Mainly foreign money is being used to finance corridor developments throughout Africa, according to an Economist Intelligence Unit report: Promise and Perils: Scaling up businesses in sub-Saharan Africa. With the exception of Namibia, governments have been slow to fund and support corridors, despite the view by the United Nations Conference on Trade and Development (Unctad) that “development corridors, special economic zones and regional value chains are some of the important tools and vehicles for promoting intra-African trade”. In the Southern African Development Community (SADC) private funding is driving the development of the Maputo, Beira and Nacala corridors and their port gateways. DP World is the most active. It is developing and operating ports in Somalia, Senegal and Mozambique, as well as logistics centres on the Mozambique/ South Africa border and Rwanda. But corridors need more than physical infrastructure to succeed in growing trade and, along with that, local economies. Andrew Robinson and Malcolm Hartwell of Norton Rose Fulbright say the “real barrier” to the growth of crossborder trade (and therefore corridors) is the short-term loss of revenue that dropping trade barriers causes. This will require political will, which is also needed to remove other constraints to the free movement of goods, such as differing legal systems, carriage regimes and liability regulations in the countries served by the corridor. The African Continental Free Trade Area (AfCFTA) aims to do this by removing tariffs on 90% of goods, progressively liberalising trade in services and addressing nontariff barriers. Some progress is also being made on non-tariff barriers (NTBs). Comesa (Common Market for Eastern and Southern Africa), the EAC (East Africa Community) and SADC have established monitoring mechanisms for NTBs, which include a website on which traders can flag problems (www.tradebarriers.org). According to the website over 628 NTB disputes (out of 683 registered complaints) have been resolved through the platform. There are now plans for an Africa-wide mechanism for reporting, monitoring and eliminating NTBs. Tralac’s Talkmore Chidede agrees that NTBs pose one of the biggest obstacles to smooth cargo flow through regional corridors. In his view the elimination of NTBs could double intra-Africa trade, and increase the benefits of AfCFTA three- to four-fold. “That means countries should be more serious about addressing NTBs under the AfCFTA,” says Chidede. He believes there should be (national and intergovernmental) institutions empowered to enforce and monitor compliance with NTB elimination obligations. “Private parties should have access to dispute settlement and be able to obtain legally binding and enforceable remedies when NTB-related obligations are violated,” he says.
INSERT: The real barrier to the growth of cross-border trade is the short-term loss of revenue that dropping trade barriers causes. – Andrew Robinson