Comesa banks on integration to spur growth

Comesa is banking on steady integration to raise growth prospects in a region weakened by the global crisis.

Central bank governors see harmonisation of monetary and fiscal policies in the region as key to reducing the risk of reversal that would aggravate political risks in the region.

The governors agreed, during a weekend meeting in Mauritius, to work out modalities for common money supply, interest rates, inflation, national expenditure and taxation policies.

According to a statement posted on the organisation’s website, a proposed Comesa Monetary Institute will help coordinate macro-economic policies, deepen financial markets, promote regional stock markets and harmonise banking supervision regulation.

The statement came as Trade minister Amos Kimunya told a Comesa meeting in Nairobi that the Monetary Institute was in the process of being established.

Mr Kimunya said that the global financial crisis had weakened prospects for growth in the Comesa region in 2009, but added that integration would help mitigate the impact of the shock

According the Comesa statement, Mauritian Vice Prime Minister Dr Rama Sithanen pointed out that though the world recession seemed to be ebbing, Africa was yet to recover.

“As regards our region, the situation still looks challenging. After sustaining strong growth for nearly a decade, the economy of sub-Saharan Africa is projected to slow down markedly to a mere one per cent in 2009 due to slumping exports and disrupted capital flows,” said Dr Sithanen, who is also in charge of finance and economy in Mauritius.

The governors who attended the meeting were from Comoros, Kenya, Madagascar, the Seychelles, Swaziland, Uganda and Zambia, while deputy governors represented Burundi, DRC, Egypt, Malawi, Sudan and Tanzania. Rwanda and Libya also sent representatives.

Price fall

Mr Kimunya said that African economies had declined from six per cent in 2007 to 5.1 per cent in 2008 and were expected to grow by only two per cent this year.

He said: “The financial crisis has also hit Africa through a fall in commodity prices and decline in lines of credit. In addition, owing to the global financial crisis and economic downturn, lower aid and capital flows, especially of foreign direct investment and remittances, worked to further weaken prospects of economic growth.”

Mr Kimunya noted that trade had grown nearly five times among the 19 Comesa members to $15.2 billion in eight years.

Comesa secretary-general Sindiso Ngwenya said there were outstanding issues that needed to be sorted out to enable the setting up of the customs union.

A committee had been formed to monitor progress towards resolving the issues.