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Al-Ahram Weekly 2 - 8 March 2000 Issue No. 471 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 2 - 8 March 2000 Issue No. 471
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Interview Features Focus Heritage Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Continental cooperation
By Ibrahim Nafie
On 28 and 29 February, Egypt hosted the first regional economic conference of the Common Market for Eastern and Southern Africa. "COMESA 2000: The Emerging African Market", as the gathering was called, symbolises Egypt's return to the heart of African affairs.
Egypt's decision to join COMESA is part of our strategy of capitalising on all channels to bolster comprehensive economic growth, and above all regional cooperation. Large regional economic blocs such as COMESA have proved highly effective in responding to the harsh challenges of globalisation. For developing nations in particular, recent experiences in regional economic integration have revived hopes for rapid economic development. If we disregard the effects of the recent financial debacle in the newly industrialised nations of Asia, for instance, ASEAN has succeeded in boosting its members' overall share of the global economic product and, moreover, greatly increased the volume and intensity of interregional trade.
COMESA itself represents the culmination of three decades of African efforts to realise regional integration. This year, COMESA intends to move towards closer integration with creation of a free trade area, with the aim of increasing interregional trade from eight to 20 per cent of its volume of extra-regional trade. Indeed, most member nations have already reduced their customs tariffs by rates of up to 90 per cent, preparatory to the creation of a COMESA customs federation in 2004.
Even before joining COMESA, Egypt had a lengthy record of close and cooperative relations with the other member countries, having frequently offered its diplomatic good auspices to mediate in regional disputes and support major national causes. Through its membership in this organisation, as President Hosni Mubarak announced in his opening address to the COMESA summit in Cairo, Egypt hopes to achieve three objectives: to promote commercial and economic relations among its member nations, to create the largest single market in Africa and to attract the investment of African and foreign businessmen.
Egypt has much to gain and much to offer. Egypt's level of trade inside Africa is less than four per cent of its total volume of trade, so there is room for expansion within the vast African market. Its petrochemical and textile industries will have an important competitive edge, given their high standards of quality. The same applies to the Egyptian construction industries, particularly ceramics. Egyptian industry will benefit greatly from the customs reductions and relatively inexpensive raw materials that it will be able to obtain from other COMESA members. Indeed, some Egyptian companies have already opened branches in other COMESA countries precisely because of the availability of inexpensive raw materials.
This country's membership in this marketplace also furnishes an incentive for multinational companies to open branches here. Foreign investment in Egypt -- a comparatively advanced industrial centre within the association -- can help establish advanced industrial assembly plants whose products can then be re-exported within the COMESA framework. Arab investment in particular will benefit greatly from Egypt's membership in light of the forthcoming agreement to grant Arab imports in Egypt the same preferential conditions that Egypt's exports enjoy within COMESA. Nor should we forget the potential for African investment. In 1999, African investment in Egypt accounted for $64 million of a total of just over a billion dollars in foreign investment.
This forum for cooperation also holds promise for Egyptian agriculture. While the members of COMESA represent a significant percentage of the earth's most fertile land, most lack the expertise necessary for the appropriate exploitation of this land. Egypt is one of the few countries with advanced agricultural research centres and the know-how to develop the food industries these areas are capable of supporting. Indeed, Egypt has already been asked to establish model agricultural projects in four COMESA nations.
Clearly, Egypt is determined to pour all its energy into optimising on its membership in COMESA. However, it is also important to realise that COMESA itself faces several serious challenges. Above all, the success of this regional network is contingent upon the political stability of its member nations. Border disputes and civil war spell disaster for domestic economies and regional cooperation alike. In this respect, Egypt has a vital role to play as an impartial mediator on good terms with all the members of COMESA.
Just as political stability is fundamental to creating an attractive investment climate, so too is a set of economic and bureaucratic policies aimed at attracting the foreign investment necessary to stimulate development in the organisation's various members. According to World Bank figures, Africa in 1998 received only five per cent of total foreign direct investment (FDI) in developing countries and only 1.3 per cent of FDI worldwide.
Egypt and Nigeria alone obtained a third of the total FDI in Africa. But other COMESA countries are not proving as attractive to foreign investment. International organisations complain of numerous obstacles, among them the lack of transparency, high administrative costs, poor infrastructure and the lack of appropriately trained labour. On the other hand, these organisations did praise the efforts most African nations made towards eradicating the legal barriers to multinational investment.
We should also keep in mind that, due to the relatively low per capita purchasing power in Africa, Egyptian industry must not overestimate the absorptive capacity of the COMESA market. At the same time, however, we can do much to stimulate this market by promoting cooperative economic relations between COMESA and the other international economic associations in which Egypt takes part, particularly through its EU and the Euro-Mediterranean partnerships. In short, if our participation in COMESA opens a promising horizon for Egypt to enhance its regional political and economic status, we must be prepared, in turn, to contribute to the advancement of COMESA. Moreover, apart from our network of international economic relations, there are many other ways we can help promote COMESA. For example, Egypt is well poised to lead the way in developing extensive labour training programmes and to help in the infrastructural development of member nations. In addition, Egypt has the ready expertise needed in health care, education and cultural exchange -- all of which will have important political and economic returns. In sum, it could be said that COMESA stands to benefit from Egypt's leadership as much as Egypt stands to benefit from its membership in COMESA.
