The endpoint of any production, goods or service is the distribution and usage of the output or products. Producers are always concerned about demand for their products, and they have the right to seek buyers anywhere and everywhere. In this world of competition, they engage in both price and non-price competitive tactics and activities to get their products sold or to increase their output. Higher output means lower costs per unit and brings down the selling price to attract more consumers.
One of the basic objectives of regional integration is to promote trade among contiguous economies and derive the benefits of large-scale production through the bigger market that such integration achieves. There are different levels of integration, starting from a free trade area, the simplest of them. There is also the preferential trade area, customs union, single market, economic union, and monetary union, and the highest is the monetary and economic union, which is all-encompassing, involving the soul and heart of member countries.
The francophone African Union Douaniere et Economique de l’Afrique Centrale and the Union Economique et Monétaire Ouest Africaine are the oldest complete regional integration in the world. The European Union also represents a complete union after transforming from the European Monetary Union in 1993 in Maastricht, Netherlands. Each of these unions has a central bank for the member countries and uses a single currency, which makes transactions seamless.
Africa has many regional economic communities with many countries belonging to more than one REC and sometimes with divided interest, commitment, or loyalty. Eight of these communities stand out. They are AMU, CEN-SAD, COMESA, EAC, ECCAS, ECOWAS, IGAD, and SADC. Some members of COMESA also belong to ECCAS, and within ECOWAS, we have UEMOA, which, until its recent disintegration by coup d’etat, was more loyal to the latter than the former. That is a story for another time. Suffice it to state that these RECs were established at different times but have fostering intra-trade as one of the basic aims.
In Africa, regional trade places more emphasis on agricultural business or the buying and selling of primary products, but this should not be so. Also, in the quest for looking for United States dollars and other key currencies, African countries prefer to trade with non-continent members who will pay the foreign currency required to transact other international businesses. These have continuously limited the intra-African trade and the consequent loss of advantages of economic integration.
The intra-African trade in the first half of 2024, according to the World Trade Organisation, rose from 11 per cent to 12 per cent, reaching US$192bn. Intra-African trade means all transactions involving goods and services that take place between and among African countries, their institutions, and individuals within the African regions in a particular period. The highest intra-African trade in recent times was put at 16 per cent in 2023. Intra-EU trade on average in the last 10 years has been between 60 per cent and 65 per cent, with variation as high as 80 per cent between and among some member countries.
Records from Epthinktank and WTO show that in 2023, intra-EU exports in goods were worth €4,126bn, intra-EU exports in services were worth €1,348bn, and intra-EU investments were worth €8,163bn. EU trade balance showed a surplus of €7.4bn in goods with the rest of the world in April 2025. For the 10 member states of the Association of Southeast Asian Nations, the intra-ASEAN trade was recorded as 24 per cent or US$543.7bn from the grand total of ASEAN trade. There is also high intra-regional trade among members of the North American Free Trade Agreement, comprising Canada, Mexico, and the United States. The NAFTA is dominated by the United States, but the objective actually is to make goods produced in the member countries easily available to the consumers in the US, giving them a variety of products and services.
Africa’s trade balance with the rest of the world has always been negative. Its contributions to the global merchandise trade in 2023 were 2.7 per cent. Africa export data shows that the total value of goods exported by Africa to the rest of the world in 2023 was $614.58 billion, while the imports for the same period were $699.36. So, the trade balance with the rest of the world has always been unfavourable and the intra-trade is also low! Information shows that export trade in most African countries is dominated by one or two primary products. Petroleum and petroleum products dominate in countries like Libya, Nigeria, Algeria, Gabon, Egypt, Angola, and the Democratic Republic of Congo, while Mauritania and Liberia have iron ore, copper in Zambia and the DR Congo, and coffee in Kenya.
The existence of multiple regional trade agreements and the African Continental Free Trade Area has not contributed to improving intra-regional trade. The daunting but surmountable factors responsible for this include infrastructural deficit, trade barriers, limited product complementarity or competition for product space, problems with the payment system, lack of an anchor currency, and a low level of economic diversification and industrialisation.
The regional communities on other continents differ from those in Africa in terms of products and services. They include highly industrialised members, and their economies are diversified. This is what is lacking in the African arrangement. Most member countries in a union have the same characteristics of production and products that are largely raw materials from agriculture and the extractive industry. In economic well-being, there is a low level of income, high unemployment rates, low productivity arising from poor health status, low literacy level, and low wages. Invariably, there is weak demand, and and low savings, culminating in low investments. Sometimes, there is a high tax on exports, including high tariffs, when the government is desperately looking for revenue.
It is noteworthy that African countries also want to benefit from regional economic integration, like countries in other regions around the world. That is why they join many such RECs. They must recognise the factors that militate against the benefits and tackle them for positive results. Countries within a regional economic community need to avoid competition in the same market but promote specialisation by country. Some of the countries must deliberately promote industrialisation with inputs based on available agricultural products and/or mineral resources available in member countries. They must remove tax on exports to promote exports.
The African Development Bank and the African Export-Import Bank need to work out a continent-wide payment system that may involve an anchor currency, adopted from one of the existing strong currencies on the continent or a newly adapted and backed by a specially devoted fund. Such a currency can be adopted as the trade currency for both internal and external transactions to give it strength. This adoption will ease and reduce stress in the search for forex to import goods by individual countries, in addition to promoting intra-regional trade.
The credits from AFRIEXIM Bank should be devoted more to promoting the production of export goods and services. This is in terms of financing agricultural and industrial goods meant for intra-regional and external trade. The ADB could also devote special funds for this purpose, but more to financing regional development projects and programmes, including research into fostering international trade and finance in collaboration with the United Nations Economic Commission for Africa in Addis Ababa.
There are a lot of untapped natural resources in Africa, which governments recognise but do not give due recognition and attention to developing. Records show that Africa is rich in untapped arable land, water, oil, natural gas, minerals, forests, and wildlife. Exploiting these resources will encourage intra-African trade and enhance the quality of life in most countries. Even where REC had been established to manage and derive the benefits of the resources, like in the case of the Chad Basin, political differences and ideologies have prevented active implementation of the policies already put in place.
The issue of lifting Africans out of poverty is imperative, and human capital development is at the heart of the project. Education and skill development should be re-emphasised and operationalised with a timeline. Mass education across the continent will, in another decade or so, put Africans in control of exploiting their natural resources rather than relying on foreigners whose agenda borders on exploitation without restoration. As ECOWAS reviews its free trade arrangements and agreements currently, the issues raised here should be part of the agenda.
