AFRICA-ECONOMY: Building Intra-Regional Trade Links

By Moyiga Nduru Reprint | | Print |

Moyiga Nduru

NAIROBI, May 17 1996 (IPS) - When Bingu wa Mutharika tunes into CNN’s prime time business reports, he usually picks up Business Asia or Business Europe.

“There is virtually nothing on Africa,” he says. “To them, Africa simply doesn’t exist.”

According to some experts, this glum perception of Africa will worsen as the West increasingly turns to emerging Asian markets, away from a continent that has been dubbed a developmental basket case.

Some forty years after independence, African countries are still battling to develop their economies beyond being sources of raw materials for their former colonial masters and limited markets for those countries finished products.

“Our people know the market in Europe and in America more than next door. Our role is therefore to reverse this trend. We want to close this gap by providing information to the private business people,” says Mutharika, Secretary-General of the 23-nation Common Market for Eastern and Southern Africa (COMESA).

COMESA this week held a ‘Regional Integration Conference,’ to facilitate intra-regional trade and encourage the local private sector to lead the continent’s economic development.

Ugandan entrepreneur Al Haji Badru, one of 300 private business people who attended the gathering, urged his counterparts to exchange information so as to purchase products cheaply within the region instead of importing them dearly from abroad.

This is already happening under COMESA’s Eastern and Southern African Business Organisation (ESABO). Operating in an area with a population of over 350 million and a gross domestic product (GDP) exceeding 300 billion dollars, ESABO has received assistance from the COMESA secretariat in Lusaka, Zambia.

Trade fairs are promoted as investment fora. For example, at the buyers and sellers meeting on wood products and furniture held Nov. 27 to 30 1995 in Harare, orders under negotiation exceeded 14 million dollars. Products like manufactured fertiliser entered COMESA’s market from Mauritius for the first time after such supply and demand surveys and buyer/seller meetings were undertaken.

The biggest number of joint venture possibilities covered by letters of intent came to 30 for Uganda (167 million dollars), Kenya, 8 (108 million dollars), Eritrea, 5 (15.55 million dollars), Ethiopia, 2 (1.88 million dollars). These covered products and services such as paper mills, tannery, soap, earth- moving and drilling equipment, solar heaters, two sugar mills, charcoal, sheet glass and bottles.

In all, there were 112 foreign investors from 32 countries. With 19 participants, the British contingent was the biggest followed by Germany and Spain with 12 each, India with 8 and the Middle East 10.

“That’s how we promote the private sector in the COMESA region,” says Mutharika, revealing that intra-COMESA trade is now climbing at an annual rate of 10.1 percent whereas COMESA’s trade with the rest of the world is growing at 7.2 percent annually.

In real terms, trade within COMESA grew from about 500 million dollars in 1985 to well over 1.7 billion in 1995. COMESA comprises Angola, Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Somalia, Swaziland, Sudan, Tanzania, Uganda, Zaire, Zambia and Zimbabwe.

For South African businessman and ESABO president Chris Saunders, this is encouraging: “The best we can do is to forget about the fears of the future, rather we must as the business community in Africa size up the chances, calculate the risks involved, estimate one’s ability to deal with them and then make plans with confidence.”

COMESA’s goal is a regional common market to facilitate trade. Sub-regional groups like the East African Community of Kenya, Tanzania and Uganda and the 12-nation Southern African Development Community are likely to be the building blocks of that endeavour.