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Africa |
ECONOMY
An overview of Africa’s economic situation
Africans are increasingly beginning to appreciate the need to exploit their own resources, efforts and home-grown initiatives, as the continent awakens to the reality that the industrialised countries will not offer solutions to the problems plaguing the poorest nations, particularly in sub-Saharan Africa. «The world out there does not owe us a living, rather we owe it to ourselves,»" Zambia’s President, Frederick Chiluba, told heads of states during the Third Summit of the Common Market for Eastern and Southern Africa (COMESA) in Kinshasa, Congo RDC, on 29 June 1998.
Of the world’s continents, Africa is the least industrialised with some factories operating at less than 30% of their capacity. In the last 20 years what’s happening to Africa’s economies, has been brought to the fore by falling living standards. The tragedy is, Africa has abundant human and natural resources, including oil, diamonds, gold, copper and other high-grade minerals. And yet there are increasing levels of poverty, rising levels of infant mortality, life-expectancy is diminishing and in the case of the consumers and business communities, there’s reduced purchasing power and dwindling industrialisation.
Africa is also over-burdened by debt. In the late 1970s, the continent’s external debt stood at some 48.5 billion US dollars; today, that figure has risen to over 300 billion. Africa, which has been ravaged by regional and civil wars and afflicted by disease, is struggling to come to terms with an economy in shambles, and lack of well-planned infrastructures.
Inter-regional trade absolutely necessary
Africa needs a high level of investment and it must obviously come from a combination of the private sector and local, foreign and regional investors through the establishment of inter-regional trade.
When most African states gained independence some 40 years ago, most of the continent’s leaders had a clear vision of the way things were going, so they established the Organisation of African Unity (OAU). The long-term intention was to establish a continental-wide African Economic Community. But a more immediate solution was at a regional level, with the birth of the Economic Community for West African States (ECOWAS) in the 1970s; and then in 1994, COMESA which replaced the Preferential Trade Area (PTA) for east and southern Africa established in 1981.
The small size of individual countries’ national economies, with their limited markets and disparity of resources, has prevented efforts at national levels to achieve economic and social development.
The fact is, if Africa is to stand on its own feet and raise the standards of living of its peoples, then cooperation in production and distribution of basic necessities and strategic goods, as well as services at the regional level must be treated as necessary conditions for achieving these aims.
The level of industrial activity in most African countries is extremely low, while the export of manufactured goods is negligible. Against this background, if Africa is to survive, then its economic integration must be achieved. The continent should not wait to establish its own economic bloc along the lines of the European Union (EU), the North American Free Trade Area (NAFTA), or the Association of South East Asian Nations (ASEAN).
COMESA
COMESA comprises 20 countries, and is working towards setting up a Free Trade Area (FTA) by 31 October this year, and a common external tariff with countries outside the region by 2004. (Member countries are: Angola, Burundi, Comoros, Congo RDC, Egypt, Eritrea, Ethiopia, Djibouti, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe). By 1992, tariffs had been reduced on about 775 products traded among COMESA member states. In February this year, COMESA‘s secretary-general, Erastus Mwencha, a Kenyan national, told the business community in Zambia’s mineral rich and industrialised Copperbelt Province, that the products in question are major contributors to inter-COMESA trade.
In 1996, inter-COMESA trade was estimated to be 2.6 billion US dollars. This is expected to grow because the establishment of a Free Trade Area will expand the market of member states’ industries to 370 million consumers. In recent years, COMESA has organised a series of Workshops to alley fears by some sceptics, who argue that the gains from integration will accrue mainly to the larger of more industrially developed COMESA member countries, and that 40 percent of the jobs in the region will be lost in the «disadvantaged economies».
COMESA is trying to convince the pessimists that the establishment of the COMESA-FTA and a Customs Union would enable member states to have more clout in bargaining with one voice in international negotiations.
Editor’s update: By 14 September, 9 of the 20 COMESA members had confirmed their participation in the establishment of a Free Trade Area on 31 October.
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