EXPORT-IMPORT BANK OF INDIA

OCCASIONAL PAPER NO. 141

COMESA (COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA): A STUDy OF INDIAS TRADE AND INvESTMENT POTENTIAl

Exim Banks Occasional Paper Series is an attempt to disseminate the findings of research studies carried out in the Bank. The results of research studies can interest exporters, policy makers, industrialists, export promotion agencies as well as researchers. However, views expressed do not necessarily reflect those of the Bank. While reasonable care has been taken to ensure authenticity of information and data, Exim Bank accepts no responsibility for authenticity, accuracy or completeness of such items.

c Export-Import Bank of India

September 2010

CONTENTS

Page No. List of Tables List of Charts Executive Summary Common Market for Eastern and Southern Africa (COMESA): An Overview Background and Economic Environment of COMESA Countries Foreign Trade of COMESA Countries Indias Bilateral Trade and Investment Relations with COMESA Countries Potential for Enhancing Indo-COMESA Bilateral Trade Relations Investment Climate and Opportunities in the COMESA Region Exim Bank in the COMESA Region Strategies and Recommendations for Enhancing Bilateral Commercial Relations with the COMESA Region 7 9 11 28 34 50 66 99 119 148

1. 2. 3. 4. 5. 6. 7. 8.

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Project Team Mr. David Sinate, General Manager Mr. Vanlalruata Fanai, Chief Manager Mr. Viswanath Jandhyala, Manager

Page No. Annexures Annexure 1: Table A1: Select Major Trading Blocs in Africa Table A3: GDP Per Capita of COMESA Countries Table A4: Population of COMESA Countries Table A5: Average Consumer Price Inflation of COMESA Countries 172 Table A6: Current Account Balance of COMESA Countries 173 Annexure 2: Annexure 3: Annexure 4: Investment Promotion Agencies and Other Key Institutions in the COMESA Region Trends in Indias Trade with Select COMESA Countries Ethiopia- Investment Opportunities in the Agriculture Sector 198 178 174 168 168 170 171

Table A2: Real GDP Growth Rates of COMESA Countries 169

lIST OF TABlES
Table No. 1 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 3.1 3.2 3.3 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 Title GDP of COMESA Countries, 2007-2011 GDP of COMESA Countries, 2007-2011 Macroeconomic Indicators of Egypt Macroeconomic Indicators of Libya Macroeconomic Indicators of Sudan Macroeconomic Indicators of Kenya Macroeconomic Indicators of Ethiopia Macroeconomic Indicators of Zambia Macroeconomic Indicators of Uganda Macroeconomic Indicators of D R Congo Macroeconomic Indicators of Mauritius Trend in Trade Performance of Select African Trade Blocs, 2004-2008 Trends in Exports of COMESA Countries, 2004-2010 Trends in Imports of COMESA Countries, 2004-2010 Indias Trade with COMESA, 2004-05 to 2009-10 Indias Exports to COMESA, 2004-05 to 2009-10 Indias Imports from COMESA, 2004-05 to 2009-10 Indias Major Exports to Egypt Indias Major Imports from Egypt Indias Major Exports to Kenya Indias Major Imports from Kenya Indias Major Exports to Sudan Indias Major Imports from Sudan Indias Major Exports to Libya Indias Major Imports from Libya Indias Major Exports to Mauritius Indias Major Imports from Mauritius Indias Major Exports to Ethiopia Indias Major Imports from Ethiopia Indias Major Exports to Zambia Page No. 13 35 37 38 39 41 42 44 46 47 48 51 53 54 67 69 71 73 74 75 76 77 78 79 80 81 82 83 84 85

4.17 4.18 4.19 4.20 4.21 4.22 4.23 6.1 6.2

Indias Major Imports from Zambia Indias Major Exports to D R Congo Indias Major Imports from D R Congo Indias Major Exports to Madagascar Indias Major Imports from Madagascar Country-wise Approvals of Indian Direct Investments in JVs and WOS FDI Inflows into India from COMESA Countries Foreign Direct Investment Inflows to COMESA Countries Trends in Outward Direct Investment from COMESA Countries

86 87 88 89 90 91 94 121 122

lIST OF CHARTS

Chart No. 1 2 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 4.1 4.2 4.3 6.1

Title Global Trade of the COMESA Region Indias Trade with the COMESA Region Global Trade of the COMESA Region Libyas Foreign Trade Egypts Foreign Trade Sudans Foreign Trade Kenyas Foreign Trade Ethiopias Foreign Trade Zambias Foreign Trade D R Congos Foreign Trade Mauritius Foreign Trade Indias Trade with the COMESA Region Indias Exports to Select COMESA Countries (% share, 2009-10) Indias Imports from Select COMESA Countries (% share, 2009-10) Trends in FDI and Outward Direct Investments in the COMESA Region, 2000-2009

Page No. 14 15 52 55 57 58 60 61 62 64 65 67 68 70 120

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EXECUTIvE SUMMARy

The Common Market for Eastern and Southern Africa (COMESA) is one of the major trading blocs in the African region, along with the Southern African Development Community (SADC), Economic Community of West African States (ECOWAS), and West African Economic and Monetary Union (UEMOA). The Treaty establishing a Preferential Trade Area for Eastern and Southern Africa (PTA) was signed in December 1981, and the PTA came into force on September 30, 1982. The PTA was established with an intent to take advantage of a larger market size, to share the regions common heritage and to allow greater social and economic co-operation, with the ultimate objective of creation of an economic community. Subsequently, the Treaty establishing COMESA was signed on November 5, 1993 in Kampala, Uganda and was ratified a year later in Lilongwe, Malawi on December 8, 1994. The principal objective behind

the formation of COMESA was to achieve sustainable economic and social progress in all member states, and economic integration and collective development so as to form a unified economic bloc for Eastern and Southern Africa to promote trade, cooperation and self-reliance in the region. COMESA envisions becoming a fully integrated, internationally competitive regional economic community with high standards of living for its people, ready to integrate into an African Economic Community. COMESA trade bloc comprises 19 nations namely Burundi, Comoros, D R Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. The principal institutions that constitute COMESA are the COMESA Authority, the COMESA Court of Justice, PTA Re-insurance Company, Regional Investment Agency, Leather and Leather Products Institute, PTA Bank, and the Clearing House.

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ECONOMIC ENvIRONMENT IN THE COMESA REGION Economic growth of the region has exhibited resilience in the face of the global economic downturn, despite the many pertinent challenges facing Africa. Notable progress within the COMESA region has been achieved through improved macroeconomic management, market-based reforms and continued structural progress in many countries. In 2009, the combined gross domestic product (GDP) for COMESA stood at an estimated US$ 448.0 billion, which is forecast to increase to US$ 512.6 billion in 2010, and further to US$ 573.5 billion in 2011 (Table 1). Per capita GDP, at current prices, of the region as a whole, was estimated at US$ 897 in 2009, up from US$ 858 in 2008.

17 countries during the same year. The average annual inflation rates in COMESA countries too were at varying levels. During 2009, while countries like Comoros, Djibouti, Libya, Mauritius and Swaziland experienced moderate inflation rates, countries such as D R Congo, Eritrea, Ethiopia, and Seychelles witnessed high inflationary rates. FOREIGN TRADE OF COMESA REGION COMESA as a region has shown significant improvement in terms of its global trade. Total trade (exports plus imports) of COMESA has more than doubled from US$ 108.5 billion in 2004 to US$ 262.6 billion in 2008, growing at a compound annual growth rate (CAGR) of 24.7 percent over the period. Growth in total trade of COMESA is on account of favourable growth performance of both exports and imports. Exports of COMESA steadily shot up from US$ 51.4 billion in 2004 to US$ 123.8 billion in 2008. Growing at almost a similar pace, imports of COMESA too rose from US$ 57.1 billion to US$ 138.8 billion over the period 2004-2008 (Chart 1). Both exports and imports of almost all COMESA countries are estimated to have declined in 2009, due to the impact of the global economic

The economies within the COMESA region are at varying stages of development. For instance, the GDP of Egypt and Libya put together was larger than the combined GDP of the remaining 17 COMESA countries, with GDP of US$ 188.0 billion and US$ 60.4 billion respectively in 2009, as compared to the combined GDP of US$ 200 billion of the remaining

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Table 1: GDP of COMESA Countries (US$ bn) (current prices)

Country Egypt Libya Sudan Kenya Ethiopia Uganda Zambia D R Congo Mauritius Madagascar Rwanda Malawi Zimbabwe Swaziland Eritrea Burundi Djibouti Seychelles Comoros COMESA Total 2007 130.3 71.7 46.5 27.2 19.6 11.9 11.5 10.0 7.5 7.3 3.7 3.3 4.7 2.9 1.3 1.0 0.8 1.0 0.5 362.9 2008 162.4 89.9 58.0 30.3 26.7 14.4 14.7 11.6 9.3 9.5 4.7 3.9 3.9 2.8 1.4 1.2 1.0 0.9 0.5 447.1 2009 188.0 60.4 54.7 32.7 32.3 15.7 13.0 11.1 8.8 8.6 5.2 4.6 4.4 3.0 1.9 1.3 1.0 0.8 0.5 448.0 2010f 215.8 76.6 65.7 34.2 30.6 17.7 16.1 12.6 9.8 8.4 5.7 4.8 5.1 3.1 2.3 1.4 1.1 1.0 0.6 512.6 2011f 248.1 84.1 74.5 38.7 31.7 18.8 17.7 13.7 10.4 8.9 6.1 5.1 5.5 3.2 2.7 1.5 1.2 1.0 0.6 573.5

f: forecasts
Source: IMF, WEO Database April 2010

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recession, before a gradual pickup expected in 2010 with recovery in global economy. COMESA region accounted for around 28 percent of Africas total trade in 2008. Chart 1: Global Trade of the COMESA Region (US$ bn)

e: estimates; f: forecasts Source: UNCTAD, International Trade Centre (ITC)

INDIAS BIlATERAl TRADE RElATIONS WITH THE COMESA The synergy that exists between India and the COMESA region, and the potential thereof, can be assessed from the robust trends in bilateral trade relations witnessed in recent years. Indias total trade with the COMESA region has risen more than three-folds from US$ 2.55 billion in 2004-05 to US$ 8.48 billion in 2009-10, with Indias exports to the region amounting to US$ 5.1 billion,

and Indias imports from the region aggregating US$ 3.3 billion in 200910. The importance of the COMESA region can be gauged from the fact that the region accounted for 38.2 percent of Indias total exports to Africa during 2009-10, while the COMESA region accounted for 13 percent of Indias total imports from Africa. Indias trade balance with the COMESA region has generally been in Indias favour, with trade surplus amounting to US$ 1.8 billion in 2009-10 (Chart 2).

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Chart 2 : Indias Trade with the COMESA Region (US$ billion)

Note: Imports include imports of oil since 2006-07 Source: Directorate General of Commercial Intelligence and Statistics (DGCIS), Ministry of Commerce & Industry (MOCI), Government of India (GOI)

TRENDS IN INDIA - COMESA INvESTMENT FlOWS Africa has emerged as an important investment partner for India in recent years, with Indian investments mostly in services and manufacturing sectors, also in natural resources, including the oil sector. During the period April 1996 to December 2007, total approvals of Indian direct investments in joint ventures (JVs) and wholly owned subsidiaries (WOS) in the

COMESA region amounted to US$ 5.2 billion, accounting for slightly more than 10 percent of Indias global overseas investments. Among the COMESA countries, Mauritius has been the major destination, with total investments amounting to US$ 3469.7 mn during the period, accounting for almost 66.6 percent of total investments from India into COMESA region. While Mauritius continues to be the leading destination for Indian overseas investments, other

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COMESA members are also gaining importance in recent years, with Indian companies also venturing into countries such as Egypt, Ethiopia, Kenya, Libya, Madagascar, Malawi, Rwanda, Sudan, Swaziland, Uganda, and Zambia. As far as cumulative inflows of foreign direct investments into India from COMESA are concerned, between April 2000 to June 2010, the largest investment came in from Mauritius to the tune of US$ 49.1 billion, accounting for almost the entire investment flow into India from the COMESA region. The other sources of investment flow into India from COMESA were Seychelles, Kenya, Uganda, Egypt, Zambia, D R Congo, Libya, and Sudan. Investments from Seychelles amounted to US$ 16.68 mn, while investment from Kenya amounted to US$ 15.85 mn during the same period. INSTITUTIONAl FRAMEWORKS & POlICy INITIATIvES With a view to facilitate and further enhance bilateral trade and commercial relations with countries in Africa, including the COMESA region, India has put in place important policy measures as also institutional frameworks to create

an enabling trade and business environment. Such initiatives have been effective in giving a new dimension to mutual cooperation and the already existing close relations between the two sides. Major policy initiatives would include, among others, Focus Africa Programme, Pan-African E-Network, India-Africa Partnership Conclaves and India Africa Summit. POTENTIAl FOR ENHANCING BIlATERAl TRADE RElATIONS Based on Indias export potentials and demand existing in the COMESA region, the potential items for Indias exports to the COMESA region could broadly include electrical and electronic goods, plastic & linoleum products, article of iron & steel, automotive components, petroleum products, pharmaceutical products, machinery and instruments, transport equipment, textiles and cotton fabrics, rubber and rubber articles. Based upon Indias primary requirement of imports, items which hold potential for import from COMESA region would include aluminium, copper, mineral fuel, metaliferrous ores and slag, coffee, resins, nuts, spices and sugar, leather, organic and inorganic chemicals and marine products.

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INvESTMENT ClIMATE AND OPPORTUNITES IN THE COMESA REGION The common aspiration of the COMESA countries is to become a fully integrated internationally competitive regional economic community. According to the Strategic Plan 2007-2010 adopted by Head of States and Governments in December 2006, by 2025, COMESA is expected to become a single trade and investment space in which tariff, non-tariff and other impediments to the movement of goods, services, capital and people have been totally removed. Trends in investment during the last decade show pick up in both inflows as well as outflows. The total foreign direct investment (FDI) into the COMESA region increased slowly in the first half of the decade, and picked up strongly since 2004, increasing over four-fold in 2009 over 2000 level. By 2009, FDI into the COMESA region stood at US$ 136.5 billion. Outflow of investment from the COMESA region is relatively lower, and was around 4 - 13 percent of the total inflows during the last ten years. Outward investment started picking up significantly only from 2007 onwards, increasing to US$ 7.9

billion from US$ 3.3 billion in 2000, and further to US$ 17.7 billion in 2009. FDI inflows has witnessed sharp rise in recent years in the case of Libya, Madagascar, Djibouti, Rwanda, Sudan, Rwanda, Uganda and D R Congo. Egypt is the largest investment destination in the COMESA region, and accounted for 49 percent of total FDI into the COMESA region in 2009, followed by Sudan, Libya, Zambia, Uganda and Ethiopia. In 2009, COMESA accounted for over one-fourth of FDI inflows into Africa, as against a share of over one-fifth in 2000. As regards outward direct investment from COMESA, Libya accounted for 68.2 percent of outward direct investment from the region in 2009, followed by Egypt, Mauritius, Zambia and Kenya. In 2009, the COMESA region accounted for 17 percent of total FDI from Africa, up from around 8 percent in 2000. In line with the policies of the Governments in the COMESA region, potential sectors that hold opportunities for investment in the region would broadly include agriculture and agro-processing, manufacturing, energy, mining, infrastructure, information communication technology, human

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resource development, healthcare, logistics and transportation, textiles, tourism and hospitality, and horticulture. EXIM BANK IN THE COMESA REGION As a partner institution to promote economic development in Africa, the commitment towards building relationships with the African region is reflected in the various activities and programmes which Export- Import Bank of India (Exim Bank) has set in place, especially in the COMESA region. Exim Bank operates a comprehensive range of financing, advisory and support programmes to promote and facilitate Indias trade and investment relations with countries in Africa, including the COMESA region. lines of Credit Exim Bank extends Lines of Credit (LOCs) to overseas governments, parastatal organisations, financial institutions, commercial banks and regional development banks to support export of eligible goods and services on deferred payment terms. Exim Bank also extends overseas buyers credit directly to foreign entities for import of

eligible Indian goods and related services or for financing eligible turnkey projects. Exim Bank also extends LOCs on behalf and at the behest of Government of India. In the African region, Exim Bank has 85 operative LOCs totalling US$ 2,857.04 mn, covering 47 countries, including the COMESA region. With respect to countires in COMESA region, Exim Bank has in place 24 operative LOCs, amounting to US$ 1,278.63 mn. Support for Project Exports Exim Bank plays a pivotal role in promoting and financing Indian companies in execution of projects in markets overseas. Such projects, primarily in the infrastructure sector, contribute to local and regional development. Exim Bank extends both funded and non-funded facilities to Indian project exporters for overseas industrial turnkey projects, civil, civil construction contracts, supplies as well as technical and consultancy services contracts. Indian companies have implemented numerous projects in Africa, including COMESA region, with the support of Exim Bank, in sectors such as power, telecommunications, transport, water supply & sanitation. As on

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September 1, 2010, the value of project contracts secured by Indian project exporters, with Exim Banks support in the COMESA region amounted to Rs. 211.5 billion. Institutional linkages Arrangements and

Exim Bank has been consciously forging a network of alliances and institutional linkages to help further economic co-operation while promoting and facilitating bilateral trade and investment between India and the African region, which in turn serve to create an enabling environment and support capacity creation and enhance institutional strengthening. In the African region, and especially in COMESA, Exim Bank has in place Memoranda of Understanding (MOUs) with several institutions including: Afreximbank; PTA Bank (Eastern & Southern African Trade Development Bank); National Bank of Egypt; Board of Investment of Mauritius; and Industrial Development Bank of Sudan. Association with African Development Bank (AfDB) India is a member of African Development Bank (AfDB). Many Indian companies participate in projects funded by African Development Bank Group. Exim

Bank works closely with the African Development Bank and has an active programme which offers a range of information, advisory and support services to Indian companies to enable more effective participation in projects funded by Multilateral Funding Agencies such as African Development Bank. Towards this end, Exim Bank and African Development Bank have in place agreement for co-financing projects in Africa, which envisages, among others, joint financing of projects (priority being given to support projects of small and medium enterprises) in regional member countries of AfDB. Exim Bank also organizes Business Opportunities seminars in Projects funded by African Development Bank at various centres in India. Member of Association of African Development Finance Institutions (AADFI) Exim Bank is also a member of AADFI, a forum of institutions / banks with the objective of creating coordination and economic solidarity among the development finance institutions in the African continent. The membership of AADFI helps Exim Bank in identifying potential markets / partners in the African region and provides an ideal

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platform for building linkages with other institutions in Africa, which are members of AADFI. Shareholder in Afrexim Bank and Development Bank of Zambia Towards facilitating economic cooperation, Exim Bank has taken up equity in the African ExportImport Bank (Afrexim Bank), which is headquartered in Cairo, Egypt. The Afrexim Bank was established in 1993 by African Governments, African private and institutional investors as well as non-African financial institutions and private investors for the purpose of financing and promoting intraand extra-African trade. Further, Exim Bank has also taken equity in Development Bank of Zambia (DBZ). Global Network of Development Finance Institutions and Exim Banks (G-NEXID) With a view to facilitating SouthSouth trade and investment cooperation, at the joint initiative of Exim Bank and UNCTAD, a Global Network of Exim Banks and Development Financial Institutions (G-NEXID) was launched in March 2006 in Geneva. Annual Meetings are held to deliberate upon measures

to foster long-term relationship, share experience and strengthen financial cooperation to promote trade and investment relations between developing countries. A number of institutions from Africa are G-NEXID members, such as Afreximbank, PTA Bank, East African Development Bank, Development Bank of Namibia, Development Bank of Zambia, Industrial Development Bank of Kenya, Industrial Development Corporation of South Africa, Development Bank of Southern Africa, ECOWAS Bank for Investment and Development, Central African States Development Bank, Exim Bank of Nigeria, SME Bank of Tunisia, Development Bank of Mali, National Bank for Investment, Cote dIvoire. Finance for Overseas Joint ventures

Further, Exim Bank supports Indian companies in their endeavour to globalise their operations, through joint ventures (JVs) and wholly owned subsidiaries (WOS). Such support includes loans and guarantees, equity finance and in select cases direct participation in equity along with Indian promoter to set up such ventures overseas. In the COMESA region, the Bank has supported several such ventures

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in countries such as Kenya, Mauritius, Zambia, Uganda, and Egypt in diverse sectors including textiles, tyre manufacturing, telecommunications, irrigation, consumer electronics, engineering goods and chemicals. These ventures serve to promote value addition, as also contribute to capacity building in host countries. Exim Bank also facilitates joint investments by Indian and overseas company in third country markets in addition to facilitating investments into India. Exim Bank as a Consultant As a partner institution in promoting economic development in Africa, Exim Bank shares its experience in the setting up of institutional infrastructure for international trade. In this regard, Exim Bank has rendered technical assistance to a number of institutions in Africa, which include: Establishing the Afrexim Bank; Establishing an Export Credit Guarantee Company in Zimbabwe; Consultancy assignment for the Government of Mauritius on Mauritius as an Investment Hub for Indian Firms; Development of international trade finance products for Industrial Development Corporation of South Africa.

Research Studies With a view to enhancing competitiveness of India exporters, as also identifying Indian trade and investment potential, Exim Bank periodically conducts research studies on countries/ regions; sectors/industry; and on macro-economic issues relating to international trade and finance. The research publications relating to Africa include studies on Indias trade and investment potential with SADC, ECOWAS, Select West African Countries, Select Southern African Countries, Maghreb Region, Southern African Customs Union (SACU), as also a study on IBSA: Enhancing Economic Cooperation across Continents. Exim Bank also helps bring out a bilingual (English and French) magazine titled Indo-African Business, which focuses on bilateral trade and investment potential between India and countries in Africa, including the COMESA region. The magazine addresses the business information needs of companies who are interested in trade with the African region. The magazine is widely distributed to key constituents in India and in the African region.

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Exim Banks Joint venture Exim Bank has taken the initiative of setting up of Global Procurement Consultants Ltd. (GPCL), in partnership with leading consultancy firms in India, that provides a range of procurement related advisory services to multilateral agencies such as World Bank, African Development Bank, and Asian Development Bank. GPCL has taken up a number of assignments in Africa in countries such as Uganda, Eritrea, Malawi, Nigeria, and Ghana. Exim Banks Offices in Africa In order to facilitate closer economic cooperation with the African region, Exim Bank has representative offices in Durban, South Africa and Dakar, Senegal. The representative offices interfaces with institutions such as Industrial Development Corporation of South Africa Ltd., African Development Bank, regional financial institutions such as Eastern and Southern African Trade and Development Bank (PTA Bank), Afrexim Bank, and West African Development Bank (BOAD) as well as Indian missions in the region, thereby being closely associated with the Banks initiatives in the African region, including the

COMESA region. Exim Banks third representative office in the African region is being set up in Addis Ababa, Ethiopia. STRATEGIES AND RECOMMENDATIONS TO ENHANCE COMMERCIAl RElATIONS WITH COMESA REGION Strategy to enhance trade and investment relations with countries in the COMESA region would entail an integrated approach comprising, among others: cooperation in agricultural development, natural resource development, cooperation in hotel and tourism industry, focus on ICT, human resource development, cooperation in infrastructure, banking and energy, besides broadening linkages with trade promotion institutions in the region; establishing a preferential trade agreement and developing linkages with investment promotion agencies. I. Cooperation In Agriculture Sector Development Agriculture and related activities are the backbone of most of the countries in the COMESA region. Several Governments in the African region, including the

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COMESA countries, view that foreign investments in agriculture cultivation would lead to possible benefits for rural poor, including the creation of a potentially significant number of farm and off-farm jobs, development of rural infrastructure, and social improvements, leading to poverty reduction. National Governments in the region, with a view to addressing the serious issue of food shortage, have been framing policies towards attracting investors in the agricultural sector to tackle food, employment and sustainability crises. The countries in the forefront to attract agriculturists include Sudan, Ethiopia and Zambia. Indian companies can explore the possibilities of investment such as joint ventures or contract farming and out-grower schemes or investments in key stages of value chains. II. Natural Resource Development With many of the countries in the COMESA region endowed with mineral wealth and natural resources, increased cooperation between India and the resourcerich countries in COMESA in developing/ exploring natural and mineral resources, with bilateral arrangements such as buy-back arrangements, could be an important

strategy to enhance Indo-COMESA commercial relations. III. Cooperation In Hotel and Tourism Industry Countries such as Mauritius, Egypt, Kenya, Seychelles in the COMESA region have emerged as major tourism destinations of the world, receiving large number of tourist population visiting Africa. With India being an emerging player in hospitality industry, Indian companies could explore the vast opportunities available in the COMESA countries. Indian companies can focus on developing world-class hotels and resorts with more Indian touch. Given the rich cultural and geographical diversities and vast biodiversity in flora and fauna of African nations, Indian entrepreneurs could also specifically focus on different kinds of tourism products, such as adventure tourism, eco-tourism and cultural tourism. Iv. Focus on Information and Communication Technology (ICT) With many countries in the African region, and especially in the COMESA region, still on the path of modernisation and computerisation,

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Information and Communication Technology (ICT) is another area for cooperation. With the strength and capability that India possesses in the realm of Information Technology sector, Indian IT firms could explore the opportunities in the COMESA region, and focus on investing in subsidiaries or joint ventures in the areas of e-governance, financial services and e-education. Indian companies could also share their expertise in providing software programmes and services for banks and financial institutions in the region. Designing specialized e-learning courses on the web for providing technological assistance, manufacturing process know-how, and other technical areas also present opportunities. v. Investment in Human Resource Development An associated area of bilateral cooperation could also be investing in human resource development. Human resource development is recognised as the premiere need of most African nations. Businesses focusing on health, education and skill development are more likely stable businesses, which are in increasingly high demand in many COMESA countries, due to their direct impact on improving the standard of life.

vI. Cooperation in Infrastructure Development An important area of bilateral cooperation could be infrastructure development in countries within the COMESA region. Investment in infrastructure development, due to an increasing need for better infrastructural facilities, coupled with the endeavour of COMESA member countries for rapid economic growth, could prove to be a mutually rewarding area of bilateral cooperation. Areas that hold immense investment opportunities include development of highways and roadways, development of railway networks and power systems, which would also help in integration of the COMESA region to a great extent. Large Indian construction companies could explore business opportunities to meet the infrastructural requirements in the COMESA region, contributing largely to economic development in the host country. vII. Cooperation in the Banking/ Financial Sector With a view to enhancing commercial relations with countries in the African region, some Indian banks have set up operations in select countries

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in Africa. In view of the potential for enhancing bilateral trade and investment relations with the COMESA region, opening branches/ representative offices in the region, and developing correspondent banking relations with select banks in the region would serve to facilitate and promote commercial relations. vIII. Energy Generation and Power

IX. Cooperation in SME Sector Towards developing entrepreneurship and human capability, India could share its expertise and experience with countries in the COMESA region, particularly in the SME sector wherein India has developed successful SME clusters. An important element in this direction could be for delegations from these countries to visit India to study success factor of SME clusters in India, and developing similar clusters in home countries based on resource and skill endowments. X. Developing linkages with Investment Promotion Agencies and Chambers of Commerce and Industry in the Region Besides streamlining their investment regimes, many countries in the region have set up specialised investment promotion agencies to promote and facilitate inflow of foreign investment into these countries, while also serving as onestop-shop for investment related activities. In light of the key role of these institutions, building closer cooperation and linkages with these investment promotion agencies and Chambers of Commerce in the COMESA region would serve to enhance access to information

Another area which holds immense potential for investment and cooperation is electricity generation and power transmission. It has been estimated that the actual demand for electricity in the COMESA region exceeds the supply by more than 20 percent, and this energy deficit is expected to continue posing a serious challenge for the overall development of the region. Insufficient investment in the energy sector leading to underdeveloped infrastructure including electricity transmission and distribution networks have exacerbated the energy problem in the region. In light of these, development of the regional energy infrastructure in the COMESA region is a priority area for governments in the COMESA region.

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about investment opportunities in the region. Such relationship would serve to enhance knowledge about potential areas for investment, upcoming projects in different sectors, prospective investment partners, as also procedures, rules and regulations required for venturing into specific sectors in these countries and incentives offered to investors. XI. Business Hub in the COMESA Region With a view to enhance India-based business in the COMESA region, Indian companies could develop a business hub in one of the COMESA member countries. The creation of such a hub could encourage and lend support to prospective companies who are interested in developing commercial relations and establish presence in the COMESA region. An added advantage of such a business hub in the region for the Indian exporter/ investor would be in terms of market access to all the markets of the COMESA region. XII. Focus on Multilateral Funded Projects Besides participating in investment activities that are promoted by the respective Governments of the

COMESA member countries, Indian companies could also endeavor to participate in multilateral funded projects. Multilateral institutions such as the World Bank, and the African Development Bank (AfDB) support and fund a number of projects in the COMESA region. They broadly cover areas such as agriculture and related activities; infrastructure development such as roads, telecommunication, postal services, electricity, water supply and sanitation; mining and quarrying; rural and urban development; environment and natural resource development; health care and education; privatization; financial market development; and tourism development. At the same time, efforts to participate in technical assistance in terms of project preparation and advisory services in such funded projects would support increased presence in the region.

XIII. Preferential Agreement (PTA)

Trading

India and members of the Southern African Customs Union (SACU South Africa, Lesotho, Swaziland, Botswana, and Namibia) are at an advanced stage of negotiations to put in place a preferential trading agreement (PTA) to boost bilateral

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trade. In light of the importance of the countries in the COMESA region as Indias trading partners, a similar PTA between India and the COMESA region could also be a worthwhile initiative to add to the overall endeavours to enhance IndoCOMESA trade and investment relations. XIv. Wider Information Dissemination of

potential exporters and investors in India as also prospective partners in the COMESA region. This can be facilitated through increased visits by trade and industry delegations from India to the region, and vice versa. The trade promotion measures could also include participation in specialized trade and industry fairs and exhibitions in the region; organizing buyer-sellers meets and preparing product catalouges in electronic form. Further, specialized Made in India exhibitions and seminars / workshops could be organized, in collaboration with the COMESA countries, to showcase Indian technology and expertise.

To enhance Indias exports to the COMESA region, as also opportunities for investment, an important element of the strategy would also be effective dissemination of information relating to trade/investment opportunities to

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1: COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA (COMESA): AN OvERvIEW

Introduction
The Common Market for Eastern and Southern Africa (COMESA), is one of the major trading blocs in the African region, along with the Southern African Development Community (SADC), Economic Community of West African States (ECOWAS), and West African Economic and Monetary Union (UEMOA).1 The Common Market for Eastern and Southern Africa traces its genesis to the mid 1960s. The idea of regional economic co-operation received considerable impetus from the buoyant and optimistic mood that characterised the postindependence period in most countries of Africa. In 1965, during the ministerial meeting of the United Nations Economic Commission for Africa (ECA) held in Lusaka, Zambia, the creation of an Economic Community of Eastern and Central African states was recommended. During December 1981, the Treaty establishing a Preferential Trade Area for Eastern and Southern Africa (PTA) was signed, which came into force on September 30, 1982. The PTA was established with an intent to take advantage of a larger market size, to share the regions common heritage and to allow greater social and economic co-operation, with the ultimate objective of creation o f a n e c o n o m i c c o m m u n i t y. Subsequently, the Treaty establishing the Common Market for Eastern and Southern Africa (COMESA), was signed on November 5, 1993 in Kampala, Uganda and was ratified a year later in Lilongwe, Malawi on December 8, 1994. The principal objective behind the formation of COMESA was to achieve sustainable economic and social progress in all member states, and economic integration and collective development so as to form a unified economic bloc for Eastern and Southern Africa to promote trade, cooperation and self-reliance in the region. COMESA envisions becoming a fully integrated, internationally competitive regional

1 List of major African Trade Blocs, along with the member countries and year of formation is presented in Annexure 1, Table A1

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economic community with high standards of living for its people, ready to integrate into an African Economic Community. As per the COMESA Treaty, the primary aims of the Common Market are : (a) to attain sustainable growth and development of the Member States by promoting a more balanced and harmonious development of its production and marketing structures;

(b) to promote joint development in all fields of economic activity and the joint adoption of macro-economic policies and programmes to raise the standard of living of its peoples and to foster closer relations among its Member States; (c) to co-operate in the creation of an enabling environment for foreign, cross border and domestic investment, including

Figure 1: Member Countries of COMESA Trade Bloc

Source: http://www.comesa.int

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the joint promotion of research and adaptation of science and technology for development; (d) to co-operate in the promotion of peace, security and stability among the Member States in order to enhance economic development in the region; (e) to co-operate in strengthening the relations between the Common Market and the rest of the world and the adoption of common positions in international fora; and (f) to contribute towards the establishment, progress and the realisation of the objectives of the African Economic Community.

Investment Agency, Leather and Leather Products Institute, PTA Bank, and the Clearing House. COMESA Authority The COMESA Authority, the supreme policy formulating organ of the community, comprises the Heads of State and Government of the different COMESA Countries. It is responsible for the general policy direction and control of the performance of the executive functions of COMESA. The Authority meets annually, besides extraordinary summits convened at the request of any member of the Authority, and which are supported by one-third of the members. The last extraordinary summit was held in 2000 at the official launching of the COMESA FTA. Summits are held in various member States. The directives and decisions taken by the Authority are binding on all member States and the other organs to which they are addressed. COMESA Court of Justice The COMESA Court of Justice was established in 1994 under Article 7 of the COMESA Treaty as one of the organs of COMESA, and enjoys independence in the exercise of its jurisdiction. The COMESA

COMESA trade bloc comprises 19 nations which include Burundi, Comoros, D.R. Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, L i b y a , M a d a g a s c a r, M a l a w i , Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. Principal Institutions in COMESA The principal institutions that constitute the Common Market for Eastern and Southern Africa are the COMESA Authority, the COMESA Court of Justice, PTA Re-insurance Company, Regional

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Authority appointed the Judges of the Court during its Third Summit on 30th June, 1998 at Kinshasa in the Democratic Republic of Congo. The establishment of the Court of Justice was a major event in the history of COMESA as an organization and in the development of COMESA Community Law and Jurisdiction. The Court of Justice plays a crucial role in the process of economic integration of the community providing one integrated strong judicial body with one Registry, and addresses the issue of enforcement of decisions taken collectively. PTA Re-insurance Company ZEP-RE (PTA Reinsurance Company) was created by an Agreement of Heads of State and Government of the COMESA region on November 21, 1990 in Mbabane, Swaziland. The Company established office in Nairobi, Kenya in September 1992 and commenced operations from January 1993. ZEP-RE is a regional organisation entrusted with the task of promoting trade, development and integration within the COMESA region through trade of insurance and reinsurance business. The Companys operational activities are driven by the desire to provide excellent technical services to all its clients and to actively participate in

and support the development of the regions insurance and reinsurance industry. Regional Investment Agency The Regional Investment Agency (RIA) was set up with a view to optimize investment and trade opportunities in the region through developing and establishing synergies, networks, alliances, and co-operation with other Regional Economic Communities, cooperating partners and international institutions in order to achieve high levels of investment leading to rapid and sustainable economic growth and development. The Agency envisions to transform COMESA into an internationally competitive investment hub, which allows free movement of capital, labour, goods and services across borders of member states and thereby facilitate sustainable growth of private domestic and foreign investments in the region. Primary functions of the Agency include:
l

improvement of national investment environments in member countries by identifying best practices and advocating their adoption at the national level.

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gathering and disseminating information on policies affecting the investment environment, cost of doing business, investment procedures, investment opportunities, and other relevant information in member countries, through databases, publications and website, promoting the COMESA FTA and a Common Investment Area. identifying and promoting investment opportunities, with special focus on projects with a regional impact. improving the regional investment environment by identifying constraints to investment and recommending measures to overcome these constraints; and training and providing development support to National Investment Promotion Agencies in member countries.

23, 1990, with a view to promoting productivity, competitiveness, trade and regional integration in the leather sub-sector. The institute is headquartered in Addis Ababa, Ethiopia. The COMESA LLPI envisions contributing to the sustainable development, competitiveness and integration of the COMESA leather sector while operating as a technical institution and a center of excellence in leather and leather products processing and manufacturing t e c h n o l o g y, t h r o u g h h u m a n resources development, investment and trade promotion, research and development, consultancy and extension, and information collection and dissemination. PTA Bank The Eastern and Southern African Trade and Development Bank (PTA Bank) was established on November 6, 1985 following the provisions of the Treaty of 1981 establishing the Preferential Trade Area (PTA), which has since been transformed into COMESA, as a financial arm of the integration arrangement. The Bank envisions contributing to the economic growth and prosperity of the Eastern and Southern Africa region, through provision of

Leather and Leather Products Institute The COMESA Leather and Leather Products Institute (LLPI) was established by the signing of the Charter by COMESA Member States in Mbabane, Swaziland on November

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development capital to countries in the sub-region. Clearing House The Clearing House came into existence at a time when the countries of the region had strict exchange control regimes and foreign exchange was scarce. The clearing system allows businesses to invoice their exports in national currencies or in UAPTA 2 . The COMESA central banks, in turn, offset these transactions on a daily

basis through the Clearing House but only settle net debtor balances in hard currencies every two months. This process has thus been effective in alleviation of the problem of inadequate foreign exchange through the use of national currencies in the regions transactions, thus giving them partial convertibility. All the parties to this arrangement benefit in that net debtor countries gain credit in foreign exchange for their outstanding net debit balances, whereas net creditor countries increase their export potential.

2 UAPTA:

Unit of account of the preferential trading area

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2: BACKGROUND AND ECONOMIC ENvIRONMENT OF COMESA COUNTRIES

This chapter presents a background and overview of the prevailing economic environment of the COMESA countries, recent trends in the macroeconomic indicators, sectoral performance in the member countries and recent developments. Economic growth of the region has exhibited resilience in the face of the global economic downturn, despite the many pertinent challenges facing Africa. Notable progress within the COMESA region has been achieved through improved macro-economic management, market-based reforms and continued structural progress in many countries. Profile of COMESA Countries In 2009, the combined gross domestic product (GDP) for COMESA increased to an estimated US$ 448.0 billion from US$ 447.1
2 Refer 3

billion in 2008, growing at a meagre growth rate of 0.2 percent on account of the global economic downturn. However, with a pickup in global economy, total GDP of COMESA is forecast to touch US$ 512.6 billion in 2010, growing at an annual average of 14.4 percent and further to US$ 573.5 billion in 2011, reflecting a slightly slower year-on-year growth of 11.9 percent in 2011 . Per capita GDP, at current prices, of the region as a whole, was estimated at US$ 897 in 2009, up from US$ 858 in 2008 (Table 2.1). The economies within the COMESA region are at varying stages of development. For instance, the GDP of Egypt and Libya put together was larger than the combined GDP of the remaining 17 COMESA countries, with GDP of US$ 188.0 billion and US$ 60.4 billion respectively in 2009, as compared to the combined GDP

to Annexure 1, Table A2 for country wise GDP growth rates Refer to Annexure 1, Table A3 for country wise GDP per capita and Table A4 for population figures

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Table 2.1: GDP of COMESA Countries (US$ bn) (current prices)

Country Egypt Libya Sudan Kenya Ethiopia Uganda Zambia D R Congo Mauritius Madagascar Rwanda Malawi Zimbabwe Swaziland Eritrea Burundi Djibouti Seychelles Comoros COMESA Total f - forecasts Source: IMF, WEO Database April 2010 2007 130.3 71.7 46.5 27.2 19.6 11.9 11.5 10.0 7.5 7.3 3.7 3.3 4.7 2.9 1.3 1.0 0.8 1.0 0.5 362.9 2008 162.4 89.9 58.0 30.3 26.7 14.4 14.7 11.6 9.3 9.5 4.7 3.9 3.9 2.8 1.4 1.2 1.0 0.9 0.5 447.1 2009 188.0 60.4 54.7 32.7 32.3 15.7 13.0 11.1 8.8 8.6 5.2 4.6 4.4 3.0 1.9 1.3 1.0 0.8 0.5 448.0 2010f 215.8 76.6 65.7 34.2 30.6 17.7 16.1 12.6 9.8 8.4 5.7 4.8 5.1 3.1 2.3 1.4 1.1 1.0 0.6 512.6 2011f 248.1 84.1 74.5 38.7 31.7 18.8 17.7 13.7 10.4 8.9 6.1 5.1 5.5 3.2 2.7 1.5 1.2 1.0 0.6 573.5

of US$ 200 billion of the remaining 17 countries during the same year. The average annual inflation rates in COMESA countries too were at varying levels. During 2009, while countries like Comoros, Djibouti, Libya, Mauritius and Swaziland experienced moderate inflation rates, countries such as D R Congo, Eritrea, Ethiopia,

and Seychelles witnessed high inflationary rates (refer Annexure 1, Table A5). During 2009, all countries in COMESA region, with the exception of Comoros and Libya, have experienced a current account deficit. Libya, on the other hand, experienced a current account surplus of US$ 10.1 billion in 2009, driven by trade surplus, though

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much lesser than the previous years surplus of US$ 36.6 billion (refer Annexure 1, Table A6). The following section provides a broad overview of the prevailing economic environment in select COMESA member countries. EGyPT Egypt is one of Africas northeastern most countries, with 95 percent of its land covered with uninhabitable desert. Egypt covers an area of 997,739 sq km, with total population of around 76.7 mn in 2009. Around half of GDP is accounted for by services, including public administration, tourism and the Suez Canal. Agriculture accounts for around 14 percent of GDP. Manufacturing industries, (including oil refining), which are heavily concentrated in Cairo and the Nile Delta, are also the drivers of the economy contributing around 19 percent of GDP, while mining (especially oil and gas extraction), account for nearly 9 percent of total GDP. Egypt has petroleum reserves, estimated at 3.77 billion barrels by the Ministry of Trade and Industry, but output of crude oil has witnessed a decline in recent years, with many oil fields maturing. However, increasing quantities of natural gas are currently being

discovered and exploited, with proven reserves of 72.3 trillion cu ft. Egypt started exporting liquefied natural gas (LNG) in 2005, and is now the eighth-largest LNG exporter in the world. Other available mineral reserves include phosphates, manganese, granite, marble, limestone, gypsum, talc, asbestos, lead, zinc and iron ore. Real GDP is estimated to have registered a relatively decent growth rate of 4.7 percent in 2009, post the financial crisis, as compared to an average growth of 7 percent during the last 3 years. Real GDP growth is expected to pickup to 5 percent in 2010, and further to 5.5 percent in 2011 (Table 2.2) with gradual recovery in external sector and global demand, after Egypts exports were severely hit by the global recession, with an yearon-year contraction of almost 13 percent during 2008-09. Having peaked at an average of 18.3 percent in 2008, the year-onyear rate of inflation fell in 2009, owing to base effects and the lagged effect of the tight monetary policy adopted by the Central Bank of Egypt (CBE) during 2008, averaging 11.8 percent for 2009. Inflation is expected to remain at an average of 11.8 percent for 2010

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Table 2.2: Macroeconomic Indicators of Egypt 2007 GDP (US$ bn) Real GDP growth ( %) GDP Per Capita (US$) Consumer Price Inflation (av,%) Population (mn) Current Account Balance (US$ bn) Total International Reserves (US$ mn)
f - forecasts Source: International Monetary Fund (IMF)

2008 162.4 7.2

2009 188.0 4.7

2010f 215.8 5.0 2758.8 11.8 78.2 0.4 35908

2011f 248.1 5.5 3109.3 9.7 79.8 2.3 38289

130.3 7.1 1771.0 9.5 73.6 0.5 31374

2160.0 2450.4 18.3 75.2 -1.3 33849 11.8 76.7 -3.2 33933

before before easing to 9.7 percent in 2011. Current account deficit is expected to widen from US$ 1.3 billion in 2008 to US$ 3.2 billion in 2009. However, on account of a slight narrowing of the trade deficit in 2010-11, combined with stronger tourism receipts, current account is expected to return to a surplus, to an average of 0.5 percent of GDP during 2010-11. lIByA Libya covers a total land area of 1.8 mn sq km with an estimated

population of 6.3 mn in 2009, and one of the worlds lowest population densities at 3 people per sq km. Industry accounts for 88 percent of Libyas GDP, while services accounts for 10 percent and agriculture a mere 2 percent. The Libyan economy is dominated by the hydrocarbons sector, with oil and gas reserves making up most of Libyas natural resources. The sector generates an estimated 98 percent of export earnings and 90 percent of government receipts, and contributes an estimated 69 percent of nominal GDP. The

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Libyan economy has grown at an annual average growth of 6.1 percent during the period 2005 to 2008. The real GDP growth is expected to accelerate from an estimated 1.8 percent in 2009 to 5.2 percent in 2010, with the lifting of OPEC production quotas. The non oil sector is also set to grow at a rapid rate, supported by government infrastructure investment programmes. With the relaxation of governmental controls over domestic market,

consumer price inflation picked up sharply in 2007-08, after consistently exhibiting low inflation. On account of high oil prices, and subsequent increase in 2008. in domestic liquidity, inflation averaged 10.4 percent Inflation is estimated to fall to 2.7 percent in 2009, due to lower prices for imported goods and commodities and lower consumer demand, before slightly increasing again in 2010 to 4.5 percent (Table 2.3).

Table 2.3 : Macroeconomic Indicators of libya 2007 GDP (US$ bn) Real GDP growth (%) GDP Per Capita (US$) Consumer Price Inflation (av,%) Population (mn) Current Account Balance (US$ bn) Total International Reserves (US$ mn)
f - forecasts Source: International Monetary Fund (IMF)

2008 89.9 3.4

2009 60.4 1.8

2010f 76.6 5.2

2011f 84.1 6.1

71.7 7.5

11773.2 14478.3 9529.3 11852.7 12772.2 6.2 6.1 28.5 79599 10.4 6.2 35.7 92508 2.7 6.3 10.1 99220 4.5 6.5 17.2 102191 3.5 6.6 17.4 109330

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SUDAN Sudan covers a total land area of 2.5 mn sq km and had a population of around 39 mn in 2009. It is the largest country in Africa, bordering nine other countries and has a very diverse topography. 29 percent of Sudans total land area is classified as desert, 19 percent as forest and 7 percent as cultivable land. Sudan is endowed with 6.6 billion barrels of known oil reserves, primarily in the south or the southern border, with huge unexplored potential. The country is also rich in fertile agricultural land, irrigated by the river Nile. Economic growth of the country is primarily driven by development of the oil sector and

investment in the infrastructure from especially Asia and the Gulf region, although it remains a predominantly agricultural economy. As a result, the economy averaged an annual growth of 7 percent in real terms during the period 1998-2007. Economic output doubled over the last four years to an estimated US$ 54.7 billion in 2009, on the back of rising oil production (Table 2.4). Agriculture has contributed the majority of Sudans export earnings till 1999, however, falling to an estimated 5 percent in 2008, due to rise in oil exports. Nevertheless, according to estimates, agriculture still accounts for around two-third of employment.

Table 2.4: Macroeconomic Indicators of Sudan 2007 GDP (US$ bn) Real GDP growth (%) GDP Per Capita (US$) Consumer Price Inflation (av,%) Population (mn) Current Account Balance (US$ bn) Total International Reserves (US$ mn)
f - forecasts Source: International Monetary Fund (IMF)

2008 58.0 6.8

2009 54.7 4.5 1397.8 11.3 39.1 -2.8 897

2010f 65.7 5.5 1638.1 10.0 40.1 -2.2 2063

2011f 74.5 6.0 1809.6 9.0 41.2 -2.5 1651

46.5 10.2

1252.2 1522.0 8.0 37.2 -3.4 1378 14.3 38.1 -1.3 1399

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Sudans manufacturing sector accounts for around 6 percent of GDP, showing gradual yet steady growth since 2000, on account of a stable macro-economic environment, increased investment, access to bank credit and greater availability of foreign exchange. Food processing is one of the leading industries of Sudan, as also automotive manufacturing and other small scale manufacturing sectors like pharmaceuticals, electrical, cement, textiles and paints. Sudan experienced only a modest fall in inflation in 2009, with a surge in prices in the final months of the year pushing inflation to an annual average of 11.3 percent. In 2010-11, inflation is forecast to remain high, as the depreciating pound increases imported inflation. However, inflation is expected to ease slightly to an average of 9.5 percent in 2010-11. The government is expected to maintain food and fuel subsidies. KENyA Kenya covers a total land area of 569,259 sq km with an estimated population of around 36 mn in 2009. Kenya is well endowed with mineral resources and also has rich agricultural land and abundant

wildlife, which greatly promotes tourism in the country. Kenya has a small formal sector engaged mainly in manufacturing focusing on agroprocessing and textile manufactures, commodity exports, agriculture and services, such as tourism. The services sector, driven by booming tourism and the impressive growth of telecommunications, has been a major engine of growth, and its share of GDP rose to 60 percent during 2007-08, averaging an impressive 8.3 percent growth during the period. The Kenyan economy, nevertheless, remains dependent on the large, informal and subsistence agriculture, which accounts for around 23 percent of real GDP, and about half of the total exports of the country, while industry accounts for nearly 16 percent of GDP. Moreover, Kenya is the most industrialised country in East Africa, even though manufacturing accounted for just under 10 percent of GDP. Kenya has enjoyed strong economic growth, which averaged 5.4 percent during 2002- 07. The economy, after exhibiting poor real GDP growth, averaging 1.5 percent and 2.1 percent in 2008 and 2009 respectively, on account of drought

40

and global recession, is expected to rebound to 4.1 percent in 2010, supported by global recovery and is forecast to accelerate further to 5.8 percent in 2011 as conditions improve (Table 2.5). During the period 2003-07, consumer price inflation has remained generally high averaging around 11 percent. On account of rising food and fuel prices and supply disruptions, consumer price inflation averaged 13.1 percent in 2008. Inflation is expected to moderate from an estimated 11.8 percent in 2009 to 8.0 percent in 2010 and further

to 5.0 percent in 2011, with the introduction of a new, re-weighted consumer price index. Kenyas long term development is guided by its official development strategy, Vision 2030, which prioritises infrastructural investment. In line with the strategy, the government envisages investment worth US$ 25 billion in key growth sectors, such as infrastructure, skills development and social services provision. The ambitious plan aims to raise Kenyas growth rate to 10 percent by 2012, making it a middle-income country by 2030.

Table 2.5: Macroeconomic Indicators of Kenya 2007 GDP (US$ bn) Real GDP growth (%) GDP Per Capita (US$) Consumer Price Inflation (av,%) Population (mn) Current Account Balance (US$ bn) Total International Reserves (US$ mn)
f - forecasts Source: International Monetary Fund (IMF)

2008 30.3 1.5 859.4 13.1 35.3 -2.0 2879

2009 32.7 2.1 911.9 11.8 35.9 -1.6 3850

2010f 34.2 4.1 937.8 8.0 36.5 -1.5 4585

2011f 38.7 5.8 1041.7 5.0 37.1 -1.7 5091

27.2 7.0 785.0 9.8 34.7 -1.0 3355

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ETHIOPIA Ethiopia spans a land area of 1.2 mn sq km with a population of 82.8 mn in 2009. The economy is highly dependent on agriculture which accounts for around 43 percent of GDP, with more than 80 percent of the population depending directly or indirectly on agriculture and allied activities. Services sector accounts for around 38 percent of total GDP, and has grown steadily in recent years. Industrial growth has been robust in recent years, growing at nearly 11

percent and accounting for around 13 percent of total GDP, driven by agro processing. The framework for Ethiopian economys reforms was provided by the Sustainable Development and Poverty Reduction Programme (SDPRP) 2001-02 to 2005-06. This was followed by the Plan for Accelerated and Sustained Development to End Poverty (PASDEP), effective from 2006-07 to 2010-11. Total investment under the project is estimated to be around US$ 36.5 billion.

Table 2.6: Macroeconomic Indicators of Ethiopia 2007 GDP (US$ bn) Real GDP growth (%) GDP Per Capita (US$) Consumer Price Inflation (av,%) Population (mn) Current Account Balance (US$ bn) Total International Reserves (US$ mn)
f - forecasts Source: International Monetary Fund (IMF)

2008 26.7 11.2 330.5 44.4 80.7 -1.8 871

2009 32.3 9.9 390.3 8.5 82.8 -2.0 1781

2010f 30.6 7.0 360.8 7.0 84.8 -2.0 1824

2011f 31.7 7.7 365.3 9.0 86.8 -2.0 1810

19.6 11.8 248.6 17.2 78.6 -0.8 1290

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The Ethiopian economy has consistently shown robust economic growth averaging 11.4 percent for the period 2005-2008. Though the economy has slowed down during 2009 on account of the global recession, it is estimated to have grown at a relatively robust growth rate of 9.9 percent during the year. GDP growth is forecast to slow to 7 percent in 2010 due to slow recovery of exports and remittances, before picking up again to 7.7 percent in 2011, driven by continued global growth and reform efforts (Table 2.6). The inflation rate declined to an average of 8.5 percent in 2009, the lowest rate since 2004, owing to a tighter monetary policy and higher domestic agricultural production, which lowered food price inflation. The relatively low inflation has been entirely the result of deflation in food prices, while non-food price inflation remained above 15 percent. Inflation is forecast to fall to 7 percent in 2010 as better agricultural output lowers food prices, before rising to 9 percent in 2011 owing to higher domestic demand. ZAMBIA Zambia covers a total land area of 752, 612 sq km with a population of 12 mn in 2009. Almost one-

half of the country is covered by bush and forest, which contain few commercially exploitable species. Of potential arable land, less than 50 percent, is cultivated, mostly with maize. Zambia has rich water reserves, accounting for around 40 percent of Southern Africas total water reserves, with substantial potential for hydroelectric power generation. Zambian real GDP growth rate averaged 5.6 percent during the period 2003-2007, on account of large investments and increased output in the mining sector. With recovery in the second half of 2009, Zambia is forecast to witness a 5.8 percent growth in 2010, forecast to increase to 6.0 percent in 2011 (Table 2.7) driven by increasing copper and agricultural production. Economic growth is driven by the services sector which accounts for 57 percent of GDP, followed by industry accounting for 26 percent and agriculture accounting for around 17 percent. Within the services sector, the largest subsector is financial intermediaries and insurance. Aided by implementation of governments Financial Sector Development Plan (FSDP), the financial sector in Zambia has improved significantly, though growth has been relatively slow. Besides copper refining, which is

43

directly related to the prospects in the mining sector, manufacturing production accounts for an important share in the overall industrial output. Food, beverage and tobacco production accounts for around 45 percent of manufacturing output and has contributed extensively to the growth of the overall manufacturing sector in the economy. Zambia has had a history of high inflation persistently averaging 20 percent primarily on account of a

weak fiscal policy, weak exchange rate and inconsistent food supply. However, inflation recorded a steep decline in 2006 due to a collective impact of a prudent fiscal policy, bumper maize crop and a strong currency, averaging 9 percent during the year. Due to high world oil prices, inflation slightly increased again to 10.7 percent in 2007. Average inflation is forecast to come down to 8.2 percent in 2010 and further to 7.5 percent in 2011 from an estimated 13.4 percent in 2009.

Table 2.7: Macroeconomic Indicators of Zambia 2007 GDP (US$ bn) Real GDP growth (%) GDP Per Capita (US$) Consumer Price Inflation (av,%) Population (mn) Current Account Balance (US$ bn) Total International Reserves (US$ mn)
f - forecasts Source: International Monetary Fund (IMF)

2008 14.7 5.7

2009 13.0 6.3 1086.1 13.4 12.0 -0.1 1892

2010f 16.1 5.8 1317.4 8.2 12.2 -0.4 2551

2011f 17.7 6.0 1421.4 7.5 12.4 -0.2 3083

11.5 6.2

1001.5 1251.9 10.7 11.5 -0.5 1090 12.4 11.7 -0.6 1096

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UGANDA Uganda is a landlocked country which covers a total land area of 197,000 sq km, of which 75 percent of is suitable for agricultural and cultivation purposes. Uganda is believed to have the worlds youngest population, with more than half of the population being under the age of 18 years. In 2009, total population was estimated to be around 33 mn, which is quickly expanding. The share of agriculture in Ugandas GDP, which accounted for 32.7 percent in 2005, declined to 28.6 percent in 2008, while that of services increased from 42.5 percent in 2005 to 45 percent during the same period. Though the importance of agricultural output in the economy has declined in relation to industry and services, it nevertheless continues to remain the largest employer, with an estimated 80 percent of the population depending on agriculture and allied activities. Although export crop production has witnessed a significant increase, subsistence farming still continues to act as the backbone of agricultural sector, accounting for almost half of agricultural output. Industry accounted for a more-or-less stable 24.4 percent

of the economys total GDP during the period. Most manufacturing is focused on processing of food, drinks and tobacco, primarily for domestic consumption. Large scale industries include tobacco, beverages, construction material, and chemicals. Driven by rapid growth in telecommunications, financial services, trade, and hotels and restaurants, the services sector has now emerged as the economys largest and most dynamic sector, contributing 45 percent of total GDP. Uganda holds huge unexplored potential of mineral resources though mining accounts, at present, for merely 1 percent of the countrys GDP. Gold has been Ugandas third largest export commodity since the last decade The economy has enjoyed two decades of uninterrupted economic growth, owing mainly to political stability and recorded an average growth rate of 7.3 percent during the period 2003-07. The economy has shown resilience in the face of global economic slump and averaged almost 8 percent during 2008-09, and is forecast to average 5.6 percent in 2010 and accelerate to 6.4 percent in 2011 (Table 2.8).

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Table 2.8: Macroeconomic Indicators of Uganda 2007 GDP (US$ bn) Real GDP growth (%) GDP Per Capita (US$) Consumer Price Inflation (av,%) Population (mn) Current Account Balabce (US$ bn) Total International Reserves (US$ mn)
f - forecasts Source: International Monetary Fund (IMF)

2008 14.4 8.7 450.7 7.3 32.0 -0.9 2301

2009 15.7 7.1 474.0 14.2 33.2 -0.9 2995

2010f 17.7 5.6 514.8 10.5 34.4 -1.2 3743

2011f 18.8 6.4 526.5 7.5 35.6 -1.3 4604

11.9 8.4 385.3 6.8 30.9 -0.5 2560

Inflation has remained high at 14.2 percent in 2009 but is expected to ease back slowly over 2010-11. Food prices are expected to remain high, driven by strong regional demand and a loose monetary policy, but overall inflation rate is forecast to fall to an average of 9 percent in 2010-11 as better weather lowers food prices. D R CONGO The Democratic Republic of Congo (D R Congo) is Sub-Saharan Africas largest country with a total

land area of 2,344,885 sq km and the third most populous in the region with a population of 64.8 mn as per 2009 estimates. More than 60 percent of the population live in rural areas. Even in terms of resources, D R Congo is one of Africas most endowed countries, with huge potential for mineral production, hydroelectricity and agriculture. Although mining has been traditionally predominant in the economy, it contributes only around 14 percent to GDP. The important minerals are copper, cobalt, zinc, and diamonds. Agriculture and

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logging, on the other hand, drive the economy, contributing around 40 percent of total GDP, with most Congolese being subsistence farmers. Real GDP growth of D R Congo averaged 6.4 percent during 200307 and is expected to accelerate further as new mining ventures enter production supported by large inflow of foreign investment. Industrial output accounts for around 12 percent of GDP. Most manufacturing, in terms of both volume and value, is the foodprocessing sector, besides limited

production of industrial goods, chemical products, construction material, textiles and light industrial goods. Real GDP growth is expected to average 5.4 percent in 2010 and rise to 7 percent in 2011 (Table 2.9).

The fall in the value of Congolese franc has more than offset the declining world oil and food prices, and inflation has remained relatively high. Owing to higher agricultural production, improved distribution of produce around the country and tighter control over the money supply,

Table 2.9: Macroeconomic Indicators of D R Congo 2007 GDP (US$ bn) Real GDP growth (%) GDP Per Capita (US$) Consumer Price Inflation (av,%) Population (mn) Current Account Balance (US$ bn) Total International Reserves (US$ mn)
f - forecasts; - : not available Source: International Monetary Fund (IMF)

2008 11.6 6.1 184.4 18.0 62.9 -1.8 78

2009 11.1 2.8 171.5 46.1 64.8 -1.8 1001

2010f 12.6 5.4 189.5 25.0 66.7 -2.5 -

2011f 13.7 7.0 199.3 30.0 68.7 -2.8 -

10.0 6.3 163.4 16.7 61.1 -0.2 181

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inflation is expected to be contained to some extent in 2010-11. Inflation is forecast to fall to an average of 25 percent in 2010, before increasing again to 30 percent in 2011, as a result of currency depreciation and lax fiscal policy. MAURITIUS Mauritius is a small, densely populated island, with a population size of 1.3 mn in 2009, and one of the highest population densities in the world with 620 people per sq km. Mauritius is ranked by the

UN Development Programme as a high human development country, sharing the distinction only with Seychelles among Sub- Saharan African countries. The World Bank, too, ranks Mauritius as the best country in Africa in terms of conducive environment for business, rating it even above South Korea, France and Chile. Moreover, Mauritius has one of the highest literacy rates among developing countries, at over 95 percent for those aged under 30 years. In terms of natural resources,

Table 2.10: Macroeconomic Indicators of Mauritius 2007 GDP (US$ bn) Real GDP growth (%) GDP Per Capita (US$) Consumer Price Inflation (av,%) Population (mn) Current Account Balance (US$ bn) Total International Reserves (US$ mn)
f - forecasts Source: International Monetary Fund (IMF)

2008 9.3 4.2

2009 8.8 1.5 6838.1 2.5 1.3 -0.7 2304

2010f 9.8 4.1 7605.2 2.1 1.3 -0.8 2360

2011f 10.4 4.7 8006.1 2.4 1.3 -0.8 2406

7.5 5.4

5966.0 7330.1 8.8 1.3 -0.4 1822 9.7 1.3 -1.0 1785

48

around 46 percent of the land area is agricultural, 20 percent built-up, 2 percent roads, and the remaining covered with forest, scrubland, grasslands, reservoirs, ponds, swamps and rocks. The bulk of cultivable land is under sugarcane cultivation. Real GDP growth of Mauritius has witnessed a declining trend since 2008 averaging 1.5 percent in 2009. With recovery in global economy, the Mauritius economy is forecast to grow at 4.1 percent 2010 and 4.7 percent

in 2011. Tourism contributed 7 percent of GDP and 22 percent of foreign exchange earnings during 2009, while the financial sector accounted for 12 percent of GDP in 2009. With the pickup in economic activity, both tourism and financial sectors are expected to benefit to a great extent. Average inflation is expected to fall further from 2.5 percent in 2009, the lowest rate for more than 20 years, to 2.1 percent in 2010, before slightly increasing to 2.4 percent in 2011 (Table 2.10).

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3: FOREIGN TRADE OF COMESA COUNTRIES

This chapter presents a broad overview of select major regional trade blocs in Africa, intra-bloc merchandise trade of these major trade blocs and focuses on the foreign trade of the COMESA region. This chapter also highlights the trends in foreign trade of select major countries within the COMESA region. Major Trading Blocs in Africa and Intra-Bloc Merchandise exports The main trading blocs in Africa include the Common Market for Eastern and Southern Africa (COMESA), Economic Community of West African States (ECOWAS), Southern African Development Community (SADC), the West African Economic and Monetary Union (UEMOA) and the East African Community (EAC) (Refer Annexure 1, Table A1). It is interesting to note that the blocs are somewhat intertwined with each other, with most countries being members of more than one distinct bloc. For instance, the eight member

countries of ECOWAS, namely Benin, Burkina Faso, Cte dIvoire, Guinea-Bissau, Mali, Niger, Senegal and Togo, in order to further reinforce their economic ties, regrouped to form the UEMOA in 1994. Similarly, eight member countries of COMESA viz., Democratic Republic of Congo (DRC), Madagascar, Malawi, Mauritius, Seychelles, Swaziland, Zambia and Zimbabwe are also members of the SADC. Likewise, four countries of COMESA namely, Burundi, Kenya, Rwanda and Uganda in addition to Tanzania formed the East African Community in 1996. Tanzania is a member country of both the EAC and SADC. An analysis of the trend in intrabloc merchandise exports of these African trade blocs reveals that SADC, ECOWAS and COMESA are the largest and highly integrated trade blocs in the region, in terms of magnitude, with intra-bloc merchandise exports accounting for 10.1 percent, 7.6 percent and 4.1 percent respectively in 2008. Intra-bloc merchandise exports of

50

COMESA amounted to US$ 5.3 billion during the year (Table 3.1). The merchandise exports within the COMESA bloc have shown a modest, yet steady growth, more than doubling from US$ 2.4 billion in 2004 to US$ 5.3 billion in

2008. However, the share of intrabloc merchandise exports as a percentage of total exports of the bloc have shown a slight decline from 5.0 percent during 2004 to 4.1 percent in 2008, indicating increased exports to other countries outside the bloc.

Table 3.1: Trend in Trade Performance of Select African Trade Blocs

2004 Merchandise Exports within Blocs (US$ bn) Common Market for Eastern and Southern Africa (COMESA) Economic Community of West African States (ECOWAS) Southern African Development Community (SADC) West African Economic and Monetary Union (UEMOA) East African Community (EAC) 2.4 4.4 6.7 1.2 0.9 3.0 5.5 7.8 1.4 1.1 3.4 6.0 8.7 1.5 1.1 4.5 6.7 11.9 1.8 1.4 5.3 8.3 15.5 2.1 1.6 2005 2006 2007 2008

Merchandise Exports within Bloc (as % of total bloc exports) COMESA ECOWAS SADC UEMOA EAC 5.0 9.3 9.7 12.9 18.9 4.7 9.3 9.3 13.4 17.7 4.0 7.9 9.1 13.1 15.9 4.5 7.7 10.0 14.8 17.5 4.1 7.6 10.1 14.5 17.6

Source: World Development Indicators 2010 and 2009, World Bank

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Global Trade of COMESA COMESA as a region has shown tremendous performance in terms of its global trade. Total trade (exports plus imports) of COMESA has more than doubled from US$ 108.5 billion in 2004 to US$ 262.6 billion in 2008, growing at a compound annual growth rate of 24.7 percent over the period, reflecting favorable growth performance of both exports and imports. Exports of COMESA steadily shot up from US$ 51.4 billion in 2004 to US$ 123.8 billion in 2008. Growing at almost a similar pace, imports of COMESA too rose from US$ 57.1 billion to US$ 138.8 billion

over the period 2004-2008 (Chart 3.1). Both exports and imports of almost all COMESA countries are estimated to decline in 2009, due the impact of the global economic recession, before showing a gradual pickup in 2010 with recovery in global economy. Share of COMESA in total trade of Africa has slightly declined from 29.5 percent in 2004 to 27.8 percent in 2008. On an average, COMESA region accounted for 26.5 percent of Africas total exports during 2004 to 2008 (Table 3.2). Imports of COMESA region too, on an average, accounted for 32.3 percent of Africas total imports during the same period (Table 3.3).

Chart 3.1: Global Trade of the COMESA Region (US$ bn)

e: estimates; f: forecasts Source: UNCTAD, International Trade Centre (ITC)

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Having analysed the trade pattern of major trade blocs in Africa and the growth in trade performance of the COMESA trade bloc as a whole, an attempt is made in this section to highlight the trade performance of select major COMESA countries

namely Libya, Egypt, Sudan, Kenya, Zambia, D R Congo, Uganda, Ethiopia, and Mauritius which are the largest countries in the COMESA region in terms of magnitude of global trade (Tables 3.2 and 3.3).

Table 3.2: Trends in Exports of COMESA Countries (US$ billion)

2004 Libya Egypt Sudan Zambia Kenya D R Congo Mauritius Uganda Zimbabwe Madagascar Ethiopia Swaziland Malawi Rwanda Seychelles Burundi Djibouti Comoros Eritrea COMESA Total Exports Africa Exports % share of COMESA in Africas total exports 20.67 12.27 3.61 1.58 2.68 1.22 2.00 0.65 1.93 0.97 0.61 2.20 0.46 0.10 0.29 0.08 0.04 0.02 0.01 51.4 182.9 2005 30.33 16.07 4.51 1.81 3.42 1.51 2.14 0.81 1.39 0.84 0.93 1.28 0.50 0.15 0.34 0.11 0.10 0.03 0.03 66.3 238.0 2006 40.95 20.55 5.48 3.77 3.50 1.48 2.33 0.96 6.43 1.01 1.04 1.46 0.67 0.14 0.38 0.23 0.20 0.05 0.02 90.7 354.7 2007 45.81 24.46 8.90 4.62 4.08 2.06 2.23 1.34 3.31 1.34 1.28 1.11 0.87 0.18 0.39 0.16 0.20 0.04 0.07 102.5 383.6 2008 62.40 26.22 9.50 5.10 5.00 3.73 2.40 1.72 1.69 1.67 1.60 0.89 0.88 0.40 0.25 0.14 0.13 0.03 0.02 123.8 510.6 2009e 36.45 23.09 7.44 4.38 4.45 3.79 1.94 2.70 1.21 1.04 1.64 1.37 0.91 0.19 0.44 0.07 0.08 0.01 0.02 91.2 2010f 44.03 25.84 9.87 6.15 5.12 7.20 1.98 2.91 1.52 0.80 1.69 1.50 1.22 0.23 0.55 0.07 0.12 0.01 0.02 110.8 -

28.1

27.9

25.6

26.7

24.2

e: estimates; f: forecasts; - : not available Source: International Trade Centre, UNCTAD & Exim Bank research

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Table 3.3: Trends in Imports of COMESA Countries (US$ billion)

2004 Egypt Libya Sudan Kenya Ethiopia Zambia Mauritius Uganda Madagascar D R Congo Zimbabwe Malawi Djibouti Rwanda Seychelles Burundi Eritrea Swaziland Comoros COMESA Total Imports Africa Imports % share of COMESA in Africas total imports 21.59 7.44 4.03 4.56 2.87 2.15 2.78 1.72 1.65 1.23 2.20 0.93 0.76 0.28 0.50 0.17 0.39 1.80 0.09 57.1 184.5 2005 27.20 8.18 7.37 5.85 4.09 2.56 3.16 2.05 1.69 1.62 2.07 1.17 1.69 0.41 0.67 0.26 0.34 1.65 0.12 72.2 210.1 2006 33.10 9.64 8.84 7.23 5.21 3.07 3.64 2.56 1.76 2.97 2.58 1.21 2.28 0.56 0.76 0.43 0.27 1.32 0.16 87.6 273.4 2007 44.95 11.94 8.72 8.99 5.81 3.97 3.90 3.49 2.45 2.78 3.44 1.38 2.33 0.70 0.80 0.42 0.35 1.16 0.16 107.7 333.0 2008 52.75 17.92 16.42 11.13 8.68 5.11 4.67 4.53 3.85 3.64 2.83 2.20 2.04 1.15 0.91 0.32 0.25 0.23 0.19 138.8 434.2 2009e 45.56 22.01 8.25 9.22 6.89 3.74 3.50 3.84 1.82 5.25 2.41 1.50 0.55 0.96 0.78 0.28 0.68 1.59 0.14 119.0 2010f 46.84 24.06 8.48 9.91 7.20 4.97 3.71 4.61 1.65 7.40 2.78 1.67 0.65 1.05 0.97 0.34 0.72 1.64 0.15 128.8 -

31.0

34.3

32.0

32.3

32.0

e: estimates; f: forecasts; - : not available Source: International Trade Centre, UNCTAD & Exim Bank research

54

A detailed analysis on the trade performance of select COMESA countries is given below. libya Libya is the largest country among the COMESA countries in terms of total trade, accounting for almost 30 percent of total trade of the region. Total trade of Libya increased almost three-folds from US$ 28.1 billion in 2004 to US$ 80.3 billion in 2008. Hydrocarbon products, oil, gas and refined products account for more than 90 percent of total exports, making trade flows vulnerable to

changes in oil prices. Sustained high oil prices over the past few years have pushed revenue up, with exports estimated to have reached US$ 62.4 billion in 2008 from US$ 20.7 billion in 2004, reflecting a more than three fold increase. Imports too have shown a steady, yet slower, growth from US$ 7.4 billion in 2004 to US$ 17.9 billion in 2008 (Chart 3.2). Exports are forecast to pickup to US$ 44 billion in 2010 from an estimated US$ 36.5 billion in 2009, while imports are expected to grow at a rate of 9.5 percent in 2010 to reach US$ 24.1 billion from US$ 22 billion in 2009.

Chart 3.2: libyas Foreign Trade (US$ billion)

e: estimates; f: forecasts Source: UNCTAD, International Trade Centre (ITC)

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Mineral fuels, oil and distillation products have been accounting for almost the entire exports of Libya in the past, averaging more than 96 percent of Libyas total exports to the world. Imports of Libya are relatively diverse and are not concentrated on one commodity. Imports primarily include machinery and boilers (accounting for around 17 percent), mineral fuels & oils (11 percent), vehicles other than railways (10 percent), electrical and electronic equipment (9 percent), articles of iron & steel (5 percent) and cereals (3 percent). Italy is the largest export destination for Libya accounting for more than 40 percent of total exports from Libya to the world. The other major countries include Germany (13 percent), France (8 percent) and Spain (7 percent). Imports of Libya are mainly sourced from Italy, which accounts for around 15 percent of Libyas total imports, Germany (6 percent), China (6 percent) and Turkey (4 percent). Egypt Unlike the Libyan economy, Egypt has been experiencing a structural trade deficit during the last few years, primarily due to improved access to hard currency, reduction in tariffs and

strengthening of domestic demand. Total trade of Egypt has increased from US$ 33.9 billion in 2004 to US$ 79.0 billion in 2008. Exports have grown steadily from US$ 12.3 billion to US$ 26.2 billion over the period 2004-08, with around 55 percent of export earnings driven by hydrocarbons and derivatives. Egypt recorded an increase in imports during the period 2004 to 2008 growing at an annual average rate of 25.0 percent reaching US$ 52.8 billion in 2008 (Chart 3.3). The expansion in imports has more than offset the marked increase in merchandise exports earnings facilitated by the fall of the pound and the rise in exports of LNG since late 2005. On account of the global recession, imports are estimated to fall to US$ 45.6 billion in 2009, before increasingly marginally to US$ 46.8 billion in 2010. Exports are forecast to pick up to US$ 25.8 billion in 2010 from an estimated US$ 23.1 billion in 2009. Mineral fuels, oils and distillation products accounted for a predominant share of 44.3 percent of Egypts exports in 2008. Other important export items include iron & steel (4.7 percent of total exports), plastics and articles thereof (3.4 percent), chemical products (3.0 percent), electrical & electronic

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Chart 3.3: Egypts Foreign Trade (US$ billion)

e: estimates; f: forecasts Source: UNCTAD, International Trade Centre (ITC)

equipment (3.0 percent), edible fruits & nuts (2.7 percent), fertilizers (2.6 percent), edible vegetables (2.6 percent), and copper & copper articles (2.5 percent). Imports primarily include machinery & boilers (accounting for 11.7 percent of total imports of Egypt), mineral fuels (10.9 percent), iron & steel (9.4 percent), electrical & electronic equipment (6.2 percent), cereals (5.9 percent), vehicles other than railway (5.8 percent), articles of iron or steel (5.2 percent), and plastics & articles thereof (4.4 percent).

In terms of destination of Egypts exports, USA accounted for the largest market with a share of 7.8 percent, followed by Italy with a share of 7.2 percent in 2009. Other key markets include Spain (6.7 percent), India (6.7 percent), and Saudi Arabia (5.8 percent) during 2009. Major sources of imports of Egypt include USA (accounting for 9.9 percent of Egypts total imports), China (9.7 percent), Germany (7.0 percent), Italy (6.9 percent), and Turkey (5.0 percent).

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Sudan Sudans total trade has increased by almost three and a half times from US$ 7.6 billion in 2004 to US$ 25.9 billion in 2008, with exports amounting to US$ 9.5 billion in 2008. Export earnings have risen sharply with expanding oil production and increasing oil prices till mid 2008, with oil accounting for more than 90 percent of total exports, as a result making Sudan highly vulnerable to oil price volatility. Imports have also increased with the purchase

of large quantities of capital goods to develop and expand the oil industry, as well as related infrastructure. Imports have sharply risen from US$ 4.0 billion in 2004 to US$ 16.4 billion in 2008, reflecting a more than four-fold increase during the period (Chart 3.4). Imports of Sudan are expected to witness a sharp fall in 2009 to US$ 8.3 billion while exports are estimated at US$ 7.4 billion during the same year.

Chart 3.4: Sudans Foreign Trade (US$ billion)

e: estimates; f: forecasts Source: UNCTAD, International Trade Centre (ITC).

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Exports of Sudan are driven entirely by oil exports, with mineral fuels, oils & distillation products accounting for 94 percent of Sudans total exports during 2008. Oil seeds, grains & fruits accounted for 2 percent of total exports of Sudan during the year. Sudans main imports comprise essentially machinery and equipment (accounting for 32.8 percent of its total imports), manufactured goods (24.7 percent), transport equipment (14 percent), and wheat and wheat flour (5 percent). With a predominant share of 58.1 percent of total exports of Sudan, China is the the largest market for Sudan in 2009. The other important markets for Sudans exports, during the year, include Japan (14.6 percent), Indonesia (9.4 percent), and India (4.9 percent). In terms of imports, China, accounted for the largest share with 21.9 percent of Sudans total imports during 2009 followed by Saudi Arabia with a share of 7.1 percent, Egypt (6.2 percent), and India (5.6 percent). Kenya Kenya has traditionally experienced a structural trade deficit, which has

steadily widened in recent years, from US$ 1.9 billion in 2004 to US$ 6.1 billion in 2008. Exports have moderately increased from US$ 2.7 billion in 2004 to US$ 5.0 billion in 2008. Imports have risen at a relatively faster rate, growing from US$ 4.6 billion in 2004 to US$ 11.1 billion in 2008 (Chart 3.5). The decrease in Kenya foreign trade on account of the global slump is expected to be somewhat moderate with imports estimated at US$ 9.2 billion and exports amounting to US$ 4.5 billion in 2009. The main items of export from Kenya to other countries in the world include coffee, tea, & spices (accounting for 21.9 percent of Kenyas total exports), plants, roots & cut flowers (11.6 percent), edible vegetables and tubers (5.5 percent), inorganic chemicals & precious metal compound (4.4 percent), and mineral fuels, oils & distillation products (4 percent). The main items of imports of Kenya include fuels (27.4 percent), machinery & boilers (9.7 percent), electrical & electronic equipment (8.6 percent), vehicles other than railway (7.6 percent), and animal & vegetable fats and oils (4.5 percent).

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Chart 3.5: Kenyas Foreign Trade (US$ billion)

e: estimates; f: forecasts Source: UNCTAD, International Trade Centre (ITC)

The main export destinations for Kenya during 2009 comprise Uganda (11.0 percent), UK (9.5 percent), USA (8.9 percent), and Netherlands (8.7 percent). Import sources of Kenya during the same year essentially include UAE (11.8 percent), Saudi Arabia (10.7 percent), South Africa (8.7 percent) and USA (8.4 percent). Ethiopia Ethiopia runs a structural trade deficit with imports substantially outstripping exports, due to the countrys high dependence on imports. Imports of Ethiopia have shown a sharp jump from US$ 2.9

billion in 2004 to US$ 8.7 billion in 2008 (Chart 3.6). The sharp increase in total imports in 2008 over 2007, was on account of the substantial jump in imports of mineral fuels, oils & distillation products of 157 percent from US$ 0.8 billion in 2007 to US$ 2.1 billion in 2008. Exports of the country, on the other hand, have shown a modest increase from US$ 0.6 billion in 2004 to US$ 1.6 billion in 2008, mainly due to rising coffee prices and increased sales of other commodities. Ethiopia depends heavily on coffee, its main export item, accounting on an average for 35 percent of total earnings, but earnings have been vulnerable to shifts in world prices.

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Chart 3.6: Ethiopias Foreign Trade (US$ billion)

e: estimates; f: forecasts Source: UNCTAD, International Trade Centre (ITC)

Oilseeds have emerged as the second most valuable export, on account of high sales of sesame to China, with earnings from the sale of these amounting to US$ 0.3 billion in 2008, as compared to exports of coffee during the same year amounting to US$ 0.6 billion. Other key exports include edible vegetables, certain roots and tubers, raw hides and leather. Among imports, mineral fuels, oils & distillation products account for the largest share with 23.7 percent

of Ethiopias total imports, followed by electrical, electronic equipment (11.7 percent), machinery & boilers (10.6 percent), cereals (6.6 percent), and vehicles other than railway (6 percent). Ethiopias main export markets in 2009 include China (with a share of 11.0 percent of Ethiopias total exports), Germany (9.8 percent), Saudi Arabia (8.0 percent), and USA (7.3 percent). As far as imports are concerned, China (accounting

61

for 14.3 percent of Ethiopias total imports), Saudi Arabia (7.6 percent), India (7.5 percent) and US (4.2 percent) are the leading sources for Ethiopias imports during 2009. Zambia Total exports of Zambia increased by three-fold to US$ 5.1 billion in 2008 from US$ 1.6 billion in 2004, primarily as a result of higher exports of copper and copper products. Total imports of Zambia also increased

by more than two-fold to US$ 5.1 billion in 2008 from US$ 2.2 billion in 2004, mainly supported by higher imports of petroleum crude (Chart 3.7). In spite of an estimated fall in Zambias foreign trade in 2009, exports are forecast to regain momentum in 2010, amounting to US$ 6.5 billion, with imports during the same year forecast to increase to US$ 5.0 billion. In 2008, major items in the export basket of Zambia include copper

Chart 3.7: Zambias Foreign Trade (US$ billion)

e: estimates; f: forecasts Source: UNCTAD, International Trade Centre (ITC)

62

and copper products (83.3 percent of total exports), unmanufactured tobacco (1.5 percent), sugar (1.2 percent), insulated wire/ cable (1.1 percent) and maize (1.1 percent). In the same year, major items in the import basket of Zambia include, petroleum crude and products (16.2 percent of total imports), copper ore (8.7 percent of total), transport vehicles (3.3 percent), medicament mixtures (2.7 percent), cars (2.2 percent) and machinery and instruments (2.2 percent). Zambias major destinations of exports include China (13.8 percent of total exports), South Africa (8.2 percent), D R Congo (7.8 percent) and South Korea (7.6 percent). Major import sources of Zambia include South Africa (52.4 percent of total imports), UAE (8.2 percent), China (6.9 percent), and D R Congo (3.6 percent). D R Congo The total trade of D R Congo has grown from US$ 2.5 billion in 2004 to US$ 7.3 billion in 2008. D R Congo has been maintaining a balanced trade during the period 2004-2008, except for a deficit of US$ 1.5 billion witnessed in 2006. Exports increased from US$ 1.3

billion in 2004 to US$ 3.7 billion in 2008, while imports increased from US$ 1.2 billion to US$ 3.6 billion during the same period (Chart 3.8). Both exports and imports of D R Congo are expected to regain momentum in 2010 and amount to US$ 7.2 billion and US$ 7.4 billion respectively in 2010. The export basket of D R Congo primarily comprises ores, slag & ash and base metals which together account for 56.7 percent of total exports of D R Congo. Other key exports include copper and articles thereof (14.1 percent), pearls, precious stones & metals (13.4 percent), mineral fuels, oils & distillation products (5.8 percent), and wood and articles of wood, wood charcoal (5.4 percent). Import basket of D R Congo comprises machinery & boilers (14.4 percent), fuels (9.9 percent), electrical & electronic equipment (7.6 percent), and vehicles other than railway (7.4 percent). In terms of exports, the main trading partners of D R Congo include China, which accounts for around 42 percent of the countrys total exports, followed by Zambia accounting for 14 percent and Belgium 13 percent. In terms of

63

Chart 3.8: D R Congos Foreign Trade (US$ billion)

e: estimates; f: forecasts Source: UNCTAD, International Trade Centre (ITC)

imports of D R Congo, South Africa, Belgium, and Zambia together account for nearly 48 percent of the countrys total imports. Mauritius The total exports of Mauritius increased to US$ 2.4 billion in 2008 from US$ 2.0 billion in 2004, with increase in exports of pearls and precious stones. Total imports of Mauritius also increased to US$ 4.7 billion in 2008 from US$ 2.8 billion in 2004, mainly supported by higher imports of petroleum products. As a result, trade deficit of Mauritius

widened from US$ 0.8 billion in 2004 to US$ 2.3 billion in 2008 (Chart 3.9). Mauritius exports are forecast to average US$ 2 billion during 2010-11, while imports are forecast to average US$ 3.6 billion during the same period. In 2009, major items in the export basket of Mauritius include textiles and clothing (38.1 percent of total exports), re-exports (accounting for 16.9 percent), fish (11.1 percent), sugar (10.7 percent) and ships stores and bunkering (8.9 percent). In the same year, major items in the

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Chart 3.9: Mauritius Foreign Trade (US$ billion)

e: estimates; f: forecasts Source: UNCTAD, International Trade Centre (ITC)

import basket of Mauritius include, manufactured goods (27.5 percent of total imports), machinery and equipment (21.3 percent of total), food and beverages (20.8 percent), fuels (19.2 percent), and chemicals (9.1 percent). In 2009, destinations Mauritius of exports major include

UK (29.5 percent of total exports), France (14.7 percent), US (5.8 percent) and Madagascar (5.1 percent). Major import sources of Mauritius in the same year include India (23.9 percent of total imports), China (11.5 percent), South Africa (8.1 percent) and France (7.8 percent).

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4: INDIAS BIlATERAl TRADE AND INvESTMENT RElATIONS WITH COMESA COUNTRIES

The synergy that exists between India and the COMESA region, and the potential thereof, can be assessed from the robust trends in bilateral trade and investment relations witnessed in recent years. This chapter elucidates trends in Indias bilateral trade with the COMESA countries, delineates the major trading partners and the major items of bilateral trade. This chapter also broadly discusses Indias investment relations with the COMESA countries, as also the institutional framework and policy initiatives to enhance bilateral trade and investment relations with the COMESA region. TRENDS IN INDIA COMESA TRADE Indias total trade with the COMESA region has risen more than threefold from US$ 2.55 billion in 2004-05 to US$ 8.48 billion in 2009-10, with Indias exports to the region amounting to US$ 5.1 billion, and Indias imports from the region aggregating US$ 3.3 billion in 2009-10 (Table 4.1). The importance of the COMESA region can be gauged from the fact that the region accounted for 38.2 percent of Indias total exports to Africa during 2009-10, though a decrease from 41.8 percent in 2008-09 and 42.5 percent in 2007-08. Indias total imports from the COMESA region, as a percentage share of Indias total imports from Africa, accounted for 13.1 percent in 2009-10, lower than the share of 15.4 percent in 2008-09. Countries such as Egypt, Libya, Sudan, Kenya, Uganda, Ethiopia, Mauritius and Zambia, among others, are not only important trading partners for India, but also major destinations for Indias overseas investments in the African region. Indias trade balance with the COMESA region has generally been in Indias favour, with trade surplus amounting to US$ 1.8 billion in 2009-10.

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Chart 4.1 : Indias Trade with COMESA (US$ billion)

Note: Source:

Imports include imports of oil since 2006-07 Directorate General of Commercial Intelligence and Statistics (DGCIS), Ministry of Commerce & Industry (MOCI), Government of India (GOI)

Table 4.1 : Indias Trade with the COMESA Region (US$ mn)
2004-05 Exports % Change Imports % Change Trade Balance Total Trade Note: Source: 2200.6 354.0 1846.6 2554.6 2005-06 2582.7 17.4 493.4 39.4 2089.2 3076.1 2006-07 4257.2 64.8 2323.9 371.0 1933.3 6581.1 2007-08 6076.2 42.7 4068.4 75.1 2007.8 10144.6 2008-09 6115.4 0.6 3734.5 -8.2 2381.0 9849.9 2009-10 5146.7 -15.8 3335.8 -10.7 1810.9 8482.5

Imports include imports of oil since 2006-07 DGCIS, MOCI, GOI

67

INDIAS TRADE WITH COMESA COUNTRIES Kenya is Indias leading export market among the COMESA members, with a share of 28 percent in Indias total exports to COMESA in 2009-10. The other major export markets during the same year were Egypt (27 percent),

Sudan (9 percent), Mauritius (9 percent), Djibouti (5 percent), Ethiopia (5 percent) and Libya (4 percent) (Chart 4.2 and Table 4.2). With the exception of Kenya, Libya, Ethiopia and Eritrea, Indias exports to all other countries in COMESA region witnessed a decline in 2009-10 over 2008-09, on account of the global financial crisis.

Chart 4.2: Indias Exports to Select COMESA Countries (% share, 2009-10)

Source: DGCIS, MOCI, GOI

68

Table 4.2: Indias Exports to COMESA (US$ mn)

2004-05 Kenya Egypt Sudan Mauritius Djibouti Ethiopia Libya Uganda Zambia Madagascar Malawi Zimbabwe Eritrea Rwanda Swaziland Seychelles Burundi D R Congo Comoros COMESA Total Africa Total % share of COMESA in Africa Total Source: DGCIS, MOCI, GOI 39.4 36.8 41.4 42.5 41.8 38.2 426.5 444.6 317.3 258.1 128.6 55.5 173.5 76.0 50.4 36.1 58.2 23.4 8.4 8.4 22.3 10.6 7.2 93.2 2.4 2200.6 5578.4 2005-06 576.5 672.3 294.6 199.4 230.3 74.7 103.3 92.6 66.5 42.6 43.6 24.0 8.2 10.6 5.2 10.6 10.7 111.6 5.1 2582.7 7013.6 2006-07 1314.6 760.5 403.5 736.0 307.4 115.7 86.2 107.4 108.3 45.6 42.6 31.9 6.6 13.7 4.7 12.9 7.9 136.2 15.5 4257.2 10271.8 2007-08 1579.6 1397.0 408.0 1086.6 457.9 197.8 135.5 153.7 132.3 57.2 64.2 31.9 110.7 12.9 10.4 71.8 8.1 151.1 9.7 6076.2 14307.1 2008-09 1337.3 1653.9 483.0 957.8 350.2 248.9 130.3 219.4 106.8 242.9 89.1 60.1 16.0 29.8 44.8 90.1 14.1 15.4 25.6 6115.4 14639.7 2009-10 1453.4 1400.0 460.2 450.5 265.3 254.4 222.5 206.9 88.2 86.6 81.6 48.3 28.7 26.4 21.7 20.1 12.6 10.2 9.3 5146.7 13468.5

69

As far as imports are concerned, Egypt is the largest supplier to India among the COMESA members, accounting for 51 percent of Indias total imports from the region in 2009-10. Libya (19 percent), Sudan (14 percent), D R Congo (4 percent), Malawi (3 percent), Zambia

(3 percent), and Kenya (2 percent) are the other important import sources from the COMESA region in the same year (Chart 4.3 and Table 4.3). Indias imports from Malawi, D R Congo, Sudan, Ethiopia and Zimbabwe have registered a sharp rise in 2009-10 over 2008-09.

Chart 4.3: Indias Imports from Select COMESA Countries (% share, 2009-10)

Source: DGCIS, MOCI, GOI

70

Table 4.3: Indias Imports from COMESA (US$ mn)

2004-05 Egypt Libya Sudan D R Congo Malawi Zambia Kenya Swaziland Zimbabwe Madagascar Ethiopia Uganda Mauritius Seychelles Djibouti Burundi Comoros Rwanda Eritrea COMESA Total Africa Total % share of COMESA in Africa Total Note: Imports include imports of oil since 2006-07 Source: DGCIS, MOCI, GOI 8.8 10.1 15.8 19.8 15.4 13.1 152.6 13.6 22.9 22.0 5.1 23.0 46.7 3.1 27.1 8.0 10.3 6.6 7.2 0.6 3.1 0.4 0.2 0.7 1.0 354.0 4006.4 2005-06 220.4 11.9 32.6 43.9 1.8 40.6 48.5 23.6 25.5 16.4 8.5 2.8 7.3 1.2 3.4 0.0 3.9 0.0 1.0 493.4 4878.8 2006-07 1741.8 134.8 89.3 59.7 5.0 86.2 56.4 56.9 32.2 19.2 11.3 4.7 14.5 0.8 2.1 0.0 6.9 1.6 0.3 2323.9 14729.0 2007-08 1983.8 1245.2 431.7 104.3 15.5 74.8 86.6 37.2 22.2 16.7 13.6 15.1 10.1 0.9 4.6 1.9 2.1 0.7 1.5 4068.4 20499.7 2008-09 2126.5 669.0 400.6 103.2 7.3 216.1 81.9 38.0 14.4 18.6 11.2 19.2 14.3 1.2 3.7 0.7 0.3 2.4 6.0 3734.5 24317.6 2009-10 1694.9 620.4 473.4 142.8 102.4 101.8 79.0 32.8 21.7 19.1 18.6 13.3 10.9 1.6 1.2 0.8 0.7 0.3 0.2 3335.8 25442.5

71

COMMODITy COMPOSITION OF BIlATERAl TRADE Indias leading trade partners in the COMESA region in terms of total bilateral trade are Egypt, Kenya, Sudan, Libya, Mauritius, and Ethiopia. This section highlights the trends in Indias trade, as also composition of Indias trade basket with select major trade partners in the COMESA region . Egypt Egypt is Indias largest trade partner in the COMESA region in terms of total trade. Since 2004-05, Indias exports to Egypt have shown a steady rise, from US$ 444.6 mn to US$ 1653.9 mn in 2008-09, due to sharp increase in exports of petroleum products, machinery & instruments, and transport equipment. However, on account of the global economic recession,

Indias exports to Egypt moderated to US$ 1400 mn in 2009-10, mainly due to sharp fall in exports of petroleum products, transport equipment, and cotton yarn fabrics and madeups. Cumulative exports of petroleum products, machinery & instruments, transport equipment, and meat & preparations accounted for 42.3 percent of total exports from India to Egypt during 2009-10 (Table 4.4). Indias imports from Egypt amounted to US$ 1694.9 mn in 2009-10 down from US$ 2126.5 mn 2008-09. Petroleum crude accounted for over 80 percent of Indias imports from Egypt. Other important items of imports from Egypt are crude fertilizers, raw cotton and coal, coke and briquettes. Imports of petroleum crude, raw cotton and manufactured fertilizers have witnessed a sharp decline in 2009-10 over the previous year (Table 4.5).

72

Table 4.4: Indias Major Exports to Egypt (US$ mn)

Commodity Name Petroleum products Machinery & instruments Transport equipment Meat & preparations Cotton yarn fabrics madeups etc. Manmade yarn fabrics madeups Plastic & linoleum products Pharmaceuticals & fine chemicals Electronic goods Manufactures of metals All Commodities 18.0 444.6 25.2 672.3 27.1 760.5 42.9 1397.0 49.3 1653.9 40.5 1400.0 19.3 6.6 21.4 6.9 33.0 6.7 59.9 13.4 75.0 91.5 58.5 55.2 46.1 45.7 46.0 44.9 49.9 66.1 37.8 55.3 63.3 101.2 78.5 90.3 71.9 88.4 117.6 117.2 123.4 94.3 0.0 0.1 21.1 56.5 109.0 110.9 21.5 44.7 73.2 187.2 162.1 120.9 48.0 66.3 75.9 113.1 148.9 166.6 2004-05 16.9 2005-06 101.5 2006-07 4.9 2007-08 186.9 2008-09 349.9 2009-10 193.8

Source: DGCIS, MOCI, GOI

73

Table 4.5: Indias Major Imports from Egypt (US$ mn)

Commodity Name Petroleum crude Crude fertiliser Combed/ uncombed raw cotton Coal, coke & briquettes Leather Fertiliser manufactured Inorganic chemicals Iron & steel Metaliferrous ores & metal scrap Non metalic mineral manufactures excluding pearls All Commodities 5.2 152.6 7.2 220.4 4.0 1741.8 9.3 1983.8 14.8 2126.5 9.0 1694.9 4.2 13.3 21.6 27.9 10.4 9.3 0.4 16.9 0.1 81.8 0.1 6.7 0.9 1.6 0.4 1.2 9.8 9.6 25.7 37.3 84.0 13.3 11.2 9.8 12.7 6.1 13.4 8.2 12.2 13.6 31.9 16.4 37.0 54.5 46.6 62.9 58.6 45.6 2004-05 25.9 2005-06 17.1 2006-07 1546.3 34.7 2007-08 1754.9 23.1 2008-09 1565.8 63.8 2009-10 1386.2 92.9

- : not available / negligible; Note: Imports include imports of oil since 2006-07 Source: DGCIS, MOCI, GOI

Kenya Kenya is Indias second largest trading partner among the COMESA member countries. Indias exports to Kenya have shown a sharp increase of 128 percent in 2006-07

to US$ 1314.6 mn from US$ 576.5 mn in the previous year, mainly on account of a sharp rise in exports of petroleum products. Exports to Kenya rose further during 2007-08 to US$ 1579.6 mn, before witnessing a slight decline in 2008-09. However,

74

during 2009-10, exports to Kenya rebounded to touch US$ 1453.4 mn, primarily due to increase in exports of petroleum products, and manufactures of metals. Petroleum products constituted the major export commodity from India, amounting to US$ 587.3 mn in 2009-10, accounting for 40.4 percent of

Indias Kenya,

total exports increasing

to from

US$ 446.9 mn in the previous year. Other major exported commodities include machinery and instruments, pharmaceutical and fine chemicals and manufactures (Table 4.6). of metals

Table 4.6: Indias Major Exports to Kenya (US$ mn)

Commodity Name Petroleum products Machinery & instruments Pharmaceuticals & fine chemicals Manufactures of metals Primary & semifinished iron & steel Transport equipment Electronic goods Manmade yarn fabrics madeups Plastic & linoleum products Rubber manufactured products All Commodities 13.4 426.5 18.0 576.5 26.6 1314.6 26.6 1579.6 32.1 1337.3 32.9 1453.4 16.9 21.7 29.4 40.5 35.1 41.3 14.5 17.3 26.7 36.0 48.1 48.0 15.8 18.2 4.2 24.6 24.3 10.8 55.0 33.7 16.6 67.6 39.4 36.9 96.6 53.2 66.4 64.8 53.3 51.1 25.1 28.7 28.4 39.4 53.0 73.4 28.4 42.7 68.5 91.1 118.5 116.3 40.6 68.4 77.7 98.4 166.6 159.0 158.7 216.1 829.8 917.4 446.9 587.3 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: DGCIS, MOCI, GOI

75

Indias imports from Kenya have witnessed a steady rise from US$ 46.7 mn in 2004-05 to US$ 86.6 mn in 2007-08, before moderating to US$ 79.0 mn in 2009-10. Inorganic chemicals are the largest item of imports from Kenya, with a share

of 29 percent in Indias total imports from Kenya in 2009-10. Other major items of imports from Kenya include crude minerals, tea, leather and metaliferrous ores and metal scrap (Table 4.7).

Table 4.7: Indias Major Imports from Kenya (US$ mn)

Commodity Name Inorganic chemicals Crude minerals Tea Leather Metaliferrous ores & metal scrap Pulses Wool raw Raw hides & skins Cashew nuts Pearls precious & semiprecious stones All Commodities 2.6 46.7 2.4 48.5 1.8 56.4 1.1 86.6 0.9 81.9 1.0 79.0 0.8 4.5 1.0 4.0 1.7 1.3 1.4 4.3 1.2 5.8 1.4 1.1 3.5 0.3 1.4 4.8 0.4 1.7 7.2 2.0 1.8 5.4 13.0 1.3 8.7 1.0 1.5 5.3 3.1 1.8 14.0 3.1 5.7 5.7 15.7 3.1 6.6 4.7 15.6 7.6 5.8 5.2 23.7 16.3 6.1 5.1 30.1 11.0 9.2 5.8 22.6 17.0 10.4 6.7 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: DGCIS, MOCI, GOI

76

Sudan Indias Exports to Sudan, after increasing from US$ 317.3 mn in 2004-05 to US$ 483.0 mn in 200809, moderated to US$ 460.2 mn in 2009-10. Major exports from India to Sudan include machinery & instruments, primary & semi-finished iron & steel, pharmaceuticals & fine

chemicals, transport equipment, and manufactures of metals (Table 4.8). Steady rise in exports of machinery and instruments has underlined the positive trend in Indias exports to Sudan during the period 2004-05 to 2008-09. As regards, imports, Indias imports from Sudan are driven primarily

Table 4.8: Indias Major Exports to Sudan (US$ mn)

Commodity Name Machinery & instruments Primary & semifinished iron & steel Pharmaceuticals & fine chemicals Transport equipment Manufactures of metals Cotton yarn fabrics madeups etc. Plastic & linoleum products Other cereals Electronic goods Inorganic/organic/ agro chemicals All Commodities 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

24.9

48.6

69.0

116.3

116.0

98.7

10.0 18.1 13.8 174.9

21.6 23.7 36.6 49.6

37.2 27.4 67.3 36.7

48.7 31.4 27.9 38.9

48.2 36.2 48.0 42.2

52.1 42.1 39.1 34.9

4.9 12.1 4.2 3.0 317.3

9.1 14.8 14.2 8.4 3.7 294.6

23.1 16.4 8.0 13.5 5.9 403.5

31.1 30.9 9.2 4.6 408.0

28.2 23.4 40.8 13.4 483.0

22.6 22.4 21.2 15.9 11.6 460.2

Source: DGCIS, MOCI, GOI

77

by demand for petroleum crude, amounting to US$ 435.5 mn in 200910, and accounting for 92 percent of Indias total imports from Sudan. As a result of sharp increase in imports of petroleum crude, Indias total imports from Sudan increased

from US$ 400.6 mn in 2008-09 to US$ 473.4 mn in 2009-10. Other major items in Indias import basket from Sudan include metaliferrous ores & metal scrap, wood & wood products, and combed & uncombed raw cotton (Table 4.9).

Table 4.9: Indias Major Imports from Sudan (US$ mn)

Commodity Name Petroleum crude Metaliferrous ores & metal scrap Wood & wood products Combed/ uncombed cotton raw Non-ferrous metals Leather Non-electrical machinery Pulp & waste paper Electrical machinery Iron & steel All Commodities 22.9 0.1 32.6 0.1 0.4 89.3 0.2 431.7 0.1 0.4 400.6 0.1 0.1 473.4 0.2 0.1 0.8 0.1 0.3 0.0 2.1 0.0 0.8 0.6 0.4 1.2 2.0 0.3 1.9 0.5 0.3 6.2 13.2 7.1 6.1 6.1 3.3 0.3 2.4 2.2 0.1 2.5 5.6 7.7 12.4 11.3 12.8 30.6 23.4 64.3 407.4 355.1 435.5 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

- : not available / negligible; Note: Imports include imports of oil since 2006-07 Source: DGCIS, MOCI, GOI

78

libya Indias exports to Libya have shown a fluctuating trend in the recent past, with exports steadily dropping from US$ 173.5 mn in 2004-05 to US$ 86.2 mn in 2006-07, due to a sharp fall in exports of machinery and instruments and project goods, before picking up to US$ 135.5 mn in 2007-08. Indias

exports to Libya amounted to US$ 222.5 mn in 2009-10, increasing sharply from US$ 130.3 mn in the previous year. Increase in total exports was primarily due to rise in exports of machinery and instruments, transport equipment and manufactures of metals, which together accounted for 61.3 percent of Indias total exports to Libya during 2009-10 (Table 4.10).

Table 4.10: Indias Major Exports to libya (US$ mn)

Commodity Name Machinery & instruments Transport equipment Manufactures of metals Electronic goods Project goods Processed minerals Manmade yarn fabrics madeups Processed fruits and juices Coffee Pharmaceuticals & fine chemicals All Commodities 0.7 173.5 2.3 103.3 4.5 86.2 5.1 135.5 4.1 130.3 3.8 222.5 1.6 1.5 2.2 0.2 4.5 0.9 3.7 4.3 4.3 1.8 2.4 3.6 6.3 9.0 7.6 0.7 0.9 1.7 1.4 4.4 8.8 49.1 1.2 29.4 12.0 2.1 33.4 23.9 2.2 2.5 58.9 6.4 0.0 12.1 18.2 20.5 13.7 12.1 0.8 1.0 4.2 1.3 11.6 34.0 79.3 30.2 5.4 17.4 37.0 82.0 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

- : not available / negligible Source: DGCIS, MOCI, GOI

79

Indias imports from Libya are dominated by petroleum crude, which accounted for as much as 99 percent of imports from the country. Indias imports of petroleum crude from Libya, however, have

moderated from US$ 1230 mn in 2007-08 to US$ 611 mn in 2009-10. India also imports iron and steel and primary pig iron from Libya, although their level is marginal (Table 4.11).

Table 4.11: Indias Major Imports from libya (US$ mn)

Commodity Name Petroleum crude Iron & steel Primary steel pig iron based items Metaliferrous ores & metal scrap Raw wool Artificial resins, plastic materials etc. Pulp & waste paper All Commodities 13.6 0.1 11.9 134.8 0.4 1245.2 0.2 669.0 620.4 0.1 0.1 0.6 0.2 0.5 0.7 0.9 0.2 0.1 7.4 16.4 2.6 81.3 1229.9 668.6 610.7 6.9 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

- : not available / negligible; Note: Imports include imports of oil since 2006-07 Source: DGCIS, MOCI, GOI

Mauritius Indias total exports to Mauritius witnessed a sharp increase from US$ 199.4 mn in 2005-06 to US$ 736.0 mn in 2006-07, mainly
80

on account of large exports of petroleum products and increased further to US$ 1086.6 mn in 2007-08. Indias total exports to Mauritius, however, declained thereafter and stood at US$ 450.5 mn in

2009-10. The steep fall in exports to Mauritius in recent years was mainly due to a fall in exports of petroleum products. Other major exports include plastic and linoleum products, cotton yarn fabrics and madeups, and pharmaceuticals and fine chemicals (Table 4.12). Indias imports from Mauritius,

have been low, amounting to US$ 10.9 mn in 2009-10, decreasing from US$ 14.3 mn in 2008-09. The main items of imports from Mauritius include metaliferrous ores & metal scrap, and professional instruments & optical goods (Table 4.13).

Table 4.12: Indias Major Exports to Mauritius (US$ mn)

Commodity Name Petroleum products Plastic & linoleum products Cotton yarn fabrics madeups etc. Pharmaceuticals & fine chemicals Manmade yarn fabrics madeups Electronic goods Machinery & instruments Meat & preparations Basmati rice Manufactures of metals All Commodities 5.5 258.1 6.9 199.4 5.7 736.0 8.3 1086.6 8.6 957.8 7.7 450.5 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

84.7

32.2

519.5

836.4

684.8

234.1

3.9

5.1

25.8

32.3

43.4

27.2

64.8 9.1 12.9 4.4 5.1 3.5 5.4

49.8 9.1 12.5 1.6 4.3 4.3 4.6

59.6 10.5 11.7 3.8 7.8 5.7 4.5

54.0 16.1 14.9 2.2 9.3 7.3 7.9

32.8 22.0 12.8 12.5 9.4 9.3 7.9

26.2 25.8 12.6 10.9 9.3 8.8 8.4

Source: DGCIS, MOCI, GOI

81

Table 4.13: Indias Major Imports from Mauritius (US$ mn)

Commodity Name Metaliferrous ores & metal scrap Professional inst, optical goods etc. Cotton yarn & fabrics Electronic goods Chemical material & products Pulp & waste paper Readymade garments (woven & knit) Non metalic mineral manufactures excl. pearls Non-electrical machinery Pearls, precious & semiprecious stones All Commodities - : not available / negligible Source: DGCIS, MOCI, GOI 7.2 7.3 0.1 14.5 0.2 10.1 0.2 14.3 0.1 10.9 0.2 0.4 1.6 0.4 0.2 0.2 0.0 0.1 0.2 0.1 0.1 0.1 0.4 0.3 0.3 0.5 0.7 0.6 0.4 0.3 0.4 0.2 0.7 0.6 0.8 1.3 0.4 0.4 0.4 1.7 0.1 0.2 0.1 0.2 0.6 0.6 0.6 0.8 1.7 2.5 3.6 4.3 8.4 6.7 10.0 4.2 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

82

Ethiopia Indias Exports to Ethiopia has witnessed a significant growth since 2004-05, growing at a CAGR of 35.6 percent during the period 2004-05 to 2009-10. Indias total exports to Ethiopia increased from US$ 55.5 mn in 2004-05 to US$ 248.9 mn in 2008-09 and further to US$ 254.4 mn in 2009-10. Major exports

from India include machinery and instruments, manufactures of metals, pharmaceuticals and fine chemicals, and electronic goods, which together accounted for 69 percent of Indias total exports to Ethiopia in 2009-10. Exports of machinery and instruments has shown a sharp increase over the period, along with exports of manufactures of metals (Table 4.14).

Table 4.14: Indias Major Exports to Ethiopia (US$ mn)

Commodity Name Machinery & instruments Manufactures of metals Pharmaceuticals & fine chemicals Electronic goods Primary & semifinished iron & steel Inorganic/organic/ agro chemicals Transport equipment Paper/wood products Plastic & linoleum products Floriculture products All Commodities 55.5 0.7 74.7 2.5 115.7 4.9 197.8 3.6 248.9 3.7 254.4 6.3 8.7 10.4 11.3 5.9 9.7 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

8.2 5.4 12.5 2.3

13.2 6.4 20.6 1.3

24.9 7.9 22.7 3.1

21.2 30.9 34.9 2.6

29.5 58.9 48.3 3.4

67.4 53.3 36.1 18.6

1.6 0.6 1.4 4.9

1.4 0.6 2.2 5.8

3.3 2.9 4.4 8.6

6.8 1.6 4.8 19.6

9.0 2.7 11.0 16.7

11.7 11.3 10.9 10.5

Source: DGCIS, MOCI, GOI

83

Indias imports from Ethiopia, on the other hand, amounted to a modest US$ 18.56 mn in 2009-10, up from US$ 11.2 mn in 2008-09,

with primary imports being pulses, oilseeds, leather, and spices (Table 4.15).

Table 4.15: Indias Major Imports from Ethiopia (US$ mn)

Commodity Name Pulses Oilseeds Leather Spices Non-ferrous metals Combed/ uncombed cotton raw Raw hides & skins Metaliferrous ores & metal scrap Non-electrical machinery All Commodities - : not available / negligible Source: DGCIS, MOCI, GOI 10.3 8.5 11.3 13.6 0.3 11.2 0.1 18.6 0.4 0.8 0.6 1.3 0.2 0.1 0.4 4.9 3.7 1.0 3.9 3.1 3.8 3.7 0.4 0.3 0.1 0.3 0.4 0.8 1.6 1.5 1.5 0.2 0.5 1.6 0.2 1.3 3.2 0.1 0.8 0.1 2.8 1.1 0.6 1.9 1.1 0.7 1.4 5.0 4.5 4.1 1.7 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Zambia Indias exports to Zambia more than doubled from US$ 50.4 mn in 2004-05 to 132.3 mn in 2007-08, before declaining in the last two

years on account of a fall in exports of machinery & instruments, transport equipment, and manufactures of metals. Indias exports basket to Zambia is fairly diversified, mainly comprising pharmaceuticals &

84

fine chemicals, machinery & instruments, electronic goods, transport equipment and plastics & linoleum products. Pharmaceuticals & fine chemicals and machinery and

instruments, together accounted for 57.6 percent of Indias total exports to Zambia during 2009-10 (Table 4.16).

Table 4.16: Indias Major Exports to Zambia (US$ mn)

Commodity Name Pharmaceuticals & fine chemicals Machinery & instruments Electronic goods Transport equipment Plastic & linoleum products Manufactures of metals Rubber manufactured products Primary & semifinished iron & steel Paper/wood products Inorganic/organic/ agro chemicals All Commodities 0.8 50.4 1.1 66.5 1.1 108.3 0.4 132.3 1.3 106.8 1.5 88.2 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

10.3 7.7 1.4 11.0 3.1 2.6

19.6 12.2 0.9 10.2 3.7 4.2

21.7 29.0 3.9 7.3 3.5 9.1

24.1 54.5 10.2 9.0 3.7 9.4

33.1 24.8 8.4 8.3 2.9 7.1

35.3 15.6 7.9 5.7 3.5 2.6

2.8

2.1

2.7

1.6

3.7

2.0

0.3 1.3

0.7 1.5

1.0 2.2

2.7 2.3

2.2 2.3

1.8 1.7

Source: DGCIS, MOCI, GOI

85

Indias imports from Zambia have also shown a steady rise from US$ 23 mn in 2004-05 to touch US$ 216 mn in 2008-09. However, during 2009-10, reflecting a steep fall in imports of metaliferrous ores

& metal scarp, total imports from Zambia declined to US$ 102 mn. Non-ferrous metals, and pearls, precious & semi precious stones are other important items of Indias imports from Zambia (Table 4.17).

Table 4.17: Indias Major Imports from Zambia (US$ mn)

Commodity Name Metaliferrous ores & metal scrap Non-ferrous metals Pearls precious & semiprecious stones Combed/ uncombed cotton raw Leather Raw hides & skins Dyeing tanning & colouring materials Crude minerals All Commodities - : not available / negligible Source: DGCIS, MOCI, GOI 23.0 0.3 40.6 0.1 86.2 0.1 74.8 0.1 216.1 101.8 0.3 0.1 2.7 0.1 0.1 0.2 1.2 0.0 0.7 0.2 15.8 19.8 13.1 27.1 27.8 11.9 3.6 19.9 17.6 14.6 11.7 13.6 0.3 51.5 32.8 175.1 68.4 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

86

D R Congo With a steep fall in exports of meat & preparations, primary & semifinished iron & steel, pharmaceutical products, machinery & instruments, and manmade yarn fabrics, since 2007-08, exports of India to D R Congo have been modest in

2008-09 and 2009-10. Exports amounted to US$ 10.2 mn in 2009-10, down from US$ 15.3 mn during the previous year. Meat & preparations, primary and semi-finished iron & steel, and pharmaceutical products are among the major export items to the country from India (Table 4.18).

Table 4.18: Indias Major Exports to D R Congo (US$ mn)

Commodity Name Meat & preparations Primary & semi-finished iron & steel Pharmaceuticals & fine chemicals Machinery & instruments Manmade yarn fabrics madeups Gems & jewellery Paper/wood products Cosmetics/ toiletries Basmati rice Transport equipment All Commodities - : not available / negligible Source: DGCIS, MOCI, GOI 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

7.6

12.9

17.1

18.3

2.3

4.3 26.9 4.4 13.9 1.2 1.1 8.6 93.2

7.5 24.9 5.2 15.1 0.01 1.3 0.8 0.1 14.7 111.6

7.0 37.3 8.2 9.8 0.3 1.4 0.9 0.1 16.5 136.2

15.4 40.9 9.4 8.6 1.4 1.1 0.1 6.8 151.1

2.4 0.9 0.7 0.1 0.2 15.3

1.4 1.0 0.5 0.4 0.3 0.3 0.3 0.3 0.2 10.2

87

D R Congo accounted for 4 percent of Indias total imports from the COMESA region in 2009-10 and was the fourth largest import source. As a result of large imports of petroleum crude, which accounted for 91.7 percent of Indias total imports from

D R Congo in 2009-10, Indias total imports from D R Congo recorded a jump from US$ 103.2 mn in 2008-09 to US$ 143 mn in 200910. The other main import item from D R Congo was metaliferrous ores & metal scrap (Table 4.19).

Table 4.19: Indias Major Imports from D R Congo (US$ mn)

Commodity Name Petroleum crude Metaliferrous ores & metal scrap Chemical material & products Artificial resins, plastic materials etc. Pearls precious & semiprecious stones Wood & wood products Non-ferrous metals Medicinal & pharmaceutical products Organic chemicals Iron & steel All Commodities 0.8 0.4 22.0 0.4 0.2 0.01 43.9 1.3 0.2 0.1 59.7 0.9 0.5 0.01 104.3 103.2 142.8 0.02 2.4 0.3 1.4 0.4 0.9 3.0 5.4 1.6 2.5 6.8 6.3 0.1 0.03 15.2 33.0 37.0 50.9 12.9 11.6 90.3 130.9 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

- : not available / negligible; Note: Imports include imports of oil since 2006-07 Source: DGCIS, MOCI, GOI

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Madagascar Indias exports to Madagascar, which increased from US$ 36.1 mn in 2004-05 to US$ 57.2 mn in 2007-08, sharply increased to US$ 242.9 mn in the following year due to a sharp increase in exports of petroleum products. However, exports from India to Madagascar in

2009-10 witnessed a sharp fall over 2008-09, mainly due to a sharp decline in exports of petroleum products. Major items in Indias exports basket to Madagascar include, besides petroleum products, machinery & instruments, primary & semi finished iron & steel, manmade yarn fabrics & madeups, and pharmaceutical products (Table 4.20).

Table 4.20: Indias Major Exports to Madagascar (US$ mn)

Commodity Name Petroleum products Machinery & instruments Primary & semi-finished iron & steel Manmade yarn fabrics madeups Pharmaceuticals & fine chemicals Glass/glassware/ ceramics/cement Cotton yarn fabrics madeups etc. Manufactures of metals Plastic & linoleum products Paper/wood products All Commodities 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

0.9 1.2

0.7 2.1

0.6 2.9

0.1 3.4

139.7 15.0

22.3 16.0

4.2 1.9 5.5 0.4

7.0 2.4 6.2 3.2

7.3 2.4 9.4 0.9

13.6 2.1 10.1 0.8

10.3 5.8 9.4 1.1

9.3 5.5 5.2 4.5

6.8 2.0 1.4 1.7 36.1

5.7 0.9 1.9 1.7 42.6

4.4 1.0 1.8 2.8 45.6

3.9 1.9 1.8 2.5 57.2

2.6 3.8 1.6 2.7 242.9

4.3 3.7 2.3 2.0 86.6

Source: DGCIS, MOCI, GOI

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Indias imports from Madagascar have been modest amounting to US$ 19.1 mn in 2009-10, a slight increase over US$ 18.6 mn recorded in 2008-09. The main

items imported from Madagascar during 2009-10 include spices and metaliferrous ores & metal scrap (Table 4.21).

Table 4.21: Indias Major Imports from Madagascar (US$ mn)

Commodity Name Spices Metaliferrous ores & metal scrap Organic chemicals Crude minerals Pearls precious & semiprecious stones Pulses Electronic goods Non-electrical machinery Cashew nuts Non-ferrous metals All Commodities - : not available / negligible Source: DGCIS, MOCI, GOI 8.0 16.4 19.2 16.7 0.5 18.6 0.1 19.1 2.2 0.9 0.7 0.2 0.2 0.3 0.1 1.1 0.1 1.1 2.4 0.1 1.3 0.3 0.5 0.5 0.4 0.3 2.7 9.9 7.6 6.1 0.1 0.2 8.3 0.5 0.3 4.8 0.6 0.6 0.8 4.0 8.1 7.8 6.5 8.8 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

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TRENDS IN INDIAINvESTMENT FlOWS

COMESA

Indias Investment in COMESA region During the period April 1996 to December 2007, total approvals of Indian direct investments in joint ventures (JVs) and wholly owned subsidiaries (WOS) in the COMESA region, amounted to US$ 5.2 billion,

Africa has emerged as an important investment partner for India in recent years, with Indian investments mostly in services and manufacturing sectors, and also in Africas natural resources, including the oil sector. Table 4.22:

Country-wise Approvals of Indian Direct Investments in Jvs and WOS (US$ mn)
2007-08 2005-06 2006-07 (Aprl Dec 2007) Total (April 1996December 2007) 3469.7 1153.1 404.8 130.3 24.0 17.3 6.8 2.6 2.5 2.5 0.0 5213.6

Mauritius Sudan Egypt Libya Kenya Rwanda Ethiopia Uganda Zimbabwe Zambia Madagascar COMESA Total - : not available / negligible

332.7 63.0 0.1 25.3 0.3 -1.8 -0.3 ----423.5

1162.8 118.2 0.1 75.0 0.2 -2.5 0.0 0.9 ---1359.7

897.5 8.3 393.1 0.0 8.1 17.3 1.0 ----1325.3

Source: Ministry of Finance, GOI

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accounting for slightly more than 10 percent of Indias global overseas investments during the period (Table 4.22). Among the COMESA countries, Mauritius has been the major destination, with total investments amounting to US$ 3469.7 mn during the period, accounting for almost 66.6 percent of total investments from India into COMESA region. While Mauritius continues to be the leading destination for Indian overseas investments, other COMESA members are also gaining importance in recent years. During the period 2007-09, based on approvals4, Indian companies investing in the COMESA region in terms of joint ventures (JVs) or wholly owned subsidiaries (WOS), apart from Mauritius, would include: Egypt
l

Mumbai Food manufacturing & processing JV ONGC Videsh Ltd - Oil exploration Ploy Medicure Ltd, New Delhi Medical & surgical equipments - JV

Ethiopia
l

Anmol Polymers Pvt Ltd, Delhi Chemical & chemical products WOS Karuturi Networks Ltd, Bangalore Floriculture WOS Neha International Ltd, Hyderabad Vegetable & flower seeds JV Cadila Pharmaceuticals Ltd, Ahmedabad Pharmaceuticals JV Geetanjali Woolens Pvt Ltd, Mumbai Carpets WOS Mercury Industries Ltd Home textile furnishings & made-ups - WOS

l
4

Gujarat State Petroleum Corporation Ltd Oil exploration Glenmark Pharmaceuticals Pvt Ltd, Mumbai - Pharmaceuticals WOS Wearit Global Ltd, Kolkata Textiles JV Monginis Foods Pvt Ltd,

Kenya
l

Arrow Webtex Ltd, Mumbai Construction - WOS Astral Poly Technik Ltd - Plastic & rubber products - JV Interlabels Industries Pvt Ltd., Mumbai - Printing & allied

As per data from Reserve Bank of India

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activities JV ONGC Videsh Ltd - Oil exploration Manipal Press Ltd, Manipal General activities - WOS Prince Plastics International Pvt Ltd, Mumbai Plastic & plastic products JV

Mining WOS Pitambra Books Pvt Ltd Printing & allied activities - JV

Sudan
l

libya
l

ONGC Videsh Ltd - Petroleum products UMC Exports Corporation, Mumbai Auto-components JV

Oil India Ltd - Oil and oilseeds - JV ONGC Videsh Ltd - Petroleum products Simplex Infrastructure Ltd, Kolkata Construction and operation of railway projects JV Hydrocarbon Resources Development Co Pvt Ltd, Mumbai Oil drilling - WOS

Swaziland Ekasila Cyber Technologies Pvt Ltd, Hyderabad Software development services -JV Uganda
l l

Devyani International Ltd, New Delhi - Beverages & tobacco WOS

Madagascar
l

Zambia
l

Eurasian Minerals & Enterprises Ltd, New Delhi Mining WOS

Malawi
l

Gravita Exim Ltd, Jaipur Machinery for mills WOS Tyre Technocrats (India) Pvt Ltd, - Transport equipments WOS from COMESA

Hi-tos Liner Agency Pvt Ltd, Mumbai Transportation - JV

FDI inflows Region

Rwanda
l

Met Trade India Ltd, Delhi -

As far as cumulative inflows of foreign direct investments into India from COMESA is concerned,

93

between April 2000 to June 2010, the largest investment came in from Mauritius to the tune of US$ 49.1 billion, accounting for almost the entire investment flow into India from the COMESA region. The other sources of investment flow into India from COMESA were Seychelles, Kenya, Uganda, Egypt, Zambia, D R Congo, Libya, and Sudan. Investments from Seychelles amounted to US$ 16.68 mn, while investment from Kenya amounted to US$ 15.85 mn during the period (Table 4.23). Table 4.23: FDI Inflows into India from COMESA Countries, (April 2000 to June 2010, US$ mn) Mauritius Seychelles Kenya Uganda Egypt Zambia D R Congo Libya Sudan COMESA Total 49,106.45 16.68 15.85 0.84 0.41 0.15 0.11 0.06 0.04 49,140.59

INSTITUTIONAl FRAMEWORKS AND POlICy INITIATIvES With a view to facilitate and further enhance bilateral trade and commercial relations with countries in Africa, including the COMESA region, India has put in place important policy measures as also institutional frameworks to create an enabling trade and business environment. Such initiatives have been effective in giving a new dimension to mutual cooperation and the already existing close relations between the two sides. Major policy initiatives would include, among others, Focus Africa Programme, Pan-African E-Network, India-Africa Partnership Conclaves and India Africa Summit. Focus Africa Programme With the African region constituting important trading partners for India, the Government of India has put in place the Focus Africa Programme since the year 2002-03 to enhance Indias trade with Africa. The main objective of the programme is to increase interactions between the two regions by identifying the areas of bilateral trade and investment. The Focus Africa programme,

Source: Department of Industrial Policy & Promotion (DIPP), GOI

94

when first introduced, focused on the Sub-Saharan African region with added emphasis on seven major trading partners of the region, namely, Nigeria, South Africa, Mauritius, Kenya, Ethiopia, Tanzania and Ghana. Effective April 1, 2003, the Focus Africa programme has been extended to cover in effect the entire African continent. The commodity groups identified as focus areas for cooperation under the initiative include, cotton yarn, fabrics and other textile items; pharmaceuticals; machinery and instruments; transport equipments; telecom and information technology. The Focus Africa programme also envisages enhancing Indias exports to the region through integrated efforts of the Government of India, Export-Import Bank of India, Export Credit Guarantee Corporation of India (ECGC), India Trade Promotion Organisation (ITPO), Export Promotion Councils (EPCs) and Apex Chambers of Commerce and Industry. New Partnership for Development (NEPAD) Africas

leaders at the 37th Summit of the Organisation of African Unity (OAU) held in Lusaka, Zambia, in July 2001, to address poverty and underdevelopment throughout the African continent, India has agreed to extend its cooperation to Africa in the implementation of the digital solidarity mechanism developed within the framework of NEPAD and also recognized energy, infrastructure and environmental sustainability, which are some of the priority areas of NEPAD, as key areas of cooperation. Government of India in 2003 announced a US$ 200 mn Line of Credit (LOC) for the NEPAD initiative in Africa. Pan-African ENetwork: An India and Pan-African Countries Initiative An important element of the strategy to enhance Indo-African cooperation in the 21st century is the Pan African E-Network Project, funded entirely by India. The project was announced by the then President of India, H.E. Dr.A.P.J.Abdul Kalam, during the Inaugural session of the Pan-African Parliament held in Johannesburg in September 2004. Towards this end, an MOU was signed between the Government of India and the African Union in October 2005, and

Moreover, in line with the New Partnership for Africas Development (NEPAD), a strategic framework adopted by African

95

Telecommunications Consultants India Ltd. (TCIL) had been selected to implement the project. Ethiopia, South Africa, Ghana and Mauritius have been identified as the initial beneficiaries of the project, said to be one of the largest infrastructure projects in Africas history. In July 2007, the Project was formally launched in Addis Ababa, Ethiopia, by former Indian External Affairs Minister Mr. Pranab Mukherjee. The Pan-African E-Network Project, with a budget of US$ 50 mn for its installation, initial operation and maintenance for 5 years, aims at bridging the digital divide in Africa and develop the continents information and communication technologies by eventually connecting all the countries in Africa by a satellite through fibre-optic networks and wireless links. The network under the Project will primarily provide tele-education, tele-medicines, internet and video-conferencing services and support e-governance, e-commerce, infotainment, resource mapping and meteorological services connectivity. The network will connect 5 universities, 53 learning centers, 10 super specialty hospitals, and 53 remote hospitals in the 53 Pan-African countries. Indias contribution for the promotion

of African connectivity and the valueadded services in the knowledge domain in education, healthcare, e-governance, agriculture would contribute in capacity building activities in the African region. This, in turn, would further enhance the role of India as a partner in Africas development and achievement of the Millennium Development Goals, and share its experience and expertise with countries in the African region. India-Africa Partnership Conclaves Furthermore, recognising the immense potential to enhance trade and investment relations between India and Africa, the Confederation of India Industry (CII), in partnership with Ministry of Commerce and Industry, Government of India; Ministry of External Affairs, Government of India; Export-Import Bank of India and African Development Bank, initiated the India-Africa Partnership Conclave during March 2-4, 2005, in New Delhi. The Conclave created platforms for decision makers from African countries and relevant multilateral, regional and national funding agencies to meet, in one place, the entire range of Indian

96

companies involved in engineering consultancy, turnkey projects, construction and supply of project goods, among others. Following the success of the first Conclave, the second Conclave was organized in New Delhi during November 6-8, 2005, with the theme Expanding Horizons, which was followed by mini-conclaves held in Lusaka, Zambia, and in Addis Ababa, Ethiopia, in April 2006, and in Accra, Ghana, in May 2006. The third Conclave was held in New Delhi in October 2006. During 2007, the Conclave on India Africa Partnership was organized in four countries in Africa: South Africa, Mozambique, Uganda and Cote dIvoire. The Conclave served as effective platforms to examine the factors that influence Indo-African trade and investment patterns, and also focused on the role of banking institutions in funding India-Africa projects. In 2008, the 4th Conclave on India Africa Project Partnership was held in New Delhi in March 2008, while regional Conclaves were held in Dakar, Senegal, in July 2008 and Dar-es-Salaam, Tanzania, in August 2008. In specific terms,

the Conclaves in 2008 focused on: building upon the momentum gathered due to the past Conclaves and promote partnerships at three levels: Government, institutional and enterprise levels; increasing outreach of information on Indian enterprise to the African business; increasing interaction between the Indian industry and the African countries where perceptible opportunities exist; discussing opportunities for Indian participation in African projects; capacity building initiative including resource mobilization; supplement the Government-to-Government dialogue at Summit level in April 2008. In 2009, the 5th Conclave on India Africa Project Partnership was held during March 22-24, 2009, at New Delhi, under the theme Celebrating Partnerships. The 6th CII-Exim Bank Conclave on India Africa Project Partnership was held during March 14-16, 2010, at New Delhi on the theme Developing Synergies: Creating a Vision. The Conclave was one of the largest ever held by any Indian organisation in India, and was aimed at accelerating trade and investment with an increased involvement of the private sector from both sides.

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The Conclaves have served as a business-to-business platform between India and the countries in Africa, and have created benchmarks for the engagement of Industry and Governments from India and the African region. The Conclaves have also created a platform for information, dialogue and better understanding to propagate and build long-term sustainable economic relations, which in turn have been instrumental in increased private sector dialogue between Indian and Africa. India- Africa Summit 2008 In light of the immense opportunities for enhancing bilateral and regional cooperation with countries in Africa, a recent initiative of the Government of India that has been taken is the First India- Africa Summit, that was

held in New Delhi in April 2008, with the objective of redefining Indias relations with the African continent by enhancing its engagement, particularly in economic field. The India-Africa Summit focused on enhancing the role of India as a key partner in capacity building and empowerment in Africa. The Summit was attended by Heads of States of African nations, heads of sub-regional groupings like the Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), and the Economic Community for West African States (ECOWAS). The Summit has been structured as a three-tier interaction between senior officials, foreign ministers and Heads of States of both the sides, in diverse areas.

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5: POTENTIAl FOR ENHANCING INDOCOMESA BIlATERAl TRADE RElATIONS

While bilateral trade relations between India and the COMESA region have witnessed robust trend in recent years, as analysed in previous sections, potential exists to further enhance two way trade flows. Accordingly, this chapter endeavours to identify sectors where potential exists to enhance bilateral commercial relation with countries in the COMESA region based on Indias export potential and demand existing in the COMESA region. IDENTIFyING COMMODITIES WITH HIGH EXPORT POTENTIAl For identifying the commodities where India has a high potential for export to COMESA countries, the following criteria were applied: 1. Demand existing in the COMESA market, based on commodity composition of the imports of COMESA countries over the years and matching Indias export capability with their import demand. 2. Commodities where India has a comparative advantage in global exports, based on Indias share in global trade. 3. Commodities, whose exports to COMESA countries have registered high growth rate in recent years, based on Indias share in global trade. 4. Commodities where India has been doing well in other markets. EGyPT Egypt is the largest importer in the COMESA region, and the second largest market for Indias exports in the region. Based on the above criteria, potential items of exports to Egypt would include: machinery and instruments, electrical and electronic equipments, articles of apparel and clothing, cotton fabrics, and manmade filaments and staple fibres, and tools implements of base metals. Machinery and instruments This category constitutes major items in Egypts import basket. In 2009,

99

Egypts imports of these items amounted to an estimated US$ 7.9 billion as against US$ 6.2 billion in the previous year. With the large import demand in Egypt, potential items of export under this category would include the following:
l

category would include:

l

Photosensitive semi-conductor device, photovoltaic cells & light emit diodes (HS-854140) Boards, panels (HS-853810) Fixed capacitors (HS-853210) Industrial & laboratory electric induction of dielectric furnaces & ovens (HS-851420) Parts of electrical transformers, static converters and inductors (HS-850490) Wind-powered generating equipment (HS-850231) Generating sets, diesel/semidiesel engines (HS-850211) DC motors, DC generators (HS-850134)

l l

Parts of sorting/screening/ mixing/crushing/grinding machines (HS-847490) Machines for mixing mineral substances with bitumen (HS-847432) Parts of metal rolling mills & rolls (HS-845590) Gantry & overhead travelling cranes on fixed support (HS-842611) Parts of centrifuges, including centrifugal dryers (HS-842191) Filtering or purifying machinery and apparatus for water (HS-842121) Parts for diesel and semi-diesel engines (HS-840999)

Electrical & Electronic equipments- This is the second largest import item of Egypt in 2009, amounting to US$ 3.7 billion. Potential items of export under this

Iron and steel and articles thereof- Egypts imports of iron and steel and articles of iron and steel together amounted to an estimated US$ 3.8 billion in 2009. Indias exports of primary and semifinished iron and steel to Egypt have risen across the years, indicating that there exists a scope to further enhance these exports to the country. Towards this end, potential exports items could include:

100

Containers for compressed or liquefied gas of iron or steel (HS-731100) Props & similar equipment for scaffolding (HS-730840) Towers and lattice masts, iron or steel (HS-730820) Pipes (HS-730511) Wire of stainless (HS-722300) Flat rolled, (HS-721934) stainless steel

their derivatives (HS-293959)

l

Insulin and (HS-293712) Palmitic acid, (HS-291570) Perchlorates, perbromates, and periodates (HS-282990) Aluminium (HS-282612)

its stearic

salts acid

l l

bromates, iodates of metals fluoride

steel
l

l l l

Bars & rods (HS-721310) Ferro-silicon (HS-720221) Ferro-manganese (HS-720211)

Potassium hydroxide (caustic potash) (HS-281520)

Transport equipment- Some of the potential items for exports under this category could include.
l

Pharmaceutical products, Organic and Inorganic ChemicalsEgypts imports of these items together in 2009 stood at an estimated US$ 2.4 billion. Some of the potential export items for India under this category could include:
l

Bicycle frames and forks, and parts thereof (HS-871491) Dump trucks designed for offhighway use (HS-870410) Automobiles with reciprocating piston engine (HS-870322)

Gel preparations designed to be used in human or veterinary medicine (HS-300670) Vitamins and their derivatives, in dosage (HS-300450) Streptomycins and derivatives (HS-294120) their

Articles of apparel and clothing Under this category, focus could be on items such as:
l

Table linen, of man-made fibres, not knitted (HS-630253) Bed linen, of man-made fibres and cotton, printed, not knitted and of textile knitted or crocheted materials (HS-630222,

Theophylline & aminophylline &

101

HS-630221 & HS-630210)

l

Ties, bow ties and cravats, of man-made fibres, not knitted (HS-621520) Mens, boys, womens and girls ensembles, of other textile materials, not knitted (HS-620429 & HS-620329) Babies garments & clothing accessories of other textile materials, knitted (HS-611190) T-shirts, singlets and other vests, of other textile materials, knitted (HS-610990)

not carded (HS-550320)

or

combed

Tools / Implements of Base Metals: Focus items under this items would include:
l

Tools for taping or threading (HS-820740) Wrenches, hand-operated, with nonadjustable jaws (HS-820411) Hand saws (HS-820210)

Other Items - Other potential items of export to Egypt could include:

l

Cotton fabrics, and manmade filaments and staple fibres Under this category, in line with Egypts import demand; focus could be on items such as:
l

Articles of jewellery & parts thereof of silver (HS-711311) Soya-bean (HS-230400) Coconut (copra) oil fractions (HS-151319) oil-cake & its

Denim fabrics (HS-520942) Cotton yarn HS-520528)

of

cotton
l

Tooth brushes (HS-960321) Cardamoms (HS-090830) Mackerel, frozen, roes (HS-030374) livers and

(HS-520611

&

l l

l l

Woven fabric (HS-540761) Staple fibres of polyesters, carded or combed (HS-550620) Waste of synthetic (HS-550510) fibres

KENyA Kenya is among the four major importing countries in the COMESA region. Potential items of exports to Kenya would include: machinery and instruments, electrical and

Staple fibres of polyesters,

102

electronic equipments, iron and steel and articles thereof, articles of apparel and clothing, organic and inorganic chemicals and tanning and dyeing extracts. Machinery & instruments These items are the are the largest category in Kenyas import basket, accounting for as much as over 11 percent in 2009. Although machinery and transport equipment are major items in Indias export basket, exports to Kenya are still marginal. During 2009, of the total Indian exports of machinery and instruments, the share of exports to Kenya was around 1.6 percent. Towards enhancing these exports, focus could, therefore, be on the following items:
l

metallurgy or metal foundries (HS-845420)

l l

Ploughs (HS-843210) Filtering or purifying machinery and apparatus for water (HS-842121) Refrigerators (HS-841821) Air compressors mounted on a wheeled chassis for towing (HS-841440) Hand pumps (HS-841320) Water tube (HS-840211) boilers

l l

l l

Transmission shafts and cranks, including cam shafts and crank shafts (HS-848310) Machines for the extraction/ prep of animal/Fixed fats/oil (HS-847920) Parts of sorting/screening/ mixing/crushing/ machines (HS-847490) Rolls for metal rolling mills (HS-845530) Ingot moulds & ladles used in

Electrical & Electronic equipmentsThis category accounted for around 9.8 percent of Kenyas imports in 2009. Focus items for India under this category could include:
l

Insulated winding wire of copper (HS-854411) Boards & panels (HS-853810 & HS-853720) Automatic circuit (HS-853521) breaker

Industrial & laboratory electric induction of dielectric furnaces & ovens (HS-851420) Transformers (HS-850433)

103

Generating sets, diesel/semidiesel engines (HS-850213) Generating sets, diesel/semidiesel engines (HS-850211) DC motors, DC generators (HS-850134)

Articles of apparel & clothingWith a view to enhance these exports, focus could be on potential items such as:
l

Shawls, scarves, veils, knitted (HS-621490) Womens/ (HS-620419) Mens/ boys (HS-620329) girls

not suits

Iron and Steel and Articles thereof- Some of the focus items to increase Indias exports to Kenya under this category, based on import demand of Kenya, could include items such as:
l

ensembles

Balls, grinding& similar articles of iron or steel, forged or stamped (HS-732611) Containers for compressed or liquefied gas of iron or steel (HS-731100) Structure & parts of structures (HS-730890) Props & similar equipment for scaffolding (HS-730840) Towers and lattice masts, iron or steel (HS-730820) Hot roll iron/steel (HS-720837) Ferro-silico-manganese (HS-720230) Ferro-silicon (HS-720221)

Jerseys, pullovers, cardigans, waistcoats and similar articles (HS-611019)

Organic and Inorganic ChemicalsUnder this category, potential items of export to Kenya could include:
l

Sulphonamides (HS-293500)

in

bulk

Palmitic acid, stearic acid, their salts and esters (HS-291570) Ethyl acetate (HS-291531) Potassium hydroxide (caustic potash) (HS-281520) Sodium hydroxide (caustic soda) solid (HS-281511) Sulphuric acid; (HS-280700) oleum

l l l

l l

Tanning and dyeing extracts Under the category of tanning an

104

dyeing extracts, potential items of export to Kenya could include the following items:
l l l

ETHIOPIA Based on the import demand in Ethiopia and Indias export capability, potential items of exports to Ethiopia would include: electrical and electronic equipments, machinery and instruments, transport equipments, iron and steel and article thereof, and articles of apparel and clothing. Electrical and Electronic equipments- These are the second largest import items of Ethiopia, after oil, accounting for around 15 percent of its total imports. India accounted for around 3 percent of Ethiopians imports of this item. Potential items for exports under this category would include:
l

Printing ink (HS-321511) Prepared driers (HS-321100) Pigments and preparations based on chromium compounds (HS-320620) Titanium pigments and preps (HS-320619) Synthetic organic products used as fluorescent brightening agents (HS-320420)

Other Items - Other potential export items to Kenya would include:

l

Stranded wire, cables, plaited bands, etc, aluminium, steel core (HS-761410) Wire of refined (HS-740811) copper

Dump trucks designed for offhighway use (HS-870410) Diesel powered (HS-870210) buses
l

Insulated (including enamelled or anodised) winding wires, including copper (HS-854411 & HS-854419) Boards & panels, etc for goods of heading no. 85.37,not equipped w their app (HS-853810 & HS-853720) Parts of electrical transformers, static converters and inductors (HS-850490) Transformers (HS-850433) electric power

Soya bean flour and meals (HS-120810) Sesamum seeds, whether or not broken (HS-120740) Maize (corn) (HS-110812) starch

105

Liquid dielectric (HS-850422)

transformer
l

(HS-842611) Filtering or purifying machinery and apparatus for water (HS-842121) Refrigerators, household type, compression-type (HS-841821) Air compressors mounted on a wheeled chassis for towing (HS-841440)

Generating sets with diesel/semi-diesel engines (HS-850211)

Machinery & instruments- These are the third largest items in Ethiopias import basket, accounting for around 13 percent of total imports in 2009. Despite the large imports by Ethiopia, Indias exports of these items to Ethiopia are still marginal. In light of the large import demand in Ethiopia and Indias export capability, potential items of export in this category would include:
l

Gasket sets consisting of gaskets of different materials (HS-848490) Parts of sorting, screening, mixing, crushing, grinding machines (HS-847490) Machines for mixing mineral substances with bitumen (HS-847432) Rolls for metal rolling mills (HS-845530) Disc harrows (HS-843221) Ploughs (HS-843210) Gantry & overhead travelling cranes on fixed support

Iron and Steel and Article thereofThese items accounted for around 9 percent of Ethiopias imports in 2009. While India is one of the major sources of Ethiopias imports of these items in 2009, their share in Indias total exports of these items are still very marginal. Under this category, in line with Ethiopias import demand, focus could be on items such as:
l

Containers for compressed or liquefied gas of iron or steel (HS-731100) Structures & parts of structures (HS-730890) Towers and lattice masts, iron or steel (HS-730820) Flat rolled coated alum-zinc alloy (HS-721061) Cold rolled iron/steel, (HS-720916) coils

l l l

106

Articles of apparel & clothing Focus items under this category would include:
l

Rice, semi-milled or wholly milled (HS-100630) Rock drilling/earth boring tools, working part cermets (HS-820713) Monumental/building (HS-680223) stone

Shawls, scarves, (HS-621490) Womens/ (HS-620419) Mens/ boys (HS-620329) girls

veils suits
l

ensembles

Jerseys, pullovers, cardigans, waistcoats and similar articles (HS-611019)

Inner tubes of rubber for motor cars etc buses or lorries (HS-401310)

MAURITIUS Based on Mauritiuss import demand, and Indias export capability, efforts to further enhance exports to Mauritius would entail focus on items such as machinery and instruments, electrical and electronic equipments, cotton fabrics and manmade filaments and staple fibres, iron and steel and article thereof, and articles of apparel and clothing. Machinery & instruments- These are the second largest import items of Mauritius in 2009. Under this category, the share of Indias exports to Mauritius in Mauritius total imports of these items as well as in Indias total exports of these items remained very low, at 1.6 percent and 0.1 percent, respectively. Some of the focus items that could be exported by India to Mauritius

Transport equipment - Focus items under this category could include:

l l

Motorcycles (HS-871120) Dump trucks designed for offhighway use (HS-870410)

Other Items Based on Ethiopias import demand and Indias export capabilities, other potential items of export could include:
l

Tobacco, unmanufactured (HS-240120) Tubes, pipes (HS-391723) and hoses

l l

Printing ink, black (HS-321511) Synthetic organic tanning substances (HS-320210)

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could include:
l

Yarn of polyester staple fibres (HS-550921) Staple fibres of polyesters, carded or combed (HS-550620) Plain weave cotton fabric (HS-520852, HS-520851, HS-520832 & HS-520822) Cotton, not carded or combed (HS-520100)

Parts of centrifuges, including centrifugal dryers (HS-842191) Filtering or purifying machinery and apparatus for water (HS-842121)

Electrical & Electronic equipments- This category forms the third largest import items of Mauritius, after mineral oils and machinery and instruments. Some of the focus items under this category would include:
l

Photosensitive semi-conduct device, photovoltaic cells & light emit diodes (HS-854140) Automatic circuit (HS-853521) Transformers (HS-850433) electric breaker power

Iron and steel and articles thereofThese items together formed the seventh largest import items of Mauritius. Their share in Indias exports of these items is less than a percent. Focus items under this category could include:
l

Props & similar for scaffolding, (HS-730840)

equipment shuttering

Semi-finished products of alloy steel (HS-722490) Bars & rods (HS-721310) Flat rolled (HS-721061) Pig iron, non-alloy (HS-720110)

Generating sets, diesel/semidiesel engines (HS-850213 & HS-850211)

l l l

Cotton fabrics, and manmade filaments and staple fibres Under this category, in line with Mauritius import demand, focus could be on items such as:
l

Woven fabrics (HS-551299)

Articles of apparel and clothing This category accounted for around 3.4 percent of Mauritius total imports in 2009. While India accounted for roughly 1 percent of Mauritius imports of these items, the share of this category in Indias

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exports stood even lower. Under this category, focus could be on items such as: Womens/ girls swimwear, of textile materials (HS-621112) Babies garments& clothing accessories (HS-620990) Mens/ boys shirts, of other textile materials (HS-620590) Womens/ girls dresses, cotton (HS-610442) of

Fish prepared or preserved (HS-160420) Ground-nuts shelled, whether or not broken (HS-120220) Rice, semi-milled or wholly milled (HS-100630) Coriander seeds (HS-090920) Mackerel, frozen (HS-030374) Sheep cuts, boneless, fresh or chilled (HS-020423)

l l l

lIByA Libya is Indias seventh largest export destination in the COMESA region. In 2009, Libya accounted for around 4 percent of COMESA total imports. In line with Libyas import demand, potential items of exports would include machinery and instruments, electrical and electronic equipments, iron and steel and articles thereof, articles of apparel and clothing, rubbers and articles, and plastics and articles thereof. Machinery and instruments This category is the largest in Libyas import basket, accounting for over 16 percent of total imports in 2009. In view of the large import demand in Libya, potential export items under this category could include:

Other items Other potential export items would include:

l

Filtering or purifying machinery and apparatus for water (HS-842121) Handbags (HS-420229) Leather (HS-411390) Tobacco extracts and essences (HS-240399) Soya-bean oil-cake & other solid residues (HS-230400) Protein concentrates and textured protein substances (HS-210610) Mushrooms prepared preserved (HS-200310) or

l l l

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Parts of sorting/screening/ mixing/crushing/grinding/ washing machines (HS-847490) Machines for mixing mineral substances with bitumen (HS-847432) Welding machinery (HS-846890) parts

view of the large import demand in Libya, potential export items under this category could include:
l

Insulated winding wire of copper (HS-854411) Industrial & laboratory electric induction of dielectric furnaces & ovens (HS-851420) Parts of electrical transformers, static converters and inductors (HS-850490) Liquid dielectric (HS-850422) Generating sets, diesel/semidiesel engines (HS-850213 HS-850211)

Welding machinery not gasoperated (HS-846880) Parts of metal rolling mills & rolls (HS-845590) Gantry & overhead travelling cranes on fixed support (HS-842611) Parts of centrifuges, including centrifugal dryers (HS-842191) Air compressors mounted on a wheeled chassis for towing (HS-841440)

l l

Electrical and Electronic equipments- This category is one the major imported by Libya, accounting for around 11 percent of total imports in 2009. While exports from India accounted for around 2.4 percent of imports of this category in Libya, the share of Indias exports to Libya vis--vis Indias total exports of these items is very marginal. In

Iron and steel and articles thereof Libyas imports of iron and steel, and articles of iron and steel together amounted to over US$ 1.8 billion in 2009, accounting for around 10 percent of total imports. Potential exports items to the country under this category could include:
l

Articles of iron or steel, forged or stamped (HS-732619) Screws, coach, iron or steel (HS-731811) Props & similar equipment for scaffolding, shuttering/ pitpropping (HS-730840)

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Angles, shapes and sections, stainless steel (HS-722240) Flat rolled (HS-721070) products

Womens/ girls (HS-620429) Womens/ (HS-620419) girls

ensembles suits

Plastics and articles Import of plastics and articles thereof accounted for around 2.5 percent of Libyas imports in 2009. Potential items of export under this category could include:
l

Mens/ boys suits, of synthetic fibres (HS-620312) Mens/ boys shirts, of man-made fibres (HS-610520) Mens/ boys jackets and blazers, of cotton (HS-610332)

Floor, wall and ceiling coverings etc, of polymers of vinyl chloride (HS-391810) Tubes, pipes and hoses, rigid; of polyvinyl chloride (HS-391723) Tubes, pipes and hoses, rigid; of polyethylene (HS-391721)

Rubbers and articles Potential items of export under this category could include:
l

Boat and dock fenders, whether or not inflatable, of vulcanised rubber (HS-401694) Pneumatic tyres, (HS-401192) of rubber

Articles of apparel and clothing Under this category, focus could be on items such as:
l

Pneumatic tires new of rubber for aircraft (HS-401130) Plates, sheets& strip of non cellular rubber (HS-400821)

Sacks, bags, packing, of strip plastic material (HS-630533) Toilet and (HS-630299) kitchen linen

Toilet and kitchen linen, of manmade fibres (HS-630293) Table linen, of man-made fibres (HS-630253) Bed linen, of man-made fibres (HS-630222)

ZAMBIA Based on the import demand in Zambia and Indias export capability, potential items of exports to Zambia would include machinery and instruments, electrical and electronic equipments, transport

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equipments, iron and steel and articles thereof, plastics and articles thereof, organic and inorganic chemicals, and articles of apparel and clothing. Machinery and instruments This category constitutes major items in Zambias import basket. In 2009, Zambias imports of these items accounted for over 15 percent of Zambias total imports. With the large import demand in Zambia, potential items of export under this category would include the following:
l

Refrigerators, household type, compression-type (HS-841821) Parts for diesel and semi-diesel engines (HS-840999)

Gasket sets consisting of gaskets of different materials (HS-848490) Transmission shafts and cranks, including cam shafts and crank shafts (HS-848310) Parts of sorting/screening/ mixing/crushing/grinding machines (HS-847490) Welding machinery not gasoperated (HS-846880) Parts of metal rolling mills & rolls (HS-845590) Rolls for metal rolling mills (HS-845530) Filtering or purifying machinery and apparatus for water (HS-842121)

Transport equipments - This category constitute the fourth largest import items of Zambia, and accounted for 7.5 percent of Zambias imports in 2009. India accounted for around 5.5 percent of Zambias imports of this category, and share of exports to Zambia in Indias total exports of these items is around 0.1 percent in 2009. Based on Zambias import demand and Indias export capabilities, focus items for exports under this category could include:
l l l

Motorcycles (HS-871120) Work truck parts (HS-870990) Bumpers and parts for motor vehicles (HS-870810) Dump trucks designed for offhighway use (HS-870410) Diesel powered (HS-870210) buses

Iron and steel and articles thereof Zambias imports of iron and steel, and articles thereof accounted for around 6 percent of its total imports in 2009. Potential exports items could include:

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Balls, grinding and similar articles of iron or steel (HS-732591) Stranded wire, ropes& cables of iron or steel (HS-731210) Containers for compressed or liquefied gas of iron or steel (HS-731100) Flanges, stainless (HS-730721) steel

Plastics and Articles thereof Under this category, focus could be on items such as:
l

Film and sheet etc of unsaturated polyesters (HS-392063) Tubes, pipes and hoses polyethylene (HS-391721)

Organic and Inorganic Chemicals - Some of the potential items under this category could include.
l

Angles, shapes and sections, stainless steel (HS-722240)

Palmitic acid, stearic acid, their salts and esters (HS-291570) Commercial calcium hypochlorite and other calcium hypochlorites (HS-282810) Sodium hydroxide (caustic soda) solid (HS-281511)

Electrical & Electronic equipments- This is the sixth largest category imported by Zambia, accounting for around 5.5 percent of Zambias total imports in 2009. Focus items for exports under this category could include:
l

Boards, panels (HS-853810 & HS-853720) Starter motors (HS-851140) Parts of electrical transformers, static converters and inductors (HS-850490) Liquid dielectric transformer (HS-850422 & HS-850423) Generating sets, diesel/ semi-diesel engines, of an output exceeding 375 KVA (HS-850211 & HS-850213)

l l

Articles of apparel and clothing Focus items for exports under this category could include items such as:
l

Babies garments and clothing accessories of cotton, not knitted (HS-620920) T-shirts, singlets and other vests, of cotton, knitted (HS-610910) Womens/ girls blouses and shirts, of other materials, knitted (HS-610690)

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Other Items - Other potential items of export to Zambia could include:

l l

the following:
l

Carpets knotted (HS-570190) Twine, cordage, ropes and cables (HS-560790) Maize (corn) (HS-110812) starch
l

Parts of sorting/screening/ mixing/crushing/grinding/ washing machines (HS-847490) Printing type, blocks, plates, cylinders& other printing components (HS-844250) Refrigerators, household type, compression-type (HS-841821)

Black tea (fermented) & partly fermented tea in packages (HS-090240) Milk powder (HS-040210)

SUDAN In line with the import demand in the country and Indias export capability, potential items of export to Sudan could include machinery and instruments, electrical and electronic equipments, rubbers and articles thereof, and pharmaceutical products Machinery and instruments This category constitutes major items in Sudans import basket. In 2009, Sudans imports of these items accounted for over 16 percent of total imports. India accounted for 7.6 percent of Sudans imports of this category, while share of exports to Sudan in Indias total exports of these items is only around 1 percent. With the large import demand in Sudan, potential items of export under this category would include

Electrical and Electronic equipments - This is the second largest category imported by Sudan, accounting for over 11 percent of Sudans total imports in 2009. Focus items for exports under this category could include:
l

Parts of electrical transformers, static converters and inductors (HS-850490) Liquid dielectric (HS-850423) transformer

Generating sets, diesel/semidiesel engines (HS-850211)

Pharmaceutical products - This is the sixth largest category imported by Sudan, accounting for 3.4 percent of Sudans total imports in 2009. Focus items for exports under this item could include:
l

Vitamins and their derivatives, in dosage (HS-300450)

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Penicillina or streptomycins and their derivatives (HS-300310).

Rubbers and articles thereof Focus items for exports under this category could include items such as:
l

Pneumatic tires new of rubber for motorcycles (HS-401140) Pneumatic tires new of rubber for aircraft (HS-401130)

Other Items - Other potential items of export to Sudan could include:

l l l

Electrical & Electronic equipments - This category constitutes major items in Ugandas import basket. In 2009, Ugandas imports of these items accounted for 18.4 percent of total imports. While India supplied around 15 percent of Ugandas imports of these items, Ugandas share in Indias exports of these items is lesser than unity. With the large import demand in Uganda, potential items of export under this category would include the following
l

Work truck parts (HS-870990) Polypropylene (HS-390210) Containers, collapsible tubular, aluminium (HS-761210) Shawls, scarves, (HS-621490) veils

Insulated (including enamelled or anodised) winding wire of copper (HS-854411) Photosensitive semiconductor device, photovoltaic cells & light emit diodes (HS-854140) Boards, panels (HS-853810) Fixed capacitors (HS-853210) Parts of electrical transformers, static converters and inductors (HS-850490) Transformers (HS-850433) electric power

l l l

UGANDA In 2009, Uganda sourced over 13 percent of its imports from India. Based on Ugandas import basket and Indias export capability, potential items of exports to Uganda include electrical and electronic equipments, machinery and instruments, transport equipments, articles of apparel and clothing, cotton and manmade staple fibres, rubbers and articles thereof, and tanning and dyeing extracts.

Liquid dielectric transformer (HS-850421, HS-850422 & HS-850423) Generating sets,diesel/semidiesel engines (HS-850211 & HS-850213)

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Machinery and instruments This is the second largest imported category in Uganda, accounting for 14 percent of Ugandas import basket in 2009. India accounted for 7.8 percent of Ugandas imports of these items in 2009. With the large import demand in Uganda, potential items of export under this category would include the following:
l

Bicycle frames and forks, and parts thereof (HS-871491) Motorcycles (HS- 871110) Work truck parts (HS-870990)

l l

Parts of sorting/screening/ mixing/crushing/grinding/ washing machines (HS-847490) Parts of metal rolling mills & rolls (HS-845590) Offset printing (HS-844311) machinery

Iron and steel and articles thereof Ugandas imports of iron and steel and articles thereof accounted for 5.7 percent of Ugandas imports in 2009 making it the fifth largest category imported by Uganda. Although India accounted for over 18 percent of Ugandas imports of these items, scope exists to further enhance these exports to the country. Towards this end, potential exports items could include:
l

Gantry & overhead travelling cranes on fixed support (HS-842611) Filtering or purifying machinery and apparatus for water (HS-842121) Pumps (HS-841311) Watertube boilers (HS-840212)

Containers for compressed or liquefied gas of iron or steel (HS-731100) Props & similar equipment for scaffolding, shuttering/pitpropping (HS-730840) Towers and lattice masts, iron or steel (HS-730820) Bars & rods (HS-721310) Flat rolled (HS-721070) products

l l

l l

Transport equipment - These are the third largest import items of Uganda and constitute 12.5 percent of Ugandas imports in 2009. Some of the potential items of exports under this category could include:

Ferro-silico-manganese (HS-720230)

Articles of apparel and clothing Under this category, focus could be on items such as:

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Life jackets and life belts, of textile materials (HS-630720) Sacks, bags, packing, of strip plastic material (HS-630533) Curtains, drapes, interior blinds (HS-630319) Bed linen, of textile knitted or crocheted materials (HS-630210) Womens/ girls (HS-620429) ensembles

Inner tubes of rubber bicycles (HS-401320)

for

Inner tubes of rubber for motor cars etc buses or lorries (HS-401310) Pneumatic tires new of rubber for motorcycles (HS-401140)

Tanning and dyeing extracts Under this category, focus could be on items such as:
l l l

Babies garments & clothing accessories(HS-611190)

Printing ink, black (HS-321511) Prepared driers (HS-321100) Pigments and preparations based on chromium compounds (HS-320620) Synthetic organic pigments and preparations based thereon (HS-320417)

Cotton and Manmade Staple Fibres Under this category, focus could be on items such as:
l

Woven fabrics of other synthetic staple fibbre (HS-551419) Plain weave polyester staple fib fab (HS-551411) Woven fabrics (HS-551211) Plain weave (HS-520852) cotton fabric

l l

COMMODITIES HAvING IMPORT POTENTIAl There is also scope to source imports from the select COMESA countries. Principal items that can be imported from Egypt could include mineral fuels, aluminium and articles thereof, and carpets and other textile floor coverings, while coffee, tea, mate and spices,

Cotton, not carded or combed (HS-520100)

Rubber and Articles thereof Some of the potential items under this category could include:

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soaps, lubricants and waxes, and paper and paper boards could be sourced from Kenya. India can import raw hides and leathers, edible vegetables of certain roots and tubers, and oilseed from Ethiopia. The items that hold import potential from Mauritius could be furniture, optical and medical apparatus, and cotton, while items that hold import potential from Libya could include leather, organic and inorganic chemicals, and salt, sulphur and

cements. As regards Zambia, India can import items like copper and articles thereof, ores, slag and ash, and sugar and sugar confectionary, while imports from Sudan could include lac, gums, resins and extracts, raw hides, skins and leather and oilseed. Items that hold potential for imports from Uganda could include fish items, coffee, tea and spices, beverages, spirit and vinegar, and animal, vegetable fats and oils.

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6: INvESTMENT ClIMATE AND OPPORTUNITES IN THE COMESA REGION

The common aspiration of COMESA countries is to become a fully integrated internationally competitive regional economic community; a community within which there is economic prosperity demonstrated by high living standards of its people coupled with political and social stability; and a community within which goods, services, capital and labour move freely across national geographical borders. According to the Strategic Plan 2007-2010 adopted by Head of States and Governments in December 2006, by 2025, COMESA is expected to become single trade and investment space in which tariff, non-tariff and other impediments to the movement of goods, services, capital and people have been totally removed. COMESA would be ready to integrate with other regional groupings to form the African Economic Community. Further, one of the aims of COMESA is to cooperate in the creation of an enabling environment for foreign, cross border and domestic investment including the joint promotion of research and adaptation of science and technology for development. Trends in Investment Trends in investment during the last decade show pick up in both inflows as well as outflows. The total foreign direct investment (FDI) into COMESA region increased slowly in the first half of the decade, and picked up strongly since 2004, increasing over four-fold in 2009 over 2000 level. By 2009, FDI into COMESA region stood at US$ 136.5 billion. Outflow of investment from COMESA region is relatively lower, and was in the range of 4 to 13 percent of the total inflows during the last ten years. Outward investment started picking up significantly only from 2007 onwards, increasing to US$ 7.9 billion from US$ 3.3 billion in 2000, and further to US$ 17.7 billion in 2009 (Chart 6.1).

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Chart 6.1: Trends in FDI and Outward Direct Investments in the COMESA Region (US$ billion)

Source: UNCTAD & Exim Bank analysis.

While increase in investment in COMESA region has been reflected in almost all the COMESA countries, growth in FDI inflows has witnessed sharp rise in recent years in the case of Libya, Madagascar, Djibouti, Rwanda, Sudan, Rwanda, Uganda and DR Congo. Egypt is the largest investment destination in COMESA region, and accounted for 49 percent of total FDI into COMESA

region in 2009, followed by Sudan, with a share of 14.1 percent. Libya, Zambia, Uganda and Ethiopia accounted for 11.4 percent, 7.0 percent, 3.7 percent and and 2.8 percent, respectively, of FDI inflows into COMESA in 2009. In 2009, COMESA accounted for over onefourth of FDI inflows into Africa, as against a share of over one-fifth in 2000 (Table 6.1).

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Table 6.1: Foreign Direct Investment Inflows to COMESA Countries (US$ mn)
Countries Egypt Sudan Libya Zambia Uganda Ethiopia Madagascar DR Congo Kenya Mauritius Zimbabwe Seychelles Djibouti Malawi Swaziland Rwanda Eritrea Burundi Comoros COMESA TOTAl Share of COMESA in Africas FDI (%) Source: UNCTAD & Exim Bank analysis. 21.4 20.7 22.2 23.9 28.9 26.5 2000 19,955.0 1,397.8 451.4 3,966.0 807.1 941.1 140.8 617.4 931.3 683.5 1,238.1 448.1 40.1 357.7 536.0 55.2 337.4 46.8 20.6 32,971.4 2005 28,881.9 7,684.1 2,021.4 5,409.0 2,024.4 2,820.8 245.7 908.3 1,113.2 804.7 1,383.1 808.0 158.7 503.0 786.2 77.0 382.6 47.4 24.2 56,083.6 2006 2007 2008 59,997.7 16,262.3 12,834.4 8,544.5 4,189.0 3,696.5 2,953.2 2,520.5 1,988.6 1,631.7 1,543.6 557.0 751.7 760.3 541.9 293.2 382.7 61.6 39.9 2009 66,709.3 19,296.4 15,508.4 9,503.9 4,987.8 3,790.1 3,495.9 3,058.0 2,129.1 1,889.1 1,603.6 1,113.9 851.7 820.7 809.0 411.9 382.7 71.5 49.0 136,481.9

38,925.0 50,503.1 11,225.5 13,661.8 4,034.4 6,024.8 2,668.6 3,366.0 738.8 800.5 1,163.9 910.0 1,423.1 905.7 322.3 535.6 831.0 107.6 383.1 47.5 24.8 8,723.4 7,603.9 3,401.7 3,588.0 1,773.4 1,520.5 1,893.0 1,249.0 1,492.0 856.2 517.7 590.3 889.3 189.9 382.9 48.0 32.3

74,438.1 98,916.2 119,550.2

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As regards outward direct investment from COMESA, Libya accounted for 68.2 percent of outward direct investment from the region, followed by Egypt, with a share of 24.3 percent. Pick up in COMESA outward direct investment, especially in the past

three years, was mainly due to increase in outward investments from Libya, Egypt, Zambia, Kenya and Mauritius. Share of COMESA in outward direct investments from African region was 7.5 percent in 2000. By 2009, it stood at 17.2 percent (Table 6.2).

Table 6.2: Trends in Outward Direct Investment from COMESA Countries (US$ mn)
Countries Libya Egypt Mauritius Kenya Zimbabwe Zambia Seychelles Swaziland Malawi Madagascar Burundi COMESA TOTAl Share of COMESA in Africas ODI (%) Source: UNCTAD. 7.5 6.5 4.7 8.9 18.6 17.2 2000 1,941.9 655.1 132.0 115.2 233.6 0.0 113.6 87.3 7.9 9.8 2.3 3,298.8 2005 1,535.9 967.3 217.2 138.8 242.2 0.0 196.3 73.5 17.1 6.4 2.3 3,397.0 2006 1,001.9 1,115.7 227.3 162.8 242.2 67.7 193.9 69.0 18.4 6.4 2.3 3,107.7 2007 4,934.9 1,780.5 285.3 198.8 245.3 153.6 162.3 72.0 19.8 6.4 2.4 7,861.4 2008 10,822.9 3,700.7 337.4 242.6 253.3 153.6 95.6 58.9 21.1 6.4 2.4 15,694.9 2009 11,987.9 4,271.8 374.9 288.6 253.3 153.6 147.5 51.9 22.4 6.4 2.4 17,560.8

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To attract more investment, all the select COMESA countries have introduced various investment incentives in the form of protection against expropriation, repatriation of profits, non-discrimination between foreign and domestic investors, etc. To actively promote foreign investment, these countries have also set up investment promotion agencies, which in most cases serve as a one-stop-shop for all investment related matters. These are:
l

l l

Kenya Investment Authority Libya Board Foreign Investment

Madagascar Economic Development Board Malawi Investment Promotion Agency (MIPA) Board of Mauritius Investment of

Rwanda Investment and Export Promotion Agency (RIEPA) Seychelles Investment Bureau Sudanese Investment Authority Swaziland Investment Promotion Authority (SIPA) Uganda Investment Authority Zambia Investment Centre Zimbabwe Investment Authority

Ministre du Commerce, de lIndustrie et Artisanat, Burundi Ministre de lEconomie et du Commerce et des Investissements, Comoros Agence Nationale pour la Promotion des Investissements (ANAPI), DR Congo Agence nationale pour la Promotion des Investissement (ANPI), Djibouti General Authority for Free Zones and Investment (GAFI) for Egypt Eritrea Investment Center Ethiopian Investment Commission

l l l

l l l

l l

Addresses and contact details of these investment promoting agencies are given in Annexure-I. Foreign investment incentives, investment environment and focus areas for investments in select countries are discussed in the following sections.

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INvESTMENT ClIMATE OPPORTUNITIES IN COMESA REGION Ethiopia

AND THE

technology transfer, and foreign exchange reserves by offering incentives to private investors. Exports originating in Ethiopia are eligible under the Africa Growth and Opportunity Act (AGOA). Custom duties generally range from 0-35 percent. Ethiopian tariffs have an average of 17 percent, with the highest band of 30-35 percent applying to approximately half of the imports, particularly those in manufacturing sector. Investment Incentives Ethiopia has offered specific incentives and streamlined administrative procedures to encourage investment. The important incentives include:
l

The Ethiopian Government promotes private sector to be an engine of growth and to play an important role in the economy. The government has eliminated most of the discriminatory tax, credit and foreign trade treatment of the private sector, simplified administrative procedures, and established a clear and consistent set of rules regulating business activities. Stateowned enterprises and ruling partyowned entities, however, continued to dominate the major sectors of the economy. In 2009, the Ethiopian Government shifted its agricultural policy focus towards encouraging private investment (both domestic and foreign) in larger-scale commercial farms. As all land in Ethiopia is owned by the government, the Ministry of Agriculture and Rural Development (MoARD) created a new Agricultural Investment Support Directorate that is currently negotiating longterm leases on more than 7 million acres of land for these commercial farms. The new Directorates goal is to boost productivity, employment,

Exemption from profit tax for a minimum period of two years, and up to five years depending on the type and location of investment, with provision for additional exemption of two to three years for investment in existing enterprises; Exemptions/reduction of custom import duties on raw materials; Exemption of Ethiopian produced export commodities from payment of export tax, and

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additional export taxes;

l

Duty incentive schemes (Duty drawback Scheme, the Voucher Scheme and the Bonded Manufacturing Warehouse Scheme) The carrying forward of losses suffered during the tax exemption period for half the tax exemption period granted. Duty free imports of capital goods including spare parts up to 15 percent of the value of capital goods imported for investment purposes. Income-tax holiday for new investments, expansion and upgrading of projects in the manufacturing and agroindustry

tantalum, marble and natural gas; as well as a variety of tourist attractions: historical sites, scenic beauty and wildlife. The government is committed to opening up larger areas of the economy to foreign investors. It has already opened telecommunication services for joint-venture investment with the Government and generation from any source and off-grid transmission of electricity for wholly owned foreign or local private investment. Foreign investors are viewed as partners in the economic development of the country, and are welcome to invest on their own as well as in joint ventures with domestic enterprises. As regards financial sector, however, only domestic investors are allowed to participate. Security of investment as regards property ownership and disposal of income is guaranteed. The security of private property is upheld by the constitution of the Federal Democratic Republic of Ethiopia. The Investment code of 2002 also provides investment guarantees and ensures the protection of private property. Ethiopia is also a member of the Multilateral Investment Guarantee Agency (MIGA), the World Bank affiliate

The country possesses comparative advantages in terms both of its natural resources and its proximity to Middle Eastern and European markets. It also has a population of over 70 mn and has potentially a large domestic market. There are huge tracts of land suitable for irrigation; and Africas largest herds of livestock. Ethiopias large labour force is both disciplined and trainable. There are considerable opportunities for mining resources such as gold, potash, copper,

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which issues guarantees against non-commercial risks that may be faced by enterprises in member countries. Conversion and Transfer Policies : Ethiopias central bank, the National Bank of Ethiopia (NBE), retains a monopoly on all foreign currency transactions. The NBE supervises all payments or remittances made abroad. The local currency (Birr) is not freely convertible. In 2004, the NBE issued a directive that allows non-resident Ethiopians and non-resident foreign nationals of Ethiopian origin to establish and operate foreign currency accounts up to US$ 50,000. Ethiopias Investment Proclamation allows all foreign investors whether or not they receive incentives, to remit freely profits and dividends, principal and interest on foreign loans, and fees related to technology transfer. Foreign investors may also remit proceeds from the sale or liquidation of assets from the transfer of shares or of partial ownership of an enterprise, and funds required for debt service or other international payments. The right of expatriate employees to remit their salaries is granted in accordance with the foreign exchange regulations of the National Bank of Ethiopia (NBE).

To facilitate both foreign and domestic investment, a separate institution, the Ethiopian Investment Commission (EIC), has been formed at the federal government level, which is a one-stopshop responsible for promoting, coordinating and facilitating FDI in Ethiopia. In addition, individual Investment bureaus at the regional administration level have been created. The foreign investor need only apply for an investment certificate at the EIC. Facilities offered by the EIC include approving investment applications and work permits, company registration, issue of trade and operating licenses, advise and aftercare services among others. Upon acquisition of a certificate and registration of the business, the foreign investor may approach the investment Bureau in collaboration with EIC to facilitate access to land and utilities. Bilateral Investment Agreements: Ethiopia has bilateral investment treaties with China, Denmark, Italy, Kuwait, Malaysia, Netherlands, Russia, Sudan, Switzerland, Tunisia, Turkey, Yemen, Spain, Algeria, Austria, UK, Belgium/ Luxemburg, Libya, Egypt, Germany, Finland, India, and

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Equatorial Guinea, among others, and a protection of investment and property acquisition agreement with Djibouti. According to UNCTAD, as on June 1, 2010 Ethiopia had signed bilateral investment treaties with 29 countries. A Treaty of Amity and Economic Relations, which entered into force in 1953, governs economic and consular relations with the United States. Ethiopia also has double taxation treaties with thirteen countries, including Italy, Kuwait, Romania, Russia, Tunisia, Yemen, Israel, South Africa and Sudan. Priority Sectors and Investment Opportunities
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scale irrigation mainly through water harvesting. Investment opportunities under this sector include commercial production of food-crops; production and processing of tea and coffee as well as cotton; horticulture; livestock; and fisheries.
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Manufacturing: Focus subsectors under manufacturing include paper and printing, nonmetallic minerals, chemicals, leather and footwear, basic metals and engineering, textiles and garment, food, beverages and tobacco. Energy & Petroleum: Both renewable and non-renewable energy Mining: Gold; tantalum; platinum; nickel; potash; natural gas; and soda ash. Manufacturing: textile and garments; food and beverages; leather; electronics; building materials; non-metallic minerals; and metallic-sub-sectors. Infrastructure: Telecommunication (it must be a joint venture with the Government). Tourism

Agriculture: The government has initiated an agricultural development programme with the objective of closing the countrys food gap in the medium term by attaining a sustainable food production growth at a rate higher than the population growth. In the food-deficit areas which are moisture stressed, the government has developed and put to effect a Sustainable Agricultural and Environmental Rehabilitation (SAER) programme that focuses on the development of small-

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Egypt The climate for investment in Egypt by foreign firms has improved substantially since 1991, when Egypt launched a programme of economic reforms. Increased foreign investment continues to be at the heart of Egyptian Governments economic strategy for attaining and sustaining high economic growth rates. The General Authority for Free Zones and Investment (GAFI), which was incorporated into the Ministry of Economy and Foreign Trade in October 1999, has the primary responsibility for regulating foreign investment. Law 8 of 1997 is one of the key laws related to investment in Egypt. Under this Law, investment incentives and guarantees, remittances and tax incentives are covered. It grants projects in identified high-priority sectors, special exemptions and incentives, as well as explicit guarantees, such as a prohibition against nationalization. Companies established under Law 8 enjoy a five-year tax holiday from corporate income tax; nonEgyptian employees hired by such Companies / projects are entitled to transfer their earnings abroad. General tax exemption of five years for any project operating in one of

these priority sectors is also covered by the law. Specific incentives of 10 years are granted to projects in new industrial zones, certain urban communities, remote areas and Social Fund for Development projects. Tax exemptions of 20 years are granted to projects outside the Cairo area. All investment projects are granted exemptions from notarization and notification fees; payment of inheritance tax on 25 percent of heirs share in invested capital; and income tax on a portion of dividends after the exemptions expire. Law 8 has been subject to a series of amendments since its passage in 1997, most recently in March 2004 and May 2007. The first eased the entry process for foreign investors via one-stop shops that the GAFI launched in major cities. Each one-stop shop has representatives of all official agencies dealing with investors (up to 40 different departments) in one location. In September 2009, GAFI introduced an onlineregistration system for completing all administrative functions online, except for the signing of the final agreement. The second amendment facilitated investment even further; it established investment zones and gave companies fast-track

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problem-solving status with local bureaucracies. Insurance Law 156 of 1998 removed the 49 percent ceiling on foreign ownership, permits privatization of national insurance companies, and abolished the ban on foreign nationals serving as corporate officers. Law 1 of 1998 permits the private sector including foreign investors to conduct most maritime transport activities, including loading, supplying, and ship repair. Attracting foreign direct investment (FDI) has been a key policy aim of the Egyptian government. And inward FDI has indeed increased substantially since 2005, in response to new investment and tax laws, the stabilisation of the exchange rate and the promotion of export-driven growth. Foreign companies have been attracted by Egypts growth potential, and improvements in the business environment have facilitated commercial activity. Exchange Controls: Egyptian law allows individuals and businesses to conduct all normal foreign exchange transactions, including establishing foreign exchange accounts and transferring foreign exchange in and out of Egypt. Authorized banks may provide the full range of foreign

exchange transactions, including accepting deposits, executing transfers and opening letters of credit. Bilateral Investment Agreements and Regional Cooperation: Egypt has signed Bilateral Investment Treaties / Agreements (BITs) with 101 countries as on June 2010, which include Albania, Argentina, Cameroon, Chile, China, India, Morocco, Togo, Central African Republic, Serbia, Qatar, Nigeria, the United States, Germany, the United Kingdom, Sweden, Switzerland, Japan, the Netherlands, Belgium, Luxembourg, France, Italy, Greece, Finland, Romania, Sudan, Thailand, Tunisia, Armenia, Libya, and Singapore, among others. In addition to investment agreements, Egypt is a signatory to a wide variety of agreements covering trade issues. Egypt and US signed on July 1, 1999, a Trade and Investment Framework Agreement (TIFA). The TIFA is a step toward creating freer trade and increased investment flows between the US and Egypt. Egypt started negotiations with EU for concluding a partnership agreement in 1995. The partnership agreement was effected on June 25, 2001. In January 1998, Egypt began implementing agreements

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reached with Arab League members in connection with the Arab Common Market treaty of the 1960s. These agreements call for phasing out existing tariffs over a 10-year period. Priority Sectors and Investment Opportunities
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health tourism, elective procedures, pharmaceuticals, continuing education programs, platforms and software, rural healthcare.
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Agri Business: Agricultural product cultivation, infrastructure projects, mega farms, production and exports. Communications and Information Technology: Business process outsourcing, key-process outsourcing, call centers, localization and Arabiclanguage development. Education: schools, universities, international accreditation, technical schools, localization and foreign-language development, corporate training and postgraduate training programs. Financial Services: Consumer and corporate banking, insurance, investment banking, private equity, advisory services, research services. Healthcare: Private hospitals,

logistics and Transportation: Road terminals and transit points, rail line expansion, connections and terminals (road rail), value-added services around ports and dry ports, and airport infrastructure. Petrochemicals: Natural gas, petroleum, plastics, acrylics and fertilizers. Renewable Energy: Wind energy, solar energy, biodiesel and biomass. Retail: Large shopping centers, modern grocery distribution, hypermarkets, supermarkets, retail and mixed-use real estate development. Textiles and Ready-Made Garments: Cotton production, yarn making, spinning, weaving, knitting, dyeing and readymade garments. Tourism: Hotels, residential tourism, therapeutic tours, nature/desert safari, ecotourism, adventures and medical/health tourism.

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Kenya Foreign direct investment is encouraged by the Government of Kenya. The major percentage of Kenyas industrial sector consists of multinational companies. With economic liberalization and privatization of public sector enterprises, since 1994, the government has sought out foreign investment through investment conferences and foreign trips by high level delegations. Private foreign investment in Kenya is governed by Kenyas Foreign Investment Protection Act (FIPA). Investors can take advantage of the one-stop office of the Investment Promotion Center (IPC), created in 1982 under the Ministry of Finance, and an independent agency since 1986. The IPC sets minimal environmental, health and security requirements for its projects. An investment code is being planned which would set forth guidelines on investment, enumerate the various investment incentives and mandate that all new projects obtain IPC approval. Efforts are under way to harmonize investment regimes in Kenya, Uganda and Tanzania and, eventually, to remove all tariff barriers between the three East African countries. In addition, the

three Investment Authorities are working towards harmonizing their investment incentives. The investment policy actively encourages investment that will produce foreign exchange, provide employment, promote backward and forward linkages and transfer technology. The only significant sectors in which investment (foreign and domestic) are constrained are those where state corporations still enjoy a monopoly. These are restricted almost entirely to infrastructure (e.g., power, posts, telecommunications, and ports) and the media (e.g., radio). Even in these sectors, ongoing commercialization and economic reform is expanding opportunities for private business. Conversion and Transfer Policies: In December 1995, Kenya repealed its Foreign Exchange Control Act and thus there are no restrictions on converting or transferring funds associated with an investment. Kenya has had a floating exchange rate since late 1993. On July 1, 1996, Kenyan shillings became freely convertible into Tanzanian and Ugandan shillings and vice versa. There are no restrictions on converting or transferring funds associated with investment. Under Kenyan law, amounts above

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KSh500,000 (about us$ 6,500) have to be declared as a formal check against money laundering. The Kenyan Anti-Money Laundering (AML) Bill was passed by Parliament and signed into law at the end of 2009. The implementation of the new AML bill is expected to bring Kenya in line with more advanced financial economies and help reduce serious issues with money laundering. Expropriation and Compensation: Article 75 of the constitution prohibits the nationalization of private property without prompt and full compensation. Kenya has also enacted the Foreign Investment Protection Act that protects foreign investment against expropriation. Performance Requirements/ Incentives: Investors in the manufacturing and hotel sectors are permitted to deduct from their taxes a large portion of the cost of buildings and capital machinery. All locally financed materials and equipment (excluding motor vehicles and goods for regular repair and maintenance) for use in the construction or refurbishment of tourist hotels are zero-rated for purposes of value added tax. There is a flat investment allowance of 60 percent, though formerly,

a higher rate was applied to investments outside Nairobi and Mombasa. Another general incentive is the Duty Remission Scheme under which materials imported for use in manufacturing for export or for production of duty-free items for domestic sale qualify. Approved suppliers, who manufacture goods to be supplied to the exporter, are also entitled to the same import duty relief. Special incentives exist for qualified investors under the Manufacturing Under Bond (MUB) programme and the Export Processing Zones (EPZs) Authority. MUB investors receive duty and value-added tax exemption on imported plant, equipment, raw materials and intermediate inputs. They are also entitled to an investment allowance of 100 percent on immovable fixed assets. Investors in the EPZs enjoy duty and VAT exemption on imported machinery and raw material inputs; a ten-year corporate tax holiday; exemption from stamp duty and withholding tax (on dividends payable to non-resident shareholders); exemption from certain industrial regulations and single licensing. EPZs are preferred as they also provide power and water as well as support services.

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With the exception of the insurance and telecommunications sectors and certain other infrastructure and media companies, Kenya does not require that its nationals own a percentage of a company. However, foreign brokerage and fund management firms are allowed to participate in the local capital market only through locally registered companies. For insurance companies, at least one-third of the controlling interest, whether in terms of paid-up share capital or voting rights, must be held by citizens of Kenya. In the telecommunications sector, at least 60 percent equity must be owned by Kenyan nationals. In other sectors, joint ventures are encouraged but not mandatory. Employment of Kenyan nationals is strongly encouraged. Foreign and domestic private entities have a right to establish and own business enterprises and engage in nearly all forms of remunerative activity, principal exceptions being public utilities (infrastructure) and the media. Retail trade is mainly in the hands of Kenyans. Bilateral Investment Agreements: As on June, 2010, Kenya had signed bilateral investment treaties with 11 countries, which include Germany, Italy, the Netherlands, Switzerland, UK and China, among others.

Priority Sectors and Investment Opportunities

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Agriculture: Investment opportunities exist in seed production, manufacture of sprayers and pesticides, veterinary services, construction of dams and bore holes, installation of irrigation systems and services. Opportunities also exist in support services, such as cold storage facilities and refrigerated transport for perishable products. Horticulture: Opportunities exist in production and export of products such as cut-flowers, French beans, pineapples, mushrooms, asparagus, mangoes, macadamia nuts, avocados, passion fruits, melons, and carrots. Agro-Processing: Opportunities for investment exist in edible and other oil production, development of substitutes for palm oil imports, coffee roasting and grinding, production of decaffeinated coffee for export, production and processing of sugar, tea, meat and dairy products. Fisheries development: Fish processing (filleting and fishmeal production), as well as

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fisheries-support infrastructure (refrigerated transport, cold storage, etc.).

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leather and leather goods: Manufacture of shoes and other leather products livestock: Investment opportunities exist in the rearing of livestock for meat and dairy products. Non conventional livestock farming, for example, of ostrich and crocodile farming, represent an exciting new area of investment. Bee keeping and honey processing are are untapped potential in Kenya. Tourism: Conference tourism, cultural tourism, cruise ship tourism, aviation/tour and travel tourism and eco-tourism Building and Construction: Road construction, development of the rail link to South Sudan, rehabilitation of Airports, development of a Second Port at Lamu, Kenya - Uganda & regional pipeline extension (petroleum), construction of upstream refinery, construction or upgrading of storage, distribution, and product handling facilities (petroleum), solar / wind energy plants, urban housing development by private and public sector
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Telecommunication: Development of broadband infrastructure, software and hardware development and supply of equipment, technical and consultancy services Tyre Manufacturing: The country currently has only one tyre manufacturing facility namely Firestone (E.A.) Limited. Industrial and Commercial Development Corporation (ICDC) is seeking joint venture partners to promote another tyre manufacturing facility. Energy: Transformer manufacturing, Geothermal Development, Coal Exploration and Exploitation, 300 MW Coal thermal plant at Mombasa Manufacturing: paper products, Textiles and Apparels, Metal and Engineering Works, Vehicle Parts and Assembly, Electrical Equipment, Electronics, Plastics, Chemicals and Pharmaceuticals, Wood and Wood Products, Mining and Mineral Products

Mauritius Mauritius actively encourages foreign investment. Tax concessions and other incentives, introduced in 1970 to attract manufacturers to

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the Export Processing Zone, have since been extended to services and to companies in the Mauritius freeport and the offshore banking and business centre. In December 2000, the government adopted a new Investment Promotion Act with a view to streamline the legal framework for the promotion and facilitation of investments in Mauritius. The Act provided for the setting up of a Board of Investment, which has been operational since March 200l. Foreign investment (except in the offshore business centre, the free port and the stock exchange) requires advance approval from the Prime Ministers Office. The Board of Investment (BOI) also acts as a one-stop service to obtain all relevant permits from various public sector agencies. Offshore business and freeport licenses are approved directly by the Mauritius Offshore and Business Activities Authority (MOBAA) and the Mauritius Freeport Authority (MFA), respectively. Offshore banking licenses are issued by the Central Bank (Bank of Mauritius), which is the regulatory and supervisory body of offshore banks. 100 percent foreign equity is permitted in export-oriented manufacturing. Foreign exchange controls were abolished in 1994.

EPZ incentives include 15 percent corporate tax (as against a 25 percent normal tax rate), no tax on dividends, free repatriation of capital, profits, and dividends, and relief from customs duty and value added tax on raw materials, machinery and spare parts. The Export Processing Zone in Mauritius is not limited to a specific geographical area. Firms eligible for EPZ certificates can operate anywhere on the island. Companies in the Mauritius free port receive exemption from company tax and tax on dividends, preferential rates for warehousing, reduced port handling charges, and exemption from import duty and value added tax on finished goods, machinery, equipment and materials. Freeport operations may be 100 percent foreign-owned and use offshore banking facilities. In the offshore sector, the main incentives include exemption from withholding tax on interest, royalties and dividends; no capital gains tax; exemption from customs duty, excise duty and VAT on essential imported office equipment and furniture. Doing Business in Mauritius In terms of doing business, Mauritius has reached 17th position in the world and 1st in Africa in the World Banks Doing Business
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Survey 2010. The government seek to continuously introduce bold strategic and administrative reforms to facilitate investment in the Freeport in view of increasing its competitiveness and to boost up further the efficiency of multi-modal logistics. Double Taxation Avoidance Treaties: The main attraction for companies to conduct offshore operations in Mauritius is its network of Double Taxation Avoidance Treaties with developed European and many emerging African and Asian economies. Countries with which such treaties have been signed and ratified include France, U.K., Germany, India, Sweden, China, Luxembourg, Botswana, Russia, South Africa, Indonesia, Sri Lanka, Singapore, Oman, Cyprus, and others. In early 2000, the government introduced the Regional Headquarters Scheme and the Permanent Residence Scheme to attract new FDI. The Regional Headquarters Scheme is aimed at companies wishing to provide headquarters services to related corporations in countries of the region. The main incentives provided under this scheme include a 10year tax holiday and a 15 percent

corporate tax thereafter, tax-free dividends, and duty-free imports of office furniture, equipment and personal belongings of expatriate employees and duty-free import of a maximum of two cars for expatriate staff. Bilateral Investment Agreements: As on June 2010, Mauritius had signed bilateral investment agreements with 36 countries, which include, among others, Germany, France, UK., China, Chad, Indonesia, Portugal, South Africa, India, Switzerland, Singapore, Zimbabwe, Ghana, among others. Priority Sectors and Investment Opportunities
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Agro-industries: Production and processing of baby vegetables; rearing of cattle for the production of fresh milk, beef / goat/ sheep / pork meat; production and processing of fruits; production of flowers for export; production of bio-fertilisers for export; and production of crops like potato, onion, tomato, fruits, maize, pulses and starchy crops in Mozambique and Madagascar for export to Mauritius. Financial Services: Banking services; insurance & reinsurance; capital markets;

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wealth management & trust services; fund structuring & investment management; and legal services & financial process outsourcing.
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design & architectural services outsourcing.

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Healthcare: Healthcare and medical travel; wellness and alternative medicine; medical devices; pharmaceutics; medical knowledge process outsourcing; biotechnology; and bioinformatics. Hospitality and property developments: Integrated resort scheme; real estate scheme; invest in a hotel scheme; hotel real estate; marinas; health tourism marinas; hotel development; up-market business hotels; shopping malls and dutyfree shops; office buildings, business and industrial parks; gaming resorts; health tourism; amusement parks; and leisure activities. Information Technology and Business Process Outsourcing: Regulated and unregulated activities; call centres & technical help desk; IT outsourcing (ITO); multimedia and design; software, web site, and content development; and engineering

logistics and Distribution Services: Warehousing and storage; breaking bulk, sorting, grading, cleaning and mixing; labeling, packing and re-packing; minor processing, transshipment, cash & carry sales; export-oriented port based activities; export- oriented airport based activities; freight forwarding; express courier services, mail order; and simple assembly, reshipment, quality control, and inspection services Creative Industries: International Art gallery; National Symphonic Orchestra; infrastructural development to foster visual and performing arts and artists in residence concept; knowledge and skills development projects, including universities and specialized creative art schools; financial opportunities - international art fund; professional music recording studio; photography studio and image enhancement; integrated film studio facilities; design, including fashion, jewellery, graphic design, products and packaging; 2D/3D animation; advertising design and multimedia

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Manufacturing and light Engineering: Value-added manufacturing using highprecision engineering or injection moulding such as the production of automotive and aerospace components; surgical equipment and medical devices manufacturing; technologybased jewellery and high-end watches manufacturing; reverse logistics for watch repairs, computer and mobile phone refurbishment; manufacturing of mobile phone handsets for the African market; medical textiles, technical textiles and protective work wear; manufacturing of semiconductors and chips for the IT sector; and manufacturing/ assembly of interactive entertainment equipment Renewable Energies and Environment: Renewable energy through the use of wind turbines and solar power; manufacturing / assembly of renewable energy products; development of green and energy efficient buildings; investment in new technology for more efficient and clean industrial processes and transport; solid waste management and water management

Seafood and Aquaculture: Fish transhipment; seafood processing activities; investment opportunities exist in activities such as filleting, packaging, canning, vacuum packing and production of ready-toeat meals; ancillary services including ship handling, bunkering, vessel husbandry, ship agency, ship building and repair and net assembly and repair; and aquaculture. Fish Farming Zones - In a radius of up to 300m around the following points Baie Fer Cheval, Ouest lot Marianne, Est Pointe Bambou (2 locations), Ouest Ile Flammand, Nord Est Annanas Bank

libya As on June 1, 2010 Libya had signed bilateral investment treaties with 29 countries including India, Algeria, Austria, Bulgaria, Egypt, Republic of Korea, Turkey, Russia, Singapore, Germany, France and Ethiopia. Priority Sectors and Investment Opportunities Law of investment encouraging direct aims at foreign

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investment in non-oil sectors such as industry, agriculture, health, tourism, and services, and does not apply to projects related to oil and gas production and exploration projects that are governed by Oil Law no. 25 for the year 1955 and its amendments. The decision of the General Peoples Committee no147/2004 has specified in details the fields open to investments as follows:
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laboratories and analysis and diagnosis centres, manufacturing of medicaments and medical requirements, and manufacturing and maintenance of medical equipments.
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Transportation Sector: Construction of airports; management of airports; handling, supply and land services in airports; building and application of civil aviation systems in cooperation with the Civil Aviation Authority in such way that this latter must have more than 50 percent as participation rate (air transportation will allow investments with a rate of participation not less than 50 percent, for Libyan nationals); construction of high roads; construction of subways and railroads; and construction, improvement, and operation of seaports with the participation of the seaport company. Health Sector: Construction of hospitals which include

Education Sector: Construction of universities and institutes; Training and vocational centers; Schools and International institutes (those institutions must have their curricula and examination procedures approved by the education related-authority in the Great Jamahirya). Industry Sector: Cement industry; sanitary materials; electro-industries; household articles; plastic industry; leather industries; fodders industry; flour-milling and packing with participation of the domestic sector; food industries with participation of the domestic sector; chemical industry; manufacturing and maintenance of marine fishing equipment; manufacturing of scholar gadgets; iron and steel industry; and waste recovery industry. Agricultural Sector: Cultivations of farm crops and fodders; and operation of poultry parents station.

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Maritime Wealth Sector: aquaculture and fish canning. Tourism sector: Tourist utilities of hotels, tourist resorts, and villages; Administration of tourism structures; and Construction of yachting utilities, leisure utilities and tourist houses and flats. Public utilities sector: Construction of residential flats and houses, and construction and development of household gas network; water desalting stations; waste water purification and drainage station; and waste recycling factories .

and cobalt extraction, and greenfield investments in the agricultural sector, in particular horticulture and floriculture production, and in tourism. In line with the above objective, the government recognised the major challenges to private-sector development in 2004 when it prepared its first private-sectordevelopment reform program (PSDRP I). The overall objective of PSDRP I (2006-08) was to lay the foundations for faster, sustained private-sector-led growth by improving the investment climate. The programme was developed around the following six reform areas: i) policy environment and institutions; ii) regulations and laws; iii) infrastructure development; iv) business facilitation and economic diversification; v) trade expansion; and vi) local empowerment. In addition, Zambia launched its Public/ Private Sector Partnership (PPP) policy in 2008 and an enabling law, the PPP Act, is in preparation. In September 2009, the government launched the second private-sectordevelopment reform programme (PSDRP II), a framework that will guide implementation of the key reforms in order to relax the abovementioned constraints.

Zambia Since 1991, the government of Zambia has focused on policies to encourage increased economic growth led by the private sector. Since the introduction of major economic policy reforms in the early 1990s, private investment, including FDI, has been playing a greater role in Zambias economy. By 2009, Zambia became the fourth largest recipient of FDI among the COMESA countries. Impressive inflows of FDI into Zambia could be attributable to the implementation of an ambitious privatization programme (1994-2001), investments in copper

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In terms of progress, the 2010 World Bank Doing Business report stated that Zambia had reduced the costs of business, as demonstrated by its improved ranking in the Ease of Doing Business category (at 90 out of 183 countries in 2010, up from to 99 in 2009 and 102 in 2008). The report notes that Zambias scores are above average in terms of Getting Credit, Paying Taxes, Protecting Investors, Closing a Business and Enforcing Contracts. In order to make substantive gains, the main private-sector stakeholders have encouraged the government of Zambia to press ahead with effective reforms in other major areas such as transport, telecommunications, energy and the financial sector. A number of critical second-generation policy-reform measures are being proposed for the medium to long term. FDI had also contributed to the longterm policy objective of Zambia, which is to diversify its production and export base from mining to other products and services. The major challenges faced by the Zambian private sector include the high cost of capital and domestic inputs for local production, which make sustaining competitiveness in an open economy practically difficult. Organisation for Economic Co-

operation and Development (OECD) and Southern African Development Community (SADC) are the main sources of FDI in Zambia. In accordance with the Governments aim to enhance investment, the Zambia Development Agency (ZDA) was established in 2006 by merging Zambia Investment Centre (ZIC), the Zambia Export Board (ZEB), the Zambia Privatisation Agency (ZPA), the Zambia Export Processing Zone Authority (ZEPZA), and the Small Enterprise Development Board (SEDB). The ZDA acts as one-stop-shop for investors, and facilitate investors access to all information and services that they may be required in order to set up investments in the country. Investment incentives available to companies operating under the ZDA Act for a period of five years from the year of first declaration of profits include the following:
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No tax on dividends will be paid by companies operating under the proposed ZDA Act for a period of five years from the year of first declaration; Only 50 percent of the profits made by companies operating under the proposed ZDA Act will be taxed under the Income

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Tax Act for a period of five years from the first year profits are made;
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legal Framework for Investment Protection The Investment Act of 1993 (amended 1st April 1996) assures investors that property rights shall be respected. No investment of any description can be expropriated unless Parliament has passed an Act relating to the compulsory acquisition of that property. Also, in case of expropriation full compensation shall be made on market value and shall be convertible at the current exchange rate. Zambia is a signatory to the Multilateral Investment Guarantee Agency (MIGA) of the World Bank and other international agreements. This guarantees foreign investment protection in cases of war, strife, disasters, and other disturbances or in cases of expropriation. Zambia has signed bilateral reciprocal promotional and protection of investment protocols with number of countries. Bilateral Investment Agreements: Zambia has signed bilateral reciprocal promotional and protection of investment protocols with most of the COMESA and the SADC member states. On October 2, 2000, Zambia became a beneficiary of the African Growth and Opportunity Act (AGOA). Zambia has initialed market access offer through the Eastern

For the purpose of the Income Tax Act, capital expenditure on improvement or for the upgrading of infrastructure will qualify for improvement allowance of 100 percent of such expenditure for tax purposes; and Suspend customs duty to zero percent for a period of five years on machinery and equipment acquired by business enterprises that will operate under the proposed ZDA Act or rural enterprises.

Conversion and Transfer Policies: Investors are free to repatriate capital investments as well as dividends, management fees, interest, profit, technical fees, and royalties. Foreign nationals can also transfer and/or remit wages earned in Zambia without difficulty. There is no exchange control in Zambia for anyone doing business as either a resident or non-resident. Additionally, there are no restrictions on non-cash transactions. Overthe-counter cash conversion of the local currency, the Kwacha, into foreign currency is restricted to a US$ 5,000 maximum per transaction for account holders and US$ 1,000 for non-account holders.

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and Southern Africa (ESA) interim Economic Partnership Agreement (IEPA) with the European Union on September 30, 2008. In completing these negotiations, the provisions of trade in goods chapter and related annexes of the ESA IEPA now apply to Zambia. As on June 1, 2010, Zambia had signed bilateral investment treaties with 11 countries viz., Belgium and Luxembourg, China, Cuba, Egypt, Finland, Germany, France, Ghana, Italy, the Netherlands and Switzerland. Priority Sectors and Investment Opportunities Investing not less than US$ 500,000 in any of the priority sectors listed below is entitled to fiscal incentives:
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Manufacturing of the following engineering products: Copper products; Iron ore and steel; Cobalt; and other engineered products Beneficiation of phosphates and any other related material into fertilizer Beneficiation of materials into cement rock

Production and processing of raw timber into wood products Production and processing of the following products in the leather sector: cattle hides; crust leather; and leather products. Building of mini-hydro power stations Information and Communication Technology (ICT): Development of computer software; and Assembly/ manufacture of ICT equipment Health: manufacture of pharmaceutical products; repair and maintenance of medical equipment; provision of laundry services to medical institutions; ambulance services; medical laboratory services; diagnostic services; and other medical services.

Floriculture: Fresh flowers and dried flowers Horticulture: Fresh and dried vegetables Processed foods: Wheat flour and other processed foods Beverages and Stimulants: Tea and tea products; and coffee and coffee products. Textiles sector: Production and the processing of cotton, cotton yarn; fabric; and garments.

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Education and skills training Manufacture of: Machinery & components; machinery

DR Congo The DR Congo has for the past two years been at the bottom of the 182-nation index of countries in the World Banks Doing Business report. The government has begun reforms to change the business climate and improve its ranking by 10 places in the 2010 report. It set up a Doing Business steering committee in 2009, which will get funding and technical help from the International Finance Corporation (IFC), and plans 10 priority measures proposed by the countrys business federation and participants at a economic round table held in 2008. The government also plans to set up an independent body to bring together the different customs operations. Priority Sectors and Investment Opportunities
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Iron & steel products; Electrical and electronic products & components & parts thereof; Chemicals & petrochemicals; Pharmaceutical products; & related

Wood & wood products; Palm oil & their derivatives; Pulp, paper & paper board; Textile & textile products; Transport equipment, component & accessories; Clay-based, sand-based & other non-metallic mineral products; Plastic products ; Professional medical, scientific, & measuring devices/parts; Rubber products; Leather & leather products; Packaging & printing materials; Fertilizer; and Cement.

Mines and hydrocarbons

Rehabilitation of the mines of: Copper, Cobalt : ( Katanga); Cassiterite: in Kivu; Gold : Kilo-Moto Province). (Eastern

Exploration of : Copper and cobalt : Katanga;

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Diamond: Eastern Kasa, Western kasa, Bandundu, Eastern Province, Equateur; Coltan: North-Kivu, South-Kivu, Maniema; Coal : Katanga; Iron: Bas-Congo, EasternKasa, Western Kasa, Eastern Province Mining and geologic research all over the national area; and Development of the operating project of Tenke-Fungurume mine.

Agriculture and Forest: Production and transportation of woods, cattle farming, pig breeding, poultry, dairy, and fishing Manufacturing: Foodstuff ; tobacco factory; leather and textile industry; wood and paper industry; chemical industry and manufacturing of chemicals, oil and coal by-products, of rubber and plastic items ; manufacturing of building material; cement works; iron and steel. Banking: insurance. Banking and

Hydrocarbons Restoration of Moanda Refinery: Coastal basin of Bas-Congo ; Production of road asphalt : BasCongo and Eastern Province ; Prospecting Basin; in the Central
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Infrastructure: Road, railway and waterways. Tourism: Development of hotel trade in urban centres, including Kinshasa, Lubumbashi, Mbuji-Mayi, Kananga, Tshikapa, Munkambalake, Matadi, Kisangani, Bukavu and Mbandaka; touristic site management; development of new sites; and modernizing national parks. Transport and harbour: Rehabilitation of Ndjili airport, Lubumbashi and Kisangani airports; Creation of transport companies; Equipping and

Geologic research in the coastal basin (Bas-Congo) ; Deposit exploitation in the Eastern Province (Ituri) ; and Building of transport infrastructures and those for the distribution of oil production in urban centres.

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modernizing harbours : Matadi, Kinshasa, Ilebo, Mbandaka and Kisangani; building a sea harbour at Banana (BasCongo); building a railway Matadi-Banana (Bas-Congo); improving the navigability of the main watercourses by dredging and beaconing.
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Investment Promotion COMESA Region

in

the

Telecommunications: Settingup a short-wave transmitter covering the whole country; rehabilitation of a cabled Office Congolais des Postes et des Tlcommunications (OCPT) network; expansion of a cabled network of fixed telephone all over the national area. Building and Civil Engineering: Building, rehabilitation and equipping basic infrastructures (schools, hospitals, blocks of flats), administrative blocks and commercial buildings (CCIC); restoration of Congo International Trade Centre with 22 floors; Building low-rent houses in various urban centres (including Kinshasa, Matadi, Bandundu, Kananga, MbujiMayi, Mbandaka, Kisangani, Goma, and Bukavu).

The Regional Investment Agency (RIA) seeks to optimize investment and trade opportunities in the COMESA region through developing and establishing synergies, networks, alliances, and co-operation with other Regional Economic Communities, co-operating partners and international institutions so as to achieve high investment levels that lead to rapid and sustainable economic growth and development. The major objective of the Agency is to make COMESA one of the major destinations for regional and international investors while simultaneously enhancing national investment. Some of the functions of the Agency are:
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Working to improve the national investment environments in member countries by identifying best practices and advocating their adoption at the national level. Gathering and disseminating information, including creation and maintenance of a database and a website. The RIA collects and disseminates, through the publications and website detailed

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information on policies affecting the investment environment, cost of doing business, investment procedures, investment opportunities, and other relevant information in member countries. The activities of RIA include:
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Promoting the COMESA FTA and a Common Investment Area. Identifying and promoting investment opportunities, with special focus on projects with a regional impact. Improving the regional investment environment by identifying constraints to investment and recommending measures to overcome these constraints Training and providing development support to National Investment Promotion Agencies in member countries.

Common Investment Area and opened the Agreement for signature by Member States that are ready to sign the agreement. The establishment of a Common Investment Area is particularly useful, as national markets in most COMESA countries are too small to attract investments on their own. Regional markets attract more investments as they have more consumers than national markets and hence more purchasing power. In addition, multinationals, fund managers and other investors now give preference to regional, rather than national markets in making decisions on where to invest. The region continues to attract substantial amounts of Foreign Direct Investments. The sectors that have been benefiting most from FDI are petroleum, tourism with very little going into manufacturing. Most of the investments come from large transnational companies but there are other categories that are not recorded such as the small transnational corporations, standalone foreign entrepreneurs and Diaspora investments.

COMESA Common Investment Area: During the last Summit, COMESA adopted the Investment Agreement for the COMESA

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7: EXIM BANK IN THE COMESA REGION

As the Apex Financial Institution in India financing, promoting and facilitating Indias international trade and investments, Export-Import Bank of Indias (Exim Banks) vision has evolved from financing, facilitating and promoting trade and investment, to a conscious and systematic effort at creating export capabilities. Since Exim Bank commenced operations in 1982, the countries in the African Continent have always been a focus region, and thus a critical component of Exim Banks strategy to promote and support two-way trade and investment. As a partner institution to promote economic development in Africa, the commitment towards building relationships with the African region is reflected in the various activities and programmes which Exim Bank has set in place, especially in the Eastern and Southern African countries. Exim Bank operates a comprehensive range of financing, advisory and support programmes to promote and facilitate Indias trade and investment relations with countries in Africa, including the COMESA region.

FINANCING PROGRAMMES lines of Credit Exim Bank extends Lines of Credit (LOCs) to overseas governments, parastatal organisations, financial institutions, commercial banks and regional development banks to support export of eligible goods and services on deferred payment terms. Exim Bank also extends overseas buyers credit directly to foreign entities for import of eligible Indian goods and related services or for financing eligible turnkey projects. Exim Bank also extends LOCs on behalf and at the behest of Government of India. In the African region, as on September 1, 2010, Exim Bank has 85 operative LOCs totalling US$ 2,857.04 mn, covering 47 countries, including the COMESA region. With respect to countries in the COMESA region, Exim Bank has 24 operative LOCs, amounting to US$ 1,278.63 mn, extended to:

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Government of D R Congo: LOC of US$ 33.5 mn for setting up a cement factory and acquisition of buses; LOC of US$ 25 mn for installation of hand pumps and submersible pumps; and LOC of US$ 42 mn for execution of Kakobola Hydroelectric Power Project. Central Bank of Djibouti: LOC of US$ 10.0 mn for three contracts viz., supplying of diesel generating sets and pumps, setting up a mini cement plant, and for civil works; Government of Djibouti: LOC of US$ 10.0 mn for cement plant project; Government of Eritrea: LOC of US$ 20 mn for multipurpose agricultural projects and educational projects; Government of Ethiopia: LOC of US$ 65 mn for energy transmission and distribution; LOC of US$ 122 mn and sugar industry; and LOC of US$ 166.23 mn for development of sugar industry. Government of Madagascar: LOC of US$ 25.0 mn, for fertilizer production and enhancing rice productivity projects;

Government of Malawi: LOC of US$ 30 mn for supply of irrigation, storage, tobacco threshing plant and one village one project; Government of Mauritius: LOC of US$ 10 mn for construction of Baie du Tombeau Sewerage Project; Government of Rwanda: two LOCs, amounting to US$ 20 mn and US$ 60 mn, respectively, for power projects; Government of Seychelles: LOC of US$ 8 mn, for export of rice, potatoes and buses; Seychelles Marketing Board, Seychelles: LOC of US$ 5 mn for exports of vehicles, spare parts, automobile tyres and medicines; Government of Sudan: LOC of US$ 50 mn for export of electrification equipment, photovoltaic cells, diesel coaches, rehabilitation of locomotives, textile machinery, copper rods etc.; LOC of US$ 350 mn for setting up of Kosti Combined cycle power plant; LOC of US$ 41.9 mn for transmission and sub-station project; LOC of US$ 48.0 mn for supply of agricultural inputs for the Sudanese Agricultural Bank, technical

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and laboratory equipment to higher educational institutions, scientific equipments for ministry of science and technology, solar electrification and meeting requirement of Sudan railways; LOC of US$ 52 mn for micro-industrial projects and development of livestock production and services; and LOC of US$ 25 mn for sugar projects;
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for a cement manufacturing project. Exim Bank also has in place an LOC of US$ 30 mn to Afreximbank for general purpose utlisation. Support for Project Exports Exim Bank plays a pivotal role in promoting and financing Indian companies in execution of projects in markets overseas. Such projects, primarily in the infrastructure sector, contribute to local and regional development. Exim Bank extends both funded and non-funded facilities to Indian project exporters for overseas industrial turnkey projects, civil, civil construction contracts, supplies as well as technical and consultancy services contracts. Indian companies have implemented numerous projects in Africa, including COMESA region, with the support of Exim Bank, in sectors such as power, telecommunications, transport, water supply & sanitation. As on September 1, 2010, the value of project contracts secured by Indian project exporters, with Exim Banks support, in the COMESA region amounted to Rs. 211.5 billion. Some of the projects are highlighted below:
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Government of Zambia: LOC of US$ 50 mn for Itezhi-Tezhi Hydro power project; and LOC of US$ 10 mn for export of TATA buses, motor vehicles, motor cycles and supply of vocational tool kits.

Exim Bank also extended seven LOCs aggregating to US$ 90 mn to Eastern and Southern African Trade and Development Bank (PTA Bank), where 15 member countries of COMESA are shareholders, for setting up of, among others, sugarcane crushing and processing plant, cement plant, paper plant, besides contracts for weaving machinery, capacitor power panel, HVAC power panel, machineries and accessories for pharmaceutical manufacturing unit and air-conditioning equipment, and refractories and ancillary equipment

Supply, erection and commissioning of 230 KV

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Transmission lines between Ethiopia - Djibouti border in Djibouti;

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pipeline projects for Sirte Oil Co. in Libya;

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Contract for supply, erection and commissioning of 500 KV Abu Quir-Kafr Zayat-Bassous double circuit overhead transmission line at Egypt; Contract for installation of several transmission lines, distribution network and electrification projects in Ethiopia; Consultancy contract for procurement advisory services in Kenya; Contract for supply and installation of 2x157 MW Western Mountain Gas Turbine based Power project extension in Libya; Al-Jabal Al-Gharbi Gas Turbine Based Power Project for General Electric Co. in Libya; Contract for execution of engineering, procurement, installation and commissioning of infrastructure networks, viz. water-sewerage-storm water mains and branch lines, roads and other facilities in Libya; Laying of El-Khoms Tripoli and Tripoli-Melita gas transmission

External Cladding Works for Cyber Tower in Mauritius; Supply, installation, testing and commissioning of electrical, air-conditioning, plumbing, drainage and fire fighting works for both Balaclava Hotel Resort Project and Apollo Bramwell Hospital at Moka, Mauritius; Supply and erection of diesel power plants to the new field processing facility of Greater Nile Petroleum Operating Co. Ltd. in Sudan; Supply & Supervision of erection of 220 KV Singa-Gadaref transmission line & substation project in Sudan; Setting up a 500 MW steam based power plant at Kosti Power Station for National Electricity Corporation in Sudan; Design, execution and completion of 330 KV transmission line from Kansanshi sub-station to Lumwana substation in Zambia; Structural & Mechanical Erection of copper smelting plant for M/s Konkola Copper Mines Plc in Zambia.

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Besides, Exim Bank and African Development Bank (AfDB) have signed an agreement for co-financing projects in Africa. The agreement envisages joint financing of projects (priority being given to support projects of small and medium enterprises) in regional member countries of AfDB. Under the Technical Co-operation Agreement between Government of India (GOI) and AfDB, Exim Bank also provides a list of Indian consultants for consideration of AfDB in respect of technical assistance being supported by GOI under Indian Consultancy Fund. Exim Bank also periodically organizes in various centres in India, Business Opportunities seminars in Projects funded by African Development Bank. INSTITUTIONAl lINKAGES AND ARRANGEMENTS Exim Bank has been consciously forging a network of alliances and institutional linkages to help further economic co-operation while promoting and facilitating bilateral trade and investment between India and the African region. These, in turn, serve to create an enabling environment and support capacity creation and enhance institutional strengthening. The network

of alliances are with financial institutions, trade promotion agencies, investment promotion agencies, export promotion agencies, chambers of commerce and information providers across the globe for assisting externally oriented Indian companies in their quest for excellence and globalisation. In the African region, and especially in COMESA, Exim Bank has in place Memoranda of Understanding (MOUs) with several institutions including:
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Afreximbank PTA Bank (Eastern & Southern African Trade Development Bank) National Bank of Egypt Board of Mauritius Investment of

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Industrial Development Bank of Sudan

Association with African Development Bank (AfDB) India is a member of African Development Bank (AfDB). Many Indian companies participate in projects funded by African Development Bank Group. Exim Bank works very closely with African Development Bank and has

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an active programme which offers a range of information, advisory and support services to Indian companies to enable more effective participation in projects funded by Multilateral Funding Agencies such as African Development Bank. Towards this end, Exim Bank and African Development Bank have in place agreement for co-financing projects in Africa, which envisages, among others, joint financing of projects (priority being given to support projects of small and medium enterprises) in regional member countries of AfDB. Exim Bank also organizes Business Opportunities seminars in Projects funded by African Development Bank at various centres in India. Member of Association of African Development Finance Institutions (AADFI) Exim Bank is also a member of AADFI, a forum of institutions / banks with the objective of creating coordination and economic solidarity among the development finance institutions in the African continent. The membership of AADFI helps Exim Bank in identifying potential markets / partners in the African region and provides an ideal

platform for building linkages with other institutions in Africa, which are members of AADFI. Shareholder in Afrexim Bank and Development Bank of Zambia Towards facilitating economic cooperation, Exim Bank has taken up equity in the African ExportImport Bank (Afrexim Bank), which is headquartered in Cairo, Egypt. The Afrexim Bank was established in 1993 by African Governments, African private and institutional investors as well as non-African financial institutions and private investors for the purpose of financing and promoting intraand extra-African trade. Further, Exim Bank has also taken equity in Development Bank of Zambia (DBZ). Global Network of Development Finance Institutions and Exim Banks (G-NEXID) With a view to facilitating SouthSouth trade and investment cooperation, at the joint initiative of Exim Bank and UNCTAD, a Global Network of Exim Banks and Development Financial Institutions (G-NEXID) was launched in March 2006 in Geneva. Annual Meetings are held to deliberate upon measures

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to foster long-term relationship, share experience and strengthen financial cooperation to promote trade and investment relations between developing countries. A number of institutions from Africa are G-NEXID members, such as Afreximbank, PTA Bank, East African Development Bank, Development Bank of Namibia, Development Bank of Zambia, Industrial Development Bank of Kenya, Industrial Development Corporation of South Africa, Development Bank of Southern Africa, ECOWAS Bank for Investment and Development, Central African States Development Bank, Exim Bank of Nigeria, SME Bank of Tunisia, Development Bank of Mali, National Bank for Investment, Cote dIvoire. FINANCE FOR JOINT vENTURES OvERSEAS Further, Exim Bank supports Indian companies in their endeavour to globalise their operations, through joint ventures (JVs) and wholly owned subsidiaries (WOS). Such support includes loans and guarantees, equity finance and in select cases direct participation in equity along with Indian promoter to set up such ventures overseas. In the COMESA region, the Bank has supported several such ventures

in countries such as Kenya, Mauritius, Zambia, Uganda, and Egypt in diverse sectors including textiles, tyre manufacturing, telecommunications, irrigation, consumer electronics, engineering goods and chemicals. These ventures serves to promote value addition, as also contribute to capacity building in host countries. Exim Bank also facilitates joint investments by Indian and overseas company in third country markets in addition to facilitating investments into India. EXIM BANK AS A CONSUlTANT As a partner institution in promoting economic development in Africa, Exim Bank shares its experience in the setting up of institutional infrastructure for international trade. In this regard, Exim Bank has rendered technical assistance to a number of institutions in Africa, which include: Establishing the Afrexim Bank; Establishing an Export Credit Guarantee Company in Zimbabwe; Consultancy assignment for the Government of Mauritius on Mauritius as an Investment Hub for Indian Firms; Development of international trade finance products for Industrial Development Corporation of South Africa.

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RESEARCH STUDIES With a view to enhancing competitiveness of India exporters, as also identifying Indian trade and investment potential, Exim Bank periodically conducts research studies on countries/ regions; sectors/industry; and on macro-economic issues relating to international trade and finance. The recent research publications relating to Africa include:
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Africa, including the COMESA region. The magazine addresses the business information needs of companies who are interested in trade with the African region. The magazine is widely distributed to key constituents in India and in the African region. EXIM BANKS JOINT vENTURE Exim Bank has taken the initiative of setting up of Global Procurement Consultants Ltd. (GPCL), in partnership with leading consultancy firms in India, that provides a range of procurement related advisory services to multilateral agencies such as World Bank, African Development Bank, and Asian Development Bank. GPCL has taken up a number of assignments in Africa in countries such as Uganda, Eritrea, Malawi, Nigeria, and Ghana. EXIM BANKS OFFICE IN AFRICA

SADC : A Study of Indias Trade and Investment Potential IBSA : Enhancing Economic Cooperation across Continents ECOWAS : A Study of Indias Trade and Investment Potential Select West African Countries; Select Southern Countries; Maghreb Region ; and Southern African Union (SACU). Customs African

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Exim Bank also helps bring out a bilingual (English and French) magazine titled Indo-African Business, which focuses on bilateral trade and investment potential between India and countries in

In order to facilitate closer economic cooperation with the African region, Exim Bank has representative offices in Durban, South Africa and Dakar, Senegal. The representative offices interfaces with institutions such as Industrial Development Corporation of South Africa Ltd., African Development Bank,

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regional financial institutions such as Eastern and Southern African Trade and Development Bank (PTA Bank), Afrexim Bank, and West African Development Bank (BOAD) as well as Indian missions in the region, thereby being closely associated with the Banks initiatives in the African region, including the COMESA region. Exim Banks third representative office in the African region is being set up in Addis Ababa, Ethiopia.

In sum, Exim Bank, with its comprehensive range of financing, advisory and support services, seeks to create an enabling environment for enhancing two-way flow of trade, investment and technology between India and the African region, including the COMESA region, while also promoting infrastructure development, facilitating private sector development in host countries, and contributing towards institutional building in the region.

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8: STRATEGIES AND RECOMMENDATIONS FOR ENHANCING BIlATERAl COMMERCIAl RElATIONS WITH THE COMESA REGION
The study, in the previous chapters, provided a broad overview of the COMESA trade bloc in Africa and analyzed in detail the economic environment in the COMESA region, trade patterns and investment climate in the COMESA countries. Indias bilateral trade and investment relations with the countries in the region was also analysed, and also the potential areas for enhancing bilateral trade and investment cooperation. Exim Banks initiatives in the COMESA region were also highlighted. The concluding chapter endeavours to provide broad strategies and recommendations which could be adopted in order to facilitate and enhance two-way trade and investment between India and the COMESA countries, based upon the analysis and findings of the study. Strategy to enhance trade and investment relations with countries in the COMESA region would entail an integrated approach comprising, among others: cooperation in agricultural development, natural resource development, cooperation in hotel and tourism industry, focus on ICT, human resource development, cooperation in infrastructure, banking and energy, besides broadening linkages with trade promotion institutions in the region; and developing linkages with investment promotion agencies. Such endeavours could also be supplemented by measures such as: focus on increased participation in multilateral funded projects; setting up business hub(s) in the region, and establishing preferential trade agreement between India and the COMESA region. A. COOPERATION IN AGRICUlTURE SECTOR DEvElOPMENT Agriculture and related activities are the backbone of most of the countries in the COMESA region, and exports from the sector are important foreign exchange earners for most countries in COMESA. Many countries in the COMESA region are home to the worlds richest agricultural resources. As

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a result, several Governments in the African region, including the COMESA countries, view that foreign investments in agriculture cultivation would lead to possible benefits for rural poor, including the creation of a potentially significant number of farm and off-farm jobs, development of rural infrastructure, and social improvements, leading to poverty reduction. Moreover, national Governments in the region, with a view to addressing the serious issue of food shortage, have been framing policies towards attracting investors in the agricultural sector to tackle food, employment and sustainability crises. For instance, countries like Zambia has decided to award farm land to foreign investors to improve agricultural production and curb food shortages, and has a plan to open up more land to investors in the coming years. Zambia has also sought Indias cooperation and investment in agriculture production especially of sugar. Ethiopia also provides immense opportunities for investment in the agriculture sector. Governments in the region have also expressed their willingness to lease land free of cost on a long term basis, wherein farmers would be free to cultivate the land and

raise any crop and sell it to the domestic market and also export the same. The countries in the forefront to attract agriculturists include Sudan, Ethiopia and Zambia. Indian companies can explore the possibilities of investment such as joint ventures or contract farming and out-grower schemes or investments in key stages of value chains. Indias investment in target country would result in improving the agricultural sector of the target country through skill development, job creation, technological upgradation, supply of quality inputs like seed, better supply chain management, and biotechnology. Towards this end, the LOCs extended by Exim Bank to the region, which are earmarked for agriculture, irrigation and related projects, would also serve to contribute towards development of the agricultural and related sectors in the region. For instance:
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LOCs to the Government of D R Congo for installation of hand pumps and submersible pumps; LOC to the Government of Eritrea for financing multipurpose agricultural projects and educational projects;

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LOC to the Government of Ethiopia for the development of sugar industry; LOC to the Government of Madagascar for financing projects for production of rice and production of fertilizer; LOC to the Government of Malawi for supply of irrigation, storage, tobacco threshing plant; LOC to the Government of Seychelles for financing export of rice and potatoes; and LOC to the Government of Sudan for financing supply of agricultural inputs for the Sudanese Agricultural Bank, and for financing sugar projects.

resources, increased cooperation between India and the resourcerich countries in COMESA in developing/ exploring natural and mineral resources, with bilateral arrangements such as buy-back arrangements, could be an important strategy to enhance Indo-COMESA commercial relations. Towards this end, Exim Bank has put in place a programme under which it selectively supports Indian companies in these endeavours as a means of strategic support, both by applying its own resources as well as by leveraging support through syndication and similar arrangements. Thus, for India, with countries in the African region, especially those in the COMESA region, emerging as important trade and investment partners, and the need of COMESA countries for strategic partners in their developmental and growth endeavours, sharing of experiences in capacity building, investments and endeavours in growth-inducing sectors in Africa could prove to be strategic in fostering and enhancing long term commercial relations as also presence in the COMESA region. C. CO-OPERATION IN HOTEl AND TOURISM INDUSTRy Countries such as Mauritius, Egypt, Kenya, Seychelles in the COMESA

With these LOCs in place, increased exports of agri-related machinery and equipment to the region by Indian entrepreneurs / exporters would serve to enhance bilateral cooperation in the agricultural sector, as also to overall development of the region. B. NATURAl RESOURCE DEvElOPMENT With many of the countries in the COMESA region endowed with mineral wealth and natural

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region have emerged as major tourism destinations of the world, receiving large number of tourist population visiting Africa. With India being an emerging player in hospitality industry, Indian companies could explore the vast opportunities available in the COMESA countries. Indian companies can focus more on developing world-class hotels and resorts with more Indian touch. Indian hotel groups could also try to acquire and renovate some hotels in the region. Moreover, among Indian companies, Premium Hotels and Palaces have shown interest in building conference and hotel facilities near Zambias main tourist attraction, the Victoria falls. Given the rich cultural and geographical diversities and vast biodiversity in flora and fauna of African nations, Indian entrepreneurs could also specifically focus on different kinds of tourism products, such as adventure tourism, eco-tourism and cultural tourism. D. FOCUS ON INFORMATION AND COMMUNICATION TECHNOlOGy (ICT) With many countries in the African region, and especially in the COMESA region, still on the path of modernisation and computerisation,

Information and Communication Technology (ICT) is another area for cooperation. With the strength and capability that India possesses in the realm of Information Technology sector, Indian IT firms could explore the opportunities in the COMESA region, and focus on investing in subsidiaries or joint ventures in the areas of e-governance, financial services and e-education. Indian companies could also share their expertise in providing software programmes and services for banks and financial institutions in the region. For instance, Indian companies, such as NIIT and Aptech, who already have presence in Africa, could expand their network of training centers in the COMESA region. Designing specialized e-learning courses on the web for providing technological assistance, manufacturing process knowhow, and other technical areas also present opportunities. Such initiatives would help industry and commerce, promote education in remote areas, create employment opportunities and provide healthcare to remote areas in the COMESA region, thereby contributing to overall development of nations in the COMESA region.

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E. INvESTMENT IN HUMAN RESOURCE DEvElOPMENT An associated area of bilateral cooperation could also be investing in human resource development. Human resource development is recognised as the premiere need of most African nations. Businesses focusing on health, education and skill development are more likely stable businesses, which are in increasingly high demand in many COMESA countries, due to their direct impact on improving the standard of life. Towards this end, countries from the region could also tie up with Indian institutions such as the Central Food Technological Research Institute (CFTRI), Mysore and Entrepreneurship Development Institute of India (EDI), Ahmedabad. Further, Indian institutions could also share their expertise in the fields of export capability creation in the region, institutional strengthening and export development in the form of technical assistance and sharing of expertise through site visits.

development in countries within the COMESA region. Investment in infrastructure development, due to an increasing need for better infrastructural facilities, coupled with the endeavour of COMESA member countries for rapid economic growth, could prove to be a mutually rewarding area of bilateral cooperation. Areas that hold immense investment opportunities include development of highways and roadways, development of railway networks and power systems, which would also help in integration of the COMESA region, and the African continent at large, to a great extent. Large Indian construction companies could explore business opportunities to meet the infrastructural requirements in the COMESA region, also contributing largely to economic development in the host country. Among the Indian companies for example, while Tata group already has substantial investments in Zambia, Essar group, which has interests in steel, energy, power and minerals has expressed interest in infrastructure development in Zambia. G. COOPERATION IN THE BANKING/ FINANCIAl SECTOR With a view to enhancing commercial relations with countries

F.

COOPERATION IN INFRASTRUCTURE DEvElOPMENT

An important area of bilateral cooperation could be infrastructure

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in the African region, some Indian banks have set up operations in select countries in Africa. Currently in the COMESA region, Bank of Baroda has branches in Mauritius, and Seychelles and Bank of India in Kenya; while State Bank of India has subsidiaries in Mauritius, Bank of Baroda in Uganda and Kenya, and Bank of India in Kenya. Further, State Bank of India has a representative office in Egypt, while a Joint Venture Bank, Indo-Zambia Bank Ltd. has been set up in Zambia by Bank of Baroda, Bank of India and Central Bank of India. In view of the potential for enhancing bilateral trade and investment relations with the COMESA region, opening branches/representative offices in the region, and developing correspondent banking relations with select banks in the region would serve to facilitate and promote commercial relations. H. ENERGy GENERATION AND POWER

deficit is expected to continue posing a serious challenge for the overall development of the region. Insufficient investment in the energy sector leading to underdeveloped infrastructure including electricity transmission and distribution networks have exacerbated the energy problem in the region. Further, despite the huge potential for energy generation, insufficient use of existing energy systems has resulted in effective generation of electricity which is less than installed capacity (which is around 35,000 mega watts) by around 20 to 30 percent due to drought, lack of maintenance and rehabilitation and also general system losses of electricity which includes transmission and distribution. In light of these, development of the regional energy infrastructure in the COMESA region is a priority area for governments in the COMESA region. Towards this end, the LOCs extended by Exim Bank to the region, which are earmarked for power generation and transmission projects, would also serve to contribute towards development of the energy sector and power generation and transmission. For instance:

Another area, which holds immense potential for investment and cooperation, is electricity generation and power transmission. It has been estimated that the actual demand for electricity in the COMESA region exceeds the supply by more than 20 percent, and this energy

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LOCs to the Government of Ethiopia for energy transmission and distribution projects; LOCs to the Government of Rwanda for power generation; LOC to the Government of Sudan for the setting up of Kosti Combined Cycle Power Plant in Sudan to be executed by Bharat Heavy Electricals Ltd. (BHEL); LOC to the Government of Sudan for financing the SINGAGEDARIF transmission and Sub-Station project; and LOC to the Government of Zambia for financing the ItezhiTezhi Hydro power project. IN SME

J. DEvElOPING lINKAGES WITH INvESTMENT PROMOTION AGENCIES Besides streamlining their investment regimes, many countries in the region have set up specialised investment promotion agencies to promote and facilitate inflow of foreign investment into these countries, while also serving as one-stop-shop for investment related activities. In light of the key role of these institutions, building closer cooperation and linkages with these investment promotion agencies (refer Annexure 2 for complete contact details) in the COMESA region would serve to enhance access to information about investment opportunities in the region. Such agencies include:
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I. COOPERATION SECTOR

Towards developing entrepreneurship and human capability, India could share its expertise and experience with countries in the COMESA region, particularly in the SME sector wherein India has developed successful SME clusters. An important element in this direction could be for delegations from these countries to visit India to study success factor of SME clusters in India, and developing similar clusters in home countries based on resource and skill endowments.

Ministre du Commerce, de lIndustrie et Artisanat, Burundi; Ministre de lEconomie et du Commerce et des Investissements, Comoros; Agence Nationale pour la Promotion des Investissements (ANAPI), DR Congo; Agence nationale pour la Promotion des Investissement (ANPI), Djibouti;

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General Authority for Free Zones and Investment (GAFI) for Egypt; Eritrea Investment Center; Ethiopian Commission; Investment

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Kenya Investment Authority; Libya Board; Foreign Investment

Madagascar Economic Development Board; Malawi Investment Promotion Agency (MIPA); Board of Mauritius; Investment of

areas for investment, upcoming projects in different sectors, prospective investment partners, as also procedures, rules and regulations required for venturing into specific sectors in these countries and incentives offered to investors. Further, investment promotional events with select investment promotion agencies would foster increased interaction between potential investors and concerned agencies in potential sectors in target countries in the region. K. COOPERATION WITH CHAMBERS OF COMMERCE AND INDUSTRy Efforts to enhance commercial presence in the COMESA region could also be supplemented by cooperation with Chambers of Commerce and Industry in the region. Such chambers would include:
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Rwanda Investment and Export Promotion Agency (RIEPA); Seychelles Investment Bureau; Sudanese Authority; Investment

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Swaziland Investment Promotion Authority (SIPA); Uganda Investment Authority; Zambia and Investment Centre;

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Chambre de commerce et DIndustrie du Burundi, Burundi; Union des Chambre commerce, DIndustrie DAgriculture, Comoros; de et

Zimbabwe Authority.

Investment

Such relationship would serve to enhance knowledge about potential

Djibout Chamber of Commerce, Djibouti;

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Federation Chambers Egypt;

of Egyptian of Commerce,

l. BUSINESS HUB COMESA REGION

IN

THE

Asmara Chamber of Commerce, Eritrea; Ethiopian Commerce Ethiopia; Chamber of & Industry,

Kenya National Chamber of Commerce and Industry, Kenya; Information Economiques Chambre de Commerce, Madagascar; Malawi Chamber of Commerce and Industry, Malawi; Mauritius Chamber of Commerce & Industry, Mauritius; Sudan Chamber of Commerce, Sudan; Federation of Swaziland Employers and Chamber of Commerce, Swaziland; Uganda National Chamber of Commerce and Industry, Uganda; Zambia Association of Chambers of Commerce and Industry, Zambia; and Zimbabwe National Chamber of Commerce, Zimbabwe.

With a view to enhance India-based business in the COMESA region, Indian companies could develop a business hub in one of the COMESA member countries. The creation of such a hub could encourage and lend support to prospective companies who are interested in developing commercial relations and establish presence in the COMESA region. An added advantage of such a business hub in the region for the Indian exporter/ investor would be in terms of market access to all the markets of the COMESA region. M. FOCUS ON MUlTIlATERAl FUNDED PROJECTS Besides participating in investment activities that are promoted by the respective governments of the COMESA member countries, Indian companies could also endeavor to participate in multilateral funded projects. Multilateral institutions such as the World Bank, and the African Development Bank (AfDB) support and fund a number of projects in the COMESA region. They broadly cover areas such as agriculture and related activities;

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infrastructure development such as roads, telecommunication, postal services, electricity, water supply and sanitation; mining and quarrying; rural and urban development; environment and natural resource development; health care and education; privatization; financial market development; and tourism development. Focus on these funded projects and increased participation by Indian project and service exporters in such projects would serve to enhance Indias commercial presence in these countries. At the same time, efforts to participate in technical assistance in terms of project preparation and advisory services in such funded projects would support increased presence in the region. N. PREFERENTIAl AGREEMENT TRADING

COMESA region as Indias trading partners a similar PTA between India and the COMESA region could also be a worthwhile initiative to add to the overall endeavours to enhance Indo-COMESA trade and investment relations. O. WIDER DISSEMINATION OF INFORMATION To enhance Indias exports to the COMESA region, as also opportunities for investment, an important element of the strategy would also be effective dissemination of information relating to trade/investment opportunities to potential exporters and investors in India as also prospective partners in the COMESA region. This can be facilitated through increased visits by trade and industry delegations from India to the region, and vice versa. Such economic/ trade missions would serve to enhance awareness in the region about Indias strengths and capabilities. The trade promotion measures could also include participation in specialized trade and industry fairs and exhibitions in the region; organizing buyer-sellers meets and preparing product catalouges in electronic form.

India and members of the Southern African Customs Union (SACU South Africa, Lesotho, Swaziland, Botswana, and Namibia) are at an advanced stage of negotiations to put in place a preferential trading agreement (PTA) to boost bilateral trade. In light of the importance of the

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Further, specialized Made in India exhibitions and seminars / workshops could be organized, in collaboration with the COMESA countries, to showcase Indian technology and

expertise. Counterparts in India as well as in the COMESA region could be apprised about the operative LOCs in the region and the ways and means of utilizing them.

167

ANNEXURE 1

Table A1: Select Major Trading Blocs in Africa

Trade Bloc year of Formation
1975

Members

Economic Community of West African States (ECOWAS)

Benin, Burkina Faso, Cape Verde, Cte dIvoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo

Cross Border Initiative

1992

Burundi, Comoros, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe

Southern African Development Community (SADC)

1992

Angola, Botswana, Democratic Republic of Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe

Common Market for Eastern and Southern Africa (COMESA)

1994

Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, Zimbabwe

West African Economic and Monetary Union (UEMOA) East African Community (EAC)

1994

Benin, Burkina Faso, Cte dIvoire, Guinea-Bissau, Mali, Niger, Senegal, Togo

1996

Burundi, Kenya, Rwanda, Tanzania, Uganda

Source: World Development Indicators 2010, World Bank

168

Table A2 : Real GDP Growth Rates of COMESA Countries (%)

Country Burundi Comoros D R Congo Djibouti Egypt Eritrea Ethiopia Kenya Libya Madagascar Malawi Mauritius Rwanda Seychelles Sudan Swaziland Uganda Zambia Zimbabwe f: forecasts Source: IMF, WEO Database, April 2010 & Exim Bank research 2007 3.6 0.5 6.3 5.1 7.1 1.4 11.8 7.0 7.5 6.2 1.2 5.4 5.5 11.5 10.2 3.5 8.4 6.2 -3.6 2008 4.5 1.0 6.1 5.8 7.2 -9.8 11.2 1.5 3.4 7.1 9.4 4.2 11.2 -0.9 6.8 2.4 8.7 5.7 -14.5 2009 3.5 1.1 2.8 5.0 4.7 3.6 9.9 2.1 1.8 -5.0 8.0 1.5 4.1 -7.6 4.5 0.4 7.1 6.3 4.0 2010f 3.9 1.5 5.4 4.5 5.0 1.8 7.0 4.1 5.2 -1.0 6.0 4.1 5.4 4.0 5.5 1.1 5.6 5.8 2.2 2011f 4.5 2.5 7.0 5.4 5.5 2.8 7.7 5.8 6.1 3.7 6.3 4.7 5.9 5.0 6.0 2.5 6.4 6.0 0.0

169

Table A3 : GDP Per Capita of COMESA Countries (US$) (current prices)

Country Burundi Comoros D R Congo Djibouti Egypt Eritrea Ethiopia Kenya Libya Madagascar Malawi Mauritius Rwanda Seychelles Sudan Swaziland Uganda Zambia Zimbabwe f: forecasts Source: IMF, WEO Database, April 2010 & Exim Bank research 2007 125.1 729.0 163.4 1108.0 1771.0 271.7 248.6 785.0 11773.2 373.1 248.4 5966.0 398.8 12067.9 1252.2 2892.5 385.3 1001.5 396.9 2008 146.5 816.8 184.4 1252.6 2160.0 275.7 330.5 859.4 14478.3 468.1 287.7 7330.1 489.3 10811.7 1522.0 2778.2 450.7 1251.9 334.9 2009 162.9 798.8 171.5 1304.2 2450.4 362.9 390.3 911.9 9529.3 412.0 328.1 6838.1 535.7 8973.4 1397.8 2906.9 474.0 1086.1 374.8 2010f 172.0 830.2 189.5 1369.2 2758.8 423.5 360.8 937.8 11852.7 393.5 336.2 7605.2 569.4 11443.8 1638.1 3026.5 514.8 1317.4 438.5 2011f 182.9 846.8 199.3 1464.0 3109.3 484.5 365.3 1041.7 12772.2 408.9 354.8 8006.1 599.7 11720.6 1809.6 3087.3 526.5 1421.4 467.8

170

Table A4 : Population of COMESA Countries (mn)

Country Burundi Comoros D R Congo Djibouti Egypt Eritrea Ethiopia Kenya Libya Madagascar Malawi Mauritius Rwanda Seychelles Sudan Swaziland Uganda Zambia Zimbabwe COMESA Total f: forecasts Source: IMF, WEO Database, April 2010 & Exim Bank research 2007 7.8 0.6 61.1 0.8 73.6 4.9 78.6 34.7 6.1 19.7 13.4 1.3 9.4 0.1 37.2 1.0 30.9 11.5 11.7 404.2 2008 7.9 0.7 62.9 0.8 75.2 5.0 80.7 35.3 6.2 20.2 13.7 1.3 9.6 0.1 38.1 1.0 32.0 11.7 11.7 414.1 2009 8.1 0.7 64.8 0.8 76.7 5.2 82.8 35.9 6.3 20.8 13.9 1.3 9.8 0.1 39.1 1.0 33.2 12.0 11.7 424.1 2010f 8.3 0.7 66.7 0.8 78.2 5.3 84.8 36.5 6.5 21.3 14.2 1.3 10.0 0.1 40.1 1.0 34.4 12.2 11.7 434.1 2011f 8.4 0.7 68.7 0.8 79.8 5.5 86.8 37.1 6.6 21.9 14.5 1.3 10.2 0.1 41.2 1.0 35.6 12.4 11.7 444.3

171

Table A5 : Average Consumer Prices Inflation of COMESA Countries (annual % change)

Country Burundi Comoros D R Congo Djibouti Egypt Eritrea Ethiopia Kenya Libya Madagascar Malawi Mauritius Rwanda Seychelles Sudan Swaziland Uganda Zambia Zimbabwe 2007 8.3 4.5 16.7 5.0 9.5 9.3 17.2 9.8 6.2 10.4 7.9 8.8 9.1 5.3 8.0 8.2 6.8 10.7 2008 24.4 4.8 18.0 12.0 18.3 19.9 44.4 13.1 10.4 9.2 8.7 9.7 15.4 37.0 14.3 13.1 7.3 12.4 2009 11.3 4.8 46.1 1.7 11.8 34.7 8.5 11.8 2.7 9.0 8.4 2.5 10.4 31.8 11.3 7.6 14.2 13.4 2010f 8.0 2.2 25.0 3.0 11.8 20.5 7.0 8.0 4.5 9.6 8.4 2.1 6.4 3.2 10.0 6.2 10.5 8.2 5.0 2011f 7.3 2.3 30.0 4.0 9.7 15.0 9.0 5.0 3.5 8.9 7.7 2.4 6.5 2.5 9.0 5.6 7.5 7.5 5.0

f: forecasts; - : not available Source: IMF, WEO Database, April 2010 & Exim Bank research

172

Table A6 : Current Account Balance of COMESA Countries (US$ bn)

Country Burundi Comoros D R Congo Djibouti Egypt Eritrea Ethiopia Kenya Libya Madagascar Malawi Mauritius Rwanda Seychelles Sudan Swaziland Uganda Zambia Zimbabwe f: forecasts Source: IMF, WEO Database, April 2010 & Exim Bank research 2007 -0.1 0.0 -0.2 -0.2 0.5 -0.1 -0.8 -1.0 28.5 -0.7 -0.1 -0.4 -0.1 -0.3 -3.4 -0.1 -0.5 -0.5 -0.4 2008 -0.1 -0.1 -1.8 -0.2 -1.3 -0.2 -1.8 -2.0 35.7 -1.1 -0.2 -1.0 -0.3 -0.4 -1.3 -0.2 -0.9 -0.6 -0.6 2009 -0.1 0.0 -1.8 -0.2 -3.2 -0.3 -2.0 -1.6 10.1 -0.7 -0.3 -0.7 -0.4 -0.2 -2.8 -0.2 -0.9 -0.1 -0.8 2010f -0.1 0.0 -2.5 -0.2 0.4 -0.3 -2.0 -1.5 17.2 -0.9 -0.3 -0.8 -0.5 -0.3 -2.2 -0.3 -1.2 -0.4 -0.7 2011f -0.1 0.0 -2.8 -0.2 2.3 -0.1 -2.0 -1.7 17.4 -0.8 -0.3 -0.8 -0.5 -0.3 -2.5 -0.3 -1.3 -0.2 -0.6

173

ANNEXURE 2: INvESTMENT PROMOTION AGENCIES AND OTHER KEy INSTITUTIONS IN THE COMESA REGION
COMESA REGIONAl INvESTMENT AGENCy (RIA) 3, Salah Salem Road, Nasr City Cairo, Egypt General Authority for Investment BLDG Email : info@comesaria.org Fax : +202 240 55 421 Tel : +202 240 55 428 BURUNDI Ministre du Commerce de lIndustrie et Artisanat Tel : +257 222 279 91/222 250 19 Fax : +257 222 255 95 Email :
commerceindustrieartisanat@yahoo.fr

THE DEMOCRATIC REPUBlIC OF CONGO Agence Nationale pour la Promotion des Investissements (ANAPI) 54, Avenue Colonel Ebeya 2eme niveau Immeuble de la Reconstruction Kinshasa/Gombe Tel : +243 9999 25 026 Fax : +243 816 99 65 48 Email : anapirdc@anapi.org Website : www.anapi.org DJIBOUTI Agence nationale pour la Promotion des Investissement (ANPI) Rue de Marseille P.O. Box 1884 Djibouti Fax : +253 358 837 Tel: +253 31 21 02/12 Email: anpi@intnet.dj Website : www.djiboutinvest.dj

THE UNION OF THE COMOROS Ministre de lEconomie et du Commerce et des Investissements BP 324 Moroni, Comoros Email : moissulisoig@yahoo.fr Tel : +269 730 000 Fax : +269 7341 55

174

THE REPUBlIC OF EGyPT Egypt General Authority for Investment and Free Zones (GAFI) 3, Salah Salem Road, Nasr City Cairo, Egypt Tel : +202 240 554 52 Fax : +202 226 337 51 Email: investorservices@gafinet.org Website: www.gafinet.org THE STATE OF ERITREA Eritrea Investment Center Minstry of Trade and Industry P.O. Box 921 Asmara Tel: +291 111 8124 Fax : +291 112 4923 THE FEDERAl DEMOCRATIC REPUBlIC OF ETHIOPIA Ethiopian Investment Agency P.O. Box 2313 Tel: +251 11 515 7985 Fax : +251 11 551 4396 Email: ethiopian.invest@ethionet.et Website: www.investethiopia.org THE REPUBlIC OF KENyA Kenya Investment Authority Haile Selassie Avenue Kenya Railways, HQR, Block D Opp.GPO Tel: +254 -020 221 401-4 Fax : +254 -020 224 3862 Email : info@investmentkenya.com

THE SOCIAlIST PEOPlES lIByAN ARAB JAMAHIRIA Libya Foreign Investment Board 20, Ben Ghashir Road Tripoli, Lybia Tel: +218 21 3608 183 Fax : +218 21 3617 918 Email: info@investinlibya.com Web site : www.investinlibya.com THE REPUBlIC OF MADAGASCAR Madagascar Economic Development Board Avenue Gabriel RamamantsoaAntaninar- Enina Antananarivo 101- Madagascar Tel : +261 202 236 777 Fax : +261 202 266 105/ 230 172 Email : edbm@edbm.mg Website : www.edbm.gov.mg THE REPUBlIC OF MAlAWI Malawi Investment Promotion Agency (MIPA) Aquarius House-First Floor Private Bag 302, Capital City, Lilongwe 3 Malawi Tel: +265 1 770 800/771 1315 Fax : +265 177 0800 Email : jrkbanda@mipanw.org, mepco@malawi.net Website: www.malawi-invest.net

175

THE REPUBlIC OF MAURITIUS Mauritius Board of Investment Board of Investment, Level 10 One Cathedral, Square Building 16 Jules Koenig Street Port Louis, Mauritius Tel: +230 203 3800 Fax : + 230 466 7900 Email : contact@investmauritius.com Website : www.boimauritius.com THE REPUBlIC OF RWANDA Rwanda Investment and Export Promotion Agency (RIEPA) Kabindi Building, Kimihurura Avenue du Lac Muhazi P.O. Box 6239 Kigali, Rwanda Tel : +250 510 248/585 223 Fax : +250 510 249 Email: info@rwandainvest.com Website : www.rwandainvest.com THE REPUBlIC OF SEyCHEllES Seychelles Investment Bureau 1167, 2nd Floor, Caravelle House Manglier Street Victoria, Mahe Tel: +248 295 500 Fax : +248 225 125 Email : sib@seychelles.sc Website : www.sib.gov.sc

THE REPUBlIC OF SUDAN Ministry of Investment Khartoum-West Hilton Tel : +(249) (183) 7171 98/7871 97/7871 96 Fax : +249 (283) 7871 92/ 7871 99 Email : invest@sudanmail.net Website : www.sudaninvest.org THE REPUBlIC OF SWIZIlAND Swaziland Investment Promotion Authority (SIPA) 7th Floor, Mbandzeni House Libandla Street P.O. Box 4194 Mbabane, H 100 Swaziland Tel: +268 404 0470/2/3/4 Fax: +268 404 3374 Email : info@sipa.og.sz Website : www.sipa.org.sz THE REPUBlIC OF UGANDA Uganda Investment Authority The Investment Centre, Plot 22B Lumumba Avenue, TWED Plaza P.O. Box 7418 Kampala, Uganda Tel: +256 413 010 00 Fax : + 256 413 429 03 Email : info@ugandainvest.com Website : www.ugandainvest.com

176

THE REPUBlIC OF ZAMBIA Zambia Investment Centre P.O. Box 34580 Lusaka Tel: +260 (0)211 255 240 Fax: +260 (0)211 252 150 Website: www.zic.org.zm THE REPUBlIC OF ZIMBABWE Zimbabwe Investment Authority Investment House 109 Rotten Row P.O. Box 5950 Harare, Zimbabwe Tel: +263 -4-757 931-5/759 911-5 Email : info@zia.co.zw Fax : +263 4 75 7937 +263 4 75 9917 Website : www.zia.co.zw OTHER KEy INSTITUTIONS African Development Bank (AfDB) Avenue du Ghana, Rue Pierre de Coubertin Rue Hedi Nouira BP. 323 1002 Tunis Belvedere Tunisia Website : www.afdb.org Email: afdb@afdb.org

African Export Import Bank (Afreximbank) Worid Trade Center Buildings 1191 Corniche El Nil Cairo 11221, Egypt PO Box 404 Gezira Cairo 11568, Egypt Website: www.afreximbank.com Email: mail@afreximbank.com; info@afreximbank.com Association of African Development Finance Institutions (AADFI) (Association des Institutions Africaines de Financement du Developpement) 06, BP 321 Abidjan 06, Cote dIvoire Website : www.aadfi.org Email: adfi@aviso.ci

177

ANNEXURE 3: TRENDS IN INDIAS TRADE WITH COMESA COUNTRIES

Table A7: Indias Major Exports to Djibouti (US$ mn)
Commodity 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

All Commodities Primary & semifinished iron & steel Manufactures of metals Machinery & instruments Rubber manufactured products Electronic goods Pharmaceuticals & fine chemicals Petroleum products Plastic & linoleum products Manmade yarn fabrics madeups

128.6

230.3

307.4

457.9

350.2

265.3

52.4

72.8

58.9

89.9

48.8

73.9

22.6 10.7

20.0 13.7

20.0 15.4

29.7 20.7

44.5 26.4

47.1 22.2

2.0 1.8

5.7 2.4

9.3 2.3

11.6 3.9

10.8 10.0

15.3 13.4

2.6

6.0

9.2

8.5

10.8

12.7

1.7

55.8

136.9

177.2

87.7

10.8

4.3

6.7

5.2

13.5

9.9

10.4

2.3

3.1

3.0

4.7

5.3

6.2

Source: DGCIS, MOCI, GOI

178

Table A8: Indias Major Imports from Djibouti (US$ mn)

Commodity Name All Commodities Leather Raw hides & skins Metaliferrous ores & metal scrap Oilseeds Spices Petroleum crude Pulses Non-ferrous metals -: not available / negligible Source: DGCIS, MOCI, GOI 0.1 0.1 0.2 0.4 1.8 0.0 0.1 1.9 1.4 0.1 1.7 0.0 0.0 1.7 0.1 0.0 0.3 0.1 0.1 0.1 3.1 0.1 1.0 3.4 0.0 1.3 2.1 0.7 4.6 0.1 2.5 3.7 0.1 0.8 1.2 0.3 0.3 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

179

Table A9: Indias Major Exports to Uganda (US$ mn)

Commodity Name All Commodities Pharmaceuticals & fine chemicals Transport equipment Machinery & instruments Electronic goods Manufactures of metals Plastic & linoleum products Inorganic/organic/ agro chemicals Manmade yarn fabrics madeups Paper/wood products 1.8 1.9 1.8 2.8 3.1 3.5 1.3 1.4 1.2 1.6 1.2 5.0 1.9 2.6 3.9 5.1 8.4 6.0 3.0 3.1 3.6 4.7 4.7 6.1 5.3 5.8 4.6 7.7 10.5 7.2 12.0 2.8 18.9 4.5 23.3 6.7 29.9 7.4 27.5 31.2 26.8 14.4 12.5 11.4 9.9 18.9 34.9 37.5 20.4 27.0 35.3 50.4 64.5 70.4 76.0 92.6 107.4 153.7 219.4 206.9 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: DGCIS, MOCI, GOI

180

Table A10: Indias Major Imports from Uganda (US$ mn)

Commodity Name All Commodities Cotton raw Metaliferrous ores & metal scrap Pulses Raw hides & skins Non-ferrous metals Leather Medicinal & pharmaceutical products Wood & wood products -: not available / negligible Source: DGCIS, MOCI, GOI 0.5 0.4 0.1 0.1 0.1 0.1 0.1 0.3 0.1 0.2 0.1 0.4 0.3 0.2 0.3 0.2 0.2 0.1 0.3 0.2 0.1 0.5 0.4 0.2 0.2 0.03 2.6 2.0 0.5 0.4 6.6 5.1 2.8 0.8 4.7 0.1 15.1 2.6 19.2 2.6 13.3 1.8 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

181

Table A11: Indias Major Exports to Zimbabwe (US$ mn)

Commodity Name All Commodities Pharmaceuticals & fine chemicals Machinery & instruments Electronic goods Jute manufactures Transport equipment Tobacco unmanufactured Plastic & linoleum products Manufactures of metals Jute hessian 0.5 0.1 0.5 0.3 0.4 0.4 1.0 0.7 0.2 0.4 1.0 0.9 0.8 0.7 0.6 0.5 0.7 1.2 0.8 0.3 1.8 0.5 0.6 1.5 1.3 1.1 0.8 0.6 2.6 1.6 1.3 1.8 1.7 3.4 1.0 2.4 3.2 0.2 4.2 0.2 4.1 1.4 5.1 0.9 4.8 1.1 4.8 2.9 6.7 10.5 16.0 14.8 20.8 26.8 23.4 24.0 31.9 31.9 60.1 48.3 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: DGCIS, MOCI, GOI

182

Table A12: Indias Major Imports from Zimbabwe (US$ mn)

Commodity Name All Commodities Non-ferrous metals Cotton raw Dyeing tanning & colouring materials Crude minerals Pearls precious & semiprecious stones Non-electrical machinery Raw hides & skins Metaliferrous ores & metal scrap -: not available / negligible Source: DGCIS, MOCI, GOI 0.9 0.02 1.3 0.4 0.2 0.01 0.01 0.01 0.3 0.1 0.5 0.1 1.4 2.8 2.9 3.4 16.7 3.1 15.7 2.2 12.7 2.4 3.4 2.6 2.2 14.4 3.6 4.9 8.7 3.3 0.1 2.6 3.6 6.8 4.5 27.1 25.5 32.2 22.2 14.4 21.7 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

183

Table A13: Indias Major Exports to Malawi (US$ mn)

Commodity Name All Commodities Pharmaceuticals & fine chemicals Machinery & instruments Transport equipment Plastic & linoleum products Manmade yarn fabrics madeups Primary & semifinished iron & steel Paper/wood products Manufactures of metals Electronic goods 1.7 1.0 1.9 0.2 2.0 0.2 2.2 1.2 2.6 4.6 2.9 2.6 1.4 1.9 1.4 2.7 2.3 3.0 0.5 0.9 1.0 3.5 6.6 4.4 20.1 2.7 6.3 6.8 6.9 5.7 1.0 1.7 3.5 3.6 3.7 5.8 8.8 5.6 5.5 6.8 12.4 6.8 6.1 6.9 6.8 9.8 17.1 16.8 6.8 14.3 9.2 21.2 24.3 18.1 58.2 43.6 42.6 64.2 89.1 81.6 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: DGCIS, MOCI, GOI

184

Table A14: Indias Major Imports from Malawi (US$ mn)

Commodity Name All Commodities Pulses Tea Metaliferrous ores & metal scrap Pearls precious & semiprecious stones Wood & wood products -: not available / negligible Source: DGCIS, MOCI, GOI 0.02 0.3 0.4 0.0 0.01 0.02 0.01 0.03 0.03 0.1 0.01 0.03 0.1 0.1 5.1 3.7 0.8 1.8 0.6 0.9 5.0 4.2 0.4 15.5 12.9 0.8 7.3 5.8 0.9 102.4 98.7 1.4 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

185

Table A15: Indias Major Exports to Eritrea (US$ mn)

Commodity Name All Commodities Cereals Machinery & instruments Pharmaceuticals & fine chemicals Misc. processed items Electronic goods Rubber manufactured products Manufactures of metals Petroleum products Primary & semifinished iron & steel -: not available / negligible Source: DGCIS, MOCI, GOI 0.3 0.2 0.6 0.5 0.3 92.3 0.1 0.6 0.5 0.5 0.6 0.7 1.1 0.5 1.0 0.7 0.5 1.0 1.1 0.2 0.0 0.0 0.2 0.3 0.1 0.1 0.2 2.0 1.6 0.8 2.5 0.8 1.6 2.0 2.3 0.7 0.9 0.5 0.5 0.6 7.1 8.4 8.2 6.6 0.6 110.7 0.02 16.0 28.7 9.7 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

186

Table A16: Indias Major Imports from Eritrea (US$ mn)

Commodity Name All Commodities Metaliferrous ores & metal scrap Iron & steel Leather Raw hides & skins -: not available / negligible Source: DGCIS, MOCI, GOI 0.04 0.1 0.3 0.1 0.2 0.1 0.4 0.1 0.2 0.1 0.6 0.5 0.3 0.3 0.1 0.1 1.0 1.0 0.3 1.5 6.0 0.2 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

187

Table A17: Indias Major Exports to Rwanda (US$ mn)

Commodity Name All Commodities Pharmaceuticals & fine chemicals Machinery & instruments Electronic goods Plastic & linoleum products Machine tools Paper/wood products Manufactures of metals Transport equipment 0.3 0.9 0.4 0.9 0.9 0.6 0.3 0.3 0.7 0.9 0.5 0.7 0.4 0.5 0.2 0.3 2.4 1.1 0.2 0.01 0.3 0.1 0.3 0.2 0.2 0.1 1.8 0.1 1.5 1.1 1.2 0.2 1.0 0.2 1.8 0.1 2.4 0.1 1.8 5.9 4.4 2.9 4.2 5.7 8.8 6.6 11.5 11.9 8.4 10.6 13.7 12.9 29.8 26.4 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: DGCIS, MOCI, GOI

188

Table A18: Indias Major Imports from Rwanda (US$ mn)

Commodity Name All Commodities Leather Pearls precious & semiprecious stones Metaliferrous ores & metal scrap Raw hides & skins Artificial resins, plastic materials etc. -: not available / negligible Source: DGCIS, MOCI, GOI 0.02 0.01 0.04 0.03 0.73 0.08 2.13 0.01 0.01 0.01 0.01 0.7 0.04 1.6 0.1 0.7 0.15 2.4 0.15 0.3 0.08 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

189

Table A19: Indias Major Exports to Swaziland (US$ mn)

Commodity Name All Commodities Pharmaceuticals & fine chemicals Gems & jewellery Machinery & instruments Electronic goods Processed vegetables Plastic & linoleum products Manufactures of metals Readymade garments cotton incl. accessories -: not available / negligible Source: DGCIS, MOCI, GOI 0.2 0.3 0.5 0.3 28.0 0.2 0.01 0.1 0.1 0.1 0.2 0.01 0.02 0.3 0.4 0.2 0.2 0.2 0.3 0.7 0.03 1.2 0.1 0.9 0.04 1.0 0.2 1.7 0.5 0.9 0.5 0.7 17.8 1.6 0.6 1.5 0.1 5.0 1.2 5.3 5.6 11.9 6.3 22.3 5.2 4.7 10.4 44.8 21.7 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

190

Table A20: Indias Major Imports from Swaziland (US$ mn)

Commodity Name All Commodities Gold Non-electrical machinery Professional inst, optical goods etc. Electronic goods Manufactures of metals Non-ferrous metals Organic chemicals -: not available / negligible Source: DGCIS, MOCI, GOI 0.03 0.2 0.6 0.2 0.6 0.4 0.01 0.1 0.4 0.3 0.4 0.6 0.02 0.1 0.9 0.9 1.2 0.7 0.01 0.2 0.3 0.4 3.6 1.0 0.7 1.6 1.9 0.9 0.9 0.3 6.9 22.9 11.6 17.6 6.9 3.1 23.6 15.0 56.9 20.4 37.2 16.8 38.0 5.2 32.8 10.4 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

191

Table A21: Indias Major Exports to Burundi (US$ mn)

Commodity Name All Commodities Pharmaceuticals & fine chemicals Machinery & instruments Plastic & linoleum products Transport equipment Rubber manufactured products Inorganic/organic/ agro chemicals Paper/wood products 0.3 0.1 0.3 0.2 0.6 0.3 0.00 0.1 0.1 0.1 0.2 0.4 0.1 0.1 0.3 0.2 0.6 0.5 0.4 0.5 0.1 0.3 0.9 0.6 0.08 0.07 0.10 0.06 0.09 0.6 0.1 0.6 0.6 0.8 0.8 1.0 4.9 8.7 5.8 5.2 8.6 7.3 7.2 10.7 7.9 8.1 14.1 12.6 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: DGCIS, MOCI, GOI

192

Table A22: Indias Major Imports from Burundi (US$ mn)

Commodity Name All Commodities Non-electrical machinery Iron & steel Raw hides & skins -: not available / negligible Source: DGCIS, MOCI, GOI 0.03 0.03 0.73 0.01 0.43 0.04 0.0 1.85 0.7 0.75 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

193

Table A23: Indias Major Exports to Comoros (US$ mn)

Commodity Name All Commodities Meat & preparations Cotton yarn fabrics madeups etc. Electronic goods Manufactures of metals Glass/glassware/ ceramics/ refractories/ cement Primary & semifinished iron & steel Readymade garments cotton incl. accessories -: not available / negligible Source: DGCIS, MOCI, GOI 0.1 0.3 0.4 0.5 0.3 0.02 0.1 0.1 0.4 0.3 0.3 0.01 2.7 0.3 0.6 0.0 0.4 0.2 0.1 0.2 0.4 0.2 0.4 1.4 0.8 1.4 1.5 0.1 2.0 12.3 1.5 0.7 0.8 2.2 3.0 4.8 4.3 2.4 5.1 15.5 9.7 25.6 9.3 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

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Table A24: Indias Major Imports from Comoros (US$ mn)

Commodity Name All Commodities Spices Transport equipment Metaliferrous ores & metal scrap -: not available / negligible Source: DGCIS, MOCI, GOI 0.2 0.1 0.1 0.03 2.7 2.3 0.2 0.2 3.9 1.0 6.9 4.5 2.1 2.0 0.3 0.3 0.7 0.7 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

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Table A25: Indias Major Exports to Seychelles (US$ mn)

Commodity Name All Commodities Basmati rice Transport equipment Machinery & instruments Pharmaceuticals & fine chemicals Primary & semifinished iron & steel Cereals Manufactures of metals Plastic & linoleum products 0.1 0.2 0.3 0.6 0.7 0.8 0.4 0.5 0.7 0.8 2.4 0.9 0.1 1.1 0.2 0.9 1.1 0.9 2.3 1.5 2.9 0.8 1.1 1.0 0.9 0.7 1.1 1.2 1.2 1.1 0.7 1.0 0.8 1.2 1.6 1.3 0.8 0.5 0.7 1.2 67.3 3.0 10.6 1.7 10.6 2.3 12.9 2.2 71.8 3.4 90.1 5.7 20.1 3.9 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: DGCIS, MOCI, GOI

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Table A26: Indias Major Imports from Seychelles (US$ mn)

Commodity Name All Commodities Electronic goods Metaliferrous ores & metal scrap Artificial resins, plastic materials etc. Non-electrical machinery -: not available / negligible Source: DGCIS, MOCI, GOI 0.7 0.1 0.02 0.0 0.03 0.02 0.2 0.5 0.4 0.4 0.8 1.1 0.5 0.6 0.02 1.2 0.1 0.8 0.1 0.9 1.2 1.6 0.9 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

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ANNEXURE 4: ETHIOPIA INvESTMENT OPPORTUNITIES IN THE AGRICUlTURE SECTOR

Background The agriculture sector is the mainstay of the Ethiopian economy, accounting for around 45 percent of the countrys GDP, 90 percent of total foreign exchange earnings and 85 percent of employment in the country. The sector also plays a crucial role in providing raw materials to the local industry. Under Ethiopias constitution, the state owns the land and provides longterm leases to the tenants. Ethiopia, with an area of 114 million hectares, is the ninth largest and third most populous country in Africa. Ethiopia is endowed with ideal climatic conditions and diverse and enormous natural resources that favor commercial farming production of almost all crops, horticulture, livestock and others. Agriculture is the leading sector in the Ethiopian economy with:
l l

18 major agro-ecological zones and 62 sub-zones; Climate suitable for growing of over 146 types of crops; Coffee is the major agricultural product with respect to export flows. It accounts for 10-12 percent of the GDP and a quarter of the total population make a living from this sector. Floriculture has recently become an important agricultural sector with potential for exports; Main agro-export products, after coffee, include oilseeds, pulses, flowers, and fruits and vegetables.

74.3 million hectares of land suitable for agriculture; 10 million hectares of irrigable land;

The Ethiopian agriculture is basically comprised of smallholder farming which accounts for more than 90 percent of agricultural production and 95 percent of the total area under crop. 94 percent of crop and 98 percent of coffee is produced by smallholders. The remaining 6 percent of crop and 2 percent of coffee is generated from mechanized farms.

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The Government has initiated an agricultural development programme with the objective of closing the countrys food gap in the medium term by attaining a sustainable food production growth higher than the population growth. In the food-deficit areas, the Government has developed and put into effect a Sustainable Agricultural and Environmental Rehabilitation (SAER) programme that focuses on the development of small-scale irrigation mainly through water harvesting. Ethiopias Agricultural Potential Ethiopia is endowed with abundant agricultural resources. Land is the basic agricultural resource on which the Ethiopian economy presently depends upon for the production of food, clothing, energy and housing. Of the 114 million hectares total land area, about 45 percent is regarded to be suitable for the production of annual and perennial crops. Main Crops The main agricultural crops include food crops and cash crops. With rich soil and diversified climatic regions, about 146 types of crops are grown in the country. The main food crops are cereals and oilseeds.

The main cereal groups include teff, barley, wheat, maize and sorghum, and pulses comprise beans, peas, chickpeas, lentils, soybeans and haricot beans. Oilseeds are grown in Ethiopia in several varieties. Among the major crops are sesame, niger seed, ground nut, rape and linseed. Sunflower and castor beans also have great potential. Despite the countrys high potential for agriculture, the production from the sector has not been commensurate with the size and growth of the population. With a view to increasing the rate of food production, therefore, the Government has launched an integrated agricultural extension programme throughout the country. While this programme has yielded encouraging results in various regional states, strengthening the programme would call for increased involvement of the private sector in large scale commercial farming and agro-industrial activities. Coffee, cotton, tobacco, sugar, tea, spices and horticulture are the major commercial cash crops grown in Ethiopia. livestock and Resources other Animal

Ethiopia is also endowed with

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abundant livestock and other animal resources. The livestock population in Africa is the largest in Africa and ranks 9th in the world. The country has about 41 million cattle, 15 million sheep, 14 million goats and 43 million poultry. As a result, hides and skins are major foreign exchange earners, along with coffee. Water Resources and Irrigation Potential Ethiopia has abundant water resources that can be utilized for irrigated agriculture. There are nine major rivers (7000 km long) and a number of lakes (7400 sq km in area). Due to this, the country is often referred to as the water tower of Northeastern Africa.
Sr. No. Basins

The countrys total surface water availability is estimated at about 110 billion m3. On the other hand, the nine great river systems have an estimated total annual discharge of 102 billion m3. The total potential irrigable land in Ethipia is estimated to be about 10 million hectares. To date, only about 160,000 hectares has been developed, with more land required to come under irrigation to feed the fast growing population, provide raw materials for local industries, and also combat recurring droughts. The potential irrigable area existing in the major river basins and the size of actually irrigated area has been presented in the following table.

Potential Irrigable Area (ha)

Actual Irrigable Area (ha) 20,010 12,270 69,900 27,310 80 20,290 350 1,800 8,000 161,010

1 2 3 4 5 6 7 8 9 10

Abay (Blue Nile) Rift Valley Lakes Awash Omo-Ghibe Genale-Dawa Wabi-Shebelle Baro-Akobo Tekeze Afar Mereb Total

977,915 122,300 204,400 450,120 435,300 204,000 748,500 312,700 3,000 37,560 3,495,795

Source: Ethiopian Investment Commission

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Agricultural Policies & Strategies The importance accorded by the Ethiopian government to the agriculture sector can be seen from the fact that the sector is at the core of the overall development strategy, under the Agricultural Development-Led Industrialisation (ADLI). The objective of the ADLI is to enhance the productivity of smallholder farming and, at the same time, promote commercial farms especially in the various river basins where the scope for irrigated agriculture is very wide. Specifically, Ethiopias agricultural sector policy can be summarized as under:
l

Provide access to free market providing the right to sell the farmers produce at places of choice; Expand modern farms; and commercial

Encourage private investors in agriculture and agri-business.

Public and state land ownership with guaranteed user right as well as the right to lease, pass it on to kins, freely sell the produce and hire labour, and to be fully compensated when expropriated; Achieve food-self sufficiency rapidly, promote the supply of agricultural commodities for export, provide raw materials for domestic industries, and eventually attain food security; Enhance the conservation and development of natural resources;

The ADLI, which is based primarily in agricultural development, is envisaged to be attained through improvement of productivity of small holdings, and expansion of large scale farms particularly in the lowlands. With the smallholder sub-sector constituting the major source of staple food production, a special emphasis is placed on encouraging smallholder farmers to raise their productivity through various incentives (access to fertilizer, credits, etc) and other supports. Towards this end, the development of the smallholder farming is envisaged to proceed in three stages:
l

Improvement of agricultural practices and utilization of better seeds; Development of agricultural infrastructure, such as smallscale irrigation, and the introduction of modern inputs

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including fertilizers and agrochemicals; and

l

respect of the right of use;

l

Increasing farm sizes which takes place along with shifting of population from agriculture to non-activities.

Provide incentives in the form of tax holidays, duty exemptions, etc; and Create enabling for the expansion private farming by infrastructure such health facilities, etc. conditions of modern expanding as roads,

The first and second stages are land augmenting in that more output would be obtained from the same unit of land. Output per farm-family would increase depending on the pace of productivity improvement. It is the belief of the Government that sustainable agricultural development can only be ensured with the realization of the third stage which is dependent on accelerated industrial development. While the agriculture sector strategy focuses on improvement of productivity of smallholder agriculture, the strategy also stresses on encouraging the growth of both extensive mechanical farming and intensive commercial agriculture, while the expansion and development of large-scale modern private farms would be promoted. Towards this end, the policy is to:
l

Potential Areas of Investment The potential areas of investment in the agriculture sector in Ethiopia would encompass cash crops, horticulture development, livestock development, fisheries, apiculture, commercial forestry and agriculture business. Cash Crops
l

Provide lands, especially in the lowlands of the various river basins, on concessionary terms and provide full guarantees in

Coffee Ethiopia is the original home of coffee and the name coffee itself is derived from Kaffa, a region where coffee has been and still is a wild crop. The country produces one of the best coffee in the world, and coffee is also the single most important crop of Ethiopia as a provider of foreign exchange. Private entry into coffee export got a boost after the declaration of a new market-oriented economic policy by the Transitional

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Government of Ethiopia (TGE) in 1991. As a result, the number of private coffee exporters has been increasing rapidly coupled with rise in volume of coffee exports. Coffee still remains the single most important export crop, utilizing over 400,000 hactares under cultivation. Thus, the potential for private production and processing is still significant.
l

has been planted on commercial scale since 1980. Currently, there are 1,300-1,500 hactares of land under tea cultivation. While coffee would remain the favourite, it is envisaged that the habit of drinking tea will develop further, thereby offering opportunities for investment in the sector.
l

Cotton Cotton is an important fibre crop grown in Ethiopia. Large-scale production, under irrigation, is carried out in the Awash valley where there are about 50,000 hactares under cotton. Small-scale farmers cultivate around 42,000 hactares annually. There is huge potential for expansion of cotton cultivation in the OmoGibe, Wabi Shebelle, BaroAkobo, Blue Nile and Tekeze river basins. Cotton production is well integrated into the rest of the economy with a large number of textile and garment factories relying on domestically produced cotton. Opportunities in processing of cotton in Ethiopia are therefore significant. Tea Tea was introduced in Ethiopia in the early 1920s, and

Sugarcane and Spices Considerable opportunity exists for the production of sugar and spices for the domestic as well as for exports. At present, there are large-scale sugar estates in the country in the Awash Basin and Blue Nile Basin. Spice bearing plants are cultivated in the southern and south-western parts of the country. Ethiopia exports sugar and significant quantities of spice extracts. Oilseeds Rape seed, linseed, groundnut, sunflower, niger seed and cotton seed serve as raw materials for domestic edible oil industry. Favourable agro-ecological conditions exist in the country for introducing coconut for the production and processing of palm oil. Tobacco Although the potential is huge, tobacco is presently grown at only two

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places in the country, viz. Shoa Robit and Blatie. As the local production is unable to meet local demands, resulting in huge imports, ample opportunity exists to grow tobacco in the country both for exports and for supplying the local industry. Horticulture Development The agro-climatic conditions in Ethiopia are suitable for the production of different kinds of horticultural crops (fruits, vegetables and flowers). The involvement of the private sector is encouraged in the production of edible fruits and vegetables such as oranges, bananas, mangoes, apples, peaches, papayas, avocados, grapes, lemons, carrots, tomatoes, cabbage, etc; as also in the production and marketing of flowers, horticultural seeds, and other ornamental crops; and in the establishment of nurseries, storage and preservation facilities for fruits, vegetables and flowers. Floriculture development has recently been booming particularly in the central highlands attracting both foreign and domestic investors alike due to the high quality of flowers grown on suitable and fertile soil.

livestock Development Ethiopia has fast weight-gaining cattle breeds, abundant area for ranch and good potential for export of live animals and livestock products. However, major production in the sector has been constrained by factors such as under nutrition, disease and poor marketing system. To increase the benefits from the livestock sub-sector, therefore, the improvement of traditional animal management techniques and the utilization of more efficient and effective methods of livestock farming become crucial. Hence, private investors are encouraged to participate in the areas of commercial breeding, production and processing of meat, milk, eggs and animal feed. Fisheries Ethiopia has enormous water bodies known for their abundant fish resources. The annual fresh water fish production potential is estimated to be about 45,000 tonnes of which only 20 percent is exploited. Fish production and consumption has tremendous potential for increasing incomes of fish farmers, improving nutrition level of the population and earning foreign exchange through exports. The development of the

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sector is, however, constrained by lack of cold storage and transport facilities, poor fishing equipment, inadequate processing capacity, etc. The entry of private investors in the production, processing and preservation of fish and fish products and in aquaculture development is encouraged by the Government. Apiculture Production of honey also presents ample opportunities in Ethiopia. The country is the first honey producing country in Africa, and the fourth wax producing country in the world after China, Mexico and Turkey. Studies have shown that under modern management, the traditional yield of 5 kg of honey per hive in one harvest season can be improved to 15-20 kg, thereby presenting opportunities for investment in the sector. Commercial Forestry From around 40 percent at the turn of the century, most recent estimates indicate that only 3.5 percent of Ethiopias land area is now under forest cover. To reverse the trend of current deforestation in the country, and at the same time maximize the use of forest resources, undertaking sound forest management and utilization programme that include

private investors is encouraged. In this regard, some of the investment opportunities in the sub-sector include:
l

Production and marketing of gums and incense; Production of Neem trees and Pyrithrium as sources of raw materials for plant protection chemicals; Establishment of integrated forest-based industries such as pulp and paper, particle board, chipwood, etc. based on plantation of eucalyptus, pine and incense; and Establishment of rubber plantations and production of ornamental tree seedling, and shrubs.

Agri-Business Production of agrochemicals and agricultural machineries and farm implements offer tremendous opportunities in the country.
l

Agrochemicals Agricultural pests are always serious threats to crop production in Ethiopia. Annual pre- and port harvest losses are estimated to be at least 30 percent 0f foodgrains

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production. While chemical application is one of the available pest control mechanism in the country, pesticides required to control migratory pests like desert locust, quella birds, army worms, etc. are estimated at about 500,000 litres per year. The demand for pesticides for use on non-migratory pests, for sprayers and other safety equipment such as goggles, gloves, etc. are also high. This presents opportunities for private investors to participate in the supply of different plant protection chemicals and equipment.
l

Agricultural Machineries and Farm Implements The use of modern tractors, combine harvesters and related heavy machineries is still limited

in Ethiopia. While tractors are being assembled in the country on a limited scale, there is also a rising trend in import of harvesters. At the same time, small farmers are looking increasing towards the use of small mechanically powered equipment both for crop production and post harvest activities. This, therefore, presents tremendous opportunities in the assembly, manufacture and distribution of heavy machineries as well as of small-powered equipment such as irrigation pumps, sprayers, mowers, bailers, shellers, threshers, flour mills, powered fishing boats, etc. Further, production of improved agricultural tools and implements also presents opportunities.

Sources: Ethiopian Investment Commission - www. ethiomarket.com/eic

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