Barriers add to cost of doing business

Thursday July 6 2017

Trucks transporting goods from Mombasa port to

Trucks transporting goods from Mombasa port to Uganda wait for clearance at Malaba border. PHOTO FILE | NATION 

MOSES K. GAHIGI
By MOSES K. GAHIGI
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Bureaucracy has been singled out as a major contributor to the high cost of doing business in Africa.

For instance, a container from South Africa takes three weeks, requires five sets of invoices, 28 Southern Africa Development Community certificates, 84 Customs stamps, 56 Customs signatures and 83 export documents before it can enter Angola.

Speakers at the annual general meeting of the African Export-Import Bank (Afreximbank) in Kigali cited this and similar trade barriers by African countries as the cause of the ever increasing cost of doing business on the continent.

“There is a costly absence of trade harmonisation in Africa; every country has its standards, non-tariff barriers are still largely unaddressed and the economic blocs are not helping a lot,” said Gwarega Mangozhe, chief executive of the Consumer Goods Council of South Africa.

Speakers at the meeting noted that many African countries are preoccupied with preserving their sovereignty and not with trade fellow African countries.

“You have to give up a lot of sovereignty if you want a lot of things to be done on a broader and more sustainable front. The EU moves as a single bloc regardless of the sovereign states involved,” said Gilberto De Barros, senior private sector development specialist at the World Bank Group.

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He added that lack of commitment between African countries in terms of trade facilitation is also witnessed in how many give preference to foreign currencies like the euro and US dollar which causes currency exchange constraints.

Intra-African trade is viewed as a $6 trillion opportunity in the short-term, and $12 trillion in the long-term, but if countries don’t advance a holistic trade harmonisation agenda, this potential WILL not be realised, she said.

In 2014, African countries committed to tripling the level of intra-African agricultural trade by 2025 and to fast track the establishment of Continental Free Trade Area and adopting a continent-wide Common External Tariff scheme, but nothing significant has been achieved so far.

Intra-African trade accounted for only 16 per cent, yet in 2014, the continent traded of the total at an average of 61 per cent with Asia, 69 per cent with Europe and 56 per cent with the US.

Reports indicate that in the first quarter of 2017, China’s total trade with Africa rose 16.8 per cent to $38.8 billion, mainly due to a 46 per cent jump in annual imports from Africa, with agricultural imports rising 18 per cent.

The World Trade Organisation is forecasting that global trade will expand by 2.4 per cent in 2017, and between 2.1 per cent and 4 per cent in 2018. However, only a fraction of this growth is expected to come from Africa.

Officials at the meeting also called upon African leaders to address basic constraints such as free movement of goods, people and labour.

Only 13 out of the 55 countries offer visa-free or visa-on-arrival to all Africans, while only the Seychelles abolished visa requirements for Africans according to the African visa openness report released last year.

“There is power in a collective structure of operation, political leaders need to be held accountable every year,” said Mr Mangozhe.

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