 |
Al-Ahram Weekly 23 - 29 March 2000 Issue No. 474 
|
||
Published in Cairo by AL-AHRAM established in 1875 |
| ||
|
Al-Ahram Weekly 23 - 29 March 2000 Issue No. 474
|
||
| Published in Cairo by AL-AHRAM established in 1875 |
| ||
Egypt Region International Economy Opinion Culture Features Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Profits pass through here
By Mahmoud Abdel-Fadil*
In 1980, a group of African leaders met to issue the Lagos Declaration and its accompanying protocol, establishing the Common Market for Eastern and Southern Africa (COMESA). The event marked the creation of a powerful framework for regional cooperation, a framework which Egypt joined relatively late, signing the documents of admission to COMESA in July 1998.
COMESA comprises 21 nations: Egypt, Sudan, Ethiopia, Eritrea, Djibouti, Uganda, Kenya, Tanzania, Rwanda, Burundi, the Democratic Congo, Malawi, Seychelles, Mauritius, Comoros, Madagascar, Zambia, Zimbabwe, Namibia, Angola and Swaziland. Of these, the ten "Anglophone" countries, said to possess a "significant economic structure," are held to be the "economic backbone" of the association. These are: Uganda, Tanzania, Kenya, Malawi, Swaziland, Seychelles, Mauritius, Namibia, Zimbabwe and Zambia.
COMESA 2000, held in Cairo, was a landmark event in the history of this organisation, which constitutes the cornerstone of the long-term project to establish an African common market. The aim is ambitious indeed, particularly in light of a number of fundamental weak points in COMESA. First, COMESA's total exports account for only a small fraction of global trade. Second, the volume of trade among its members is also very low, reaching by the end of the 1990s no more than $2.4 billion, in marked contrast to a total import volume of $25 billion. Third, infrastructure, particularly the transport and communications networks linking the member countries, is still rudimentary. Finally, according to the vice-president of the World Trade Organisation (WTO), approximately 40 per cent of the inhabitants of COMESA nations live on less than a dollar a day.
Despite these weaknesses, COMESA offers enormous potential for developing interregional trade. Given the abundance of cultivable land and water resources, there is considerable scope for enhancing agricultural production. In addition, the region's mineral wealth offers excellent prospects for collective industrial projects within the COMESA framework.
There is a direct link between enhancing the systems of production in COMESA countries, on one hand, and raising levels of trade among these countries and between COMESA and the rest of the world, on the other. After all, the idea of a common market alone will not achieve the organisation's aims.
It is vital in this context to consider the relationship between such regional associations as COMESA and the process of globalisation. We may approach this crucial relationship from two perspectives. According to the first, which we term "closed regionalism," the member states focus initially on developing their production and infrastructure, and employ well-conceived protectionism to build a solid regional structure over a relatively long transitional period. The other alternative, termed "open regionalism," in the words of Davos Forum Chairman Klaus Schwab, is meant to bring in businessmen and corporations of the international community as powerful partners in the process of building a new Africa. This perspective explains why more than 150 transnational companies were represented at COMESA 2000.
COMESA members meeting in Cairo had before them the crucial task of striking a delicate balance between the "closed" and "open" regionalism. They had to make the difficult reconciliation between the need to create a cohesive regional structure and a structure geared towards the specifications of international economic globalisation. Such reconciliation was essential for COMESA to generate a platform allowing it to set up a common market.
To this end, it is important to consider ways to stimulate the crucial relationship between COMESA and the Arab Free Trade Zone. Increasing the volume of trade and joint investment enterprises between these two regional organisations will be of primary strategic value during the first decade of the 21st century. Egypt, a member of both, is well placed to activate mutual cooperation between Africa and the Arab world.
Egypt has the additional advantage of possessing the strategic location, human capital and infrastructure necessary to allow transnational firms access to the COMESA market through a variety of joint ventures. The enormous potential of the COMESA market should prove highly attractive to transnational corporations. By establishing branches in Egypt, they will be able to benefit from the customs exemptions granted COMESA member nations. Thus, for example, it would be possible to use foreign investments in Egypt -- as an advanced industrial centre within COMESA -- to establish assembly plants for high-technology products that would be re-exported to other countries in the association. We already have a model for such a project in the Mercedes plant in Egypt.
What is important is that Egypt does not become a mere transit point for international companies seeking access to COMESA markets, leaving Egypt no more than the scraps left over after the banquet. If Egypt is to offer international investors its services, it should take measures to ensure that its economy derives some benefit. For example, as the host country for investment projects geared toward re-export through COMESA, Egypt should negotiate with prospective international entrepreneurs to arrive at some form of profit sharing arrangement.
Finally, it is important that we work together to avoid the modes of foreign investment that capitalise on preserving fragmentation between COMESA's relatively weak national economies, draining their resources to the benefit of international capital. Only through such joint action can we ensure that the arrangements we form cause new investments to strengthen the bonds of economic partnership, and enhance collective prospects of substantial growth and development.
* The writer is professor of economics at Cairo University.
