A senior UN official told participants attending the ongoing Africa Trade Forum that simplifying trade relationships, in areas such as clearance times at ports can greatly facilitate trade and bring about economic dividends. Mr. Stephen Karingi, Director, Regional Integration and Trade Division of the United Nations Economic Commission for Africa (ECA) made this statement during a debate on trade facilitation, Monday this week. The Forum is holding on the theme: Boosting intra-African trade and establishing the continental free trade area, from 24-26 October.
Referencing studies by the OECD, he noted that improvement of coordination among border agencies and reducing clearances times could reduce trade costs by about 2.4 per cent. “The solution that comes to mind is to establish the now familiar One Stop Border Posts (OSBPs), such as the one in Chirundu, at the border of Zambia and Zimbabwe,” said Karingi, adding that such best practices could be scaled up.
“A related best practice is the improvement of information, providing advance rulings on tariff classification and applicable duties, which combined have been estimated to reduce the trade costs by at least 5.5 per cent,” stressed Karingi. He added that the establishment of National Single Windows (NSWs), which are meant to reduce documentation “could also provide the avenue to enhance information flow and advance decisions.”
He also said that a framework for networking these NSW initiatives could go a long way towards boosting intra-African trade, “If two or more of these NSWs are to speak to one another, there is need for coordination,” he emphasized.
Acknowledging that measures, including road transit facilitation instruments have been put in place to promote the free flow of goods, Karingi noted that stakeholders, such as truck drivers, transporters and shippers continue to face difficulties along African trade and transit corridors. “If we are to move from talk to action, we must get practical solutions that will make the efforts that we are currently undertaking to work,” he urged. For instance, streamlining fees could cut 1.7 per cent of total costs.
“Any business person or trader will tell you that a 10% reduction on trading costs means a lot to the bottom-line and the competitive margin,” he said.
The series of Assessing Regional Integration in Africa reports published jointly by the ECA, African Development and the African Union Commission have articulated the range of challenges in this regard. They point out that the average time required for customs clearance for a sea cargo in Africa is 10.1 days, compared with 2.1 days in OECD countries; and only 30% of the African road network is paved. Further, each day of delay at customs is estimated to be the equivalent of adding 85 kilometers between a country and its trading partner. And, the number of road blocks in some countries can be as numerous as 1 for every 10 kilometers.
The session underscored the need to increase implementation of the trade and transport facilitation instruments and measures that have been agreed between countries in the Regional Economic Communities (RECs).
Source: Economic Commission for Africa (ECA) – Press Release – 25 September 2012