1. Regional Integration and Trade Facilitation Joseph Atta-Mensah Regional Integration, Infrastructure and Trade Division (RITD) United Nations Economic Commission for Africa Ethiopia Commodity Exchange – UNDP Knowledge Forum 24 February 2010, Addis Ababa, Ethiopia

2. PRESENTATION OUTLINE
Evolving definition and scope of trade facilitation
Key issues of trade facilitation
Trade facilitation initiatives in Africa
Way forward
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UNECA

3. Evolving Definition and Scope of Trade Facilitation
Logistics of moving goods through ports or documentation associated with cross-border trade
Environment in which trade transaction takes place
Transparency of customs, regulatory agencies
Harmonization of standards, conformity with international and regional regulations
Natural barriers to trade
Non-tariff barriers
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UNECA

4. Regional Economic Communities (RECs)
Considered by the African Union as the building blocks of the African Economic Community within the context of an African Common Market
8 are seen by the AU as the main pillars namely:
Arab Maghreb Union (UMA)
Common Market for East and Southern Africa (COMESA)
Community of the Sahel-Saharan States (CENSAD)
East African Community (EAC)
Economic Community for Central African States (ECCAS)
Economic Community for West African States (ECOWAS)
Inter-Governmental Authority on Development (IGAD)
Southern Africa Development Community (SADC)
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5. Evidence of weak Intra-African Trade
REC
Intra-community
Rest of Africa EU US
Others
CEMAC
1.9
2.2
41.2
30.5
24.2
COMESA
6.0
8.2
39.3
20.8
25.7
EAC
18.1
12.4
40.5
3.6
25.4
ECCAS
2.5
45.2
27.7
22.8
ECOWAS
10.3
2.9
39.0
26.1
21.8
SADC
12.8
4.6
26.6
14.0
42.0
Africa
6.8
5.8
49.7
15.1
22.7
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6. Marginalisation in the Globalisation Process
Volume of goods across borders has increased exponentially in recent years: 50 times higher in 1999 than in 1960
Africa has failed to benefit from steady increase in international trade
In 1950, Africa delivered 10% of world exports, by 2000 this share had declined to <3%
Situation worse in sub-Saharan Africa whose share of world exports of goods and services is < 1.5%
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7. KEY ISSUES OF TRADE FACILITATION
High transport costs
Complicated customs procedures
Inadequate usage of information and communication technology
Payments, insurance and other financial requirements
International trade standards
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UNECA

8. CONTRIBUTING FACTORS TO HIGH TRANSPORT COSTS IN AFRICA
Inadequate infrastructure network
Inefficient transport services
Multiplicity of rules governing international transportation of goods
Numerous roadblocks
We will not focus too much on factors relating to transport costs in Africa, however we will focus on the opportunities that may be afforded by the advent of commodity exchanges, especially considering the fact that Africa is rich in a plethora of primary commodities.
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UNECA

9. CUMBERSOME CUSTOMS AND ADMINISTRATIVE PROCEDURES HAMPERS TRADE EXPANSION
Excessive documentary requirements
Insufficient use of automated systems
Lack of transparency, predictability and consistency
Lack of cooperation among customs and other governmental agencies
Separated border posts, differences in working hours, visa requirements for transport crew members
New maritime security measures
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10. Negative results that emanate from most of these challenges may seemingly be overcome by an effective commodity exchange on a continental scale
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11. INSUFFICIENT USE OF ICT INCREASES TRADE TRANSACTION COSTS
Telecommunication services are inadequate, inefficient and very expensive
Strong linkage between customs delays and telephone charges and internet distribution:
Botswana and Namibia: 4 days delay; $4.8 and $4.28 per 3 minutes international call respectively
Ethiopia and Cameroon: 30 and 20 day delays; $7.44 and $7.7 per 3 minutes international calls respectively
Low level of awareness of e-commerce
Insufficient physical infrastructure
Deficient electronic transaction infrastructure
Inadequate legal and regulatory framework
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12. Mobile Telephone and Internet connectivity in African RECs
Cellular subscribers per 100 people
Internet users per 10,000 people
CEMAC
5.2
21.8
COMESA
5.8
35.0
IOC
15.6
115.5
SACU
11.3
490.5
SADC
10.1
147.1
UMA
129.3
The nature of commodity exchanges actually fosters the use of ICTs as demonstrated by the presentation given by Dr. Elleni Gebre-Medhin in the morning.
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UNECA

13. INEFFICIENT INTERNATIONAL PAYMENT MECHANISMS RESULT IN LONG DELAYS
Documentary credit is the most popular international payment system in Africa
Half of all payment requests are rejected because of documentary inconsistencies.
High insurance premiums for African countries
Customs guarantee payments represent a high cost for transport operators
Multiplicity of currencies and exchange rate arrangements
The adoption of efficient settlement systems within commodity exchanges will address some of these challenges.
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UNECA

14. MULTIPLICITY OF INTERNATIONAL TRADE STANDARDS CONSTITUTE A BARRIER TO TRADE
Standards have potential to substitute tariffs and quantitative restrictions
Standards impose higher production costs for firms in developing countries
EU standards on agricultural products are of great concern to Africa
The insistence on maintaining product quality within commodity exchanges trickles down to the farmer in ensuring that their products are fit for the commodity exchange market. Consequently getting competitive prices for their produce.
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15. ONGOING EFFORTS TO FACILITATE TRADE IN AFRICA
Efforts at sub regional level
Several RECS have trade facilitation programmes
Bilateral cooperation
Several bilateral agreements exist
Cameroon has signed conventions with Chad and CAR; special facilities provided to landlocked countries at seaports
Efforts at country level - One stop shops
Efforts by international organizations
Corridor management committees
Observatories of abnormal practices
Joint border posts
Consequently, commodity exchanges may be seen to be the next realm of facilitating Intra-African trade on a continental scale.
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UNECA

16. Probable and Unique Regional TF Activities : Creation of Knowledge Networks
Questions that can be addressed through creation of Knowledge Networks as rightly stated amongst themes of this Knowledge Forum are:
How can markets be appropriately developed to transform the African primary commodities sector?
What are the prospects for commodity exchanges in Africa?
How can commodity exchanges be regionalized or contribute to regional trade?
Observatories could also play an important role in that regard
The objectives of the Knowledge Forum are to highlight lessons from comparative global experiences in establishing commodity exchanges and to engage in learning on the actual process of implementation and the challenges faced.
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17. THE WAY FORWARD ON TRADE FACILITATION
1. Strengthen Africa’s infrastructure network to support international trade
2. Improve the efficiency of transport services
3. Remove illegal roadblocks
4. Speed up customs and border crossing procedures
5. Promote the use of new technology
6. Strengthen regional initiatives
7. Reduce negative impact of multiplicity of standards
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18. Thank you!
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