Setting up smart corridors will help get trade moving on the continent

There is a need to strengthen multimodal transport infrastructure and improve stakeholder co-operation

The need to improve African trade is of great importance to SA, with the gradual materialisation of the African Continental Free Trade Area (AfCFTA) an encouraging factor. SA’s exports to AfCFTA countries already account for nearly a quarter of the country’s global exports, and this should in theory rise rapidly as the agreement kicks in. It nevertheless remains a reality that there are many major inhibitors of African trade that remain stubbornly in place, including the turbulent geopolitical context, adverse regulatory frameworks, the fragmented African market, and energy, and water and finance challenges. The need to strengthen multimodal transport infrastructure, with its key role in the creation and functioning of production value chains, remains particularly relevant, as is the need for improved stakeholder co-operation.

The Programme for Infrastructure Development in Africa, a flagship programme of the AU, aims to address Africa’s infrastructure challenges, especially those of transport, thereby supporting the goal of the AfCFTA to create an integrated continental market, along with the related goal of integrating regional economies. Existing physical and digital transport infrastructure in most of Africa remains generally inadequate to achieve these goals, despite progress on many fronts.

Related to the infrastructure issues are those of logistics, with the especially damaging effects of non-tariff barrier costs affecting value chain development and trade. The fact that much of Africa’s trade is linked to inland areas makes an expanded rollout of dry ports in Africa imperative, along with innovative ways to address the problems hobbling physical as well as digital infrastructure.

Transport challenges include inefficient ports; uncoordinated border posts; a lack of shared data relevant to trade flows; the absence of real-time monitoring of goods from origin to destination; generally slow physical movement of goods; an absence of supportive ICT systems in many cases; weak, often outdated rail systems; the poor condition of roads, which are being forced to carry increasing amounts of freight with multifaceted negative results; weak co-ordination between many key government officials such as those dealing with customs and transport; frequent obstructive bureaucracy with much red tape; and not infrequent cases of corruption.

The increased use of digital solutions can be a major help to improving many of these issues and improving trade flows, including co-ordination between role players and standardisation.

The challenges confronting African trade have already led to increased usage of e-commerce on the continent, which has helped stimulate growth in decentralised manufacturing and production. There has also been growth in the use of blockchain technologies. Opportunities for digitally managed trade flows to add to efficacy and cost savings in SA trade flows are considerable, while also adding to the complexity of the factors involved in multimodal transport.

An important new procedure is the use of expanded versions of digital governance systems on transport nodes and corridors to improve and support trade flows, also known as smart corridors.

This needs greater attention, and the AU as well as some of the regional economic communities have already begun, or plan, to build such corridors to improve trade flows. Smart corridors require a national and/or cross-border hub or platform that helps connect the trading community in a broad ecosystem of stakeholders, thereby improving regional integration.

This multifactor approach is especially important for developing the bio-economy, with its tremendous potential gains when it comes to trade. The forestry sector is one of the best examples that could hold considerable benefits for SA, its economy and employment creation, along with tangential gains. These include environmental, research & development capabilities, and rural development. The format of the forestry sector, though linked to physical infrastructure, would also make its entire chain of activities especially well suited to digital infrastructural support and smart corridors with blockchain features.

In this fluid context, SA has unfortunately experienced increased challenges regarding its trade-supportive infrastructure, especially that relating to transport. President Cyril Ramaphosa recently noted that for some years, “the efficiency and competitiveness of our ports and rail network have been in decline” and that SA needed to “fix” its logistics architecture.

Railways have become particularly problematic, as have some of the key ports used for exports. The mineral sector has been among those worst affected as is illustrated by the fact that coal exports using the Richards Bay Coal Terminal have dwindled to levels last seen in the early 1990s. In recent months, fruit exporters have also complained of severe bottlenecks related to equipment breakdowns.

Unfortunately, it is not only in terms of infrastructure that SA has been falling behind on key issues related to trade. Despite the relative sophistication of the SA economy, there has been a progressive decrease in the availability of many of the supportive clusters of inputs and entities that feed into the value chains that use the infrastructural support for diversified value-add combinations and onwards processes.

The need for better co-operation between all stakeholders, especially business and the government, is obvious and fortunately this situation is starting to improve, though not as quickly as hoped.

It is in this context that Ramaphosa has announced that, as with the energy sector, the private sector can now become involved in SA’s freight rail operations, though the state will retain ownership of the routes. He has also said that by “upgrading and expanding our port terminals through innovative public-private partnerships, we aim to position SA as a leading player in global markets”.

These and similar moves have significant relevance for two-way trade in future, and should have echoes in other aspects of the context in which SA’s trade takes place.