Lack of good infrastructure bedevils inter-African trade
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.
Transnet chief executive Siyabonga Gama highlights problems.