A Solution for Africa: The Coexistence of Regionalism

By Anna Collins
Cornell International Affairs Review
2009, Vol. 2 No. 2 | pg. 2/2 |

The Drawbacks of the External Guarantor Model

Given the risks associated with the narrow pursuit of EU-style regionalism (when globalization is ignored) as well as the narrow pursuit of globalization (when regionalism is ignored), Africa can only harness the benefits of both policies by allowing them to coexist. One possible method of achieving this state of coexistence would be to make the EU external guarantor to regional integration in Africa.

Former South African President Thabo Mbeki and President of the Council of the European Union Nicolas Sarkozy meet at the Inaugural EU-South Africa Summit in July 2008.

Former South African President Thabo Mbeki and President of the Council of the European Union Nicolas Sarkozy meet at the Inaugural EU-South Africa Summit in July 2008.

External guarantee refers to when a domestic institution bears the responsibility of repayment to either institutions abroad from which Africa chooses to borrow money or to foreign-funded financial institutions established within Africa. As external guarantor, the EU would act as the financial institution authorizing this business and encourage a partnership between the developed European and developing African nations.

The model for external guarantee has its basis in the West African Economic and Monetary Union (UEMOA), a regional organization established in 1993 by eight West African countries in conjunction with France. By early 2000, members of the UEMOA had adopted a customs union and common external tariff and have since developed a common program of action on trade liberalization and macroeconomic policy convergence. As noted by Jeffrey Fine and Stephen Yeo, who proposed this new paradigm for regional integration in 1997, "France could have commenced withdrawal…from an arrangement that had proven increasingly costly to maintain in recent years.

Instead, it has moved in the opposite direction, embedding an expanded role in a new international treaty for which it acts as the ultimate guarantor. Furthermore, the commitment is open-ended, involving the establishment of new multilateral institutions and surveillance of macroeconomic policies whose credibility ultimately rests on France herself. In short, France's role as guarantor appears significantly greater than under the previous monetary agreement" (451).

Acknowledging that the justification for closer regional integration is the pursuit of sustained economic growth, Fine and Yeo note that "we depart from traditional approaches to regional integration by suggesting that its virtues lie not in its ability to stimulate new trade, but rather in its ability to provide a framework for locking in sound and stable macroeconomic policies that will in turn induce faster accumulation, and more effective utilization of physical and human capital" (449). This "framework for sound and stable macroeconomic policies" they suggest be arranged and monitored by the external guarantor. Furthermore, with the EU as external guarantor, any structural adjustments, rather than being implemented all at once, could be implemented incrementally, allowing Africa to strengthen gradually and with a greater sense of self-reliance.

Nonetheless, there remains uneasiness over Africa's dependence on external agents or donors, seen as inimical to long term development in Africa; although the external guarantor model may indeed instigate good governance practices, it would almost certainly entail intrusive conditionalities that would worsen Africa's already severe development challenges as the continent became increasingly dependent on extra-regional powers to fund the regional agenda as well as to provide development capital, giving said powers the ability to determine regional policy.

While attempts to reconstruct Africa from the outside may enhance the accountability of African governments to the rest of the world, there is no evidence to suggest that such a structure creates long-term economic fortunes, a viable and independent African entrepreneurial class, or political stability. The last thing Africa needs is a perfunctory effort from outside Western states that are unwilling to give sustained and genuine support to initiatives in which there own national and security interests are only marginally involved, especially when the project may very well be perceived as neocolonialism.

Alternative Approach: Deserting the EU Model and Drawing on Regional Realities

The perceived failure of the external guarantor model leads us to a second possible method of achieving regionalism's and globalization's coexistence beginning with abandonment of the EU model, proponents of which claim only seems to be committed to the principle of differential treatment for developing, vulnerable countries. Following abandonment, the continent's regional organizations, in order to "play a real role in the economies of the South", must be "embedded into the real life context of these economies" (Boas, Marchand and Shaw).

That is to say that the regional organizations must be reformed, must become fixed in reality, must act as a source of connection between the formal and informal economies of Africa, the latter of which has been either consistently discounted by some countries or depended on too heavily by others. As to the situation in which the informal economy is consistently discounted, Boas et al remind us that:

Quite often it is [in the informal economy], and not in the formal economy, that we find considerable…imagination, innovation, and entrepreneurship. The informal second economy covers a whole range of activities, from street vendors and small-scale informal cross-border trade to the warlordism of Sierra Leone and Somalia….

Rather than racing immediately for the aid of external guarantors while ignoring the regional agenda, Africa should instead begin with its preexistent formal and informal trade flows and cooperation networks between neighboring countries, the multitude of which would constitute an excellent starting point for formal regional organization/would effectively inform the design of regionalization schemes and institutions.

Once the informal and formal sectors of the economy have been reattached so that countries overemphasizing informal trade stop losing money because of their bias and countries underutilizing informal trade begin to take advantage of it (for instance by enhancing food security with the development of an informal agricultural sector, which provides markets for surplus farm produce and income for the local producers, opportunities for those producers to invest capital in nonagricultural activities, and finally food in low income houses in the major towns), Africa will be strong enough to pursue policies of globalization as it will have independently put in place the prerequisites for such policies.

If the EU (or other external financial institution) is to have any role, it should be to implement regional projects that will stimulate economic growth within to develop and or improve existing regional infrastructure. Essentially, the approach to regionalism should be predominantly introverted and should involve the mobilization of domestic resources so that collective self-reliance receives the most emphasis.

Whereas excessive dependence on the international system will continue to do Africa more harm than good, this alternative approach will offer better policy frameworks for long term development and integration. Restructuring the existing continental and regional groupings to give priority to the increasing volume of underutilized intraregional trade will involve consolidation of institutions such as regional Organizations for Economic Cooperation, African Payments Unions, regional clearing houses, and compensatory mechanisms (Mbaye).


In the end, in order for the coexistence of regionalism and globalization to work, the intergovernmental, supranational EU model can no longer be viewed by Africa as the only workable solution to marginalization; regional cooperation must also be pursued as one of a two-part economic strategy. Once the current infrastructure of Africa is improved and reinforced, the continent will gain both economic autonomy and the ability to act as an active participant in the international economy, at which time their marginalization by the capitalist core will decrease. Of course, the theory of regional integration in Africa must be redefined if this vision is to be realized, and regional market integration must be rethought (in other words, must disconnect from the EU model and recognize the African realities). Should this be accomplished, Africa will eventually profit by the advantages of both regionalism and globalization.


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