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China urged to explore investment opportunities in COMESA

Xinhua, China

China urged to explore investment opportunities in COMESA

15 June 2010

by Gretinah Machingura

HARARE, June 15 (Xinhua) — Common Market for Eastern and Southern Africa (COMESA) Secretary-General Sindiso Ngwenya on Tuesday urged China to enter into joint ventures with Africa’s largest regional trading and economic grouping to capitalize on the customs union that was launched last year.

The Common Market for Eastern and Southern Africa, boasting 19 member states and a population of more than 450 million, is endowed with vast natural and human resources that make it a fertile investment destination, Ngwenya said.

"With a combined population of 456 million and a combined Gross Domestic Product of 450 billion U.S. dollars, this region is very rich in natural resources, rich in human resources and land for agriculture.

"This region will therefore become the region of first choice for investment and has the potential to feed the whole world," Ngwenya told Xinhua in an interview.

He said China should take COMESA as its preferred investment destination and increase trade with Africa’s largest trading and economic grouping.

Ngwenya has previously urged more Chinese investment in the manufacturing sector so that Africa can move up the value chain and increase the incomes of its people while ensuring that less wealth is exported abroad.

Trade between COMESA countries and China has also been growing by between 50 percent and 100 percent depending on the country, but on average by more than 50 percent annually and by the end of 2008 China-Africa trade was approaching the 100 billion U.S. dollars, according to Ngwenya.

Ngwenya said the COMESA Customs Union presented immense opportunities for the Asian giant to deepen and consolidate economic cooperation with member states, most of whom it had strong bilateral, economic and political ties with. China has diplomatic relations with nearly all African countries.

"So with Chinese investors increasingly looking for investment in Africa, we should as COMESA make it a requirement for them to enter into joint ventures with our companies to avoid backlash from our people who might feel disadvantaged," Ngwenya said.

Among others, the COMESA Customs Union provides for easier trade among members states and with other countries outside COMESA through harmonized trading systems.

Member states that join the union will adopt an agreed Common External Tariff (CET) to be charged to third parties.

The agreed CET rates are 0 percent on capital goods, 0 percent on raw materials, 10 percent on intermediate goods and 25 percent on finished goods.

The policy will also determine revenue sharing amongst the union’s members.

Ngwenya said with its 19 member states, a population of 456 million and annual imports valued at 32 billion U.S. dollars and exports of 82 billion U.S. dollars, COMESA forms a major market place for both internal and external trading.

The regional integration program for COMESA member states established a Free Trade Area (FTA) in October 2000, a customs union in 2009, and aims to establish a monetary union by 2015 and a COMESA community by 2025.

The customs union was launched at the 13th summit of the COMESA Heads of State and Government held in Victoria Falls, Zimbabwe, last year at which Zimbabwean President Robert Mugabe assumed the rotational one-year-chairmanship of the regional economic grouping.

Meanwhile, Ngwenya said COMESA was in the process of working out modalities to access the 1 billion U.S. dollar China-Africa Development Fund to benefit COMESA small and medium entrepreneurs.

The creation of the fund was one of eight mechanisms for assisting African countries unveiled by Chinese President Hu Jintao at the Forum on Africa-China Cooperation held in Beijing in November 2006.