Intra-African Trade Fair: Obasanjo Calls for African Unity to Promote Action

Intra-African Trade Fair: Obasanjo Calls for African Unity to Promote Action and Development

The recent address by former President Obasanjo at the Intra-African Trade Fair (IATF) highlights the imperative for continental integration, emphasizing the need for unity and collective action to address the inherent coordination challenges created by Africa's fragmentation into 54 sovereign states. This fragmentation leads to suboptimal continental outcomes, as individual states prioritize national interests over supranational cooperation.

From a political economy perspective, the collective action problem, as outlined by Ostrom and Hardin, is a significant barrier to cross-border infrastructure development, regulatory harmonization, and economies of scale. The lack of supranational cooperation mechanisms with enforcement capacity hinders the realization of continental integration. President Oramah's call to dismantle barriers underscores the need to reduce transaction costs imposed by Africa's fragmented regulatory landscape, including non-tariff barriers, divergent standards, customs inefficiencies, and visa restrictions.

The concept of institutional void and transaction costs, as discussed by North and Williamson, is also relevant in this context. Empirical studies have consistently shown that non-tariff barriers increase trade costs within Africa more than tariffs do externally. Harmonization of regulatory frameworks can reduce search, negotiation, and enforcement costs for businesses, enabling market integration and promoting economic growth.

Furthermore, the report emphasizes the critical role of political will in driving continental integration. This aligns with the institutional theory of Acemoglu and Robinson, which suggests that extractive political institutions prioritize rent-seeking and maintaining fragmented markets that benefit local elites over broad-based growth. Shifting to inclusive institutions requires deliberate political choice to dismantle these vested interests, as underscored by Obasanjo's rejection of rhetoric.

To achieve thriving economies, beyond just trade liberalization, the IATF 2025 recommendations recognize the need for complementary investments in supply-side constraints, value chain development, and trade facilitation. Addressing infrastructure deficits, fostering regional value chains, and implementing digital customs systems can lower production costs, improve competitiveness, and create jobs.

The African Continental Free Trade Area (AfCFTA) provides a legal framework for addressing these issues, but its effectiveness hinges on member states ceding sovereignty to supranational bodies for rule-setting, dispute resolution, and enforcement. Implementation requires deep regulatory harmonization, not just tariff reduction, and significant political will to dismantle rent-seeking structures.

In conclusion, achieving "The Africa We Want" necessitates overcoming collective action problems through credible supranational institutions, significant reduction of transaction costs via harmonization, and the political will to dismantle rent-seeking structures. The focus on thriving, not just trading, underscores the need for integrated industrial and infrastructure policies alongside market integration, highlighting the importance of a comprehensive approach to continental integration.

NTA Network