Kenya in COMESA

Brief on COMESA
The Common Market for Eastern and Southern Africa was founded in 1993 as a successor to the Preferential Trade Area for Eastern and Southern Africa (PTA), which was established in 1981.  COMESA formally succeeded the PTA on 8 December 1994 upon ratification of the Treaty.  The establishment of COMESA was a fulfillment of the requirements of the PTA Treaty, which provided for the transformation of the PTA into a common market ten years after the entry into force of the PTA Treaty.

With a total population of USD 400 million covering an area of 12.89 million Km2 and a GDP of USD 230 billion COMESA is the largest of the regional groupings in Africa.  With its 19 member states, population of over 389 million and annual import bill of around US$32 billion with an export bill of US$82 billion COMESA forms a major market place for both internal and external trading. Its area is impressive on the map of the African Continent covering a geographical area of 12 Million (sq km).

The COMESA Free Trade Area was launched on 31st October, 2000 to provide duty free and quota free market access goods originating from COMESA Member States. The Launching of the FTA has seen phenomenal growth in intra COMESA trade.
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Kenya in COMESA

Kenya has been one of the countries that has been steadfastly implementing COMESA programmes and has signed and ratified almost all COMESA instruments.  These include the following:

  1. COMESA Treaty,
  2. Regional Customs Transit Guarantee Scheme,
  3. Protocol for Establishment of the Fund for Cooperation, Compensation and Development (COMESA Fund),
  4. Charter on a Regime of Multinational Industrial Enterprises (MIE),
  5. Protocol on the Gradual Relaxation and Eventual Elimination of Visa Requirements,
  6. Articles of Association of Commercial Banks of COMESA,
  7. Charter Establishing the Federation of National Associations of Women in Business in Eastern and Southern Africa,
  8. PTA Bank Charter,
  9. ZEP-Re Charter, and
  10. Agreement on Privileges and Immunities

Kenya also hosts some of the COMESA institutions in Nairobi which include the COMESA insurance institution- ZEP-RE, the COMESA Monetary Institute and the Regional Reference Laboratory, catering for plant protection. Kenya will continue to provide a favorable environment for the running of these institutions to ensure that they meet their objectives.

COMESA region remains one of the most important market destination for Kenya analysis demonstrates that the COMESA FTA is fueling the vigorous growth of Kenya’s exports to COMESA member states. Kenya’s major exports into COMESA comprise of tea, Portland cement, tobacco cigarettes, detergents, malt beer, cooking oil and salts. The total exports from Kenya into the COMESA market rose by 77% from US$ 944 million in 2004 to US$ 1.672 billion in 2008. Imports from the COMESA region rose by 145% from US$ 174 million in 2004 to US$ 428 million in 2008.

Although most of Kenya’s exports to COMESA comprise manufactured goods, there is a dichotomy in regard to market destination.  Whilst exports to Egypt and Sudan are largely composed of tea and coffee, exports to markets in East, Central and Southern Africa include consumables, steel products and pharmaceuticals. Certain non-traditional exports have experienced a substantial improvement in performance.  Exports of black fermented tea, Portland cement and flat rolled steel have maintained their high places in the export rankings. Chocolates, soaps, plastic furniture, sacks and bags have demonstrated a dramatic improvement.

Kenya’s total exports to the top ten countries in COMESA increased from US$ 423 million in 2000 to US $790 millions in 2005, with Uganda taking the lead, followed by Egypt. Kenyan exports to Sudan have steadily increased overtime from 26 million in 2000 to 85 million in 2005. Notable export expansion has been observed in all the top ten Export destinations especially to DRC, Rwanda, Ethiopia, Burundi, Zambia and Malawi.  The trends observed for exports also apply to re-exports, which rose from US$ 150.1 million in 2000 to US$ 464.2 million in 2005.

The FTA has also resulted in greater competition amongst companies in COMESA, leading to vulnerability of some industries in Kenya, notably sugar, wheat flour, paper products and construction materials. With regard to imports, Egypt has maintained its lead as Kenya’s main COMESA import source, with the value of Kenyan imports from Egypt rising from US$ 21 million in 2000 to US$ 80 million in 2005.  Egypt is followed by Swaziland, from which imports rose over this period from US$ 2.7 million to US$ 35 million, and by Mauritius, where the increase was from US$ 5 million in 2000 to US$ 13 million in 2005.

Cognizant of the fact that the FTA has largely been of benefit to large and medium-sized exporters and manufacturers, COMESA is promoting small-scale cross border traders through holding trade fairs and exhibitions, and implementation of the simplified Certificate of Origin, which targets consignments not exceeding US$ 500 in value. The level of cross-border trade between Kenya, Uganda, Sudan and Ethiopia is expected to increase through the operationalization of the simplified Certificate of Origin.