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Mr. HON. K.N.K. BIWOTT,
former Minister of East African and Regional Cooperation
(Now Minister of Tourism, Trade and Industry On the subject of COMESA)
Interview with:
Mr Biwott,
Nairobi, August 28th, 1999
SELECTED TOPICS
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The COMESA summit took place in Nairobi in May 1999. One of the main resolutions decided upon was that His Excellency President Moi was going to be the president of COMESA for 2 years. What implications does that have for Kenya?
It has great implications. One is that Kenya in the Chair of COMESA will preside over the completion of the process to zero tariff in October 2000 and it will continue to usher in zero tariff in COMESA in the year 2001. Kenya will be handing in the Chairmanship in May 2001 and this means that Kenya will be leading COMESA throughout the dynamic period of realizing the zero tariff by the year 2000.
Nevertheless there are some problems because many of the COMESA members do not have the same level of development and there have been talks that some of them are going to pull out such as Tanzania, which wants to be a member of COMESA but does not want to play by all of its rules. Since Kenya has the presidency of COMESA, how are you planning on dealing with all these different problems in terms of development, especially in the case of Tanzania, a country which heavily depends on import taxes for the input of funds?
Those are problems which, when they come, will have to be handled. There are provisions in the COMESA treaty which allow some countries to derogate certain processes. For example, if they cannot achieve a tariff of 0%, they can be exempted for good reasons, e.g. Namibia, Congo, Angola, especially Angola where a war is going on. They are given certain exemptions. However they would be expected to comply at a later date. Therefore, the question of flexibility in administration of the process is incorporated in the treaty. Integration is a process that creates short-term disruptions in industry and it has to be accepted that it can happen. Integration also takes place among economic regions that are not necessarily equal in the degree of development. Therefore the process has to go through a period of instability in the industrial and economic situation of its member states. To enter into an economic integration situation, one must be very clear about the mission. One has to decide to go through with the process. It must be a commitment while accepting the challenges without wavering from the goal. You have to decide also on the type of economic system. You have to decide to be a free market. You have to accept free market and to allow the private sector to determine the flow of goods and services based on comparative advantage and also based on market driven forces. We do however recognize that there is a need for COMESA as a group to devise a mechanism which will facilitate, in one way or another, a system which will allow the less fortunate member countries access to the beneficial flow of capital for the investment or services. In its last meeting the summit decided on the possibility of creating the COMESA Investment Agency, an Agency which will be looking into these other aspects. Following the COMESA summit decisions, a small committee mandated to look into this aspect met in Lusaka. We decided on a meeting of National Investment Agencies. In Kenya, for instance, we have the Investment Promotion Centre. We will meet and decide among ourselves how to work out modalities for creating and harmonizing modalities which can guide investment in the region. In that case, each country will feel that it is not being marginalized. We were looking for a win-win situation where each country will be no less worse off than it is before the integration. In the case of Tanzania, it is a sovereign state and it has a right to decide on its future. So far, I have heard in the press that they had decided to pull out. Normally countries that wish to pull out give a one year's notice to that effect, so that dialogue can take place within that one year. I am still optimistic that at the end of it all, we will be able to win Tanzania back to COMESA, because there is no harm in being in COMESA and SADC. COMESA and SADC are complementary. They told us that it was a question of rationalization. They did not want to subscribe to too many regional organizations which are doing the same thing. They thought that in terms of time and cost, they will be better off with two: East Africa Cooperation (EAC) and SADC. But we have tried to convince them to accept the fact that in COMESA their interests will be catered for as the cost that they will incur by way of contribution will be far outweighed by the benefits that they will gain in the process. So the dialogue continues and in the end I would like to see Tanzania remaining in COMESA.
You mentioned that by the year 2000 the Eastern Africa Cooperation will bring down all its frontiers and you are going to act the way you used to do In the past, since Kenya, Uganda and Tanzania used to be the same community with the same currency etc. Do you think that in the next ten years we are going to see something similar to what you used to have or will it be a totally different concept? And how are your neighbors going to integrate if Kenya is much stronger politically and economically?
We hope that in the not too distant future we might see a federation of the East African countries. Regarding our differences, a lot of it is more in the imagination than in reality. The fear of Kenya should not be there, they ought to be fearing outside dumping. Dumping of goods from places such as Asia is the real danger. We in Kenya get a lot of Chinese, or South African products dumped into our markets and far more so than our sister countries can claim to get from Kenya. There is the fear that Kenya is more advanced than the others. We accept it, but we think this is a very temporary situation because the moment the market is opened, our three markets will merge and benefit all three countries equally. Therefore the equalizing factor that will have to be in place in due course will be a development process that protects them in the future. If you look at the comparative advantages, then Tanzania can be said to have far more natural resources than Kenya. For example, Tanzania is endowed with more minerals than is Kenya and it has great agricultural potential. You will expect that more industries will shift towards Tanzania. If you look at the electricity potential for example, developing energy and so on, Uganda has far more potential to do so than Kenya. The fear which is there is more of an imprisoning fear and one that is borne out of failure to recognise the tremendous benefits that our open and unified market has to offer. I'm more and more optimistic that we will achieve closer cooperation within the East African Cooperation. I am convinced that the treaty will be signed by the end of November 1999. It is four months late due to the crisis in Congo. The Minister from Tanzania Mr. Kikwete has been very busy as he has been involved in the search for peace settlement in the Congolese rebellion. We are now happy to see that they have agreed to sign the peace agreement in Lusaka, Zambia and we are sure that we will succeed.
At the end of September 1999 you are going to visit several European countries and then you will visit the United States. What is the purpose of your visit? What do you expect from these two blocks?
We will go to Europe and the United States with our eyes wide open to see what they have done to solve their problems and their efforts to liberalize and to break down trade barriers. We will also be introducing COMESA to them and we will be trying to get them to understand our point of view. In other words it will be more confidence building, public relations and dialoging as COMESA is not presently well understood in those countries. Officially we got an opportunity to put our case across.
How do you perceive the USA relations with Kenya and the Region?
Bill Clinton visit to Uganda brought a renewed interest in relations between East Africa and the United States of America. In the past American companies invested heavily in Kenya and in the region. American Government and businesses have always enjoyed good relations in the region. What has changed though is that there is now more emphasis and focus on Africa as a region. New opportunities in the region will facilitate more contact between East Africa and the USA and will hopefully boost economic relations. | Despite the difficult economic situation Kenya is going through, and the lack of help of the Bretton Woods institutions the integration of East African countries is still taking place. How do you foresee the development of COMESA?
The development of the COMESA integration process will continue despite the difficulties experienced in the current economic situation. COMESA is a good program which will bring economic benefits to the region in the short run as well as in the long term. It is therefore worth sacrificing for this process. There are however some difficulties in this process which might cause disruption and adjustment in industries and commerce and also result in some members suspending or withdrawing their membership. The recent COMESA summit, recommended the creation of a COMESA Investment Agency, which will look into mechanisms which will promote capital inflow into all COMESA member countries in order to ensure a win win situation in the development programs of each member country.
 SELECTED TOPICS |
HON. K. N. K BIWOTT,
Minister of Trade Tourism and Industry,
former Minister of EAST AFRICAN AND REGIONAL CO-OPERATION.
 PRIORITIES IN THE DEVELOPMENT OF THE REGION |
The region is currently caught between the existing structural weaknesses that render its economic fundamentals weak hence perpetuating poverty, and the imperative to liberalize and open up the economy in pursuit of being in tandem with the rest of the globalizing world.
This requires a delicate mix of intervention measures that nurture enterprise in pursuit of improving the national capacity to compete and survive in the liberalizing world arena, and at the same time gradually and measuredly open up the economy starting at the sub-regional level and carefully moving towards the wider world.
With full recognition and respect of the fact that the region is constituted of independent states each with its peculiar uniqueness, sovereignty and absolute discretion, priorities for development of the region thus include:
-Closer linkage of the member states through physical infrastructure to facilitate the joining up of national and regional economic spaces and freeing the movement of goods, services, capital and people.
-Bringing harmony in monetary, fiscal, trade investment, standards specifications and competition policies of member states.
-Promoting peace and security in the region through nurturing better understanding and comradeship among the member states, so as to create a favorable environment for trade, investment and growth.
-Nurturing ideological similarity in social policies of member states with a view to creating a level playing ground without necessarily eliminating competition among members.
| CO-OPERATION WITH THE NEIGHBOURING COUNTRIES PROJECTS |
The overriding goal of cooperation in the region is to improve the quality of life of the people of the region. In pursuit of this, member states identify a common problem/concern and develop an intervention program or project to address such a concern.
The East African region is currently pursuing the following programs/projects among others:
i. East African Digital Telecommunications Project
This is a project aimed at modernizing the region's telecommunications backbone. It is being spearheaded by the national telecommunication authorities of each country on a commercial basis, financed through off-shore borrowing.
ii. The East African Roads Network Program
The three EAC countries have identified the principal road corridors that link their networks. A rehabilitation needs assessment has been done on these identified corridors, and a donors conference was held in 1998 in Arusha, where funds for rehabilitation of the network was pledged. A high Level Task force of officials is already pursuing implementation of the project in liaison with prospective donors.
iii. Lake Victoria Environment Management Program (LVEMP)
LVEMP has been established to oversee a sustainable management of the Lake Victoria catchments environment and resources.
iv. Lake Victoria Fisheries Organization (LVFO)
LVFO was established to oversee a sustainable management of the fish resources of Lake Victoria.
v. Water Hyacinth Regional Program
EAC is in the process of finalizing a regional strategy for the control of water hyacinth and other invasive aquatic weeds in East Africa.
vi. Extension of Oil Pipeline to Uganda
Plans are underway to extend Kenya's oil pipeline to Uganda.
| RESULTS OF THE EAC TREATY |
The process of developing the EAC Treaty is at the final stage.
The Signing of the Treaty which has been earlier agreed to be 30th July, 1999 was not feasible because work had been interrupted considerably by other regional events and non-concluded related issues.
The signing of the Treaty will be done in October 1999 at a date to be mutually agreed by the three member states.
| IMPLEMENTATION OF ZERO TARIFF |
Kenya has effected a 90% reduction rate while Uganda and Tanzania have attained 80% level of reduction.
The three countries have agreed to eliminate tariffs among them starting July 2000, subject to the small list of items that each country may subject to a maximum 10% surcharge.
| PLANS FOR THE FUTURE |
Finalize, sign, the EAC Treaty and commence its implementation process.
Develop a Common External Tariff (CET) and a common market with zero intra-EAC tarif.
Deepen the process of integration in all spheres of human endeavor.
Explore ways of developing a monetary union with a common currency, and ultimately a political federation. |
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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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