Infrastructure gap, non-tariff barriers impediments to regional trade in Africa
A group of researchers on Tuesday, October 29 at the ongoing Africa Economic Conference in Johannesburg reaffirmed the need to step up investment in physical infrastructure and remove non-tariff barriers to facilitate regional trade across the continent.
During a session dedicated to Regional Integration in the Economic Community of West Africa States (ECOWAS), chaired by Janvier Litse, Director of NEPAD, Regional Integration and Trade at the African Development Bank, scholars observed that bridging the existing infrastructure gap among countries including improving the quality of roads and investing in telecommunication infrastructure is needed to facilitate regional trade.
“Improvement in the quality of roads will increase movement of factors of production which will foster intra-regional trade in the short, medium and long term,” Litse said.
Other soft infrastructure is needed to fast-track the achievement of the objectives of the ECOWAS trade liberalization scheme,” said Uduak Akpan, from the Infrastructure Consortium for Africa during his presentation titled: “The Impact of Regional Road Infrastructure –Improvement on intra-regional trade in ECOWAS.”
Citing the Dakar-Lagos highway, which spans 4,010 kilometres of which 3,260 are paved in various areas, Akpan argued that the route provides the most direct road connection between the capitals of both countries (Senegal and Nigeria) along its alignment.
“Completion of the Lagos-Dakar highway has increased in the average road quality between Lagos and Dakar from its current level to the level of roads in South Africa,” he said, pointing out that the improvement in Lagos-Dakar average road quality has boosted regional trade.
However, increasing the quality of the roads demands huge financial investment making it necessary for governments to work with international financial institutions such as the African Development Bank (AfDB) to raise funds.
Currently, the AfDB remains the largest external financier for infrastructure in Africa at both the national and regional level, with 20 per cent of its concessional window earmarked for regional integration projects.
For instance, between 2009 and 2011, the Bank completed 51 transport projects valued at over $3 billion, covering road, airport, seaport and railway infrastructure. The institution has financed over 4,000 kilometres of roads and several major bridges in Africa.
In his paper titled “Telecommunication infrastructure, regional integration and the convergence of revenues in ECOWAS”, Demba Sy, an economic statistician and researcher from the National Agency of Statistics and Demography in Senegal, argued that regional integration has had an impact on not only strengthening of commercial ties between member countries, but has also resulted in a more productive direction of investment in the telecommunications sector.
“They could better serve to strengthen regional integration in further connecting the real economy and facilitating bilateral trade flows,” he argued.
Intra-Africa integration continues to lag behind the rest of the world as evidenced by movement of goods and services across borders. Intra-African trade is only 12 per cent compared to 60 per cent, 40 per cent, 30 per cent intra-regional trade in Europe, North America and ASEAN, respectively.
In her paper titled “Economic Integration, Trade Facilitation and Agricultural Exports Performance in ECOWAS Member States”, Oluyomi Ola-David, from the teaching and research department at Covenant University, Nigeria, argued that on the average, the level of trade facilitation in ECOWAS is below world average.
She noted that the 15 ECOWAS members experience greater costs of exporting and importing respectively due to bureaucratic processes.
“Countries need to relax stringent bureaucratic processes in order to reduce the number of days required to process domestics for import and export,” David said.
In addition, infrastructural provision is essential for improving trade facilitation with provision of Internet having a significant impact on trade facilitation.
“The increase in the use of ICT in the operations of various customs activities in the member states will go along way in facilitating trade in the sub-region,” she said.
Strengthening the institutional framework in the ECOWAS sub-region, in particular curbing the menace of corruption and adherence to the rule of law, has potential to facilitate trade, David said.