African governments have it in their power to boost economic growth through intra-regional trade simply by removing border red tape, according to Africa’s Development Dynamics (AfDD) 2019, which is published by the African Union Commission (AUC). Released on November 5, the report states “regional policies can achieve some ‘quick wins’ by reducing administrative procedures and by promoting and streamlining logistics. Currently, most African firms are losing out to new competitors both at home and in emerging markets. Only 18% of Africa’s new exporters survive beyond three years. “Beyond tariffs, fast and efficient customs and port procedures are essential to the smooth operation of supply chains. “Harmonising transport procedures and regulations, simplifying customs procedures and improving freight services and warehousing management through competition in regional logistics services could reduce transit costs.” It adds that significant costs are incurred as a result of non-tariff barriers such as administrative barriers and the nonconsistent application of standards and regulations. Opportunities are identified for SADC companies and countries. “Policy makers can focus on dynamic regional corridors to invest resources and attract investment, as seen with the LAPSSET Corridor (KenyaEthiopia), the Maputo Development Corridor (Mozambique-South Africa) and the Walvis Bay Corridor (five SADC countries),” the report recommends. An example to follow is the East African Community’s (EAC) Single Customs Territory, which has reduced transit times and the cost of goods entering the EAC from Mombasa by around 50% and 30% respectively. Over the medium-term governments need to invest more in logistics-related infrastructure. “The poor quality of Africa’s transport infrastructure accounts for 40% of logistics costs in coastal countries and 60% in landlocked countries,” it states. In southern Africa capital could be provided by the SADC Development Fund to finance integrated regional transport and logistics infrastructure projects. These include transport corridors to link sea and inland ports especially for landlocked countries. “SADC could also promote greater integration and harmonisation of financial and payment systems to facilitate the settlement of international trade invoices,” states the report. The study’s main finding and recommendation is that “African firms are the key to the economic transformation of the continent, but they need governments to create better conditions for them to thrive”. Without bold policy changes, most African businesses may not be ready for reaping the benefits of the African Continental Free Trade Area Africa (AfCFTA) which is projected to open up a market of 1.2 billion consumers, according to Professor Victor Harison, commissioner for economic affairs of the AUC.
INSERT: Only 18% of Africa’s new exporters survive beyond three years.