REGIONAL INTEGRATION

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REGIONAL INTEGRATION

• Presentation by Mark D. Tomlinson

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AFRICA VERY LARGE, VERY SMALL

• Africa is larger that the US, Europe, Brazil,
  Australia and Japan combined.
• GDP of 47 economies of sub-Saharan Africa in
  aggregate approximately GDP of Belgium
• Median GDP about 4 billion a modern city
• Basic services to median population of 15million?
• Infrastructure over median land area equivalent
  to France?

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SQUARE MILES POPULATION (2004) Africa 11,715,721
885 million Belgium 11,787 10,4 million
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SQUARE MILES POPULATION (2004) Europe
3,120,066 584 million (excl. Russia)
Mozambique 308,653 19,2 million
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SSA GROWTH RATES

• Growth
• Sub -Saharan Africa 1995-2003 3,3
• SSA in 2003
• 19 countries lt 3 pa
• 14 countries 3-5 pa
• 13 countries gt 5 pa
• SSA in 2004 5.0 Best in 8 yrs!
• But no country will reach MDGs
• MDGs require sustained growth of 7pa. How?

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NEED MORE EXPORT LED GROWTH

• Many countries have not been able to take
  advantage of trade opportunities because of
  supply side constraints throttling
  competitiveness.
• Africas share of global trade continues to
  slide 3 in 1980 about 1.5 today.
• Intra-regional trade lowest for any region,
  average about 10 of GDP
• FDI remains about just 1 global total, with most
  going to South Africa.

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COMPETITIVENESS ISSUES

• Capital inefficiencies in many sectors increases
  to manufacturing costs
• Serious infrastructure deficiencies road and
  rail networks, ports, power systems,
  telecommunications
• Trade facilitation deficiencies trade policy,
  customs regulations and administration, customs
  facilities

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CAPITAL OUTPUT RATIOS

• Country GDP range Period Av.
  Capita Output Ratio
• Thailand 520-609 1963-1966 0.45
• China 440-603 1993-1996 0.32
• Indonesia 500-600 1980-1985 0.28
• SSA 540-590 1990-2003 0.14
• SSA (inc. SA) 560-590 1997-2003 0.18

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MAINSTREAMING REGIONAL INTEGRATION WITHIN THE AAP

• OBJECTIVE
• Strengthen growth, particularly export-led
  growth through incorporating regional approaches
  into national PRS and CAS
• PRIORITIES
• Policy reforms to improve the environment
  for private business, investment and trade
• Infrastructure, facilities and systems to
  sharpen competitiveness and improve
  agricultural production and
• trade facilitation
• Improved service delivery through regional
  approaches.

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MAINSTREAMING REGIONAL APPROACHES IN THE AAP

• PRIORITIES
• Support to selected Regional Economic
  Communities (RECs)
• - assigned key roles for implementation of
  NEPAD
• - main fora for regional policy debate at
  senior level
• - key roles in preparing priority regional
  investments
• Capacity development
• - nationally and in RECs important for
  progress on
• each objective

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REGIONAL APPROACHES GROWTH

• Incorporating regional programs in CAS will aim
  to reinforce support for growth in four areas
• Implementation of customs unions. Harmonized
  regional customs facilities and systems
• Gap-filling in regional infrastructure. Focus on
  trade corridors, regional power systems and
  international telecommunications
• Financial sector development and integration.
  Focus on broadening access to financial services
  and introduction of trade-related instruments
• Agricultural productivity. Regional approaches
  to enhance agricultural research and technology
  development.

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REGIONAL APPROACHES SERVICE DELIVERY

• Main thrust will continue to be through national
  engagements. Regional approaches will complement
  in three areas
• Management of water resources at basin level
  water supply, irrigation, flood control,
  environmental objectives
• Improving outcomes in tertiary education, health
  care through rationalizing facilities regionally
• Combating migratory diseases, malaria, HIV/AIDS,
  tsetse.

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REGIONAL APPROACHES RECs

• For selected RECs, move from support for specific
  TA to program engagements focusing on
  harmonization of main donor support (jointly with
  AfDB.) Focus
• Capacity development of the REC closely aligned
  with near-term capacity needs in view of regional
  deliverables set by member states and
• Strengthening capacity of the REC to select and
  prepare priority regional investments, including
  through establishment of multi-donor sub-regional
  funds.

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REGIONAL APPROACHES CAPACITY DEVELOPMENT

• Improved regional statistics
• Stocktaking of regional analyses
• Identification of capacity development needs
• Identification of roles RECs, ACBF, others
• Capacity building in specific contexts near
• term deliverables and longer term needs.
• Harmonization of approaches
• Funding, implementation and ME.

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REGIONAL PROGRAMS TO DATE

• Existing portfolio of 14 projects, including 3
  GEF
• Total IDA commitment 632 million
• Total disbursed 84.6 million average age 2.5
  years
• Examples West Africa Gas Pipeline, WA Power
  Pool,
• Emergency Locust Program, Regional Trade
  Facilitation,
• Capital Markets Development
• FY05 265 million in six operations
• Strong pipeline (2 billion) for IDA 14 in
  transport, energy,
• water, telecomms, financial sector, human
  development,
• and agriculture
• Strong support from AFR management

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OPERATIONAL PRIORITIES

• STRATEGY
• - Lessons IDA 13 retrospective of regional
  programs (equivalent to CPAR) plus OED review
• - Regional Assistance Strategies (RAS) two in
  FY06 based on existing regional PRS, two in FY07.
  Explicit linkages into and among CAS
• NEW OPERATIONS
• - Strong demand for regional investment
  financing under NEPAD STAP. Build regional
  program to 500m pa. FY06 program 400m plus.
• - Non-lending engagements with RECs focusing on
  harmonization, gap-filling TA
• - Capacity development
• IMPLEMENTATION
• - Partnership approaches
• - Identify best practice. Invest significantly

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Operational Challenges

• Staffing
• Ongoing. FY06 CD16 staffed as full CMU. Senior
  field positions plus Washington staff
• Strategic Approaches
• More effective RECs policy and projects.
  Capacity.
• Additional regional PRS, improved regional PRS
• Outward looking CAS
• Operations
• - Creating best practice lending, non-lending,
  AAA
• Budget
• Regional working comparatively expensive
• - Invest in AAA to strengthen knowledge base for
  capacity development, investment.

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Thank you!
More impact through regional approaches