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Q&A: Regional Integration in Southern Africa Takes Another Step

Stanley Kwenda interviews SINDISO NGWENYA, COMESA Secretary General

HARARE, Jun 12 2009 (IPS) - Zimbabwe has just hosted the 13th Common Market for Eastern and Southern Africa (COMESA) summit where a customs union among some of the region’s countries was launched. But will it improve regional trade and assist passage across borders for the member countries’ numerous women traders?

Sindiso Ngwenya: Freedom of movement of people still a challenge. Credit:  Stanley Kwenda/IPS

Sindiso Ngwenya: Freedom of movement of people still a challenge. Credit: Stanley Kwenda/IPS

Stanley Kwenda asked Sindiso Ngwenya, COMESA secretary general, about value addition, regional credit lines and how the customs union will help women cross-border traders.

IPS: The theme of the summit was ‘‘Deepening Regional Integration Through Value Addition, Trade and Food Security’’. What does this mean? Sindiso Ngwenya: Over the past 25 years, COMESA (and its previous incarnation as) the Preferential Trade Area for Eastern and Southern African states has made significant strides in integrating the economies of eastern and southern Africa regions, culminating in the launch of the COMESA Free Trade Area in 2000. Intra-COMESA trade subsequently rose.

We have seen diversification of trade and cross border investments. For example, Kenya became a major investor in Uganda, Tanzania and Rwanda. We have also seen Zimbabwean companies investing in the region despite the economic crisis it is facing.

Companies such as Dairiboard Zimbabwe Limited acquired a diary plant in Uganda and the Zimbabwe insurance and banking sector has moved into the region. It is from this movement that we want to consolidate trade among COMESA countries.

IPS: What does the launch of a customs union mean to member countries? SN: The customs union will level the playing field among COMESA countries. When it comes to customs duties, taxes and other related levies charged to goods coming from outside COMESA there will be equal treatment. For example, if a common external tariff involves raw materials coming from outside the region, they will attract zero percent customs duty.


The same with capital goods, while intermediate goods will attract a 10 percent customs duty and finished or processed products will attract a 25 percent customs duty.

IPS: What benefits will it bring? SN: The common external tariff means that COMESA countries will have a common trade policy vis-a-vis third party countries. Investors will know in advance the kind of duties that they will pay. They will know that if they bring capital goods in the region then they will be zero rated.

This will level the playing field because countries have been charging different percentages, leading to others complaining that the field is not level and they cannot compete. It will also bring price transparency and predictability for investors because when you have a common trade policy it is no longer a question of each country deciding on what taxes to charge on goods from outside.

IPS: Who will benefit most? SN: The customs union is for the people such as agricultural producers, manufacturers and those in the service sector. But these sectors can only compete globally if there is significant value addition to African products.

COMESA’s share of global trade needs to be increased and that will be the second stage after the launch of the union.

IPS: Do you have a value addition strategy? SN: We have the Buy Africa Build Africa (BABA) vision. It says that if we add value to our commodities, we will address the issue of wealth creation. This means that we need to start processing, branding and marketing our goods. We should stop exporting raw materials which we import at a higher price than the (raw materials).

The dream is to have farmers who benefit directly from the sweat of their toil.

IPS: What is your message to political leaders in this regard? SN: Let’s have more small and medium enterprises (SME) in our countries and bring them together in networks through contracts to produce or sub-contract them to do work on behalf of the bigger international market players. This is the only way in which they can grow and be globally competitive one day.

IPS: What kind of measures are you taking to ease the burden of trade in the services sector in view of the fact that African countries still have to confirm credit via Europe and America? SN: We have the COMESA clearing house which will be hosted by Zimbabwe. It is basically a regional payment system which will allow African countries to trade without going through London and New York to confirm letters of credit. It will save Africa millions of dollars and expedite payments to exporters.

IPS: How are cross-border traders going to benefit from the customs union? SN: They have already been accommodated under the COMESA Free Trade Area. They are trading duty and quota free. We have the COMESA/Southern African Development Community (SADC) Cross-Border Association. But the ultimate goal is to do away with rules of origin, meaning we will have free circulation of goods and services once the union is fully operational.

IPS: Cross-border traders complain that the FTA you talk about has not brought free movement of people. SN: There are countries that have signed the COMESA protocol on the free movement of people. But others countries argue that if they do so, they will have a deluge of people. In those countries where there is free movement of people we have not seen that. What we have is a fear of the unknown.

What we envisage is a people-to-people integration because it is only through these individual and collective efforts that Africa can become what India and China are — the locomotives of the global economy.

IPS: Women constitute the largest number of cross-border traders. How will they benefit under this arrangement? SN: In line with Article 154 and 155 of the COMESA Treaty the grouping has adopted the COMESA Gender Policy and the Addis Ababa Declaration of 2002. The COMESA Gender policy advocates equal and full participation of women in all aspects of COMESA activities and other operations taking place in the region.

Affirmative action will be employed to ensure that barriers that prevent women’s participation in core COMESA activities such as trade, the private sector, infrastructure development and science and technology are addressed and removed.

The COMESA policy will also facilitate the ‘‘engendering’’ of legislation in member states in order to promote women’s access to and control over productive resources such as land, technology and credit.

IPS: Will this customs union change the manner in which African countries have been negotiating the economic partnership agreement (EPA) with the European Union? SN: We hope the launch of our customs union will see our countries negotiate as one bloc. We are already working together on EPAs as SADC and COMESA.

 
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