Regional Intergration and the African Peer Review Mechanism

The idea of establishing an African monitoring mechanism came as a response to governance challenges and problems that the continent has experienced since the first phase of independence in the 1960s, and the subsequent political instability and poor economic performance. For many years, African states have relied on the outside world (bilateral, multilateral donors and development partners) to solve their governance issues. This approach has had limited impact, as corruption, protracted conflicts, unstable political environments and underdevelopment continue to plague the continent. Faced with these challenges, African leaders initiated their own vision, dubbed the New Partnership for Africa’s Development (NEPAD) in 2001 in the wake of the Africa Union. NEPAD is a development plan to pedal the continent out of the vicious cycle of poverty, political instability and global trade blocks. Philosophically, the new development strategy takes its roots on a new thinking that African solutions to African problems. This means that Africans must be empowered to become active participants in the political and economic transformation of their own countries in particular, and the continent, in general. As a result of this need, the African Peer Review Mechanism (APRM) was initiated to bring about standardisation in terms of governance, economic development, corporate governance and socio-economic development. On the same token, African leaders such as Gaddafi have borrowed the ideals of Marcus Garvey of a United States of Africa that is regional integration.

Conceptualisation of APRM

Before examining the APRM itself, it is necessary to explain the concept of peer review. Even though it is one that has not taken on a rigorous and widely acceptable definition, its meaning and connotations appear to attract some kind of consensus. Peer review may be described as "the systematic examination and assessment of the performance of a state by other states, with the ultimate goal of helping the reviewed state improve its policy making, adopt best practices, and comply with established standards and principles." (Hope, 2002). The process is normally conducted on a voluntary basis, and it is used when states have mutual trust for each other and share a joint confidence in the process. The use of peer review is not unique to Africa, it has also been exercised around the globe for instance, the World Trade Organisation (WTO) has a system of peer review under its Trade Policy Review Mechanism. The organ mandated to monitor and conduct the African Peer Review Mechanism (APRM) operates within the auspices of a mutually agreed instrument voluntarily acceded to by the member states of the African Union (AU). The APRM has four thematic areas which are democracy and political governance, economic governance and management, corporate governance and socio-economic development.

Democracy and Political Governance is enshrined in the AU Constitutive Act 2000, Articles 3 and 4. The APRM places a high premium on democracy and good governance, which is its first thematic area, because the success of the three other thematic areas is largely based on the success of this first theme. This thematic area ensures that respective countries’ rule of law and constitutions reflect the democratic philosophy enshrined in the AU and offer practical accountable governance, and that citizens participate in the political process through free and fair elections. The aim is to enforce strict adherence to the position of the African Union (AU) on unconstitutional changes of government like Joseph Kabila’s plan to alter the constitution of DRC to allow him a third term in office and other decisions of our continent aimed at promoting democracy, good governance, peace and security. Under this key thematic area, there are 9 key objectives which are: Prevention and reduction of intra/inter-state conflicts, constitutional democracy including periodic free and fair elections, clear, concise and practical rule of law, Bill of Rights and the supremacy of the constitution are firmly established in the constitution (De Waal, 2002).

Good Economic Governance and Management is declared to be an essential prerequisite for promoting economic growth and reducing poverty. The Constitutive Act of the African Union (2000); the Abuja treaty establishing the African Economic Union (1991); International Standards in Auditing; International Accounting Standards; the Code of Good Practices on Transparency in Monetary and Financial Policies; Principals for Payment systems; Core Principals for Effective Banking Supervision and the NEPAD Framework documents (2001), all specify the need for good economic governance and management (Landsberg, 2002). The key objectives under the theme of economic governance and management are the promotion of macroeconomic policies that support sustainable development, the implementation of transparent, predictable and credible government economic policies and promotion of sound public finance management; fighting and combating corruption and money laundering; and the acceleration of regional integration by participating in the harmonisation of monetary, trade and investment policies amongst the participating states.

The APRM definition of Corporate Governance involves all aspects that govern a company’s relations with shareholders and other stakeholders. The APRM defines Corporate Governance as concerned with the ethical principles, values and practices that facilitate holding the balance between economic and social goals, and between individual and communal goals (Kanbur, 2003). The aim is to align as much as possible the interests of individuals, corporations and society within a framework of sound governance and common Codes and Standards. The approved codes and standards have the potential to promote market efficiency, control wasteful spending, consolidate democracy and encourage private financial flows. According to Mistry (2005) APRM Corporate Governance Assessments are undertaken along five main objectives: Providing an enabling environment and effective regulatory framework for economic activities. Ensuring that corporations act as good corporate citizens with regard to human rights, social responsibility and environmental sustainability, promoting the adoption of codes of good business ethics in achieving the objectives of the organization. Ensuring that corporations treat all their stakeholders (shareholders, employees, communities, suppliers and customers) in a fair and just manner. Providing for accountability of corporations and directors.

Socio-Economic Development can be most effectively tackled through the promotion of democracy, good governance, peace and security as well as the development of human and physical resources. An exegesis of this objective, one can clearly see that for socio-economic development to be successful, the other three themes should be implemented well for this theme to happen (Bafalikike and Jammeh, 2002). Key socio-economic thrusts such as promoting gender equality, allocation of appropriate funds to the social sector, as well as promoting new partnerships between governments, the private sector and civil society, are also essential in this area. According to Lesufi (2004) there are six key objectives pursued which include the promotion of self-reliance in development and building capacity for self-sustaining development. Accelerating socio-economic development to achieve sustainable development and poverty eradication. Strengthening policies, delivery mechanisms and outputs in key social development areas, ensuring affordable access to water, energy, finance markets (including micro-finance), ICT to all citizens, especially the rural poor, progress towards gender equality, particularly equal access to education for girls at all levels. Encouraging broad based participation in development by all stakeholders at all levels.

Exposition of the 5 stages of the APRM

Stage One: Constituting National Structures and developing the country’s self-assessment Report based on the questionnaire and a preliminary Programme of Action; and the submission of these to the APR Secretariat. The APR Secretariat also prepares a Background paper on the country;

Stage Two: the Country Review Team visits the country to undertake wide consultations with stakeholders;

Stage Three: the drafting of the report by the Country Review Team;

Stage Four: the submission of the Country Review Report to the APR Secretariat and the APR Panel, and to the Forum for Peer Review discussions among the Heads of State and Government;

Stage Five: the final stage of the APR process involves making public the country’s report and related actions.

Conceptualisation of Regional integration

Regional integration is the process by which two or more nation-states agree to co-operate and work closely together to achieve peace, stability and wealth. Regional Integration is a process in which neighbouring states enter into an agreement in order to upgrade cooperation through common institutions and rules. According to (Lesufi, 2004) regional integration refers to various types of political and economic agreements that form closer ties between sovereign countries. Such policies vary from trade agreements to more extensive treaties in which individual member countries sacrifice part of their national sovereignty to a higher entity. The most famous example is the European Union, where a series of countries together formed a new political body, with each member state sacrificing certain powers such as the right to mint currency. In Africa, there is the umbrella body called the Africa Union which boasts membership from all the 54 countries on the continent. We also have sub-regional bodies which foster integration such as ECOWAZ, SADC. Agreements like these are not uncontroversial, because they entail certain advantages and disadvantages as discussed below.

Advantages of regional Integration

Trade gains are one of the major advantages of regional integration for individual member states. Besides the European Union, other trade-related regional integration policies include numerous agreements in Africa: for example, the Southern African Customs Union Agreement and the Multilateral Monetary Agreement (South Africa, Namibia, Lesotho and Swaziland). In various ways, these agreements make moving goods across borders in Africa easier and to some extent cheaper. This leads to gains in trade. Trade agreements that open borders allow a country with a particularly strong industry, like wool, cotton, grain and oil to sell its goods to an even bigger market outside of the country or origin (Mistry, 2005). This leads to monetary gains for countries involved, through more profits for the country of origin and through cheaper products for the importing country.

Regional integration agreements expand the market for goods and therefore allow companies, factories and industries to produce more of their goods and sell it to a bigger market. This creates something called economies of scale, where the per-unit price of producing a good decreases as the total quantity of that good's production increases (De Waal, 2002). Fewer trade barriers also allows increased competition, which in turn results in the provision of cheaper, quality products and services. This is an overall net positive, because it leads to greater productivity within industries.

Disadvantages of regional integration

Some regional integration agreements that involve the creation of a common currency (most notably the European Union and Multilateral Monetary Agreement) lead to fiscal crises. Without regional integration, individual countries can control the supply of their own currency to suit the nation's economic conditions. When a higher entity controls that currency -- as is the case with the EU's euro -- individual countries have no power to vary the strength of their currency when their economy weakens. This occurred when Greece's national finances were very weak, and its economy suffered. If it could have printed more currency to pay its bills, the country's financial situation would not have been as weak. The European Union, however, controlled the country's currency, which left it little power to fix its own economy.

Trade Diversion: Because of trade barriers, trade is diverted from a non-member country to a member country despite the inefficiency in cost. For example, a country has to stop trading with a low cost manufacture in a non-member country and trade with a manufacturer in a member country which has a higher cost. National Sovereignty: Requires member countries to give up some degree of control over key policies like trade, monetary and fiscal policies. The higher the level of integration, the greater the degree of controls that needs to be given up particularly in the case of a political union economic integration which requires nations to give up a high degree of sovereignty.