Washington, DC — Erastus J. O. Mwencha, secretary general of the Common Market for Eastern and Southern Africa (Comesa) has been in Washington for the fall meetings of the World Bank and International Monetary Fund and for talks with administration officials and Congressional leaders on strengthening and extending the African Growth and Opportunities Act (Agoa).
In November last year, Comesa became the first regional grouping in sub-Saharan Africa to sign a Trade and Investment Framework Agreement, commonly known as a TIFA, which is intended to improve trade and investment relations between the United States and COMESA states.
Although Agoa remains a key part of Comesa's trade and investment strategy, Mwencha also has been speaking out on U.S. and European Union trade barriers that African nations continue to face and on the need for greater regional integration in Africa.
COMESA, established in 1994, groups 20 countries stretching from Egypt to the Democratic Republic of the Congo and Angola, "to facilitate the removal of structural and institutional weaknesses of member states so that they are able to attain collective and sustained development." Other members include, Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.
On October 2, Mwencha participated in launching the U.S. operation of a new program designed to increase awareness and understanding of Agoa in the public and private sectors in the 13 Comesa members that are Agoa-eligible. The program is funded by the U.S. Agency for International Development and administered by the International Executive Service Corps.
Mwencha was interviewed during a visit to AllAfrica's Washington office. Excerpts:
The theme of the recently ended World Bank and International Monetary Fund meetings was said by IMF Managing Director Horst Köhler and World Bank President James Wolfensohn to be "implementation" of the pledges that came out of the meetings in Monterrey, Doha, and Johannesburg, as well as President Bush's Millennium Challenge Account and UN Millennium Development Goals. Did you make any headway on implementation?
What came out in the main was statements that said 'let's get down to doing business; we've talked enough'. That underscores that we have had enough of the promises. We would like to see movement in the following areas: One is in ODA (overseas development assistance). There is general agreement that ODA should move from the current 0.2 percent to 0.7 [of GDP]. That has not happened. We would like to see movement in the area of the WTO [World Trade Organization]. There were quite a number of promises made under what is called the Doha Development Agenda. We still have a problem of market access, especially in the area of agriculture.
And Bali (where the fourth preparatory meeting for the sustainable development summit was held) ended up in failure, essentially.
Well, I wouldn't put it that way. At least there is a premise from which to continue to dialogue. We have also come forward with the Nepad (New Economic Program for Africa's Development) and we would like to see commitments on that. Nepad has set out an agenda and what we want now is to see action on the ground.
We know that the G8 summit in Canada did embrace it. We have seen statements which say it's a good basis for sustainable African growth. Now, let's get down to business! And so, yes, I want to kind of agree with what you have said. There is now agreement on what needs to be done. But what we are not seeing is action on the ground in terms of implementation.
Mr Wolfensohn and Mr. Köhler said much the same thing: expect to see an action agenda. I talked with Mr. Gomes, one of the Bank's directors from Guinea Bissau. He ticked off exactly what you have just listed to me. And so my question to you is, since the meetings are over, are you walking away with any concrete committments?
Concrete committments, no. Promises, yes. Sympathy, yes.
What do you expect, then, given the promises and given the sympathy?
For us, we are now pursuing schemes like Agoa (African Growth and Opportunity Act) and that is why we are here. Let me start with the good news as far as Agoa is concerned. We have seen good movement in Agoa. We have seen trade increase. The volume of trade from the region into the U.S. is about US$3 billion.
Now look at the elements of that trade. These are the points one wants to underscore. US$2.8 billion of that is oil. US$200 million is in the form of maybe textiles. You don't see much of other products that we would like to see in the U.S. where Africa has got a comparative advantage.
For example?
Agricultural products. We still have problems of access to the U.S. market in the form non-tariff barriers. This is the cry we have at WTO. This is the cry we have even under Agoa. Open up this market because this is where we can empower Africa to tackle the problem of of development, to tackle the problems of gender, of HIV/Aids, because it is all intertwined.
If you look at what happened in Singapore, what happened in Seattle and what one might call in quotes the "success" story of Doha, it was the commitment of the developed countries. There are still a number of elements that we are looking for. We are still talking of market access. We are still talking of subsidies that are affecting the marketplace and affecting production, impacting the local producer and consumer. We are also talking about access to things like medicines. Those elements still remain at the top of the WTO agenda.
Should we make distinctions here between subsidies in Europe and subsidies in the United States? Are there any important differences here? Is it important that the United States has an Agoa and the EU does not?
Yes. You can make distinctions in subsidies. And there is that move under the conventional agenda that is now on the table in the WTO. There are various subsidies. You can talk of the green box, the yellow box, the amber... And there is an attempt to try and say, 'These subsidies are less harmful than the other subsidies.'
But I think, at the end of the day, we should all be agreed that a subsidy is a subsidy and try to find a long-term solution to it. We know that this will not happen overnight. But for the last three years we have been saying that OECD is spending over US$300 billion on subsidies. And that figure remains the same. So we would like to see some significant development here.
What about other non-tariff barriers? And what's more important here, agricultural subsidies that prevent crops like cotton from being sold in Europe. or barriers that prevent finished goods like chocolate bars being sold from Ghana instead of just cocoa beans?
The non-tariff barriers, particularly when it comes to technical barriers to trade. This is where you bring in elements like sanitary issues, or even what you might call bureaucratic issues. These are the issues that we must be tackling now so that we can truly have market access to developed countries.
Before we started talking about subsidies you were talking about Agoa. Textiles seem to be central to Agoa programs thus far.
Textiles give us market access that allows African garments to come in quota free and duty free. But that market is going to be challenged come the year 2004 because there is a requirement that all textiles coming in must have African fiber. Now is the time that we would like to see technology transfer. We would like to see investment. And we want to see a two-way trade flow.
We want to encourage yarn making, fabric making and then the garment. At the moment, we have only started with the capacity we have, which is garment making. These "upstream" industries are yet to be developed. This is the potential we want to look at.
The Agoa has been running now for the last one and a half years. If you look at the trade flow, the trend is promising and one that shows opportunities, one that holds a lot of potential. We need to act now if we are going to have sustainable development in this area. We need long term stability so that it doesn't crash in 2004 when the multi-fiber agreement ends.
You don't expect to be able to get an extension of this?
Given what has happened in the last few years, and the few years we have left of this Agoa window, we should now be talking of extension. We can't see all of these things being dismantled when we know we still have the subsidies which are distorting the marketplace. We should have a program which is all embracing. We should bring everything to the table and say 'There are all of these distorting factors'. And as we remove these distorting factors create special differential arrangements to take into account the special circumstances because of this unfavorable environment.
You have been talking with administration officials and on Capital Hill. Are your discussions far enough along for you to outline what they might be committed to on this>
We are satisfied, first of all because we have been able to put a very strong case on opening the market for agriculture. I think we have demonstrated where there is need for action. We have agreed that there is need for us to start looking at Agoa and fine-tuning it, so that it can work even better. And there is need for us to look beyond Agoa. And we are agreed to look at the international environment that affects trade and investment.
Would you comment on regional integration in Africa? What are we looking at in terms of trade barriers between African countries?
That's what we are doing under Comesa -- trying to create a viable market. Comesa as it stands now has a population of 380 million people and of that we now have a free trade area for nine countries with a total population of 200 million people.
In this free trade area, we trade free in terms of duty --non-tariff barriers -- and we are creating a huge market. Comesa is the first African grouping to be a free trade area and the third in the world after the European Union and Nafta. And there are six other countries that have made significant moves toward being part of the free trade area.
But removing barriers to trade is not enough. What we need now is to start tackling investment. And we need to look at the issues that affect investment in the region. I can give you three or four ideas.
One is the fiscal infrastructure and environment which makes it very difficult to do business in the region; high transaction costs. The second is to be able to attract foreign direct investment into the region and create an environment that is conducive. Third involves looking at the macro economic environment in the region, political and all that, so that we can have Comesa as an attractive investment destination. And we are doing just that.
What we are doing in that connection, using Agoa -- we have established a Comesa Agoa desk in Washington, DC to match business communities in our two continents so that we can get investment. Even under Agoa, we have seen in Comesa cross border investments to do what you might call cumulative value where one country may be having yarn but they don't have garment-making facilities. That is happening within Comesa and we want to encourage it.
Where, for example
We have yarn moving from Zambia to Mauritius to Madagascar to produce garments for the U.S.
In the last year we have seen the formation of the African Union. And we have seen the establishment of Nepad to do in a continental way what you have talked about Comesa doing. What will be the relationship of Nepad to the economic arm of the African Union? And where do groups like Comesa fit in this emerging new form of economic activity in Africa?
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Nepad has a coordination mechanism, which is based in Johannesburg [and] which is not intended to be a bureaucratic arrangement. Nepad is a concept. It's a program of action too. That program of action will be implemented by regional organizations like Comesa.
If you look at the agenda of Nepad and the agenda of Comesa -- whether you are talking of ICT, whether you are talking of infrastructure, whether you are talking of agriculture -- it's exactly the same program that we are pursuing under Comesa. So Nepad is the concept; the vehicle is Comesa.
The African Union is the finality of what we see as regional integration groupings. They are the building blocks; there are six bulding blocks for the African Union including Ecowas, Comesa, SADC, Igad -- which will finally become the African Union. When Comesa is achieving a customs union that means the AU is partially achieving that. And what we now need, and what we are working on, is to have each block fit into each other.
Do you feel Africa is being unfairly burdened in it efforts to get investment and aid from the United States and G7 countries because of political dissatisfaction with African responses to various political crises? Zimbabwe, of course, comes immediately to mind. Yes. That is a fundamental point. Investment Africa has a number of challenges. One is the high debt factor, and also low savings. Africa needs a lot of resources for growth. We have agreed on the Millennium Development Goals. We must achieve at least a 7 percent growth rate for us to achieve those Millennium Development Goals by 2015.
But to achieve them we need huge investments. If you look at the portion of foreign direct investment going to Africa at the moment it is only 4.8 percent of world foreign direct investment flows. That is totally inadequate. Africa should be looking at 15 percent or more, at least.
But why isn't it coming to Africa? I think first of all there is undue bad publicity about Africa. And I think this is because in the continent, with so many countries, a few things which are happening that might not be ideal are the ones which catch the headlines. We need to address this. And I think the problem lies both from the African side and from those we might call "partners." We are now in an indivisible world. Interdependence is undeniable. So we need to confront this problem so that we can turn the tide and see Africa grow.
We talked about foreign market access, but if you look at the HIPC (Heavily Indebted Poor Countries] Initiative, the progress there is very slow and Africa is hurt.
Is that slow progress for political reasons or economic reasons?
If there is good will, one can see a significant flow, because even the pledges of resources which were meant to go for HIPC need to be looked at. There is need for action.
The HIPC Initiative started in 1996. I think only 5 African countries have reached completion point.
Exactly. There you are.
