Recent events, including the COVID-19 pandemic, have shown that more than ever countries around the world are now facing common challenges.
As in the rest of the world, Africa countries have to come up with common solutions for common problems and realizing economic integration seems to be the first step.
At this critical time when collaboration and cooperation is highly needed, Ethiopia should play a leading role in furthering and strengthening economic integration among East African countries.
Such economic integration would also bear fruit in times of common challenges. For instance recently, Djibouti has made 82.5 percent reductions in port tariffs for exports at this critical time for Ethiopia, according to Prime Minister Abiy.
On the other hand, Djibouti is one of the countries, besides Sudan, that received 625 kWh of power Export from Ethiopia within the past eight months of the budget year, according to the Ethiopian Electric Power.
Macroeconomic expert, Dr. Eyob Tesfaye says by following similar economic policy and through expansion of trade and investment, countries can gain comparative advantage out of integrated economic cooperation, he noted.
“Bilateral trade and investment among neighbouring countries minimize transaction cost. Economic integration assists countries to root out trade sanctions or ‘quota’ system between them,” he says.
Dr. Eyob says as a first step country need to give due attention to establishing free trade zone among countries this includes the establishment of customs union, and free trade by minimizing tariff and forming ties with other customs union. This will help to transfer the free trade zone into a single market.
After this, the following steps would be realizing economic unity and putting in place identical fiscal and monetary policy.
The main purpose of economic integration is creating wealth jointly. “If you take Ethiopia, for in instance, its population is now over 100 million. This means, there is a huge market for neighbouring countries which encourages them to increase their productivity, he said.
“On the other hand, Ethiopia is a landlocked country. But, its neighbours have ports. And this is a huge opportunity for Africa to interlink its economic ties with its neighbours and vice versa.”
But, the integration process should be applied step by step as more tasks are required to be done on policies issues. As it is a journey that takes countries to unity, the process should be gradual.
“And the process has to be accepted not only by governments but also by the public at large. Every citizen should get benefit out of the multilateral relations.”
Noting that infrastructural development is imperative to ensure economic integration, Dr. Eyob said that Ethiopia, for instance, has been supplying power to its neighbours and this will bear fruit on both ways.
Dr. Belay Fille, Economist at Civil Service University on his part says many African countries do not trade with each other. Thus, every country needs to start thinking about how to utilize regional institutions such as COMESA, ECOASS, and IGAD etc to foster regional trade.
Instead of competing with one another by producing identical products, African countries have to start thinking about diversifying their products by exploiting their comparative advantages.
The ongoing infrastructural development among countries is essential and should be sustainable. “The visa on arrival is another point that we need consider, it means a lot for tourism development among regional countries,” Dr. Belay said.
Indicating that Africa has untapped resources, Dr. Belay says that infrastructural development has a greater advantage in terms of connecting the continent and increase productivity. In trade, distance matters most.
African investors also need to invest in other [African] countries other than their own and expand their businesses.
Peace and stability is also salient for economic integration and hence, African countries need to give due attention to this issue in their quest to achieve economic integration.
The Ethiopian Herald April 23/2020
BY GIRMACHEW GASHAW
