Wednesday,22 August, 2018
Current issue | Issue 1242, (16-22 April 2015)
Wednesday,22 August, 2018
Issue 1242, (16-22 April 2015)

Ahram Weekly

Building on COMESA

How can Egypt gain greater benefits from its membership in the COMESA economic bloc, asks Mona El-Fiqi

Al-Ahram Weekly

Egypt’s relations with the Common Market for Eastern and Southern Africa (COMESA), the largest economic bloc in the region, date back to 1998. While economic cooperation between the members of the bloc has increased over the years, tariff and non-tariff barriers still limit its potential.

In 1998, Egypt’s total imports from COMESA countries came in at $154 million, increasing to $730 million in 2013. Egypt’s exports to COMESA rose from $64 million in 1998 to $2.5 billion in 2013, of which $1 billion was to Libya and Sudan.

During the last quarter of 2014, exports to COMESA countries reached LE3.4 billion, representing 9.7 per cent of Egypt’s total exports.

Egypt’s exports to COMESA are mainly chemicals, building materials, pharmaceuticals, food products, vegetables, fruits and rice. The list of Egypt’s imports from the bloc includes coffee, tea, copper and livestock.

However, these figures remain moderate in the light of the size of the market. With a market of nearly 400 million people, total annual exports of $110 billion, and total annual imports of $100 billion, there seem to be huge unspent opportunities.

To boost relations with the COMESA countries, “political will as well as public contributions are needed,” said Nagwa Saad Eddin, a professor of economics at the National Planning Institute.

Not only state bodies but also NGOs and the private sector must play a role in enhancing the economic, cultural, religious and political ties with African countries, according to Saad Eddin.

As for investment, COMESA countries suffer from a shortage of manufactured products and their markets have a plenty of room for Egyptian industries. There is also room for Egyptian investments in other sectors like agriculture, livestock, food industries, energy and communications, Saad Eddin said.

However, when talking about business in Africa the problem of transportation can be an obstacle. Saad Eddin suggested that the African governments should cooperate to solve this problem.

A project to establish a marine line connecting Lake Victoria, Africa’s largest lake with shores in Kenya, Tanzania and Uganda, with the Mediterranean Sea is expected to give a considerable boost to inter-African trade when completed.

Moreover, it has been announced that a road between Cairo and Cape Town in South Africa is to be established to facilitate trade between COMESA member countries.

“We hope to see an improvement in the shipping and transport infrastructure of the continent because poor roads and underdeveloped transport systems have been cited as impediments to intraregional trade,” Saad Eddin said.

Businessmen have complained that when they ship goods to Zambia they have to go first to South Africa and then to Zambia. The same problem exists if their products are sent to Kenya.

Not only is it hard to reach land-locked African nations, most having poor roads and inadequate landing and storage capacity, there is also a lack of proper insurance and credit arrangements to cover the trade.

To find solutions for these problems and follow up on the progress of the regional bloc, the heads of state and government of the 19-member bloc of countries held their 18th meeting at the African Union Commission Headquarters in Addis Ababa at the end of March. “Inclusive and Sustainable Industrialisation” was the theme of the summit.

According to a report presented at the summit, some non-tariff barriers have been identified as restrictive to trade in the region. They include government participation in trade and restrictive practices due to lengthy customs and administrative entry procedures.

Other problems include quantitative restrictions and quotas, charges on imports, transport, clearing and forwarding, and issues related to transit clearance and procedural restrictions.

Customs and administrative entry procedures are at the top of the list of non-tariff barriers followed by transport, clearing and forwarding and other procedural problems.

One of COMESA’s aims is to remove tariffs among bloc members on products having at least 45 per cent added value in one of the member states. However, Ahmed Basyoni, an African affairs researcher, explained that some member states still apply only partial exemptions of tariffs on imports from COMESA countries.

“Due to low state revenues in some African countries, tariffs are considered an important source of revenue for the countries’ budgets.

They prefer to import products from non-COMESA countries and impose customs duties on them rather than facilitate the entrance of low-tariffed products from COMESA members,” Basyoni explained.

In 2014, intra-COMESA trade rose to $22.4 billion from $19.2 billion in 2013, and it is expected to rise to $25 billion in the coming year. The figure was $12.7 billion in 2009.

According to a study conducted by the COMESA secretariat in 2014, average GDP growth in member states was 5.5 per cent, and the sectors with the highest trade potential are textiles, wooden furniture, household items, leather products and white and red meat.

To move the work of regional integration among COMESA countries forward, its member states decided at the end of their 18th meeting to support the COMESA industrialisation policy, considered vital for the economic transformation and sustainable development of the region.

Having recognised the importance of the customs union to COMESA’s integration agenda, member states decided that the customs subcommittee should hold its meetings at least once every six months in order to take stock of the progress members states are making in the implementation of the customs union.

What is COMESA?

The Common Market for Eastern and Southern Africa (COMESA) started with a Preferential Trade Area (PTA) Agreement between the countries of Eastern and Southern Africa signed on 21 December 1981 and entering into force on 30 September 1982.

A formal COMESA agreement was signed on 8 December 1994, replacing the old PTA. Egypt joined the COMESA bloc in May 1998.

The objectives of COMESA are:
• To achieve sustainable growth and development in member countries by promoting a more balanced production and marketing structure;
• To boost joint development in all fields of economic activity, adopting macroeconomic policies and programmes to improve the welfare of citizens and encourage close relations between member countries;
• To create a suitable environment for domestic, foreign and cross-border investment;
• To strengthen relations between COMESA and the rest of the world;
• To cooperate in driving peace and security processes between member countries so as to strengthen economic development ties in the region.

Currently, COMESA includes 19 countries: Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, the Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.

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