The private sector can and must play a key role in building Africa’s capacity to trade

[Business Action for Africa]

Miguel Veiga-Pestana
Vice-President Global External Affairs, Unilever

The global economic downturn is exacerbating well-documented infrastructure constraints in Southern and Eastern Africa, which are already contributing to low levels of trade, economic growth and poverty reduction, with landlocked countries especially affected. The OECD recently reported that inter-regional trade still only accounts for 9.5% of trade in Africa. Increasing regional integration and trade is vital to enabling higher levels of economic diversification and foreign direct investment.

For companies doing business in the region, it is not just the poor quality of physical infrastructure that remains a problem. Significant delays in moving goods across borders due to inefficient regulatory and customs procedures make transportation costs prohibitively expensive. It is estimated that in Southern and Eastern Africa, regional transport costs are 75% higher than the international benchmark.

Poor quality infrastructure does not just impede growth in regional and international trade volumes. It also inhibits foreign direct investment, job creation and economic growth. According to the World Bank, the potential contribution of infrastructure development to growth across African regions ranges from 1.5% in North Africa to almost 3% in East Africa and Central Africa.

To unlock the region’s undoubted potential, especially across the agricultural value chain, producers need a faster and more reliable transport system which will reduce costs, ensure products reach markets faster and deliver supply and distribution chain efficiencies for both importers and exporters.

The COMESA-SADC-EAC initiated North-South Corridor programme, which spans Southern and Eastern Africa, is to be welcomed, with its potential to create a modern, low-cost and reliable transport network. We are particularly encouraged by the holistic nature of the solution, which uniquely aims to tackle both hard and soft infrastructure constraints through an integrated process, offering a model for potential replication across the entire region.
However, the task of addressing infrastructure constraints such as weak customs administration and other barriers to doing business cannot fall just to governments and development organisations. Beyond providing investment and delivery expertise, the private sector can and must be a key stakeholder in the process. As infrastructure users, we have already demonstrated we can add significant value to tackling soft constraints like customs procedures.
One example is Business Action for Improving Customs Administration in Africa (BAFICAA), a private sector-led trade facilitation programme that emerged from Business Action for Africa. BAFICAA’s primary objective is to build a cooperative dialogue between business and governments based on a relationship of trust and the recognition that the private sector can be an active partner in improving the customs environment. In East Africa, BAFICAA has been working in partnership with other leading companies, SITPRO (the UK’s trade facilitation agency), the East African Business Council and government authorities, to recommend real and practical improvements in the customs environment to benefit the broader local economy and to change the culture of customs administration from a controlling function to a facilitating one. We are also addressing these issues in West Africa.

BAFICAA activities are focused on six key areas, which include addressing the need for fast-track customs services for compliant and low risk taxpayers and traders, the need for greater automation of customs processes and procedures, and the development of valuation processes and training, accreditation and certification for customs agencies.

More funding and support for programmes like BAFICAA will boost Africa’s capacity to trade, improve the environment for business and deliver significant economic benefits to governments and the wider community. The private sector is ready and willing to play its part in scaling up these important initiatives.

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[Tanimu salihu]

am very glad to read this write up and i hope you can keep your words and develop all this in action ,please in africa now we really need action in time of climate change exchange trade and economic growth.