July, 2001

The Egyptian Role in COMESA's Sixth Summit

Khaled Hanafi Ali

On 22-23 May 2001, Egypt hosted the sixth summit of the Common Market for Eastern and Southern Africa -COMESA-. The summit was an attempt to prompt the market towards more economic integration so that member-states can better face globalisation with all the opportunities and challenges it entails.
The summit called for members to join the free-trade zone declared in the COMESA summit of Lusaka in October 2000. Nine countries responded to the call in 2000, while the remaining members called for time to adjust their internal economic conditions.

The Cairo summit helped overcome a number of the impediments that had hindered some countries joining the free-trade-zone agreement. Members agreed on a mechanism that would help compensate countries for any harm caused to them by joining the free-trade zone. This mechanism is represented in the establishment of a fund to make up for any deficiencies in the political resources of the countries joining the zone. This resolution prompted another four countries to join - namely, the Seychelles, Rwanda, Uganda and the Comoros islands. In addition, Egyptian diplomatic sources alluded to the possibility of Burundi and Congo joining the free-trade zone, while both Namibia and Swaziland expressed their intentions to do the same albeit without defining a time frame.

As far as Egypt is concerned, although COMESA provides it with a crucial opportunity to protect its interests in the waters of the Nile and help it circulate its products in African markets, Egypt does not fully utilise the economic opportunities provided. The balance of commercial exchange between Egypt and the members of COMESA is still very limited, even if this applies also to inter-trade relations between other COMESA members. This decline can be attributed to a number of factors:
- Similarity between the production structures of COMESA members, most of which depend on the export of primary materials and the importation of all their needs for manufacturing. This has led to the deterioration of commercial-exchange conditions and to the economies of these countries being associated with multinational companies. No database is available for marketing conditions between the individual members, which affects the private sector and discourages investors.
- Transportation is the primary impediment hindering commercial exchange. No direct lines of transportation are available, with products shipped via European countries, which raises the costs of exports and hence reduces commercial exchange.
- Most COMESA members suffer from deficiencies in their hard-currency resources as well as in banking services, and thus interaction takes place mainly through European banks.

Besides these general impediments, trade between Egypt and COMESA members has been impeded by further factors, including:
- Poor promotion of Egyptian products, doubling the burdens on commercial representation offices.
- Scarce economic studies in Egypt about the tastes of African consumers, which is not the case in Asian counties, which are keenly monitoring the African market.
- Lack of maintenance services for Egyptian products in African markets makes it very hard for Egypt to compete with similar European and Asian products.
Proposals to boost Egypt's role include:
- Amendment of the insurance and banking systems with regard to African products and the offering of special interest rates to encourage import and export activities.
- Implementation of detailed marketing studies about the COMESA market, including consumer patterns, competition in the market and the availability of opportunities.
- Opening of new branches of Egyptian banks in COMESA member-states to help carry out all banking services related to foreign trade, which in turn would minimise the risks for Egyptian exporters.
- More attention should be devoted to certain Egyptian products that might have a good market in COMESA member-states.