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Easing Border Bottlenecks will Boost intra-African Trade, Says New AfDB Report
Africa’s numerous border and customs posts, with the associated bureaucracy and long delays, continues to hold back trade and economic growth on the continent, reports a new study from the African Development Bank (AfDB).
The high number of checkpoints results from the fact that Africa has 54 countries, but even so the process could be simplified, leading to big cuts in wasted time and transport costs, according to the report.
The study, from the AfDB’s Chief Economist’s department, is entitled ‘Border Posts, Checkpoints, and Intra-African Trade: Challenges and Solutions’.
Boosting trade within Africa is one of the benefits of furthering the process of regional integration on the continent. The authors of the report acknowledge that the border issue is only one of a number of challenges faced by the regional integration agenda.
However, they note that ‘the range and scope of the challenges are too broad to be covered in a short single paper.’
They go on to explain, ‘Consequently, we focus our discussion on border posts and key impediments to intra-African trade, which lie at the very heart of the issue.’
Trade has long been seen as crucial to economic growth and prosperity. This has been the case around the world, and it is just as relevant to Africa. In an interview with the Guardian newspaper, President Museveni of Uganda was clear and succinct on the issue, saying: ‘We want to trade our way out of poverty.’
The report outlines some of the results and costs of the restraint on intra-African trade. For instance, in 2009, trade between African countries accounted for only 10 percent of the continent’s total trade.
By contrast, intraregional trade in the same year in Asia stood at 50 percent, and in Latin America it was 22 percent.
Creating better conditions for intra-African trade through regional integration has been a priority for Africa for more than 50 years, the report notes, and promoting regional integration is one of the key pillars of the strategy of the AfDB.
One of the outcomes of this push for regional integration in Africa has been the establishment of regional trade agreements (RTAs) and regional economic communities (RECs).
Many RECs now exist in Africa, with varying degrees of integration, but they have not been wholly successful, says the report. ‘They have failed to live up to their full potential in terms of achieving significant economies of scale, increased competitiveness, industrial modernization and upgrading, higher domestic and foreign investment, and greater intraregional trade,’ it states.
The report then goes on to ask why this has been the case, asking, ‘What are the fundamental challenges to trade (ie, the free movement of goods and services) which need to be addressed?’.
The aspect that the report focusses on is customs and border problems. The processes are cumbersome.
The report states: ‘In Africa, the average customs transaction involves 20 to 30 different parties, 40 documents, 200 data elements (30 of which are repeated at least 30 times), and the rekeying of 60 to 70 percent of all data at least once.’
Also, in most African countries, there are two sets of procedures to complete – one on each side of the border.
Firstly, the report states that these lengthy procedures could be cut by bringing in automated systems for document checking – many African border posts do not use modern information technology.
Also, time and money could be saved by not duplicating the process on both sides of the border.
Border checkpoints are overstretched, resulting in long delays. A container or truck can wait up to three days to cross a border in Africa, according to the report.
For instance, trucks must negotiate 47 checkpoints and weigh stations between the Rwanda capital of Kigali and the Kenyan port of Mombasa.
This adds to the cost not just of intra-African trading, but exporting too. The average cost of exporting a container overseas from Africa is USD 2,000, compared to USD 900 from Asia, the study notes.
The report proposes joint border posts as one solution to the delays. This approach has worked elsewhere, in Asia for instance. In some countries there, the practice of One-Stop Customs Inspection is followed. Customs procedures are carried out on only one side of the border, but in compliance with the laws of both countries.
Africa is beginning to introduce or consider this approach. The report cites the case study of Chirundu, on the border between Zambia and Zimbabwe.
Chirundu is the main entry point for commercial goods entering Zambia from Zimbabwe, South Africa and commercial ports in southern Africa or proceeding through central and eastern Africa. As a result, it became a choke point for lorries.
The solution was the One Stop Border Post (OSBP) at Chirundu, introduced in December 2009. Now, northbound trucks are checked and cleared only on the Zambian side, and southbound lorries are processed on the Zimbabwean side.
The results have been impressive. A truck now crosses the border in just two hours instead of two or three days. The fast-track pre-clearance process takes only 15 minutes.
The success of Chirundu has helped promote the introduction of the OSBP system in the East African Community (EAC). The EAC is currently piloting the development of OSBPS, including between Kenya and Tanzania at Namanga and between Kenya and Uganda at Busia,
Similarly, in west Africa, four OSBPS are under construction between Nigeria and Benin, between Ghana and Togo, between Benin and Niger, and between Togo and Burkina Faso.
Regional integration will be intensively discussed at the AfDB's Annual Meetings in May during a High Level Debate entitled: 'Innovative Financing of Infrastructure and Regional Integration post Economic Crisis'.
- Paper author: Habiba Ben Barka