THE VISION OF COMESA

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1 THE VISION OF COMESA To be a fully integrated economic community that is prosperous, internationally competitive, and ready to merge into the African Union. COMESA Member States are: Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. Contacts: Common Market for Eastern and Southern Africa (COMESA) Secretariat Ben Bella Road P O Box 3005, Lusaka, ZAMBIA Tel /32 Fax info@comesa.int or pr@comesa.int Website: COMESA in Brief 1

2 BACKGROUND COMESA comprises 19 African Member States that came together with the aim of promoting regional integration through trade and the development of natural and human resources for the mutual benefit of all people in the region. COMESA was initially established in 1981 as the Preferential Trade Area for Eastern and Southern Africa (PTA), within the framework of the Organisation of African Unity s (OAU) Lagos Plan of Action and the Final Act of Lagos. The PTA was transformed into COMESA in The PTA was established to take advantage of a larger market size, to share the region s common heritage and destiny and to allow for greater social and economic co-operation. THE OBJECTIVES OF COMESA Among other things, COMESA Member States have agreed on the need to create and maintain: (a) (b) (c) (d) (e) A full free trade area guaranteeing the free movement of goods and services produced within COMESA and the removal of all tariffs and non-tariff barriers; A customs union under which goods and services imported from non-comesa countries will attract an agreed single tariff in all COMESA Member States; Free movement of capital and investment supported by the adoption of a common investment area so as to create a more favourable investment climate for the COMESA region; Gradual establishment of a payment union based on the COMESA Clearing House and the eventual establishment of a common monetary union with a common currency; and The adoption of common visa arrangements, including the right of establishment leading eventually to the free movement of bona fide persons. 2 COMESA in Brief

3 INSTITUTIONAL SET UP The Decision making structure is as follows: The Authority of Heads of State and Government: This is the supreme organ of the Common Market and is composed of the Heads of States and Government of all the 19 Member States. The Council of Ministers: This is composed of Ministers from the Coordinating Ministries of all the Member States. It is responsible for overseeing the functioning and development of COMESA and ensuring the implementation of agreed policies. The Technical Committees: These are responsible for the preparation of comprehensive implementation programmes and timetables, which serve to prioritise the programmes with respect to each sector. In addition, they monitor and review the implementation of the programmes on co-operation and may request the Secretary-General to undertake specific investigations. Articles 15 and 16 of the Treaty stipulate that the Technical Committees of the Common Market shall be the following: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) The Committee on Administrative and Budgetary Matters; The Committee on Agriculture; The Committee on Comprehensive Information Systems; The Committee on Energy; The Committee on Finance and Monetary Affairs; The Committee on Industry; The Committee on Labour, Human Resources and Social and Cultural Affairs; The Committee on Legal Affairs; The Committee on Natural Resources and Environment; The Committee on Tourism and Wildlife; The Committee on Trade and Customs; and The Committee on Transport and Communications. COMESA in Brief 3

4 The Committee of Governors of Central Banks: comprises the Governors of Central Banks of all the Member States and they are in charge of the regional finance and monetary affairs. The Intergovernmental Committee: This Committee develops the programmes and action plans in all sectors of co-operation, except in the finance and monetary sectors. It monitors the functioning and development of the Common Market and oversees the implementation of the programmes in accordance with the provisions of the Treaty. The Secretariat: Consists of members of staff, headed by the Secretary-General, who is appointed by the Authority. The Secretariat of the Common Market is in Lusaka, Zambia. LINKAGES WITH OTHER REGIONAL ECONOMIC COMMUNITIES There are a number of regional organisations that work in collaboration with COMESA. These are: the East African Community (EAC), the Inter-Governmental Authority on Development (IGAD), the Indian Ocean Commission (IOC) and the Southern African Development Community (SADC). COMESA has excellent working relations, both formally and informally, with all of these regional organisations. Memoranda of Understanding have been signed with EAC, IGAD and IOC such that these organisations have agreed to adopt and implement the COMESA trade liberalisation and facilitation programme. COMESA and SADC have also set up a Joint Task Force to harmonise their programmes; and under the Tripartite Arrangement, COMESA, EAC and SADC have embarked on the implementation of programmes in Climate Change mitigation, infrastructure development and trade, among others. PROGRAMME ACTIVITIES TRADE LIBERALISATION Free Trade Area COMESA Member States established a Free Trade Area (FTA) on 31 October 2000 after a sixteen year period of progressive trade liberalisation through reduction of intra-comesa tariffs. As at April 2008, 14 countries were participating in the Free Trade Area. The other five Member States had effected tariff reductions of between 60 percent and 90 percent. The result is that average tariffs on intra-comesa trade have fallen significantly. The number of FTA participating countries is expected to increase ahead of the Customs Union scheduled for December According to COMESA 4 COMESA in Brief

5 statistics, intra-comesa trade has grown at average of 7 percent every year since the establishment of the Free Trade Area with a higher increase reflected between the intra- FTA states. Rules of Origin The COMESA Rules of Origin have five (5) independent criteria and goods qualify as originating in COMESA if they meet any one of the five. The exporter is free to base his claim to COMESA duty-free or preferential tariff treatment on any one of the criteria, according to which of them has been complied within the production process. With the exception of small consignments, goods being exported under COMESA FTA or preferential tariff reduction treatment have to be accompanied by the COMESA Certificate of Origin. COMESA Simplified Trade Regime (COMESA-STR) A number of COMESA Member States are implementing a simplified Trade Regime (COMESA-STR) for the small cross boarder traders. The STR aims to formalize informal cross-border trade (ICBT) by putting in place instruments and mechanisms tailored to the trading requirements of small-scale traders that are decentralized to border areas where informal trade is rampant with the view to facilitate ease of access by small traders. Various Member States have put in place national institutional mechanisms to support a multi-sectoral and multi-institutional approach in the implementation of the COMESA-STR. A key and unique element has been the involvement of the cross-border traders themselves in the design and implementation of this simplified trade regime. COMESA Customs Union The establishment of the FTA in COMESA by the year 2000 was a prelude to the establishment of a Customs Union. There are various administrative, legal, institutional and logistical preparations for the operation of the Customs Union. To that end, so far the draft COMESA Common Tariff Nomenclature and Common External tariff (CTN/ CET) have been recommended for adoption by Council. On the basis of the agreed HS2012, Member States are in the process of finalizing their lists and schedules of tariff alignment. Many Member States are in the process of migrating to the COMESA CTN; others are in the process of adopting their national tariff into the COMESA CET; and two Member States have submitted their final lists of sensitive products. The compilation, adoption and implementation of the Common Tariff Nomenclature by the Member States is a prerequisite to the harmonisation and standardisation of the commodity coding system within the region, and Member States are being COMESA in Brief 5

6 encouraged to adopt a common product description and commodity coding system such as the HS So far Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Swaziland, Uganda, Zambia, Zimbabwe, Sudan and Rwanda have acceded to the HS 2002 and are implementing it. The COMESA Customs Document (COMESA-CD) The COMESA-CD was officially adopted by COMESA at the Council of Ministers meeting in April The Secretariat runs training courses for Customs officials in other COMESA countries on how to use the COMESA-CD as part of a programme to harmonise customs and trade statistics systems (including ASYCUDA). Common Statistical Rules The use of common statistical rules, which were adopted by the COMESA Council of Ministers at their meeting in April 1996, is necessary for comparison of trade data and statistics. All countries which are implementing the COMESA-CD are also implementing the common statistical rules and others are in the process of implementation. ASYCUDA/Eurotrace The ASYCUDA and Eurotrace programmes are an important component of the overall regional integration programme of COMESA. ASYCUDA (Automated System for Customs Data and Management), makes the customs process more efficient, promotes trade through reducing the time taken to clear goods (thus saving importers and exporters money), so reducing non-tariff barriers to trade. The ASYCUDA programme also has a strong positive effect on revenue generation by making the tariff collection procedure more efficient. This, in turn, allows national governments to streamline tariffs and reduce tariff rates without having an adverse effect on revenue collected. ASYCUDA has been installed in thirteen Member States; while 16 Member States have all installed Eurotrace at their National Statistical Offices. The ASYCUDA system has a very valuable spin-off product; the trade statistics it collects which, when fed into the Eurotrace system, is capable of producing very accurate and up-to-date trade statistics. In countries where ASYCUDA is not being implemented, Eurotrace has a data capture module which is also used to capture data from nonautomated customs offices by the statistics office. Eurotrace is also used to process trade data captured by other customs computerised systems. The Regional Harmonisation of Customs and Trade Statistics Systems (RHCTSS) project, which was operational between 2000 and 2005, contributed to the successful harmonisation and improvement of national customs practices; strengthening the 6 COMESA in Brief

7 capacity at the national and regional levels for producing high quality trade statistics; improving the links between the customs departments and the National Statistical Offices; and establishing a regional trade information system which has now been developed into COMSTAT (COMESA Statistics), an on-line statistics database system for COMESA. Removal of Non-Tariff Barriers Steady progress has been made in elimination of non-tariff barriers (NTBs) such as in liberalisation of import licensing, removal of foreign exchange restrictions, removal of taxes on foreign exchange, removal of import and export quotas, removal of road blocks, easing of Customs formalities, extending times border posts are open, creation of pilot one stop border posts, among others. WTO Compliance If the Eastern and Southern African region is to achieve significant economic growth, it must do this through full integration into the world economy within the framework of GATT/WTO. The COMESA Secretariat is keen to disseminate information on WTO and the world trading system, and to develop capacity in the region, to allow COMESA Member States to more actively participate in the global economy. COMESA was notified to WTO under the Enabling Clause on 29 June COMESA has also applied for observer status for a number of WTO Councils and Committees. Regional Competition Policy With the reduction of tariff and non-tariff barriers in the region, trade has been enhanced and competition increased. In order to ensure fair competition and transparency among economic operators in the region, COMESA enacted the regional competition law and policy to harmonise existing national competition policies to avoid contradictions and provide a consistent regional economic environment. The COMESA Regional Competition Regulations were adopted in 2004 to facilitate the achievement of regional economic integration. The COMESA Competition Commission is the first regional competition authority in Africa and the second in the world, after the European Competition Authority. It is charged with the enforcement of the regulations. The introduction of the regulations created a One Stop Shop for the assessment of cross border transactions thereby reducing the burden and cost of doing business in the region, given that such transactions no longer need to be examined in each Member State. The COMESA regime also provides the only and most extensive network of national competition authorities in Africa. The Commission, in its enforcement of the regulations, enjoys international legal personality COMESA in Brief 7

8 in the territory of each Member State and the legal capacity required for the performance of its functions under the Treaty. The Commission also plays an advocacy role in handling complaints relating to anticompetitive business practices and other unfair business practices; and has established a Fast-Track platform to deal with day to day complaints. The rate of mergers and acquisitions taking place in all the COMESA Member States is an indication of the attractiveness of investing in the Common Market. This is so because mergers now represent the most favoured rule for investing in Africa. The COMESA Competition Commission is hosted in Malawi. TRADE FACILITATION COMESA Secretariat is implementing programmes to improve the transport and communications systems of the region as well as improve information available to businessmen wishing to trade both within the region and beyond. They include the following: Harmonised Road Transit Charges The Road Transit Charges system was introduced in 1991 (currently being implemented by Burundi, Ethiopia, Kenya, Malawi, Rwanda, Sudan, Uganda, Zambia and Zimbabwe) and specifies that heavy goods trucks with more than 3 axles should pay a road charge of US $10 per 100 km; trucks with up to 3 axles should pay a charge of US $6 per 100km; and buses with a capacity of more than 25 passengers pay US $5 per 100km. COMESA Carrier s License The COMESA Carrier s License allows commercial goods vehicles to be licensed, with one license, which is valid throughout the region so that the vehicles can operate in all Member States. This means that vehicles can pick up back-loads in other countries which make more efficient use of the region s transport fleet so reduces the cost of trade. The license was introduced in 1991 and is currently in operation in 11 mainland countries (Burundi, Ethiopia, Eritrea, Kenya, Malawi, Rwanda, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe). Harmonised Axle Loading and Maximum Vehicle Dimensions Axle load limits are: 8 COMESA in Brief

9 (a) single steering axle = 8 tonnes (b) single load or drive axle = 10 tonnes (c) tandem axle group = 16 tonnes (d) triple axel group = 24 tonnes The maximum vehicle dimensions approved by the COMESA Authority (and currently implemented by Malawi, Swaziland, Zambia and Zimbabwe) are: (a) 12.5m for a rigid chassis single vehicle or trailer; (b) 17m for articulated vehicles; (c) 22m for truck and draw-bar trailer; (d) 2.65 maximum width; and (e) 4.60 maximum height The Regional Customs Transit Guarantee Scheme The Regional Customs Transit Guarantee Scheme, popularly known as the RCTG CARNET was introduced in accordance with the provisions of COMESA Protocol on the Transit Trade and Transit Facilities. Work on developing the modalities of operations and institutional arrangements was started in 2002 and the implementation of the scheme commenced in Since the RCTG Scheme became operational in the Northern Corridor in 2012, over 194 Regional (RCTG) Bonds with guarantee amount of US $89 million have been executed by Clearing and Forwarding Agents in Kenya, Uganda and Rwanda. During the same period over 1,129 RCTG Carnet were issued for transit goods from Mombasa, Kenya to Uganda and Rwanda and vice-versa. The RCTG Scheme is operational in Burundi, Democratic Republic of Congo, Djibouti, Eritrea, Ethiopia, Kenya, Malawi, Rwanda, Sudan, Uganda, Zambia and Zimbabwe. Tanzania is also a member of the scheme. The Yellow Card The COMESA Yellow Card is a Vehicle insurance scheme, which covers third-party liability and medical expenses for road accident victims. A Yellow Card issued in one COMESA Member State is valid in all other countries participating in the scheme. COMESA in Brief 9

10 In addition, the Yellow Card is being issued to non-comesa motorists, particularly from the SADC countries travelling in the COMESA region. COMESA and SADC have been working together to harmonize the Yellow Card Scheme with the Fuel Levy system adopted by SACU countries. It is hoped that South Africa, Botswana, Namibia, Lesotho and Mozambique would use the Yellow Card as an extension to the Fuel levy system. Currently, there are over 170 insurance companies involved in the operations of the scheme. COMESA Virtual Trade Facilitation System (CVTFS) The CVTFS is an electronic trade facilitation initiative developed to monitor consignments along different transport corridors across the region. It integrates other COMESA instruments on one online platform including: the Yellow Card (third party motor vehicle insurance); Regional Customs Bond Guarantee System, (RCTG); Transit Data Transfer Module; Carrier License for road freight operators; Harmonized Axle Load, and (Gross Vehicle Mass Limits which includes the COMESA Certificate of Overload Control); and the Customs Declaration Document. The CVTFS makes use of software that helps interpret all the information on the seal and transmits to a dashboard the container details, the vehicle details, and any other relevant details which appears on a centralized server which you can monitor from anywhere. The seal has a GPS modem that provides the location of goods in real time and a GSM modem to transmit information to a central server and a sensor to detect tampering. The device is fitted on a cargo container carrying the consignment. CVTFS provides full visibility in real time of all tagged consignments from source to destination; making it an effective solution for cargo tracking management. The system is accessible to Customs authorities, freight forwarders, insurance companies, banks, port authorities, container freight stations and traders to mention but a few. The system is in currently in use in the Northern Corridor states of Kenya, Uganda, Rwanda and D R Congo. Other states that have so far adopted the use of CVTFS include Ethiopia, Djibouti, Malawi, Zambia and Tanzania. Telecommunications Interconnectivity A reliable, efficient and cost-effective regional telecommunications network would greatly facilitate economic integration in the region. It is recognised that the existing network is not adequate to meet the needs of the users and the current practice of routing regional telecoms traffic via countries outside the region (mainly in Europe) makes the implementation of competitive tariffs very difficult. To address this problem, COMESA has initiated the establishment of a private, limited liability company (COMTEL) which will build an asynchronous transmission mode (ATM) system which will link national 10 COMESA in Brief

11 systems together. While gateway to gateway infrastructure is COMTEL s priority, the national infrastructures are equally important and there is a need for all countries in COMESA to continue to develop and improve national infrastructures. COMTEL is to have a strategic partner who will hold 30 per cent of the equity of COMTEL, the rest being owned by participating National Telecoms Operators (25% of the equity) and private sector investors (45% equity stake). The estimated investment cost is US $300 million. Liberalisation of the Skies COMESA is working with the relevant authorities and the region s airlines on a programme to remove air traffic controls. The aim is to eventually removal of all air traffic controls except for those concerned with safety. Increased competition within regional routes will reduce the cost of air travel and transport, and foster greater regional trade. A detailed policy on Air Transport has been adopted by the COMESA Heads of State and Government. The policy takes into account the Yamoussoukro declaration on Air Transport in Africa. The policy has been adopted in collaboration with SADC and EAC to cover the whole Eastern and Southern Africa region. Air Transport Competition Regulations have been developed jointly by the EAC, COMESA and SADC Ministers responsible for air transport. In 2014, COMESA Secretariat secured approximately US $10 million from the African Development Bank (AfDB) to establish a single, seamless airspace in the sub-region. This will reduce air transport costs and increase tourism, trade and regional social economic integration. FINANCIAL AND MONETARY SYSTEMS Monetary Harmonisation Programme COMESA has adopted a phased monetary co-operation programme which aims at establishing a common monetary area. It is apparent that greater monetary stability will facilitate the economic integration efforts and provide for sustained economic development. The ultimate objective is to establish a monetary union, and thus enable the Common Market to attain the status of an Economic Community. A phased Monetary Harmonisation Programme is in place to prepare the ground towards the eventual establishment of a monetary union. The programme enables Member States to: i. Take aggressive economic reform programmes while at the same time learning how to co-operate and co-ordinate their economic policies; COMESA in Brief 11

12 ii. iii. iv. Through their reform programmes, create an enabling environment for price stability and economic growth to allow a natural development of financial markets and a high degree of economic integration; Increase intra-regional trade while narrowing inequalities through economic growth; and Form a more balanced monetary union of relative equality in the region. To achieve the above, it was considered essential that the Member States should first go through a process of monetary harmonisation with a view to achieving macro-economic convergence. In order to assess progress being made towards this objective, a number of convergence criteria were formulated, with a view of gauging the progress being made by the Member States in the implementation of the programme. With increased integration of the region, a single COMESA market in financial services will need to be created in which banks authorized in one country will be able to export their services to any other COMESA country and have rights of establishment of branches and subsidiaries. This requires achievement of financial sector stability and harmonization of bank supervision and regulation in the region. COMESA has, therefore, an action plan for harmonising bank supervision and regulation in the region. COMESA PAYMENT SYSTEMS AND FINANCIAL INSTITUTIONS The COMESA Clearing House COMESA has a Clearing House, based in Zimbabwe, which enables Member States to use local currencies in their intra-comesa trade. Although the Clearing House was highly utilized in 1980s and early 1990s when most Member States imposed strict exchange controls, it is being restructured to enable real time gross settlement payments in the new liberalised market setting. To this end, the Regional Payment and Settlement System (REPSS) was commissioned and set up as a single gateway for Central Banks within the region to effect payment. The direct participants of the COMESA Clearing House are the Central Banks of Member States. The system was designed by COMESA Central Banks payments experts, with inputs from the IMF, commercial banks and other financial institutions of the region and with financial support from the EU under the Regional Integration Support Programme (RISP). REPSS is a Multilateral Netting System with end-of-day settlement in a single currency (US$ or Euro) with the system allowing for settlement in a multicurrency environment (US$, Euro or any other specified currency). 12 COMESA in Brief

13 The main aim of REPSS is to stimulate economic growth through an increase in intraregional trade by enabling importers and exporters to pay and receive payment for goods and services through an efficient and cost effective platform. Local banks access the payment system through their respective Central Banks. Any participating bank is, therefore, able to make payments to and receive payments from any other participating bank. The linkages through Central Banks avoid the complex payment chains that may sometimes occur in correspondent bank arrangements. Under REPSS, importers and exporters deal with their local commercial banks for trade documentation. The importer s payment to the exporter is channeled through the Central Bank of the importer to the Central Bank of the exporter using the REPSS platform. Central Banks send payment messages to REPSS on a particular day and at the end of the day, REPSS nets the payments and settlements are made to the respective Central Banks accounts. The Central Banks credit the commercial banks accounts with them and the commercial banks then credit the exporters accordingly. The credibility of the Central Bank and pre-funding of account by commercial banks provide guarantee of payment. REPSS started live operations on 03 October 2012 and registered its first transaction between Bramer Bank of Mauritius and Fina Bank of Rwanda, through their respective Central Banks. PTA Bank In addition to creating the policy environment for freeing trade, COMESA has specialised institutions to provide the required financial infrastructure and service support. The Trade and Development Bank for Eastern and Southern Africa (PTA Bank) has an impressive track record in providing trade and development finance, requiring mediation with international capital markets. Its headquarters are in Bujumbura, Burundi, with a branch in Nairobi, Kenya. The PTA Bank has 19 members, seventeen of whom are countries in eastern and southern Africa. The African Development Bank is the institutional shareholder while the People s Republic of China is the only non regional member. However, as part of the Bank s membership drive, the bank has approached a number of other emerging markets and OECD countries with a view to encouraging them to join the Bank. This would give the Bank a global positioning and make its resource mobilisation efforts in the international money markets much smoother. Although China is a shareholder of the Bank, it is does not borrow from the bank. However, because of the phenomenal growth experienced in China in most sectors especially in the engineering and telecommunication sectors many of the bank s customers are finding it more cost effective to source their equipment requirements COMESA in Brief 13

14 from China. The Bank provides financing for mainly large scale investors who are willing to borrow between US $300,000 up to a ceiling of US $20 million. These limits can be reviewed as appropriate depending on individual business requirements. The interest rates charged depend on the risk rating of individual customers, but are very competitive, in addition to the bank s products range from the short term trade financing facilities to long term project financing. Although the Bank does not lend directly to small and medium sized enterprises, it extends lines of credit to those banks that have experience in this critical business area. For example, in 2008the PTA Bank extended a line of credit of KShs 750 million (about US $11 million) to K-Rep, a financial institution that is a leader in the small and medium scale enterprise sector in Kenya. With an expanded equity base, increased mix of shareholding and enhanced risk management, the Bank secured its first credit ratings upgrades, by Global Credit Rating in 2012 and Fitch in 2013, with the ratings up to BB+ and BB respectively COMESA Fund and Regional Integration Support Mechanism (RISM) The COMESA Fund protocol was adopted in 2002 and includes two windows, a special facility referred to as the COMESA Adjustment Facility (CAF) founded on Articles 60 and 150 of the COMESA Treaty and the COMESA Infrastructure Fund (CIF). The CAF was operationalized by the Regional Integration Support Mechanism (RISM) through a Contribution Agreement between COMESA and the European Union (EU) in The total funding for the RISM programme is 78 million under the 9th European Development Fund (EDF). Since its inception, RISM has played a key role in fostering regional integration and contributed to the membership of Rwanda and Burundi to the East African Community Customs Union by providing revenue loss support of 35.3 million in 2009 and The scope of the programme was expanded beyond revenue loss support to enable countries implement economic reform programmes in the context of regional integration. The RISM programme was later amended through a rider in 2012 and since then, an additional amount of about 25.5 million has been approved to thirteen COMESA Fund Member States as adjustment support under the two Calls for Submissions launched in 2012 and These are Burundi, Comoros, Democratic Republic of the Congo, Djibouti, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Swaziland, Uganda, Zambia and Zimbabwe. COMESA Fund Member States access RISM resources by submitting Regional Integration Implementation Programmes (RIIPs) which include performance indicators. 14 COMESA in Brief

15 Continued support is based on the progress monitoring reports, which highlight the level of achievement against set targets. In 2012, nine Member States successfully submitted their RIIPs and received about 9.7 million as adjustment support. Furthermore, a total of 15.8 million was secured in Throughout the process, secretariat provides technical support to the Member States for the preparation and formulation of RISM submissions. African Trade Insurance Agency (ATI) The African Trade Insurance Agency (ATI) was established in The initial group of participating countries was: Burundi, Malawi, Rwanda, Kenya, Tanzania, Uganda and Zambia. Both country and corporate membership has since increased by six more members, Madagascar, Eritrea, Sudan, COMESA, Gerling NCM, the PTA Bank and ZEP-RE. The project was supported by the World Bank (IDA). The major purpose is to provide political risk cover from commercial sources or export credit agencies which were not available in any COMESA Member State. Membership to the ATI is open to all AU Member States. The project is supported by the World Bank, which provides low interest loans to participating Member States. The most important benefit of a regional scheme is its potential to deal with the perception of high levels of risk in doing business in Africa as a region. It is clear that many financial institutions and business enterprises associate political risk to the region as a whole and never get to the stage of attempting to distinguish different levels of political risk between individual countries. It is this perception of high regional political risk that deters financial institutions and business enterprises from establishing a presence in the region. ATI s current range of insurance products includes: i. Trade Political Risk Insurance ii. iii. iv. Comprehensive Trade Political Risk Foreign Direct Investment Insurance Project Loan Cover v. Mobile Assets Cover vi. vii. Unfair Calling of Bonds and Standby Letters of Credit Credit Insurance Cover COMESA in Brief 15

16 The PTA Reinsurance Company (ZEP-RE) The PTA Reinsurance Company (ZEP-RE) is a COMESA institution with the responsibility of promoting trade, development and integration in the insurance and re-insurance sector. ZEP-RE is further mandated to: i. Transact reinsurance business through Treaty and facultative cessions in respect of all or some classes of insurance inside as well as outside the sub-region; ii. iii. iv. Create and administer pools for various risks for the account and to the interest of the sub-region s insurance and reinsurance markets; Facilitate the training of insurance and reinsurance industry personnel in the Sub-Region; Provide technical assistance to the insurance and reinsurance institutions of the Sub-Region; v. Invest its funds in the sub-region in a manner that promotes economic development, provided the company may invest outside the sub-region to meet its operational and/or technical requirements; and vi. Promote contacts and business co-operation among national insurance and reinsurance institutions in the sub-region. Besides operating in several COMESA countries, ZEP-RE also serves many non COMESA Member States such as Morocco, and Algeria in North Africa, Ghana, Nigeria, Togo and Senegal in West Africa, Mozambique in Southern Africa, and Tanzania in East Africa. The company is rated by Global Credit Rating (GCR) AA for local/national and BBB- for international Business. INVESTMENT The COMESA Regional Investment Agency The COMESA Authority meeting in Kinshasa in 1998 declared COMESA to be a Common Investment Area. At the 1999 Economic Forum meeting, held as part of the 1999 COMESA Summit meetings in Nairobi, Kenya, it was further decided to establish a Regional Investment Agency, which is tasked with implementing the Common 16 COMESA in Brief

17 Investment Area. The establishment of a CCIA is particularly useful, as national markets in most Member States are too small to attract investment on their own. Regional markets attract more investment as they have more consumers than national markets and hence more purchasing power. Furthermore, multi-nationals, fund managers and other investors now give preference to regional, rather than national markets in making decisions on where to invest. An Investment Framework Agreement was adopted by the Twelfth Summit of the COMESA Authority in 2007, which will form the basis of investment laws and policies in the region. Some of the benefits that the COMESA investor and other foreign investors will receive under the Agreement are national and most favoured nation treatment. They will have access to international arbitration and their investments will be guaranteed against expropriation and nationalisation. By the end of 2005, an office for the COMESA Regional Investment Agency (RIA) had been opened in Cairo, Egypt making the CCIA a reality. AGRICULTURE The Comprehensive Africa Agricultural Development Programme (CAADP) Over the past three years COMESA has been implementing the Comprehensive Africa Agricultural Development Programme (CAADP) in consultation with NEPAD. This programme is intended to address the various challenges in agricultural development in COMESA. The Comprehensive Africa Agriculture Development Program (CAADP) is the highest policy level framework for the development of agriculture in Africa. COMESA has the mandate to implement the CAADP agenda in Eastern and Southern Africa. Accordingly, following submission of the initial COMESA CAADP two year work plan in March 2006, COMESA received support from development partners, mainly DFID, SIDA and USAID to assist its member States put in place a framework for evidence based priority setting and investment framework in implementing CAADP. The overall goal of CAADP is to: Help African countries reach a higher path of economic growth through agriculturally-led development, which eliminates hunger, reduces poverty and food insecurity, and enables expansion of exports. The target is to increase agriculture by 6% per annum up to 2015 as tool for attaining the MDGs. COMESA in Brief 17

18 By the end of 2013, COMESA had mobilized technical, financial and organizational support to facilitate Member States in implementing the CAADP agenda. The precompact support has quantitatively yielded the following results: 14 countries have signed their national CAADP compacts, namely Rwanda, Burundi, Ethiopia, Swaziland, Uganda, Malawi, Kenya, Zambia, Democratic Republic of Congo, Seychelles, Djibouti, Sudan, Madagascar and Zimbabwe. Rwanda, Uganda, Kenya, Burundi, Ethiopia, Malawi, Zambia, Democratic Republic of Congo and Djibouti have finalized the design of their National Agriculture and Food Security Investment Plans (NAFSIPs). Food and Agriculture Market Information System (FAMIS) COMESA is also implementing an AfDB-funded project on the COMESA-wide Food and Agriculture Market Information System (FAMIS). The market information programme has been boosted by the offer by Egypt to develop a web-based database to capture business contact information and profile of private sector enterprises in the COMESA region. Another key success has been in forging public-private sector partnerships to advocate for and create a regional environment that is supportive of open regional agricultural trade, improve export and reduce import restrictions; harmonise standards and sanitary and phyto-sanitary (SPS) requirements across the region for animal and plant products. Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA) ACTESA is a specialised agency of COMESA formed to address staple food production and marketing in order to increase market access; food production; food productivity and removal food trade barriers. ACTESA implements programmes that enhance national and regional staple food trade and seek to attract agricultural growth and accelerate broad-based poverty reduction in the Eastern and Southern Africa subregion. It further channels policies between the public and private sectors, acting as an information hub, facilitating and co-ordinating activities by partners at national and regional level including mobilization of resources focusing on staple food development. Climate Change Adaptation and Mitigation COMESA, with financial support from the EU, DFID and Norwegian Ministry of Foreign Affairs, collaborates with the EAC and SADC and works directly with 26 Member States on the COMESA Climate Change Programme. A ring-fenced Fund from Rockefeller foundation is also available to COMESA and focuses mainly on supporting Africa negotiations at the ongoing United Nations framework Convention on Climate Change (UNFCC). 18 COMESA in Brief

19 The core objective of the COMESA-EAC-SADC Climate Change Programme is to address the impacts of climate change in the Tripartite region through successful adaptation and mitigation actions, which also build economic and social resilience for present and future generations. COMESA is the overall coordinator, with some activities being implemented by the respective RECs and others carried out by the individual RECs. PRIVATE SECTOR SUPPORT COMESA works closely with the private sector through the COMESA Business Council. Every year the private sector joins the Heads of State at the COMESA Business Summit to discuss and seek solutions to challenges faced by the private sector in the COMESA region. INSTITUTIONAL SUPPORT COMESA Court of Justice The COMESA Court of Justice is the judicial organ of COMESA. The Court provides certainty that COMESA is as a rules-based institution, with rules, which can be enforced through a court of law. The Court of Justice, which has its permanent seat in Khartoum, Sudan, was formally brought into being at the COMESA Heads of State summit in June 1998 at which the initial seven Judges of the Court were appointed. The Judges all hold high judicial office in their own countries. In 2004 the Treaty was amended to expand the Court into two Divisions. The lower Division which is called the Court of First Instance has seven judges. The upper Division of the Court, which has five Judges, is called the Appellate Division. The Court of Justice adjudicates and arbitrates on, among other matters, unfair trade practices, interpretation of Treaty (Protocols and other legislative acts) and ensures that Member States uniformly implement and comply with agreed decisions. Decisions of the Court on the interpretation of the provisions of the COMESA Treaty have precedence over decisions of national courts and are binding on all COMESA Member States. COMESA in Brief 19

20 COMESA Leather and Leather Products (LLPI) Since its establishment in 1990, the institute has prepared several programmes and projects in areas such as human resource and institutional development, trade and investment in the leather and leather products sector. LLPI has helped a number of entrepreneurs with preparation of investment feasibility studies. It has also designed and executed several projects to help Member States develop their sectors. The LLPI also conducts training programmes in leather footwear technology and pattern making for its Member States small and medium scale entrepreneurs. In 2007, LLPI completed its new headquarters in Addis Ababa, Ethiopia, where it is situated. Gender and Women-in-Business COMESA developed a regional Gender Policy, which was adopted by the COMESA Heads of State and Government at its Seventh Summit in May 2002 in Addis Ababa, Ethiopia. Part of the Gender Policy is a Women-in-Business (WIB) programme which has established a number of national groups of women entrepreneurs in Member States across the region. The WIB programme is implementing a set of complementary activities to develop capacity within the COMESA Secretariat to establish a sub-regional Information and Business Centre. Under this programme, the Federation of National Associations of Business Women, FEMCOM, focal points in Zambia, Tanzania, Uganda, Rwanda and Ethiopia were supported with information technology facilities. The Secretariat also has a fully-fledged Gender and Social Affairs Division so as to enhance its gender mainstreaming support to Member States. IMMIGRATION AND FREE MOVEMENT OF PERSONS COMESA Protocol on the Gradual Relaxation and Eventual Elimination of Visa Requirements The Protocol relating to the Gradual Relaxation and Eventual Elimination of Visa Requirements within COMESA (the Visa Protocol) was adopted and signed by the Authority of Heads of State and Government as far back as The liberalisation of the movement of persons is intended to facilitate particularly the movement of business persons within COMESA. The Visa Protocol was designed on the basis that Member States shall allow each other s citizens entry free visas at points of entry for periods of up to 90 days. 20 COMESA in Brief

21 The Visa Protocol recognises that two or more Member States can maintain existing bilateral or multilateral arrangements (or enter into new ones) among themselves in respect of free movement of persons which provide for more favourable treatment for their nationals than are provided for in the protocol. These measures are encouraged and this is already the case for the East African Community and various bilateral agreements. COMESA Protocol on the Free Movement of Persons, Labour, Services, the Right of Establishment and Residence The COMESA Protocol on the Free Movement of Persons, Labour, Services, the Right of Establishment and Residence been adopted by the COMESA Authority of Heads and States and is in the process of being signed and ratified. The implementation of the Protocol will be in the following five stages: Stage I: Part II Articles 3 to 8 Objective: Gradual removal of visa requirements and co-operation in the prevention and the fight against crime. Period: Being implemented. Stage II: Part III Article 9 Objective: Enhancing movement of skilled labour. Period: Progressively implemented since Stage III: Part IV Article 10 Objective: Movement of services. Stage IV: Part V Article 11 Objective: Right of Establishment. Stage V: Part VI Article 12 Objective: Right of Residence. Period: 2014 (20 years from date of entry of COMESA Treaty). COMESA in Brief 21

22 MULTILATERAL TRADE NEGOTIATIONS ACP - EU Relations In 2002, 16 countries from East and Southern Africa (ESA), who are also members of COMESA, IOC, IGAD and EAC, decided they would jointly negotiate an Economic Partnership Agreement with the EU as one group. The Eastern and Southern African countries have agreed that Economic Partnership Agreement negotiations with the European Union give priority to development issues. The Economic Partnership Agreement being negotiated between ESA countries and the European Union is intended to restructure trading arrangements between the EU and the ESA countries to make them more effective in promoting EU-ESA trade be more supportive of broader development goals, and more compatible with World Trade Organization (WTO) rules. This is in line with the Cotonou Agreement, which provides for negotiations of Economic Partnership Agreements (EPAs) between the EU and ACP countries, which were to go into effect in January 2008 after the Cotonou Agreement expires. The ESA region embarked on negotiations an Economic Partnership Agreement (EPA) in February 2004, with the main objectives of strengthening the regional integration process, improving market access into the EU and assisting with the economic development of the region. In market access terms, EPA negotiations aim to achieve in the long-term a Free Trade Area between the EU and ESA. This implies reciprocity of trade liberalisation, even though the need for a certain element of asymmetry is recognised by the EC, given that most of the countries in the region need to build their productive capacity to become competitive and/or are LDCs. On 31 December 2007, EAC initialled an interim EPA on behalf of its partner states (Burundi, Kenya, Rwanda, Tanzania and Uganda). Within the rest of the region, the ESA Interim Agreement had been initialled by Comoros, Madagascar, Mauritius, Seychelles and Zimbabwe. In the last quarter of 2008, Zambia initialled the Agreement. Other countries are free to join in subsequent phases. Both Interim Agreements are WTO compatible, with full market access (duty free quota free) on the EU side, and on the other side transition periods not longer than 15 years and sensitive lists covering maximum 20% of trade (and sometimes less). EPA Rules of Origin are greatly improved over Cotonou, especially in areas such as textiles, fisheries and agriculture, while continuing to avoid the possibility of trade circumvention. The interim agreements also make reference to the development matrix developed by the region as a basis for co-operation. The matrix identifies the main areas where support is needed in order to fully benefit from regional integration and an EPA. These address supply-side constraints (infrastructure development, productive capacity, and private sector 22 COMESA in Brief

23 development), trade policy and regulations, and adjustment costs. The national strategies and the present regional strategy constitute the main response strategy to the EPA identified needs. Support to Member States at WTO Negotiations COMESA was the first regional trade organisation of African countries to be notified to the WTO under the Enabling Clause, on 29 June 1995; and it was the only one until January 2000 when UEMOA was also notified. In order to support the Member States negotiate at the WTO meetings the Secretariat has prepared position papers for all the Ministerial meetings since the Seattle meeting of 1999 to date. African Growth and Opportunity Act COMESA with the support of the Member States has been lobbying actively for increased access to opportunities offered under the Africa Growth and Opportunity Act (AGOA) of the United States, passed into law by the US Congress in May Under this Act, 34 Sub-Saharan African (SSA) countries qualified to export close to 8,000 types of products to the US market duty and quota free. Most COMESA States have since qualified to benefit under the AGOA provision. PEACE AND SECURITY The COMESA Treaty recognizes under Article 163, that peace and security are fundamental prerequisites to social and economic development and also vital to the achievement of regional economic integration objectives of the Common Market. The COMESA Heads of State and Government, at their annual Summit in 1999 also took a deliberate decision that COMESA must address the question of peace and security in order to facilitate regional integration and development. The Authority mandated the COMESA Ministers of Foreign Affairs to meet at least once a year to address issues of peace and security. This landmark decision, which is in compliance with Article 3(c) as read with Articles 6 and 163 of the COMESA Treaty launched the COMESA Programme on Peace and Security. Subsequently, COMESA has established a three-tier structure composed of a Committee of Officials, Ministers of Foreign Affairs and the Heads of State and Government at the top to address issues of peace and security. This structure is complemented by the Committee of Elders, in consultation with other stakeholders in the region including the business community, civil society organisations and parliamentarians. COMESA addresses issues of peace and security in co-ordination with the African Union and other sub-regional organisations in order not to duplicate efforts. The focus is on: COMESA in Brief 23