COMESA’s priorities and objectives

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 (as defined by
its Treaty) 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’
and as such it has a wide-ranging series of objectives which
necessarily include in its priorities the promotion of peace and
security in the region.

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..

COMESA’s current strategy can thus be summed up in the phrase

‘economic prosperity through regional integration’. With its 19 (now
21 since 18 July 2018) Member States, population of over 520
million and global trade in goods worth US$ 235 billion 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. (Newest Member States: Tunisia and Somalia
not included)

A 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. 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. It is expected that the launch will be
achieved by the year 2008

Trade promotion
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.
 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.

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
COMESA Objectives and Priorities

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 (as defined by
its Treaty) 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’
and as such it has a wide-ranging series of objectives which
necessarily include in its priorities the promotion of peace and
security in the region.

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..

COMESA’s current strategy can thus be summed up in the phrase

‘economic prosperity through regional integration’. With its 21
Member States, population of over 583 million a Gross Domestic
Product of $805 billion, a global export/import trade in goods worth
US$ 324 billion, COMESA forms a major market place for both
internal and external trading.
Geographically, COMESA almost two thirds of the African Continent
with an area of 12 Million (sq km).
Establishment and member countries
The Treaty establishing COMESA was signed on 5th November 1993 in Kampala,
Uganda and was ratified a year later in Lilongwe, Malawi on 8th December 1994.
Member countries are Angola, Burundi comoros, D.R. Congo, Eritrea, Ethiopia,
Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seycelles, Sudan,
Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.

COMESA replaced 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.'

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. By the year
2000, all internal trade tariffs and barriers will be removed. Within 4 years after that
COMESA will have introduced a common external tariff structure to deal with all
third party trade and will have considerably simplified all procedures. It has a wide-
ranging series of other objectives which necessarily include in its priorities the
promotion of peace and security in the region.

History of COMESA

At the first and second conferences of independent African States, held in Accra,
Ghana, in April 1958 and in Addis Ababa, Ethiopia in June 1960, respectively,
economic problems to be faced by independent Africa were discussed. There was a
consensus that the smallness and fragmentation of post-colonial African national
markets would constitute a major obstacle to the diversification of economic activity,
away from a concentration on production of a narrow range of primary exports, to the
creation of modern and internationally competitive enterprises, which would satisfy
domestic needs and meet export requirements. It was, therefore, agreed that African
countries which had gained political independence, should promote economic co-
operation among themselves.

Two options were advocated for the implementation of the integration strategy in
Africa: a) the Pan-African, all-embracing regional approach, which envisaged the
immediate creation of a regional continental economic arrangement; and b) the
geographically narrower approach that would have its roots at the sub-regional levels
and build on sub-regional co-operation arrangements to achieve geographically wider
forms of co-operation arrangements.

The majority of the countries favoured the narrower sub-regional approach. Based on
this, the United Nations Economic Commission for Africa (ECA) proposed the
division of the continent into four sub-regions: Eastern and Southern, Central, West
and North Africa. The Commission’s proposals were adopted by the OAU Conference
of Heads of State and Government. All independent African Sates were enjoined to
take, during the 1980’s, all necessary steps to strengthen existing sub-regional
economic co-operative groupings and, as necessary, establish new ones so as to cover
the whole continent sub-region by sub-region and promote co-ordination and
harmonization among the groupings for the gradual establishment of an African
Economic Community by the end of the century.

The origins of the COMESA can be traced as far back as the mid-sixties. Before the
Lagos Plan of Action and the Final Act of Lagos were adopted, the countries of
Eastern and Southern Africa had already initiated the process towards creating an
Eastern and Southern African co-operation arrangement.

In October 1965, the ECA convened a ministerial meeting of the then politically
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 Southern African states. To
achieve this objective, the meeting also recommended that an Interim Council of
Ministers, assisted by an Interim Economic Committee of officials, should be set up to
negotiate the treaty and initiate programmes on economic co-operation, pending the
completion of negotiations on the treaty.

At the first meeting of the interim Ministerial Council held in Addis Ababa, in May
1966, the Terms of Association to govern the interim arrangements before the signing
of the formal Treaty were adopted and signed by Burundi, Ethiopia, Kenya,
Madagascar, Malawi, Mauritius, Rwanda, Somalia, Tanzania, and Zambia. In
November 1967, a meeting of the Interim Economic Committee of officials
recommended an interim programme of action for implementation which would be
integrated into the Treaty when approved. Parallel with these developments, two other
organizations were established, the Pan-African Freedom Movement in East, Central
and Southern Africa (PAFMECSA), and the conference of East and Central African
states. Although these were mainly political in their orientation, their membership
extended beyond the sub-region and they included in their activities programmes on
economic co-operation.

In the 1970’s, the need for a sub-regional economic arrangements became more
urgent as a result of three major developments. First, the collapse of the federations in
Eastern and Central Africa reduced political co-operation amongst States of the region
and this needed to be addressed. Second, the destabilization of the economies of the
southern African States by apartheid South Africa made it necessary to create, as a
matter urgency, a sub-regional organization which would be an economic
counterweight to South Africa. Third, despite the failure of earlier efforts to establish
a sub-regional economic co-operation arrangement, the countries of Eastern and
Southern Africa recognised that there was no alternative to reducing their traditional
economic dependence on the industrialized countries of the north and that this could
only be done through the adoption of self-sustaining development measures in all
sectors.

In March 1978 the First Extra-ordinary meeting of Ministers of Trade, Finance and
Planning met in Lusaka. The meeting recommended the creation of a sub-regional
economic community, beginning with a sub-regional 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” 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 as provided for in Article
50 of the Treaty.

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

The process of economic integration in Eastern and Southern Africa has, therefore,
not been episodic, but rather systematic, following a logical progression on a step by
step basis. Firstly, a Preferential Trade Area was established and operated for over a
decade, which was then transformed into a common market. The third phase will
involve the eventual establishment of an Economic Community.

Priorities and Objectives according to the Treaty

The Treaty establishing COMESA binds together free independent sovereign States
which have agreed to co-operate in exploiting their natural and human re- sources for
the common good of all their peoples. In attaining that goal, COMESA recognises that
peace, security and stability are basic factors in providing investment, development,
trade and regional economic integration. Experience has shown that civil strives,
political instabilities and cross-border disputes in the region have seriously Affected
the ability of the countries to develop their individual economies as well as their
capacity to participate and take full advantage of the regional integration arrangement
under COMESA. It has now been fully accepted that without peace, security and
stability there cannot be a satisfactory level of investment even by local entrepreneurs.

Therefore, in pursuit of the aims and objectives stated in Article 3 of the COMESA
Treaty, and in conformity with the Treaty for the Establishment of the African
Economic Community signed at Abuja, Nigeria on 3rd June 1991, the member States
of COMESA have agreed to adhere to the following principles:

(a) equality and inter-independence of the member States;

(b) solidarity and collective self-reliance among the member States;

(c) inter-State co-operation, harmonisation of policies and integration of programmes

among the member States;

(d) non-aggression between the member States;

(e) recognition, promotion and protection of human and people's rights in accordance
with the provisions of the African Charter on Human and People's Rights;

(f) accountability, economic justice and popular participation in development;

(g) the recognition and observance of the rule of law;

(h) the promotion and sustenance of a democratic system of governance in each

member State;

(i) the maintenance of regional peace and stability through the promotion and
strengthening of good neighbourliness; and

j) the peaceful settlement of disputes among the member States, the active co-
operation between neighbouring countries and the promotion of a peaceful
environment as a pre-requisite for their economic development.

COMESA is an all-embracing development organisation involving co-operation in all

economic and social Sectors. However, due to resources Constraints, the implemen-
tation of activities and programmes will be prioritised to areas where the greatest
impacts can be made. To that end, the first COMESA Authority of Heads of State and
Government, at its meeting held in Lilongwe, Malawi from 8th to 9th December 1994,
adopted the following five priorities to be the basis of COMESA's focus for the next
five to ten years.'

 significant and sustained increases in productivity in industry, manufacturing,

processing and agro-industries to provide competitive goods as the basis for
cross-border trade and to create more wealth, more jobs and more incomes
for the people of the region;
 increase agricultural production, with special emphasis on the joint
development of lake and river basins so as to reduce dependence on rain-fed
agriculture and new programmes on food security at the provincial or district
levels, national and regional levels;
 development of transport and communications infrastructures and services
with special emphasis on linking the rural areas with the rest of the economy
in each country as well as linking the member States
 new programmes for trade promotion, trade expansion and trade facilitation
especially geared to the private sector, so as to enable the business
community to take maximum advantage of the Common Market, and
 development of comprehensive, reliable and up to date information data
bases covering all sectors of the economy including industry, energy,
environment, agriculture transport, communications, mvestment and ftnance,
trade, health and human resources to form the basis for sound investment
decisions and macro-econoinic policy formulation and programming.

The aims and objectives of COMESA have been designed so as to remove the
structural and institutional weaknesses in the member States by pooling their
resources together in order to sustain their development efforts either individually or
collectively. These are as follows:

 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;
 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.

The COMESA agenda is to deepen and broaden the integration process among
member States through the adoption of more comprehensive trade liberation measures
such as the complete elimination of tariff and non-tariff barriers to trade and
elimination of customs duties; through the free movement of capital, labour, goods
and the right of establishment; by promoting standardised technical specifications,
standardisation and quality control; through the elimination of controls on the
movement of goods and individuals; by standardising taxation rates (including value
added tax and excise duties), and conditions regarding industrial co-operation,
particularly on company laws, intellectual property rights and investment laws;
through the promotion of the adoption of a single currency and the establishment of a
Monetary Union; and through the adoption of a Common External Tariff (CET).

By agreeing to the above, member States have agreed on the need to create and
maintain:

 a full free trade area guaranteeing the free movement of goods and services
produced within COMESA and the removal of all tariffs and non-tariff barriers;
 a customs union under which goods and services imported from non-COMESA
countries will attract an agreed single tariff all COMESA States;
 free movement of capital and investment supported by the adoption of
common investment practices 50 as to create a more favourable investment
climate for the entire COMESA region:
 a gradual establishment of a payments union based on the COMESA Cleaning
House and the eventual establishment of a common monetary union with a
common currency;
 the adoption of a common visa arrangement, including the right of
establishment leading eventually to free movement of bona fide persons.

The free trade area and common tariff structure

A Free Trade Area

COMESA is to establish a Free Trade Area (FTA) by the year 2000 and all countries
are supposed to have reduced tariffs by 80% as at October 1996. In fact, only 5
countries (Comoros, Eritrea, Sudan, Uganda and Zimbabwe) have reached this level,
with Kenya, Malawi and Mauritius on 70% and processing the 80% level. Tanzania is
also currently processing the 80% tariff reduction, which is now before parliament.
All other countries, except Angola, Ethiopia and Zaire (which have yet to reduced
tariffs by the 60% reduction rate), and those countries which still enjoy a derogation
from publishing these tariffs (Lesotho, Swaziland and Namibia) have reduced tariffs
by either 60% or 70%.

The problems some countries face are that they are applying tariff reduction rates to
already low national rates, leading to inequitable revenue losses and making exports
to countries with higher national rates less competitive. There is also a problem with
application of the tariff reduction programme at different stages by different countries.
Although these problems are seen as temporary, if the FTA is achieved by 2000, and
can also be addressed through the principle of reciprocity, the COMESA Secretariat
needs to continue to assess the revenue implications the application of the tariff
reduction programme is having on individual COMESA countries and, where
possible, suggest ways in which reduced revenues from reduced tariff rates can be
compensated for, if only in the short-term and in this area the Secretariat may require
the assistance of short-term technical assistance inputs.

A further problem to be addressed is the inherent inconsistencies in the

implementation of the FTA of COMESA, the proposed SADC FTA and the CBI tariff
reduction programme, although this may not constitute a problem, de facto, as if all
COMESA countries abide by the agreed timetable of implementing a COMESA FTA
only two countries in SADC (South Africa and Botswana) will not have implemented
a FTA. However, this is an area in which the COMESA Secretariat will need to work
closely with the SADC Secretariat to ensure that implementation of the respective free
trade protocols are not contradictory and again this is an area in which the COMESA
and SADC Secretariats may need to request the support of short-term technical
assistance inputs.

One of the principle mechanisms through which COMESA member States will fulfil
the provisions of the COMESA Treaty to simplify and harmonise their customs
procedures and documents, to standardise the collection of reliable, accurate and up-
to-date trade statistics, to facilitate trade in the region is through the implementation of
the Automated System for Customs Data and Management (ASYCUDA) and
EuroTrace.

The objective of ASYCUDA/EuroTrace is to assist the business community to clear

goods faster from customs areas, make available up-to-date and accurate international
trade statistics, modernise customs administrations and, through improved
efficiencies, increase the revenues of COMESA member States.
ASYCUDA is being implemented in 13 COMESA countries (Burundi, Comoros, DR
Congo, Madagascar, Mauritius, Rwanda, Sudan and Zimbabwe), with formal requests
for the system having been received from Malawi, Swaziland and Zambia and
projects underway in Eritrea, Ethiopia, Namibia, Tanzania and Uganda.

The assistance of the donor community, at the level of installing

ASYCUDA/EuroTrace at the national level (involving supply of computer hardware
and initial technical assistance) and at the regional level (through the provision of
regional support to the national systems from the COMESA Secretariat) is welcome.

Related to the establishment of a Free Trade Area is the elimination of Non-Tariff

Barriers (NTBs) and the simplification of COMESA Rules of Origin and Value
Added Criteria.

Steady progress has been made in elimination of non-tariff barriers (NTBs) such as in
liberalisation of import licensing, removal of foreign exchange restrictions and taxes
on foreign exchange, removal of import and export quotas, removal of road blocks,
easing of Customs formalities, extending times border posts are open, etc. There are,
however, still a number of improvements which should be made, which should make
intra-regional trade easier, such as improving the transport and communications
structures, ease visa requirements, improve information, and access to information on
trade opportunities, further reduce customs and bureaucratic procedures at border
crossings etc. Many of these (such as improving the transport and communications
infrastructure) will require significant investment and will only be achieved over a
medium to long term time scale and is an area in which donor support and foreign
private sector investment will be needed for some time to come.

One specific NTB is the amount of documentation required to move goods between
COMESA countries. To assist with the removal of this NTB, by reducing the
multiplicity of customs documents, COMESA has designed the COMESA Customs
Document, or COMESA-CD, which was scheduled for introduction by all COMESA
member States by 1st July 1997.

The Secretariat is currently working on the identification of other remaining non-tariff

barriers and drawing up measures on ways in which these NTBs can be resolved and
the assistance of the private sector and the donor community in identifying NTBs,
recommending ways in which they can be reduced or removed and collaboration with
COMESA on the process of their removal would be of benefit to the process of
economic growth in the region.

COMESA has been working on levels of value-added content and COMESA Rules of
Origin for some time now. Crown Agents carried out a study on these issues in 1994
and recommended introducing a 40% value added on ex-factory price basis and
deleting the provision for 25% value added for goods of particular importance to
economic development. Although these recommendations were accepted by
COMESA, the Secretariat is in the process of undertaking a new study on value added
and rules of origin because there are some member States which are not comfortable
with the current rules of origin which give undue emphasis on value added content.

The view of the Secretariat is that rules of origin should not be based on an added
value criterion alone. In fact firms will try to reduce added value, through reducing
costs and becoming more efficient and so rules of origin based on just added value
may be counter-productive in promoting intra-regional trade. Added value rules are
also arbitrary in nature, complex to apply and introduce a high risk of fraud. Given
these drawbacks the rules of origin study proposed by the COMESA Secretariat is not
be limited to added value criteria only and will address other issues of regional trade.

The COMESA Secretariat would welcome donor assistance in the implementation of

the study on value added content, rules of origin and related topics.

Common External Tariff

COMESA has reached an agreement to implement a Common External Tariff by the

year 2004 and as this currently stands the CET will be 0%, 5%, 15% and 30% on
capital goods, raw materials, intermediate goods and final goods respectively.

There are still a number of obstacles to be faced regarding the CET, not least on the
levels, on compliance, on identifying alternative sources of revenue where revenue
loss could result from adopting the CET, on defining the modalities of administering
the CET and the categorisation of goods into the proposed CET structure.

The COMESA Secretariat would welcome the support of donors, and the involvement
of the private sector, in preparing studies which come up with solutions to these
obstacles in the implementation of a COMESA CET.

COMESA institutions

There are four organs of COMESA which have the power to take decisions on behalf
of COMESA, these being: the Authority of Heads of State and Government; the
Council of Ministers; the Court of Justice; and the Committee of Governors of Central
Banks. The Intergovernmental Committee, the Technical Committees, the Secretariat
and the Consultative Committee make recommendations to the Council of Ministers,
which in turn make recommendations to the Authority.
 The Authority, made up of Heads of State and Government is the supreme
Policy Organ of the Common Market and is responsible for the general policy,
direction and control of the performance of the executive functions of the
Common Market and the achievement of its aims and objectives. The
decisions and directives of the Authority are by consensus and are binding on
all subordinate institutions, other than the Court of Justice, on matters within
its jurisdiction, as well as on the member States.
 The Council of Ministers (Council) is the second highest Policy Organ of
COMESA. It is composed of Ministers designated by the member States. The
Council is responsible for ensuring the proper functioning of COMESA in
accordance with the provisions of the Treaty. The Council takes policy
decisions on the programmes and activities of the COMESA, including the
monitoring and reviewing of its financial and administrative management. As
provided for in the Treaty, Council decisions are made by consensus, failing
which, by a two-thirds majority of the members of the Council.

 The COMESA Court of Justice is the judicial organ of COMESA, having

jurisdiction to adjudicate upon all matters which may be referred to it
pursuant to the COMESA Treaty. Specifically, it ensures the proper
interpretation and application of the provisions of the Treaty; and it
adjudicates any disputes that may arise among the member States regarding
the interpretation and application of the provisions of the Treaty. The
decisions of the Court are binding and final. Decisions of the Court on the
interpretation of the provisions of the COMESA Treaty have precedence over
decisions of national courts. The Court, when acting within it jurisdiction, is
independent of the Authority and the Council. It is headed by a President and
consists of six additional judges appointed by the Authority. Consideration is
being given to establishing the Court of Justice in the not too distant future.
 The Committee of Governors of Central Banks is empowered under the
Treaty to determine the maximum debt and credit limits to the COMESA
Clearing House, the daily interest rate for outstanding debt balances and the
Staff Rules for Clearing House staff. It also monitors, and ensures the proper
implementation of the Monetary and Financial Co-operation programmes..

 The Inter-governmental Committee is a multi-disciplinary body composed of

permanent secretaries from the member States in the fields of trade and
customs, agriculture, industry, transport and communications, administrative
and budgetary matters and legal affairs. Decisions of the Committee are by a
simple majority. Its main functions include:
 o the development of programmes and action plans in all the sectors of
co-operation, except in the finance and monetary sector;
o the monitoring and keeping under constant review and ensuring proper
functioning and development of the Common Market; and
o overseeing the implementation of the provisions of the Treaty and, for
that purpose, requesting a technical committee to investigate any
particular matter.
 There are 12 Technical Committees, namely, on Administrative and Budgetary
Matters; on Agriculture; on Comprehensive Information Systems; on Energy;
on Finance and Monetary Affairs; on Industry; on Labour, Human Resources
and Social Affairs; on Legal Affairs; on Natural Resources and Environment; on
Tourism and Wildlife; on Trade and Customs; and on Transport and
Communications. The Technical Committees are responsible for the
preparation of comprehensive implementation programs and monitoring their
implementation and then making recommendations to the Council.
 The Consultative Committee of the Business Community and other Interest
Groups is responsible for providing a link and facilitating dialogue between the
business community and other interest groups and other organs of COMESA
 The Secretariat is headed by a Secretary General who is appointed by the
Authority for a term of five years and is eligible for re-appointment for a
further term of five years. The basic function of the Secretariat is to provide
technical support and advisory services to the member States in the
implementation of the Treaty. To this end, it undertakes research and studies
as a basis for implementing the decisions adopted by the Policy Organs. The
various activities of the Secretariat encompass: Agriculture; Transport and
Communications: Industry and Energy; Trade and Customs; Monetary Co-
operation; and Administration. The Office of the Secretary General includes
the Legal Office, Technical Co-operation, Women in Development and an Audit
Unit.

An important COMESA innovation is that the Common Market Treaty establishes a

Court of Justice to oversee the legal relations within COMESA. Persons resident in
the Common Market may contest the legality of acts of Common Market institutions
as well as that of member States. In effect, the Treaty establishes a "legal community",
being whereby entrepreneurs will be guaranteed that business decisions and
transactions are not unduly frustrated by unnecessaty bureaucratic interventions.

The COMESA Court of Justice will inter alia: (a) have jurisdiction to adjudicate upon
all matters which may be referred to it pursuant to the COMESA Treaty; and (b) have
jurisdiction to hear disputes between COMESA and its employees that arise out of the
application and interpretation of the Staff Rules and Regulations of the Secretariat or
the terms and conditions of employment of the employees of COMESA, and to
determine claims by any person against COMESA or its institutions for acts of their
servants or employees in the performance of their duties.

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

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

COMESA Achievements

 COMESA, as well as is predecessor the PTA, has achieved a lot in the area of
trade, customs, transport, development finance and technical co-operation.
Impressive progress has also been made in the productive sectors of industry
and agriculture.
 Trade facilitation and trade liberalization measures are bearing fruit. Intra-
COMESA trade has grown from US$834 million in 1985 to US$ 1.7 billion in
1994, an annual growth rate of 14%, and studies indicate that this can
increase to about US$4 billion annually. The challenge facing COMESA is to
exploit this potential further.
 As a result of COMESA traffic facilitation measures, transport costs have been
reduced by a factor of about 25% and efforts are underway to reduce them
further.
 In the sector of telecommunications, special emphasis has been placed on
network development to enable direct telecommunication links through more
reliable infrastructure in order to avoid third country transit systems, which
prove to be very costly.
 COMESA has established several important institutions including the PTA
Trade and Development Bank, the COMESA Clearing House, the COMESA Re-
insurance Company and the COMESA Leather and Leather Products Institute.
 The PTA Bank has, over the years, been very active in promoting investments
and providing trade financing facilities. The Bank's cumulative project
 approvals, 1995-1996, stand at USS$148 million and cumulative trade finance
activities, 1992 - 1996 totalled US$345 million.
 A number of decisions have been taken to make the COMESA Clearing House
more responsive to the current needs of member States, especially the private
sector, including the introduction of the COMESA Dollar to replace the UAPTA
as the new Unit of Account of the Clearing House.
 The Re-Insurance Company (ZEP-RE) has, since its etablishment in 1992, been
able to carve out a reasonable share of the regional insurance business and is
now transacting business in some nineteen (19) countries. The share capital
has risen to US$6.07 million. By the end of 1995, the premium income realized
had increased to US$7.5 million. Two additional member States acceded to
the ZEP-RE Agreement in August 1996. This shows the great business potential
of the COMESA region in terms of re-insurance.
 COMESA now recognizes that in order to increase levels of intra-regional
trade, there is a need to address the regulatory and policy aspects of transport
and communications to make the movement of goods, services and people
between countries in the region easier and cheaper; to create a legal
framework and enabling environment within which private sector business
can operate effectively in the region, and to harmonize macro- economic and
monetary policies.
 COMESA also recognizes the need to promote investment in the region and
addresses this issue through facilitation of bilateral agreements; promoting
export drives by individual member States, and identifying specific projects
which have the potential to act as grnwth poles between two or more
member States.

Economic situation

Africa as a whole will enter the next millennium facing huge economic, social and
political challenges. Paramount among these are a hostile external trade environment,
a large debt burden and reducing levels of Official Development Aid (ODA).

Up until the late 1980s and early 1990s most COMESA countries followed an
economic system which involved the state in all aspects of production, distribution
and marketing, thus denying the private sector an economic role to play, except as
shopkeepers, and promoted import substitution and subsidised consumption. The
theory was that successful emerging industries could be identified by the state and
nurtured, through a system of subsidies, grants and protection from foreign
competition behind a high tariff wall, and that these industries could then grow to a
size from which they could compete against foreign firms. This did not actually
happen as the domestic markets were too small, in terms of purchasing power, for
industries to realise economies of scale; lack of competition resulted in poor quality
goods being produced; foreign direct investment was actively discouraged, resulting
in insufficient levels of investment taking place in both capital and labour and in low
levels of technology transfer; and a lack of complementarity between domestic
industries.

Initially, import substitution programmes were financed from domestic earnings, such
as revenues realised from sale of primary agricultural commodities and minerals. As
levels of revenue from these sources declined, owing to declining terms of trade and
reduced efficiencies in production systems, these countries started borrowing on
western capital markets, and from the World Bank and IMF, to maintain previous
levels of consumption. As many of the countries concerned where at this stage
considered to be middle-income countries, they borrowed at commercial rates. The
borrowed money was usually not used to improve production so real levels of GDP
continued to decline while expenditure levels, which had by then risen significantly,
as a result of higher debt servicing payments, continued to increase.

Governments of COMESA countries faced these economic crises by continuing to

borrow on international markets; placing heavy restrictions on foreign currency
transactions to try to reduce capital flight; pegging the value of the local currency
against freely convertible foreign currencies artificially high to reduce costs of
essential imports (such as fuel which in itself caused crises in the early 1970s); using
revenues from parastatal industries to finance the public sector recurrent budget,
leaving little revenue for re-investment in these strategic industries, resulting in
further declines in production; reducing the import bill by restricting by statute items
which could be imported; and heavily subsidising all aspects of domestic agricultural
production to promote self-sufficiency in food production, which only served to make
agriculture sectors even more inefficient than they already were.

This package of economic policies has contributed significantly to the economic

decline of the region and to Africa’s gross domestic investment having fallen
consistently for the last 20 years, being currently recorded at 17 per cent of GDP.
Assuming that a minimum investment ratio of 20 per cent of GDP is needed to cover
depreciation and repair costs, current levels of gross domestic investment leave no
room to finance production expansion, productivity improvement or diversification.
The net result is decreasing competitiveness on the world market and loss of market
share.

Foreign direct investment (FDI) in Africa is negligible, at approximately 1 per cent of

GDP. This represents 0.8 per cent of all FDI and 2.1 per cent of FDI going into all
developing countries. The low levels of FDI being attracted by Africa confirms,
among other things, the region’s exclusion from the intra-firm network, which
accounts for the largest contribution to growth of world trade, with intra-firm trade
being, to a large extent, fuelled by FDI.

The COMESA region (excluding South Africa) is not yet in a position to attract FDI
and portfolio funds at a level which would result in a significant economic impact,
because of the real and perceived risks associated with investment in the region, and
because of the perception that returns on investment in Africa are low. Risk-related
aspects of investment are affected by both political and commercial factors which may
threaten invested capital and/or dividend returns. Profitability of investment relates
primarily to market size and the cost of doing business, the latter largely influenced by
productivity and effectiveness of infrastructure.

As regards market size, Africa has many of the world’s smaller states, with 7
countries with a population of less than one million, and 36 with a population of less
than 10 million. Only 4 sub-Saharan countries have a population of more than 30
million. Southern Africa, without South Africa, has a total GDP of around US$30
billion (1993), about a quarter of South Africa’s present GDP of US$120 billion and
less than half of Israel’s GDP of US$69.7 billion (1993). Similarly, the current total
GDP of the COMESA region of 23 countries is only around US$90 billion, less than
that of South Africa and less than half of Belgium’s.

Net external financing to all African countries including South Africa, is not expected
to exceed US$20 billion in 1997, which is in stark contrast to the situation in other
developing regions, where FDI has become the dominant vehicle for the transfer of
resources from the rich to the poorer countries.

The above problems are further compounded by the region’s terms of trade which
have declined by over 15 per cent since. The share of the region’s trade in the world
markets has also fallen by half since 1970 and accounts for less than 1.5 per cent of all
world trade, placing sub-Saharan Africa at the very margins of the global economy.

In terms of African trade, there has been little structural transformation, with trade
being dominated by exports of primary commodities. In 1993, 86 per cent of Africa’s
foreign exchange earnings were derived from primary commodities, including crude
petroleum, whereas 73 per cent of the total value of imports was accounted for by
manufactured goods.

Africa (including South Africa) contributes no more than 3 per cent to globally traded
goods and its share of world trade has been declining steadily since 1980. Between
1980 and 1993, when world trade doubled in value, Africa’s external trade remained
at about the same level in absolute terms. The share of 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. Since then the share
of the continent in global trade has fallen to just over 2%.

The magnitude of COMESA’s external indebtedness is also a source of serious

concern. The external debt of the COMESA region has increased twenty-fold since
1970 and 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. While member States borrowed heavily to maintain incomes and
investments, the collapse of their export earnings undermined attempts to reduce their
debts. Debt relief to the COMESA region, and sub-Saharan Africa as a whole, has
been limited in relation to the magnitude of the problem and inflows of Official
Development Assistance (ODA) continue to decline. 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.

On the production side, both the agricultural and industrial sectors have been in
decline. For many COMESA countries, agriculture constitutes between 50 and 76 per
cent of GDP but the growth of agricultural output, at an average of 2 per cent per year
over the last three decades, has barely matched that of population growth, so has not
contributed effectively to sustainable growth and development. Agricultural exports
have declined, budgetary allocations to agriculture have remained small and
inadequate and an anti-poor bias in agricultural policy across much of the region,
notably through over-taxation of crops, inadequate spending on market infrastructure
for small-holder producers, and insufficient investment in research of local foods have
combined to adversely affected the region’s trade share of exports in the world
market, which has dropped by 50 per cent since 1970. Food imports are increasing at
about 8 per cent a year and COMESA’s current bill for cereals is over US$2 billion.
This heavy and chronic dependence on food imports is particularly dangerous for
COMESA, not only because it’s debt and trade problems impose serious limits on it’s
ability to purchase food in world markets, but also because there is no guarantee that
food aid and/or commercial imports will be available when needed in the required
quantities and quality.

Although industry grew roughly three times as fast as agriculture in the first decade of
independence, the past few years have seen an alarming reversal in many States where
de-industrialisation, as a short-term effect of structural adjustment, has set in. Progress
in the manufacturing sector has fallen far short of the target growth rate of 8 per cent
per annum projected in the second Industrial Development Decade for Africa (IDDA
II) 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. Most African industries have a very low capacity utilisation rate and current
structural adjustment programmes have as yet to have a positive impact on the
industrial sector.

Population is expanding at a rate of around 3.2 per cent, outstripping agricultural and
food production and COMESA now has twice the population it had in 1965 and more
than five times the population it had at the beginning of the century.

The region has also experienced, over the last few years, unprecedented droughts,
leading to widespread food shortages and famine. There is growing and widespread
poverty in the COMESA region, especially among the rural communities, aggravated
by the decline in expenditures on social services, including health, education and
public utilities, nutrition has worsened and mortality continues to increase.

There is a major crisis in employment in all countries, especially among the youth in
cities and towns. Unemployment in most countries is as much as 30 per cent or more
of the active labour force and under-employment is just as serious. The majority of the
region’s population still dwell in the villages and earn their living cultivating between
one and fifteen hectares.

The COMESA region has also had to contend with civil strife, ethnic wars and
political instability which have also contributed to the decline in economic growth.

In summary, the economic performance of the COMESA region has been rather
disappointing over the last two to three decades, with overall economic growth of the
COMESA region having averaged 3.2 per cent a year since 1960 and only marginally
above the level of the region’s population growth. By 1993, this region of over 280
million people, which has 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.

Economic and social forecasts for the region suggest that the outlook for the future is
promising provided member States adopt and implement strategies which will further
outward-orientated regionalism in the process of becoming fully integrated into the
global economy. Most COMESA countries are individually too small to achieve
economies of scale in the production and marketing of their products and need to
work together as a region if they are to achieve significant levels of economic growth
and compete in a world market which is becoming increasingly dominated by large
trading blocs.
The 1990s have seen the progressive globalisation of economic activity and an
increased economic interdependence between countries. This globalisation has, in
many instances, been achieved first through a process of regional economic
integration. The developed world, for instance, has created regional groupings such as
NAFTA, the European Union and APEC and these groupings are now poised to take
full advantage of the opportunities offered by the further globalisation of the
economy, under WTO rules and regulations.

If sub-Saharan Africa is to benefit from sustainable economic growth it will need to

do this through trade liberalisation and regional integration. Countries and regions
unable or unwilling to integrate themselves into the global economy will not benefit
from growth-enhancing features of this larger integration and will be further
marginalised in the world goods and capital markets. Integration tends to promote
higher growth through such channels as improved resource allocation, greater
competition, technology transfers and learning and improved access to foreign capital.
Trade and investment tend to increase in countries which have opened themselves up
to the world economies and growth itself tends to promote integration.

Intra-regional trade will therefore be an essential vehicle for the promotion of

diversification and establishment of linkages between production units in different
African countries. Not only will it contribute to improved productivity and greater
competitiveness for African products, it will also provide a stronger basis for the
effective participation of the African region in the global economy.

The consensus on the need for closer regional co-operation and integration in Africa;
the view that effective co-operation and integration would assist African countries to
overcome the difficulties linked to the economic fragmentation of the continent; and
the disappointment in the results achieved by previous attempts to create closer
regional ties is also shared by Africa’s co-operating partners.

It is in this context that COMESA is promoting regional integration and, through this,
regional economic growth, by emphasising measures which reduce the costs of
moving factors of production, goods and services across national boundaries in the
Eastern and Southern African region, with relatively low tariff barriers against third
parties.

Almost all COMESA member States are implementing structural adjustment

programmes, most with the support of the Bretton Woods institutions. The process of
structural adjustment and economic reform at the national level make it more likely
that regional integration measures will succeed, in that countries are now no longer
operating under the constraints of import-substitution, industrialisation strategies.
Countries which have removed exchange control restrictions, reduced tariff barriers to
trade, reduced the bureaucratic obstacles to doing business (including obstacles to
cross-border investment and movement of factors of production), allowed interest
rates to be set by the market and implemented other fiscal, financial and structural
reforms are now better placed to achieve economic integration with each other. In
addition, with a few notable exceptions, countries of the region do not have the strong
political differences, which existed in particular in the 1970's, and so do not restrict
economic interaction with their neighbours purely on political and security grounds.

However, although these measures alleviate some of constraints on intra-regional

economic activity, there have occasionally been cases where the programmes have
been detrimental to regional integration. By placing trade liberalisation and
deregulation measures in a regional context, COMESA is able to build upon the
progress made under national structural adjustment programmes while at the same
time addressing the regional dimensions of adjustment.

By taking full account of the general move away from state controlled economies in
favour of more liberalised, market-determined economies and by recognising the vital
role the private sector has to play in the social and economic development of the
region, COMESA is uniquely positioned to assist with the process of regional
integration. The priority role of the COMESA Secretariat, within the framework of the
COMESA Treaty, is to take the lead in assisting its member States, through promotion
of regional integration, to make the adjustments necessary for them to become part of
the global economy within the framework of WTO regulations.

By taking, as its focal areas, issues of trade promotion and economic integration,
COMESA is concentrating its activities on trade liberalisation and customs
cooperation; administrative aspects of transport and communications to make the
movement of goods, services and people between countries in the region
administratively easier; promoting the adoption of a common set of industry
standards; promoting the establishment of a stable and secure investment climate;
creating a legal framework within which businesses can operate within the region; and
playing a role in harmonising macro-economic and monetary policies.

COMESA is now poised to achieve a free trade area by the year 2000 and recent
studies indicate that this process will result in intra-COMESA trade increasing from
its present 8 per cent to nearly 20 per cent.

Expanded intra-COMESA trade would help overcome feast and famine surges and
shortages in food supplies. It would also give industries in member States, which have
been too long protected in markets that are too small, expanded markets in which to
compete and enable them to expand production and exports within COMESA and
with third countries.
The role of the private sector in this process of economic growth and regional
integration can not be over-stressed and the economic future of the COMESA region
is almost totally dependent on the performance of this sector.

The role FDI will play in the economic future of the region is also of major
importance. Although COMESA can offer an attractively-sized and harmonized
market of over 300 million people and although the region has large mineral and
agricultural wealth in which there are exciting investment opportunities, the member
States need to continue to offer a stable and attractive political and economic
environment for them to attract FDI so that the region’s potential can be realised in
full.

Evolution of PTA/COMESA

The Common Market for Eastern and Southern Africa 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.
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 as provided for in Article 50 of the Treaty.
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
Common Market for Eastern and Southern Africa, 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.

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.
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.
Common Market for Eastern and
Southern Africa – COMESA
The Common Market for Eastern and Southern Africa (COMESA) was formed in December
1994 to replace the former Preferential Trade Area (PTA) from the early 1980s in Eastern and
Southern Africa. COMESA was created to serve as an organization of free independent
sovereign States that have agreed to cooperate in developing their natural and human resources
for the good of all their people. In this context, the main focus of COMESA has been on the
formation of a large economic and trading unit to overcome trade barriers faced by individual
States.
The member States of COMESA are: Burundi, the Comoros, the Democratic Republic of
Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius,
Rwanda, Sudan, Swaziland, Seychelles, Uganda, Zambia and Zimbabwe.

The objectives of COMESA reflect its priorities to promote sustainable

economic development:

 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;
 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.

COMESA has established a number of institutions to support the private

sector. These include:
  The Trade and Development Bank for Eastern and Southern Africa
(PTA- Bank);
 The COMESA Clearing House;
 The COMESA Leather and Leather products Institute (LLPI);
 The COMESA Re-Insurance Company (ZEP Re);
 The COMESA Monetary Institute (CMI);
 The African Trade Insurance Agency (ATI);
 The COMESA Competition Commission (CCC);
 The COMESA Regional Investment Agency (RIA);
 The COMESA Business Council (CBC)
 The Alliance for Commodity Trade for Eastern and Southern Africa
(ACTESA);
 The Federation of National Associations of Women in Business.

Selected regional indicators for COMESA (2014)

GDP $657.4 billion

GDP per capita $1,335.0

Area (sq. km) 12 million sq.km

Total population 492.5 million

Total imports $183 billio

Total exports $95 billion

Source: United Nations Conference on Trade and Development, statistical

database[1]

COMESA Pillars for Integration

Trade and market integration has had a central role in the evolvement of
COMESA given its background as a Preferential Trade Area (PTA) for
Eastern and Southern Africa. The previous foundation has therefore
supported the establishment of institutions that foster trade liberalization
and trade facilitation programmes. In addition, article 4 of the Treaty
Establishing COMESA[1] reiterates the removal of obstacles to the free
movement of persons, labour and services, along with the right of
establishment and residence for investors in the COMESA region.

At present, COMESA operates a free trade area (FTA) among fifteen of its
member States, Burundi, the Comoros, Djibouti, Egypt, Kenya, Libya,
Madagascar, Malawi, Mauritius, Rwanda, Seychelles, the Sudan, Uganda,
Zambia and Zimbabwe. The Democratic Republic of Congo joined the
COMESA FTA in December 2015 and is currently finalizing its tariff phase-
down. A Customs Union was subsequently launched by COMESA in 2009.
From the time of the launching, member States agreed on a three-year
transitioning period to domesticate the customs management
regulations, common external tariff and the common tariff nomenclature
that would gradually form the Customs Union. The plan was to finalize the
Customs Union by 2012, however, even after a second postponement of
the transition period to 2014, the Custom Union is still not operational.

In October 2008 COMESA, East African Community and Southern African

Development Community agreed to negotiate a tripartite free trade
agreement amongst the regional economic communities. After lengthy
negotiations, the tripartite FTA was officially launched in June 2015.
Although 17 out of the 26 Member States have signed the Tripartite FTA
Agreement, it has not yet entered into force due to outstanding
ratifications. Moreover, remaining technical work on tariff liberalization,
rules of origin, and trade remedies are likewise delaying the process.
However, interim arrangements were agreed to operationalize the
Tripartite FTA, which would effectively make it the largest FTA in Africa.
It has also been estimated that the Tripartite FTA could boost intra-
regional trade by as much as one third.[2] It is therefore important that
remaining member States join the FTA avoid undermining the
establishment of the Tripartite FTA.

The Investment Agreement for the COMESA Common Investment Area

(CCIA) was adopted in May 2007. It is an instrumental tool that the
COMESA Secretariat anticipates will ensure a stable investment
environment that promotes and protects cross-border investments. It
aims at harmonizing investment policies, regulations and legislation,
setting the standards for investor and investment protection and
encouragement along with creating an institution to facilitate
intraregional economic community trade. For instance, expanding the
number of bilateral Avoidance of Double Taxation Agreements, promoting
arbitration mechanisms for investment disputes, harmonizing all company
registration procedures, and developing capacity-building programmes on
investors’ services for the national investment promotion agencies.
Moreover, COMESA’s trade facilitation instruments, including the
Regional Customs Transit Guarantee scheme and Yellow Card, are
effective in the COMESA region and have been adopted by non-COMESA
member States including Tanzania and South Sudan. Angola and
Mozambique are soon expected to enlist even though they are not
COMESA members.
[1] Treaty Establishing COMESA. Available
from https://www.tralac.org/wp-content/blogs.dir/12/files/2011/uploads/
200605….
[2] United Nations Economic Commission for Africa. Tripartite Agreement could
boost intra-regional trade by one
third (2016) http://www.uneca.org/stories/tripartite-agreement-could-
boost-intra-regi… (accessed 1 July 2016).

Common Market for Eastern and Southern

Africa (COMESA)

The Common Market for Eastern and Southern Africa (COMESA) is the
largest regional economic organization in Africa, with 19 member states and a
population of about 390 million.

COMESA has a free trade area, with 19 member states, and launched a customs
union in 2009.

COMESA countries include:

 Burundi
 Comoros
 D.R. Congo
 Djibouti
 Egypt
 Eritrea
 Ethiopia
 Kenya
 Libya
 Madagascar
 Malawi
 Mauritius
 Rwanda
 Seychelles
 Sudan
 Swaziland
 Uganda
 Zambia
 Zimbabwe

U.S.-COMESA Trade Facts

The United States had a $11.6 billion in total (two ways) goods trade with COMESA
countries during 2017. Goods exports totaled $6.3 billion; goods imports totaled $5.4
billion. The U.S. goods trade surplus with COMESA countries was $878 million in
2017.

Exports

U.S. goods exports to COMESA countries in 2017 were $6.3 billion, up 10.7% ($607
million) from 2016, but 12.7% from 2007.

The top 5 U.S. export markets in the COMESA countries for 2017 were: Egypt ($4.0
billion), Ethiopia ($877 million), Kenya ($454 million), Djibouti ($157 million), and
Libya ($135 million).

The top export categories (2-digit HS) in 2017 were: aircraft ($1.6 billion), machinery
($710 million), mineral fuels ($572 million), miscellaneous grain, seeds, fruit
(soybeans) ($393 million) and electrical machinery ($340 million).

Imports

U.S. goods imports to COMESA countries in 2017 were $5.4 billion, up 43.2% ($1.6
billion) from 2016, but down 26.3% from 2007.

The top 5 U.S. import suppliers from the COMESA countries for 2017 were: Egypt
($1.6 billion), Libya ($1.4 billion), Madagascar ($743 million), Kenya ($572 million),
and Ethiopia ($292 million).

The top import categories (2-digit HS) in 2017 were: mineral fuels ($1.6 billion),
woven apparel ($789 million), coffee, tea & spice (mostly coffee) ($744 million), knit
apparel ($641 million), and precious metal and stone (diamonds) ($142 million).

Trade Balance

The U.S. goods trade surplus with COMESA countries was $878 million in 2017,
down 53.6% ($1.0 billion) over 2016.

Investment

U.S. Reported foreign direct investment (FDI) in COMESA countries (stock) was
$31.2 billion in 2016 (latest data available), down 5.9% from 2015.

COMESA countries’ Reported FDI in the United States (stock) was $213 million in
2016 (latest data available), down 30.4% from 2015.

Trade Agreement
The United States and COMESA signed a Trade and Investment Framework
Agreement (TIFA) in 2001 and have held six TIFA Council meetings, the most
recent of which was held in Lusaka, Zambia in November 2009.

U.S. trade capacity-building assistance to COMESA, delivered mainly through

USAID's East Africa regional mission and its East and Central Africa Global
Competitiveness Hub in Kenya, has helped COMESA to advance its internal free
trade area, to harmonize members' policies in telecommunications, services, and
investment, and to increase trade linkages with the United States under AGOA.
Fourteen COMESA members are AGOA-eligible, and nine qualify for textile and
apparel benefits.

*NOTE: COMESA (19) countries include: Burundi, Comoros, Congo, Dem Rep.,
Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius,
Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe.