Towards a Continental Free Trade Area: time to revisit the legal and institutional challenges to regional integration in Africa?

Towards a Continental Free Trade Area: time to revisit the legal and institutional challenges to regional integration in Africa? 1.0 Introduction More than two decades after coming into force of Abuja Treaty, Africa has registered marginal improvement in its trade performance both internally and globally. The Treaty envisaged an integration approach of trade liberalization within regional economic communities which would eventually culminate into the formation of an African economic community. The disappointments have resulted in a decision by the African Union (AU) requiring RECs to proceed to establish a Continental Free Trade Area (CFTA) by 2017 as a means of fast tracking the integration process. This paper examines the viability of the latter approach in light of the existing legal and institutional challenges to integration in Africa and argues that the process of fast tracking will have minimal impact on Africa s trade performance if perennial legal challenges to integration are not addressed beforehand. The paper proposes that before negotiations for the CFTA are commenced, there is need to go back to the drawing board on some of the legal impediments that may have hampered with realization of full trade benefits two decades after signing of the Abuja Treaty. Among the issues that need to be looked into for the success of the CFTA that this paper explores is the harmonization of business laws at a continental level. 1.1 Background Regional integration has been pursued in Africa right from the early years of independence. The post-independence efforts towards integration were mainly geared towards creating a self reliant African economy and improving the continent s economic performance. These efforts led to a number of significant integration milestones starting with the formation of the Organisation of African Unity (OAU) in 1963 to the Monrovia strategy of 1971, the Lagos Plan of Action and the Final Act of Lagos (1980) that culminated into the adoption of the Abuja Treaty in 1991 providing for the establishment of an African Economic Community (AEC) through the use of regional economic communities as building blocks. And, finally the Sirte Declaration leading 1

to the preparation and adoption of the Constitutive Act establishing the African Union in 2001. The African Union is today the main institution tasked with achieving regional integration in Africa. Where economic integration is concerned, the African Union is to work in collaboration with the Regional Economic Communities (RECs) to establish the African Economic Community (AEC). Today the vigorous drive towards integration is based on the need to improve the Continent s trade performance and consequently its economic development. Despite positive World Bank statistics indicating an improvement in Africa s economic growth rate 1, the Continent continues to remain marginalized in the global economy. This is evidenced by the fact that, the Continent which is home to about 14 per cent of the global population accounts for less than 3 per cent of the global GDP and receives only 3 per cent of foreign direct investment. 2 In the area of global trade, the continent s share of world trade in 2010 was only 3.2 per cent 3 and intra-african trade stands at around 12 per cent in comparison with intra-regional trade achieved by Europe (60 per cent), North America (40 per cent) and Association of South East Asian Nations (30 per cent). 4 It is argued by the Continent s policy makers and researchers that regional integration and cooperation is the most appropriate way to improve weak intra-african trade and the continents global trade performance. This argument is premised on the fact that regional integration will 1 Africa s economic performance has started to improve with World Bank statistics indicating that the continents economic growth rate to have risen to 5.3% in 2012 and for the current year (2013) to be at 5.6%. 1 This growth rate is forecast to rise to 6% for Sub-Saharan Africa excluding South Africa. 1 The continent is also registering some positive progress in reducing poverty as the World Bank s latest poverty update shows that the regions US$1.25 a day poverty rate has fallen from 58.1% in 1999 to 47.5% in 2008, a 10.6 percentage point decline. See World Bank, Africa. Available at http://www.worldbank.org/en/region/afr/overview [Accessed on 28/07/2013] 2 Report of the Meeting of the Committee of Experts of the Sixth Joint Annual Meetings of the ECA Conference of African Ministers of Finance, Planning and Economic Development and AU Conference of Ministers of Economy and Finance on the Assessment of the progress of regional integration in Africa March 2013 Available at http://www.uneca.org/sites/default/files/document_files/assessment-of-progress-on-regional-integration_en_0.pdf [Accessed on 30/07/2013] 3 United Nations Economic Commission for Africa, Assessing Regional Integration in African (ARIA V): Towards an African Continental Free Trade Area (2012) at 11. Available at http://www.uneca.org/sites/default/files/publications/aria5_print_uneca_fin_20_july_1.pdf [Accessed on 30/07/2013] 4 Report of the Meeting of the Committee of Experts of the Sixth Joint Annual Meetings of the ECA Conference of African Ministers of Finance, Planning and Economic Development and AU Conference of Ministers of Economy and Finance on the Assessment of the progress of regional integration in Africa March 2013 Available at http://www.uneca.org/sites/default/files/document_files/assessment-of-progress-on-regional-integration_en_0.pdf [Accessed on 30/07/2013] 2

provide possibilities of generating large economies of scale from activities typically associated with expanded trade. 5 The promotion of intra-african trade is said to be a fundamental factor for sustainable development, employment generation and effective integration of Africa into the global economy. 6 The general global consensus on the benefits of free trade for economic growth and the success stories of free trade in other parts of the world have provided a basis for integration as a strategy for improving the Continent s poor trade performance. 7 Furthermore, the rationale for regional integration lies in the creation of larger markets that serve as incentives and support large scale production and industrialisation. 8 1.1.1 The post-abuja Treaty disappointments 3 June 1991 marked an important milestone for the African regional integration agenda when the Abuja Treaty establishing the African Economic Community opened for signature in Abuja, Nigeria. The Treaty entered into force on 12 May 1994. Many scholars hailed the adoption of the Treaty as a new chapter for African regional integration. Rene N Guettia 9 referred to it as a new gamble on the future of Africa, as a whole and particularly its economic and political future and according to Bankole Thompson 10 the Treaty marked an important milestone in African economic integration efforts. On the whole the adoption of the Abuja Treaty was viewed as a historic opportunity for the Continent and its economic integration future. Integration under the Abuja Treaty would be a gradual process spanning 34 years subdivided into 6 stages of variable duration. 11 The first stage would deal with strengthening existing Regional Economic Communities (RECs) and the creation of new ones where necessary, stabilisation of tariffs and other trade barriers would be tackled in the second stage, the third stage would deal with establishment of a free trade area within the RECs through 5 United Nations Economic Commission for Africa, Assessing Regional Integration in African (ARIA V): Towards an African Continental Free Trade Area (2012) at 13 6 Assembly/AU/DEC.394 (XVIII) 7 United Nations Economic Commission for Africa, Assessing Regional Integration in African III, Towards Monetary and Financial Integration in Africa Report (2008) at 23. Available at http://www.uneca.org/sites/default/files/publications/aria3_eng.pdf 8 John Akokpari, Dilemmas of Regional Integration and Development in John Akokpari et al (eds) The African Union and its Institutions (2008) at 98-99 9 Rene N Guettia Kouassi The Itinerary of the African Integration Process: An Overview of the Historical Landmarks (2007) Vol 1 No 2 African Integration Review at 5 10 Thompson Bankole Economic Integration Efforts in Africa: A Milestone- The Abuja Treaty (1993) 5 African Journal of International and Comparative Law at 745 11 Treaty establishing the African Economic Community, article 6 3

removal of trade barriers and also the establishment of customs union and the adoption of a common external tariff, this is to done at the level of each regional economic community. The fourth stage entails the co-ordination and harmonisation of tariff and non-tariff systems among the various regional economic communities with a view to establishing a customs union at the Continental level. And the fifth and sixth stages would deal with establishment of the African Common Market and setting up institutional structures to complete the integration process at Continental level. 12 However, the signing of the Abuja Treaty did not have the kind of impact on Africa s trade performance as it had been expected to have. This is because two decades after the signing of the Treaty both intra-africa trade and external trade remain low. 13 With intra-african Trade accounting for only 12 per cent of the continent s total trade and its share of global trade estimated to be at a meager 3.2 per cent. With these disappointing results, efforts to boost Africa s trade performance led the African Union Ministers of trade to propose to the AU Assembly the idea of fast tracking the formation of a Continental Free Trade Area (CFTA). 1.1.2 The AU Assembly decision on fast tracking the CFTA In a bid to accelerate the Continental integration process the African Union Assembly passed a decision at its January 2012 summit for fast tracking the establishment of a CFTA by the indicative date of 2017 based on the framework, roadmap and architecture with the following appropriate milestones; 14 a) Finalization of the Tripartite initiatives between the East African Community, the Common Market for Eastern and Southern Africa and Southern African Development Community (EAC-COMESA-SADC) by 2014; b) Completion of FTAs by non-tripartite RECs through parallel arrangements similar to the EAC-COMESA-SADC Tripartite initiative or reflecting the preferences of Member States, between 2015 and 2016; 12 Ibid. Article 6 13 United Nations Economic Commission for Africa, Assessing Regional Integration in African (ARIA V): Towards an African Continental Free Trade Area (2012) at 32 14 Decisions, Declarations and Resolutions of the Assembly of the Union, passed at the eighteenth ordinary session held on 29-30 January 2012. Ref: Assembly/AU/DEC.394 (XVIII) 4

c) Consolidation of Tripartite and other regional FTAs into a Continental Free Trade Area (CFTA) initiative between 2015 and 2016; d) Establishment of the CFTA by 2017 with the option to review the target date according to progress made. As preparatory steps towards the establishment of the CFTA, the Assembly mandates Member States in conjunction with the African Union Commission and the RECs to implement short, medium and long-term programmes and activities contained in the Action Plan at national, regional and continental level and it also requires the establishment of a group of experts from Member States with a view to developing a framework for the conclusion of a draft agreement on rules of origin. The establishment of the CFTA is anticipated to improve intra-african trade through enlarging markets that will in-turn increase economies of scale and enhancing specialization in primary and industrial production of tradable products. 15 It is also hoped to transform diverse and heterogeneous political and economic African entities into a manageable and homogenous market. 16 In addition, the CFTA is also expected to bridge the disconnect in physical infrastructure between the different regions in Africa. 17 With these anticipated benefits the arguments for the establishment of a CFTA are very strong. However, the realization of these benefits is highly dependent on addressing the issues that have led to the disappointing trade results two decades after the signing of the Abuja Treaty. RECs have been going through the Abuja Treaty integration stages with some RECs such as EAC and COMESA being in advanced stages and yet the effect on trade has not been as far-reaching as had been anticipated. The ensuing discussion examines the legal and institutional challenges that may have contributed to the disappointing results and are likely to negatively affect the CFTA if not definitively dealt with. 2.1 Legal and Institutional challenges to regional integration in Africa The legal and institutional issues discussed in this section arise from three important areas, first they include implementation challenges of existing economic integration treaties, protocols and 15 ARIA V op cit (note 12) at 34 16 Ibid 17 Ibid 5

decisions, secondly some arise from ambiguity in treaty provisions or total lack thereof and lastly, they are a reflection of the haphazard approach to integration issues on the continent. It is important to note that the issues raised in this discussion are not new, most of them have been highlighted by previous Authors but have to date not been addressed. The aim of this discussion is therefore to reincarnate these issues for the attention of the various stakeholders in order for them to be addressed in order for the CFTA to achieve the success that it is anticipated to achieve. 2.1.1 Non-utilisation of the mechanisms to ensure implementation The biggest challenge to regional integration in Africa has always been poor implementation of integration activities outlined in Treaties and Protocols. African Union as the main institution tasked with overseeing the integration process has a number of mechanisms available to it to ensure implementation of Treaties and Protocols by Member States and RECs but these have not been utilized. The Constitutive Act of the African Union and the Protocol on Relations between the African Union and Regional Economic Communities (hereafter, Protocol on relations) provide for mechanisms through which the AU can force its Member States and RECs to comply with integration timelines and targets. The Constitutive Act of the African Union gives the African Union power to impose sanctions against a Member State which fails to comply with the decisions and policies of the Union. 18 The Protocol on relations between the AU and RECs establishes two important institutional organs known as the Committee on Coordination and the Committee of Secretariat Officials to coordinate policies, measures, programmes and activities of RECs and to ensure implementation of the Protocol. 19 Another important function of the committees is to monitor and keep under constant review progress made by each REC towards the implementation of the objectives of the Abuja Treaty. To augment the work of the committees, the African Union is also expected to open liaison offices at the headquarters of each REC. 20 In addition to these institutional mechanisms, the Protocol gives power to the African Union to take measures against any REC whose policies and programmes are incompatible with the objectives of the Abuja Treaty or 18 The Constitutive Act of the African Union, Article 23(2). 19 Protocol on Relations, Article 6 20 Protocol on Relations, Article 21 6

whose implementation of its policies, programmes and activities lags behind the time limits set out in the Abuja Treaty. 21 These legal and institutional mechanisms for ensuring implementation and compliance need to be utilized more especially with regard to economic integration timelines and targets because success of regional integration on the continent is highly dependent on the commitment of Members to implement treaties, protocols and decisions. To ensure full utilization of the above mechanisms, the African Union needs to require periodic reports from RECs, Member States and the Committee on Coordination and Secretariat officials on the status of implementation of integration activities and areas of challenge that require the assistance of the AU. This exercise will be even more necessary with the proposal for the establishment of the CFTA. Secondly, where a Member State or REC has either deliberately or through omission failed to comply with set targets and timelines and such non-compliance has been brought to the notice of the State or REC but nothing has been done to address it, then the power of AU to impose sanctions on the defaulting State or REC comes into play. However, the imposition and enforcement of sanctions on a non-complying State will require strong political will from the AU leaders. The plans for the formation of the CFTA require strong implementation commitments from Member States, RECs and the AU in equal measure. Member States and/or RECs on their part will need to adhere to their commitments on elimination of tariff and non-tariff barriers within the timelines agreed upon, harmonization of trade documentation and procedures and issues to do with freedom of transit for goods within the CFTA will need to be adhered to. Other areas requiring strong commitment in the implementation of the CFTA will include harmonization of customs rules and cooperation in customs matters, issues concerning rules of origin and other areas of trade law such as anti-dumping, countervailing and safe guard measures. The current uncoordinated progress by RECs through the integration process will not dramatically change with the launch of a CFTA. 22 The AU on its part will need to exercise stronger leadership in the 21 Protocol on Relations, Article 22 22 Of the eight AU recognized RECs, only EAC and COMESA are in advanced stages of integration, the former having launched its common market in 2010 and the latter having launched its customs union 2009. SADC and ECOWAS are at the stage of implementing their FTAs. ECCAS launched its FTA in 2004, but is facing enormous challenges in its practical application. AMU, CENSAD and IGAD are moving slowly and are still in the early stages of cooperation among their Member States 7

form of taking measures against a Member State or REC that is not complying with set timelines and targets. 2.1.2 Unaddressed relational issues Oppong extensively discusses the problems surrounding the legal relationship between AEC and RECs. 23 He argues (rightly so), that there is a legal separateness of RECs and AEC and as such the legal status of one within the other should be defined by agreement to which both are parties, or at least, in some definite and binding agreement. The status of RECs within the AEC is not defined and their fate after the formation of the AEC is completed is also unclear. Oppong concludes by suggesting the negotiation of a merger protocol to address, inter alia, issues relating to the legal status of the RECs after the formation of the AEC; the assets and liabilities of the RECs after the merger; whether the merger is compulsory or voluntary and when the merger is to occur, that is, whether it will happen simultaneously for all RECs or incrementally after each REC reaches the necessary stage of integration. 24 This suggestion may have not been given serious consideration in the past as the formation of the AEC may have seemed far off but with the discussions for the formation of a CFTA already in motion, there is need to revisit the issue of the status of the RECs in the event of a successful continental integration. The issues for consideration should include; the status of RECs after the formation of the CFTA, that is, whether the RECs will still need to go ahead with the formation of their customs union once the CFTA is successfully formed or whether the negotiations for the formation of the customs union will now be done at the continental level. And, what the status of the RECs will be after the formation of the AEC, that is, whether the RECs will disappear entirely or would continue to operate as a mid-level legal system. 25 In addition, the proposal by Oppong for the negotiation of a merger protocol should be given serious consideration by the stakeholders as it will eliminate the uncertainties surrounding the fate of the RECs upon the completion of the Continental integration. 23 Oppong R.F The AU, AEC and regional economic communities Legal aspects of economic integration in Africa ed. (2011) 64-81 24 Ibid 25 Ibid 8

The disconnect between activities of RECs and their overriding obligation to work towards the establishment of the African Economic Community is another issue that needs to be addressed. Article 88 of the Abuja Treaty states that the African Economic Community is to be established through progressive integration of the activities of RECs and the Constitutive Act of the African Union too reiterates the role of RECs in the establishment of the continental economic community. 26 However, a cursory look at the treaties of the eight AU recognized RECs 27 reveals an interesting pattern that most of the REC treaties are silent about their role in the establishment of the AEC. 28 If RECs through their individual treaties do not recognize their role in the continental economic integration, it is difficult to compel them to work towards achieving something that they did not set out to achieve in the first place, that is to say, if the establishment of the AEC is not one of the objective of a REC how can it be expected to vigorously pursue an objective that it did not set out to pursue?. It is submitted that for RECs to be reminded of their role in continental economic integration, each REC needs to amend its Treaty to provide for the establishment of AEC as their main objective and any other activities can be pursued as an addition. To this end, the COMESA Treaty provides a good illustration of what the treaties of the other seven AU recognized RECs should contain as regards their role in the establishment of the AEC. 29 2.1.3 The need for clarification on the continental trade dispute settlement forum One of the vital components for the sustainability of regional integration process is the legitimacy and effectiveness of the dispute settlement mechanism. 30 The existence of a 26 Constitutive Act of the African Union, article 3 27 African Union recognises eight (8) RECS that are to act as the building blocs of the AEC and these are: The Economic Community of West African States (ECOWAS), The Economic Community of Central Africa States (ECCAS), The East African Community (EAC), The Common Market for Eastern and Southern African States (COMESA), The Southern Africa Development Community (SADC), The Arab Maghreb Union (AMU), Community of Sahel-Saharan States (CEN-SAD) and Inter-Governmental Authority on Development (IGAD) 28 Only COMESA Treaty clearly sets as one of its key objectives the establishment, progress and the realisation of the African Economic Community. 29 The COMESA Treaty demonstrates the fact that its Member States are conscious of their role as building blocks of the AEC. Article 178 of the Treaty provides that its final objective is to facilitate the implementation of the AEC Treaty and it enjoins its Member States to convert the organisation at a time to be agreed upon into an organic entity of the African Economic Community. It further mandates the Secretary-General of the organisation to coordinate the activities of COMESA with those of the AEC and to submit periodic reports in this respect 30 Adopted from Ruppel O and Bangamwabo F, The SADC Tribunal: A Legal Analysis of Its Mandate and Role in Regional Integration in Anton Bosl et al (eds) Monitoring Regional Integration in Southern Africa Year Book (2008)8 Trade Law Centere for Southern Africa. pp 179-221 9

functioning dispute settlement mechanism in regional integration process is very critical because it provides a stable and predictable environment for traders, individuals, corporations and investors that are key drivers of regional integration to operate. For a court to function and promote regional integration key issues such as the independence of the court, its jurisdiction, locus standi before the court and respect for the rulings/ judgments of the court are important for it to be able to operate. To this end, the Abuja Treaty provides for a Court of Justice to be established to adjudicate over matters concerning application of the Treaty. 31 To date, no such court has been established rather what exists as a continental court is the African Court of Justice and Human Rights (hereafter, the ACJHR) which was established after the merger of the Court of Justice of the African Union and African Court of Human and Peoples Rights. 32 It is uncertain whether the court of justice provided for under the Abuja Treaty will ever be established. One author argues that the ACJHR will assume jurisdiction of the court of justice established under the Abuja Treaty by virtue of the AEC being an integral part of the African Union, and also the fact that the jurisdiction of the ACJHR covers the interpretation of Union treaties and all subsidiary legislation adopted within the framework of the African Union and thus encompasses the AEC Treaty. 33 This argument may be correct, but in the absence of a legal instrument to clarify on the status of the court established under the AEC treaty, uncertainties on the proper forum for institution of a trade dispute will arise. Therefore, there is need for clarification on the continental court that is to handle trade matters, more so, with plans for the establishment of a continental free trade area already under way. In addition, the suitability of the African Court of Justice and Human Rights as a Court for adjudicating economic integration disputes is constrained by the fact that locus standi before the Court in non-human rights violations is restricted to State parties; the Assembly; the parliament and other organs of the African Union authorised by the Assembly; and a staff member of the AU on appeal. 34 This means that the Court does not have jurisdiction to entertain matters brought by individuals, companies, investors, traders and producers who comprise the main 31 AEC Treaty, Article 18 32 The Court is established by the Protocol on the Statute of the African Court of Justice and Human Rights (hereafter, the ACJHR Protocol) 33 Oppong AU/AEC Institutions and the enforcement of Community Law Legal aspects of economic integration ed. (2011) 165-187 34 ACJHR Protocol, Article 29 10

participants in the African economic integration process. The establishment of the CFTA will require a continental dispute settlement forum which gives access to all participants of the economic integration including natural and legal persons and States in equal measure. This will necessitate either an amendment of the Article 29 of the ACJHR Protocol to expand the jurisdiction of the Court or the establishment of a separate trade court such as that envisaged under the Abuja Treaty. 2.1.4 The need for harmonisation of business laws in Africa The harmonization of trade legislation and commercial practices is an essential component for successful regional economic integration. 35 Experience has shown that disparities in legal systems has the potential to distort trade flows as it makes the regional trading environment uncertain and unpredictable for private trading partners/contracting parties. It has been argued that an international economic organization with neither the authority to develop and modernize a comprehensive and harmonized legal regime relating to regional economic issues, nor the power to enforce compliance with regional law will be incapable of integrating the economies of the member states. 36 Presently there is no institutional organ charged with the responsibility to harmonize the business laws at a continental level and there is no judicial or monitoring institution to ensure uniform interpretation of legal norms relevant to regional commerce, nor is there a mechanism for harmonisation Africa s business laws amongst all Member Countries. There is therefore need to adopt a mechanism for harmonizing trade laws within the Continent in order realize the potential benefits of a CFTA and to make the Continent more attractive to international investors and business partners. The harmonization exercise entails creating coherence between domestic legislation of member states in order to ensure their uniform application. This is kind of result is achieved through legislation, directives or recommendations adopted by a supranational 35 Ndulo M Harmonisation of Trade Laws in the African Economic Community 42(1) The International and Comparative Law Quarterely (1993) 101-118 36 Fitzpatrick JP The Future of the North American Free Trade Agreement: A Comparative Analysis of the Role of Regional Economic Institutions and The Harmonization of Law in North America and Western Europe (1996) 19 Hous. J. Int l L. 1 11

organization who then passes them on to its member states for implementation with the latter having the discretion to choose the appropriate modality for adopting the new harmonized rule. 37 There are already initiatives towards harmonisation of business laws in Africa being undertaken by francophone states which if adopted at a continental level will go a long way in improving intra-african trading environment and prospects. This initiative is the Organisation for the Harmonisation of African Business Laws (Organisation pur l Harmonisation en Afrique du des Affaires, hereafter OHADA ) which was established pursuant to a Treaty that has now been acceded to by 17 west and central African nations. 38 The objective of OHADA is to harmonize business laws of its contracting parties through the elaboration of simple modern common rules adapted to their economies and also by setting up appropriate judicial procedures for settlement of contractual disputes. 39 The Acts adopted for this purpose are known as Uniform Acts which upon adoption become directly applicable in Member states, notwithstanding any provision of domestic law to the contrary. 40 OHADA implementation institutions consist of a Council of Ministers assisted by a Permanent Secretary Office, and, a Common Court of Justice and Arbitration. 41 Uniform Acts are thus prepared by the Permanent Secretary office in consultation with the Governments of Contracting states and they are then debated and adopted by the Council of Ministers in consultation with the Common Court of Justice and Arbitration. 42 The uniform acts then become applicable and directly binding on OHADA Member States within ninety days after their adoption and Gazetting, without the need for additional legislation from the States parties. 43 The key feature of the OHADA laws is that it takes into consideration the complexity and peculiarities of the African legal system and attempts to simply it in order to make it easier to do business within its Member States. 37 Mancuso S Trends on the Harmonization of Contract Law in Africa (2007) 13 Ann. Surv.Int l & Comp. L. 157 38 Treaty on Harmonization of Business Laws in Africa, October,1993 (Hereafter, the OHADA Treaty). Currently the 17 countries that have joined OHADA include; The Member states of the Treaty on the Harmonisation of Business Law in Africa are; Benin, Burkina Faso, Cameroon, Central African Republic, Comoros, Republic of Congo, Ivory Coast, Gabon, Equatorial Guinea, Mali, Niger, Senegal, Chad and Togo, Guinea-Bissau, Guinea and Democratic Republic of Congo. 39 OHADA Treaty, article 1 40 OHADA Treaty, article 10 41 OHADA Treaty, article 3 42 OHADA Treaty, article 6 43 OHADA Treaty, article 9 12

The benefits from OHADA are starting to become evident with a 2012 publication on doing business in Africa indicating that OHADA members made it easier to do business across their region in the period 2005 to 2012. 44 The statistics indicate that the average cost to start a business decreased by 67% of the average per capita income and the average time required to register property also decreased by 28% within OHADA Member States. 45 In certain categories measured, the region s economies are comparable to the world s best performers for instance, by setting up a one stop shop, starting a business in Senegal takes only 5 days, same as in Canada and faster than in France. 46 After 4 years of successive reforms, obtaining construction permits in Burkina Faso takes only 98 days, 3 month faster than the European Union average. 47 Considering the benefits of harmonization that have been illustrated using the OHADA case study above, the case for an Africa-wide harmonization initiative is made stronger. The potential gains from a harmonized business law in system in the entire continent are enormous; first it will reduce the cost of doing business across the region, it will enhances predictability of business transactions and it encourage investment both domestic and foreign. A continental harmonization exercise will be made easier if stakeholders would adopt the initiative already started through OHADA such that it becomes applicable to all the 54 Countries in Africa. The legal framework in the Abuja Treaty for the harmonization of laws is to be found in Article 5 by which Member States undertake to create favourable conditions for the development and attainment of the objectives of the community, particularly by harmonizing their strategies and policies. In addition, each Member State is required to take all necessary measures to ensure the enactment and dissemination of such legislation as may be necessary for the implementation of the provisions of the Treaty. 48 The common interest of African States to increase intra-regional trade should serve as incentive towards progress in this area. 49 44 World Bank, Doing Business Dans les Etats members de l OHADA 2012, Washington, D.C Available at http://www.doingbusiness.org/reports/regional-reports/ohada 45 ibid 46 ibid 47 ibid 48 Treaty establishing the African Economic Community, article 5 49 Ndulo M, op cit (note 35) 13

2.2 Conclusion This paper has discussed the legal and institutional challenges that need to be addressed in order for Africa to reap the full benefits from the CFTA yet to be established. First the paper has noted that the problem of poor implementation of treaties, protocols and decisions relating to integration can be dealt with through the African Union making use of the mechanisms available to it under the Constitutive Act of the African Union and the Protocol on relations. The paper has also implored the policy makers to consider the issue of the status of the RECs within the CFTA and what the implications of the formation of the CFTA will mean for their role in the integration process. In addition the lack of clarity on the status of the RECs after the formation of the AEC needs to be addressed. The paper has discussed the need for harmonization of business laws at a continent-wide level similar to that being undertaken within the framework of OHADA so as to foster trade and to make the continental business environment more predictable for all economic operators. The need for a dispute settlement mechanism which gives access to all economic operators including individuals and corporations has also been cited in this paper as a sine qua non for the success of regional trade in Africa. The focus of this paper on only the legal essentials for integration does not mean that other non- legal challenges such as poor infrastructure that impedes regional movement of goods, services and people, inadequate financial resources for integration activities, political instability and civil strife that disrupts trade need less attention. These challenges have an equally negative effect on regional trade. Therefore, efforts towards addressing them such as the on-going Programme for Infrastructure Development in Africa (PIDA) that aims to improve infrastructure on the continent are a welcome initiative and need to be pursued vigorously. Regional integration is the solution to achieving sustainable development in Africa. The current positive trend in the growth rate of the continent makes the need for successful regional economic integration even more urgent as a means of maintaining the new growth trend and furthering it. However, this will require commitment and consistency from all stakeholders regarding integration timelines and targets and the legal and institutional challenges discussed hereinabove will have to be addressed in order to give a solid foundation to the Continental Free Trade Area and eventually the African Economic Community. 14

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