European Union saga: lessons for Africa

The European Union project is the most ambitious economic integration project of the 20th century, which Africa and other regions have sought to emulate. But as Africa seeks to create expanded markets, with the recent agreement of the Tripartite Free Trade Area (TFTA) signed last June by the COMESA, SADC and EAC blocs, the current situation in the EU should be Africa’s greatest teacher, argues Professor Said Adejumobi. 

The EU has made phenomenal progress since its establishment, yet signs of evolving crisis are evident. In the eurozone, the 19 countries that share a common currency, economic growth has been sluggish with an average of 0.36 per cent for about two decades (1995 to 2013) and the virtual economic meltdown in some of the member-states like Greece, Portugal, and Spain. Real GDP growth rate in the entire EU has fluctuated on the lower end from 3.1% in 2007, to -0.5%, 0.0% and up to 1.3% in 2012, 2013 and 2014 respectively.  

The OECD in its 2014 Economic Survey of the European Union noted “high tax burdens, rigid labour laws, barriers to competition, and slow innovation dynamics weigh on growth. Inequality has grown since the 1980s, and high unemployment is hurting the young and the most vulnerable, weakening public support for the EU project”. The truth is that the EU project is currently at a crossroads, although drivers of the project may not readily admit it. 

There are three major sources of the EU crisis. First, the integration project has not been able to generate even and sustainable growth for all the countries in the club; some are doing fairly well, some are wobbling and some are in terribly bad shape like Greece. An integration project that leaves behind a large part of it in the growth path will likely have to deal, at internals, with economic emergencies – of crisis management, bailouts and humanitarian financial assistance. 

Second, the ideational foundation of the EU project, which is about creating an integrated union where people, goods and services can move freely, is being questioned. The UK has consistently challenged the notion of the free movement of persons, and some of the ruling elite in Britain have been calling for a plebiscite on whether the UK should remain in the EU or not. 

Third, the EU’s response to the recent economic crisis in the region, which is orthodox structural adjustment reforms, a replica of what was administered in African countries in the late 1980s and early 1990s, have worsened rather than ameliorated the crisis. Austerity measures are money-saving, but they are generally anti-people and anti-growth, and history has not demonstrated their capacity to pull countries out of economic crisis, and they often pitch the state against the people, and erode public confidence in authorities that administer them.

It was this reality that made the Greek electorate reject the EU bailout proposal and vote an overwhelming ‘no’ in their referendum on 4 July.

National dignity

It was not only money that was at stake in the Greek referendum but also national dignity, pride and decency. The Greeks, like the Africans in the 1990s, in spite of their trepidations and growing poverty, were reluctant to yield to external pressures and dictates, which even on a symbolic level, is very important to national identity and perceptions of sovereignty. Unfortunately, with the country cash-stripped, while it voted against austerity, it had to crawl back to the negotiating table in search of badly- needed bailout cash. 

The EU project is therefore being challenged not only by the weak but also the strong. Weak countries like Greece, Spain and Portugal are complaining, while the strong, like Britain, are also questioning their involvement in the EU project. In a sense, this may be democracy at work, but in another sense, it signals very clearly that the EU project has serious challenges. 

There are lessons to learn in what the EU is currently going through. The first is that regional economic integration must be a win-win project for all its stakeholders beyond the tokenism of solidarity and charity. Expanded markets must be complemented by increased productivity and enhanced industrial capacity by all the countries involved. The reality of the EU is that the market has expanded but production is highly skewed across countries. Few countries deepened industrialisation and moved to the e-industrial economy, while the large majority became de-industrialised. Industrial production in the EU as a share of GDP declined from 20.1% in 2007 to 19% in 2014, which signals the de-industrialization process, but skewed amongst its member states. The de-industrialised economies became consumers without commensurate productivity. The consequence is that they were living beyond their means with charity from the common pool, and sooner rather than later, they were bound to recline into crisis.

As Africa seeks to create expanded markets, with the agreement of the Tripartite Free Trade Area (TFTA), signed in Sharma el-Sheikh on 10 June 2015 by the three regional blocs – COMESA, SADC and EAC – and as negotiations for the Continental Free Trade Area (CFTA) commence soon, part of the calculus must be to scale up production by all the countries involved in the agreement. 

The good news is that the discussion about creating a free trade area in Africa is coming hand in hand with that of promoting industrialisation on the continent.

The SADC region has developed a strategy and roadmap on industrialisation which was endorsed by the Heads of State and Government of the region on 29 April 2015. Regional value chains must be taken seriously so that every country has an entry point into the regional production system and is able to contribute to the industrialisation process on the continent. Lopsided growth and productivity will only create skewed development, which will invariably undermine the regional integration project. 

Africa’s quest

The other lesson is that it is important for Africa to understand and agree on the key ethos of the integration agenda. Does it seek to create an integration of and for capital or an integration of the people or both?

The integration of people is currently being questioned in Europe. But there cannot be a pan-European project without Europeans, the same way there cannot be a pan-African project without pan-Africanists.

The pan-African agenda underpins Africa’s quest for regional economic integration. The unity and solidarity of the African people is the driving force of our togetherness beyond capital or finance. When capitalist development discountenances the people, it loses its soul. The soul of capitalist development at the national, regional and global level must be the people. The people must be the means and end of any development process. 

A regional integration agenda that appears to privilege some, who often wield the “big stick”, will only create disillusionment, frustration, and anger for the weaker ones, and will sooner rather than later begin to unravel itself.

These are the lessons for Africa as Africa threads its way cautiously through the regional integration process.