‘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.