REGIONAL INTEGRATION: AFRICA
CHALLENGES
OPEC Fund Quarterly: Why is regional integration important? Sérgio Pimenta: Many of the development challenges and opportunities for African countries transcend boundaries. Regional integration helps African countries create jobs and raise living standards by making it easier to trade goods and services and sharing costs to become more efficient. Regional integration means larger markets where economies of scale can be leveraged, and the mobilization of increased competition. Deeper integration within existing sub-regional blocks (e.g. ECOWAS, COMESA, SADC, ECCAS) and between them through the implementation of the African Continental Free Trade Area presents a major opportunity for African countries to enhance long-term growth and lift more than 30 million people out of extreme poverty. This is why regional integration is a priority for Africa and, therefore, a priority for IFC. As of February 2021, about 17 percent of IFC’s total investment portfolio of US$10.2 billion in sub-Saharan Africa was in cross-border projects.
OFQ: Which are the most / least regionally integrated areas of the world, and what are the main obstacles preventing integration? Sérgio Pimenta: Africa continues to be the least economically integrated region of the world, according to the United Nations Conference on Trade and Development (UNCTAD), compared
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OPPORTUNITIES &
Sérgio Pimenta is the International Finance Corporation's (IFC) Vice President for the Middle East & Africa. Via the following interview conducted over email, he explains the importance of regional integration on the African continent.
“
World Bank Group’s Regional Integration and Cooperation Assistance Strategy aims to support Africa to remove some of the obstacles to integration; for example, weak infrastructure. More than half of the continent’s 1.2 billion people lack access to electricity. So we are helping to develop regional, interconnected electricity markets and promoting regional power trade to increase access to reliable and affordable electricity. That, and other measures, such as lowering transport costs, strengthening regional value chains, and integrating financial markets will help advance Africa’s integration.
We are helping to develop regional, interconnected electricity markets and promoting regional
power trade to increase access to reliable and affordable electricity.
Sérgio Pimenta
to regions like Asia and Europe where pre-pandemic trade flows accounted for 67 and 61 percent of GDP respectively, compared to Africa at two percent. The
OFQ: Are some sectors more conducive to regional integration than others? Sérgio Pimenta: Certainly, some sectors offer more leverage than others for development impact. In sub-Saharan Africa, IFC has invested more than US$1.5 billion in regional projects, notably in disruptive technologies, regional infrastructure, manufacturing and agribusiness, and the financial sector. A recent report by IFC and Google estimates that Africa’s internet economy could reach 5.2 percent of the continent’s GDP by 2025, contributing nearly US$180 billion to its economy. We can help African countries tap into this opportunity by improving regional connectivity through shared digital infrastructure. In agribusiness, we can help improve productivity by strengthening regional value chains.
PHOTO: IFC
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