Illicit trade is a global menace that seriously affects both the public and private sectors within the COMESA region and all other parts of the world. It undermines the concept of a free and open market place which is fundamental to improving competitiveness, increasing investment, generating jobs and ultimately contributing to economic growth of COMESA member states.

Illicit trade, in its varying forms poses number of adverse effects which include among others: revenue losses, unfair competition, health risks, and huge financial loses for companies, industries and governments.

The industry in the region recognizes the fact that some COMESA Member State governments are doing their best to combat illicit trade but without a regionally coordinated mechanism. The fragmented nature of the enacted laws makes it difficult to prosecute illicit trade cases effectively. Institutions working to combat illicit trade have failed to collaborate in combining their efforts when discharging similar mandates and corruption has taken root affecting the prevention and prosecution of the vice. In addition, challenges of accessing up to date and reliable data on illicit trade continues to make it impossible to fully understand and articulate ways of resolving the problem.

As COMESA continues to ensure free movement of goods as a key feature of the Customs Union, it makes no sense to have national efforts that are in isolation of the regional realities, mainly because, COMESA member States without anti illicit trade laws will serve as entry points and conduits of illicit goods into the whole region.

In light of this fact, many stakeholders argue that, without concerted regional collaboration approach, national efforts alone will not achieve much. What remains to be done, therefore is to enact a COMESA regional anti-illicit trade protocol to be adopted and implemented by COMESA member states.

The commissioning of this study by COMESA Business Council (CBC) stems from an understanding and strong consensus from key stakeholders, that illicit trade, due to its far reaching negative impacts cannot be ignored. This report highlights the challenge of illicit trade at a national, regional and international level. It showcases the existing regulatory frameworks on combating illicit trade and demonstrates best practices. Drawing from experiences of key stakeholders, the report provides positions of selected industries on illicit trade. Above all, the study presents a sustainable approach to curbing illicit trade within the COMESA region which includes among others drafting a COMESA anti illicit trade protocol. Finally, the report concludes by highlighting recommendations to be considered and adopted by key stakeholders.

Introduction and background

The Common Market for Eastern and Southern Africa (COMESA) is the largest regional economic community/trade bloc in Africa, with membership of 19 Countries, a geographical area of 12 Million (sq km), a population of about 490 million people, an annual import and export bill of approximately US$170 billion and US$ 113 billion respectively. COMESA membership comprises of the following countries: Burundi, Comoros, D.R. Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.

COMESA has slowly progressed from a Preferential Trade Area with lower duties charged on goods originating from member countries to a Free Trade Area (FTA) in 2000 and finally a Customs Union in 2009, with the ultimate goal of establishing a Common Market. The Customs Union provides a framework for coordination and harmonisation of policies in a broader range of areas, and strengthens COMESA into a coherent group that has clout in international relations and in its engagement with the rest of the world.

Illicit trade is an international phenomenon that seriously affects both the public and private sectors within the COMESA region and all other parts of the world. Illicit trade leads to various adverse economic and social impacts; including revenue losses, unfair competition, health risks, and huge financial loses for companies, industries and governments. In light of these challenges, the manufacturing sector in the COMESA region continues to call upon COMESA to strengthen the means and mechanisms of combating illicit trade in a sustainable manner.

Recognizing the need to address illicit trade and building on the general observations from key players (public and private), a number of COMESA’s key stakeholder institutions in the respective member states, COMESA Business Council (CBC) and the COMESA Secretariat, have with serious determination responded to the call of the private sector through commissioning a study to propose guidelines for developing: a COMESA anti-illicit trade regulatory framework, consumer, enforcement action and a “Made in COMESA” Label that will facilitate and promote the movement and purchase of COMESA goods that meet the required Origin standards.