The OECD membership hurdle for Africa

Introduction

The OECD (Organization for Economic Cooperation and Development) works with Africa, but no African country is currently a member state of the OECD. Why has no African country become an OECD member state? The short answer is: African countries are currently unable to meet the economic, legal, political, and other high ‘standards’ required by the OECD. The long answer is what this blog aims to shed light on. From OECD membership being a moving target to the failure of African countries to ‘up their game’, ‘like-mindedness’ being an end that the continent’s structure disallows and the burden of OECD membership, the blog unpacks the lines of readiness required for OECD membership. Is this a case of high barriers to entry as the OECD membership process gets increasingly rigorous with time or a case of a flaccid approach to policy issues which Africa has become synonymous with?

The OECD membership criteria

The OECD currently has 38 member states. An increase of 18 member states from when the OECD Convention was signed in 1960 with just 20 countries. In the last 63 years, only 18 countries have met the OECD membership criteria and have successfully joined the organization, 14 of these joined from 1994. This means that between 1960, when the Convention was signed, to 1994, only 4 countries joined the OECD [1]. Becoming a member of the OECD is a result of a ‘rigorous review process’. According to the OECD’s Framework for the Consideration of Prospective Members, the OECD governing body (the Council) made up of all (now 38) member countries, decide, through mutual agreement, to begin ascension discussions with countries. These are either at the initiative of the Council or upon receipt of a written request by an interested country. Once the Council agrees, an Ascension Roadmap is prepared which is to be adopted by the prospective member country [2].

Prospective OECD members are evaluated on 5 key aspects:

State of Readiness which covers:
- Economic and public governance characteristics (for which evidence is provided on whether the country has a rules-based open market economy, tax transparency, stable financial system etc.),
- ability, capacity and engagement (whether the country is able to sustain the ascension process with adequate resources to meet obligations and to engage with OECD committees), and
- reach and impact (the prospective member’s regional or global role in the world economy).
Country’s commitment to OECD values and membership obligations covering commitment to democratic values, rule of law and human rights, like-mindedness, global considerations etc.
Institutional framework assesses key features of the prospective country such as government type, administrative divisions, legal system, judiciary, central bank, and competition authority.
Key economic indicators are also assessed such as population, GDP, export, imports, external debt stocks, inflation, labour force, unemployment, FDIs (inflow and outflows) etc.
Relations with the OECD assesses participation in country and regional programs and general participation in OECD bodies.

For each key aspect above, evidence in the form of progress towards adhering to these 5 framework characteristics must be provided. This can be in the form of OECD legal policy instruments. For example, for the economic and public governance characteristics under the state of readiness, a prospective member country must adhere to a legal instrument called the ‘Declaration on International Investment and Multinational Enterprises’. This declaration on its own requires adherence to 13 other OECD acts (4 of which are legally binding) [2]. Another is the ‘Recommendation on Good Statistical Practice’. The OECD is also able to, at its discretion, include additional criteria, such as in the case of South Korea that needed to meet an additional commitment for labour law reform [3].

Why OECD membership is out of reach for African countries

OECD membership: a moving target

Since 1960, with the core 20 member states setting the rules and standards, membership framework and requirements, while correspondingly developing their own internal systems, the bar has been set very high for non-OECD countries. OECD economies have changed substantially, and countries’ institutional frameworks have also changed considerably. For example, a key aspect for evaluating prospective members is their institutional framework, which assesses key features of the prospective country such as having a competition authority. Prior to now, some member states who joined the OECD in 1960 did not have functional and independent competition agencies, a criterion that needs to be met now for prospective members. For example, the Hellenic Competition Authority (HCC) only became an independent authority in 1995, 34 years after Greece joined the OECD. Also, though Belgium joined the OECD in 1961, the Belgian Competition Authority only opened shop in 2013, 52 years after joining the OECD [4]. The fact is, OECD standards though admirable are subject to change, current members can make the switch and adjust with each other. Non-members do not have that luxury and would always have to play catch up.

‘Like-mindedness’ being an end that the continent’s diversity disallows

Like-mindedness reflects the degree of political commitment that prospective member states need to show to OECD values especially in driving whatever country level reforms OECD internal committees prescribe [5]. Looking at Africa and the various national interests and country level values and how these translate into policy design and implementation, one can observe the diversity of values across a sample of African countries. The region’s diversity in language, culture, religion, food, art, music, economic geography, size of economies, though positive in some instances, can pose obstacles in discussions on like-mindedness. Like-mindedness after all is a value-proposition [6]. And if African countries do not whole-heartedly accept all aspects of the OECD’s ‘value proposition’, this significantly hinders the type of rapport that could occur with the OECD and limits the leverage that can advance the continent’s interests. While coalitions and regional organizations exist on the continent with some shared values, galvanizing the level of like-mindedness on policy making required by the OECD on a continent as diverse as Africa would need to be approached strategically.

The failure of African countries to ‘up their game’

Truth be told, Africa has developmental challenges. Evidence of the lip service paid to democracy and democratic values, free markets, infrastructural development, and lack of strong governance/policy making is readily available. From the energy crisis in South Africa to the deepening struggles of oil dependent states with countries like Sudan, Nigeria, Angola, and Ethiopia, among the eight Sub-Saharan African oil exporters accounting for nearly half of the region’s GDP, growing at rates below their long-term average growth [7][8]. These woes largely show how African countries are governed. Also, the Ibrahim Index of African Governance (IIAG) measures security and rule of law, human development, foundations for economic opportunity, participation, rights, and inclusion etc. This index showed that in 2022, the overall average for governance in Africa was 48.9 out of 100.0, with outliers like South Africa (67.7), Botswana (68.1) and Tunisia (70.9) scoring above the continental average [9]. With this backdrop, majority of countries in Africa would find it difficult, albeit impossible, to meet the standards of the OECD.

The ‘burden’ of OECD membership

African leaders balance whether it is worth the trouble joining the OECD. They would after all balance the rigour required to join versus maintaining the status quo. This is because the path to OECD membership can last almost a decade with various ‘structural adjustments’ required before formally becoming an OECD member. Colombia became the OECD’s 37th member in 2020. A journey that started in 2013 from when the OECD Council began ascension discussions with Colombia. Colombia’s Roadmap for ascension involved in-depth reviews by about 23 OECD technical committees from the Investment Committee to the Working Group on Bribery in International Business Transactions, Competition Committee, Chemicals Committee, Committee on Financial Markets, Health Committee, Committee on Statistics etc. A long, painful process that the country submitted itself to, showing willingness to comply and make rigorous structural changes in meeting the requirements of the OECD from 2013 to 2020 [10].

African countries have not reached the point where the drastic changes required to make democracy work on the continent are pursued. In governance and policy making, the minimum is usually done with piecemeal approaches to development, while the benefits of OECD membership largely remain unclear to African leaders. African countries may consider that adhering to OECD standards, though high, is strongly correlated with endless possibilities of economic growth and development on the continent. South Africa, Egypt and Morocco are allying as key partners with the OECD as the rest of Africa looks on.

Conclusion

The OECD does not give the impression that they are desperate for African countries’ membership. They state:

‘…The OECD does not aim to become a universal organization in terms of its size but rather to ensure that the OECD’s standards and policies are applied and implemented on a global scale. The continued success of the Organization requires a strategic approach to Membership and engagement that enhances geographic representation and preserves and promotes the OECD’s standards and policies.[11]

The foregoing means that whether African countries join or not, the ‘global’ standard setting continues.

References

Author's bio

Oluwatobi Ogundele's economics experience and interests have been in the areas of competition law and policy, health and migration. She has masters degrees in Economics and in International Public Policy with specialization in International Economic Relations and Global Governance.

ECONOLICY AFRICA