IMPLICATIONS OF OVERLAPPING MEMBERSHIP ON THE EXPECTED GAINS
FROM ACCELERATED PROGRAM FOR
ECONOMIC INTEGRATION (APEI)
ABSTRACT
In September 2012, five like-minded and reform oriented countries namely Malawi, Mauritius,
Mozambique, Seychelles and Zambia decided to launch the Accelerated Program for economic
Integration (APEI) in order to speed up integration based on the principles of variable geometry
and variable speed. They agreed to accelerate their economic integration process by enhancing
trade in goods and services, harnessing foreign investment, creating greater employment
opportunities and fostering higher economic growth, including the sharpening of their
competitive edge. To that end, a five pillar action matrix identifying priority constraints and a set
of specific actions is set for implementation over a 3-year time frame, starting in May 2013. At
the same time the APEI is under implementation, these five participating countries are also under
a number of regional, multilateral or bilateral trade agreements requiring their full commitment.
Additionally, among the five, there are subsets of countries that are within the same trade
agreements outside the APEI. It is also worth noting that some of the goals of APEI are even
covered in those other trade agreements such as Southern Africa Development Community
(SADC) and Common Market for Eastern and Southern Africa (COMESA) Trade Agreements.
Under a bilateral trade agreement, most of the issues in APEI are also heavily targeted. What
value then is APEI adding? What are the expected gains that these five countries are to reap from
APEI in light of their membership to other trade agreements with similar goals? This paper
attempts to answer these questions by analyzing the gains reaped from existing membership in
other trade agreements and if at all a gap exists that APEI will successfully fill and be recognized
as value-adding.
Table of Contents
INTRODUCTION .......................................................................................................................... 4
OBJECTIVES ................................................................................................................................. 7
ANALYSIS OF GAINS FROM SADC TRADE AGREEMENT ................................................. 8
ANALYSIS OF GAINS FROM COMESA TRADE AGREEMENT ......................................... 11
HOW CAN COUNTRIES IN APEI ENHANCE THEIR GAINS FROM THE PROGRAM? ... 11
CONCLUSION ............................................................................................................................. 13
FURTHER IMPROVEMENTS THE AUTHOR WILL MAKE ON THE PAPER..................... 13
INTRODUCTION
APEI is under the Intra-African Talent Mobility Partnership (TMP) implemented in July 2013 to
facilitate the execution of Pan African Parliament's mandate to enact laws which would allow the
movement of people, goods and services across borders to accelerate economic integration and
trade. The TMP is a voluntary undertaking by some African countries spearheaded by Mauritius
in the Eastern and Southern Africa; and Ghana in the West Africa sub-region. The partnership
seeks to establish "Schengen" and or related type mechanisms from other regions on Talent
mobility and skills development to accelerate economic integration, open borders, common
policies or laws in Africa. The Partnership will support participating countries to address
constraints on intra-African labor mobility and skills development gaps that seriously reduce
Africa's attractiveness as an investment destination and related overall economic growth
performance. The development objectives are to boost growth and competitiveness of companies
with actions to fill needed skills development gaps; and enhance intra-African Talent or Labor
mobility to address skills mismatch across borders. This will involve (a) stocktaking and country
assessments of constraints, critical skills gaps, likely impact on reforms and mitigating measures;
(b) elaboration of the building blocks and the design of Framework Agreement; (c) conducting
series of multi-stakeholder dialogues and exchanges, and (d) preparation, signing and
implementation of Framework Agreement by participating countries.
The objectives of APEI are handled at National level currently using the Matrix of Agreed
Priority Areas for Reforms. Table 1 below summarizes the five main building blocks, priority
constraints to address and objectives of APEI at national level which will later be escalated to
regional level.
Table 1: Matrix of Agreed Priority Areas for Reforms
Building Blocks
Building Block 1.
Improvement of business
regulatory environment
Priority Constraints to
Address
Challenges related to register
business
Objectives
Challenges related to license
business
Streamline licensing system
Access to finance is limited
and expensive
Lower costs and increase
access to finance for firms,
including SMEs, through
improved coverage of credit
information / reference system
Further ease business
registration
Building block 2:
Elimination of barriers to
trade in goods
Building Block 3.Promoting
trade in services
Procedures for paying taxes
and non-tax charges are
opaque, cumbersome and
incoherent
Difficulty to register property
Increase transparency and
simplify procedures
NTM/NTBs hinder imports
and exports in the region
Identify, review and
streamline/ eliminate
NTM/NTBs to minimize
impact on trade while ensuring
policy objectives are achieved
Transport and transit costs are
too high and unpredictable
Harmonize transport standards
and ensure effective
functioning of transit
arrangements
Ensure that standards do not
negatively impact trade
Differences in standards,
equipment and accreditation
of laboratories, and
institutional constraints,
including application/
enforcement hampers regional
trade
Difficulty to obtain business
visas, business/work permits
Problems in acquisition of
immovable property
Countries do not
automatically accept official
documentations related to
opening a business from other
countries
Reduce the number of days,
costs and procedures for
registering property
Facilitate getting business
visas, and ease procedures for
getting business/work permits
for different categories of
services providers.
Increase transparency and ease
conditions related to the
acquisition of immovable
property
Ease administrative
requirements for doing
business by recognizing the
official docs from other
countries
Building block 4.
Improvement in trade
facilitation
High Communication costs
and limited connectivity
Reduce costs and improve
connectivity through reforms
and market opening in the
following priority sectors:
- Transport
- Telecommunication
- Financial services
- Tourism
- Education services
- Professional services
Limited business to business
(B2B) interaction
Facilitate B2B linkages
Cross-border traffic incurs
significant delays at borders
due to lack of coordination
among agencies and lack of
transparency
Reduce border crossing times
and facilitate movement of
goods by improving
collaboration among border
agencies and increase
transparency of regulations
and procedures
High physical inspection rates
at borders and ports increase
delays and costs to operators
Introduce risk management
systems to reduce the share of
consignments that are
physically inspected, including
with scanners, while ensuring
legitimate policy objectives are
achieved.
Improve the functioning of
enquiry points to permit
information on policies and
regulations to flow to
economic operators, and
information/queries/complaints
from operators to flow towards
political decision makers
Structure and strengthen public
private dialogue process and
build capacity within both
public and private sector and
make it more results oriented
Enquiry points on regulations
and procedures are not
functioning well in capitals
and at border crossings
Buildings block 5. Capacity
building and peer to peer
learning
While the TMP is designed to involve all interested African countries, the start-up
implementation support would be provided in the context of APEI and other sub-regional
initiatives such as (a) sub-regional hub initiatives in Eastern and Southern Africa (covering
Rwanda, Kenya, Tanzania and South Africa); and (b) sub regional initiative spearheaded by
Ghana in West Africa (initially targeting countries within the Abidjan-Lagos trade development
corridor, and other interested countries in the sub region).
Much as the members in APEI are expected to gain from the program, they are also engaged in
other regional bodies which they joined in expectation of much more gains in trade. The two big
regional bodies considered in this paper are SADC and COMESA as shown in Figure 1. Will
APEI bring any unique contribution to the participating countries?
Figure 1: Overlapping membership of SADC and COMESA member states
COMESA
Other
countries
not in APEI
Malawi
Zambia
Mauritius
Mozambique
Seychelles
SADC
OBJECTIVES
The main objective of the paper is to examine the expected gain from APEI amidst the existing
trade agreements among the five countries in the program. Alongside this main objective,
specific objectives will be examined and these are:


Investigate the extent to which some of the five participating countries have benefited
from SADC trade agreement and how this affects the expected gains from APEI
Examine the magnitude of benefits obtained from COMESA trade agreement by the
participating countries and implications for expected gains from APEI
ANALYSIS OF GAINS FROM SADC TRADE AGREEMENT
The establishment of SADC 17 August 1992 in Windhoek, Namibia came along with it the shift
in focus from coordination of developmental projects to a more complex task of integrating
economies of member states. Currently SADC is comprised of 15 member states. The member
states include the following:- Botswana, Tanzania, Zambia, Angola, Mozambique, Malawi,
Swaziland, Lesotho, Zimbabwe, Mauritius, South Africa, Madagascar, Seychelles, Democratic
Republic of Congo and Namibia.
It can be noted that all the member states of APEI fall under SADC. It the interest of this paper
to find out how their membership to SADC has benefitted them and the value that APEI may
add.
First, we explore the contribution of SADC to world trade and intra-regional trade. From Table
2, it can be noted that SADC contributes 16.4% in the recent period 2007 to 2011 which is a
decline from the previous period 2001 to 2006 by about 0.3%. The decline was sharper
compared to the period 1996 to 2000 which registered 34.2% of total trade. The share of SADC
in total African trade has been on the decline for the whole period 1996 to 2011. Overlapping
membership of regional economic communities could partly account for this trend. However,
SADC is the highest contributor to trade in the continent compared to other regional bodies for
all the periods. As of 2007 to 2011, the share of SADC was 78.4%.
Table 2: Share of Africa in total trade Share of REC in African trade
RECS
SHARE OF AFRICA IN TOTAL
TRADE
1996–2000 2001–2006 2007–2011
CEN-SAD
COMESA
EAC
ECCAS
ECOWAS
IGAD
SADC
AMU
9.3
16.6
24.0
8.3
13.7
17.3
34.2
4.2
Source: UNCTAD, 2013
10.0
13.5
26.0
7.7
14.7
15.1
16.1
4.0
10.2
13.3
23.1
9.3
14.2
14.3
16.4
5.0
SHARE OF REC IN AFRICAN
TRADE
1996–2000 2001–2006 2007–2011
74.5
30.8
57.6
21.0
76.2
53.4
94.6
67.1
67.7
42.6
49.4
18.7
72.7
48.4
83.6
63.5
64.7
48.6
52.1
19.8
65.5
40.5
78.4
59.5
Migrating from the broader picture, we now focus on the five participating members of APEI. As
already stated, all these countries belong to SADC and we look at the trade patterns among the
five countries. Which among the five are frequent trade partners? Table 3 provides the main
exporting countries for each of the APEI members.
Table 3: Intra-African exports, five main destinations by country, 2011
Country
Five main export destinations in order of importance
Malawi
Zimbabwe, South Africa, Egypt, Kenya, Zambia
Share
in total
exports
78.1
Mauritius
South Africa, Madagascar, Seychelles, Kenya, Rwanda
91.8
Mozambique
South Africa, Zimbabwe, Malawi, Mauritius, Botswana
95.7
Seychelles
Madagascar, Uganda, Mauritius, Zimbabwe, Zambia
95.4
Zambia
South Africa, Dem.Rep. of the Congo, Egypt,
Zimbabwe, Malawi
87.6
Source: UNCTAD, 2013
Of interest in the table is the number of countries in SADC already trading and it is evident that most of
the exporting countries are in SADC. However, only few are in APEI. For instance, each of the countries
Malawi, Mauritius, Zambia has only one APEI member among the main export destinations. While
among main export destinations for Seychelles and Mozambique are two APEI countries.
Turning to the main import destinations, the SADC region also accounts for most of the imports by each
of the countries in APEI. It is also interesting to note that two members of APEI are among the main
import destinations for countries Malawi and Mauritius. However, the other three APEI participating
countries do not import mainly from other APEI members.
Table 4: Intra-African imports, five main destinations by country, 2011
Country
Five main import destinations in order of
importance
Malawi
South Africa, Zambia, United Rep. of Tanzania,
Kenya, Mozambique
South Africa, Kenya, Egypt, Zambia, Mozambique
South Africa, United Rep. of Tanzania, Swaziland,
Namibia, Tunisia
South Africa, Mauritius, Kenya, Swaziland,
Madagascar
South Africa, Dem. Rep. of the Congo, Kenya,
Zimbabwe, United Rep. of Tanzania
Mauritius
Mozambique
Seychelles
Zambia
Share in
total
imports
90.3
84.9
97.4
98.9
97.3
Source: UNCTAD, 2013
The impact of SADC membership on the expected gains from APEI
Despite SADC contributing mainly to the large volume of trade in Africa, it can be noted that
there are gaps in the intraregional trade among most neighboring countries in SADC especially
those in APEI. From Table 3, which shows main export destinations, it can be noted that very
little trade in terms of exports to APEI countries is currently taking place. Thus, once APEI
achieves its main aim of boosting trade between the five participating countries, there should be
substantial shakeup in the export destinations. APEI countries, having enhanced trade within
them, will end up trading large volumes thereby replacing some of the major exporting
destinations given in Table 3.
In Table 5, expected gains in the main export destinations are shown. From the export
perspective, Malawi, Mauritius and Zambia stand to gain more from APEI than the other two
member states who are already exporting to the more APEI participating countries.
Table 5: Expected gains in the main export countries
MALAWI
APEI
COUNTRIES
Malawi
Zambia
Mozambique
Seychelles
Mauritius
MAURITIUS
MOZAMBIQUE
SEYCHELLES ZAMBIA
From the import perspective, Table 6 summarizes the likely gains from APEI based on the
information presented in Table 4.
Table 6: Expected gains in the main import countries
MALAWI
APEI
COUNTRIES
Malawi
MAURITIUS
MOZAMBIQUE
SEYCHELLES ZAMBIA
Zambia
Mozambique
Seychelles
Mauritius
ANALYSIS OF GAINS FROM COMESA TRADE AGREEMENT
COMESA originated as a preferential trade area (PTA) for East and Southern Africa in 1982. It
has 19 members, of which seven (DRC, Madagascar, Malawi, Mauritius, Seychelles, Swaziland,
Zambia, and Zimbabwe) are also members of SADC. The remaining members are: Burundi,
Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Rwanda, Sudan and Uganda.
Thus, except for Mozambique, the rest of the countries in APEI are also COMESA member
states.
Thus, from the COMESA perspective, the APEI member states will benefit from the inclusion of
Mozambique in the group of countries to trade with.
HOW CAN COUNTRIES IN APEI ENHANCE THEIR GAINS FROM THE
PROGRAM?
First, APEI Countries should include Tanzania in the agreement. If not, they should at least make
efforts to hold talks with Tanzania and gain easy transit access through it. Figure 2 shows a map
of APEI countries and how inclusion of Tanzania would enhance trade. The red circle shows the
APEI countries and with Tanzania in the circle, trade between Zambia and Seychelles would be
greatly facilitated.
Figure 2: Map of APEI countries and possibility of including Tanzania
Secondly, the members in APEI would reap more gains through the harmonization and
converging of COMESA and SADC that they eventually merge into one organization as opposed
to remaining separate organizations between which member states with overlapping membership
are compelled to choose. This suggestion is conformity with the ultimate objective by the
African Union (AU) to achieve the African Economic Community (AEC) using regional
economic communities as the building blocks.
Thirdly, if APEI could establish a secretariat where all concerns would be addressed rather than
rotating the position of chairperson at annual meetings. Also, the current arrangement where
countries meet independently at national APEI forums would not yield much gain and would
foster self-interest in reaping from APEI. A secretariat would show more commitment by APEI
participating countries to jointly achieve their sub-regional goals.
CONCLUSION
The paper has discussed how membership of APEI countries in SADC and COMESA would
impact gains from the program. Further, it has suggested how APEI countries can benefit more
from their participation. In line with the main aims of the TMP, the Accelerated Program for
Economic Integration is very promising in as far as easy labour mobility, trade in services and
investment and private sector growth are concerned. The participating countries need to carry out
an analysis of the expected benefits from the program in light of other regional bodies they
participate in as well as how they can increase their gains through the program.
FURTHER IMPROVEMENTS THE AUTHOR WILL MAKE ON THE PAPER
 The author learnt just last week (August 19th, 2013) about the Conference and had to
quickly come up with something to submit. However, further improvements can be made
to the paper and the author, given time and a go ahead, can do the following to the paper:
o Expand the discussion on the impact of SADC and COMESA on gains from
APEI.
o Include other regional bodies that some of the five countries belong to such as
IOC (Mauritius and Seychelles), Bilateral Trade agreements (Malawi and
Mozambique).
o Include a panel regression analysis of the five APEI countries and regress GDP
growth on exports to APEI and other explanatory variables using available data
and from the analysis, explain the impact of an increase in exports to APEI
countries on each country’s GDP Growth.