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 Minister of Tourism, Trade and Industry |
Contact:
Ministry of Tourism, Trade and Industry
Hon. Biwott, Minister of Tourism, Trade and Industry
P.O. Box 30510 Harambee House
Nairobi, Kenya
Tel: 254 (2) 240424
Map of COMESA |
| BRIEF ON THE COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA (COMESA) |
| 1. BACKGROUND |
COMESA was established in 1994 through the transformation of the Preferential Trade Area for eastern and Southern Africa (PTA). Presently, COMESA has a membership of 21 states, namely Angola, Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Kenya, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.
The major objective of COMESA is to promote economic integration within Eastern and Southern Africa so as to improve the living standards of the people of the sub-region. In order to achieve the objective, COMESA has defined its short and medium term strategic focus as being Trade Development and Investment Promotion. By pursuing this strategy, Member States are expected to make adjustments necessary for them to become part of the global economy within the framework of the World Trade Organization (WTO) regulations and other international agreements.
| 2. STATUS OF IMPLEMENTATION OF COMESA PROGRAMS |
The strategic approach being pursued by COMESA has focused its activities in the areas of trade liberalization and promotion, transport and trade facilitation, monetary harmonization, investment and institution building. The progress achieved with regard to the implementation of these measures so far is as follows:
 Trade Liberalization and Promotion |
In order to enhance intra-COMESA trade, programs for the reduction of tariffs, elimination of non-tariff barriers and other obstacles, restrictions and constraints were designed. The following schedule for tariffs reduction was agreed upon:
October, 1993 - a reduction of 60%
October, 1994 - a reduction of 70%
October, 1996 - a reduction of 80%
October, 1998 - a reduction of 90%
October, 2000 - a reduction of 100%
As of 31st July 1999, 4 countries have published 90% tariff reduction; 6 countries had published 80% reduction; 1 country 70% reduction and 3 countries 60% reduction. This implies that 14 Member States have reduced their tariffs by 60%-90% and 7 states have not effected any reduction. A number of countries that have not implemented tariffs reduction are under derogation from doing so due to the peculiar environment they find themselves in. They are all, however, expected to have reduced their tariffs by 100% by 31st October 2000. This is the time when COMESA is expected to achieve a Free Trade Area.
With regard to non-tariff barriers and other obstacles, restrictions and constraints to trade, COMESA Member States have made considerable progress in their elimination. Presently, conventional and conspicuous non-tariff barriers such as the restrictive exchange control, export and import licensing, quotas and foreign exchange allocations have been eliminated. However, there were still various non tariff barriers and other obstacles and impediments that various Member States have reported as hindering the expansion of intra COMESA trade. These include immigration formalities and visa requirements, delays in customs clearance of goods, cumbersome transit procedures and charges, insecurity of transit traffic etc.
To facilitate the elimination of these emerging non-tariff barriers, COMESA Secretariat is undertaking studies for the purpose of documenting them. Further, Member States have been urged to eliminate all the known non-tariff barriers in their countries.
In addition to undertaking the aforementioned measures, COMESA is also implementing the following programs as part of trade liberalization:
The categorization of imports of COMESA Member States into a Common External Tariff (CET) structure of: 0% (capital goods), 5% (raw materials); 15% (intermediate goods); and 30% (finished goods).
The local value added criterion for enabling goods from Member States being accorded preferential treatment per the COMESA Rules of Origin was lowered from 45% to 35% as an interim measure pending a detailed study to be commissioned by the Secretariat. Member States were also requested to undertake studies on their industrial structures so as to determine the most appropriate local value added requirement.
| Transport and Trade Facilitation |
In the areas of transport and trade facilitation, the following programs have satisfactorily been implemented: Axle load scheme, harmonized road transit charges, vehicle dimensions and the high frequency fadio cross border communications system for trucks, Advanced Cargo Information System (ACIS), The Third Party Motor Vehicle Insurance Scheme commonly referred to as Yellow Card Scheme. Other transit facilitation measures such as COMESA transit plate, overload control and the coupon system for road transit charges have been implemented by only a few Member States.
In the area of telecommunications network inter-connectivity, COMESA is making preparations for the registration of a private off-shore company to be called COMTEL. The shareholders of this company will be national telecommunications operators (NTOs), a strategic equity partner (SEP) and the private sector. The project is intended to upgrade and expand existing interstate telecommunications links so as to facilitate easy communications and trade among Member States.
The full implementation of these programs will facilitate trade by ensuring speedy movements of goods and the attendance reduction in costs of transit traffic. So far, the transport transit facilitation has resulted in a reduction of costs by as much as 25 %.
| Financial and Monetary System |
The COMESA Monetary Harmonization Program which was adopted by the Authority of Heads of State and Government in 1992 to eventually achieve a monetary union is being redesigned to take into account recent structural and policy changes in COMESA countries.
Further, COMESA is promoting a limited currency convertibility within the region and introducing a stored value smart card to replace the COMESA traveler's checks. The PTA Bank is currently preparing a business plan for the introduction of the stored value smart card system.
The COMESA Clearing House has been undergoing restructuring for the last two years. The aim of the restructuring exercise is to offer commercially viable services in a liberalized market setting. The following services have been identified:
An Africa Guarantee Facility (AGF) - to increase the availability and to reduce costs of trade finance by mitigating the political risks associated with international trade payments. So far, an Agreement has been reached with the World Bank on the finalization and implementation of the facility.
A Fast payment Facility (FAP) - to provide a certainty and quickness of payment to exporters while doing away with the need for outside confirmation. To facilitate its implementation, an agreement has been reached with the IMF and EU to provide technical and financial support, respectively.
A Swift Regional Center - to ensure secure and instantaneous credit.
| Investment Promotion |
The Fourth Summit of the Authority of Heads of State and Government held in Nairobi, Kenya on 24th - 25th May, 1999 decided that a Regional Investment Promotion Agency be established to:
Help identify and provide information on investment opportunities within COMESA.
Develop a joint approach in promoting COMESA a Common Investment Area for direct foreign and cross border investment.
In order to facilitate compliance to the above-cited Summit directives, a meeting of national Investment Promotion Agencies of Member States would be convened before the end of this year.
| Promotion of Peace and Stability in Member States |
The fourth Summit of COMESA Authority held in Nairobi agreed that COMESA should be active in promoting peace and stability in line with the provisions of the Treaty since peace and security are pre-requisite to the achievement of the regional integration objectives of the group.
Consequently, the Authority reviewed the state of conflicts in the region and agreed that COMESA needed to devise a mechanism for resolution of conflicts so as to ensure that those conflicts do not derail the integration process. Further, the Authority decided that a meeting of COMESA Ministers and Ministers of Foreign Affairs be convened at least once a year to consider modalities of promoting peace and security in collaboration with OAU mechanism for conflict management, prevention and resolution. |
| Court of Justice |
Following a decision by the COMESA Council of Ministers in 1997 to establish a Court of Justice, seven judges were appointed from the Member States and sworn in by the Authority during its third Summit held in Kinshasa, Democratic Republic of Congo on 29th July, 1998. One of the judges was elected the President of the Court. Six of the seven judges and the registrar of the Court recently undertook a study tour of the Court of Justice of European Communities in April this year to enable them to gain a deeper insight into the procedural aspects of the operations of the Court.
| 3. GROWTH IN INTRA-COMESA TRADE AND FUTURE PROSPECTS |
The performance of COMESA can be judged by the growth of intra-regional trade. Available data clearly show that intra-COMESA trade has expanded substantially. It rose from US$ 2.8 billion in 1996 to US$ 4.2 billion in 1998. This growth is not, however, solely due to COMESA's trade facilitation and promotional activities but also due to the simultaneously on-going trade liberalization programs being undertaken by various member states under the Structural Adjustments Programs, continued reduction tariffs and, consequently, the establishment of a Free Trade Area in the year 2000 is expected to increase the trade even further. This will be boosted further by the establishment of a common external tariff (CET) or customs union by the year 2004 which will mean less restriction on the movement of people within the region. The COMESA region, which has a combined population of more than 400 million people and a Gross Domestic Product (GDP) of US$ 165 billion, and stretches from Swaziland in the south to Egypt in the north, is to date the largest economic group in Africa.
| 4. PROBLEMS AND CHALLENGES |
Even though COMESA has done much to facilitate the increase flow of goods and services within the sub-region, a number of Member States have failed to give priority to this regional organization. This is reflected by the failure by a number of Member States to pay their contributions to the COMESA budget and fulfillment of other obligations contained in the Treaty such as the implementation of various agreed programs. Yet it is evidently clear that there is a need to strengthen the capacity of the Secretariat so that it can be able to implement the various regional integration programs and decisions of the Authority and the Council of Ministers.
In realization of these problems, the Fourth Summit of the Authority of Heads Of State and Government of COMESA held in Nairobi, Kenya, from 24th -25th May, 1999, decided inter-alia that a special committee of Ministers comprising Kenya, Mauritius, Zambia, Uganda, Egypt, Zimbabwe, Malawi and the Democratic Republic of Congo be established to work out modalities on the implementation of COMESA programs and the count down activities that will culminate in the launching of the COMESA Free Trade Area on 31st October 2000.
| 5 .THE IMPORTANCE OF COMESA TO KENYA'S ECONOMY |
Kenya has been in the forefront in the support of COMESA. This is due to the realization of the enormous benefits and sustained economic growth that accrue from the membership to such regional co-operation and integration as exemplified by the former East African Community. Regional co-operation facilitates access to wider markets which in turn enable the exploitation of economies of scale and consequently the attraction of foreign investment. The membership of Kenya to COMESA has benefited the country substantially. The value of Kenya exports to COMESA region has increased from Ksh 45 billion in 1997 to approximately Ksh 53.4 billion in 1998, while imports have increased marginally from Ksh 1.8 billion to Ksh 2.5billion over the same period. Therefore the country has a huge trade surplus with other COMESA countries. The region has overtaken the European Union as the main trade partner. COMESA countries total exports to the region have risen from 38.l% in 1997 to 44.0% in 1998.
The measures undertaken by COMESA to facilitate intra-regional trade seem to have benefited Kenya enormously. But more importantly is that this trade is dominated by non-traditional goods and specifically manufactured goods unlike trade with the European Union which is dominated by primary products such as agricultural ones. Therefore, the intra-COMESA trade is in line with the country's development strategy of promoting industrialization as expanded in the Sessional paper No.2 of 1997 on industrial Transformation to the year 2020.
The penetration of Kenya manufactured export into the COMESA market will act as a spring board for venturing far and wide in the international markets. COMESA is certainly providing the country with opportunities to develop the practice of dealing with external markets. It would appear that when COMESA achieves a Free Trade Area in the year 2000, the intra-COMESA trade will even expand more and Kenya will stand to gain more from it.
| 6. COUNT DOWN TO COMESA FREE TRADE AREA - 31ST OCTOBER, 2000 |
The Special Ministerial Committee established by the Authority of COMESA Heads of State and Government in their Fourth Summit held in Nairobi, as earlier indicated, met in Lusaka, Zambia on 24th June, 1999 and agreed on a detailed program of activities that will precede the launch of the Free Trade Area. The activities are:
Publication of COMESA Tariffs by Member States.
Organization of a COMESA Trade Fair during the extra-ordinary Summit in October, 2000.
Member States participation in each other's Trade Fair from October 1999 to November 2000.
Encouragement of the Government to partner Member States to participate in trade missions from July 1999.
Writing a book on the concept, opportunities and challenges of a Free Trade Area.
Production of COMESA Free Trade Area Anniversary T-shirts, neckties, cravats, kitenge, khanga etc.
Production of year 2000 calendars and diaries entitled COMESA Free Trade Area.
| by October 2000. |
Holding of the extra-ordinary Summit on 30th October to 1st November 2000, Lusaka, Zambia.
Issuance of COMESA Free Trade Area postage stamps.
Organization of a soccer competition between CECAFA and COSAFA champions.
COMESA Anthem to be played on national television and radio at prime news time from January to December 2000.
A program coordinating Ministries of Finance, Foreign Affairs and Chamber of Commerce and Industry and other relevant ministries and organizations to appear on television and on the print media on the benefits of the COMESA Free Trade Area.
Establishment of Cabinet Sub-Committee at national level to spearhead the implementation of the Free Trade Area activities and COMESA programs, in general.
Organization of information and education awareness workshops for the media and the business community in each Member State.
Organization of national business forums on the COMESA Free Trade Area: benefits and opportunities.
Organization of a business forum to be held during the Extra-Ordinary Summit on 9-30th October 2000.
Secondary Schools essay competition on the challenges and opportunities of a COMESA Free Trade Area.
Public lectures at Universities on the COMESA Free Trade Area, October, 2000:
| Investment and Trade opportunities. |
Organization of social/cultural activities during the Count Down period and at the Extra-Ordinary Summit.
Organization of a competition on quality assurance standards.
Organization of one regional forum for Parliamentarians on the COMESA Free Trade Area, including global trade issues.
COMESA vision and strategy paper/COMESA Annual Report 1999.
Program to ensure that the COMESA integration agenda is introduced in all teaching curricula from Primary School to University Level.
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© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Kenya published in Forbes Global Magazine.
November 29th 1999 Issue.
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