vijay Makhan, said ongoing globalisation has made regional integration an urgent imperative.

<African specificities as small country markets, the extreme balkanisation of the continent, extensive common borders, the high incidence of land-locked states, few navigable rivers into the interior, and an underdeveloped infrastrucuture combine to make regional integration an inevitable appointment with our destiny,< he said.

The three-day meeting, being attended by more than 300 ranking government officials, economists and academicians, is organised by the Senegalese government and the African Futures unit of the UN Development Programme in collaboration with a host of multilateral agencies.

The Forum hopes to devise modalities for improving African economies to make them become competitive on the market.

Makhan, who is heading the secretariat of the African Economic Community in Addis Ababa, said to achieve this, regional integration must not only be an essential part of the strategy of industrialisation but also of enhancing competitiveness in the context of globalisation.

He said the dynamics of globalisation, including ongoing liberalisation of national economies, the revolution in information technology and increasing flow of capital, goods and services across borders, have been widely felt in Africa.

<In particular, the far-reaching technological developments associated with globalisation have exposed the limitations of our commodity dependent economies,< he added. <The ongoing dematerialisation of production as well as the bleak long-term outlook for commodities suggests a need for us in Africa to take a hard and realistic look at our future competitiveness in the new global world ecoomy.<

Another reason why Africa must take globalisation seriourly, he said, is the fast decline of its share of global trade in recent years.

Makhan said between 1980 and 1997, Africa's contribution to world trade declined from 2.3 percent to 1.4 percent. Its share of world exports also fell to below 2 percent.

To further demonstrate the level to which African economies had declined, he cited the case in 1996 where the Republic of Korea exported goods worth 130 billion US dollars, a figure that was far higher than the 116 billion dollars aggregate exports for all Africa in the same year.

The rate of investment in the GDP of African countries has also dropped from an average of 26 percent during the 1970s to below 20 percent in the 1980s and then to 16 percent in the first half of the 1990s.

Africa attracts the lowest share of Foreign Direct Investment presently hovering around 3 percent of global flows, Makhan said, adding that the 4.7 billion FDI Africa received in 1997 was about the same as what Malaysia alone attracted that same year.

<Indeed, the failure to address comprehensively this declining trend in investment must rank high among the shortcomings of the structural adjustment programmes which our countries have implemented for nearly two decades now,< he said.

The integration of African economies, beginning with sub-regional groupings and culminating in an African Economic Community later in the coming century, is one of the four themes on the agenda of the Forum.

Others are the macro-economic setting, governance, parameters for competitiveness and external influences that affect the competitiveness of enterprises.