Uganda has become a successful exporter of education services to countries in East Africa. In West Africa, Nigerian financial institutions have expanded branch networks throughout the region making available the benefits of scale to consumers in very small countries. African supermarket chains are spreading throughout the continent. These are some of the successes Africa is seeing as it fights to integrate the market for regional trade in services.
But non-tariff barriers continue to mar the growth of these services, and the flow of goods and investments throughout Africa, imposing unnecessary costs on exporters that limit trade and raise prices for consumers, undermine the predictability of the trade regime, and reduce investments in the region. In southern Africa, a truck serving supermarkets across a border may need to carry up to 1600 documents as a result of permits and licenses and other requirements. In central Africa, the majority of traders who cross from DRC to Burundi, Rwanda and Uganda are women carrying staples—85 percent report having to pay a bribe and over 50 percent report physical and sexual harassment. As one trader said, “I buy my eggs in Rwanda; as soon as I cross to Congo I give one egg to every official who asks me. Some days I give away more than 30 eggs!” This experience is not unique to this group of countries.
The incidence of barriers to regional trade fall most heavily, and disproportionately, on poor small traders, preventing them from earning a living in activities where they have a comparative advantage—catering for smaller, local markets across borders. Most of these small scale, poor traders are women and their trading activities provide an essential source of income to their households.
Deeper integration of regional markets can lower trade and operating costs and relax the constraints faced by many firms operating in small national markets. And regional trade can bring staple foods from areas of surplus production across borders to growing urban markets and food deficit rural areas.
To do this, policy makers have to move beyond the conventional and drive a more holistic process to deeper regional integration.
Earlier this month , our team at the World Bank launched a report, Defragmenting Africa, that calls for African governments to reform policies that create non-tariff barriers; put in place appropriate regulations that allow cross-border movement of services suppliers; deliver competitive regionally integrated services markets; and build the institutions that are necessary to allow small producers and traders to access open regional markets. With rising incomes in Africa there are emerging opportunities for cross-border trade. We hope to work together with governments and their partners to exploit these opportunities and help Africans trade with each other.