October, 2000
The launch of a free trade area covering nine nations in eastern and southern Africa was a step in the right direction, but not enough to boost economic growth in the region, economic analysts said on Wednesday.
Nine of the 20 members of the Common Market for Eastern and Southern Africa (COMESA) agreed to end trade tariffs between them at a meeting in the Zambian capital Lusaka on Tuesday. Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe launched the free trade area guaranteeing the immediate free movement of goods and services amongst them and the removal of tariff and non-tariff barriers. "The creation of a free trade area does not guarantee the flow of trade. The region will also have to address the plethora of non-tariff barriers that stand in the way of truly open markets," Olubanke King-Akerele, resident representative of the UN Development Programme in Zambia, said.
Analysts said that at the levels of development in these countries, there was little chance of carving a place in the global marketplace. They said the economies were too small, with non-diversified production bases, underdeveloped infrastructure and inadequate skilled human capital. But Tony Hawkins, professor of business studies at the University of Zimbabwe, said the free trade proposals were "all good ideas".. "The more that African economies recognise the need for regional integration, the better," added Iraj Abedian, economist at Standard Bank in Johannesburg. "If such regional arrangements are going to be taken seriously and have a credible payoff, soon after the announcement should flow a series of protocols and policy changes that would bring benefits," Abedian told Reuters.
Analysts said governments should improve domestic growth and competitiveness, weaken the powers of domestically entrenched special interest groups and install policy stability and credibility to attract investment. High productivity and high quality, on the basis of low wages, must then be backed by access to technology and technical know-how, which many COMESA states do not have, they said.
Other non-trade calamities including the AIDS pandemic, a huge external debt and civil wars also undermined Africa's ability to push forward economic integration. Trade between COMESA members is estimated at just $4.2 billion compared to an annual trade volume of $63 billion. The percentage of debt over exports is 396 percent and external debt stands at just over $124 billion. AIDS is a major challenge to COMESA states and presents a huge bill in healthcare and drug costs, including professionals in the region. In some COMESA states, HIV infections are as high as 30 percent. "One needs to go beyond political posturing and commitments and more into the operational requirements that speed up trade and investment integration," said Standard Bank's Abedian. COMESA comprises Angola, Burundi, the Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda Zambia and Zimbabwe. Tanzania pulled out of the grouping last month.
Analysts also said the dual membership of some COMESA countries with the rival Southern Africa Development Community (SADC) could create complications in trade policy and harmonisation of macro-economic policy. The absence of continental powerhouse South Africa from COMESA remains a point of concern because many countries in the region complain that its products are swamping their small markets at a time South Africa continues deeply protectionist measures. "South Africa seeks integration at its own pace, and it is known to be protectionist. That's why it is not a member of COMESA," said COMESA chief executive Erastus Mwencha. Analysts said they also saw the promised free movement of skilled labour and a single monetary unit as a pipe dream. In the short-term, COMESA states face competition mainly from Asia for exports to Europe under the new European Union-African Caribbean Pacific (ACP) protocols.
To make up for this, COMESA economies would need to expand agricultural exports to take advantage of the anticipated increase in Asian import demand for cereals, non-grain crops, forestry and fish products due to reduced trade barriers, higher incomes and structural transformation in Asia," one Lusaka analyst said. The problem is that states do not seem ready." Three-quarters of COMESA's 400 million population live below the World Bank poverty threshold of $1 a day. The COMESA area has a joint gross domestic product of $166 billion.
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