COMESA FTA spurs companies to diversify products

The introduction of the Free Trade Area (FTA) among member countries of the Common Market for Eastern and Southern Africa (COMESA) has forced companies in the region to diversify their products in order to remain competitive, a senior official said Friday.

COMESA senior trade advisor Mwansa Musonda said the competition resulting from the establishment of the FTA has made companies become more innovative and embark on survival plans.

"Competition under the COMESA FTA has led to diversification of production and trade in the region. Good examples are Kenya and Egypt which are now exporting more manufactured goods into the region," said Musonda, who was presenting a paper at a meeting of marketing practitioners.

The official said competition under the FTA has become more intense, a situation that has forced many companies to develop sharp marketing skills.

While acknowledging the challenges brought by the establishment of the free trading arrangement, Musonda said the initiative has made companies have a bigger market.

The COMESA market is estimated at around 250 billion U.S. dollars with a combined population of almost 400 million people.

"African countries are generally very small in terms of economic content because their gross domestic products and gross national incomes and the purchasing power of their nationals are very low," he said.

He said companies in the region would only be able to grow and compete favorably by trading in a larger market. This, he added, would also enable them to compete on the global market.

COMESA launched its first ever FTA on the African continent in 2000 with initially nine countries. And this has now grown to 13 countries out of a membership of 20 countries.

However, the launch of the FTA was met with resistance from some countries saying it would hurt companies that are not able to compete favorably.

Source: Xinhua