Wednesday, March 11, 2009

COMESA calls for harmonized African economy

By Theodore May [Daily News-Egypt], First Published: February 26, 2009

The annual Common Market for Eastern and Southern Africa (COMESA) conference convened Wednesday in a continued effort by the 19 member states to enhance trade and economic cooperation and to reach consensus on building an economic bloc of African nations.

Representatives of investment and trade ministries, including Egyptian Minister of Investment Mahmoud Mohieldin, spoke at the conference’s opening meeting.

“Some policymakers [in developing countries] are going to be confused by the policies coming from the developed economies,” Mohieldin warned.

He added, therefore, that the conference “should be ending with some specific targets” for bringing investment to the region.

The Preferential Trade Area for Eastern and Southern Africa (PTA) was established in 1981. This was the first step towards building an African trade bloc and using the continent’s abundant resources locally, rather than exporting them to Europe, Asia, or the US.

COMESA was established at a signing ceremony in Uganda in 1993. COMESA represented an evolution of PTA and signaled progress in developing a preferential trade bloc.

“We have to look at COMESA as a united economic entity and not as separate member states,” Assam Ragab, chairman of the General Authority for Investment and Free Zones (GAFI), said.

Some of the ministers argued for a more sovereign economic system in Africa. They chided the audience, encouraging them to take responsibility for their own development plans.

“Africa will not be developed by foreigners,” argued Ugandan Minister of State, Tourism, Trade and Industry, Gaggawala Nelson Wambuzi. “Africa will be developed by Africans.”

Many of the ministers and their deputies took their allotted time to promote investment opportunities in their countries.

Deputy Minister of Trade and Industry of Malawi Ellock Maotcha Banda called his country a “foothold into emerging regional markets and emphasized that foreign direct investment (FDI) would be critical to Malawi’s growth.

“It is our hope that Zambia will be a model,” said Zambian Deputy Minister of Commerce, Trade and Industry Richard Taima. “We are working toward establishing a harmonized free trade area.”

Among the central themes of the conference, though, was the effort to establish a credible African economic bloc to compete with China, the US and the European Union, among others.

“All the world is coming to regional configurations,” said Kosti Manibe, the Sudanese minister of investment.

In recent years, COMESA has grown by leaps and bounds. It now boasts a GDP of $400 billion.

COMESA boasts having developed three strategies for integrating the economies of the member states.

“There are generally three recognized approaches to integration: market integration, production or project-directed integration and development integration,” said the COMESA website.

Market integration, the site explained, pushes trade liberalization by, among other things, reducing or eliminating trade tariffs between member states.

The production and project approach helps build bilateral projects to promote cooperation between nations. The development integration, while not dissimilar from the other two strategies, uses compensatory and corrective initiatives to sponsor development.

Stressing this growth, both financially and strategically, Ragab said that despite the economic crisis, opportunities abound.

“The perceived lack of finance in the region,” he said, “I tend to disagree.”

He said, rather, Africa’s greatest challenge lies in “enhancing local talent.”

The conference also sought to come to grips with some of the most obvious challenges facing the region today, namely political instability and the continent’s notoriously reputation for being an unreliable place to invest.

Cyprien Sakubu, vice chairman of the Africa Trade Insurance Agency, argued that his agency, as well as a number of other regional organizations, was working to develop state-of-the-art insurance products to bolster investor confidence.

“Leading international private financial institutions,” he said, “see Africa as a high risk place to do business. So we need to address this challenge.”

After the morning sessions, the day held a number of workshops designed to promote dialogue between sector experts in different countries. The group held workshops on tourism, infrastructure, agriculture and energy.

Introducing these workshops, Heba Salama, COMESA regional manager, said that COMESA member states, of which there are 19, would be less affected by the economic crisis than much of the rest of the world. As a result, she argued, there was some urgency to strengthen the economic bloc from a position of power.

“We believe the region will not in the short-term be as affected as the developed countries,” she said.

In this light, she argued, now was the time to establish a “common external trade tariff” and a “common trade policy.”

COMESA members have reason to be confident in their system. Over the last quarter century, the coalition has grown in size and is quickly being seen as an emerging power in international trade circles.