COMESA registers $71 billion trade deficit due to COVID19 disruptions

Date:

BY PAUL TENTENA

The Common Market for Eastern and Southern Africa (COMESA) region registered a trade deficit of $71 billion in the year 2021, mainly brought about by the COVID19 pandemic disruptions, according to Marday Venkatasamy President of COMESA Business Council.

Venkatasamy, who was addressing the 16th COMESA Business Forum in Zambia, which preceded the 22nd COMESA Summit that was held under the theme “Economic Integration for a Thriving COMESA anchored on Green Investment, Value Addition, and Tourism” said the COMESA region exported goods worth $156 billion and imported goods worth US$227 billion, while the intra-COMESA trade stood at US$12.7 billion.

“Most COMESA Member States traded with the rest of the world than among themselves, but there are a lot of opportunities for Member States to trade among themselves.

“This will increase intraCOMESA trade. In order to increase intra-COMESA trade, it requires Member States to deepen trade with their existing trading partners in COMESA and also expand trade with other Member States in COMESA,” said Venkatasamy.

Venkatasamy said it is apparent that the private sector has a pivotal role to play in driving the sustainable trade development agenda in the region.

“I, therefore, urge all of you to embrace this rare opportunity with excitement and exchange our ideas as we strive to recover from the time that has been lost when the whole world was at a standstill.

“The COVID-19 pandemic taught us that digitalization increases the scale, scope, and speed of trade. It allows firms to bring new products and services to a larger number of digitally connected customers across the globe,” stressed Venkatasamy.

The COVID-19 pandemic had a serious impact on the economies of the COMESA Member States.

The Member States suffered adverse effects of the pandemic, including restrictions on international movements of people, tight border controls, disrupted cross-border trade, cut-off linkages with regional and global value chains, as well as reduced travel and tourism.

Regardless of the pandemic which has resulted in the dwindling of regional trading activities, Venkatasamy said the COMESA bloc has remained resilient and presents enormous growth potential.

“We have therefore embarked on the implementation and operation of the Regional Digital Retail Payments Scheme for MSMEs.

“This initiative will directly respond to the intra-trade deficit in the COMESA region.

“In the COMESA region, the key drivers of financial inclusion have been mobile money and agent banking, now reaching millions of previously unbanked individuals, households and Small and Medium Size Enterprises (SMEs), offering affordable, instant, reliable services on payments, savings, credit, and insurance services, among other services,” he said.

He said Digital finance has played a significant role in expanding financial inclusion.

“Mobile and digital technologies provided by FinTechs and Telcos are increasingly allowing more people, who would otherwise be excluded from the traditional banking system, to have access to financial services,” noted Venkatasamy.

He said in the 2030 Sustainable Development Goals (SDGs), financial inclusion is notably identified as an underpinning enabler of several other developmental goals, some of which include, SDG1 on eradicating poverty; SDG 2 on ending hunger, achieving food security and promoting sustainable agriculture; SDG 5 on achieving gender equality and economic empowerment of women; SDG 8 on promoting economic growth and jobs; SDG 9 on supporting industry, innovation, and infrastructure; and SDG 10 on reducing inequality.

“On a related development, financial inclusion, however, is not only about facilitating access to formal financial systems, but also about digital literacy skills, developing knowledge and understanding of savings and credit products, as well as no-frills remittance facilities, all towards improving the financial resilience of disadvantaged communities at the bottom of the financial pyramid.

“In the same vein, there is a need for capacity building of SMEs in accessing trade opportunities on a large scale.

“In cognizance of this, CBC is pleased to embark on an initiative to strengthen MSMEs’ capacity in the region, to equip them with the necessary tools and skills needed to take full advantage of trade opportunities in COMESA through the E-Academy, which is an online learning platform,” said Venkatasamy.

COMESA has made substantial progress towards the formulation of model laws, frameworks, and protocols in the areas of trade liberalization and facilitation, transport, energy, ICT, industry and investments, gender, and social affairs amongst others.

However, the implementation/domestication of these issues has been slow, partly due to low levels of commitment and ownership of the regional integration agenda.

Several interventions have been undertaken by 6 different stakeholders in the COMESA region to speed up the implementation of legal instruments such as protocols, the decisions that have been adopted by Policy Organs, and the domestication of rules and regulations, among others.

Venkatasamy said it is important to have feedback on these issues through regular consultations and dialogue with stakeholders on the pertinent issues of regional integration.

He said while it may have been their wish to witness a borderless trade experience in the region amongst their traders, COMESA continues to face a myriad of challenges affecting the anticipated smooth and speedy integration of the region.

“As a case in point, there has been a slow process of recovery of the Member States from the effects of COVID-19, barriers on intra-COMESA food trade, coupled with weak regional value chains and productive capacities for producers/manufacturers, among other challenges,” said Venkatasamy.

He said the Business Forum provides a platform to discuss the aforementioned challenges, including opportunities, and agree on measures to address the challenges and to exploit the opportunities that will create smarter, sustainable, innovative, efficient, and profitable businesses in COMESA and Africa at large to develop the region in its entirety.

“Suffice to mention that it is also at this gathering that we are expected to hold discussions focusing on the promotion of regional food trade through improved market access, especially from countries with surpluses to countries experiencing shortages.

“We will also share our thoughts on means of strengthening regional value chains and building productive capacities of producers/manufacturers in the COMESA region,” he said.

Venkatasamy said amidst the litany of challenges, it is, however, pleasing to note that some Member States have introduced a Green Economy as one of the options for the protection of the environment and sustainable use of scarce natural resources.

“The Green Economy, as a concept, is being applied in an increasing number of countries and at a growing scale.

“In a green economy, growth in employment and income is driven by public and private investment in such economic activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem services.

“At the end of this Forum, we anticipate having discussed and drawn attention to the measures to accelerate the recovery of COMESA Member States from COVID-19 through green investment, value addition and tourism, to promote Regional Food Trade in COMESA: Addressing the Market Access Gaps and to promote Regional Value Chains and Building Capacity of Producers/Industries.

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