UNDP Chief: A Pathway for Africa

10 May 2011

Opening Remarks by Helen Clark
Administrator of the United Nations Development Programme

Side Event at the Fourth United Nations Conference on the Least Developed Countries
Regional Integration and Human Development: A Pathway for Africa

Istanbul, 10 May 2011

It is a pleasure to welcome participants here this afternoon for a discussion on regional integration and its potential for generating sustained economic growth and sustainable human development in Africa.

The case for African economic integration

The potential of regional integration to deliver higher economic growth is now widely appreciated. Around the world, regional economic communities have generated more trade, and increased incomes and numbers of jobs. By working together, countries have learned how to make the most of the opportunities opened up by integration, and businesses have learned how to compete –enabling them to tap bigger markets. The explosion of industry in many parts of Asia, for example, including in services and agro-industry, has created jobs, reduced poverty, and spurred growth.

The proposed Istanbul Programme of Action identifies regional integration as a pathway for LDCs to “overcome marginalization and effectively integrate into the global economy.”

African countries acknowledge the importance of integration for their region, and indeed it has deep historical roots on the continent. The UN Economic Commission for Africa and the African Union Commission have recently worked to demonstrate how regional integration can increase domestic demand, employment, and economic stability. The significant efforts of the African Union, and the establishment of SADC, COMESA, ECOWAS, and the EAC, reflect an appreciation of regional integration as a critical step to boost Africa’s development and global exports.

The role of integration as a driver of economic progress is important for Africa’s LDCs. While half of Africa’s population lives in LDCs, those countries generate less than one quarter of Africa’s total gross domestic product and trade. Twelve of Africa’s LDCs are land-locked, making international trade in the absence of regional cooperation difficult. Regional integration can also help compensate for the relatively small size of many countries and cities in Africa, helping to grow the size and attractiveness of markets.

Regional Integration and Human Development

UNDP sees the potential for regional integration to benefit LDCs. In the lead up to this conference, we undertook a study to identify the connections between regional integration, economic growth, and human development.

The study was spurred by the insights shared at last year’s MDG Summit and reinforced in UNDP’s 2010 Anniversary Human Development Report, suggesting that while economic growth is essential for development, on its own it is not enough. To reduce extreme poverty, tackle inequality, and accelerate MDG progress overall, growth must reach the poor and their communities. UNDP is focused on promoting inclusive growth for the more equitable outcomes it offers.

The results of our study on regional integration are being released here today, in the report entitled “Regional Integration and Human Development: A Pathway for Africa”.

Building on the work of UNECA, the AU, and others, the Report argues that ambitious and well-designed integration agendas can advance both inclusive growth and human development –enabling African LDCs to accelerate progress towards the Millennium Development Goals.

The Report analyzes various forms which African integration could take, and looks at the experiences of other regions. The findings indicate that African-wide integration, supported by cross-border infrastructure and lower transportation costs, would have real and significant human development gains for all of the sub-regions of Africa. It suggests that the gains would be even higher for LDCs.

The findings point to the importance of broadening our definition of regional economic integration. Liberalizing trade and opening borders is important, but not enough in and of itself. To enable LDCs to take advantage of more open markets, regional integration must include investments in regional infrastructure, the harmonization of regulation, shared policy frameworks, jointly managed natural resources, and increased labour mobility.

The findings also stress the importance of designing integration policies and initiatives so that they explicitly address human development objectives too.

For example, increasing labour mobility across Africa has the potential not only to increase incomes and remittances, but also to empower people, including women and youth, through new opportunities to improve their lives and those of their families. To realize that outcome, the rights of migrants and their families must be fully respected.

In pursuing such benefits and taking forward the regional integration agenda, African countries face a number of challenges. The infrastructure, investments, and institutions which are needed require collective action and sufficient financing. Institutions must have the capacity to manage competing interests and claims in a manner perceived by all to be fair. Overlapping economic communities and other issues also represent challenges.

A pathway to African integration

The Report makes evidence-based recommendations designed to help Africa overcome challenges to integration.

  • The first priorities should be to establish well-functioning regional institutions and to get more investment into infrastructure. Improved national and cross-border transportation, power, water, and communications systems are needed for people to bring their goods and services to the markets where they can get the best returns, and for workers to avail themselves of opportunities.
  • Second, the rules and standards governing trade should be made predictable and transparent, and be harmonized across borders. To increase trade and attract investment, customs reform and modernization and transparent border management are critical.

    Evidence suggests that a one-day time delay in moving goods can reduce, on average, the volume of a country’s trade by approximately one percent.

    UNDP can help, including through its participation in the Enhanced Integrated Framework for Trade-Related Assistance for the LDCs, and through initiatives which strengthen the policy and institutional capacities required for trade. In Lesotho, for example, UNDP has helped to establish a mechanism for the government to share information on business regulation and customs requirements.

  • Third, regional industrial policies could be a way of increasing competitiveness. Integrating economies can help overcome the limitations of small market size and limited economies of scale in many African countries. By pooling labour and other scare capacities, countries could facilitate the development of the skills and technologies needed for new businesses and industries. Regional integration has the potential to accelerate industrialization and diversify local economies, making them more resilient to future crises.

  • Fourth, regional institutions need to ensure that the benefits of integration are widely shared. Tariff revenue losses will most likely be low due to the current low volume of intra-African trade, but international support to bridge that revenue gap would be an important contribution to African integration.

  • Fifth, social protection systems are needed to help populations cope with not only shocks, but also the added risks of more open and competitive markets. Social protection systems can set a minimum level of well-being below which no human being should fall.

  • Sixth, improvements in health and education are needed to build an empowered, resourceful, and productive citizenry. It is people themselves who will ultimately determine the success of regional integration.

  • Seventh, combined efforts, capacities, and resources are needed to make growth and development environmentally sustainable. Regional integration can make it easier for countries to address common environmental threats. It can also facilitate better stewardship of shared natural resources, such as rivers and forests, enabling more people to benefit from these vital resources sustainably into the future.

    UNDP supports such efforts by, for example, strengthening the capacities of communities and governments in over one hundred countries to manage trans-boundary water resources, reach agreement across borders, and establish the legal frameworks and institutions which will entrench co-operation.

  • Eighth, the policies of the international community should support regional integration in Africa. Development partners can help to strengthen the capacities of regional institutions, and work with the private sector to encourage the formation of regional value chains. A development-oriented conclusion to the WTO’s Doha Development Round would complement and build on the benefits of regional integration. Finally, pursuing and implementing more ambitious integration within Africa requires strong political will, committed leadership, and support.

There is much success on which to build. From 2002-2008, LDCs in Africa grew at more than seven percent a year. While growth slowed with the global recession in 2009, it rebounded last year. The 2010 global Human Development Report included six LDCs in the ‘medium human development category’. This outcome was due in part to rising school enrolment and life expectancy.

Progress, therefore, has been made, despite adversity and unforeseen challenges. At UNDP, we are committed to working closely with African LDCs to scale up our support to accelerate MDG progress, including through regional integration.

In the follow up to this Conference, and in support of LDC priorities, all parts of the development community need to take the bold steps necessary to support regional integration. The evidence gathered for UNDP’s Report is intended as a guide to what could be. We know that it will be African capacities which take African integration forward to higher MDG achievement and development generally.