FREQUENTLY ASKED QUESTIONS

Transcription

1 FREQUENTLY ASKED QUESTIONS 1

2 Frequently Asked Questions

3 What is COMESA? The Common Market for Eastern and Southern Africa, COMESA, was launched in 1994, and with its 19 Member States, is Africa s largest Regional Economic Community. Its objective is to create a fully integrated, internationally competitive and unified regional economic community in which goods, services, capital and persons move freely, for the sustainable economic development of the region. Overview COMESA % Africa Imports (2015, billions of USD) Main Imports (2015) Main Import Partners (2015) Petroleum oils and oils; Maize; Medicaments; Electrical energy; Soya oil; Rice; Motor vehicles for goods; Wheat South Africa; USA; Turkey, France; South Korea; Japan; Brazil; Switzerland Population (2015, millions) % Population Projections (2030, millions) % Surface Area (km²) 10,972, % GDP (2015, current, billions of USD) Real GDP Growth (2015, annual %) % 3.3 N/A FDI (2015, billions of USD) % Sources: UNPD Department of Economic and Social Affairs, World Bank Open Data, AfDB Data Portal, IMF World Economic Outlook, UNCTAD World Investment Report, COMESA Online Portal, and ITC Trade Statistics. Exports (2015, billions of USD) Main Exports (2015) Main Export Partners (2015) Languages 74.7 Tobacco; Gold; Nickel; Vanilla; Cloves; Ferro-chromium; Diamonds; Shrimp South Africa; USA; France; Turkey; South Korea; Canada; Switzerland; Japan English, French and Arabic Sources: UNPD Department of Economic and Social Affairs, World Bank Open Data, AfDB Data Portal, IMF World Economic Outlook, UNCTAD World Investment Report, COMESA Online Portal, and ITC Trade Statistics. 1 2

4 Who are the COMESA Member States? What is COMESA RIA? COMESA s 19 Member States are: Burundi Comoros DR Congo Djibouti Egypt Eritrea Ethiopia Kenya Libya Madagascar Malawi Mauritius Rwanda Seychelles Sudan Swaziland Uganda Zambia Zimbabwe The COMESA Regional Investment Agency (COMESA RIA) is an institution of the Common Market for Eastern and Southern Africa (COMESA) which was launched in Cairo, Egypt, in 2006 to: Make COMESA one of the major destinations for regional and international investors while simultaneously enhancing national investment. Carry-out other activities in investment promotion, facilitation and advocacy. In conformity with the COMESA treaty through its various activities, RIA provides a platform for private sector to interact with COMESA Governments and serves as an information hub through which it can promote the COMESA region, detailed information on legislation and policies affecting the business environment, cost of doing business, investment incentives, investment procedures, investment opportunities and projects, major events affecting investment and other relevant information. In doing so, RIA works closely with Member States Investment Promotion Agencies (IPAs) to promote the COMESA region as a common investment area, and in building a positive image of the region and of its Member States for a worldwide audience. 3 4

5 What is COMESA RIA? RIA works to improve the business and investment climate of Member States namely through development support and capacity-building activities targeting their IPAs and other relevant Government Officials. As such, RIA improves Member States ability to facilitate and retain investments, and to promote themselves and the COMESA region, hence, to attract investment. Some of RIA s achievements include: 32 Regional Workshops and Trainings with total of 640 participants; Collaboration and partnership with the promotion of 30+ International Conferences & Seminars; 7 Investment Forums (1 in Belgium, 3 in Egypt, 2 in UAE, and 1 in Rwanda) with participants reaching 3000 delegates; 9 websites for COMESA Investment Promotion Agencies (IPAs); 4 Investors Tracking Systems; More than 22 publications, resources and studies published; 12 Practical Guides for Doing Business in COMESA Member States; 7 Investment Teaser with an approximate of 400 projects promoted per edition; And various Roadshows and investment missions. How can businesses benefit from the COMESA Free Trade Area? The COMESA Free trade Area has been in operation since November 2000 and now comprises the following Member States: Burundi, Comoros, Djibouti, Egypt, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Uganda, Zambia and Zimbabwe. Among them, these countries trade duty free and quota free for originating goods. Eritrea has reduced tariffs for trade in COMESA originating goods by 80%, Ethiopia by 10% and Swaziland is under derogation to reduce tariffs for COMESA trade. D R Congo has undertaken to reduce tariffs in three yearly phases of 40%, 30% and 30% to become a Free Trade Area member. To be able to access the COMESA market duty-free, businesses must abide by any one of the following rules of origin: Wholly Produced Rule: The goods should be produced totally in the exporting Member State such that there are no foreign materials added to the manufacturing process. Such goods are live animals, agricultural produce e.g. maize, cotton, minerals, etc. Material Content Rule: Goods that are made with some foreign materials added to the manufacturing process and the C.I.F. (Cost, Insurance and Freight) value of those foreign materials should not be over than 60% of the total value of the materials used in making that product; 5 6

6 What is the Tripartite Free Trade Area (TFTA)? Value Addition Rule: Goods made with foreign raw materials, in the course of the manufacturing process and the value added should be at least 35% of the ex-factory cost of the product; Change in Tariff Heading Rule or CTH: Goods that are made with foreign materials such that the Tariff heading of the final product should be different from the tariff headings of the foreign materials used or satisfy the workings and processing defined for that chapter or heading under the COMESA Rules; and; Goods of Particular Economic Importance Rule: These are goods that are on the list approved by the Ministers in Charge of Trade in COMESA Member States (also called the Council of Ministers) which are regarded as very important in the economic development of economies of COMESA Member States and that, in the process of manufacturing where foreign materials are used, the value added should be at least 25% of the ex-factory cost of the product; Examples of goods on the list are: minibuses that are assembled in some Member States; cement; fridges and freezers; insecticides; dental, medical, surgical and veterinary instruments; and agricultural equipment. The COMESA-EAC-SADC Tripartite Free Trade Area was officially launched in June 2015, setting the stage for the establishment of a single market for the 26 African countries in the Eastern and Southern African Region. TFTA countries include: Angola, Botswana, Burundi, Comoros, DR Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Lesotho, Libya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. Following the signing, the countries will proceed to initiate the ratification process through their legislative assemblies. The Agreement will come into force once ratification is attained by three quarters of the Member States, upon which the free trade area will enter into force. The establishment of a Tripartite FTA is expected to bolster intra-regional trade by creating a wider market, increase investment flows, enhance competitiveness and encourage regional infrastructure development as well as pioneer the integration of the African continent. 7 8

7 Is it risky to invest in the COMESA Region? Ernst and Young compare on a yearly basis the perception of businesses established in Africa versus those not established in Africa with regards to the attractiveness of the continent, as far as investment goes. It comes as no surprise that those already established in Africa not only consistently perceive it to be more attractive than those who are not, but also think it is the best investment destination in the world. While economies are liberalizing and diversifying, opportunities are multiplying, and risks are diminishing too. Various institutions are now insuring business against a large array of risks. ATI The African Trade Insurance Agency (ATI) is a COMESA Institution and Africa s export credit agency. It provides political risk and trade credit risk insurance products with the objective of reducing the business risk and cost of doing business in Africa. Since 2003, ATI has supported over USD 17 billion worth of trade and investments across the continent, secured an investment grade rating of A from Standard & Poor s, and expanded membership with plans to attract even more African member countries and international financial institutions in the near term. MIGA and ICSID Likewise, all COMESA Member States are members of the Multilateral Investment Guarantee Agency (MIGA) and most of the International Centre for Settlement of Investment Disputes (ICSID), both members of the World Bank Group. MIGA provides political risk insurance guaran tees to private sector investors and lenders. MIGA s guarantees protect investments against-non-commercial risks and can help investors obtain access to funding sources with improved financial terms and conditions. Since our inception in 1988, MIGA has issued more than USD 28 billion in political risk insurance for projects in a wide variety of sectors, covering all regions of the world. ICSID on the other hand provides for settlement of disputes by conciliation, arbitration or fact-finding. More than 600 cases have been administered by ICSID to date. Either investors seize the chance and adapt to the business culture or others will move in, the fastest emerging of which are African businesses. First-movers have already been there for a long time. For more information, please visit and

8 Why should a business invest in the COMESA Region? According to UNCTAD World Investment Report 2016, FDI Inflows in COMESA region in 2015 increased by 10% to record US$19.355bn compared to US$17.54bn in Since 2002, FDI Inflows in COMESA grew by 600%. In addition, FDI stock in COMESA increased by 9% to record US$224bn in 2015, compared to US$205bn in the previous year. FDI inward stock grew by 582% during the period According to Financial Times, FDI markets 2016, During the period , Financial services sector attracted the highest number of FDI projects, followed by Business Services, Communications, Coal, Oil and Natural Gas, Metals, Software and IT Services, Food and Tobacco, Transportation, Real Estate, and Hotels and Tourism. 1. A growing urban consumer market is driving COMESA s growth giving rise to new opportunities. Investors have direct access to million consumers (2015) with an average population growth rate of 2.21% annually. 2. Because of its truly strategic location on world trade routes such as the Suez Canal, the Red Sea, the Mediterranean Sea, and the Indian Ocean, COMESA offers global access to a large, diversified, integrated and resilient market. 3. COMESA has been experiencing real and sustainable growth averaging 5% in the past five years, offering investors the stability they need to commit to long-term plans. 4. A growing, increasingly qualified and less dependent workforce will provide better and cheaper human resources to businesses over the coming decades. 5. COMESA offers a fully-functioning free trade area offering duty-free access to 15 of its 19 Member States

9 What investment protection guarantees and incentives do COMESA Member States offer? Most COMESA Member States have in recent years revamped their investment code and now offer key investment protection guarantees including equal treatment between domestic and foreign investors, the right to repatriate profits, protection against expropriation, and more. As well, they offer very competitive fiscal and non-fiscal incentives, as well as exemptions and allowances, subject to certain criteria. How much does it cost to do business in the COMESA Region? In its Ease of Doing Business Report, the World Bank continues to move COMESA Member States towards the top of the list: Mauritius is ranked 49th and Rwanda 56th, ahead of Luxembourg, Italy, Turkey, Chile and many others, and various COMESA Member States including Burundi, DR Congo, Djibouti, Egypt, Kenya, Rwanda, Uganda, and Zambia have figured among the top 10 most improved in Doing Business in the past few years, which clearly reflects the overall strength and stability of COMESA Member States. In fact, in the 2015 Doing Business report, Africa accounted for the largest number of regulatory reforms 75 of the 230 worldwide

10 Where can investors find opportunities in need of financing in the COMESA Region? COMESA RIA publishes on a yearly basis the COMESA Investment Teaser, a compilation of hundreds of national and regional investment projects and opportunities promoted by Member States Investment Promotion Agencies. It is possible to download the COMESA Investment Teaser from COMESA RIA s website, as well as to browse through the database of projects and opportunities by sector and by country on the same website. Investors are invited as well to get in touch with COMESA RIA for further advice on individual countries and ways to do business in the COMESA region. COMESA RIA is always pleased to facilitate. Which companies currently invest in the COMESA Region? Logistics TransCentury, Kenya Dubai World, UAE Bahrain Maritime and Mercantile International Agility, Switzerland Maersek, Denmark DHL, Germany Aramex, UAE Mining Tenke Fungurume Mining (Free Port McRoan), USA Kolwezi Copper Company, Switzerland BHP BILITON, Switzerland Rand Gold (Kibali Gold Mining), Canada Mutanda Mining, Canada Ashanti Gold, Canada First Quantum Minerals, Canada China Nonferrous Metals Mining, China Vedanta Resources, UK Agribusiness Aico Africa, Zimbabwe Zambia Sugar, Zambia Cevital, Algeria Brabanta, Belgium 15 16

11 Nestlé, Switzerland Kitoko Food, Israel Coca-Cola, USA Nestle, Swaziland Heinken, Netherlands Hatsun Agro Product, India Swaziland Beverages, UK Rhodes Food Group, South Africa Cadbury, UK Tourism Hotel Properties, Singapore InterContinental Hotels Group (IHG), UK Accor, France Four Seasons Hotel, Canada Fairmont Raffles Hotels, Canada Thomas Cook, Germany Real Estate and Construction Orascom Construction Industries, Egypt The Arab Contractors, Egypt Murray & Roberts Holdings, South Africa Emaar, UAE Qatari Diar, Qatar Barwa Real Estate, Qatar Manufacturing Dangote Cement, Nigeria Elsewedy Electric (Elsewedy Cables), Egypt Diamond Trust Bank, Kenya Nissan, Japan LG, South Korea Toyota, Japan Sony, Japan Sumitomo Group, Japan Tata Group, India Arab Swiss Engineering Co (ASEC), Egypt Lafarge, France Tata Group, India ICT MTN Group, South Africa Safaricom, Kenya Seacom, Mauritius Mobiserve Holdings, Egypt UST Global, Mauritius Ongair, Kenya Vodacom, South Africa Etisalat, UAE ZTE, China Huawei Technologies, China Cisco, US 17 18

12 Google, US Airtel, India IBM, US Zain, Bahrain Siemens, Germany Orange, France Financial Services Diamond Trust Bank, Kenya Global Trust Bank, Uganda Commercial Bank of Africa, Kenya Equity Bank, Kenya KCB Bank Uganda, Uganda Reinsurance Solutions Group, Mauritius Misr Bank, Egypt Sanlam, South Africa Banque Fédérale de Commerce, Kuwait BIC, France Commercial International Bank (CIB), Egypt AlexBank, Italy Qatar National Bank (QNB), Qatar Abu Dhabi Islamic Bank (ADIB), UAE HSBC, UK Gulf Finance House, Bahrain National Bank of Abu Dhabi, UAE First Gulf Bank, UAE Arab Insurance Company, Bahrain Retail Shoprite Holdings, South Africa Nakumatt, Kenya Imperial Holdings, South Africa Energy Sonatrach, Algeria Eskom, South Africa Vivo Energy Maroc, Morocco Total Maroc, Morocco Apache, USA Eni SPA, Italy Woodside Petroleum, Australia Royal Dutch Shell Plc, Netherlands D1 Oils, UK Vanco Energy, USA ExxonMobil, USA Petronas, Malaysia China National Petroleum, China Total, France Heritage Oil, UK PUMA Energy, Singapore China Africa Sunlight Energy, China 19 20

13 How can we contact COMESA National Investment Promotion Agencies? NOTES COMESA RIA coordinates between investor/inquirer and any member of the National Investment Promotion Agency (IPA) of a specific Member State from the 19 countries. The profile and mandate of the IPAs are available on RIA s website. RIA also coordinates missions and meetings with COMESA IPAs. 21

14 NOTES

15 COMESA Regional Investment Agency 3A, Salah Salem Road, Nasr City, Cairo, 11562, Egypt General Authority for Investment BLDG Tel.: (+202) / Fax: (+202) info@comesaria.org /