‘Non-tariff barriers are killing intra-Africa trade

Containing costs is a major
element of export success,
but when it comes to intra-
Africa trade, the region
seems to be shooting itself
in the foot.
According to the deputy
director-general of the
World Trade Organisation,
Valentine Rugwabiza, sub-
Saharan African countries
impose more non-tariff
barriers on trade between
themselves than on trade
with third countries.
“Efforts at harmonising
technical regulations and
standards, sanitary and
phytosanitary measures
as well as rules of
origin have been timid
adding to the costs of
doing business,” he said
during a presentation
at the University of the
Witwatersrand earlier this
month.
Rugwabiza quoted
a World Bank Report
entitled ‘De-fragmenting
Africa’, which states that
Shoprite spends $20 000 a
week on securing import
permits to distribute meat,
milk and plant-based
goods to its stores in
Zambia alone.
“There could be up
to 1 600 documents
accompanying each truck
Shoprite sends with
a load that crosses an
SADC border,” he added.
“Africa is almost the
most expensive continent
in which to do business:
whereas it costs around
$900 to ship a container
from South-East Asia, it
costs almost $2000 to ship
the same container from
Africa. Likewise, whereas
it costs $935 to import
a container from South-
East Asia, it costs almost
$2500 to import the same
container from Africa.”
With the right regulatory
frameworks and political
will, the potential for trade
among African countries
could be unlocked and
contribute tremendously
to the growth and
development goals of the
continent, he said.
“Africa remains the
most fragmented continent
in the world with 54
countries with numerous
border crossings. Intratrade
among African
countries stood at 10%
last year,” he said. This
compares unfavourably
with other regions of the
world where intra-trade
in the EU-27 is around
70%, 52% for Asian
countries, 50% for North
American countries and
26% for South American
countries.”
Africa’s share in world
trade is also small, he
added, at less than 3%
last year. Its top trading
partner regions were the
European Union, Asia and
the United States.
Its trade is also overly
dependent on a narrow
range of primary products.
In 2010, fuels and mining
products constituted 66%
of its total merchandise
exports.
And while historical
under-spending on
infrastructure is part of
the problem, investment in
infrastructure has begun
to pick up pace in the last
two decades, although
actual spending does not
match identified needs.
Because of the high cost
of doing business on the
African continent, foreign
investors have bypassed
Africa even though there
are several studies which
suggest that returns on
investment in Africa are
far greater than returns
on investment in Asia and
Latin America. “Last
year, Africa attracted less
than 5% of global FDI
flows. Whereas China
attracted $124 billion
in FDI flows, African
countries only attracted
$52 billion.”
The low level of intra-
African trade is a missed
growth and development
opportunity for African
countries, he said.