The decision to establish the Preferential Trade Area for Eastern and Southern Africa (PTA), the forerunner to the Common Market for Eastern and Southern Africa (COMESA) was taken by the relevant Ministers of Trade, Finance and Planning at a meeting in Lusaka, Zambia in 1978. It was not until 1981, however, that the PTA was set up with the broad aim of promoting co-operation and development in trade, customs, monetary affairs, industry, agriculture and communications in eastern and southern Africa. The PTA Treaty was signed on 21 December 1981 by nine member states.
The more specific objectives of the PTA include the establishment of a common external tariff against non-member states, the dismantling of non-tariff and tariff barriers, and the granting of most-favoured nation status amongst member states. The headquarters of the PTA (now COMESA) was in Bujumbura, Burundi.
In order to facilitate the intra-regional trade amongst members the PTA Clearing House was established in 1984 and is located within the Reserve Bank of Zimbabwe in Harare and is intended to enhance co-operation in the settlement of payments for intra-regional goods and services. The Clearing House system makes it possible for settlement of day-to-day payments to be effected in national currencies (as opposed to using the traditional 'hard' convertible currencies such as the US dollar, pound sterling etc.) with net balances only being subject to settlement in convertible currency at the end of a transaction period of two months. The COMESA Clearing House makes use of a common unit of account, the UAPTA (Unit of Account of the PTA), which is equivalent to the Special Drawing Right (SDR) of the International Monetary Fund.
A Free Trade Area was achieved on 31 October 2000 when nine of the member States, namely Djibouti, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe, eliminated their tariffs on COMESA originating products in accordance with the tariff reduction schedule adopted in 1992. This followed a trade liberalisation programme that commenced in 1984 on reduction and eventual elimination of tariff and non-tariff barriers to intra-regional trade. Burundi and Rwanda joined the Free Trade Area on 01 January 2004. These eleven Free Trade Area members have not only eliminated customs tariffs but are working on the eventual elimination of quantitative restrictions and other non-tariff barriers.
Several COMESA institutions have been created to promote sub-regional co-operation and development. These include:
The COMESA Trade and Development Bank in Nairobi (Kenya)
The COMESA Clearing House in Harare (Zimbabwe)
The COMESA Association of Commercial Banks in Harare (Zimbabwe)
The COMESA Leather Institute in Ethiopia
The COMESA Re-Insurance Company (ZEP-RE) in Nairobi (Kenya)
In addition a Court of Justice was also established under the COMESA Treaty and became formally operational in 1998. Further initiatives exist to promote cross border initiatives, form a common industrial policy and introduce a monetary harmonisation programme.
According to COMESA offers its members and partners a wide range of benefits which include: A wider, harmonised and more competitive market, greater industrial productivity and competitiveness, increased agricultural production and food security, a more rational exploitation of natural resources, more harmonised monetary, banking and financial policies, more reliable transport and communications infrastructure.
The current (2007) member states of COMESA are: Angola, Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Ethiopia, Eritrea, Kenya, Libya, Madagascar, Malawi,Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. Countries which were previously members but which have withdrawn from COMESA include Lesotho,Mozambique, Namibia and Tanzania.