Towards Knowledge-Based Economic Communities in Africa

About half a century ago, African leadersand economic diversifications. A larger market will
established the Organization of African Unity partlysupport economies of scale, better market
to promote socio-economic structures aimed ataccess and production efficiency through
improving the welfare of the citizens and generalcompetition.
integration of the continent. But owing to decadesIn addition, economically integrated Africa could
of political tensions and weak economicprovide stable exchange rate, increase
infrastructures, the goals have not materialized.cross-border trade with efficient banking clearing
The success of the single European currency,and payment systems. There will be more
Euro, which has become very central to manypotentials for improved consumer welfare,
recent transformations in Europe by offeringstronger political and security ties in the continent.
more efficient means of transacting businessesIt promises to offer better fiscal and monetary
and using the human and institutional capabilities ofcooperation among states with long-term
the continent to foster more prosperity hasmacroeconomic stability.
shown the power of integrated monetary systemNonetheless, despite these potential benefits, the
in a globalizing world. As the world moves towardsproblems of poor transport and communication
knowledge-based economic structures and datastructures in Africa continue to limit more
societies, which comprise networks of individuals,intra-regional and intra-continental trades among
firms and nations that are linked electronically andmembers. The incessant political tensions across
in mutually dependent global relationships, thethe regions continue to affect the creation and
power of a single African currency has becomeexpansion of trade. From South Africa to Nigeria,
very important. A single African currency, ifAfrican nations continue to trade heavily with their
realized, would radically redefine Africa's social,ex-colonial rulers over African Union partners. As a
political and economic landscapes and position theresult, many African products get to member
continent on a solid footing to tackle thestates via Europe. For many of the fiscally
enormous challenges of the 21st century.undisciplined nations, a loss of national autonomy
This plan is poised to offer an African marketon macroeconomic policy could be challenging.
with no internal frontiers in which the freeLosing autonomy on currency devaluation and
movement of goods, persons, services and capitalrevaluation, fiscal and monetary policies on interest
is ensured. A single currency stands for an Africaand exchange rates will present major worries
of unity, integration and strength. However, thereacross African capitals.
is a possibility of potential failure of a singleHow this integration will play out is still not clear.
currency if implemented haphazardly withTake for example, the Francophone Africa is
enormous consequences to not only Africa'sconsidered an 'undertrader' despite the CFA franc
image but also the member states' economieszone having one of the most extensive monetary
and, ultimately, the citizens.unions in the world. Projected data in case of
Irrespective of the challenges and opportunities, adoubling of trade (from integration) suggests that
single currency will not just solve Africa'ssome of the five regional economic communities
problems overnight and it would be a mistake towill have net welfare gains, while others will have
hedge all the future developments of thislosses. Yet, while the feasibility and desirability of a
continent on this venture.united African currency union could be debatable,
As the new chairman of the African Union, Libyanthe structure and dynamics of the globalizing
Muammar al-Gaddafi, goes to work towardsworld makes economic integration a necessity if
realizing the United States of Africa (by the way,the continent must survive global competition.
I prefer, Union of African States), it is importantAll the continent has to do is to approach the
that we evaluate this project beyond politics andadoption of the single currency cautiously. African
solidarity. While it is possible to be carried away byUnion must work to strengthen the regional
the success of Euro, it is imperative that Africaneconomic communities (REC) for better currency
leaders understand that the EU has beenunions and financial integrations. This will involve
cooperating for decades and it took many yearstransforming them, I suggest, into Knowledge
to realize the single currency after the Treaty ofEconomic Communities (KEC) where knowledge
Rome. Signed by six nations (France, Germany,will become the main factor of production with
Belgium, Italy, Luxembourg and the Netherlands)coherent trade shocks among member states.
on 25 March 1957, the Treaty created theThis means more funding for science education,
European Economic Community (EEC) thatbetter information networks and transportation
provided the foundations for European unitysystems, revamped innovation and entrepreneurial
based on the common values of peace, freedom,environment and vibrant democratic institutions.
equality, the rule of law and democracy. Today,Afterwards, these KECs will converge to a single
the EEC is the world's largest free trade area.African economy of one currency to be managed
An African equivalent of the Treaty of Rome isby a continent-wide supranational central bank. A
the Abuja Treaty signed on June 3, 1991. Thatknowledge economic Africa with our vast
Treaty created the African Economic Communityresources will transform every aspect of modern
(AEC). AEC provides the platforms for largercommerce and industry and move millions out of
African market for negotiating favorable tradingpoverty.
terms bilaterally and globally, boosting investment