Geographies in Depth

How can Africa kill the red tape and improve trade?

A trader arranges second-hand shoes for sale at an open market in Kenya's capital Nairobi, April 3, 2009. The global economic slump makes it even more important for African governments to help local businesses by cutting red tape in areas like customs, tax and registration, a continental investment body said on Friday. REUTERS/Thomas Mukoya (KENYA BUSINESS POLITICS) - RTXDKLE

Several African countries have made strides in simplifying regulation Image: REUTERS/Thomas Mukoya

Ilmari Soininen
Economist, Measurement and Metrics, Global Alliance for Trade Facilitation, World Economic Forum

“There are so many processes, so much documentation. A centralized place of clearance could solve anything.” These are the words of Sharon Kimanini, head of logistics for a Kenyan garment exporter. Her message is clear.

As the Global Enabling Trade Report 2016 points out, improving the efficiency of process and reducing the red tape around cross-border trade remains an easy win for international trade. While progress on multilateral trade talks looks dim and overall infrastructure investment lags, focusing on regulatory efficiency can help governments enable trade quickly, doing more with less.

According to UNCTAD and OECD estimates, the implementation of the WTO Trade Facilitation Agreement costs between $4 to $20 million per country, while the impact on exports, and hence jobs, would be many times greater. The WTO estimates it could boost developing country exports by up to $730 billion per year.

Loading...

A number of countries across Africa have made important strides on the efficiency front.

Botswana leads the region on the Enabling Trade Index’s border administration pillar, seen below. Its compliance with import procedures requires only eight hours on average, on a par with major global traders such as South Korea and the United States. On the cost side, Kenya has managed to radically cut the price of import compliance, from an average of $550 to $115 per container. These types of efficiency drivers – reducing time and cost for red tape – are critical when it comes to enabling trade, especially for small and medium-size companies, which often face the most significant hurdles.

However, more needs to be done. Governments must work hand-in-hand with the private sector to identify key bottlenecks and agree on ambitious roadmaps for reform. Governments must also coordinate with regional counterparts to ensure coherent and coordinated implementation, which can support regional integration, including those at the continental level, such as the African Union’s Boosting Intra-African Trade agenda. These reforms can also help to better position economies as attractive destinations for foreign investment, particularly as manufacturing opportunities open up with increasing costs in Asia.

The Global Alliance for Trade Facilitation is engaging with companies, government agencies and private-sector organizations in Ghana and Kenya to support this critical joint process, and plans to explore future partnerships with other countries in the region in 2017.

From speaking with traders such as Sharon Kimanini, it appears there are a number of concrete solutions that can address these bottlenecks. Although these solutions may not call for big financial investments, they will require champions from both government and business to ensure they are fit for purpose and sustainable. With momentum picking up with the imminent entry into force of the Trade Facilitation Agreement, we look forward to seeing continued progress and finding out which economies will lead the way in 2018, when the next Enabling Trade Index comes out.

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Stay up to date:

Trade and Investment

Related topics:
Geographies in DepthTrade and Investment
Share:
The Big Picture
Explore and monitor how Africa is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

How Japan can lead in forest mapping to maximize climate change mitigation

Naoko Tochibayashi and Mizuho Ota

November 12, 2024

Americans went to the polls. Here’s how US presidential election works

About us

Engage with us

  • Sign in
  • Partner with us
  • Become a member
  • Sign up for our press releases
  • Subscribe to our newsletters
  • Contact us

Quick links

Language editions

Privacy Policy & Terms of Service

Sitemap

© 2024 World Economic Forum