The elephant in the room is bribery and corruption
Economists have coined
the phrase “thick borders”
to summarise the list
of challenges facing
companies wanting to do business
within Africa – challenges that
are largely left to clearing agents,
forwarders and hauliers to manage.
“Empirical evidence suggests that
only about a quarter of delays along
major transport corridors are as a
result of poor infrastructure, the
rest being due to non-tariff barriers
and poor trade facilitation,”
according to a World Bank report,
“De-fragmenting Africa”, edited by
Paul Brenton and Gözde Isik.
The result is that it costs more
than twice as much to move a
container across a border in sub-
Saharan Africa than between East
Asian and OECD countries.
There are however
signs that the
authorities have
taken note – at least
in some regions.
The 2016 Doing
Business report
says sub-Saharan
Africa accounted for
about 30% of the
regulatory reforms,
making it easier
to do business in
2014/15.
Members
of the Organisation for the
Harmonisation of Business Law in
Africa (a West African initiative)
were “particularly active”: 14 of the
17 economies have implemented
business regulation reforms in the
past year – 29
in total.
An
International
Monetary
Fund report
singles out
Ethiopia,
Kenya,
Seychelles,
South Africa
and Tanzania
as countries
whose efforts
to breach the cross-border trade
barriers are paying off.
“In these countries, the sectors
that have benefited the most
from the deepening of integration
include agriculture and agrobusiness
(especially in
Ethiopia and
Seychelles), and
manufacturing
(particularly in
Tanzania), but
also textiles,
transport and
tourism, although to a lesser extent.
“These experiences bode well for
the region: for one, the increase in
depth of integration in some of these
countries, at 10 percentage points or
more, is of a similar magnitude to
that experienced by countries such
as Poland or Vietnam that are now
success stories within large GVCs
(global value chains).
“The examples also highlight
the sectors – agro-business, light
manufacturing, tourism and
textiles – in which sub-Saharan
Africa has the potential to leverage
its comparative advantages,” it
adds.
But, the elephant in the room
is bribery and corruption, both of
which add significantly to the cost of
cross-border trade in Africa.
According to research consolidated
by the World Bank some 25% of
companies doing business in Africa
have reported incidents of bribery,
compared to the global average of
17.4%.
Some 19% of firms say officials
expect “gifts” before import licences
are issued.
Around 37.9% of companies
surveyed identified corruption as a
major constraint to doing business
(16.9% in South
Africa and 33.2%
globally).
Steps are being
taken to tackle the
scourge by most
countries with
which South Africa
does business (and
in South Africa itself).
These include the introduction of
electronic document management
at the border posts and increased
surveillance.
However, the problem of having to
bribe officials at random road blocks
and other points remain.
INSERT 1
It costs more than twice
as much to move a
container across a border
in sub-Saharan Africa than
between East Asian and
OECD countries.
INSERT 2
25% The percentage of companies trading
in Africa that have reported incidents of
bribery
