Boosting Intra-Africa Trade through enhanced Trade Facilitation

1. Boosting Intra-Africa Trade through enhanced Trade Facilitation Africa Trade Forum II 24 September 2012 petermasi@gmail.com

2. Key messages • Africa’s performance in global trade performance indicators reflected in actual trade performance • TF should be viewed from a supply chain efficiency perspective (cost, time, reliability) • The efficiency of a supply chain depends on how effectively it is integrated into global supply chains • Identifying and strengthening weakest links critical for improved performance

3. Background • Africa’s performance in main trade, transport and logistics performance indicators has been poor. • Africa’s performance lags behind other regions in critical factors that influence trade • Generally strong correlation among the indicators/reports (ETI, GCR, LPI, CPI, LSI)

4. In spite of Africa’s advantages • Very liberal trade regimes at home • Host of trade preferences to developed markets • Increasing number of regional agreements • Progressive improvements in infrastructure (esp. roads, ports) • High natural resource endowment • Low labor costs etc…

5. Africa’s trade performance remains constrained… • Africa’s trade… • Accounts for only 3% of global trade • Intra-Africa trade… • Accounts for only 10% of Africa’s trade. • Compared to 40% trade among North American states • and over 60% among Western European states

6. Role of enhanced Trade Facilitation • Advantageous position and good infrastructure make a difference… • … but not adequate in themselves. • Require a range of complimentary measures to translate advantages into improved trade performance. • Not least is the ever growing role of enhanced trade facilitation.

7. Opportunity offered by AU decision on CFTA • Deeper integration to boost intra-Africa trade. • Key question: what is the complement of measures that will translate AU aspirations into tangible trade growth? • Global trade performance indicators can help point us in the right direction…

8. Africa in Main Trade Performance Indicators Table 1_AFTII_TF.docx

9. Some highlights from the reports • Performance varied within regions and income groups. • Landlocked countries had worse LPI scores, but did not necessarily enable trade less than maritime countries. • Countries with liberal trade regimes did not necessarily enable trade more than those with less liberal regimes. • In ETI scores, only 2 African countries in top 50, and 7 in bottom 10.

10. Key Issues and lessons • Optimizing supply chain efficiency = cost, time and reliability (consistence). - What happens from origin to destination matters. • The supply chain is as strong as its weakest link. • This has implications on how we approach trade facilitation.

11. Conceptual Framework Cost dimension Time dimension Reliability dimension 9 Logistic activities 27 KPIs

12. Infrastructure Logistics System Institutional Framework Service Provider Shippers/Consignees Logistics Evaluation Model: Key Indicators (1) service quality level or meeting customers’ expectations, (2) global coverage, (3) liability, (4) reliability, (5) track & trace capability and (6) document accuracy (1) road, (2) ports, (3) inland waterways, (4) rail and (5) air (1) trade openness, (2) average time needed for export, (3) average time needed for import and (4) average number of documents (1) average export cost per TEU and (2) average import cost per TEU

13. Some key lessons: 1. Border management • Interagency coordination enhances benefits from customs modernization. • Useful tools include Integrated Border Management systems, Joint inspection schemes and Single Window Systems.

14. Key lessons: 2. Infrastructure utilization • Improved infrastructure creates favorable trading conditions… • …Optimizing infrastructure utilization increases trade flow from the same infrastructure. • Infrastructure projects like OSBP should be guided by process flows. • ICT can enhance processes by eliminating duplications, reducing human movement, and minimizing arbitrary decision making.

15. Key lessons: 3. Eliminating NTBs • Many non-tariff measures are intended to fulfill legitimate objectives (security, improving revenue collection, protecting life)… • …the common practice states that trade facilitation should not diminish the rights of government to pursue these objectives… • …the best practice however states that these measures should not be implemented in a manner that impedes trade…

16. Eliminating NTBs: 3b. The usual set-backs • Trade facilitation is normally provided for in regional agreements… • …however, implementation usually painfully slow, and usually with limited reference to international best practice… • lack of capacity normally cited as the culprit. • IBP helps to aggressively address competing interests. • Opportunities offered by participation in international conventions and professional bodies.

17. Key lessons: 4. Promote private sector /PPP • Transparency a key ingredient for attracting private sector participation. • Transparency minimizes opportunities for corrupt practices, making costs and process times more predictable. • Self-regulation schemes for private sector reduce the cost of regulating.

18. Concluding remarks • Complimentarity of measures - no silver bullet in trade facilitation. • Global performance reports can help benchmark and direct attention to weak areas so they can be strengthened. • The effort (input) determines the outcome (output).

19. Thank you!