, NAIROBI, Kenya, Feb 8 – A recent World Bank report has reinforced the need for African countries to institute policy reforms that will eliminate barriers to trade and enable them to easily do business with each other.
According the report titled ‘De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services,’ the continent will only achieve full integration if it opens up its markets by having regulations that allow free cross-border movement of goods and services.
“To deliver integrated regional markets that will attract investment in agro-processing, manufacturing and new services activities, policy makers have to move beyond simply signing agreements that reduce tariffs to drive a more holistic process to deeper regional integration,” the report documented.
Non-Tariff Barriers (NTBs) have been cited as the biggest obstacle to the trade in Africa and are said to cost the continent billions of dollars in unrealised potential.
For instance, a World Bank survey found out that South Africa’s supermarket Shoprite, spends Sh1.6 million ($20,000) per week on securing import permits to distribute meat, milk, and plant-based goods to its stores in Zambia alone.
“For all countries it operates in, approximately 100 (single entry) import permits are applied for every week; this can rise up to 300 per week in peak periods. As a result of these and other documentary requirements there can be up to 1,600 documents accompanying each truck Shoprite sends with a load that crosses a SADC border,” the findings show.
Other barriers include the cumbersome and costly customs procedures that cause long delays for both passengers and the transportation of goods.
Such restrictions not only significantly increase the cost of commodities but also render them uncompetitive.
In turn, these impediments deprive the continent of new sources of economic growth, new jobs, hence the reason why these countries have been unable to address the high poverty levels.
“It is clear that Africa is not reaching its potential for regional trade, despite the fact that its benefits are enormous- they create larger markets, help countries diversify their economies, reduce costs, improve productivity and help reduce poverty,” commented outgoing World Bank’s Vice President for Africa Obiageli Ezekwesili.
For this reason, these countries will have to not only embark on regulatory reforms but also enhance the capacity of institutions charged with enforcing those legislation.
The report came a few days after a section of the business community in East Africa called for the implementation of legal mechanisms that penalises countries that do not comply with measures agreed upon to eliminate the NTBs.