COMESA compensates for Union tariff

September 30, 2009

, NAIROBI, Kenya, Sept 30 – Regional economic bloc COMESA has embarked on an exercise to compensate some of its member States that have been impacted by the implementation of its recently launched Customs Union.

COMESA Secretary General Sindiso Ngwenya said that countries such as Burundi have suffered revenue losses from the transition and were now being compensated from the COMESA Fund which had an initial capital of Sh8.5 billion.

“Burundi has already received Euro 4.4 million which is 60 percent of their total losses as compensation. Later on after reviewing the implementation, we shall then give them the balance. I was in Rwanda last week I was able to give them Euros 10.3 million again to compensate them,” he disclosed.

The Fund which has two windows; one of which is the adjustment facility and the infrastructure window was established in 2002 to enable members to implement their regional integration commitments.

In an exclusive interview with Capital Business, the Secretary General however said together with European Union (EU) they were looking at ways of reviewing the rules for accessing the Fund to enable countries whose industries will suffer from the adjustment benefit as well.

The Fund was initially limited to compensation for revenue losses but countries such as Kenya are likely to suffer from the ‘social and economic’ costs of adjustment.
“It may mean that as a result of lowering the national tariff to the Common External Tariff (CET), then industries are exposed and they may therefore not be competitive, some of them may even be forced to close down,” he explained.

Money received from the Fund would however be used to train workers in such industries to learn new skills that would see them move and fit in other sectors of the economy.

“We are now working on the second phase of the Regional Integration Support Program which will be implemented from next year and we hope that we shall be in a position to include the social cost for adjustment,” Mr Ngwenya added.

He said they were looking for more development partners to contribute to the Fund and help to fast track regional integration. The EU this year contributed Euros one billion while the COMESA member states have contributed the same amount to the kitty.

The ongoing global economic crisis has demonstrated the need for regional integration which would increase trade and investment in the continent and help it to weather the external shocks that it gets from exporting commodities to the developed world.

Mr Ngwenya hailed the members’ economies which he said were still in good shape despite the economic turmoil which he credited for the policy reform measures they have implemented in the last few years.

“We dare not have any policy reversal because if we do we might not make it to the Promised Land,” he warned.


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