Lack of good in­fra­struc­ture be­dev­ils in­ter-African trade

The Star Early Edition - - NEWS - Siseko Njobeni

TRANSNET chief ex­ec­u­tive, Siyabonga Gama yes­ter­day be­moaned the low lev­els of in­tra-Africa trade and lack of in­fra­struc­ture.

The rest of Africa is an im­por­tant mar­ket for Transnet after the group adopted the so-called Africa Strat­egy through which it wants to be the lead­ing provider of lo­gis­tics ser­vices in sub-Sa­ha­ran Africa by pur­su­ing port, rail and pipe­line op­por­tu­ni­ties.

Speak­ing at the In­ter­na­tional Heavy Haul As­so­ci­a­tion con­fer­ence in Johannesburg, Gama high­lighted some of the im­ped­i­ments fac­ing in­vestors in the rest of Africa, de­spite eco­nomic growth.

“We can see Africa for the first time be­ing ahead in terms of eco­nomic growth. We can see an uncertain world where Europe and the Amer­i­cas are no longer the lead­ing and shin­ing light. But what is it that we can do in Africa so that every­body can also be in­cluded?

“Part of the is­sues we have been look­ing at in Africa is the no­tion of in­tra-African trade. If you look at Amer­ica, 60 per­cent of that con­ti­nent trades with it­self. If you look at Asia and Europe, 40 per­cent does that. But when it comes to South Africa, the statis­tic is a bit less com­pelling. It is at 17 per­cent,” said Gama.

He cited a 7km rail­way line be­tween Egypt and Su­dan that was stopped in 1967. “It has still not been built. That is the miss­ing link,” he said. The rail­way line would have en­hanced trade be­tween the two coun­tries, he said.

Gama also lamented the in­fra­struc­ture deficit in the con­ti­nent which he said stood at $100 bil­lion (R1.28 tril­lion) a year. Over the years, it had been grow­ing by 2 per­cent. “So when you ex­pe­ri­ence a high growth rate with­out in­fra­struc­ture be­ing able to catch up, that gap con­tin­ues to in­crease. We have a com­bi­na­tion of years of delin­quent un­der in­vest­ment in in­fra­struc­ture, not only on our roads and rail but also on our ports,” he said.

The lack of in­fra­struc­ture made it harder for com­pa­nies to de­liver raw ma­te­ri­als from pro­duc­tion ar­eas to mar­kets. “As many of you know, Africa is a rich con­ti­nent, with poor peo­ple. That is the dilemma. So part of what we need to be say­ing is how do we ac­cel­er­ate in­dus­tri­al­i­sa­tion,” said Gama.

Sinethemba Zonke, a con­sul­tant at Pan-African ad­vi­sory firm Africa Prac­tice, said the low trade among African coun­tries was due to a va­ri­ety of fac­tors, including un­der de­vel­op­ment.

“Other fac­tors such as inadequate trans­port in­fra­struc­ture de­vel­op­ment, tar­iffs and non-tar­iff bar­ri­ers im­pede the move­ment of goods and peo­ple af­fect­ing in­tra-re­gional trade lev­els,” said Zonke.

The lack of ad­e­quate trans­port in­fra­struc­ture made it ex­pen­sive for com­pa­nies to move goods within the re­gion, with costs in Africa more than 40 per­cent higher than in re­gions such as south-east Asia.

“The high cost of trans­port­ing goods in Africa can have a se­vere im­pact on a crit­i­cal sec­tor like agri­cul­ture. For ex­am­ple, Africa’s low agri­cul­tural yields are a re­sult of lack of ac­cess to in­puts such as fer­tiliser, which are a lot more ex­pen­sive on the con­ti­nent as a re­sult of trans­port costs,” he said.

He said non-tar­iff bar­ri­ers such as cor­rupt, com­pli­cated, or lengthy cus­toms pro­ce­dures added to the dif­fi­cul­ties of trade within the con­ti­nent. “Africa’s lack of har­mon­i­sa­tion in terms of rules and reg­u­la­tions across in­dus­tries, including agri­cul­tural could also fur­ther com­pli­cate cus­toms pro­ce­dures,” said Zonke.

PHOTO: SIMPHIWE MBOKAZI

Transnet chief ex­ec­u­tive Siyabonga Gama high­lights prob­lems.

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