Look at almost any country on the continent of Africa and the chances are that
it trades more with distant lands than it does with its neighbours. It is this
factor that has dragged on the continent of Africa’s development for decades.
The oft-cited reasons for this state of affairs – beyond the economic legacies
of colonialism – are poor infrastructure, and the daunting bureaucracy,
corruption and other barriers that business people find at borders on the
continent.
Africa remains in desperate need
of better road and rail connections. But there are signs that addressing the
difficulties of crossing borders is at last coming into new focus. When the
world’s trade ministers gathered in Bali for the biennial ministerial meeting
of the World Trade Organization, they hope to sign off on a “trade
facilitation”. The goal is to standardize fees and paperwork, set clear,
transparent and enforceable time-limits on how long goods can be delayed at
borders, and put emphasis on such things as automation. If it lives up to even
part of the hype, the benefits could be huge for trade in Africa.
Dissecting the proposed package,
analysts at the Organization for Economic Co-operation and Development
estimated that the deal would reduce the cost of trade by up to 14.5 per cent
in low-income countries worldwide. Each 1 percentage point reduction in costs
globally would increase income worldwide by $40bn, with 65 per cent of that
benefit going to developing countries, they found.
Those sorts of gains would be
very large for Africa, according to Raed Safadi, the former Dubai government
chief economist who is now one of the OECD’s leading trade experts. A pro-trade
industrial policy might reduce costs by 3-5 per cent, Mr Safadi says. Cutting
the costs of business by “14-15 per cent will define the difference between
those who participate in global supply chains and those who don’t,” he says.
Also important is reducing the delays that both exporters and importers face at
many borders in Africa.
“Time is money,” says Mr Safadi.
“We live in a ‘just in time’ world …Time is what determines if the contract
goes to Romania or to a supplier in Africa.” In a report last year, the African
Development Bank (AfDB) offered a daunting view of the challenges to
intra-regional trade on the continent.
In Africa, the average customs
transaction involved 20-30 parties, 40 documents, 200 data points, and the
re-keying of 60-70 per cent of all data at least once, the AfDB report’s
authors wrote. Moreover, “in most African countries, there are two complete
sets of controls to be completed – one on each side of the border post”.
African leaders have certainly
latched on to the need for better regional integration. The 15-nation Economic
Community of West African States (Ecowas), a bloc of some 300m people, agreed
to implement a single customs tariff regime from 2015 to speed integration.
So has the private sector, Created in 2011,
the Borderless Alliance in West Africa is a private sector advocacy and
education group that also monitors the practical costs of trade along the
region’s roads and at its ports. Its quarterly reports, which detail the cost
of bribes per 100km travelled and stops and delays faced by truckers along
important corridors, make for daunting reading.
In 2012, for example, drivers
taking goods from the port of Abidjan in Ivory Coast to Bamako, the capital of
Mali, could expect to pay $66 in bribes along the road and a further $25 in
bribes at the border, according to Borderless Alliance reports.
But Justin Bayili, Borderless Alliance’s
managing director, says that the main obstacle to reform in West Africa remains
one of implementation. Over the years, leaders and ministers have committed to
many ambitious goals at summits, he says, and delivered few results on the
ground. “We are all convinced that trade can benefit our region provided some
of the barriers are eliminated,” he says. “It’s easy for our ministers of trade
to sign documents about facilitation. But concrete measures are needed.”
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