Pushing COMESA forward

Niveen Wahish , Wednesday 24 Nov 2021

Egypt will have its hands full as it takes over the presidency of COMESA

Pushing COMESA forward
Pushing COMESA forward

African leaders gathered in the New Administrative Capital on Tuesday for the 21st Common Market for Eastern and Southern Africa (COMESA) Heads of State and Government Summit.

During the summit, President Abdel-Fattah Al-Sisi assumed the chair of COMESA, taking over from the president of Madagascar. It is the second time since 2001 that Egypt has occupied the chair.

Egypt will do what it takes during its presidency of the COMESA to build on what has been achieved, with the aim of realising the aspirations of the group’s member states, Al-Sisi told summit participants.

He called for concerted regional efforts to deepen integration, saying that Egypt has developed a regional integration framework in line with the COMESA Medium-Term Strategic Plan 2021-2025.

Sherif Fahmy, general manager of NGage Consulting, told Al-Ahram Weekly that Egypt’s presidency of COMESA provides an opportunity to push forward with integration plans. He pointed out that Egypt has always played a leading role in driving the regional integration in African forums, and during Egypt’s chairmanship of the African Union two years ago; the majority of outstanding points in the African Continental Free Trade Agreement (AfCTA) were concluded.

Under the theme “Building Resilience Through Strategic Digital Economic Integration”, the summit aimed to encourage COMESA’s 21 member states to make greater use of digital platforms to facilitate business and enhance resilience against the economic disruption caused by the Covid-19 pandemic.

In the last five years Egypt has moved very fast in terms of digitisation and will share its experience to fast-track similar programmes in the region, which will reflect positively on the economy in general, and regional intra-COMESA trade specifically, said Fahmy. He hopes Egypt’s expertise will expedite the implementation of COMESA digital free trade area instruments like electronic certificates of origin, and see online trade portals established for COMESA member states.

Digitisation is facilitating efforts to integrate Africa, according to Obi Emekekwue, president of DelReeve Konsult Limited, an Africa-focused communications and business advisory group. It has brought about the levelling that makes it possible for African countries to leapfrog development, and the revolution in mobile money has brought many previously unbanked people into the formal economy. The Pan-African Payment and Settlement System which is being implemented by the African Export-Import Bank will drive this digital inclusion even further by making it possible for people to buy products from another African country and pay in local currency, while the seller receives payment in their own currency. The challenge now is for Africa to ensure the infrastructure needed to support this digitalisation revolution is available across Africa, stressed Emekekwue.

COMESA is striving towards achieving a free trade area, followed by a customs union, and finally a common market among its member states.

President Al-Sisi underscored the necessity of introducing exemptions to customs as agreed within the framework of the AfCFTA. He highlighted his proposal to set up a mechanism to review the trade policies of member states on a periodic basis to ensure the effective implementation of customs privileges.

To meet its full potential, Fahmy said COMESA members need to be more committed. Barriers to trade remain common, including restrictive trade practices in clearing imports and exports, and verification of origin and quantitative restrictions add to the cost of doing business in the region.

Khaled Ramzy, export director at one of Egypt’s major home appliances producers, said the fact the grouping allows for tariff free access to neighboring markets is invaluable. He would like to see all member states opening their markets. COMESA is a promising market for Egyptian exports, which account for 20 per cent of exports within the bloc, worth $2 billion, while imports from COMESA amounted to $700 million, Egyptian Minister of Trade and Industry Nevine Gamea said earlier this week.

The summit comes at a critical time, especially considering the economic challenges posed by the Covid-19 pandemic and the slowdown of the global economy. The COMESA region’s average growth had slowed down to 0.6 per cent in 2020, down from 5.2 per cent in 2019 and six per cent in 2018 on the back of Covid-19, COMESA Secretary-General Chileshe Kapwepwe said in her address to the summit.  

COVID-19 has been a major challenge to the progress of regional integration.

“The region is facing a huge health and economic crisis that could reverse its achievements, particularly in terms of economic growth. Inflationary pressures are threatening the region and lockdowns and containment measures have affected the trade across borders on which most COMESA members depend,” said Fahmy. Covid-19 led to the postponement of some technical and high-level meetings during 2020, member states’ focus on managing internal issues related to the pandemic distracted them from integration, and Covid-19 budget pressures delayed plans for tariff liberalisation.

Another factor that could have distracted from COMESA’s integration efforts, according to Fahmy, is the strive towards broader regional integration in the form of the Tripartite Free Trade Area (TFTA), and the Africa Continental Free Trade Area (AfCFTA). AfCFTA was founded in 2018, though it was only officially launched in January 2021. It comprises 54 of the African Union’s 55 states.

Ramzy believes these expanded groupings open up even broader horizons for Egyptian exports.

The success of AfCFTA, however, depends on regional economic communities being well established. “COMESA member states’ intra-trade will exist even after the full activation of the AfCFTA, because the current level of tariff liberalisation between them is much more than the activation stage of AfCFTA,” said Fahmy.

Meanwhile, Fahmy wants to see more trade between member countries in products with added value. COMESA’s exports are dominated by primary commodities, which make up 67 per cent of the total. In addition, most of the region’s exports — 91.5 per cent of the total — are traded outside the region.

This, said Emekekwue, is the result of years of colonialism. The colonial powers which dominated Africa structured their colonies to be producers and suppliers of primary commodities to the colonial headquarters where they were processed into final products and then sold back to the colonies. Local manufacturing and processing were not encouraged, he said, leading to no trade between African countries. Moreover, individual businesses were unaware of the products available in other African countries, and sometimes ended up buying products from outside Africa when the same items could be bought from a neighbouring African country at a lower cost. The focus now is to break down these artificial boundaries to achieve an integrated Africa and have more of primary products processed locally before export.

Within that framework, Al-Sisi launched an initiative for regional industrial integration during the summit. He said that an executive plan will be drawn up by member states and the general secretariat to achieve this integration and increase productivity under the slogan ‘Made in COMESA’. Egypt will also work on ramping up economic integration in the infrastructure sectors, especially transportation, energy, communications, and information technology, Al-Sisi said.

*A version of this article appears in print in the 25 November, 2021 edition of Al-Ahram Weekly.

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