Using innovative technologies to break barriers in regional trade

A World Bank Report called “Defragmenting Africa” describes Africa’s borders as thick. This thickness is attributed to “mountains of documents that exporters and importers and transitors brave in trading in Africa. Similarly, the United Nations Economic Commission for Africa shows in its 2013 report “Trade facilitation from an African perspective, 2013,” that Africa had the highest cost of doing business in the world in contrast to other regions. This has significantly contributed to the perceived unattractiveness of Africa: On average, according to this report, there are eight documents to export, nine to import, 31 days to export, 37 days to import, $1,990 to export a container, $2,567 to import a container. These figures are twice or three times those of some other regions of the world. It is for this reason, that improving the business environment in order to reduce the cost of doing business has been an important priority for governments at home and acting jointly within the framework of regional economic communities (RECs). The Common Market for Eastern and Southern Africa (Comesa) has been the trailblazer, both in terms of overarching programmes and of specific projects within the framework of regional economic integration. What is Trade facilitation? It is about freedom of transit for goods. It is about reduction of the number of documents, simplification of the complexity, of documentation; shortening of time spent at border crossings for goods vehicles and persons; publication and easy access to information and applicable rules; use of tested international best practices in management of customs operations; and efficient border agencies that address constraints faced by importers, exporters and logistics people. The overall framework for trade facilitation programs in Comesa for example, is the Free Trade Area (FTA). The Comesa FTA operates as a rule-based duty-free, quota-free, exemption-free regime with a clear prohibition of non-tariff barriers (NTBs). In 2000, when the FTA was established, intra-Comesa trade in goods (merchandise trade) stood at $3.1 billion and has grown phenomenally to $19.3 billion in 2013. This excludes informal cross-border trade in goods estimated at about 40% of total trade and services. These on average contribute to 60% of the GDP of COMESA member states. This performance has generated regional investments and attracted foreign direct investment into the Comesa region. For example, the Comesa Competition Commission processed mergers and acquisitions in the region estimated at $ 1 billion in 2013 alone. Intra-Comesa investment flows have also been on the rise, and rose by 86% between 2011 and 2012. This success has been underpinned by a rule-based system enforced by the COMESA Court of Justice which has assisted in promoting predictability and better planning, and confidence in the regional market. Also contributing to trade facilitation is an effective system for removing non-tariff barriers (NTBs). A success rate of at least 80% of reported barriers has been achieved in the region through an online reporting system which is in place. Short Messaging Service (SMS) is being developed to complement the online reporting system that will allow economic operators report NTBs instantly using their mobile phones All these mechanisms on addressing NTBs together have a success rate of over 99%. To date for instance, of all reported NTBs in Comesa, a total of about 220, have been removed, except for five of them relating to trade in milk from Kenya into Zambia (health standards), palm oil from Kenya into Zambia (rules of origin), soap from Madagascar into Mauritius (rules of origin), fridges and freezers from Swaziland into Zimbabwe (rules of origin), and electronic products from Egypt into Kenya (rules of origin). The One-Stop-Border-Post (OSBP) has been another runaway success as demonstrated on the Zambia-Zimbabwe border at Chirundu. For about two years now, waiting time at the border for trucks has reduced from up to nine days to a mere 20 minutes for accredited clients or two hours for importers that use the advance declaration system, and not more than two days for others. However, beneath the success of all the trade facilitation initiatives is political commitment at the highest level and resources to formulate and implement policy and institutional reforms. Greg Mills, in his book Why Africa is Poor cites success stories where determined political leadership was what it took to turn round apparently insurmountable trade facilitation nightmares at ports and along trade corridors. He concluded that the only thing still keeping Africa poor is leaders who choose to keep Africa poor; a stunning indictment. It took the resolve of the heads of State in the Northern Corridor (Kenya-Uganda-Rwanda) recently, to bring down cargo transit time from the Port of Mombasa to Kigali from 21 days to seven. The author is the Director of Trade, Customs and Monetary Affairs, at the Common Market for Eastern and Southern Africa (COMESA)