Malawi losing out on Comesa trade facility

Malawi is yet to register significant gains from the Common Market for Eastern and Southern Africa’s (Comesa) Simplified Trade Regime (STR) facility, 14 years after its adoption.

A review by Trade and Law Centre (Tralac) of Zimbabwe, Zambia and Malawi trading under the Comesa STR shows that there has been no increase in trade volumes which could suggest increased utilisation of the STR.

This is happening at a time the bulk of traders continue to use traditional informal border crossings while smuggling remains rampant as red tape at the border increases the cost of doing business. 

Reads the review in part: “Despite the successes of the Comesa STR as evidenced by the implementation of the STR in the East African Community and recommendations for a similar STR under the African Continental Free Trade Area [AfCFTA] agreement, more needs to be done.

“Lack of awareness among informal cross-border traders remains a constraint for its utilisation and must be addressed.”

Tralac says there is need to be mindful of the political and economic obstacles that could hinder the adoption of trade-promoting protocols and measures as certain stakeholders may feel threatened.

STR is a trade agreement facilitated by the 21-member Comesa bloc that allows cross-border traders within the bloc to enjoy duty-free status when importing goods originating from other member States.

According to Malawi Revenue Authority, the list of eligible products include live animals, food products, furniture, stationery and other assorted items. Traders enjoy duty-free status on such goods originating from any of the three member-States.

Malawi, with a threshold of $3 000 (about K5.2 million), joined the Comesa STR to facilitate informal cross-border trade activities for small-scale traders operating in border areas where informal trade is common.

Cross-Border Traders Association of Malawi president Steve Yohane said in an interview yesterday that Malawi is failing to benefit largely because of bureaucratic factors.

He said: “STR is a good vehicle enabling cross-border trading duty-free of not more than $3 000 (about K5.2 million). However, the systems are not user friendly and some are a cost to business.

“For example, to get an import or export permit, one has to travel to Lilongwe and get the permit and this adds to cost of doing business.”

Yohane said besides that, they also have to incur border charges on both sides apart from non-tariff barriers.

Minister of Trade and Industry Sosten Gwengwe said in an earlier interview that his ministry will continue to support the local industry to benefit from the opportunities offered by Comesa.

Tralac data shows that Zimbabwe’s ICBT’s total trade flow to Malawi under STR ranged between $400 000 (about K7 million) and $1.7 million (about K2.9 billion) in 2023 with Zimbabwe’s main imports from Malawi being groundnuts while exports consists of a diverse range of mostly manufactured goods with bottled water.

On the other hand, Zambia’s value of ICBTs on Malawi under STR range between $1.67 million (about K2.9 billion) and  $6.67 million (about K11 billion) in 2021.

Comesa has 640 million people with a gross domestic product of $1 trillion.