- March 25, 2014
- Posted by: admin
- Category: Current News
Regional integration is increasingly becoming a critical developmental agenda for Africa. Capitalizing from the unity built during the liberation movements and philosophy of building One Africa, regional integration is considered as the way to achieving the continent’s dream.
Contributing towards achieving the above vision for Africa, MEFMI, in collaboration with the International Monetary Fund Institute for Capacity Development (IMF ICD), Southern African Development Community (SADC) and the South Africa Reserve Bank (SARB) conducted a joint course on Economic Issues in Regional Integration from 24 February to 7March 2014. The two-week course was funded by MEFMI and the SADC Committee of Central Bank Governors (SADC-CCBG) Secretariat and resourced by experts from the IMF’s ICD.
The course was intended to enhance participants’ analytical skills on economic issues in regional integration. This focus is in line with the need across Regional Economic Communities (RECs) to strengthen qualitative and quantitative macroeconomic convergence targets. Macroeconomic criteria are used by RECs to determine entry requirements of new members and the readiness to advance from one stage of regional integration to the other.
The training was further meant to update participants on progress realized by Regional Economic Communities (COMESA, EAC, SACU and SADC) with respect to trade integration, economic integration, monetary integration and financial integration. Issues related to the political economy of regional integration were also debated.
The opening ceremony and official closure were graced by Mr. Wim Brits, Assistant Chairperson SADC CCBG, Mr. Marc Quintyn, Chief African Division, IMF ICD and the MEFMI Programme officer and task manager, Mr. Evarist Mgangaluma.
The course covered theories of regional integration, case studies and analysis of macroeconomic indicators. The theory sessions imparted participants with conceptual knowledge on:-
• Stages of regional integration; Free Trade Areas (FTAs), Customs Union (CU), Common Market, Monetary Union and Political Federation;
• Economic issues in regional integration; trade integration, economic integration, monetary integration and financial integration; and
• Regional integration and growth convergence theories.
The case studies exposed participants to success stories and failures on implementation of some regional integration arrangements. These included:-
• The role of France and EU on successful implementation of a single currency (Central Africa Franc) in the CFA zone. The CFA Zone comprises Cameron, Central Africa Republic, Chad, Republic of the Congo, Equatorial Guinea and Gabon. These countries are using single currency which is pegged to Euro. It is one of the success stories in implementing single currency, with France as guarantor;
• SACU is the oldest customs union in Africa but its progress was reported to be sluggish.
• The role of Tripartite Free Trade Agreements (COMESA, EAC and SADC) in addressing the chronic problem of multiple memberships in Africa; and
• Transnational Value Chains as the driver of trade integration and industrial development in Asia.
During the analysis sessions, participants applied various analytical methods including econometric methods (regression analysis, correlations, HP Filter, Band Pass Filter and Augmented Dickey Fuller test), conventional algebra and graphical tools. These methods were simplified in excel spread sheets for easy understanding by participants with weak mathematical background. Further, the tools were used to establish behaviours and interrelationships of various economic variables which are critical in assessing strength and weaknesses of various stages of regional integration. The analysis included:-
• Macroeconomic Convergence indicators – this entailed assessing convergence targets among RECs set on inflation, fiscal deficit to GDP, public debt to GDP, etc. This analysis was intended to establish economic credibility of member states and the likelihood of spill-overs in each REC;
• Measuring business cycle synchronization -. This is a key tool to measure the transmission of shocks across countries in a regional block. A country is more willing to relinquish monetary sovereignty and join a currency union if the other members of the union have business cycles that are highly correlated with its own. Participants further observed that for a country to benefit from regional integration it has to register shrinking output gap overtime;
• Assessing Optimum Currency Area (OCA). This measures the degree of integration required for a regional block to use single currency. To examine this, participants used different methods to measure the magnitude of intra-trade, labour mobility, capital mobility, financial integration, monetary policy transmission mechanisms, business cycle synchronization etc.
It was agreed that going forward, there is need to sustain the arrangement of working together to address capacity gaps in disciplines of a regional nature and mutual interest. This will minimize duplication of efforts and enhance harmonization of training programmes.
With 38 participants, course turnout was relatively high with representation from the SADC region and 12 MEFMI member states. According to SARB, the attendance was on the extreme side compared to their usual limit of 25 participants per event. Female participation accounted for 47%. Officials from the MEFMI region represented 74% of total participation. MEFMI Candidate Fellow on Regional Integration and Trade Policy was also in attendance in line with his Customized Training Programme (CTP).
A majority of the participants were mid-level managers from diverse specialties including fiscal, monetary, international economics, finance, research and regional integration. This mix was expected as regional integration is multidisciplinary by nature.
Three resource persons were on gratis from IMF ICD; Mr. Marc Quintyn, Chief African Division, Mr. Jules Leichter, Senior Economist at the African Division, and Mr. Martin Klein, a consultant and Professor from Martin-Luther University, German. This team had expertise in international economics, trade theories, fiscal and monetary policies, econometrics and other quantitative methods. The experts further brought in experiences from the Financial Cooperation of Central Africa (CFA), EU, ASEAN and West Africa Economic Monetary Union (WAEMU). These made the course enriching and very insightful.
The course employed a combination of lectures, plenary discussions, round table debates, role plays and workshops. More time was allocated to hands-on activities to enhance participants’ comprehension of concepts imparted during lecture sessions