COMESA's huge steel potential.

Author:Dhliwayo, Dominic
Position:Common Market for Eastern and Southern Africa

Last November, the Common Market for Eastern and Southern Africa (Comesa) held its inaugural buyer-seller meet on the region's iron and steel industry in Nairobi.

On the surface, the event was a success. Delegates from over 50 companies and 10 of Comesa's 16 member states attended, with $16m worth of contracts initiated over the four days. However, surveys carried out in the run-up to the meeting and research by the UN agency, Unido, revealed a darker reality. During the 1990s, the disparity between average annual iron and steel imports ($340m) and exports ($28m) for the trade bloc has averaged $312m. This is excluding South Africa, which would exacerbate the imbalance.

That many of the products could be sourced from suppliers within the region, is obvious. So why the startling figures? Comesa's trade has been thwarted by four factors: Poor infrastructure, a lack of business knowledge, competition from South Africa and, in no small part, the collapse of Zimbabwe's Ziscosteel. As the only sizeable producer in the region, the integrated Zisco plant has long been responsible for servicing a sizeable proportion of the region's steel needs. The lack of finance to effect long overdue repairs however, has seen production decline to well under a quarter of its capacity of 1m tonne a year. In January 1997, after months of indecision, the Government finally put the company up for privatisation.

Nevertheless, the survey showed that in 1994 Zimbabwe still accounted for 60% of Comesa's iron and steel exports. The region's second biggest producer, Kenya, followed far behind at 22.3%. Out of the total imports, reconstruction-minded Angola led with 19.4%, which were mainly tubes and structural steel. A close second was Kenya at 18.1% despite the relatively advanced nature of its industry, followed by Burundi at 14.3%.

Dr M Kanyangarara, a Unido consultant in charge of a project operating from Lusaka which aims to resuscitate Comesa's metallurgical industries, explains that the Comesa countries comprise a region of enormous potential for the development of this industry. This applies both in terms of the possibilities of increased production as well as internal and external trade. He reports that significant demand in the region, albeit in the form of small often economically unviable consignments, is largely...

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