Infrastructure and non-tariff barriers stifle trade

Poor road and rail infrastructure and non-tariff barriers are stifling intra-African trade along its corridors, according to the United Nations’ 2024 Economic Development in Africa report. It says only Botswana, Cabo Verde, Egypt, Libya, Mauritius, Seychelles and South Africa have “well- integrated” road networks. Numerous studies, which highlight transport infrastructure as a key driver of trade costs in Africa, are cited in the report. The findings are supported by the African Development Bank (AfDB), a key funder of infrastructure projects in Africa. In his foreword to a report on cross-border corridors, Mike Salawou, director in the AfDB Department of Infrastructure and Urban Development, writes: “Africa has a significant road infrastructure deficit, leading to increased production and transaction costs. The continent accounts for just two kilometres per 100 square kilometres of paved road (km2). “Only 43% of Africa’s rural population has access to an all- season road. Meanwhile, just 53% of roads on the continent are paved, isolating people from access to basic social services, including healthcare, education, trade hubs and economic opportunities.” The result, according to a United Nations Conference on Trade and Development (Unctad) study, is that intra- African transport costs, measured as the share of trade value per 10 000 km, are much higher than extra-African transport costs. “Developing countries must do twice as much transport work (calculated as multiplying the weight of the goods by the distance they need to be shipped) as developed countries,” due largely to poor logistics systems, the UN report states. It costs more for Africans to trade with Africans than with the rest of the world. “These differences in the net transport costs between countries and regions significantly contribute to the viability of the comparative advantage that underlies the productivity of industries and, hence, the mapping of investments and production hubs and the overall value chains within and across regions,” the report points out. It also identifies non-tariff barriers as a significant cost factor inhibiting intra-African trade along the corridors. There is some good news, though. Non-tariff trade costs decreased in some regions, for example, within the Common Market for Eastern and Southern Africa, and between the Common Market and the East African Community and the Economic Community of West African States. However, these costs rose within various interregional economic communities, for instance, between the Common Market for Eastern and Southern Africa and the Southern African Development Community, as well as between the East African Community and the Economic Community of West African States. “This calls for stronger initiatives at the continental level to reduce non-tariff trade barriers systematically,” it states. ER