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How to boost Africa’s exports

Caroline Freund's picture

Consider the following description of a trucker’s journey in Cameroon:  “The plan was to carry 1,600 crates of Guinness and other drinks from the factory in Douala where they were brewed to Bertoua.  According to a rather optimistic schedule, it should have taken 20 hours, including an overnight rest. It took four days. When the truck arrived, it was carrying only two-thirds of its original load.”

And this is how a Tanzanian exporter explains why few firms stay in the exporting business: “They discover that it is a miserable experience. Having gone to the effort of getting an export order they then spend weeks pounding through bureaucracy, endlessly waiting in dirty government corridors trying to find a morose civil servant prepared to do his job.”

How do these costs affect Africa’s trade?

 

The World Bank’s 'Doing Business' report, provides information on the average time it takes for an exporter to complete a series of procedures when moving goods from the principal city to the port of exit. Each procedure is classified into one of three main categories: documentation, inland transportation, and customs and ports (see Figure 1).

We found that while all types of delay reduce exports; inland-transit delays have the largest negative impact on new products’ export values. We estimate that a one-day decrease in the inland-transit time:
- Increases exports of new products by 7%.
- Is equivalent to about a 1.5% increase in all import tariffs of partner countries.

Geography is not the primary reason for long delays in transit times. There are more important factors such as the quality of the roads, quality of the vehicles, likelihood of accidents, theft, competition in trucking, road blocks, and waiting times at borders.

Conclusion: inland transit is key to stimulating Africa’s exports. While improvements in ports and customs procedures can help exporters, the impact of improved inland transit is roughly five times greater.
 

FIGURE 1:

Comments

This is a great example of how infrastructure development must coincide with social entrepreneurship and business development. It is important to consider that many African countries are landlocked and rely on road transportation. Another major challenge I noticed in Uganda was the cost of petrol thanks to its dependency on overland routes through Kenya and other neighbouring countries.

Submitted by G.Raballand on
I am not sure if the economist story is really relevant and delivers the right message since very few compliant transporters in Cameroon (not overloaded with the right documentation), would have gone to Bertoua through Melong and not going to Yaounde first. Indeed, if you have a 60-tonne truck (overloaded then), you could try this route and indeed in this case, you will have to pay bribes all the way because the police knows you are not compliant ... And there is also another issue. It is probably true that transit time en route for exports is longer than delays in ports but that does not necessarily means that port processes are not really important. For a company to start import/export operations (the bulk of world trade, except in SSA), there is a need to have import/transit processes quick and reliable and the port is where most time is spent. If transit processes are cumbersome and lengthy (the initiation of transit takes more than 50% of import transport time in most SSA countries), exports are not going to grow (except the ones without strong imports components) and, therefore, the emphasis on en route transport time becomes less relevant. In order to develop non-traditional exports, revising transit regimes and simplifying clearance processes (to start in ports) is key because for the time being it is where transport time/reliability is the highest.

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