COMESA

COMESA(Common Market for Eastern and Southern Africa)

ByAbhinandan SawantAjinkya Wanjalkar

Overview of COMESA The history of COMESA began in December 1994 when it

was formed to replace the former Preferential Trade Area (PTA) which had existed from the earlier days of 1981.

COMESA was established 'as an organisation of free independent sovereign states which have agreed to co-operate in developing their natural and human resources for the good of all their people’

However, due to COMESA's economic history and background its main focus is on the formation of a large economic and trading unit that is capable of overcoming some of the barriers that are faced by individual states.

Ref : www.comesa.int

Overview of COMESA (contd.) COMESA's current strategy can thus be summed up in the

phrase 'economic prosperity through regional integration'. 19 member states Population of over 470.26 million. Annual import bill of around US$170,895 million. Export bill of US$112,546 million. COMESA forms a major market place for both internal and

external trading. Its area is impressive on the map of the African Continent

covering a geographical area of 12 Million (sq km). Its achievements to date have been significant.


Vision

COMESA’s Vision is to “be a fully integrated, internationally competitive regional economic community with high standards of living for all its people ready to merge into an African Economic Community”


Mission

• Its Mission to “Endeavour to achieve sustainable economic and social progress in all Member States through increased co-operation and integration in all fields of development particularly in trade, customs and monetary affairs, transport, communication and information, technology, industry and energy, gender, agriculture, environment and natural resources”.

• The Secretariat was guided to develop its specific Mission Statement as follows: “To provide excellent technical services to COMESA in order to facilitate the region’s sustained development through economic integration”.


Core Values

• The Secretariat believes in satisfying its customers• It delivers services with professionalism, integrity and

innovation.• It believes in quality leadership, teamwork and respect

for each other in an enabling environment.• It cares for the environment and upholds its social

responsibility • The Mission and Values Statements on their own are

not sufficient to ensure an efficient and effective service delivery.


Core Values (Contd.)

• They have to be linked to the strategy of the Secretariat which is building excellence into every process of the organisation through: – Creation of a participatory environment which allows and

encourages every staff to contribute to the development of the organisation either individually or in teams.

– Enhancement staff competencies through continuous improvement.

– Establishment of economical, efficient and effective systems and procedures.

– Effective and efficient communication.


Evolution of PTA/COMESA• The COMESA traces its genesis to the mid 1960s.

• The idea of regional economic co-operation received considerable impetus from the buoyant and optimistic mood that characterised the post-independence period in most of Africa. The mood then was one of pan-African solidarity and collective self-reliance born of a shared destiny. It was under these circumstances that, in 1965, the United Nations Economic Commission for Africa (ECA) convened a ministerial meeting of the then newly independent states of Eastern and Southern Africa to consider proposals for the establishment of a mechanism for the promotion of sub-regional economic integration.

• The meeting, which was held in Lusaka, Zambia, recommended the creation of an Economic Community of Eastern and Central African states.


Evolution of PTA/COMESA (Contd.)

• An Interim Council of Ministers, assisted by an Interim Economic Committee of officials, was subsequently set up to negotiate the treaty and initiate programmes on economic co-operation, pending the completion of negotiations on the treaty.

• In 1978, at a meeting of Ministers of Trade, Finance and Planning in Lusaka, the creation of a sub-regional economic community was recommended, beginning with a sub-regional preferential trade area which would be gradually upgraded over a ten-year period to a common market until the community had been established.

• To this end, the meeting adopted the "Lusaka Declaration of Intent and Commitment to the Establishment of a Preferential Trade Area for Eastern and Southern Africa" (PTA) and created an Inter-governmental Negotiating Team on the Treaty for the establishment of the PTA.

• The meeting also agreed on an indicative time-table for the work of the Intergovernmental Negotiating Team.



• After the preparatory work had been completed a meeting of Heads of State and Government was convened in Lusaka on 21st December 1981 at which the Treaty establishing the PTA was signed.

• The Treaty came into force on 30th September 1982 after it had been ratified by more than seven signatory states.

• The PTA was established to take advantage of a larger market size, to share the region's common heritage and destiny and to allow greater social and economic co-operation, with the ultimate objective being to create an economic community.

• The PTA Treaty envisaged its transformation into a Common Market and, in conformity with this, the Treaty establishing the COMESA, was signed on 5th November 1993 in Kampala, Uganda and was ratified a year later in Lilongwe, Malawi on 8th December 1994.



• It is important to underline the fact that the establishment of PTA, and its transformation into COMESA, was in conformity with the objectives of the Lagos Plan of Action (LPA) and the Final Act of Lagos (FAL) of the Organisation of African Unity (Organisation of African unity).

• Both the LPA and the FAL envisaged an evolutionary process in the economic integration of the continent in which regional economic communities would constitute building blocks upon which the creation of an African Economic Community (AEC) would ultimately be erected.


COMESA Members

COMESA Members


Changes in the Regional Economy

• Up until the late 1980s and early 1990s most COMESA countries followed an economic system which involved the state in nearly all aspects of production, distribution and marketing, leaving the private sector to play a minor economic role.

• This system promoted import substitution and subsidised consumption


Changes in the Regional Economy (Contd.)

• The inefficiencies inherent in this system contributed significantly to the economic decline of the PTA/COMESA region. For example, by the mid 1990s:

– Gross domestic investment had fallen consistently for 20 years to a level below a minimum investment ratio of the required 20% of GDP needed to cover depreciation and repair costs; foreign direct investment (FDI) in Africa was negligible, at approximately 1 per cent of GDP, representing 0.8 per cent of all FDI and 2.1 per cent of FDI going into all developing countries.

– The share of exports from sub-Saharan Africa in world exports declined from 2.5% in 1970 to 1% in 1990, while its share in developing country exports declined from 13.2% to 4.9% in the same period.



– External debt of the COMESA region had, by the early 1990s, increased twenty-fold since 1970. Debt service ratios, which in 1970 were insignificant, averaged 45 per cent of export earnings in 1989-90, making the region one of the most heavily indebted in the world. The aggregate external debt owed by sub-Saharan Africa, including South Africa, was US$318 billion in 1994, compared to external financing to all African countries of about US$15 billion in 1996.

– Although industrial output grew in the 1960s and 1970s, this was followed by a sharp decline as a result of entrenched structural rigidities, weak inter-industry and inter-sectoral linkages, lack of access to advanced technologies and poor institutional and physical infrastructure. The African continent's share of world manufacturing value added (MVA) rose from 0.7 per cent in 1970 to 1 per cent in 1982 and fell to 0.8 per cent in 1994.



• Thus from 1960 up until the mid-1990s, the economic growth of the COMESA region averaged 3.2 per cent a year, a figure marginally above the level of the region's population growth. By 1993, this region of about 280 million people then (excluding Egypt), which had more than doubled its population since independence, had a total GDP of around US$90 billion, and included fifteen of the twenty-three States classified as Least Developed Countries (LDC's) by the United Nations.


What COMESA Offers

COMESA offers its members and partners a wide range of benefits which include:

• A wider, harmonised and more competitive market• Greater industrial productivity and competitiveness• Increased agricultural production and food security• A more rational exploitation of natural resources• More harmonised monetary, banking and financial policies• More reliable transport and communications infrastructure.


Aims and Objectives of the Common Market

• to attain sustainable growth and development of the Member States by promoting a more balanced and harmonious development of its production and marketing structures;

• to promote joint development in all fields of economic activity and the joint adoption of macro-economic policies and programmes to raise the standard of living of its peoples and to foster closer relations among its Member States;

• to co-operate in the creation of an enabling environment for foreign, cross border and domestic investment including the joint promotion of research and adaptation of science and technology for development;


Aims and Objectives of the Common Market (Contd.)

• to co-operate in the promotion of peace, security and stability among the Member States in order to enhance economic development in the region;

• to co-operate in strengthening the relations between the Common Market and the rest of the world and the adoption of common positions in international fora; and

• to contribute towards the establishment, progress and the realisation of the objectives of the African Economic Community


Fundamental Principles

• equality and inter-dependence of the Member States; • solidarity and collective self-reliance among the Member

States; • inter-State co-operation, harmonisation of policies and

integration of programmes among the Member States; • non-aggression between the Member States; • recognition, promotion and protection of human and peoples'

rights in accordance with the provisions of the African Charter on Human and Peoples' Rights;


Fundamental Principles (Contd.)

• accountability, economic justice and popular participation in development;

• the recognition and observance of the rule of law; • the promotion and sustenance of a democratic system of

governance in each Member State; • the maintenance of regional peace and stability through the

promotion and strengthening of good neighbourliness; and • the peaceful settlement of disputes among the Member States,

the active cooperation between neighbouring countries and the promotion of a peaceful environment as a pre-requisite for their economic development.


Decision Making Process• COMESA has evolved a comprehensive decision making structure

at the top of which are the Heads of State of the 20 member countries.

• There is then a Council of Ministers responsible for policy making, 12 technical committees and a series of other advisory bodies (including specific relations with partner countries and the business community).

• In addition each member state appoints liaison persons in their appropriate ministries who form part of the day-to-day communication process.

• Overall co-ordination is achieved through the Secretariat, based in Lusaka, Zambia, who will be happy to deal with all initial communication.


Free Trade Area

The FTA was achieved on 31st October, 2000 when nine of the member States namely Djibouti, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe eliminated their tariffs on COMESA originating products, in accordance with the tariff reduction schedule adopted in 1992.

This followed a trade liberalisation programme that commenced in 1984 on reduction and eventual elimination of tariff and non-tariff barriers to intra- regional trade.


Free Trade Area

Burundi and Rwanda joined the FTA on 1st January 2004.

These eleven FTA members have not only eliminated customs tariffs but are working on the eventual elimination of quantitative restrictions and other non-tariff barriers.


Customs Union A Customs Union maybe defined as a merger of two or more

customs territories into a single customs territory, in which customs duties and other measures that restrict trade are eliminated for substantially all trade between the merged territories.

The territories, in turn apply the same duties and measures in their trade with third parties.

In preparation for a Customs Union the Eleventh Meeting of the Council of Ministers held in Cairo, Egypt adopted a Road Map that outlined programmes and activities whose implementation was necessary before the launching of the Union.


Trade PromotionThe Member States shall adopt measures designed to promote trade within the Common Market. In this regard, Member States shall :

ensure the development and dissemination of market intelligence and trade information with a view to providing the widest possible knowledge-base of intra-Common Market trade opportunities and encourage the development of exports and markets to meet the public and private procurement needs;

actively encourage the undertaking of supply and demand surveys, the organisation of buyers and sellers meetings and other multi-country contact promotion events in order to further identify and exploit the potential of intra-Common Market trade;

undertake the removal of measures that have been identified during the market surveys, which restrict the flow of goods and services to their identified markets, including the establishment of agency offices, trade missions, free movement of samples and advertising;


Trade Promotion (Contd.)The Member States shall adopt measures designed to promote trade within the Common Market. In this regard, Member States shall :

identify the possibilities of product adaptation and diversification to broaden their respective export base with a view to expanding or introducing products to new markets in the Member States;

review and initiate programmes for the rationalisation and improvement of import operations and techniques to ensure that savings will accrue from such rationalisation of purchase operations;

seek to ensure that donor-funded import procurement programmes allow as far as possible for the purchase of goods from other Member States;

organise frequent general and specialised trade fairs;


Trade Promotion (Contd.)The Member States shall adopt measures designed to promote trade within the Common Market. In this regard, Member States shall :

improve the performance of small-and-medium scale enterprises for export development such as marketing, business management and the provision of credits;

promote export-oriented joint ventures, by encouraging and facilitating enterprise-toenterprise contacts;

support privatisation endeavours through the introduction of trade services or improvement of the trade promotion infrastructure to meet the special requirements of privatised companies; and

encourage the improvement of services relating to trade such as export financing, quality control and standardisation, packaging and specification aspects, warehousing and storage operations, and others that will increase the flow of goods within the Member States.


Trade Promotion (Contd.)

Other objectives which will be met to assist in the achievement of trade promotion include:

Trade liberalisation and Customs co-operation, including the introduction of a unified computerised Customs network across the region.

Improving the administration of transport and communications to ease the movement of goods services and people between the countries.


Trade Promotion (Contd.)

Other objectives which will be met to assist in the achievement of trade promotion include:

Creating an enabling environment and legal framework which will encourage the growth of the private sector, the establishment of a secure investment environment, and the adoption of common sets of standards.

The harmonisation of macro-economic and monetary policies throughout the region.


COMESA Programmes

• Trade policy• Trade Facilitation• Multilateral Transport• Information Communication Technology (ICT)• Energy• Private Sector Development• Investment Promotion• Gender Mainstreaming.


Trade, Customs and Monetary Affairs

• The final objective of cooperation in Trade, Customs and Monetary Affairs is to achieve a fully integrated, internationally competitive and unified single economic space within which goods, services, capital and labour are able to move freely across national frontiers.


Trade, Customs and Monetary Affairs (Contd.)

• Thus, the programme of cooperation aims to achieve the removal of all physical, technical, fiscal and monetary barriers to intra-regional trade and commercial exchanges through the following stages of integration:

– A Preferential Trade Area (PTA) with lower tariffs applied to intra-regional trade originating in member countries than to extra-regional trade.

– A Free Trade Area (FTA), in which no tariffs are levied on goods from other member States whilst each member State applies its own regime of tariffs to goods imported from outside the region.

– A Customs Union (CU) involving free trade amongst the member States but with a Common External Tariff (CET) according to which every member State applies the same tariffs on goods from outside the region.

– A Common Market (CM) with free movement of capital and labour, considerable harmonisation of trade, exchange rate, fiscal and monetary policies, internal exchange rate stability and full internal convertibility.

– An Economic Community (EU) with a common currency and unified macroeconomic policy.


COMESA Yellow Card Scheme

• The COMESA Yellow Card is a motor vehicle insurance scheme which is valid in all the participating countries.

• It covers third-party liabilities and medical expenses for the driver of the vehicle and his passengers should they suffer any bodily injury as a result of an accident to an insured vehicle.

• It also facilitates cross border movement of vehicles between COMESA member countries.

• As this card is valid in many parts of the region, transporters and motorists do not have to buy insurance cover at each border post they cross.


COMESA Yellow Card Scheme (Contd.)

• For example, if a Kenyan motorist wishes to drive to Harare, Zimbabwe, he will purchase a Yellow Card from an insurance company in Kenya for the required period of time and to cover the countries he will travel through.

• If on his way to Zimbabwe he is involved in an accident in Malawi all he will be required to do is to report to the Malawian Yellow Card National Bureau, which is the focal point (often an insurance company) representing all the insurance companies issuing Yellow Cards, and the traffic police.

• The National Bureau will then handle and settle the claim arising from this accident.

• Therefore, if his vehicle is in a roadworthy state the motorist is then free to continue his journey to Zimbabwe.


COMESA Yellow Card Scheme (Contd.)

• The scheme is currently operational in Burundi, Democratic Republic of Congo, Eritrea, Ethiopia, Kenya, Malawi, Rwanda, Uganda, Tanzania, Zambia and Zimbabwe. About 150 insurance companies are involved in the operation of the scheme and issue about 50,000 cards annually.


Infrastructure

• COMESA has recognized infrastructure development as a priority and strategic focus area that requires special attention.

• The Strategic Objective to be pursued is, therefore, to effectively address constraints related to the improvement of infrastructure and services in the region in order to reduce the cost of doing business and also and to enhance competitiveness, through fostering physical regional connectivity and deepening infrastructure integration.


Infrastructure (Contd.)

• A holistic and corridor based approach to infrastructure development has been adopted s based on three key pillars i.e. policy and regulatory harmonization, development of priority regional physical infrastructure covering transport, information communications technologies (ICT) and energy.

• The transport sector covers civil aviation, surface transport (covering road and rail) and water transport covering maritime and inland water transport subsectors

• The ICT comprises telecommunications, broadcasting and postal services subsectors, whilst Energy covers electricity, fossil fuels and renewable energy subsectors.


Infrastructure (Contd.)• A number of key strategies have been adopted in order to achieve the

infrastructure strategic objective indicated before. They include the following:– Development and revision of model policies and regulations (for

Transport, ICT, and Energy);– Development of aid for trade programs along the major regional

corridors including the establishment of One Stop Border Posts (OSBPs);

– Development of legal and institutional frameworks for public private sector partnerships in order to increase the private sector participation in infrastructure development; and

– Implementation of a communication strategy for the dissemination of information on development of infrastructure projects to all stakeholders.


COMESA Agricultural Programmes

• COMESA Member States are cognizant of the critical role that agriculture plays in their national economies.

• Agriculture is considered to be the engine for economic development in the COMESA region.

• The sector accounts for more than 32 per cent of COMESA's gross domestic product (GDP), provides a livelihood to about 80 per cent of the region's labour force, accounts for about 65 per cent of foreign exchange earnings and contributes more than 50 per cent of raw materials to the industrial sector.


COMESA Agricultural Programmes (Contd.)

• The objectives of the COMESA Treaty and the COMESA Agricultural Policy (CAP) are in line with the broader Comprehensive African Agricultural Development Programme (CAADP) of the New Partnership for Africa's Development (NEPAD) under the African Union (AU).

• The CAADP has been endorsed by African Heads of State and Governments as a framework for the restoration of agricultural growth, food security and rural development in Africa within an integrated and coordinated approach.



• CAADP defines four Pillars for improving Africa's agriculture:– Extending the area under sustainable land management

and reliable water control systems;– Improving rural infrastructure and trade related

capacities for market access;– Increasing food supply, reducing hunger and

improving responses to food emergency crises; and– Improving agricultural research, technology

dissemination and adoption.



• The overall African Union vision for agriculture is that the Continent by the year 2015 should:

– Improve the productivity of agriculture to attain an average annual production growth rate of 6%, with particular attention to small-scale farmers, especially women;

– Have dynamic agricultural markets within countries and between regions;– Have integrated farmers into the market economy and have improved access to

markets to become a net exporter of agricultural products taking into account Africa's comparative and competitive advantage;

– Achieved a more equitable distribution of wealth as a result of rising real incomes and relative wealth for rural populations through more equitable access to land, physical and financial resources, and the knowledge, information and technology for sustainable development;

– Be a strategic player in agricultural science and technology development to meet growing needs and demands of African agricultural development;

– Practice environmentally sound production methods and have a culture of sustainable management of the natural resource base through increased knowledge, information and technology application.


Other Activities / Programme

• Information and Networking Division• Science and Technology• Legal Division• Peace and Security• Budget and Finance Division• Gender and Social Affairs Division


COMESA Institutions Several institutions have been created to promote sub-regional co-

operation and development. These include: The COMESA Trade and Development Bank in Nairobi, Kenya The COMESA Clearing House in Harare, Zimbabwe The COMESA Association of Commercial Banks in Harare, Zimbabwe The COMESA Leather Institute in Ethiopia The COMESA Re-Insurance Company (ZEP-RE) in Nairobi, Kenya

In addition a Court of Justice was also established under the COMESA Treaty and became formally operational in 1998.

Further initiatives exist to promote cross border initiatives, form a common industrial policy and introduce a monetary harmonisation programme.


Security and Other Restrictions to Trade

• A Member State may, after having given notice to the Secretary-General of its intention to do so, introduce or continue or execute restrictions or prohibitions affecting: – the application of security laws and regulations; – the control of arms, ammunition and other war equipment and

military items; – the protection of human, animal or plant health or life, or the

protection of public morality; – the transfer of gold, silver and precious and semi-precious stones; – the protection of any item deemed to be of national importance

provided that the Member State concerned shall furnish proof to the Council that the item is of national importance; and

– the maintenance of food security in the event of war and famine.


Security and Other Restrictions to Trade (Contd.)

• A Member State shall not so exercise the right to introduce or continue to execute the restrictions or prohibitions conferred by this Article as to stultify the free movement of goods envisaged in this Chapter [6(50)].

• Security and other restrictions imposed in accordance with paragraph 1 of this Article shall not extend for more than is necessary to achieve security aims and other risks intended to be eliminated and shall be applied on the basis of non-

discrimination.

Ref : www.comesa.intRef : www.comesa.int

COMESA

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