Product diversity critical for regional trade — Comesa
Oliver Kazunga, Senior Business Reporter
INTRA-regional trade is being weakened by the lack of product diversity as most states within the Common Market for Eastern and Southern Africa (Comesa) and whole of Africa are almost producing and exporting similar goods.
Comesa recently expressed concern over the low intra-regional trade among its 21 members, which is estimated at seven percent. According to findings presented at the recent 7th Comesa Annual Research Forum, a researcher within the bloc, Mr Manaseh Oiro, noted that the existing export structure depicts a region that produces more or less similar products in terms of their export sophistication.
The top five exports to Africa include tobacco and tobacco substitutes, ores, slag and ash, essential oils and resinoids, sugars and sugar confectionery. Mineral fuels and related products are among Comesa’s top exports to the rest of the world.
In a research paper titled “Estimating Comesa’s trade potential in Africa: optimising export opportunities in the AfCFTA (African Continental Free Trade Area),” Mr Oiro, observed that similar products are being exported to the rest of the world in larger quantities because they are used as inputs for industrialised countries. To address this, he recommended that Comesa member States should embark on implementation of the region’s industrialisation strategy, which is aimed at improving trade complementarity among the countries.
“This can be achieved through structural transformation, particularly enhancing value addition such that member States trade in value added products and move away from exporting raw materials and minerals to developed countries,” said Mr Oiro.
The study set out to establish the drivers of Comesa’s trade with the rest of Africa, to provide solutions to boosting the region’s share of exports within the continent. The five top exporting countries in the trading bloc were selected for the study and a further five non-Comesa countries used to estimate the trade potential within the African continent.
The study found that intra-Comesa exports were 112 percent below its average exports to the rest of African countries.
“Based on the analysis, Comesa’s exports to other African countries were worth US$146,9 million while average exports were worth US$69,3 million.
“The region’s efficiency in exports was found to be low at 47,1 percent,” said the trading bloc.
Bilateral partners that include Ethiopia and South Africa, Kenya and Nigeria, Zambia and Namibia were used in the research to estimate trade potential. Mr Oiro recommended the establishment of a strong monitoring and evaluation framework at the Comesa secretariat for implementation of the regional industrialisation strategy.
“A holistic approach needs to be taken to address this, right from the curriculum in institutions of learning to on job training and the overall economic development policy,” he said.
He underscored the need for harmonisation of policies across member States, especially the macro-economic and legal and regulatory environment to ensure economic growth catalyses trade within the region.
Tariff liberalisation also needs to be accompanied by elimination of restrictive or discriminative non-tariff measures for the liberalisation effort to have an impact. — @okazunga