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$20bn expected trade balance after activating tripartite agreement: COMESA Sec-Gen - Daily News Egypt

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$20bn expected trade balance after activating tripartite agreement: COMESA Sec-Gen

Total funding for annual infrastructure projects at $52bn, only $22bn provided causing Africa to lose infrastructure fund, says Ngwenya


Common Market for Eastern and Southern Africa (COMESA) Secretary General of Sindiso Ngwenya (DNE File Photo)
Common Market for Eastern and Southern Africa (COMESA) Secretary General of Sindiso Ngwenya
(DNE File Photo)

By Shaimaa Elise and Nehal Mounir

Daily News Egypt interviewed the Common Market for Eastern and Southern Africa (COMESA) Secretary General of Sindiso Ngwenya to talk about the problems and opportunities of activating the Sharm El-Sheikh tripartite agreement, held in Sharm El-Sheikh from 7 to 10 June.

What is your interest in joining the Sharm El-Sheikh agreement? How have the negotiation been until now?

We have been negotiating over a Tripartite Free Trade Area (FTA) since 9 June 2011. During this conference we are going to sign two documents. The first is the tripartite agreement gathering COMESA, SADC, and EAC, and the other is the declaration.

The Sharm El-Sheikh declaration it includes the special provisions on what could be done after signing the agreement, to be submitted for parliament for ratification. At the same time, we have to conclude negotiations on the rules of origin and accomplish a unified rule of origin, and we hope to finish all stages in six months, because the agreement can enter into force after the ratification of 14 countries.

How do you intend to resolve the issue of transportation in Africa?

The negotiations include industrial and infrastructure programmes, as we have a tripartite programme that includes projects for roads and marines to connect the countries. In addition, the African Union is working on its programme to develop transportation infrastructure in Africa.

In addition, we have a project on huge speed rails for the entire African continent, and for island countries there are some programmes for shipping and submarines to connect these countries with the others.

What is the time frame to complete these roads and railways?

First, we have to find funders to finance these projects because countries cannot finance all of them. However, the challenge is preparing feasible studies for these projects, as well as engineering and designs.

When will you start negotiations on liberalising services and logistics in Africa?

Services agreements have been negotiated, and services are in our build up agenda, which means they were agreed upon, but we are waiting for signing after negotiations.

What incentives are provided to attract investments and support small- and medium-enterprises (SMEs) in Africa?

SMEs are most effective in the African economy and are funded by the mother bank of Africa. In addition, all countries provide incentives for these enterprises , through capital equipment , utilities, taxes, providing raw materials, and enterprises are not going to pay any cooperate taxes for five years.

The African Development Bank provide loans for SMEs, and small investments and loans come through the Central Bank of Africa, commercial banks and the COMESA bank. The bank provided trade finance loans worth $2.7bn (EGP 25bn).

What about transit trade decrease after the activation of the agreement?

The transit trade is very important for us because we are going to implement our transit facilitation programmes to ensure carrying goods safely and promptly. We are working on dealing with the issue of the transit then facilitating the issue of the costs.

What is the expected amount from increasing the trade balance between African countries?

We expect to increase the trade balance by $10bn to $20bn, but the activation of the agreement includes other sectors besides trade, like industry , which is important to be promoted to provide investments and job opportunities.

How much is the funding of infrastructure projects in COMESA countries, and what is the source of the funding?

The total funding for annual infrastructure projects amounted to $52bn, and only $22bn have been provided, with a deficit of $30bn, so Africa lost the infrastructure fund. By the end of the year, we will provide an additional fund of $1bn to finance infrastructure by the African Development Bank, the premier bank funding these projects.

Do you expect that poorer countries will be harmed from liberalising trade and cancelling tariffs?

Yes, it may harm them, but we are working on encouraging businessmen to boost more investments to raise their capacities to compete in the trade sectors. For example, El-Sewedi business has some projects in a lot of African countries, it can invest in infrastructure and other projects to get benefit instead of importing from outside; it is a win- win situation.

The total tripartite exports in 2013 amounted to $285bn, while the imports in the same year amounted to $310bn.

 

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