COMESA SMEs AND THE MANUFACTURING SECTOR.

COMESA region is composed of over 440 million consumers, with an increased GDP of 518 Billion US$ as of 2011. Intra COMESA trade has increased to 18.4 BN US$ as of 2011. The region is dominated by Small and Medium Scale enterprises(SMEs) who constitute about 90% of the private sector of the member states in the COMESA region, just as is the case in many economies of the world. SMEs provide most of the employment in the economies of member states especially among vulnerable sectors of society and are crucial players in the attainment of the public policy objectives of poverty eradication and wealth creation.

The prevalence of SMEs in COMESA economies and the promise they hold for promoting the attainment of key public policy objectives mean that SMEs will be a focus as major beneficiaries of the major areas of cooperation in COMESA. The development of SMEs is therefore an important priority in COMESA.

SMEs in manufacturing have a presence in the following sectors- food and beverages, tobacco, wood, paper, refined petroleum and coke, rubber and plastics, glass and other non metallic metals, basic metals. In Resource Based Manufactures, there are textiles and Apparel, Leather, Publishing and printing, Fabricated metal products, Furniture. In low technology manufacturing there are in chemicals, machinery and equipment, office machinery, electrical machinery, Radio, TV and communication equipment, medical , precision and optical instruments, motor vehicles.

When looking at the challenges in the manufacturing sector, empirical analysis revealed that African countries are very dependent to resource based manufacturing. In 2009, it accounted for about 49% of both total Manufactured Value Added and Manufacturing Exports in the region. This dependence makes the sector vulnerable because it involves relatively low value addition, exporting countries are exposed to external price shocks, exhibits low productivity growth and there are fewer linkages with the sector and the rest of the 3 economy. Secondly, the manufacturing sector in Africa is dominated by small firms who also very weak in terms of numbers and average size. Thirdly, domestic firms also have weak technological capabilities and are embedded in fragmented learning and innovation systems.

Most important to note is that within the SME based firms, one finds low interaction at firm level. This is with the exception of firms that are involved in industrial clusters. It is for this reason that clusters are now viewed at firm level as important to enhance firms’ competitiveness, cooperation, innovation, learning and skills development and the overall promotion of Small and Medium Size Enterprises. Based on international experience, industrial clusters play a key role in manufacturing because they make market access easier, are characterized by pooling of labor, facilitate technological spill-overs , and create a more conducive environment to joint actions.

Regional Integration has been seen as critical to fostering manufacturing development. Building robust, competitive regional markets in COMESA and the larger Africa, unlocks manufacturing potential . How is this done? When African countries, especially those who trade within a single market or customs union target their regional markets as buyers of their manufactured products, this approach permits firms in the region to exploit economies of scale and garner the experience needed to successfully face global competition. Through the Regional platform the COMESA offers, facilitation of development of other markets that are complimentary to industrial development becomes critical to boosting competition in the region. These markets are financial markets, transport and infrastructure, ICT, science technology and innovation among others. 

During the 8th COMESA Business Forum 2012, the private sector recommended to the 16th Heads of State Summit, the need to form a manufacturers’ technical workgroup that would represent their interests at the regional level, and contribute and influence the ongoing deliberations at the policy organ level on barriers to trade, competitiveness and intra trade promotion. The Forum also recommended that the CBC should support the SME sector to link with the manufacturing industry in the region, in the spirit of boosting Intra- Africa Trade.