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To promote exports, look behind the border

Shanta Devarajan's picture

In the past, policy advice on promoting trade in Africa may have overstressed the need for African countries to bring down their own trade barriers, such as import tariffs, and insufficiently emphasized the need to improve trade logistics, infrastructure, business competition, and regulation. As I mentioned in a recent interview, lowering tariffs may not help if it takes an average of four days to clear goods at the port of Mombasa, Kenya. It can take up to 21 days for a vessel to offload its cargo at Dar es Salaam port. Given the large number of landlocked countries in Africa, poor infrastructure—such as road and communications networks—could be as much a barrier as trade tariffs.

Furthermore, some of these infrastructure constraints may be due to excessive regulation and barriers to entry in the trucking industry. Finally, Africa’s “spaghetti bowl” of overlapping regional trading arrangements makes it difficult for firms to compete abroad. While trade tariffs continue to be a barrier in some countries, relaxing some of these “behind-the-border” constraints may be one of the most effective ways of promoting trade in Africa.

Comments

Submitted by Anonymous on
Behind the border may not be enough. The individual markets are very small and even the one or two national firms of optimum scale need the markets across the borders. The RECs need to provide the space for this dialog. As we are finding out in even smaller and relatively more effective RECs like the EAC, significant inter-member economic differences dictate the ease of goods trade. NTMs applied along the major transit corridors often serve national protectionist motives - if not in policy, then in implementation at the goods clearance points. Can these RECs in AFR do what the EU has done, or what the ASEAN is trying, with respect to the NTMs?

Shanta, Excellent point. Poor infrastructure is clearly a major barrier to increased trade in Africa—even in some coastal countries, as I recently found out on a visit to Angola: http://blog.doingbusiness.org/2008/08/why-is-luanda-s.html Best, Kjartan

Submitted by Todd on
USAID has done some interesting surveys of road barriers in Mali, Burkina, Ghana, and Togo. The maps show check points, bribes and delays along the main corridors. They have done 4 rounds so far since 2006 - the latest map is here: http://www.watradehub.com/images/stories/downloads/studies/Report%20on%20fourth%20IRTG%20results%20EN.pdf

Another thing that could help increase trade between African countries are industrial policies. Many African countries that are specialized in exporting commodities won't have many trade opportunities with neighboring countries since this trade pattern is based on complementaries of the type "commodities for manufactured goods". Developing a capacity of exporting manufactured goods through industrial policy would develop the intra-industrial trade, one of the pillars of economic integration.

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